Daily new dominion. [volume] (Morgantown, W. Va.) 1897-1906, 1898-12-12

WASHINGTON, Dec. 12.-Assistant Sec
rotary Vanderllp, who is not expected
here until Dec. 20, has made his second
informal report of his observations in
Porto Rico. He said in part:
1.-The island some 20 years ago was
using American currency. At the
time OF the emancipation the Spanish
government found the value of silver
declining, and it discovered that it
would be profitable to make payment
in Mexican dollars, and in that way the
currency was brought to a silver basis.
The heavy payments for crops made a
redundant currency and great deal of
it was shipped away. Eventually the
government decided ON silver coinage
for the island, making a further profit
by debasing the silver in the peso. The
silver in the peso is 900 fine The Span
ism government gave this new peso
certain redeemability by offering to re-
deem them at the Bank of Spain in
Madrid at 95 in gold.
lone of the American commanders
reports to me that condition that must
be taken into account is the ownership
VI ulOot VI bAo pldubdOlOA5. Lu6y are
nearly all owned by Spaniards; great
many of them by Spaniards residing in
Spain This has resulted, instead of
an apparent balance OF trade consider
ably in favor of the island. in real
balance against the island.
"When the American troops landed
it was thought an easy temporary solu-
ton of the situation to fix the rate of
exchange as between American dollars
and pesos at two for one. That worked
satisfactorily for little while, but the
exchange dealers soon found that they
could make more profitable rate of ex-
change and our ratio, therefore, became
Ineffective and imperative. The settle
ment of the question lies between two
extremes. On the one hand the fixing
Of the value of the pesos at the exact
value of the bullion and on the other
giving 1t an equivalent gold value equal
to the nominal redeemable rate of 90,
which the Spanish government fixed.
Exchange dealers have controlled
the situation with little reference to the
actual balance of trade. 1t would be a
hardship on the debtor class to have the
peso too high, and the debtor class is
the whole working population of the
island. There is a great amount of
SAld11 MINUS. NV OuO o0O1uS W WOIh
without the spur of a debt behind him,
and TO compel the repayment of these
debts in a coinage more valuable than
that in which they were contracted,
would be a great hardship. 1t is be-
lieved by some that to undervalue the
peso, gagged by the average exchange
rate, would work much less hardship,
and would really come very near being
just. 1t would enable the small debtor
class to more easily meet their obliga-
tions and would even, if the exact
bullion value were taken as a basis,
still offer ample profit to the money
lenders, for they have oppressed the
borrowers with an ingenious variety of
methods.
'It was suggested to me that with
respect to the issues of the Spanish
bank, they might be redeemed in our
money at the same rate of exchange
which we fix on the peso. If that rate
is low then the bank can better attempt
the redemption. The volume of cur
rency is reported to be smaller than is
generally estimated. While the orig
inal currency was from 10000 to g.
100000 pesos, 1T is thought by some that
there may not now be more than 4,0OO,-
600 pesos that would be exchanged.
Attempts are now being made to col
lect internal taxes, but at present armed
guards have to be sent with the collec-
tor. The scheme Of taxation is some
thing like this: The central government
levied on the municipalities "a munich
pallty covers not only city, but dis
tr1ct) certain amount that must be
collected for the support of the govern
ment. The municipality adds to that
further sums for local expenditures.
The scheme of taxation by which this
total amount was collected varies in
different municipalities.
1.-THE best opinion is that the Judi
cious introduction of our internal reve-
nue. system and the abandonment of
the Spanish system would be WISE The
raising Of taxes on spirits would be
popular movement, and the abandon
ment of other forms of taxes would
give the new scheme further popularity.
1t Is thought by some that, for the
present, we arc collecting too much
revenue. for the reason that up to this
time there has been practically no sx-
penditure.
There has been good deal Of dis
turbance and destruction Of property in
Aguadilla, the province at the north
west corner of che island, and in Maya.
guez. 1t is thought that $500. 900 worth
of property has been destroyed in Aqua.
dilla and that practically nothing could
be raised there this season"