Indianapolis Journal, Volume 48, Number 341, Indianapolis, Marion County, 7 December 1898 — Page 2

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The expenditures for the same period are estimated as follows: For the civil establishment *93,000,009.00 For the military establishment 250.000.000.00 For the naval establishment ,000.000.00 For the Indian service 12.000,000.00 For pensions 141,000,000.00 For Interest on the public debt 41,000,000.00 For postal service 92,674,647.37 Total estimated expenditures $689,674,647.37 Or a deficit o! *112,000,000.00 It is estimated that upon the basis of existing laws the revenues of the government for the fiscal year of 1900 will be: From customs $205,000,000.00 From internal revenue 285.000,000.00 From miscellaneous sources 20.000,000.00 From postal service 100,958.112.00 Total estimated revenues $010,958,112.00 The estimates of appropriations required for the same period, as submitted by the several executive departments and offices, are as follows: Legislative establishment $4,476,935.86 Executive establishment— Executive proper $239,980.00 State Department 157,820.00 Treasury Department.... 9.661,040.00 War Department 2,372.866.00 Navy Department 502,280.00 Interior Department 4,890,284.00 PoStofHce Department... 910,190.00 Dept, of Agriculture 3,127,722.00 Department of Justice... 231,950.00 Department of Labor.... 172,980.00 Judicial establishment 707.620.00 Foreign Intercourse 1,832 028.76 Military establishment 145,119,431.51 Naval establishment 39.114.652.08 Indian affairs 7,069,316.41 Pensions 145,233,800.00 Public works— Legislative $7,500.00 Treasury Department.... 5,844,739.97 War Department 42,852,991.20 Navy Department 8,013.599.00 Interior Department 113,260.00 Denartment of Justice... 95.000.00 Miscellaneous—legislative *3,811,095.20 Treasury Department.... 13,232.376.23 War Department 5.589.299.00 Interior Department 2,429,613.20 Department or Justice... 5,001,012.00 District of Columbia 7.230.805.07 Postal service, including $4,265,888 deficiency In postal revenues 105,221,000.00 Permanent annual appropriations— Interest on public debt.. 540,400.000.00 Refunding—customs, internal revenue, etc 5,422,000.00 Collecting revenue from customs 5,500,000.00 Miscellaneous 24,356,220.00 i , Total estimated appropriations, exclusive of sinking fund $641,006,490.64 Or an estimated deficit of $30,048,378.64 TREASURY OPERATIONS. In reviewing the operations of tho treasury# Secretary Gago says: “The aggregate receipts for the fiscal year, under warrant, as shown by the report of the treasurer ©f the United States, were *738,549,255.20, and the disbursements $827,588,124.80. There was consequently a decrease of $89,038,869.60 in the general treasury balance, which stood at $864,790,237.71 at the opening of tho year and at $775,751,368.11 at the close. Besides the ordinary revenues, there were receipts on account of the public debt which swelled the total income available in the fiscal oper - ations of the government to> $481,612,255.20, while corresponding additions to the ordinary expenditures brought the total on this side of the account up to $543,561,104.80, and created a deficiency of $61,948,849.60 as the net result. These figures, however, do not Include any part of the loan of $200,000,000, the proceeds of which had begun to come in before the close of the year, though none were formally covered into the Treasury until afterwards. On the side of the receipts is included the sum of $64,751,223.75, realized from the sale of the Union Pacific and Kansas Pacific, railroads, •while, on the other hand, the expenditures ere increased by $29,850,952, disbursed in the redemption of Pacific railroad subsidy bonds. “A better view of the results of the year’s fiscal operations is afforded by the changes In the assets of the treasury. The total holdings available in this branch of the business show only insignificant falling off from $283,295,424.23 to $275,747,803.17. So unusual a variance as this between the accounts of the department and the actual condition of the treasury is due chiefly to the receipts from the new loan, on the one hand, and to unexpended advances to disbursing officers on the other. “In the character of the assets there was Buoh an improvement as to constitute a substantial gain in strength. The changes ■were an increase in gold and in deposits in national banks, while the Mosses were in silver and treasury notes. With insignificant interruptions, the free gold, which tffood at $139,867,158.57 at the beginning of the year, continued to increase until it reached $181,240,388.81 on May 4, 1898. After this, the extraordinary expenditures caused by the war, together with the depletion of the other forms of cash, compelled the use of gold in current disbursements, and drew down the treasury reserve, by June 18, to $163,474,057.32. ‘After that date the proceeds of the loan began to afford relief, and the reserve grew napidly, until it reached $245,063,795.51 on October 7, 1898, the highest point this fund has ever attained. Since then the necessities of the situation have required an enlarged use of the coin in disbursements, which has had the inevitable result of diminishing the holdings, though only to an insignificant extent. “By forethought and care an ample stock ©f notes of suitable denominations was provided to meet the demand for the annual movement of the crops, and the difficulties presented by this task in former years have been in large part avoided. Within fortv after the first of September Chicago •lone was supplied with $5,150,000 in small ivotes in exchange for larger denominations. In the twelve months ended Sept. 30 last the amount of outstanding notes of the denomination of S2O and under increased from $861.433.826 to $903,090,863, w’hile the. Increase of the old coin in circulation in the same period, *ll, of course, of the like denominations, •mounted to $94,551,059, making a total addition to such currency of $136,208,096. SMALL NOTES EXCHANGED FOR GOLD “Although the net gold In the treasury during the past year has exceeded the needs of tho government, having been greater, both absolutely and In proportion to other moneys, than ever before, It was found possible, up to the middle of October, to accept *old coin to the extent of over $15,000,000 in exchange for notes of small denominations, which were needed to facilitate the business of the country. “The fiTst proceeds of the