Apart from the labour question, if the Chinese were allowed a free entry they would perpetuate the smartest pure Oriental mixed class in the Islands. On the other hand, if their exclusion should remain in force beyond the present generation it will have a marked adverse effect on the activity of the people (vide pp. [182], [411]).
At the period of the American occupation the Currency of the Islands was the Mexican and Spanish-Philippine peso, of a value constantly fluctuating between 49 and 37 cents. gold (vide table at p. [647]). The shifty character of the silver basis created such an uncertainty in trade and investment transactions that the Government resolved to place the currency on a gold standard. Between January 1 and October 5, 1902, the Insular Treasury lost $956,750.37½ from the fall of silver. A difficulty to be confronted was the impossibility of ascertaining even the approximate total amount of silver current in the Islands. Opinions varied from ₱30,000,000 upwards.[6] Pending the solution of the money problem, ineffectual attempts were made to fix the relative values by the publication of an official ratio between gold dollar and silver peso once a quarter; but as it never agreed with the commercial quotation many days running, the announcement of the official ratio was altered to once in ten days. Seeing that ten days or more elapsed before the current ratio could be communicated to certain remote points, the complications in the official accounts were most embarrassing. Congress Act of July 1, 1902, authorized the coinage of subsidiary silver, but did not determine the unit of value or provide for the issue of either coin or paper money to take the place of the Mexican and Spanish-Philippine pesos in circulation, so that it was quite inoperative. Finally, Congress Act of March 2, 1903, provided that the new standard should be a peso equal in value to half a United States gold dollar. The maximum amount authorized to be coined was 75,000,000 silver pesos, each containing 416 grains of silver, nine-tenths fine. The peso was to be legal tender for all debts, public and private, in the Islands, and was to be issued when the Insular Government should have 500,000 pesos ready for circulation. The peso is officially alluded to as “Philippine currency,” whilst the popular term, “Conant,” derives its name from a gentleman, Mr. Charles Conant, in whose report, dated November 25, 1901, this coin was suggested. He visited the Islands, immortalized his name, and modestly retired.
The “Philippine currency,” or “peso Conant,” is guaranteed by the United States Treasury to be equal to 50 cents of a gold dollar. The six subsidiary coins are 50, 20, and 10 cents silver, 5 cents nickel, and 1 and ½ cent bronze, equivalent to a sterling value of one shilling to one farthing. This new coinage, designed by a Filipino, was issued to the public at the end of July, 1903. The inaugurating issue consisted of 17,881,650 silver pesos, in pesos and subsidiary coins, to be supplemented thereafter by the re-coinage of the Mexican and Philippine pesos as they found their way into the Treasury. For public convenience, silver certificates, or Treasury Notes, were issued, exchangeable for “Conant” silver pesos, to the extent of 6,000,000 pesosʼ worth in 10-peso notes; another 6,000,000 pesos in 5-peso notes, and 3,000,000 pesos in 2-peso notes, these last bearing a vignette of the Philippine patriot, the late Dr. José Rizal. On December 23, 1903, the Governor reported that “not till January 1, 1904, can the Mexican coin be demonetized and denied as legal tender value.” A proclamation, dated January 28, 1904, was issued by the Insular Treasury in Spanish and Tagalog to the effect (1) that after October 1, 1904, the Government would only accept Mexican or Philippine pesos at the value of their silver contents, and (2) that after December 31, 1904, a tax would be levied on all deposits made at the banks of the above-mentioned coinage. Notwithstanding the publication of numerous official circulars urging the use of the new peso, the Mexican and Spanish-Philippine dollars remained in free circulation during the first six months of 1904, although rent and certain other payments were reckoned in “Conant” and current accounts at banks were kept in the new currency, unless otherwise agreed. Naturally, as long as the seller was willing to accept Mexican for his goods, the buyer was only too pleased to pay in that medium, because if, for instance, he had to pay 10 Mexican dollars, and only had “Conant” in his pocket, he could call at any of the hundred exchange shops about town, change his 10 “Conant” into Mexican at a 5 to 20 per cent. premium, settle his bill, and reserve the premium. Almost any Far Eastern fractional coins served as subsidiary coins to the Mexican or Spanish-Philippine peso, and during nine or ten months there were no less than three currencies in use—namely, United States, Mexican (with Spanish-Philippine), and “Conant.” It