Mr. Day to Mr. Hay.
We have information Philippines debt as follows:
Prior to insurrection August, 1896, colony paid its way by local taxes and moderate tariff. After war began captain-general instructed to draw from prosperous local banks, such as deposit bank, local savings bank, and Banco Hispano-Filipino. He also obtained advance from friars. Expenses increasing, colonial minister empowered to draw on funds raised for expenses Cuban war, which he did to the extent of 7,660,403.13 pesos or dollars. Expenses still increasing, Government was authorized by law of Cortes, 10th June, 1897, published Madrid Gazette 29th June, to grant general guaranty of nation for operations of credit which would be necessary for Philippine Islands in consequence of disturbances there. Then royal decree 28th June, 1897, authorized colonial minister to issue four hundred thousand hypothecated bonds of Philippine Islands treasury at 6 per cent, redeemable at par in forty years, with special guaranty of Philippine Islands revenues and general guaranty of Spanish nation. The issue consists of one series of two hundred and fifty thousand bonds of five hundred pesetas each, and another of one hundred and fifty thousand bonds of one hundred pesos each. First series reserved for issue in Spain; two hundred thousand immediately placed and fifty thousand kept back by minister for the colonies and placed later on, also in Spain. Second series intended for Manila, part to reimburse advance and rest to be placed there. This loan produced 38,570,494.27 pesos net. Madrid Gazette, 20th October, 1898, shows that of this sum 19,891,800.60 were used for war in Philippine Islands; 7,660,403.13 reimbursed to Cuban treasury, and 10,938,477.02 advanced to same, leaving balance 13th June, 1898, to credit of Philippine Islands treasury of 79,813.50 pesos. Nothing in Gazette or other official document shows any part of this loan applied to purely local purposes or objects of utility. It is said that not 5 per cent of Philippine Islands bonds have been placed outside of Spain and colonies, and of fifteen million intended for Manila between ten and eleven million actually placed there and rest returned to Spain and placed easily, chiefly in Barcelona.
You may expect very shortly a telegram embodying views of American Commissioners on Philippine Islands question.