popular loan of J 300.000.000 were received on the 14th of June, and from that date forward the inflow of money from this source has been rapid and constant. The total amount received up to (Nov. 1 was $195,444,187.62. “With the object of averting the possibility of financial stringency, which might have been apprehended as the result of the drain upon the currency in circulation, the payment of the interest due Oct. I on the 4-per-cent. loan of 1907 was anticipated, the maturing coupons being made payable on Sept. 10, while the checks for the interest on the registered bonds were sent out Sept 20. Like anticipation was also made in the case of the interest falling due Nov. 1. The total amount of the payments thus advanced Was $9,815,116.83. With like purpose, under the circular of Sept. 3, 1898. the Pacific Railroad bonds, which will fall due on Jan 1 1899. amounting to $14,004,560, were made payable, principal and interest, in full, with a 5fL at # a J f *2 n r ha ! sos fof 1 l>er cent - rt was also directed that a large share of the proceeds of the popular loan be deposited in national banks so that these funds, while at all times available for use, might, until needed, remain in the channels of trade. The deposits banks were thus increased by $66,775,610.88 between May 31 and Oct. 31 The •effect of thesa measures has proved in all respects satisfactory." The secretary next gives points from the reports of the director of the mint, the controller of the currency, the Bureau of Fingraving and Printing and other subdivisions of his great department, synopses of which have been published. Under tho head of "Public Moneys," the secretary says: “The monetary transactions of the government have been conducted through the treasurer of the United States, nine subtreasury officers and 194 national bank depositories. The amount of public moneys held by them on June 30. 1898. including those to the credit of the treasurer’s general account and United States disbursing officers, was $38,743,017.17, an increase since June 30, 1897 in amount of holdings of $22,784,283.35. “Since the beginning of the present fiscal year deposits on account of the new 3 per oenf. war loan have been received to the •mount of $300,000,000. and in order to avoid a dangerous stringency which might he created by a too-rapid absorption of funds into the treasury, a large number of national banks were designated, under Section 5153, Revised Statutes, as depositaries of public moneys, and public funds deposited therewith temporarily, thereby increasing the holdings of Buch depositaries to an amount exceeding $90,000,000.” THE NF3W BONDS. In treating of “Loans and Currency." Mr. Gage says: “The Interest-bearing debt July I, 1897, included unmatured United States bonds outstanding in the amount of $847,$89.00*). No material change appeared in the debt statements in the fiscal year ended June 30, 1898, but on June 13 a circular was published inviting public subscriptions for $200,000,000 3 per cent, bonds authorized by the act of June 13. 189& "The public response to this Invitation was

not confined to any section of the country, and during the thirty days prescribed in the circular as the period for subscriptions there were received 232,224. of SSOO and less, accompanied by full payment for the bonds, and over 88,000. in sums greater than SSOO, accompanied in each instance by a deposit of 2 per cent, of the amount subscribed. The total of subscriptions of SSOO and less was $100,444,560, and the total in greater amounts than SSOO, including certain proposals guaranteeing the loan, amounted in the aggregate to more than $1,400,000,000. “As provided by the circular, the allotment of bonds to subscribers of amounts greater than ssoo began immediately upon the close of the books July 14, the smallest subscriptions being first allotted, until those of $4,400 and less had been reached. There was a residue, ascertained to be about two million and a half dollars, which was allotted pro rata among the subscribers of $4,500, each subscriber for that amount being awarded the sum of $1,300. On Page 80 will be found a statement showing the number of subscribers, by groups, for amounts over ss“> t and SSOO and less. “The bonds were dated Aug. 1, 1898, and their preparation was carried on as rapidly as possible. Soon after that date the department began their delivery, subscribers for SSOO and less being the first to receive their bonds, substantially in the order of the receipt and acceptance of their subscriptions. The delivery of the bonds to subscribers of this class was practically completed about the Ist of September, though there are still some undelivered, owing to incomplete address or some other irregularity not yet adjusted. “Before the delivery of the bonds to subscribers of SSOO and less had been completed the department began the delivery on account of greater subscriptions. This has continued to the present time, and is still in progress, as subscriptions amounting to about $200,000,000 are still in part unpaid under that provision of the circular of June 13 which provided for payments in installments of 20 per cent, at intervals of forty days. “The changes in the amounts of the several kinds of money in the United States, outside the treasury, between Nov. 1, 1897, and Nov. 1, 1898. are shown in the following table. The estimated population of the United States Nov. 1, 1897, was 73.461,009, and the per capita supply of money outside the treasury was $23.23. The estimated population and per capita supply of money Nov. 1, 1898, were 75,059,030 and $24.87, respectively.” FOREIGN COMMERCE. Several pages of the report are devoted to our foreign commerce. The secretary says: “The foreign commerce of the fiscal year 1898 in many respects has been phenomenal. The exportations of the products of both field and factory exceeded In value those of any preceding year, and thq grand total of exports was the largest ever recorded. For the first time in the history of our foreign commerce tho year’s exportations averaged more than $100,000,000 per month, the total being $1,231,152,330, against $1,050,993,556 in 1897 and $1,030,278,148 in 1892, no other years having reached the billiondollar line. “Os our domestic exports, tho vajue of agricultural products was $853,683,570, surpassing by $54,355,338 the highest record ever before made, that of 1892. Our manufacturers also made their highest record of exports, those