Coin smuggling in Davao

On August 28, 2008, a composite team of government agents seized a container van in Manila bound for Pusan, South Korea, containing 17.9 metric tons of one-peso Philippine coins. Law enforcers valued the confiscated currencies at P30 million, making it the biggest COIN smuggling of its kind in the country.

The surge in coin smuggling FIRST resonated in Resolution No. 922 filed in the 14th Congress (2207-10) by Sen. Manuel VillaR. It urged the Senate committee on banks, financial institutions and currencies “to conduct an inquiry… on the unprecedented rise of cases involving the smuggling, defacement and mutilation of Philippine coins with the objective of promoting and maintaining the integrity of the Philippine peso.”

Coin smuggling, associated today with the extraction of copper and nickel content, dates to the colonial period. During the Galleon Trade, also known as the Manila-Acapulco Trade, coins were standard currencies. Willem G. Wolters, in ‘Flooded with Foreign Coins: Spanish and American Administrators Dealing with Currency Problems in the Philippines 1890-1905’ (2001), explained the use of silver currencies in Asia in colonial times:
“From about 1877 till 1903 the Philippine islands were part of a larger monetary world dominated by silver currencies, which also encompassed the Chinese coastal areas and parts of its hinterland, the British colony of Hong Kong, French Indochina, Singapore and the Straits Settlements, British Borneo and Labuan [Malaysia], and the islands of Sumatra and Borneo of the Netherland Indies. In fact, this whole region formed a de facto monetary union; the feeble attempts to establish border controls were largely ineffective. Although Asia produces hardly any silver itself, its monetary systems were all based on the use of silver coins. This silver had bee supplied from the Americas on a large scale, ever since the European states had established military and trade links between the Old World and the New World. Even China, with hardly any silver in its own mines, had a monetary system based on silver.”

As late as 1887, trafficked Mexican dollars entering the country from Hong Kong reached P150,000 monthly. Edward W. Harden, in the ‘Report on the Financial and Industrial Conditions of the Philippine Islands’ (1898), wrote:
“The smuggling of silver into the islands was a recognized industry. It was carried on largely by the rich ‘mestizos’, or Chinese half-castes. There was a regular system for the bringing in of these coins, which would be shipped from Hong Kong in a special steamer and the cargo would be landed at some point north or south of Manila Bay.”

In ‘Report of the United States Philippine Commission to the President,’ Vol. 1 (1900), American authorities found out that in only four months, from August to November 1900, the local banks were exporting over P3 million Mexican pesos to China along with private speculators.

Coin smuggling, however, included Davao and Zamboanga as lucrative markets. The Tribune, in its November 25, 1932 article (“Spurious Coins Flooding South; Rush Report of Serious Situation in Davao, Zamboanga Received Here”) recounted:
“Spurious coins in denominations of from five to 50 centavos, smuggled into the southern provinces, have been reported by the constabulary in Davao and Zamboanga to Manila headquarters as flooding those provinces.

“The counterfeit coins are crudely manufactured, according to the report. They have been in circulation in those regions for some time, resulting in the arrest and detention of scores of persons for attempting to pass them, but the provincial authorities are at a loss to know where the plant of the counterfeiters is situated.

“The report was rushed to Manila constabulary headquarters yesterday in the hope of obtaining aid from the intelligence division in locating the source of the spurious money. Investigators suspect that the coins have been smuggled from other countries.

“Governor General [Theodore Jr.] Roosevelt has requested Japanese Consul General Kimura [Atsushi] to cooperate with the insular government in stopping the flow into the country of bogus American five-dollar coins, allegedly being sold by peddlers in Yokohama.”

While coin smuggling has not been reported in Davao region in the postwar period, currency trafficking in form of gold bars has been rampant in the past three decades, chiefly using black market channels and backdoor networks. Most of the gold came from illegal mining.

Records in the Bangko Sentral, particularly those gold bars bought from Diwalwal sources in Monkayo, Compostela Valley, reflect very low trading due to high taxes on sales and the fluctuating and unpredictable gold prices in the world market.