The money was counted by a board of officers and turned over to Major C. H. Whipple, Paymaster U. S. A as custodian of Spanish Public Funds.  A few thousand dollars in other public offices were still to be collected.

The money received at the Custom House and other offices is turned in daily, at the close of business, to Major Whipple.  Money for current expenses is furnished to heads of departments on their requisition, by warrant drawn by the Intendente General on the Custodian of Spanish Public Funds.  The heads of the departments are to submit their vouchers and accounts monthly to an auditing department, which was being organized when I left.

All these public offices and funds were surrendered to me only on threat of using force and on granting permission to file a formal written protest.  None of these had been received at the time I left, but the ground of verbal protest was that the officials recognized no authority in these islands but the Governor General appointed by the King of Spain, and without his order they were unwilling to surrender them.  On the other hand, I recognized no 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.