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Philippines Paper Money Pioneered Smaller U.S. Notes
By Fred L. Reed III, Bank Note Reporter
July 11, 2011

This article was originally printed in Coins Magazine.
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This month we show one of the most important notes in the history of U.S. federal paper money—a Series 1903 Philippine Islands 10- pesos note.


I didn’t stutter. This small-size note is the forerunner of all the cash you are carrying today in your pocketbooks and purses. It is in fact the first type of small-size note printed at the U.S. Bureau of Engraving and Printing, and its success ushered in the entire panoply of small-size Federal Reserve Notes, National Bank Notes, Silver Certificates and United States Notes that you collect, spend, and labor mightily for.

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A little background might be in order for those of you who have slept a few times since attending your history classes in school.

By the end of the 19th century, the reconstructed smoke-belching American economy was roaring on all cylinders. American’s had conquered “sea to shining sea,” had various interests were looking outward intent on creating an American imperium to compete with European colonial interests around the globe.

The Spanish-American War resulted from the so-called “yellow journalism” pursued by media magnates like Joseph Pulitzer and William Randolph Hearst. The upshot of Col. Roosevelt’s and Commodore George Dewey’s victories was U.S. possession of various former Spanish colonies including the Philippine Islands, Guam and Puerto Rico.

Manila, capital of the Philippines, fell to U.S. forces on Aug. 13, 1898. The peace brought more than 7,000 islands on the Philippine archipelago under U.S. control.

Initially these dependencies were placed under the administration of the War and Navy Departments. Unlike the Spanish overlords that preceded U.S. hegemony, United States intentions for the island nations were benign.

U.S. policy was to return the Philippines and Cuba to independence.

In the Pacific, U.S. administration stressed improved education opportunities, land reform and institution of a good government over the territory. The U.S. also provided economic and trade concessions that led to rapid economic growth for the Philippines under the ruling Philippine Commission.

In 1902-03 the U.S. Congress passed legislation establishing a monetary system for the Philippines, including provisions for a coinage and paper currency system based on a silver peso of comparable fineness and weight to the U.S. silver dollar.

The Act of March 2, 1903, authorized the U.S. Treasury secretary to print currency notes upon request of the Philippine government. Accordingly, the BEP prepared Silver Certificates of two-, five- and 10-pesos equivalent to like sums of Philippine silver pesos being struck at the Philadelphia and San Francisco Mints or standard U.S. silver dollars.

This was the first time the BEP had been permitted to print currency for other than U.S. requirements. At first, Secretary of War Elihu Root feared confusion would result between the Philippine Silver Certificates and U.S. currency.

To alleviate those concerns, the Bureau devised a format for the currency that was materially different from the U.S. notes. In order that “a marked difference between the Philippine and United States certificate[s]” would prevail, the BEP suggested that the Philippine notes be “materially reduced to a small oblong 6 1/2 in. X 2 5/8 in.”

This suggestion was accepted by the War Department, and the notes like the 10-peso shown here were printed and circulated.

“Little was it dreamed,” a BEP historian later wrote, “that the decision was to have a bearing on the future reduction in size of U.S. currency some 20 years later.

“The successful use of the small-sized Philippine currency was a significant factor in the adoption of a similar size for U.S. paper money in 1929,” the account added.

The BEP printed nearly 400 million of these notes for the Philippines through 1949.

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