BONDED DEBT Herewith is a tabular statement of the bonded debt of the Philippine Government, together with explanatory notes which fully describe the purpose of each issue, authority therefor and the terms thereof: the Registered bonds $1,000 and $10,000. All bonds are payable in United States gold coin. Transfer books close in Washington on the 21st day of the month preceding the date upon which interest is paid, except for the Land Purchase Bonds which books close on the 15th day of the month preceding interest payments. The United States Treasury Department acts as registering and transfer agent. It also makes disbursements on account of principal and interest from funds furnished by the Philippine government. *The debt of the Philippine Government is limited by the Act of Congress Aug. 29, 1916, to $15,000,000 exclusive of the Friars' Land Purchase Bonds. NOTES 1 FRIARS' LAND PURCHASE BONDS. Act of United States Congress, July 1, 1902 (32 Statutes, 691; Chapter 369). Purpose of Issue and Terms Section 64 of the act authorizes the Philippine Commission to acquire lands held by the religious orders (the so-called ''Friars' lands'') "in such large tracts or parcels and in such manner as in the opinion of the Commission injuriously to affect the peace and welfare of the people of the Philippine Islands." For the purpose of providing funds to acquire these lands the Government of the Philippine Islands is empowered to sell at not less than par such an amount of bonds as may be necessary. The details as to interest, maturity, registration and payment in United States gold coin are set forth in the table printed above. Provision is made that such bonds shall be tax exempt in the Islands and in the United States. * * * All Section 65 contains this Sinking Fund provision: moneys realized or received, from sales or other disposition of said lands or by reason thereof shall constitute a trust fund for the payment of principal and interest of said bonds at their maturity." The Philippine Commission on January 6, 1904, passed an act (No. 1034) authorizing an issue for the purpose of $7,237,000 bonds and on the terms and conditions imposed by the act of Congress. Only $7,000,000 bonds were offered for sale as it was believed, as proved to be the case, that the premium to be secured would provide for the additional amount of money required. Section 4 of this act of the Commission makes the following specific provision for a Sinking Fund. Sinking Fund "In the event of the lease, sale, or other disposition, by the Government of the Philippine Islands, of any part or all of said lands contracted to be purchased, as above set forth, all moneys received from such leasing, selling, or other disposition shall constitute a trust fund to secure the payment of the principal and interest of said bonds and shall also constitute a sinking fund for the payment of said bonds at their maturity and shall be devoted to no other purpose. When and as rents are collected from any land so leased and when and as the proceeds of sale or other disposition of any of said lands, when sold or disposed of, are received by the Government of the Philippine Islands, the same shall be deposited in the Treasury of the Philippine Islands and shall be there held as a separate trust fund and shall be invested and reinvested as a sinking fund for the payment of the principal and interest of said bonds as they mature, in such manner as the Philippine Commission shall provide.'' An act of the Philippine Commission dated April 26, 1904 (No. 1120), provides as follows: SECTION 23. All moneys derived by the Chief of the Bureau of Public Lands from the leasing or sale of said lands, or from interest on deferred payments thereon, shall by him be promptly deposited in the Insular Treasury. Such moneys shall be by the Treasurer held separate and apart from general insular funds and shall constitute a trust fund for the payment of the principal and interest of the seven million two hundred and thirty-s -seven thousand dollars of bonds, issued and sold by the Secretary of War in the name and on behalf of the Government of the Philippine Islands for the purpose of raising money to pay the purchase price of said lands as provided in Act Numbered Ten hundred and thirtyfour, entitled An Act providing for the issue of bonds of the Government of the Philippine Islands to the amount of seven million two hundred and thirty-seven thousand dollars, gold coin of the United States of the present standard value, for the purpose of acquiring funds for the payment of the purchase price of certain large tracts of land in the Philippine Islands, commonly known as the Friar lands, pursuant to the provisions of sections sixty-three, sixty-four, and sixty-five of the Act of Congress entitled 'An Act temporarily to provide for the administration of the affairs of civil government in the Philippine Islands, and for other purposes, approved July first, nineteen hundred and two." Said money shall also constitute a sinking fund