it would be able to pay all its debts and pay its stockholders in full and have 52 per cent more to divide among the stockholders; that is the real effect of your statement, is it?

BALBAS. Yes, sir. He says in answer to your question, yes; but he says it is a hypothetical question, and it might not be practical to do it to-morrow, but it could be done eventually.

Judge IDE. But that is upon the basis, of course, that the assets are all in and there are no losses.

BALBAS. I understand that every liquidation is just the same. With a bank it meets a certain amount of losses.

Judge IDE. Now, the amount of bank notes that your bank has issued has varied along from time to time-the number of bank notes that has been outstanding has varied?

BALBAS. Yes, sir.

Judge IDE. What is the largest number-largest amount of bank notes that the bank has ever had outstanding at one time?

BALBAS. It was the months of April and May, 1898, after the battle. Judge IDE. And how much was the issue at that time?

BALBAS. $3,300,000 or $3,400,000.

Judge IDE. And perhaps you can state in a general way how your amount of outstanding notes progressed from that time onward—in a general way.

BALBAS. In the year 1898, after the battle of Cavite; the battle of Cavite was on Sunday; on Monday they began to change all the notes; then, in changing four days-$800,000-and get it in cash. Well, they stopped. In the month of August, of 1898, when the Americans entered Manila, I don't remember how many I took from the market, because there was another run.

Judge IDE. That is, the people presented the notes, and you had to pay out silver for them?

BALBAS. Silver. I think there were about two or three hundred thousand dollars; and afterwards, the month of November, 1898, there was another little run-I don't remember if it was $150,000-for two or three days, and I took off from the market all those; and from that day, and having collected all of the $200 notes which had been taken out of the market, and from the year 1899, I think, I have been collecting $25, $50, $100, and $200 notes.

Judge IDE. And retaining them in the bank?

BALBAS. I burn them. When we have a meeting of the board of directors we put all the notes on the table, and two gentlemen of the board of directors, or the secretary, before the four persons, they look one by one at the numbers, and

Judge IDE. And the record is kept of them?

BALBAS. From the beginning; yes, sir.

Judge IDE. And are new notes issued in place of those?

BALBAS. No; they are withdrawn from circulation.

Judge IDE. So that the amount of your notes that were in circulation has been gradually decreased, ever since 1898?

BALBAS. Compared with May, it has been diminished. We have withdrawn all of a certain series of the years 1852, 1865, and 1883, from circulation; above $10. We have withdrawn all of those bills from circulation and burned them up.

Judge IDE. What was the purpose of that?

BALBAS. Because they were of a different grading, a different issue from those years, and in order to have a uniform issue, they withdrew the old bills from circulation.

Judge IDE. What does he mean by saying they were different issues? BALBAS. They were distinct issues, altogether different paper and different engraving; there was no similiarity between the $10 bill of that day and the $10 bill of this day.

Judge IDE. What is the amount of paper that is now outstanding? BALBAS. 2,154,450 pesos; that is the total, Iloilo and here (Manila). Judge IDE. Perhaps you could prepare a statement showing in detail the amount of those old issues, each, and the amount of them that has been destroyed?

BALBAS. Yes.

Judge IDE. You have not the data here, in your head?

BALBAS. Yes. On the 17th of July, I think, the old issues outstanding are $192,000; that is, the issues of 1852, 1865, and 1883. He says, in order to separate and make a detailed statement of the three issues it would be extremely difficult for them, because it would involve the labor of looking through all of the minutes of the board of directors, when they authorized the burning of the bills that came in; that if you wished a detailed statement, he says it would be very difficult, indeed.

Mr. CONANT. Doesn't he know, in the case of each class of 1852, 1865, and 1883, what the total issues were?

Judge IDE. He could get that without reference to this burning? BALBAS. Yes; he will give you the total issues of the three together. Mr. CONANT. Dosen't your balance sheet show what your obligations still are on the issue of 1852?

BALBAS. No; they are separated. The account is kept in the minutes of the board of directors; when the authority is given for burning up these bills the minute is taken of this fact.

Mr. CONANT. It would not be necessary for me to know about these separate destructions, but the balance sheet ought to show the total, but you can not give that without too much labor for each separate vear; - I mean for each year since 1852.

