lessened the liability of breakage from rough handling. It is a big improvement over old methods. By the changes mentioned the old warehouses have been made as much as possible like the new warehouse "P" under the new wing of the customs building. With its unimpeded wooden floor, plenty of doors, wooden platform outside, of a height of the carts, the handling of the merchandise has been vastly facilitated and the time reduced one-half or more, especially by use of the warehouse trucks introduced by the arrastre division. Quickness of delivery has been the object sought. No complaints are now made of inability to obtain merchandise out of the custom-house as soon as the consignee wants it. On the contrary, complaints have been made that delivery is ready before the consignee is.

SAMPLE PACKAGES.

The sample packages for appraiser's examination were until lately not taken to the appraiser's stores until requested by the consignee, who brought the permit for the samples with him from the appraiser's office. This has been changed by the permits being sent without intervention of the consignee and by the samples being transferred to the stores by the arrastre force without delay. This work has been so systematized that a saving has been effected not only in arrastre labor, but the good effects are felt in the work of appraisal. It has also resulted in a saving to the importers, who need fewer representatives-a saving not readily ascertainable, but a fact.

UNINTENTIONAL PROFITS.

Notwithstanding these enlargements of the service performed by the arrastre system, the expense was kept down by more systematic and better methods, so that in time it was found that the charge of P1.50 per ton yielded a considerable profit, even after many improvements had been made to the plant. It was not the intention of the government and the insular collector of customs to conduct the arrastre service for the purpose of making a profit and thus create a revenue, but to do the work for cost and thus make the service as inexpensive as possible to the importer. But a surplus being unintentionally created, the general fund of the Philippine government was reimbursed on June 27 last by 122,368.39 being paid back out of the arrastre profits as a partial refund of the P36,368.39 expended out of the appropriation by the Commission for the purchase and operation of the plant. Another refund of 15,000 was made August 3 and the remainder, 19,000, was paid back September 8.

Thus the entire cost of the arrastre plant to the government has been paid back (without expectation) out of its earnings, notwithstanding the greatly increased service and the reduction of the rate, in less than one year from the date of the appropriation for its purchase and less than eleven months from the actual assumption of the service by the custom-house. The charge of P1.50 per ton having yielded net profits larger than expected, on July 1, 1904, the arrastre rate was reduced by 16 per cent from P1.50 per ton to P1.25 for warehouse deliveries, and from 11 to P0.90 per ton for wharf deliveries. This reduction will save the importers of Manila over 122,300 a year.

EXPENSE SAVED TO IMPORTERS.

Altogether, therefore, the taking over and operation of the arrastre service by the customhouse has saved to the importers of Manila over 108,600 a year of the expense to which they were formerly subjected, as follows:

The importers have also saved some other expenditures, especially demurrage on lighters, which can not well be computed, and it is believed have been given a greatly improved and more expeditious service and freer from liability to breakage than they ever enjoyed before. Moreover the saving of demurrage to steamships coming to Manila has been very considerable. It is not only a saving to the shipping of Manila in actual money, but it is a reform that wipes out an evil which contributed much in former years to giving a bad name to this port and to hampering the commerce of the Philippine Islands.

IMPROVEMENTS TO PLANT.

The plant of the arrastre system has been much improved. The locomotive in use on the tramway, a French engine of old style, being unable to haul the traffic, a new American

locomotive of latest design and double the capacity has been purchased. It has the distinction of being the first American locomotive to be introduced into the Philippine Islands. The light rails of the main line of the tramway have been replaced with heavy steel rails. New tracks and switches have been laid, increasing the trackage 50 per cent and vastly improving the facilities. A firm roadbed paved with cobblestone has been constructed. Board runways with receiving and delivery platforms have been built in five warehouses. and a sixth is now being likewise improved. A track has been constructed through the appraiser's stores for the conveyance of samples direct from the warehouses. The ware-houses have all been supplied with hand trucks, which the Filipino laborers handle quite well, contrary to the expectation of many. The steam cranes and other machinery have all been repaired and put in good condition. About half the customs wharf has been repaved by the arrastre division, and quite a number of minor improvements have been made to facilitate the work. Altogether P13,784.42 has been expended on additions and improvements to the plant in materials, besides considerable labor.

FIRE AND POLICE PROTECTION.

The arrastre division maintains and has charge of a system of fire protection of the customhouse grounds, consisting of a reel and fire hose and barrels and buckets. It also provides four policemen and watchmen in the warehouses by day and one on the wharf at night, in addition to the regular custom-house watchmen. The division also cleans the customs. wharf and grounds once or twice each day.

OFFICE AND PERSONNEL.

The entire finances of the arrastre are conducted by its own office, the collections for the charges being made by its receiving teller and deposited with the insular treasurer in separate account. The expenditures are made by its disbursing officer under the usual regulations. A complete system of accounts is kept in its office.

The personnel has given excellent service. In the office the chief clerk and two clerks are Americans and the receiving teller, bookkeeper, and three clerks are Filipinos. In the wharf and warehouse force the wharfinger (who has general charge) is an American. The first assistant wharfinger, the warehouseman, and first assistant warehouseman are Spaniards (now Philippine citizens); the second assistant warehouseman a Chinese, and three other assistants Filipinos-all these being old employes of the arrastre retained by the custom-house. The engineers of locomotives and steam cranes, the superintendent of the tramway railroad, the conductors, firemen, machinists, and watchmen are Filipinos, as are also the 12 wharf and warehousemen foremen and the 12 openers and packers. Both Chinese and Filipino carpenters are employed. The laborers are all Filipinos-mostly Pampangas, Visayans, and Ilocanos, only a very few Tagalogs. About one-fourth are steady workers. Another fourth, or a little more, work about three to four days a week. The others come and go, working one to two or three day a week. There has never been any difficulty in obtaining all laborers needed. They do good work if plentifully superintended, but not otherwise. They are paid 90 centavos Philippine currency per day of eight hours, and at the same rate for overtime, and are paid weekly. The average number employed is 125 to 150.

