mmered the exchange
rate down and bought silver, then boosted the rate skyward and sold.

The American army brought in a large amount of gold, but this did
not remain in circulation long, as it was exported by the different
business concerns, or hoarded.

United States silver money had a limited circulation during the
early days of American occupation, but it passed at less than its
true value. An effort was made under the military administration to
keep the ratio of exchange at two to one by the purchase from the
public of all United States currency offered at that rate to the banks.

For a long time the banks refused to carry private accounts in United
States currency, but when it was offered for deposit it was changed
into Mexicans with a heavy charge for the transaction, and an account
opened in Mexican currency to the credit of the depositor. If the
depositor afterward desired to get United States currency, he gave a
check for it at the then existing rate of exchange. Such conditions
were intolerable, and the commission passed an act making it an offence
to refuse to accept for deposit the currency of the sovereign power,
but this did not remedy the fundamental difficulty. There came a
heavy slump in the price of silver. The Insular government lost a
very large sum because of the decrease in value of its silver coin.

Mr. Charles A. Conant had been brought from the United States to make
a report on the feasibility of providing an American coinage for the
islands. He recommended that the unit of value should be a peso,
equivalent to fifty cents United States currency. Congress, by an
act passed July 1, 1902, vested general authority over the coinage
in the Philippine government, but the commission decided not to take
action until more specific authority could be obtained from Congress,
as the proposed reform was radical, and it was very important that the
new currency should at the outset command the confidence so essential
to its success.

After long discussion, Congress authorized, by an act passed March
2, 1903, a new currency system based on a theoretical peso of 12.9
grains of gold 900 fine, equivalent to one-half of a United States
gold dollar. The circulating medium was to be the Philippine silver
peso, which was to be legal tender for all debts, public and private,
and its value was to be maintained on a parity with the theoretical
gold peso. For this purpose the creation of a gold standard, or gold
re