BALBAS. I would be bound to read over every article from 1852. don't remember when they began to burn. I must look one by one. Mr. CONANT. Well, this total will do.

I

Judge IDE. Have you formed any estimate as to the amount of your outstanding notes that have been lost, burned, or destroyed in the hands of the public?

BALBAS. It is very difficult. I thought of those old issues that there would be lost about $400,000, but, now, you see, that $192,000, now. Judge IDE. There are only $192,000 out?

BALBAS. Out.

Judge IDE. Well, you could not have lost $400,000 out of those? BALBAS. I thought in the beginning, for the year 1896, when we began to burn all those notes.

Judge IDE. You thought you were going to save $400,000?

BALBAS. But I was mistaken altogether.

anomalies.

This is the country of

Judge IDE. Has the number of notes that are outstanding been gradually decreasing ever sine 1898, or have there been times when it has increased somewhat?

BALBAS. All the bills of large denominations-over $25-have dinninished a great deal since 1898, and the total quantity has diminished somewhat; but this year I have been unable to sign any more bills of small denominations than what I have done, because you can imagine what an awful labor it is for a person to sign every $25 bill that comes in, or larger; $5 bills are issued for it, not in exactly the same quantity, because the amount has diminished, but I have been compelled to sign every one of these bills, and it has diminished somewhat the circulation.

Judge IDE. They carry in their vaults a large number of the notes of their bank as an asset?

BALBAS. He says that it goes into both sides-into the assets and liabilities; he still has them there. He enters them as an asset, and offsets them as a liability on the other side. The balance sheet must show everything he has in the vault.

Mr. CONANT. The way most banks treat unissued notes and notes on hand is as representing nothing, and they don't carry them as an asset or a liability.

BALBAS. That has been my system since the beginning; it is the policy of the institution in keeping their books from the very start. It is the same principle exactly as a man goes in there and leaves $400 in gold in a box, and he puts that box in the safe, and signs for it, and some dishonest employee steals it; he is liable for it he has signed for it.

Judge IDE. You stated that the surplus was 52 per cent. To state it in pesos, how much is the surplus, approximately?

BALBAS. $787,500; that is 52 per cent, I think.

Judge IDE. That is near enough for what I want to know. Now, the bank met with a considerable loss in this Mendezona hemp deal? BALBAS. I have separated it already. Now, at this moment, we have $540,000.

Judge IDE. After deducting that loss from the Mendezona deal? BALBAS. We lost $1,016,000, but now the losses are $540,000 the 30th of June.

Judge IDE. What did you mean by saying that you lost $1,016,000. and now the loss is $540,000; what did you mean by that?

BALBAS. The difference I have collected.

Judge IDE. When you say you lost $1,016,000, you meant that the debt was in the beginning

BALBAS. In the beginning; yes.

Judge IDE. And that has been reduced?

BALBAS. TO $540,000, in round numbers.

Judge IDE. Did you expect to realize on some portion of that $540,000, or is that probably all a loss?

BALBAS. This is all in round figures. They owe me now, in the books

Judge IDE. Who owes him now?

BALBAS. Mendezona & Co. owe him now $540,000.

Judge IDE. By "him" you mean the bank?

BALBAS. Yes, sir. He expects to realize 38 per cent of the assets. of Mendezona & Co. on the 10th of August-that is to say, $231,000, which will leave a loss of $309,000.

Judge IDE. Mexican?

BALBAS. Yes, sir. Now, he is going to take from his earnings of

the bank $150,000, which will reduce it to $159,000, and $50,000, which will reduce it to $109,000.

Judge IDE. And how much will the surplus be after deducting that whole loss, in round numbers the surplus of the bank? In other words, after making good their loss, taking enough out of the surplus to make good the whole of that loss, how much will the surplus of the bank still be, above all liabilities, including liabilities to stockholders? Mr. CONANT. How much of the reserve?

BALBAS. He says he expects that the last item of $50,000, which he expects to turn over on the books on the 31st of December-he says he expects to cut that down about $22,500, so that he shall be able to still declare a dividend of 4 per cent to the stockholders from the earnings of the bank.

Judge IDE. That is, a semiannual dividend of 4 per cent?

BALBAS. Yes, sir.

Judge IDE. Well, now, suppose that they take that same loss immediately from their reserve, how much would their reserve still be? The reserve is about $587,000, isn't it?

