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APPENDIX AA.

OFFICE OF THE SECRETARY TO THE
UNITED STATES MILITARY GOVERNOR

IN THE PHILIPPINES,

Manila, P. I., September 26, 1900. To the U. S. MILITARY GOVERNOR IN THE PHILIPPINES.

Sir; In obedience to instructions, I have the honor to submit the following report of the operations of this office for the fiscal year ending June 30, 1900:

The reorganization of the secretaryship of the military government was effected by General Orders, No. 64, current series, of the military governor's office. Under the terms of this order the office became, in all respects, one of record, charged with issuing all orders, general or special, of the major-general commanding in his capacity as military governor, and with the conduct of correspondence relating to civil affairs. Through it is exercised the supervision and control of the military governor over the following enumerated departments of civil administration:

1. Judicial department.

2. The general customs and internal-revenue services, with their several provincial and local dependencies.

3. Postal department.
4. Office of the captain of the port of Manila and its several branches.
5. Treasury department.
6. Auditor's department.
7. Municipal governments.
8. Public instruction.
9. Department of public works, including works of the port of Manila.
10. Office of patents, copyrights, and trade-marks.
11. Mining bureau.
12. Forestry bureau.
13. Department of island prisons.

In addition, the nautical school of the Philippine Islands and the boards of officers on claims and conference with the Spanish board of liquidation were likewise required to report to this office.

The increased work resulting from this reorganization necessitated an increase in the clerical force of the office, which now numbers 6 civilians and 19 detailed enlisted men, including 1 chief clerk, 5 stenographers, 3 interpreters and translators, 9 clerks, and 1 representative of the secret service.

On August 1 last the system theretofore in force of keeping records in books was abandoned and the card system instituted in its stead. It promises, when better understood, to abridge the work and to afford a much more ready access to the archives of this office, which have already become very voluminous,

What I have said above relates to the work of the secretary's office proper, and no reference is made to a force of 14 native clerks who

are occupied in classifying the archives of the Spanish Government, a reference to which work is hereinafter made.

I am unable to submit any concrete recommendation as to the necessities for a clerical service in the future, being unacquainted at the present time with the functions which will, in view of the dual control which has existed since September 1, be left to this office. Thus far there has been no diminution, but rather an increase, of office work. Assuming that this condition will continue, an office force of not less than 30 men will be required.

As soon as it can be accomplished I would recommend that the force be constituted entirely of civilians, reserving a suitable number of these positions for the enlisted men at present on duty in the office, who have proven their qualifications and who should be discharged to accept such appointments.

TREASURY DEPARTMENT.

The problem of securing a stable currency,

a stable currency, difficult of accomplishment in all countries, appears never to have even approached a definite solution in the Philippines. Of this fact the accumulation of laws on this subject since 1836, and the voluminous records pertaining thereto which the Spanish administration left unfinished in the latter days of its existence, afford convincing proof. During the period of American rule the problem has not pressed for immediate settlement until quite recently, when the exchange rate between United States currency and Mexican silver fell below the commonly accepted commercial rate of 2 to 1. When the daily bank rate reached 1.98 and promised to go lower the trade in Manila reduced the rate at which United States currency was accepted even lower than the bank rate, and it was reported that in certain remote localities in the provinces, where conditions were imperfectly understood, there was for a few days an even exchange of United States and Mexican dollars.

As a provisional remedy General Orders, No. 107, current series, office of the United States military governor in the Philippines, was issued, and the government in addition engaged itself (reserving the right to cancel the arrangement at any time) to reimburse the banks in kind for all Mexican silver which they were compelled to pay out in receiving United States currency from disbursing officers and trade at the rate first above named. The effect was immediate and the public confidence was restored without loss to the Treasury, but the experience gained is as yet contined to too limited a period to enable a conclusion to be expressed as to the desirability of continuing this arrangement, or as to the more permanent remedy which should replace it.