for the payment of said bonds at maturity and may be invested and reinvested in safe interestbearing bonds or other securities, which shall likewise be held by the Treasurer as a part of such sinking fund, and all interest, dividends, or profits derived from said bonds or other securities thus purchased shall likewise be a part of such sinking fund and may in turn be invested and reinvested in bonds or other securities. All purchases of bonds or other securities by the Treasurer shall be subject to the approval of the Secretary of Finance and Justice. For modifications of the above see Section 6 of the Act of the Philippine Legislature (No. 1954) dated May 20, 1909, printed on a subsequent page. On December 31, 1914, the Auditor of the Philippine Islands reported the total assets in this sinking fund to be $1,927,980. This fund was then invested as follows: Philippine Railway bonds (par $702,000) Manila Hotel bonds (par). Provincial and municipal loans. Accrued interest Cash overdraft $646,650 40,000 450,000 814,360 25,180 48,210 $1,927,980 Public Offering This issue of bonds was offered for subscription in a circular dated at Washington December 30, 1903. The opening clause of this circular reads as follows: "By direction of the Secretary of War, and the authority of the Government of the Philippine Islands, the Bureau of Insular Affairs of the War Department invites bids for $7,000,000 of the Land Purchase Bonds of the Government of the Philippine Islands.' It is stated that: "The bonds will be registered and transferable at the office of the Register of the Treasury at Washington, D. C.'' "These bonds are exempt from payment of all taxes or duties of the Government of the Philippine Islands, or any local authority therein or of the Government of the United States, as well as from taxation in any form by or under any State, Municipal or local authority in the United States or in the Philippine Islands.'' "Subscriptions will be payable at the Sub-Treasury in New York City * * * and delivery of bonds will be made at said Sub-Treasury." * * * "The Secretary of the Treasury authorizes the statement that the Philippine Land Purchase Bonds will be accepted at par as security for deposits of public moneys, should further deposits be made." * * * "The legality of the issue has been passed upon by the Attorney General of the United States, and the form of bonds as drafted has been approved by the Secretary of the Treasury and the Attorney General.” The opinion of the Attorney General is contained in two letters addressed respectively to the Secretary of War and to the Secretary of the Treasury. The more important portions of these letters read as follows: "The Secretary of War. Department of Justice, Washington, D. C., December 26, 1903. "Sir: In your letter of December 24 you cite Sections 63, 64 and 65 of the Philippine civil government act of July 1, 1902, and state that under that legislation the Philippine government has agreed to purchase certain large parcels of land owned by religious orders or other associations, and, for the purpose of providing funds to acquire such lands, is about to borrow money and to issue $7,200,000 of registered 4% bonds redeemable at the pleasure of said government after ten years from the date of issue, and payable thirty years from said date. You enclose a draft of the proposed bond, and request an opinion upon the legality of the issue and of the form of bond. * * "It is further to be observed that the law explicitly restricts the application of the proceeds of the loan to the purpose of the acquisition of the property authorized, and creates a trust and sinking fund for the payment of the principal and interest of the bonds. As with government and municipal loans in general, similarly authorized and conditioned, the reliance of purchasers of the bonds for protection and security is upon the statutory grant of authority and upon the credit and responsibility of the governmental obligor supported by its property and assets. "In this case the lands to be acquired will constitute by express enactment a portion of the public property of the Philippine government, and all moneys realized from disposition of the lands will form a sinking fund for the bonds. "The pledge of the faith and credit of the Philippine government, covering the due application of the proceeds of the loan and the maintenance of the sinking fund, proceeds, then under authority explicitly conferred by the national power; and while in the strict and legal sense the faith of the United States is not pledged as a guarantee for the payment of the loan, or for the due use of the proceeds or the observance of the sinking fund requirements, the entire transaction is to be negotiated under the auspices of the United States and by its recognition and aid." * * * "I have the honor thus to suggest, outside your precise query, that I see no reason for any legal doubt of the adequacy or extent of the protection and security given to the purchasers of the bonds; |