Q. Would not the rate fall if there was more capital out here?-A. I don't think so. Q. You receive deposits of the minimum amount of how much?-A. About $250 gold or $500 Mexican. Q. The Chartered Bank receives for one-half that?-A. They adver tise doing so. We really have no fixed rule; each case is considered on its merits. Q. Well, that doesn't mean that a man can never draw below the limit? A. Certainly not. He can draw what he likes so long as he has a credit balance. Q. Under what provision of law do you exercise your functions here?-A. We act under a power of attorney granted us by our chief office in Hongkong. Q. By what authority of the local government? It would be competent for any government to prohibit foreign banks from doing business. Have you any specific grant from the local government?-A. Not that I know of. Q. It is a tacit understanding-A. We were here when the United States came, and our right to be here has never been questioned. We were properly registered under the Spanish Government. Q. That is what I suppose; but you have not personally investigated the subject?-A. I know of an agreement dated 29th June, 1883, between the Court of St. James and the Court of Madrid, giving freetrade facilities between Great Britain and Spain. Nothing has been done since, so far as I am aware. Q. Have you any further suggestions?-A. Well, touching the stamp tax, we should very much like to see the embossed stamp introduced, so that we could send our check books up to the stamp office and get them stamped instead of having to affix the adhesive stamp. Q. Are the embossed stamps generally used in other countries?—Â. Yes, sir. We should also like to see a uniform rate of stamp duty on any denomination of check, and whether to "order" or "bearer. Q. Would it be an improvement if this ad valorem stamp tax on checks to "order" was made more liberal; for instance, for checks below $2,000 pay 2 cents, and the higher checks be taxed a little higher?-A. It would certainly be an improvement; but why not do away with it altogether and let all demand instruments bear a uniform stamp, as in other countries? The system of "bearer" checks is very insecure indeed. We largely employ native collectors. Payment is made to them in "bearer" checks. If those checks are on other banks what is to prevent them from cashing them and absconding? Q. If the rate were lower-instead of paying $8 for a check of $10,000 to "order," if we had a lower rate, do you think they would be willing to pay that for the additional security?-A. A few might; the majority would not. A check is a demand instrument, and I think the rate on them should be uniform. EXHIBIT No. IV. Statements of officers of the Army regarding the need for a legal depository of public funds at Manila. HEADQUARTERS DIVISION OF THE PHILIPPINES, OFFICE CHIEF PAYMASTER, Manila, P. I., September 25, 1901. SIR: In response to your request, I have the honor to inclose a list of reasons why an assistant treasurer should be located in the Philippine Islands. Your proposition to have the insular treasurer act as a depository would, I think, answer the requirements. Very respectfully, Colonel, Assistant Paymaster-General, U. S. A., A. S. TOWAR, Chief Paymaster. Mr. CHARLES A. CONANT, Manila, P. I. [Memorandum inclosed.] REASONS WHY THERE SHOULD BE AN AGENT OF THE UNITED STATES TREASURY WHO WOULD RECEIVE DEPOSITS OF DISBURSING OFFICERS, ETC., OF THE UNITED STATES LOCATED IN MANILA. A representative of the Treasury Department in these islands would be desirable to acquaint the Department at Washington with the financial conditions prevailing not only in these islands but in the Orient generally, with which Manila would, in a measure, be in sympathetic touch. To avoid the distribution of money in the hands of a large number of disbursing officers. If kept in one place better means of protection could be employed. At present all feel that matters are temporary, and safety is often sacrificed to economy in cases where the work is to be temporary. Guards are required at each office where funds are kept. For the prompt detection of counterfeiting and to secure authoritative action without delay on the part of a competent secret service. Considering the character of the people of these islands, it would be desirable that American money should be above suspicion, even from this source. This also puts a heavy risk on the chief paymaster of the division, as he receives money from different sources, and has been unable to get an assistant who is an expert in the detection of counterfeit money. The great bulk of the money comes from the banks, but I understand that they have no one who is experienced in that capacity. To redeem old, worn-out bills, unfit for circulation. This factor will increase as time goes on. It has not yet been a large item, as nearly all the money sent out has been new. The banks promise to take all money and send the worn back to the United States, but it can be readily seen that they will not care to take very old bills, and, not knowing the Treasury regulations in regard to redemption of paper money, will naturally refuse all that may appear doubtful, thus to an extent discrediting the United States currency. For convenience of exchange in the islands. Disbursing officers now have to draw checks on New York or San Francisco and the banks charge 1 per cent or over for cashing them. The postmaster cashes a large number at par, but when he has not sufficient funds to do So, the holder is compelled to go to the banks. To distribute fractional currency to the citizens. At present there is a great scarcity of pennies, nickels, and dimes, and business men are very much inconvenienced by the lack of them. The Filipino people earn small wages and are accustomed to and require a large supply of fractional currency. This is a very important matter. HEADQUARTERS DIVISION OF THE PHILIPPINES, OFFICE CHIEF COMMISSARY, Manila, P. I., September 28, 1901. DEAR SIR: As requested by you, I have the honor to suggest the need of a designated depository at Manila, and, for very many reasons, I think the treasury of the insular government would be the proper depository. Personally, I should not recommend any local bank, for while they are, I understand, sound financially, their capital is largely foreign and their management is not American. As it is now, disbursing officers are obliged to keep large sums of currency on hand, at the personal risk of the officer, for the purpose of meeting outstanding obligations and for the transaction of current business. They have no proper safes or vaults, and are, therefore, compelled to accept risks that should not be put upon them. Again, in my department especially, we receive considerable amounts, the result of sales at the