coinage and banking is now in the city and desires to leave before the close of the present month. Very respectfully, yours, HENRY C. IDE, Commissioner. Manila, P. I. The DIRECTORS OF THE BANCO ESPAÑOL FILIPINO, [Translation.] SPANISH-FILIPINO BANK, Manila, P. I., September 27, 1901. Hon. HENRY C. IDE, DEAR SIR: The letter which you have been pleased to direct to us, under date of the 24th of the current month, informing us of the conditions under which, in your judgment, the banks already established and those to be established in the future in these islands ought to be conducted, has been the subject of our most careful consideration and study, as well as the regulations to which it would be suitable to sub ject the issuance and circulation of notes. Having carefully examined your propositions, the directorate of the bank has arrived at the conclusion that it is not authorized, within the limits of its powers and attributes, to decide the matter per se and to give a concise and categorical answer as to its acceptance or its refusal to accept your propositions, for the reason that they are of such a nature as to essentially change the statutes of the bank, which constitute our fundamental law. In view thereof the directorate called a meeting of the board of governors and, at a session held yesterday, submitted your communication to it for deliberation and resolution. The board, after studious consideration, formed the opinion that, its powers being purely administrative, it was powerless to take any action which would alter, modify, or revoke the fundamental law of the bank, its statutes, as would most certainly be the case should it take favorable action per se upon the recommendations that you have proposed. Upon these grounds the bank is of the opinion that only its shareholders, who are the true and lawful owners of the establishment, are qualified and authorized to take definite action upon the matter in hand; therefore it has decreed to consult their opinion before giving categorical answers to the points involved. The directorate of the bank very much regrets that the great importance of the matters which you have raised prevents its giving an answer in a short time, as you would desire in consideration of the near departure of the commissioner from the War Department to the United States; but it begs to assure you that it will make use of every instrument within its reach to infuse into this matter the greatest possible activity. We have the honor to be, sir, very respectfully, yours, By the directors in office, VENANCIO BÁLBÁS. JOSÉ DE LA ROSA. WAR 1901-VOL 1, PT I- -19 EXHIBIT No. VII. Statement of Mr. Korekiyo Takahashi, vice-governor of the Bank of Japan, at the head office of the bank at Tokyo (through an interpreter), October 29, 1901. Mr. CONANT. I would like to ask you if the adoption of the gold standard has proven beneficial to Japan? Mr. TAKAHASHI. It has proven to be very beneficial all around, especially in our trade with foreign countries. The only exception is with China. As we were accustomed to trading with them in silver, we noticed some change when the standard was made gold. This was due to the ignorance of the Chinese in matters of exchange. Q. The conditions you speak of as regards China were only temporary, were they not? The trade is quite good now?-A. It has always been very good. The trouble was only temporary, but those who opposed the gold standard took this opportunity of saying that it was a result of the change into the gold standard. Q. Your total trade was not reduced?-A. Not at all. Q. Did you find, when you were on a silver basis, that it promoted the export of merchandise?-A. When silver was low it was naturally thought we could export our merchandise to other countries. At the same time, when we changed to a gold standard, it has become difficult for the Japanese merchants to import from other countries. Q. Difficult since the adoption of the gold standard?-A. While we were on a silver standard prices were falling, and we could sell cheaper in a falling market-the tendency of silver was to go lower. Q. You think the country realized a benefit from that condition?— A. Temporarily, for export trade. For import trade it was an inconvenience, because people had to pay higher prices than they received, the imports being mostly from gold countries. Q. Could you have kept up favorable conditions for exporting if you had kept the silver standard?-A. No; we would not have done so. The fluctuation in the price of silver made it difficult for manufacturers and merchants to work together in Japan; while, since we have changed to a gold standard, there being less fluctuation-almost no fluctuation that trouble has disappeared. Q. In any case you do not believe that silver would have continued to fall?-A. No; not always. Sometimes it goes down and sometimes it goes up; that fluctuation makes it very difficult for manufacturers and merchants to sell goods and work together. Q. That is, if it is fluctuating to a small extent up and down.-A. People feel uneasy. Q. Would it not compel the merchant to charge more than he otherwise would to cover risk?-A. Yes; to cover risk. Q. How did the silver standard affect the wages of the people?—A. The gold standard has not had much effect upon wages in Japan. Our standard of wages is based upon rice, which is the principal thing in Japan, and in olden times the price of rice was not affected by the foreign trade. Wages were low, but since our rice has become one of the articles of foreign trade it has felt the effect of the foreign markets, and at the same time the demand for rice has become so great in Japan the price of rice has come up; therefore wages have greatly increased as compared with several years ago, and the gold standard bas not much to do with the rise of wages in Japan. Q. Didn't the purchasing power of wages fall when you were on the silver standard and silver was falling?-Å. That is true; the purchasing power would decrease under a silver system. Q Was not that one of the reasons why you had an advantage in exports?-A. You mean imports. No; under the silver system our exports increased. Q. Was not that because wages were falling and you could sell cheaper in gold countries? A. Yes; that was so; but only temporarily. Q. Have any evil results followed the adoption of the gold standard?