but through the courtesy of the Quartermaster's Department it has been possible to secure transportation of the remains of such deceased employees on army transports free of charge from Manila to the United States. At the present time, however, it is incumbent upon the family of a deceased employee to arrange for the transportation of his remains from the port of entry at which they arrive in the United States to place of burial, and to defray the expenses incident to their disinterment in the Philippines in the event the estate of the deceased is not sufficient for this purpose and the family wishes the removal of the remains.

In most instances where practicable, however, the courtesy of the Quartermaster's Department has been extended and the expenses incident to the disinterment of the remains of deceased employees is reduced to a minimum by permitting the burial corps to perform this work.

EXTRADITIONS.

During the year there have received consideration cases involving the extradition of fugitives from justice of four persons from the United States to the Philippines and one person from the Philippines to a foreign country.

THE PURCHASE OF SUPPLIES FOR THE PHILIPPINE GOVERNMENT IN THE UNITED STATES.

The same method, as explained in detail in last year's report, has been followed since. During the past year 341 requisitions were received from Manila and 80 by cablegram. These orders were in turn turned over for execution to the Philippine purchasing agency located in New York but attached to this Bureau. In addition to the purchasing and shipping of goods called for in these requisitions, fully two-thirds of the articles specified in the stock orders of the previous year, approximating $300,000, were purchased, shipped, and paid for during this year.

Requisitions for supplies similar to those furnished the Department of the United States under contract prices were, through the cooperation of the various Bureau offices of this Department, bought after inspection by their experts, and at the same low prices these Bureaus have received.

The United States Post-Office Department included a clause for the fiscal year ending June 30, 1905, providing that successful bidders should furnish similar materials and at the same prices when required by the Philippine government upon requisitions issued through the War Department.

As a rule, supplies have been purchased f. o. b. New York, but in many instances it has been found to be more advantageous to the government to purchase goods at places of manufacture and ship them across the continent by rail to San Francisco and thence by steamer to Manila under contracts made with various lines for through transportation.

The merchandise is insured on dock and in transit to Manila against all loss or damage, however it may be occasioned, and all ocean freight charges are prepaid.

The New York office is maintained by Philippine funds, and as now organized consists of one purchasing agent, one clerk, one stenographer, and one typewriting and filing clerk. The system of records in use is practically the same as that in the disbursing office of this Bureau. The books show in detail every transaction and are arranged so that the duplication of purchases or excessive charges may be readily detected.

The articles called for in the requisitions transmitted to that office have been promptly purchased and forwarded, and the work of the office is up to date.

In response to an appeal made by the Manila merchants the Philippine Commission has decided that in order to encourage bona fide merchants and to make it an object for them to carry large stocks from which purchases. can be made for immediate delivery, they shall be favored with the government business, provided their prices are not more than 10 or 15 per cent above the prices asked for similar goods in the United States. This experiment is now being tried, and for the time being will result in smaller purchases through this Bureau. However, a great many requisitions are being received for articles which, for various reasons, the Manila merchants can not afford to carry in stock.

The difficulty of this plan, it is believed, will be the impracticability of distinguishing between the bona fide merchant who is willing to carry a large stock and the commission merchant or inconsequent agent whose credit and knowledge of doing business is such as to preclude the confidence of important commercial houses in the United States.

DISBURSEMENTS OF PHILIPPINE REVENUES.

The total disbursements since the date of last year's report amount to $9,230,876.49, and are in payment of 2,756 accounts, and the total disbursements from May 20, 1901, the date the disbursing office was established, to the present time, amount to $18,027,235.52, and are in payment of 5,684 accounts, and have been made without the loss of a cent either to the government or to the disbursing agent.

More than 25,000 expense items have been verified, checked, and recorded during the year.

The method of handling requisitions, proposals, invoices, bills of lading, certificates of insurance, and vouchers, as well as the method of recording all transactions, was shown in detail in last year's report.

CATALOGUES.

A catalogue system fully indexed under the names of firms and articles has been inaugurated. More than 1,000 catalogues have been received from manufacturers and dealers, and two catalogue filing cabinets are required for their reception. They are of much value in the purchase of supplies and in the checking of accounts.

CABLEGRAMS AND TELEGRAMS.

During the past year the total number of telegraph and cable accounts received was 94 and covers a cost of sending 3,951 mes

sages, the total charges amounting to $16,976.55, as per the following

INSULAR SALARY AND EXPENSE FUND.

During the past year there has been deposited with the disbursing agent to the credit of the insular salary and expense fund, to cover the cost of transportation to Manila, $63,555.57.

PURCHASE OF BULLION.

All accounts for the purchase of bullion for the silver coinage, for blanks and metal for the minor coinage, for material and labor in packing the coin for shipment, for expense of coining, and for marine insurance, ocean freight charges, and miscellaneous coinage expenses have been carefully audited in the purchasing and disbursing division. The following amounts were disbursed in connection with this coinage: For purchase of bullion at San Francisco..

For purchase of bullion at Philadelphia..

For blanks for minor coinage..

For coining, Philadelphia..

For coining, San Francisco.

For insurance..

$954, 501.66

130, 964. 50

103, 135. 82

26,794.29

91, 791.36

Less amount paid during the previous year for preparation of silver certificates, later being charged, upon request of the Auditor, to the appropriation for general purposes..