for the year being $290,697,354, against $277,285,391 in the preceding year. For the first time also in the history of our foreign commerce tho exports of domestic manufactures were greater than the imports of foreign manufactures, while the total exports of the year were twice as great as the total imports—a condition heretofore unknown, the trade balance in our favor being more than twice as great as that of any former year. Nearly all branches of the great manufacturing industries shared in this increase of the export trade, particularly manufactures of iron and steel, leather, boots and shoes, and mineral oils, the principal exception being cotton goods, the demand for which was somewhat reduced by the fact that certain countries formerly buying our manufactured goods are now buying our raw cotton for use in their own factories. Nearly all classes of the great agricultural products made their highest record of exports in the past year. The value of the wheat and flour exported was greater man In any preceding year, except 1892; the quantity of cotton, corn and oats surpassed in each case that of any preceding year, and the exports of meat and dairy products, grouped under the general head of provisions, exceeded in value those of any former year. “The prices realized on nearly all important articles of export were higher than the preceding year, the notable exception being cotton and mineral oils, in each of which tho production in the United States, the world’s chief producer of these articles, has been in the past few years phenomenally large, thus affecting the prices abroad as well as at home.” The secretary gives several tables showing the exports and imports, the features of which have been exploited in statements prepared by the treasury bureau of statistics. Brief space is devoted to the operations of the tariff law, Alaska, the Bering sea fisheries, public buildings, immigration and other matters. The receipts from the several objects of taxation under the internal revenue laws for the fiscal years ended Juno 30, 1897 and 1898, were as follows: Objects of taxation 1897. 1898. Increase. Dis. 5pirit5...*82,008,542.92 *92,546.999.77 $10,538,456.85 Man. tobacco. 30,710,297.42 36,230.522.37 5.520,224.95 Fer. liquors... 32,472,182.07 39,515,421.14 7,043,259.07 Oleo’garine ... 1.034.129.60 1,315,750.54 281.650 94 Filletl cheese. 18,992.38 16,518.55 * Mis. col’tions. 875,469.08 1,241,576.99 566,107.91 Total 146.619,593.47 170,866,819.36 24,247,225 89 •Decrease, *2,473.83. The total cost of collection for the fiscal year ended June 30, 1898, was $3,907,010.50; the total cost of collection for the fiscal year ended June 30, 1897, was $3,848,469.49, showing an increase for the fiscal year ended June 30, 1898, of $58,541.01. REVENUE CUTTER SERVICE. Following is a summary of the work performed by the vessels of the revenue cutter service during the year, being exclusive of services rendered in co-operation with the army and navy during the war: Miles cruised 280,110 Miles cruised for the life-saving service 1,120 Lives saved, actually taken from the water 27 Persons rescued and succored with provisions, fuel, etc., in the Arctic regions 2455 Patients treated by the medical officer of the Bear, in Alaska, from Unalaska to Point Barrow and return 1,557 Vessels boarded and papers examined 23,172 Vessels seized and reported for violations of law 648 Fines and penalties incurred by vessels reported $242,695 Vessels in distress assisted 92 Value of vessels assisted and their cargoes $1,640,280 Persons on board vessels assisted... 679 “The revenue cutter service has taken an active and conspicuous part in the war with Spain," the secretary says. “There were with the navy thirteen revenue cutters, carrying sixty-one guns, ninety-eight officers and 562 enlisted men. Os these, eight cutters (forty-three guns), fifty-eight officers and 339 men were in Admiral Sampson's fleet and on the Havana blockade; one cutter (six guns), ten officers and ninety-five men were in Admiral Dewey’s fleet at Manila, and four cutters (twelve guns), thirty officers and 128 men co-operated with the navy on the Pacific coast. “At the battle of Manila, the McCulloch, Capt. D. B. Hodgsdon, R. C. S., efficiently performed the duties assigned by Admiral Dewey. It was the McCulloch that carried to Honk-Kong the dispatches announcing to the government and to the world that glorious and signal victory. Admiral Dewey has officially commended the commander us the McCulloch for the value and efficiency of his command. “At the battle of Cardenas, May 12, the revenue cutter Hudson, Lieut. Frank 11. Newcomb, R. C. S., commanding, sustained the fight against the gunboats and shore batteries of the enemy, side by side with the naval torpedo boat Winslow, and when Ensign Bagley and half the crew of the latter named vessel had been killed and her commander wounded, rescued from certain destruction the vessel and the balance of the crew, under the furious fire of the enemy's guns. On the same day (May 12) the Windom, Captain McGuire, R. C. S.. engager! the enemy’s shore batteries at Cienfuegos. demolished the lighthouse, and destroyed tho rendezvous of the Spanish troops there. During this engagement the senior naval officer present, in appreciation of the fine work of the Windom, signaled from his flagship: ‘Well done, Windom.' “The Manning, Capt. F. M. Munger, R. C. S., commanding, was in many engagements with shore batteries of -the enemy, and Captain Todd. U. S. N.. lias officially bestowed upon her commander generous praise for the efficiency of his command and for effective and meritorious services. Rear Admiral Howell and Commoddore Remey have officially commended the efficiency of the service in co-ojreration. “In addition to services rendered by vessels with the naval forces, there were seven others, carrying ten guns, thirty-three officers and 163 men, with the army, engaged in patrolling and guarding mine fields in various harbors, from Boston to Mobile and New Orleans. “The revenue cutter service had, in active eo-operation with the army and navy throughout the war, twenty vessels, carrying seventy-one guns, 131 officers and 723 men. There were three other vessels—-twenty-five officers and 210 men—ordered to be transferred to the navy, but, because of unavoidable delays by contractors in finishing their work, the vessels could not be sent

THE INDIANAPOLIS JOURNAL, WEDNESDAY, DECEMBER 7, 1898.

