than can ever be obtained from the present tariff, and if the importer, merchant, and middleman should at first absorb the reductions thus made and the customer not benefit thereby, as has been the case, at least temporarily, in Cuba (see report of Robert P. Porter and J. P. Sanger on Cuban tariff to the Secretary of War, dated Washington, D. C., March 8, 1900, hereto attached, marked "X"), such a result would be due to an absence of business methods and the healthy competition usually attending the interchange of commerce that would quickly challenge the attention of energetic American merchants and capitalists to the abnormal.conditions of trade in the Philippines, with the result that modern methods of business procedure would be introduced into the islands and the resulting competition would in the end give the consumer the benefit of these reductions.

One item of reduction contained in the revision herewith presented demands special mention. In scaling the duties on husked and unhusked rice from those of the present tariff $1.257 and $1.177 per 100 kilos to 75 and 70 cents, respectively, the action of the board has been with the sole purpose of decreasing the cost of what is a necessity of life to most of the inhabitants of the islands, and with the appreciation that such reduction can only result in the lessening of customs receipts by the amounts of the reductions made.

Max L. Tornow, in a sketch of the economic conditions of the Philippines, on page 1307 of "Foreign Commerce of Cuba, Porto Rico, the Hawaiian, Philippine, and Samoan Islands," Treasury Department, Bureau of Statistics, says:

Formerly, in 1850 to 1860, or even later, rice was exported from the islands, but the quantity gradually decreased until exportation ceased altogether and finally began to be imported.

The importation of rice into Manila alone for the year 1899 amounted to 148,527,169 pounds, of the value of $2,349,666, and the duties. obtained therefrom were $449,882, gold, or an ad valorem duty of 19.1 per cent, while in the first quarter of 1900 there were brought into the same port 22,374,039 pounds, at a valuation of $326,646, gold, and duties were collected thereupon in the sum of $62,621, gold, or an ad valorem charge of 19.1 per cent.

Up to the year 1896 the total import duties on rice in the Philippines, husked and unhusked, amounted to 50 cents per 100 kilos. În 1896 and 1897 there were added to this ad valorem charges of 2 and 6 per cent, 8 per cent in all, upon the arbitrary system of valuations hereinabove referred to. The duties as thus increased are maintained to-day, while the prices for native rice, unhusked, in Manila have advanced from $3.75 per 100 kilos in 1894 to $4.35 in 1900; of native handcleaned rice from $5 in 1894 to $8.04 in 1900; of steam-cleaned native rice, from $5.565 in 1894 to $9.09 in 1900, with the same figures for Saigon rice, which constitutes the bulk of the importations. These figures are based upon the estimate furnished the board by the Manila Chamber of Commerce in response to a request from it, hereto attached and marked Exhibit W. The table furnished by the Spanish Chamber of Commerce shows the increase upon husked rice for the same period as being from $2.65 to $4.766; upon native white rice, husked, from $4.95 to $7.82, and upon Saigon rice from $4.94 to $9.09.

These duties are borne by the consumer, and the board has felt that the present conditions, under which the price of this staple article of food is from 50 to 60 per cent higher than in 1896 when the duties were

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per cent less than those now prevailing, should not continue and that the Government should contribute to the lessening of the cost of what is a necessity of life to almost the entire population of the archipelago, particularly in view of the fact that as the United States extends its control of the islands and methods of agriculture improve this source of revenue may be expected to wholly cease.

As no definite instructions have been received by the board as to the scope of the revision of the tariff for which it was convened, the board has felt at liberty to consider the whole matter in its general bearings upon the welfare and prosperity of the archipelago, as well as upon its revenue-producing aspect. From this point of view two courses seemed open to it as a basis for its labors of revision: First, such a system of customs taxation as would produce the largest revenue in the near future that the industries and conditions of the archipelago would stand without adding to our political and governmental embarrassments; or, second, such a system of customs taxation as would give the maximum revenue with the least injury and greatest encouragement to the industries of the islands.

The only advantage that could be claimed for the first course appeared to the board to be that of a high revenue in the immediate future which would help meet the great cost of the war and aid in the reestablishment of civil government in the islands. As an offset to this it could be reasonably urged that the adoption of such a course would tend to restrict the production of standard crops, increase the discontent of the people, whose rebellion against Spain was, as alleged, largely due to overtaxation, and thus lessen the revenue in the near future by restricting the purchasing power of the people.