The skilled and semiskilled employees are paid monthly and number 65 to 70. The native assistant superintendents are paid salaries of from 142 to 150, the locomotive engineers from 142 to 50, the crane engineers P34, firemen P20, machinists 25 to P50, carpenters P40 to 50, wharf and warehouse foremen P30, and openers and packers P30.

The whole force of skilled and semiskilled employees and laborers have done good work, being well and liberally superintended.

FINANCIAL STATEMENT.

The following shows the amount of merchandise handled by the arrastre plant from October 16, 1903, to June 30, 1904:

Merchandise delivered from wharf..
Merchandise delivered from warehouses..

Total tonnage of merchandise landed at custom-house.

Merchandise given pasé delivery...

WAR 1904-VOL 13-42

Tons. 11, 511. 66 57, 248. 44

68, 760. 10 51,579.82

Statement of the finances of the arrastre from October 16, 1903, to August 31, 1904.

Reimbursement to general fund, government of Philippine Islands........

Expense:

Labor.

Salaries.

Supplies.

Improvements to plant.

Overtime, customs employees..

Total expenditures.

Treasurer's balance, August 31, 1904.

Disbursing officer's balance, August 31, 1904.

Cash balance, August 31, 1904..

Total balances..

P27, 368. 39

P24, 824.93

35, 562.75
7,392.78

13, 784. 42
1,743. 36

83, 308. 24

18, 013. 36

3,743. 65
589.63

12, 346. 64

123, 023. 27

Total credits......

The P29,000 appropriated and expended for the purchase of the plant is not included in the above statement. As stated above, since September 1, 1901, P9,000 additional has been reimbursed to the general fund of the government, making the total refunded P 36,368.39, all that was expended out of the appropriation for the arrastre.

The greatest satisfaction of the operation of the arrastre plant by the custom-house is not so much in the favorable financial exhibit as it is in the belief that great relief has been given to the importers and that a bad condition hampering the port of Manila and choking its commerce has been destroyed.

Respectfully,

CLIFFORD D. HAM, Deputy Surveyor of Customs, in Charge of Arrastre.

The COLLECTOR OF CUSTOMS FOR THE PHILIPPINE ISLANDS.

(Through office of insular surveyor.)

EXHIBIT 8.

ANNUAL REPORT OF THE ACTING COLLECTOR OF INTERNAL

REVENUE.

OFFICE OF ACTING COLLECTOR OF INTERNAL REVENUE,

Manila, P. I., October 1, 1904.

The honorable the SECRETARY OF FINANCE AND JUSTICE,

Manila, P. I.

SIR: As the acting collector of internal revenue to date of August 1, 1904, I have the honor to submit herewith my report covering the period from September 1, 1903, to which date the last annual report was brought, to August 1, 1904, when "the internal-revenue law of 1904" went into effect and a complete reorganization of the bureau inaugurated.

As is well known to you, sir, the jurisdiction of the collector of internal revenue was limited to the unorganized provinces. Little by little the field became narrowed down to a part of the island of Mindanao and to the Jolo Archipelago, and not long after the closing of the last annual report all this territory was swept from under our control by the inuaguration of the Moro government.

Exhibit A, hereto attached and made a part of this report, shows the internal-revenue collections from September 1, 1903, to date of transfer to the new government above referred to.

The undersigned, as acting collector of internal revenue, continued until August 1, 1904, to collect the fees for the forestry bureau on forestry products coming to and assessed in the city of Manila. Said collections are covered by Exhibit B, hereto attached. The distribution of revenue stamps to the provincial treasurers, through the insular treasurer, was also continued up to August 1. Exhibit C, attached hereto, shows such distribution and also shows the account balanced by transfer of stock to the city assessor and collector. Such stamps are now handled and distributed by the said city assessor and collector of the city of Manila, in accordance with the provisions of Act No. 527.

Exhibit D, attached hereto, is a complete return of the accountable and expendable property on hand belonging to the internal-revenue bureau, the disposition of which the undersigned awaits your instructions.

Respectfully submitted.

A. W. HASTINGS,

Acting Collector Internal Revenue, Philippine Islands.

EXHIBIT A.-Statement of collections by subcollectors of internal revenue during the months of September and October, 1903, as shown by reports on file in the office of the acting collector of internal revenue for the Philippine Islands.

Internal revenue.

Philip- Local Philip- Local pine cur- pine cur.

Philip- Local Philip- Local pine cur- pine curcurrency. rency. currency. rency. currency. rency. currency. rency.

EXHIBIT B.-Statement of taxes collected on forestry products cut from the several provinces, for the period from September 1, 1903, to July 31, 1904, by A. W. Hastings, as acting collector of internal revenue for the Philippine Islands.

EXHIBIT C.-Statement of stamp account of A. W. Hastings, acting collector of internal revenue, for the period from September 1, 1903, to July 30, 1904.