to the front. Attention Vis again Invited to tho necessity of adequate legislation for the further promotion of the efficiency of the revenue cutter service. THE MERCHANT MARINE. Under the hea-d of “Navigation" Mr. Gage says: “War with Spain and the annexation of the Hawaiian archipelago, which have changed the political and commercial relations of the United States not only with Cuba, Puerto Rico, Hawaii and the Philippines, but also with the continents between which and North America those islands are stepping stones, require the prompt adoption of an affirmative maritime policy by the United States. * * * By selection and combination from the methods referred to, it will not be difficult to evolve a legislative project for the development of our merchant marine and of domestic shipbuilding, adjusted to our special needs and based on the prevalent conditions of competition in the ocean-carry-ing trade. The method recommended may be specifically set forth in the following propositions: “First—A remodeling and extension of the act of March 3, 1891, relating to the carrying of ocean mails in American steamships, so that it shall meet requirements which have arisen since the law went into operation. Second—The establishment of a system of graded bounties upon the mileage navigated by registered American vessels while engaged in the foreign carrying trade as compensation for the training of seamen available for the national defense, the system to have regard also to the construction or vessels which may be promptly and economically converted into cruisers, troopships, colliers, and supply ships for the use of the government. Special provision should also be made for vessels and men engaged in the deep-sea fisheries. “Third—Extended application of the principle of the act of May 10, 1892, by virtue of which the St. laiuis and St. Paul were constructed in this country upon the registry of the foreign-built steamships New York and Paris, this extension to continue for a short term of years and to be so guarded as to preserve the coast trade to Americanbuilt vessels. “Fourth—A moderate increase in the rates of our tonnage taxes, equalizing them with the corresponding charges at present imposed at London, Liverpool, and Hamburg. “Fifth—The restriction of the trade between the United States, Porto Rico and Hawaii and the coasting trade of those islands to vessels of American registry. “These propositions are drawn from the current practices of our maritime competitors. They can be put into operation promptly upon their enactment. They will not raise diplomatic difficulties, delaying action and involving us in prolonged discussion or a war of commercial retaliation. They will not raise political questions upon which parties, as now constituted, may divide.’ They are believed to be entirely adequate to our needs. The details of these propositions are discussed in the report of the commissioner of navigation, in which are also to be found statistics upon the subject The report of that officer shows: On June 30, 1898, the merchant marine of the United States, including all kind£ of documented shipping, comprised 22.705' vessels, of 4,749,738 gross tons. On June 30, 1897, it comprised 22,633 vessels, of 4,769,020 gross tons.

NEEDS OF POItTO RICO. Secretary Gajre Urges a. Reformation of Its Currency System. An interesting portion of Secretary Gage's report relates to Porto Rico. He says: “An important question, which will no doubt demand consideration in Congress at an early day, is the money situation in Porto Rico. The existing currency of that island consists of silver coins known as pesos and centavos. The peso is of the weight and fineness of five pesetas and correspQnds in both respects to the five-franc pieces of the Latin Union. Its bullion value, compared to the bullion value of the American dollar, is as 93.5 is to 100. The centavo is onehundredth of a peso, and the smaller coins consist of 20 centavos and 40 centavos, these being the exact counterparts in weight and fineness of the Spanish pieces of one and two pesetas and the French coins of one and two francs. “The Porto Rican coins bear no fixed relation to gold, not being anywhere redeemable in the yellow coin. They were introduced into the island by Spain in 1895, and by a forced exchange were substituted for Mexican coins, which had previously constituted the principal money medium. The best estimates obtainable place the volume of this silver money now circulating in Porto Rico at 5,500,600 pesos. The fact that the Spanish government put the same quantity of fine silver into the peso as it did into the five-peseta Spanish coin indicates a purpose to have maintained the two on a parity. If so, the purpose was not accomplished; the Porto Rican coins quickly fell below the value of the coins of the home government, and have since had no established relation in value to them. The oscillation in value as related to gold coin has been constant, rising and falling, as affected by the state of the exchanges between Porto Rico and Its foreign markets. “It is unnecessary here to point out at any length the general evil results upon industry and commerce of a currency medium so out of harmony with the world’s money as to induce a widely fluctuating rate of exchange. It may be instructive to consider them as illustrated in Porto Rico. Situated as that island now is, with a circulating medium void of any established relation to the world’s money of commercegold—it is exposed, to the fullest extent, to such evil results. A brief statement of facts will make this apparent. Dating back to 1894, the peso has oscillated in its power to buy sterling bills on London, or bills on New York payable in American money, as follows: In 1894 the average value of the peso, thus tested, was 65.76 cents; in 1895 it was 60.38, in 1896 it was 63.95, in 1897 it was 60.10, In 1898 it was 58.70. But these averages by no means represent steady, continuous values. Each year, each day of the year, the fluctuation has been wide. Tho limit of this fluctuation was, in 1894, 18 per cent.; in 1895, 20 per cent.; in 1596, 10 per cent.; in 1597, 11 per cent. A TAX ON INDUSTRY. “Upon this wavering, uncertain, variable money medium the commercial and industrial affairs of the island have been conducted. The determining influence upon the value of Porto Rican money seems to have been the state of the foreign exchanges. When exports of island products—sugar, tobacco and coffee—were large, the desire to convert the value of these products, realized abroad, into the domestic money, creating, as it did, an extra demand for it, caused the peso to rise, or, what is equivalent, it caused exchange to fall. From whatever point viewed, tho result was the same in its effect upon the producer—he was deprived of a just realization on his products. This unfortunate currency condition was a tax upos his enterprise and industry. "Contrariwise, when foreign bills were not in supply, because crops had been marketed, and when those engaged in importing wares and merchandise from abroad were under necessity of settling their accounts in London or New York, the offering of domestic money to the bankers and brokers in exchange for drafts on London or New York increased in volume, exchange rose in price, or, what is