The recommendation of the treasurer of public funds that the Spanish seized funds be taken up on his books as “miscellaneous” is concurred in with the qualification that it be first made to appear, by an expert examination of the books of the treasury kept by the preexisting island government, that there are no objections to such a

The balance on hand at the end of the fiscal year of 1899–1900 was 4,045,133.51 pesos, and on August 31, 1900, 6,520,015.48. To this total should be added the amount of Spanish seized funds of 890,229.86 pesos, making a grand total of available assets on August 31, 1900, of 7,410,245.34 pesos.

course.

AUDITOR'S DEPARTMENT.

The office of auditor was created by General Orders, No. 3, office military governor, series of 1898, which designated Maj. Charles E. Kilbourne, paymaster, U. S. A., as auditor of public accounts. Subsequently Major Kilbourne was relieved from this duty and Lieut. Col. C. L. Potter, U. S. V., appointed in his place on October 10, 1898, who was in turn succeeded by Capt. Albert Todd, Sixth U. S. Artillery. Thereafter, on April 1, 1900, Captain Todd was succeeded by Mr. Walter G. Coleman, the present incumbent, who thus became the first civilian auditor of the archipelago.

From data furnished by the auditor since the rendition of his annual report the following information is obtained, showing the receipts and disbursements of the military government in the Philippines for the first eight months of the year 1900, and which is here noted not only as a matter of first importance and general interest, but as well on account of its close connection with the reports of the various departments that follow in order.

The total receipts from January 1 to August 31, 1900, were, in Mexican currency, $12,041,504.71, and the total disbursements for the same period were $7,407,988.71, leaving a surplus of receipts over disbursements in the sum of $4,633,516. Of the total receipts for this period those from customs amounted to $9,952,936.68; those from internal revenue, $902,484.97, and from miscellaneous or all other sources, $1,186,083.06. Of the disbursements there were expended in the customs service for this period $269,844.52, and for the expenses of internal revenue, $71,498.50; for miscellaneous or all other expenses of government, $7,066,645.69.

These figures do not include receipts for the same period from the postal service of $32,771.98, with disbursements for the expenses of such services in the sum of $31,408.34, both of these amounts being expressed in American currency.

Recent instructions from the War Department requiring a reaudit of the accounts from the commencement of our occupation have imposed a great deal of extra work upon this department, for which an adequate clerical force was not immediately available. This work is now rapidly approaching completion, and all required records will soon be brought up to date.

CUSTOMS SERVICE.

The initial difficulty of securing by detail from the Army officers and enlisted men qualified for the performance of the technical duties of the customs service was measurably overcome in the first few months of administration, since which the record of this department has been one of continual progress and gratifying success.

Manila was opened to commerce under American occupation as a port of entry on August 20, 1898, in obedience to instructions of the President, which required the opening of ports and places in the Philippines in the possession of the United States to the commerce of neutral nations equally with our own in articles not contraband of war upon the payment of the duties in force at the time of the importation. Under these instructions Iloilo was opened to commerce on February 22, 1899; Cebu on March 14, 1899; Zamboanga, Siassi, and Jolo on December 26, 1899. These are the only ports of entry in the Philippine Islands, and as they constitute convenient centers from which imported merchandise can be distributed throughout the archipelago through the medium of the coasting trade it is not anticipated that any increase in their number will be found necessary. Such, certainly, is not now required.

The present table shows the comparison of total custom-house receipts under Spanish and American administration, and is self-explanatory:

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Any discrepancies that may exist between the statement of receipts under the Spanish administration as here given and as stated in Exhibit C to the report of the collector of customs of the islands is to be accounted for by there having been discovered since the preparation of the latter, in the intendencia building, data more comprehensive, and, it is believed, more reliable, than those heretofore attainable.

