authority of the Spanish
Governor General who was merely a prisoner of war; I acted under the
orders of General Merritt as the United States Military Governor,
and in accordance with the terms of capitulation. The claim will
probably be made by the Spanish officials that as we captured Manila
a few hours after the peace protocol had been signed at Washington,
this property still belongs to the Spaniards. But I believe that the
law in such cases was clearly defined in decisions made by the United
States Supreme Court in 1815. We captured Manila, and the capitulation
(under which these funds became United States property) was signed by
both parties, before either had received any notice of the protocol
of suspension of hostilities.

On the opening of the Custom House several important questions arose
for immediate decision. The first was in regard to Mexican dollars. The
importation of these has for several years been prohibited, with
a view of forcing the Spanish coinage (which contains less silver)
into circulation. The large English banks represented that there was
a scarcity of currency, owing to the amount which had been hoarded and
sent away during the seige, and they agreed in consideration of being
allowed to import Mexican dollars free of duty, to guarantee the notes
and accepted checks of the Spanish bank, which should be received
by us in payment of customs up to $200,000 at any one time. The
Spanish bank was in difficulty, owing to the enormous amount which
the Government had taken from it under the form of a forced loan, and
any discrimination on our part against it would result in its failure,
entailing widespread financial disturbance. As there seemed no reason
against allowing the importation of Mexican dollars and many in favor
of it, I recommended that the Custom House continue to receive the
notes and checks of this bank in payment of customs (for which we
were amply protected by the guarantee of the strong English banks)
and with General Merrill's approval wrote to these banks authorizing
them to import Mexican dollars free of duty until further notice.

The next question was in regard to the rate of duties on imports and
exports. After a careful consideration of the matter, I recommended
that the tariff be not changed until the question had been fully
studied and ample notice given. General Merritt approved this and
the customs are being collected on the Spanish tariff.

About a week after the Cust