equivalent, the peso fell in its power to exchange for tho world’s money. “Whichever way looked at, the effect was tho same in raising to the merchant, and through him to the consumer, the cost of all products purchased abroad. The domestic and the wage-worker were tho unconscious but the real victims of these financial derangements. The only beneficiaries were the speculator and the exchange dealer, for to these two it is an axiom that the wider the range of fluctuation the greater the range for possible profits. “It is highly important that American capital should find no obstacles in its transfer to and from Porto Rico, if the United States and the island alike are to reap the benefits which ought to flow from their proximity, their new relations, and from tho enterprising commercial spirit of our people. A wide difference in the rate of exchange, occasioned by the use of a differing and unrelated currency is a serious obstacle to the transfer of capital, as it is to legitimate industry. The obstacle can and ought to be removed. It is, therefore, suggested that, at the proper time, action be taken by Congress lo assimilate the currency of Porto Rico to that of the United States, so far and so rapidly as this can be done without unduly disturbing existing conditions and contract relations with Porto Rico. This, it is believed, can be accomplished by making customs dues In the Island payable In Ameri-

can money, yet receiving the silver pesos and centavos at a fixed relation to our dollar. The limited amount of Porto Rican money would thus find an important avenue where a uniform value on the basis arranged would be realized. This avenue would probably be broad enough to give the assurance needed to keep the peso and its minor subdivisions current through the island at the custom-house valuation. If any doubt should arise as to the sufficiency of such a provision, it could be made the duty of ihe secretary of the treasury to give American coin in direct change for the Porto Rican coin at the custom-house ratio whenever in his opinion it should be, necessary so to do in order to maintain the ratio established. RATE OF RATIO. “The rate or ratio to be adopted should be determined by the fair average of the Porto Rican coirs during tho last three or five years in their power to purchase bills of exchange on London or New York. If the information necessary for fixing the fair ratio be lacking, the subject might be referred to a commission of experts, who, after hearing testimony from merchants, bankers and wage earners in Porto Rico, could undoubtedly fix the ratio based upon the specific facts presented to them. “From information fairly to be relied upon, it appears that the island coins have had a value In domestic exchanges and in the purchase of sterling bids considerably above their bullion value, measured by the world’s price for silver. It would seem just and wise to adopt this local value in the establishment of a fixed ratio to the United States standard. To adopt the bullion value of the currency in fixing such a ratio would seriously disturb existing conditions between debtors and creditors. “If a laborer’s wages be 1 peso per day, and the average power of that coin to purchase what his needs require be equal to 60 cents gold, then to reduce the value of the coin in which he is paid to 40 cents would by so much destroy the reward of his labor, although his nominal compensation should remain the same. On the other hand, to raise the value of the peso to the value of our dollar (though the disparity in weight and fineness between our silver dollar and the peso is small) would operate to increase the labor cost to the employer to a pftint where the product obtained might not justify by its market price the cost of producing it. This, of course, would depress industry and throw labor out of employment. “Again, the relations between debtors and creditors call for equitable and just consideration. It is estimated that in the form of mortgages, etc., there is an indebtedness of some twenty or twenty-five millions, and that the current shorter-time credit obligations aggregate about the same in amount. The average value of the peso for some time past is the best measure of the value that was transferred when these evidences of debt were issued. To make an arbitrary change so as either to enhance or reduce its general average value would therefore work hardship and injustice. The average power of the peso, while widely fluctuating between the two limits, has ranged from luO to 190— that is to say, at times 160 pesos were as effective in paying a debt or buying goods in London or New York as 100 American dollars; at the other extreme, it has required 190 pesos to be as effective as 100 American dollars. FIXED VALUE FOR THE PESO. “Subject to correction from a better knowledge, I think all interests would meet in giving a fixed value of 166 2-3 to the peso —that is to say, the peso shall be maintained at the value of 60 cents, first by receiving it in payment for customs at that price; second, by giving for it, when required, American money at that rate of exchange. It is by a similar process that our own silver money has been kept on a parity with our gold coins. “It is not contemplated in the consideration here presented to retire the Porto Rican coins—certainly not until the coins of the United States have become familiar and acceptable to the people. There are three things to which a simple people cling with tenacity—their language, their religion, their money of account The peso and its fractional part, the centavo, are terms made familiar, by use, to the laborer and the tradesman. These coins, valued and fixed as above suggested, would no doubt for some time be preferred to the American coin, which to their minds would present the apparent contradiction of a coin of the same material, possessing less bulk and weight, yet carrying with it a higher exchangeable value. They would doubt at first, refuse to believe, and cling to the terms ‘peso’ and ‘centavo,’ rather than adopt the really effective ones, ‘dollars’ and ‘cents.’ Therefore the peso, if received through the custom house or for other taxes, or if received in exchange for American money at the government agency, would be again disbursed or re-exchanged as demand from the people might require. In fact, it may be necessary, in order to give absolute steadiness to the peso, not only to receive or redeem it at a fixed price to be again disbursed at the same price, but it may also be necessary to coin at our mints an additional ajmount of the pesos and their fractional parts for use in the island. If, as suggested, customs dues be made receivable in American money and the peso be received as equal to 60 cents, there is little or no danger that it will fall below that value anywhere in the island. Being effective at 60 cents for customs dues, it will not be exchanged elsewhere for less. But this would not prevent its rising above that value. “It is now apparent that the influx of American money is having the effect to give the peso a higher value. The peso being the domestic money, familiar to al*l the people of all classes, it becomes desirable to exchange American money for the domestic, and the pressure to do this raises artificially the exchangeable