completion of important sections of railroad on certain specified lines. "The effect of this provision for loans to municipalities and provinces is broader than appears at first sight. Heretofore in the absence of sufficient demand for secured deposits in the Islands to enable the Government to place more than a minor part on deposit in Manila, the greater part of the fund had been necessarily deposited in banks of the United States which furnished ample security. At the same time, owing to the active demand for money at higher interest rates, there was no established market in the Islands for provincial or municipal bonds bearing low rates of interest, although the current revenues of these local governmental bodies are unequal to the needs for additional schoolhouses, markets, water systems, and other public works. This act has made available for this purpose an initial fund of about four and a half million dollars. As showing the awakening of public spirit throughout the Islands, it is interesting to note that 250 municipalities have filed applications for loans for the construction of markets, besides numerous applications for loans for waterworks, and other public utilities. "Acting within its exclusive general legislative jurisdiction over all that part of the Philippine Islands inhabited by Moros or other non-Christian tribes, the Philippine Commission has enacted the necessary legislation to make a proportion of the funds available to them." Amendments to this act made in 1914 and 1915 increased the portion of the fund available for investment from 50% thereof to 80% and provided for additional forms of investment. These new forms of investment were the interest bearing first mortgage bonds of corporations organized to erect and operate sugar centrals, to manufacture copra and cocoanut oil and to manufacture hemp and products derived therefrom; in loans for the establishment and operation of agricultural colleges; and, in loans to corporations or associations organized to complete, maintain and improve irrigation systems. On December 31, 1915, the gold standard fund was invested as follows: In this connection the following quotation from the last report of the Secretary of Finance and Justice is interesting and important. "The gold standard fund legislation in effect at the end of the fiscal year 1915 authorizes the investment of the 80 per cent. of the fund in the various projects cited above and contemplates that the remaining 20 per cent. be held in liquid cash. If the full amount were invested as authorized, over Pesos 14,800,000 of the fund would be thus utilized and approximately Pesos 3,700,000 held in cash. This latter amount, under careful administration, would be sufficient to carry on the ordinary exchange operations which are a factor of importance in the maintenance of the parity of the currency with gold, but would not be sufficient to maintain confidence in our currency system or to meet emergencies or abnormal conditions should they arise. With this in mind, and notwithstanding the legislation above referred to, it has been decided to postpone indefinitely some of the contemplated investments and to abandon others entirely. It has been definitely decided to limit investments to the extent of 65 per cent. of the fund, retaining the remaining 35 per cent. in cash. This amount even under adverse circumstances, and with the existing power to issue temporary certificates of indebtedness for the purpose of acquiring gold, is in the opinion of the undersigned ample to meet all demands on the fund and will enable it to fully perform the function for which it was created. "The amount of exchange on New York sold through the fund during the year was Pesos 22,021,461.02, as compared with Pesos 22,016,056.58 for the preceding year. The exchange sold on New York was offset by credits amounting to Pesos 23,000,000 furnished in Manila to the Treasurer of the United States in exchange for an equivalent amount placed to the credit of the Philippine Government in gold dollars in New York. The earnings of the fund from the sale of exchange, interest on deposits, interest on loans and seigniorage amounted to Pesos 997,763.48 for the year under review, as against Pesos 1,017,109.29 for the preceding year, and the net income of the fund from all sources was Pesos 914,489.06, as compared with Pesos 914,955.09 for the preceding year." The revision of the Philippine currency is one of the most important events connected with the American control of the Islands and reflects great credit upon Mr. Taft and his associates in the Commission in 1901, to whose earnest efforts this reform is attributable. CIRCULATION On December 31, 1915, the Philippine coinage available for circulation is stated by the auditor to have amounted to Pesos 52,913,754. Of this amount Pesos 31,113,920 were in the Silver Certificate Redemption Fund. In addition to the silver and silver certificates, the Bank of the Philippine Islands had in circulation about Pesos 5,300,000 notes. The total amount of money in circulation on December 31, 1915, was therefore about Pesos 58,000,000, which, based on an estimated population on January 1, 1917, of 8,880,000, would give a per capita circulation of Pesos 6.6 or $3.30, compared with an estimated per capita circulation in 1898 of $2.50 and with a per capita circulation in Cuba of probably about $5 and for the United States of $38.48 at the same date. The amount of Mexican and Spanish-Filipino coins exported during the period from July 1, 1903, to December 31, 1915, is stated to have been Pesos 33,768,901. This tallies very closely with the estimate of the amount of silver in circulation made by Mr. Harden in 1898. The fact that the very moderate increase in circulation at the present time appears to be adequate for the demands of trade may probably be attributed to the more stable government, better transportation facilities and better banking facilities. INCOME AND EXPENDITURE The following is a comparative statement, expressed in United States currency, of receipts and disbursements of the Government of the Philippine Islands, |