he only paper currency in circulation in the island of Puerto Rico is that issued by the Banco Español de Puerto Rico. There are no government notes of any kind, either from the provincial treasury or the treasury of Spain. The bank notes issued by the Spanish bank have been compelled to meet all the demands for a circulating medium except the silver coinage.

The Spanish bank of Puerto Rico was established by royal charter of the date of May 5, 1888, with an authorized capital of 1,500,000 pesos and the privilege of increasing that to 2,000,000 when the governor of the island should approve. It was granted the exclusive right of issue in the island, on condition that its resources should be at the disposal of the provincial government for loans up to a total of 500,000 pesos, on which the government should pay not more than 8 per cent interest. The charter of the bank provides that it may issue notes or "billetes," payable to bearer at sight, to the amount of three times its capital, and of denominations not less than 5 pesos nor more than 200 pesos. It is required that "the bank shall hold constantly in the vaults, in money current, either gold or silver or in bullion of the same metals, at least one-third of the total issue of billetes in circulation, and the other two-thirds in preferred securities of terms not to exceed 120 days."

No other security is behind the issue of bank notes but the credit of the bank itself. The government assumes no responsibility whatever except to make an inspection once in awhile, and the bank issues no statements for public information. I was unable to learn even the total amount of bank notes outstanding. Nevertheless the people seem to be satisfied with the security offered and the notes circulate side by side with silver without any variation in their value. It was explained to me that the bank was sound and its management satisfactory to the public, so that the notes were all right, whereas if they had been guaranteed by the Spanish government there would have been a doubt as to their value, and as soon as it became evident that Spain was to lose Puerto Rico they surely would have begun to depreciate.

Spain abolished slavery by paying the slave owners something for the property which was set free. In 1873, when slavery in Puerto Rico came to an end, there was a sum amounting to nearly $10,000,000 appropriated by the home government to settle the bill, and the money was distributed in various ways without letting the slave holders get any great part of it. Many years were occupied in the distribution of the fund and the closing of the deal, but the last item in it all was the establishment of the Spanish bank of Puerto Rico. Former slave holders were given one share in the bank for each slave they had held, and the money which might have gone to them in cash was thus employed in starting the bank. The details of the story are a bit complicated, forming one of the picturesque incidents in the history of finance in the island, but the essentials are as above.

The bank devotes itself altogether to a current commercial business, paying no attention at all to country investments or farm loans, which are left to the Agricola bank. It does a large business in commercial discounts and short-time personal credits after the fashion of city banks at home, carries a large number of deposit accounts for merchants and capitalists and makes loans on city property in San Juan. The bank rate for discounting commercial credits in 9 per cent. If anyone is surprised at the rate of discount charged by the Spanish bank, the comparison should be made with the private banks in San Juan, which charge 12 per cent for the same service or with the banks in country towns, whose rates usually are 18 per cent.

The Territorial and Agricultural bank partakes more of the nature of what we know as a loan and trust company than of a bank in ordinary commercial business. It is almost exclusively a land bank, carrying current deposit accounts, it is true, but doing no discount business at all, no foreign business and little in the way of short-time personal security loans. The terms of the charter permit the bank to buy and sell mortgages, to issue mortgage bonds payable to bearer, to make loans on growing crops and to make loans for a maximum of ninety days on personal security.

The images were scanned from various brochures of flora from Puerto Rico.