price of the peso. The broker and the money changer know how to make the most of the opportunity. To counteract this operation, which tends to repress the introduction of capital in the form of money, it may be necessary, as before stated, to coin on government account an additional stock of the domestic money, which shall be freely offered in exchange at the uniform price, this new supply, together with the old stock, to be received at the custom house or otherwise redeemed at the same price. NEW COINS NEEDED. “At the risk of prolixity, which the Importance of the subject might excuse, I submit this additional thought for such consideration as it may merit. The present Porto Rican coins carry the emblems of Spanish sovereignty. Whether or not additions to the coinage be made, new coins should be struck, of the same weight and fineness, upon which should be imprinted proper emblems of our new relat'ons, and these should be substituted for the old. By melting up the old as they come in and by paying out the new, such a substitution can be easily and quite rapidly effected. Gradually custom and use would establish American money, whether of silver, gold or paper, as the medium of exchange and payment. “Then, it rnay be expected that the present I orto Rican money will not be called for, American money and American terms of account and payment having superseded those now in use. Then, upon the government—either of the island itself or upon the United States government, as may be determined—tho loss will fall resulting from the redemption of the Porto Rican coins at an overvaluation. If the peso be rated at 60 cents, as herein suggested, and if the bullion in the coin remains at its present value of 40 cents, and, lastly, if the amount of the silver money referred to be correctly estimated at 5.500.000 pesos, the loss would amount to $1,100,000 American money. This would be the ultimate cost of relieving the island from the grievous ills of a bad currency system. The benefits would be immediate, and, it may be hoped, would be continuous for ail time. The cost, when it began to be experienced, womd be distributed over a series of years, and might easily be covered by proper appropriations from the revenues of the island. “The necessity of securing stability to the peso is fully recognized by all parties in Porto Rico, although opinions differ as to tho ratio which ought to be observed in relating it to American money. Suggestions have also appeared in favor of an Immediate and coercive exchange of the insular coins for our money upon a ratio to be determined. While this could be mado operative to introduce American money and American terms of account at an earlier period than by the course above recommended, it is open to some objections. It would throw confusion into the minds of the simpier- minded people and excite suspicion as to the purity of our intention. It would create an immediate deficit for the difference between the bullion value of their coins and the price for which they were exchanged. This deficit would have to be faced and provided for at once, while by tho slower process that deficit would be spread over a period of years, and could be more easily met. “I have so far spoken as if silver coin were tho only medium of exchange in Porto Rico. Such is not the fact. The Spanish Bank of Porto Rico, holding a franchise from the Spanish government, has been privileged to issue Its notes to the extent of three times its capital, and the note issues of this bank at one time outstanding have been a high as 2 500,0)9 pesos. Under the circumstances now existing the notes of the bank are not in favor, and it is not improbable that its affairs will be liquidated. This being so. the function which it has in tho past discharged should be assumed and prosecuted, within proper legal limitations, by someone bank organized witli ample capital and with the right to establish branches at convenient points, and to Issue its own notes to circulate as money. Or, if this should not be favorably considered, then an act extending to the island the

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rights and privileges of the national banking system might merit approval.” + NEW BOND ISSUE. Snrcessfnl Flouting of the Loan-Dan-ger in Fixing: Hate of Interest. Regarding the war bond issue the secretary says: ‘‘Under the caption of ‘.Loans and Currency,’ on Page 24 of this report, will be found particulars (in the way of information) as to the issue of $200,000,000 3 per cent, bonds, authorized by the act of June 13, 1898. When the bill was reported, which after amendment became the law, some doubt was expressed by those best acquainted with such matters whether bonds bearing so low a rate as 3 per cent, could be sold except at a discount. There were substantial facts cited in support of such opinion. The then recent declaration of war with Spain had disturbed the always sensitive conditions of trade and finance. The morbidly timid along our eastern and northern coast were in a state of more or less alarm. The simpler-minded depositors in savings banks made withdrawals of their funds; tho commercial banks in the larger cities sympathetically suffered through loss of cash reserves to savings institutions. The rate of interest rose; the price of securities declined. Even old issues of United States bonds fell to a point where they would yield to the investor from 3.1 to 3.25 per cent, per annum upon an investment then made. Such was the condition of the financial market in the latter part of April and the earlier part of May last. ‘‘There was another factor, however, which operated to secure a successful negotiation of the new loan at 3 per cent., which it is well to note. That factor was the selfinterest of national banks. These institutions as a whole then enjoyed an unavailedof privilege under the law to issue nearly four hundred millions in circulating notes. True, the condition precedent to the exercise of such privilege was the deposit of United States bends, the price of which in the public market had so advanced as to destroy the motive of profit for the exercise of tha privilege. Owing to the feature of the national bn.nking act which restricted the issue of circulating notes to 90 per cent, of the face of the bonds deposited as security, a 3 per cent, interest bond at par, when used for the purpose indicated, yields better returns to the banks than 4 or 5 per cent, bonds at the rate of premium then or now prevailing. It is demonstrated that the 3 per cent, bonds at par would afford to national banks the means of obtaining through circulating notes a profit of substantially 1.4 per cent, on the amount invested. That this profit would furnish a sufficent motive for the banks as a whole to take up $200,000,000 in bonds need not be argued; it is self-evident. These conditions practically insured the successful negotiation at par of the loan at the rate of 3 per cent. This was quickly perceived in the money market, and, joined to easier conditions in general finances, it operated to establish a prospective premium on the anticipated issue; in fact, at the moment when tho act was approved, the whole isisue of $200,000,000 could have been sold at a premium of probably % per cent.. This could hardly have been foreseen, and it was evidently tho opinion of Congress also that a wide distribution of the obligations among the people, at the uniform price of par, was of more value to public interest than the realization of a possible bonus from small groups of professional dealers. The discriminating mandate of the law was thus expressed: ‘‘ ‘The bonds authorized by this section shall be first offered at par as a popular loan, under such regulations, prescribed by the secretary of the treasury, as will give opportunity to the citizens of the United States to participate in the subscripions to such loan, and in allotting said bonds the several subscriptions of individuals shall be first accepted, and the subscriptions for the lowest amounts shall be first allotted.’ SUBSCRIPTIONS. “Obedient to the fair spirit of the law, the Treasury Department sought by every means to extend the opportunity for subscription to all the people. Every newspaper in the United States was supplied with interesting and instructive information relative to the issue, which, with few exceptions, was patriotically and free of charge prominently displayed. Blank forms for subscriptions, with circulars of information, were supplied to more than 21,003 money order postoffices, every express office and all the banks. A period of thirty-one days was allowed for the receipt of subscriptions, A summary of subscriptions received, classified as to amounts, is here given: —Subscriptions for SSOO and less.— Less than SIOO n,483 SIOO to SI SO 14,974 S2OO to S2BO 9.902 S3OO to S3BO 7,694 S4OO to S4BO 7,61*8 SSOO only 180,573 Total 232,224 —Subscriptions for more than SSOO. $520 to S3BO 11.862 SI,OOO to $1,980 35,152 $2,000 to $2,380 10,313 $3,000 to $3,080. 6,165 s4,<*oo to $4,400 6,223 $4,504 1,875 59.626 More than $4,300 28,376 Total 88,002 “The burden of work thus suddenly thrown upon the department it is difficult to fully comprehend. In the mere matter of names and addresses, the work of writing—by reason of necessary duplication—was equal to a detailed schedule embodying several million of names, with the address—town, county and State—of each fully extended. To accomplish the work imposed, an addition for three months or more of nearly six hundred persons to the regular working force of the department was necessary. The Bureau of Engraving and Printing was correspondingly overtaxed. The immense increase in the number of bonds of small denominations, as compared with any previous issues, is a partial explanation. The acquisition and installation of twelve highgrade power presses, made in anticipation of inci eased operations, alone saved that bureau from a complete breakdown. • “That the popular loan method so successfully used on this occasion gave general satisfaction to the people is beyond dispute. Led to believe—whether justly or unjustly—

that on former occasions advantage had been taken of public necessities by intermediaries who made unfair profit between the government and the people, they hailed with satisfaction this attempt to deal directly with the citizen. There was a great moral value in this, difficult to estimate in terms of money, yet worthy of consideration in the mind of the statesman. Was the operation advantageous, also, from an economic standpoint? As already indicated, a bonus of perhaps five millions could have been sc* ured by offering the Ran to competitive bidding. That was the sacrifice made in order to place the loan directly with the people at the uniform price of par. OWNERSHIP CONCENTRATING. “The act now under consideration was no doubt influenced by the theory, if not definitely shaped on it, that the dissemination of government securities among the people would attach the holders thereof by closer bonds of sympathy to the government, and secure from all such a more zealous watchfulness over public affairs; for it is this kind of watchful interest which best secures the welfare and perpetuity of a free state. If this motive operated in the legislative councils, its practical value was not so permanent as could be hoped for. As before stated, allotments were made to less than 325,000 persons, aggregating $200,000,0*40. From the moment the bonds were issued until the present time, a movement of concentration has been observable. At this time $77,36*1,000, the original holdings of .about 116,000 subscribers, have passed into the ownership of 1,001 persons, firms and corporations. To this extent the moral value of private ownership has already disappeared. “The loan was promptly taken; In fact, it was subscribed for many times over. From this It may be assumed that similar results would follow on future occasions. It will not do to rest securely on such an assumption. In fixing the conditions of a proposed bond as to time and rate of interest, Congress is in essence formulating & proposal. The public—the^investor—is yet to determine whether or not the proposal is satisfactory. Congress cannot exactly hit the mark in advance. If it determines that tho proposed bond shall not be sold at less than par, it must so fix the rate of interest and time of payment as to make the new security somewhat more attractive than outstanding issues—price now being considered. It must also make allowance for a disturbance in the previous market equilibrium. A large addition to a previous supply, other things being the same, tends to reduce the price, whether of commodities or securities. I repeat that in a legislative act it is impossible to forecast and exactly determine these ruling factors. Economically considered, the part of wisdom would seem to be to provide a sufficient margin of new advantages in interest, or otherwise, to float the loan successfully, and then allow' the market, by fair competition, to reduce the margin thus provided to the narrowest limit. The new bonds were properly fixed at 3 per cent. Strict business logic dictated that they should enter into competition with the older issues; it was the only way by which their true relative value could be determined. Instead of this, the whole issue was offered to the subscribing public at the uniform price of par. Nevertheless, the experiment may be considered a justifiable one, and it worked out in a way to strengthen the national credit. From it, however, useful suggestion may be derived. SUBJECT TO DANGER. “It is evident that an attempt by Congress to fix the proper rate of interest to justify an offer of the government’s obligations at par will always bo subject to one of two dangers—“First—lf the rate of Interest be fixed too low—time and circumstances being considered—the loan may fail, with the consequence of serious derangement to i:ne uc<u ury; or Second—ls the rate of interest be fixed too high, and the issue offered at par, while it will be eagerly taken, the result may be a great economic waste to the treasury. “The considerations thus presented lead to the conclusion that w’hile the features intended to make the loan a popular one should be preserved, provision should also be made to secure to the government the highest value attainable under the fair operation of the popular-loan principle. It is but commonplace to allege that in its relation to business affairs the government should have strict regard to the principles which everywhere and elsew'here obtain, I. e., in