serve fund, was provided for, and this fund was to be maintained
and could be used for no other purpose.

Considerable difficulty was experienced in introducing the new currency
into the islands. The banks at first failed to give any assistance to
the government. The business men of Manila, and especially the Chinese,
discounted the new Philippine peso, because it did not contain as
much silver as did the Mexican dollar. They were quickly brought to
time, and given to understand where they stood if they discredited
the currency of the country.

The Spanish Philippine coins and the Mexican coins in circulation were
collected by the treasury and exported to the San Francisco mint,
where they were reminted into new coins of the weight and fineness
prescribed by law.

The establishment of a gold standard fund to maintain the parity
between the gold and silver dollar was quickly effected by the sale of
exchange on the United States in accordance with the established law,
at a cost estimated to be the same as the transportation of the gold
coin itself.

The army, by direction of the secretary of war, ceased to pay
in United States money, and its paymasters were given credit at
the Insular Treasury, where they obtained the necessary funds in
Philippine currency.

The government also authorized, in addition to the coinage of silver,
the issuance of paper money in two, five, and ten peso notes. All of
the coins and bills were readily interchangeable with the United States
coins in common use, the dollar being worth two pesos, the half dollar
one peso, the twenty-five cent piece a half peso, the ten-cent piece
a peseta, the five-cent piece a media peseta and the cent two centavos.

Unfortunately the silver value of the new peso was such that when the
price of silver again rose, its bullion value was greater than its
money value, and in consequence coins of this denomination were hoarded
and exported. It proved necessary to prohibit their exportation,
and to issue new coins of less bullion value, but this was the only
really serious difficulty attending a fundamental reform which put
the currency on a sound basis. The original pesos were recoined and
a handsome profit made on the transaction.

No one who has not lived in a country where the circulating medium
is constantly fluctuating in value can fully appreciate the enormous
benefit conferred on the Philippine Islands by this important reform.

Another reform of far-re