was not practicable to deny a legal-tender value to so much Mexican, and Spanish-Philippine coin in circulation. The retailer was required to exhibit in his shop a card, supplied by the municipality, indicating the exchange-rate of the day, and declaring in Spanish, English, and Tagálog as follows: “Our prices are in American currency. We accept Philippine currency at the rate of...”; but the reckoning in small-value transactions was so bewildering that, in practice, he would accept any coinage the purchaser chose to give him at face value. From August 1, 1904, when the “Internal Revenue Law” (vide p. [630]) came into operation, merchantsʼ and bankersʼ accounts and all large transactions were settled on the new-currency basis. Many retailers followed the lead, and the acceptance of the new medium thenceforth greatly increased. Still, for several months, provincial natives were loth to part with their old coin at a discount, or, as they plainly put it, lose 10 to 20 per cent. of their cash capital at a stroke. The Insular Treasurer therefore issued another circular in December, 1904, stating that whosoever engaged in business should make use of the old coinage in trade transactions after December 31, 1904, without special licence, would be condemned to pay not only that licence, but a heavy fine, or be sent to prison; and that all written agreements made after October, 1904, involving a payment in old currency, would pay a tax of 1 per cent. per month from the said date of December, 1904. Nevertheless, further pressure had to be exercised by the Civil Governor, who, in a circular dated January 7, 1905, stated that “it is hereby ordered that the Insular Treasurer and all provincial treasurers in the Philippine Islands shall, on and after this date and until February 1, 1905, purchase Spanish-Filipino currency, Mexican currency, Chinese subsidiary silver coins, and all foreign copper coins now circulating in the Philippine Islands at one peso, Philippine currency, for one peso and twenty centavos, local currency.”
As late as March, 1905, there was still a considerable amount of old coinage in private hands, but practically the new medium was definitely established. The total number of “Conant” pesos in circulation in the Islands, in the middle of May, 1905, was 29,715,720 (all minted in America), and “Conant” paper, ₱10,150,000.
From the time of the American occupation up to May, 1902, the two foreign banks—the Hong-Kong and Shanghai Banking Corporation and the Chartered Bank of India, Australia, and China (vide Banks, p. [258])—were the only depositaries for the Insular Treasury, outside the Treasury itself. In the meantime, two important American banks established themselves in the Islands—namely, the “Guaranty Trust Company,” and the “International Banking Corporation.” On May 15, 1902, the “Guaranty Trust Company” was appointed a depositary for Philippine funds both in Manila and in the United States; and on June 21 following the “International Banking Corporation” was likewise appointed a depositary for the Insular Treasury, each being under a bond of $2,000,000. These two banks also act as fiscal agents to the United States in the Philippines.[7]
In 1904 the position of the “Banco Español-Filipino” (vide p. [258]) was officially discussed. This bank, the oldest established in Manila, holds a charter from the Spanish Government, the validity of which was recognized. The Insular Government sought to reduce the amount of its paper currency, which was alleged to be three times the amount of its cash capital. Meanwhile, the notes in circulation, representing the old Philippine medium, ceased to be legal tender, and were exchanged for “Conant” peso-value notes at the current rate of exchange.
For a short period there existed an establishment entitled the “American Bank,” which did not prosper and was placed in liquidation on May 18, 1905, by order of the Gov.-General, pursuant to Philippine Commission Act No. 52 as amended by Act No. 556.
In February, 1909, the terms of Article 4 of the Treaty of Paris (vide p. [479]) will lapse, leaving America a freer hand to determine the commercial future of the Philippines. It remains to be seen whether the “Philippines for the Filipinos” policy, promoted by the first Civil Governor, or the “Equal opportunities for all” doctrine, propounded by the first Gov.-General, will be the one then adopted by America. Present indications point to the former merging into the latter, almost of necessity, if it is desired to encourage American capitalists to invest in the Islands. The advocate of the former policy is the present responsible minister for Philippine affairs, whilst, on this work going to press, the propounder of the latter doctrine has been justly rewarded, for his honest efforts to govern well, with the appointment of first American Ambassador to Japan.
[1] Report on the Commerce of the Philippine Islands, prepared in the Bureau of Insular Affairs, War Department, Washington, 1903.