The marked increase in the amount of the receipts from customs under the American administration over that reported in Spanish times is deserving of remark. The statistics left by the Spanish officials are often incomplete and contradictory, and it is impossible to state with certainty the exact reasons for this increase. It is not believed that the importations under American occupation, leaving out of consideration supplies for the Army, admitted free, have greatly exceeded in value those entered under any corresponding period in the latter years of Spanish rule. It is unreasonable to suppose that, with the disturbed conditions attending the insurrection and the consequent disarrangement and partial paralysis of trade conditions, the importation of goods has increased either in quantity or value. The increase, then, in receipts under American occupation must be accounted for mainly in some other way, and is believed to be primarily due to two causes: First, and least, merchandise imported from Spain and its colonies was, under Spanish rule, admitted free of the original and principal duty that was imposed upon all imported merchandise, being made to bear only those additional impost charges that from time to time were added to the tariff as originally framed and which were designated “harbor dues," "consumption tax," “surtax,” and “ad valorem charges.” The last available data on this subject show that in the year 1894 the declared value of importations to the Philippines was 28,558,552 pesos, of which total 10,509,937 pesos represented merchandise imported from Spain and its dependencies, and upon which the duties were therefore materially less than the same commodities would have paid under American administration when the differential in favor of Spain has not obtained. So, in the year 1893, the total value of importations to the Philippines as declared was 25,992,515 pesos, of which those from Spain represented a valuation of 8,327,691 pesos. In the fiscal year ending June 30, 1900, as is shown by Exhibit C to the report of the collector of customs, the total valuation of imported dutiable merchandise to the Philippines was $17,521,807, with merchandise from Spain to the amount of $2,023,647, American currency, or, roundly speaking, 35,043,614 and 4,047,294 pesos, respectively. So that the importations from Spain constituted a much larger proportion of the total dutiable merchandise entered under Spanish rule than they have under American control, and paid lower duties than their equivalents would have contributed in the latter period.

The second and principal cause for the increase in the receipts for customs under American occupation is believed to be due to the wide difference of methods prevailing in the administration of customs under Spanish and American government. The testimony of merchants of Manila before the board of officers appointed for the revision of the present tariff was to the effect that this, as administered by Spain, amounted to an elaborately contrived system for the avoidance of the payment of duties as prescribed rather than one for their enforcement and collection; that it was the prevailing custom of importers to declare their goods erroneously, either in class or quantity, or both, with the result that the duties exacted were materially lower than those which should bave been collected upon the various importations; that this practice was recognized and connived at by the customs officials.

So prevalent, it was developed in the inquiries of the board, was this system of undervaluation that any comparison of Spanish figures with those of American occupation, under which the duties have been uniformly collected as prescribed, concerning the relative amount and value of importations under the two régimes, must be unsatisfactory and uncertain. In view of the ascertained facts, however, the greater receipts under American administration do not indicate with any certainty a corresponding increase in importations over those under Spanish rule.

The conditions which have directly affected the receipts from customs during American occupation have been fluctuating and uncertain, shifting from time to time with the course and progress of military operations. These, however, show for the last four months of the fiscal year and for the months of July and August indications of permanency sufficient to warrant the belief that in the future the receipts for this period will be maintained, if they are not increased, as the te: ritory now occupied is brought more completely under established law and as the progress of American arms is further advanced, with the resulting resumption by the people of their peaceful pursuits, so long and largely interrupted in the disaffected districts.

The total customs receipts for the fiscal year ending June 30, 1900, were $11,483,813.03, Mexican currency-more than twice those of the year 1897, under Spanish administration, 127 per cent more than the total for 1896, and nearly three times those of 1895; 22 per cent greater than the entire revenues of the archipelago from all resources for the year 1890, 10 per cent greater than those for 1891, 1.4 per cent greater than those for 1892, 17 per cent less than those for 1893, 23 per cent less than those for 1894, 24 per cent less than those for 1895, 38 per cent less than those for 1896, and 23 per cent less than the

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