the purchase of material and supplies required for public use, it should—as it does—seek the lowest price for the same goods; and, conversely, in the sale of what it may have to sell, whether of material or of its own interest-bearing obligations*, it .should also seek to realize the highest attainable price. Should exigencies arise—not now observable—under which further issues under the act of June 13 should be made necessary, it would seern wise to modify in some way the mandatory provision which would now require an offer of the same to the people at par. With a market premium of 6 per cent, now established, and conditions remaining the same, such a proceeding would involve an inexcusable economic waste. On the other hand, as before noted, it is not to be expected that a previous market premium can be fully realized on a large addition to the market supply. I believe that, with some extension of discretionary power to the administrative department of the government in this connection, the popular features of the present act can be fully preserved, while the risk of ur.due sacrifice in maintaining that valuable principle may be obviated. “Under the provisions of the act one-tenth of 1 per cent, of the amount of the bonds authorized was allowed ‘to pay the expense of preparing, advertsing, and shipping the same.’ The records show an average cost to the government of 1 per cent, as the expense of negotiating and distributing securities in the past. The experiment proves that the allowance of one-tenth for expenses in connection with the late issue was inadequate. Instead elf one-*tenth or twotv. entieths, of 1 per cent., the total cost rose to thirty-five hundredths of 1 per cent., distributed as follows: Compensation of temporary clerks, messengers, etc $166,966.96 Engraving and plate printing 88,356.30 Pap.'r-for bonds 16,376.61 Stationery and Printing blank forms 12,813.37 Typewriting machines, purchase and rent of 1,292.45 Electric fans, electric lighting, wiring, etc., in new city postoffice building 2,056.43 Tables and chairs bought and rented 1,154.69 Miscellaneous 3,943.06 Total $292,969.98 “The express charges for carrying the bonds, it is estimated, will amount to $65,000, bills aggregating some $22,000 already having been audited and approved, but which do not appear in tho above total.” ® . CURRENCY AND BANKING. Tle Secretury’* Previous Recommendatlons Again trgeil on Connre. On the currency and banking questions Secretary Gage says: "In submitting my report, I feel it my duty to impress upon Congress, as best I may, the important subject of currency and banking reform. It is the misfortune of evil conditions to produce derangement and hinder progress, which, It long continued, kv accustom the

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Indeed, it is a familiar fact that individuals, families, and nations ignorantly suffer under the Illusion that the very source of their affliction is itself an agency for good. Something like this has marked our financial history for thirty years. Making progress In spite of all obstacles and embarassments to commerce and industry, we ascribe the advancement to the causes which have really hampered and disconcerted th* forward and upward movement. With a financial system condemned by the judgment of the most experienced and wise, both at home and abroad, its evils Illustrated in daily business, and emphasized in recurring panics, we fail, with an obtuse timidity”, to face the questions which must be met and rightly solved before industry and commerce can be established upon enduring conditions of security. “Tho arguments against government issues of paper money as a medium for commercial exchanges have been fully made and need not bo repeated In detail. Its rigidity, its failure to meet demands where demand is most urgent, the dependency of the whole industrial structure upon th* state of the revenue and public expenditure —these are important links in the chain of argument. Even in a state of foreign war, the civilized demand of both contestants is for due respect to private property and individual contract relationships. How much more in a state of peace, in a free state, should private rights and contract relationships be given immunity from the incidental, though serious, effects now suffered through perturbations in government finances. The menace to our domestic affairs, several times recurring from a threatened change in the standard under which they are carried on, and our foreign trado settled, has been a companion evil—perhaps the greater of the two. “The cure for these evils is not difficult to find. It lies within the easy range of congressional action. Nor is the remedy one to infiict even temporary pains or penalties on tha body politic. The healthful, stimulating effect of right action In these direction# would be experienced with the first sense of assurance that the desired end was to be accomplished. TIRADES AGAINST REASON. “The proposal to substitute bank issue* for government notes is opposed with many honest prejudices and assailed by bitter denunciations. The first arise from a failur* to comprehend the true philosophy of a paper currency, and must be patiently considered. The latter obscure the question by reckless statements, charging that all propositions for currency reform are bank conspiracies to exploit the people. Referring to Buch proposals, an eminent speaker recently warned his uninstructed hearers: ‘These banks will become cormorants to eat up your substance, control your politics and warp the political views in all the communities. Send a man to Congress to help defeat this great evil,’ Such tirades against reason and such appeals to prejudice and ignorance the statesman must opiiose by the simplo truth. Is a system of bank credit currency, in its ability to meet the varying wants of an Industrious commercial people, superior to the issues of government paper money? If that question be answered affirmatively, It may be safely left to time to show that the nature of the banker differs not at all from the general nature of men in other callings. As every other man who gets an honest living must live by service rendered in the sphere of his activlFes, so the banker must perform faithfully an 1 well his function or fall of his fair reward. The motives for ills action are the same. It is not for the benefit of the banker or any particular class that the plea for currency reform is urged; it is urged on behalf of the whole people, who will be the recipients of the benefits thereof. And it is on thl* (tonUnitetl on Fourth Pnge.) ♦ Little ♦ l Folks t <s> <s> ♦ Like the new ♦ t Food l : Grape-Nuts: <9 & instinct: Taste Is Frequently a Valuable (iuide iu Selecting Food. A little child’s taste is often a reliable guide to palatable and desirable food, and It is worth one's while to observe how the Tittle folks take to Grape-Nuts, the famous new food made by the Postum Cos., at Battle Creek, Mich. Children eat Grape-Nuts freely without adaition of sugar, for the food has the peculiar, mild but satisfying sweet of grapesugar, and the natural taste either of child or adult recognizes at once a food that will agree with and richly nourish the system. A hot dish can instantly be served by pouring hot milk or cream on Grape-Nuts.