The advantages in favor of the second course, viz: Such a system of customs taxation as will give the greatest encouragement to the industries and native productions of the islands are deemed by the board to point to the advisability of deriving the customs revenue almost exclusively from the products and manufactures of foreign countries, not in competition with home products and stimulating and encouraging home industries wherever possible.

The board has adopted the second course as a basis for its work, and by allowing the free entry of all agricultural apparatus and machinery and cheapening the cost of the staple food of the inhabitants, trusts that prosperity will come, and that the farming and marketing of the crops will bring such increase of wealth in the near future as will greatly augment the revenue.

In connection with the raising, producing, and marketing of the agricultural and other products of the archipelago the matter of transportation appears of almost first importance, the islands being wholly without suitable roadways and the small coasting-trade vessels charging such high freights for carrying the produce from the points of production to the ports of exportation as to make the marketing of crops exceedingly costly. The board has in considering this matter recommended the admission of railway and tramway material free for a period of years and has, in the schedule submitted, reduced the duties on such furnishings for ships as canvas, metal sheathing, and rope, in the expectation that by cheapening the cost of maintaining vessels and stimulating the construction of railways and tramways the freight charges will be greatly reduced.

In arriving at the schedule of charges herein the board has made

material reductions upon the duties as now levied upon building stones, cement, and lime, believing that these are inordinately high at present and that greater receipts will follow the reductions proposed. The duties upon statuary and fine manufactures of marble have been greatly increased.

Diamonds and precious stones under the present tariff have been referable to no appropriate classification, and the board has provided for this by fixing a charge of 10 per cent ad valorem.

The duties upon coal and coke have been materially reduced-about 50 per cent for the reason that as now levied they are inordinately high and so increase the cost of these articles that ships will not coal here. It is believed that greater importation of this commodity will result from the lower duty herein established and in time produce greater receipts than would result from the present tariff.

The duties upon petroleum, refined and crude, have been reduced, respectively, 25 and 50 per cent, in the belief on the part of the board that to the present high charges upon these products is due the small consumption thereof, and that by the reductions proposed the consumption will be so increased that the amount of duties derived therefrom will be greater than at present.

In glass and glassware the present charges have been generally maintained, as fair and equable, except in the fine forms, where they have been increased.

In pottery and porcelain existing charges have either been maintained or slightly increased, except in the class of porcelain for sanitary purposes, newly created, with duties materially lower than those at present imposed upon such goods. The importations thereof at present are few, if any, and it is believed that by the low duties fixed therefor in the proposed schedule not only will a considerable income be derived where none is now received, but that the health and comfort of the residents will be greatly improved.

The duties upon gold, silver, and platinum have been largely increased.

In iron and steel the duties have been increased upon the articles that have been heretofore imported in any quantity. Upon the heavier articles, such as structural and railroad iron, the duties have been materially decreased to encourage importations where practically none have been had and to aid in the development of the islands.

In copper and its alloys the duties have been materially decreased upon wires and electrical supplies, as well as upon sheathing for vessels, in pursuance of the policy to encourage wherever possible the advancement of the islands by placing low duties upon the instruments of commerce.

Other forms of this metal and its alloy have increased duties placed upon them.

The duties upon tin, zinc, lead, and other metals have been slightly increased, except in their crude forms, where they have been correspondingly reduced to encourage native craftsmen.

On drugs and chemicals, animal oils, and heavy oils duties have been increased, in the case of the latter to encourage the local products, while turpentine and the lighter oils have been decreased about 30 per cent in the belief that greater importation and increased receipts will follow therefrom. Colors, dyes, and varnishes have been slightly increased, and in medicines and chemical products generally the present

duties have been maintained, excepting quinine and other products of cinchona bark, and germicides, which have been placed upon the free list.

Starch and soap have been given the duties now borne by them, while the duty upon wax has been slightly decreased. In gunpowder the duties have been largely increased. In tobacco the duties have been increased upon cigars, but decreased upon smoking tobacco to place the latter in grades not manufactured in the islands within the reach of the consumer desiring them. The duties at present being inordinately high, the rates retained are more than sufficient to afford ample protection for native products, if these should ever be produced in form and quality equal to those now imported.

Upon matches the duty has been slightly increased.

In cotton, raw and in yarns and in tissues, the duties have been maintained, and the same is the case with flax and hemp.