-A. None that I have noticed. Q. It has been reported that there was a crisis in the country last year, and that a number of banks failed at Osaka, and that money was scarce and interest high.-A. The recent crisis and the failure of a few banks had nothing to do with the gold standard. There were other causes which can be clearly traced, and it had nothing to do with the monetary standard. Q. There was a large demand for capital for new enterprises, was there not?-A. Yes. I have made a very minute examination into this whole matter of the failure of the banks, etc., and have published a small book stating my ideas with reference to the recent crisis. The book was for circulation among my intimate friends, and was not intended for the general public. It gives me pleasure to present you with a copy, which will explain my views of the situation. Q. Did this crisis affect the people generally, or only a few financial institutions?-A. Only a few financial institutions. Q. There was no stopping of mills and throwing people out of employment?-A. No. Q. There was a large export of gold from Japan?-A. Last year we exported considerable, and it continued until July or August of this year. The foreign banks in Yokohama sent gold to other countries. Q. What has the movement of gold been within the last few months?-A. For a few months, after July and August, exportation has ceased and gold remains the same. Only a few weeks ago, since there were several bills to pay for imported goods, considerable of our gold was taken away. Q. What measures does the bank take to keep gold at home in Japan?-A. The measures we are taking at present are, first, to keep up the high rate of interest; second, to induce merchants to import gold from China and Korea; but, like other countries, our bank has no power to stop the exportation of gold from this country. Only by checking the importation of goods from other countries can we keep our gold at home. Q. Do you pay gold at the bank to all who ask it without demanding any premium?-A. We pay to all who ask; no premium. Q. You do not try to show disfavor?-A. Not at all. Q. You redeem all your notes at par in gold?-A. Yes, sir. Q. When a depositor asks for gold you give it to him?-A. Yes, sir. Q. You have been able to maintain a gold reserve? A. Yes, sir. Q. What is your present gold reserve?-A. 69,000,000 yen. About April of this year it came down to a little less than 60,000,000. Q. You have here, I notice in your printed balance sheet, the item of foreign bills. You do not count those as gold?-A No, sir. Q. They do count them as gold in Belgium.-A. Yes, sir. Q. So you have nearly 12,000,000 yen in gold obligations?-A. Yes, sir. What we call the gold reserve is gold coin. Q. In regard to the actual method you took in establishing the ratio of 32 to 1, you think that was better than to have adhered to 16 to 1?A. The rate of 32 to 1 was the market rate at the time we adopted the gold standard. The subsidiary coins are less than that-27 to 1. Q. What is their fineness?-A. Nine hundred; that of the subsidiary coins, 835. Q. That is the same as the Latin Union subsidiary coin. A considerable rise in the price of silver would carry your subsidiary coins above their face value, would it not?-A. There is a great deal of talk about making our 50-sen piece and other subsidiary coins of the same size and fineness as other countries. At present they are larger in size, while fineness is the same. Q. At present there is rather a scarcity of subsidiary coin in Japan?— A. No; we have a great deal. Q. I was told to-day that in some parts a premium had to be paid for small silver.-A. În some localities there is probably a scarcity. Q. You think the amount in the whole country sufficient?-A. Yes, sir. Q. Are you going to withdraw your 1-yen notes?-A. We are withdrawing them gradually. When they come into our hands we retain them and give out small subsidiary coin instead. Q. When this process is completed there will be nothing between a 5-yen note and a 50-sen piece in silver?-A. There will be nothing between. Q. Do you coin a 5-yen gold piece?-A. Yes, sir. Q. How many of them are there coined?-A. About 1,500,000 yen. Very few. Q. How much has been coined of 10-yen pieces?-A. I can't give you the figures. Q. I suppose your statistics will show the coinage. Is there a statement showing the denominations of your notes? A. Yes, sir. Q. Do you think there is enough paper money in Japan at present?-A. There is sufficient, but we have to be on guard for the reserve in our bank. Q. What is the law limiting your issues now?-A. We issue 120,000,000 yen on securities. We can issue 120,000,000 on security, Government bonds; this is the authorized issue. Q. Above that you can issue on gold without paying a tax?-A. The sum of 120,000,000 yen is on security of gold and other Government bills; above that on gold to any amount. Q. If you issue without gold you have to pay a tax of 8 per cent?A. Yes, sir; the minister of finance can fix the rate to be paid at any amount not less than 5 per cent. Q. Do you think the adoption in the Philippines of a system similar to yours, with a subsidiary system at 32 to 1, or a little less, and exchangeable for American gold, would be a good system?-A. I think it an excellent system. I have been considering a proposition in Japan of making the 50-sen piece at the ratio of 23 to 1, and then make different denominations, 25 sen and 10 sen, accordingly-23 or 24 or perhaps 27 to 1. With your country it is 16 to 1. 293 Yes, sir.-A. I desire to make it 24 or 27 to 1 in Japan. Q. Would a system such as I have described for the Philippines promote trade between Japan and those islands?-A. I believe it would establish strong commercial relations between the two countries. Q. I have nothing further to ask. Would be glad to hear from the vice-governor. The VICE-GOVERNOR. Was it your idea to make the standard in the Philippines 16 to 1? Mr. CONANT. No; 32 to 1, or less. VICE-GOVERNOR. It is rather difficult to extemporize all these answers without preparation. If you wish to have exact figures, and would submit your questions, would be glad to consider them carefully and make answers. Mr. CONANT. I think the answers already received are sufficient, and are very satisfactory. I thank you most cordially for your courtesy and consideration. |