Kansas City journal. [volume] (Kansas City, Mo.) 1897-1928, 1898-12-12
VARIABLE RATE OF EXCHANGE
FORCED SUBSTITUTION OF AMERI-
CAN CURRENCY URGED.
American Currency Was Used i'm Por-
to Rico Twenty-Five Years Ago,
but Wns Then Driven Out
by the Cheaper Sill
yer Money.

retary Vanderlip, who is not expected here
until December 20, in his second informal
report of his observations in Porto Rico,
says that the history of the currency situ-
alton is about this:
The island. some twenty-five years ago,
was using American currency. At the
time of the emancipa ton the Spanish gov
ernment found the value of silver declin-
ing, and it discovered it would be profitable
to make payment in Mexican dollars. ana
In that way the currency was brought to
Il silver basis. The heavy payments for
crops made a redundant currency and a
great deal of it was shipped away. Event
ually the government decided on coinage
for the island, making further profit by
debasing the silver in the peso. The silver
in the peso is 800 fine. The Spanish govern
ment gave this new peso certain re-
deemabiity by Offering to redeem it at the
Bank of Spain at Madrid at % in gold,
and 1 understand that some of the coins
have been redeemed at that rate. although
comparatively few of them have been car
ried back to Spain.
Zone of the American commanders re-
ports to me that n condition that must be
taken into account is the ownership of
most of the plantations. They are nearly
all owned by Spaniards. a great many of
them by Spaniards residing in Spain. This
ance of trade considerably in favor of the
island. in real balance against the island.
The great sugar plantations, owned by peo-
pie residing in Spain have, year after year,
raised a crop of sugar at an extremely
low labor cost. The sugar has been sold
abroad and practically the whole return
for it has remained abroad, creating no
demand for exchange against the island.
About the only thing that has been import
ed is little callce, and while the trade
returns show a large excess of exports.
the value of those exports never return In
any form to the island.
when the American troops landed II
was thought an easy temporary solution 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 deal
ers soon found that they could make
more profitable rate of exchange, and our
ratio, therefore, became ineffective and in
operative. The settlement of the question
lies between two extremes: on the one
hand. the fixing of the value of the peso
at the exact value of the bullion, and, on
the other giving it an equivalent gold
value equal to the nominal redeemable rate
of 50, which the Spanish government fixed.
IAN army officer with whom l talked is
in favor of an immediate forced substitu-
ton Of our currency for the present Porto
Rican currency, and thinks this might be
done by military order fixing the rate of
exchange. The question is, what rate
should be fixed. 1t is not believed the aver
age rate of exchange for series of years
should be taken. 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 ISL
and. There is a great amount of small
debts. No one seems to work without the
spur of debt behind him and to compel
the repayment of these debts in coinage
more valuable than that in which they
| were contracted would be great hardship.
| 1t is believed by some that to undervalue
| the peso, gauged 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 its obligations and
would, even il the exact bullion value were
| taken as basis. still offer ample profit to
| the money lenders, for they have oppressed
! the borrowers with an ingenious variety of
methods. 1t 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
|
| then the bank can better attempt the re-
demption. The volume OF the currency is
reported to be smaller than is generally es-
tiEated. While the original currency was
| from 100000 to GOOO,OO0 pesos, it is thoug 1t
| by some that there may not now be more
than 100000 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 collector
| The scheme OF taxation is something like
| this: The central government levied on the
| municipalities "a municipality covers not
| only a city. but districO a certain
| amount that must be collected for the sun
| port of the government. The munic;pality
| adds to that further sums for local ex-
| penditures. The scheme Of taxation by
| which this total amount was collected va
| ries in the different municipalities 1t is
| quite the reverse from our internal reve-
| nue. taxes. for little, If anything. is laid on
| The best opinion is that the iudicious in
| PRODUCTION of our internal revenue system
| and the abandonment of the Spanish sys-
| TEN would be wise. The raising of taxes on
| spirits would be a popular movement and
| the abandonment of other forms of taxes
| would give the new scheme further popu-
| larity. 1t is thought by some that. for the
| present We ara collecting too much rev
| enue, for the reason that up to this time
| there has been practically no expenditure.
| There has been good deal of dis
| turbance and destruction of property In
| Asuadilla the province at the northwest
| corner of the island. and in Mayaguoz. II
is thought that sJOe.0oo worth of property
practically nothing could be raised there
| &c