In wool, raw and in yarns, the present duties are maintained, but a reduction of about 50 per cent has been made in tissues, those now levied being prohibitory, the customs receipts from importations thereof into Manila for the year of 1899 and for the first quarter of 1900 only amounting to $5,000, Mexican currency.

In silks a new class has been created for worms and cocoons, where there have been no previous importations, with duties materially less than these would pay under the present tariff. In spun silks and yarns the duties have been slightly reduced in order to encourage native weaving, and larger importation should follow. The duties upon silk tissues, as velvets, plushes, lace, etc., have been increased about 10 per cent.

In rubber and rubber goods the duties have been materially reduced; the old tariff is prohibitive on these, and if the reductions proposed herein are adopted the board believes the income from customs will be largely added to by the increase in importations that will result therefrom.

The duties upon paper in its coarser grades are regarded as excessive and have been reduced. Those imposed by the present tariff have been maintained or slightly increased in the case of the finer grades. Books and periodicals have been placed upon the free list in the belief that the free entry of these and their correspondingly decreased cost to the consumer will prove a factor for civilization and progress that will greatly outweigh any pecuniary advantages that might be derived from the retention of the.existing duties thereupon.

Pasteboard boxes of the cheaper grade are at present too high, and the board has recognized the justice of the number of complaints by materially reducing the duty upon these. Those now charged for the entry of higher and more expensive grades have been increased, and in this class, as in almost all cases where the board has reduced the duties, it is believed that a greater income will be derived than is now obtained from the present tariff.

In wood the duties upon staves for barrels have been decreased, as is the case generally in ordinary wood, where, on account of the inordinately high prices prevailing for furniture, it has been thought advisable to reduce the duties, which are now practically prohibitive, to a point which, in the absence of the development of the native industry, will admit of the importation of foreign products and which will at the same time afford sufficient protection to native or resident

mechanics whenever the development of this portion of the resources of the islands shall be seriously undertaken.

Upon firewood the present duties are maintained, as well as those upon common furniture, and increased upon furniture of fine and expensive woods.

For the same reason the duties on furniture of cane and rushes have been reduced, those upon the raw articles comprising them have been deemed moderate enough and therefore have been maintained.

In the case of animals, those for breeding purposes have been placed upon the free list, with provision against their importation for other

uses.

The duties upon horses and mules for draft purposes are materially reduced, but maintained at such a price as to afford all proper encouragement to resident breeders.

On leather the duties upon the cheaper grades, unworked, have been reduced, and increased upon the higher classes and manufactures.

The duties upon animal remains have been retained except that guano and manures have been placed upon the free list.

In watches and clocks the duties have hitherto been excessive upon the cheaper grades, and the board has placed a low specific duty thereupon that will, in its opinion, result in the large importation of American clocks and watches of these classes with increased revenue to the Government. Musical instruments retain the duties imposed upon them or have these increased.

In machinery and apparatus the board has placed agricultural machinery upon the free list and affixed a low ad valorem duty upon other heavy forms; the result should be large importations where previously lacking and the development of the islands with accompanying increase in customs receipts.

In carriages the duties have been reduced as being too high, while railway carriages have been placed upon the free list.

Fresh meats have been placed upon the free list, and the duties upon cured pork, bacon, and other hog products greatly reduced. Fish, cured, has had lower duties placed upon

it.

The duties upon grains, except rice, have been maintained. Flour, corn, and corn meal have been materially reduced-about 30 per cent being excessive in the opinion of the board.

Vegetables, dried and desiccated, have been decreased about 50 per cent for the same reason, and fresh vegetables placed upon the free list.

The duties upon biscuits, unsweetened, have been slightly reduced, and sweetened, materially, being excessive in the case of the latter.

In tropical products and those of the islands the duty has been retained upon sugar, except in the case of refined sugar, where it has been reduced, maintained upon cocoa, slightly reduced upon coffee, and increased upon spices.

In table oils, liquors, and wines the present duties have been maintained or slightly increased, except in the case of champagnes, where it has been increased some 200 per cent, and in still wines, where a reduction has been made of 33 per cent, which will, it is believed, benefit alike the consumer in the islands and the producers of California.

In canned meats, vegetables, and fruits large reductions have been made, the present charges thereon being excessive, and in many cases prohibitive. A reduction is also made upon preserved fruits.