BALBAS. $787,500.

Judge IDE. Now, take from that the estimated loss, the total estimated loss of this Mendezona deal, without taking into account the earnings of the bank, which will cover that loss; without taking into account any future earnings; take it just as it is to-day.

BALBAS. $478,500.

Judge IDE. Now, does Señor Balbas think that the other assets are all good for their face value, or does he think that there are some doubtful ones among them?

BALBAS. Perhaps some assets-I have some of the old assets of the bank, although I don't call them losses this moment. I don't know how to estimate their value; but to cover such losses I take 5 per cent of the value of the real estate of the bank and put it against these estimated losses every month-every six months. To give you an illustration, I have a note for $4,500 belonging to some heirs in Spain, and I had for a long time considered that as a loss, but had not taken it off the books. Lately, I have been paid $17,000. It was real estate, to secure this mortgage. I thought from the year 1896 it was a loss, but the heirs in Spain, on account of the judges, because they are separated in Spain, and I can not put them together, and now they have been to me to sell the ground, and I thought that they were offering me four or five thousand dollars, so there would be a loss of interest, because I have not calculated in the interest; but the other day they told me, we offer you for the ground $17,000. All right, if you pay me the capital and interest, the rest can go to those persons in Spain. Judge IDE. Now, the bank, at the close of the war, had a large claim against the Government of Spain for money advanced? BALBAS. Yes, sir.

Judge IDE. And that has been adjusted and settled?

BALBAS. Adjusted in a very bad way; not adjusted good.

Judge IDE. It has been settled, hasn't it?

BALBAS. Not yet, because they-I speak to gentlemen here, and I don't know what happens in Spain, but certain claims, forty-two by one side and thirty-six or thirty-seven on the other side-they don't pay. I don't know what happens there.

Judge IDE. What is the amount of the claim that you now have against the Spanish Government?

BALBAS. $78,000 to $80,000; but I have put it in the books.

Judge IDE. That is the whole?

BALBAS. That is the whole now. But I have put it in the books as losses already, $36,000—the year 1898 or 1899.

Judge IDE. But you had a much larger claim than that, did you not? BALBAS. I had.

Judge IDE. Yes.

BALBAS. I had $1,700,000.

Judge IDE. And it has all been paid-the rest of it?

BALBAS. Yes, sir. What we claim now

Judge IDE. These large payments that were made on the Spanish debt, were they paid in cash?

BALBAS. In cash; because they wired me from Spain, if I wished to receive $400,000, I think it was; $400,000 or $500,000, at the exchange of 55 per cent. Well, I was bound to receive it, in the year 1899. Mr. CONANT. The exchange here?

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BALBAS. They obliged me, because in the telegram they said, Arrange with the Spanish Bank that we shall pay them $400,000 or $500,000;" I don't remember if the exchange was 55 per cent.

Mr. CONANT. That is, it was represented as the value of the Mexican dollar.

BALBAS. It was a bad exchange, but I was obliged to receive it, losing 2 or 3 per cent, and then, two or three days afterwards, they arranged with the Chartered Bank and with the Hongkong Bank at 53 per cent, so that I lost.

Judge IDE. That is a small matter. What I want to know is, that these payments that were made were made in cash or in Spanish securities?

BALBAS. In cash.

(Mr. Balbas wished to explain that they placed to his credit in Madrid the amount in cash, and that in wiring for it here he had suffered some loss in exchange.)

Judge IDE. The bank pays dividends now at the rate of 8 per cent a year, as I understand it. How long has it been paying at that rate? BALBAS. Since the second semiannual dividend of 1898. Then, after having paid that dividend for three semiannual dividends, it did not pay any, but for the third semiannual they paid for a year and a half, because they had not the money. The Spanish Government had it. Judge IDE. What had been the rate of dividend from the year 1890 down to 1898? cent per

BALBAS. On an average, from the year 1889 we paid 14 per year up to 1898.

Judge IDE. Now, do the religious orders own some portion of the capital stock of this bank?

BALBAS. Yes, sir.

Judge IDE. Which religious orders?

BALBAS. The four religious orders and the archbishop.

Judge IDE. And how much of the stock of the bank of one million and a half paid-up stock is owned by the religious orders and the bishop?

BALBAS. About the third part of the capital stock. The College of Santa Isabel also owns some stock.