several posts, and disbursing officers' checks, with many indorsements, are frequently sent here. These finally find their way to New York or San Francisco, and for some slight informality are frequently returned, and probably three or four months have elapsed since these checks were indorsed, and to correct the error is often very difficult. With a depository here this long delay would be avoided. Again, if contractors are paid in checks on New York or San Francisco, they must generally add from 1 to 2 per cent to cover the discount charged by the banks, and where officers or enlisted men receive checks for the safe-keeping of their funds they must pay this discount when they need the currency. If the treasury of the insular government was made the depository the probabilities are that they would have branches at some of the more important points in the archipelago, where checks drawn upon the depository could be readily cashed at par. If there could be added to the depository a savings-bank feature, no matter how low the rate of interest, by which the employees of the General and insular governments could deposit their savings, it would be an aid to them and promote economy and temperance. Very respectfully, C. A. WOODRUFF, CHAS. A. CONANT, Esq., Special Agent of the War Department, Manila, P. I. EXHIBIT No. V. Interview between Hon. Henry C. Ide, secretary department of finance and justice, and Señors Balbas and Larosa, directors of the Banco Español Filipino. Mr. Conant, present; Rupert Ferguson, interpreter; P. S. Carter, reporter-September 9, 1901. Judge IDE. You are two of the directors of the Spanish-Filipino bank here? BALBAS. Yes, sir. Judge IDE. The commission had a communication from the War Department some time ago referring to quite a number of banking matters here, and I wanted to confer with some representatives of your bank in relation to the subject-matter of that telegram; and upon the Kilpatrick, which has just arrived, Mr. Conant came in, who is sent out from the Department at Washington to make investigations in regard to the banking and financial conditions here, with a view to obtaining direct information that will be useful for the Administration and for Congressional committees when Congress meets, so that I have asked him to come in this morning at this conference, so that he might receive such information directly as we were able to obtain. I have the papers here that show the organization and details and constitution of your bank, but for the purpose of making the history a little fresher, so that Mr. Conant may get the outline of it, I will ask one or two questions as a preliminary matter. In what year was your bank authorized by the Spanish Government? BALBAS. Mr. La Rosa says that the act was first authorized in the year 1828, but, owing to the financial state of the Philippines at that time, it did not come into being until the year 1852, and at that time they had to get a new authority, and under the authority which was granted them the Spanish Government required that several of the larger corporations of the Philippines should take stock in it, including the municipality of Manila, the ayuntamiento of Manila, and the community funds. When the civil directorate was formed here, also the general government of the Philippines, there were certain community funds which, according to the description of Mr. Balbas, were funds of provinces which were reunited and placed into one central fund, were also compelled to take shares of the new bank-community funds. He says he is not aware how these community funds came to be formed, because he was a very small boy at the time, but that is what they call them-provincial funds. Judge IDE. They commenced business in the year 1852? Judge IDE. And was the first period, after the charter was granted, for twenty-five years? BALBAS. Yes, sir. Judge IDE. That brought it down to 1877? BALBAS. Yes, sir. Judge IDE. And then was there another extension for twenty-five years? BALBAS. Until the end of this year-1901. Judge IDE. Then was there another one? BALBAS. For another twenty-five years. Judge IDE. And when was this last renewal for another twenty-five years granted? BALBAS. In the year 1896. Judge IDE. What time in the year 1896, do you recollect? I have the papers all here, but I simply want this general outline of the story. BALBAS. The rebellion began in August; I think it was April or May. Judge IDE. Before the rebellion commenced? BALBAS. Yes, sir; it was published here in the Gazette, at the end of 1896, I think; I am not sure; October or November. Judge IDE. That is sufficient for general purposes. That was an act of the Government of Spain? BALBAS. Yes, sir. Judge IDE. The original capital of the bank was how much, in 1852? BALBAS. Four hundred thousand ($400,000). Judge IDE. Four hundred thousand? BALBAS. Four hundred thousand dollars. In the year 1867 they increased it to $600,000; and then, afterwards, in this next lease, it was increased to $1,500,000. Judge IDE. And it so remains to-day? BALBAS. And with a right to increase it to $3,000,000. Judge IDE. But it never has been increased to $3,000,000, but remains at $1,500,000? BALBAS. No, sir. Judge IDE. And has so remained since 1877? BALBAS. 1897. We increased first $300,000, from $600,000 to $900,000, the year 1896, I think. Then the first three months of 1897 we increased another $300,000, and the second three months of the year 1897 we increased another $300,000, so that will be $1,500,000. Judge IDE. The last increase then was in the year 1897? BALBAS. 30th of June, 1897. Judge IDE. And, without going into details, your charter anthorizes you to issue bank notes to the amount of three times the amount of the paid-up capital; that is correct? BALBAS. Yes, sir. Judge IDE. And, as at present constituted, under that charter, you would be entitled to issue $4,500,000 of bank notes? There is no personal liability on the part of the stockholders for the debts of the bank? BALBAS. The shares are all paid. Judge IDE. And there is, by the terms of the charter, no provision for further liability? BALBAS. No; it is what the English call a limited company. Judge IDE. What you say is that their authorized capital is $3,000,000 and the paid-up capital is $1,500,000, and that you are authorized to issue bank notes to three times the amount of the paid-up capital, and therefore you are now authorized to issue bank notes to the amount of $4,500,000? BALBAS. Yes, sir. We are not bound to keep this second reserve fund. Every six months we separate this amount. Judge IDE. I understand you that your statement is that the bank has 52 per cent of the reserve funds? BALBAS. 52 per cent. Judge IDE. In other words, if the bank should be closed to-morrow WAR 1901-VOL 1, PT I--18 |