Total....

CUBAN ACCOUNTS.

13, 168. 01

4,369.83

4,537.67

1,503.76

1,330,766. 90

10, 465.88

1, 320, 301.02

On March 31, 1903, Lieutenant McCoy transferred his balance, amounting to $10,710.78. Of the $1,205.58 on hand at the time of my last report, $236.94 has been disbursed during the year, leaving a balance on hand at the present time of $968.64.

ACCOUNTS RELATING TO THE EDUCATION AND MAINTENANCE OF FILIPINO STUDENTS IN THE UNITED STATES.

Act No. 854 of the Philippine Commission, enacted August 26, 1903, provides as follows:

The cost of education and maintenance of said students in the United States, not exceeding the sum of five hundred dollars, in money of the United States, per student per annum, and the actual and necessary traveling expenses of said students to the educational institutions in the United States to which they have been assigned and their actual and necessary traveling expenses from such educational institutions to Manila, Philippine Islands, upon

the completion of their studies in conformity with this act and their agreement, shall be paid by the government of the Philippine Islands.

There is hereby appropriated, out of any funds in the insular treasury not otherwise appropriated, the sum of seventy-five thousand dollars, in money of the United States, or so much thereof as may be necessary to carry out the provisions of this act. Funds appropriated for the purpose of this act for expenditure in the United States shall be disbursed by the disbursing officer of insular funds, Bureau of Insular Affairs, War Department, Washington, District of Columbia, on vouchers properly signed and duly presented.

In accordance with the last section accounts have been opened with each of the 101 students, showing the amounts paid for room rent, board, clothing, laundry, tuition, books, school supplies, and incidental expenses.

Accounts for all these expenses until recently, when they were placed in educational institutions, were made by the agent in charge of the Filipino students in the United States, who is attached to this Bureau. Now, that they have been so placed, the balance of the funds in his possession were transferred to the disbursing agent of Philippine revenues for the payment of same.

INSPECTIONS.

Two inspections of the office of the disbursing agent have been made by officers detailed from the Inspector-General's Department, and everything found correct and the office commended. The following summary is a general statement of the balances, receipts, and disbursements for the year ended October 31, 1904:

General statement of balances, receipts, and disbursements for the year ended October 31, 1904.

Total.

2,267.48

1,873.75

16,000.00

30,000.00 6,240,000.00 6, 270,000.00 6,240,000.00
184,871.69 1,150,000.00 1,334,871.69 1,520,301.02

11,985.60

1

63,555.57

75,541, 17 33,892.67

48,031.10 210,000.00

48,031. 10 210,000.00

38, 174.60 139,330.00

$173, 278.20 $41,074. 15

877,946.05 26,202.39 389, 101. 75

2,267.48

16,584.72 1,289.03

6,240,000.00 30,000.00 1,320,301.02 14,570.67

33,892.67 41,648.50

38,174.60 9,856.50

139,330.00 70,670.00

415, 604. 62 9, 050, 583. 119, 466, 187.73 8,854,310. 74 376,565.759,230,876. 49 235, 311. 24

LIVE STOCK SELECTED IN THE UNITED STATES FOR THE PHILIPPINE

ISLANDS.

During the past year the following animals have been purchased and shipped or are on their way to the Philippines:

Horses-12 stallions and 95 mares, 30 geldings for the Manila fire department, and 28 "cow ponies" for the Philippine constabulary;

burros-17 males and 45 females; cattle-1 Holstein bull, 4 Holstein cows, 3 Jersey bulls, 65 Jersey cows, and 2 heifers; hogs-2 Chester white boars and 2 Berkshires.

During the past year the Philippine government has given active consideration to the introduction into the Philippines of domestic service animals from the United States. Several of these are for service pure and simple, and many strictly imported for breeding, and others still for the double purpose of service and breeding, as is indicated by the above list.

In the Philippine Islands there is a race of horses of wonderful endurance and serviceability, when their diminutive size is considered. These little horses will probably not average more than twelve to thirteen hands in height and the mares from eleven to twelve. Undoubtedly these animals, judging from the qualities they possess and from their appearance, have descended from Barb and Arab blood, and under a tropical climate and with the absolute neglect of the mares, which are seldom used except for breeding, the animals have deteriorated in size to their present stature; but for their inches are as good as any horses that exist. The race is probably an illustration of the law of the "survival of the fittest," uninfluenced by any care as to selection in breeding.

Horses are used only in harness and under saddle, and they are seldom gelded.

The purpose in sending the mares and stallions to the Philippines was to make an effort to grade up the Filipino ponies so as to make a general-utility horse capable of a wider range of work. In any attempt to grade up to a better size and greater carrying capacity the problem presented was to secure a definite type and not mongrels. It was therefore not deemed wise to send any stallions or brood mares out that did not belong to definitely reproducing types; otherwise the experiment was doomed to failure. In the selection of breeding stock four types only were considered to be such as would tend best to reproduce that type for the purpose in view. The types selected were Arabs, Morgans, Denmarks, and thoroughbreds.

Percheron, Clydesdale, and other draft breeds were considered unsuitable, by reason of blood and conformation. One of the first considerations in the selection of stallions was the size of their type, which, if too large, mated with native mares would (and it has been proved that it does) smother the foal and endanger the life of the mare in foaling. Again, it is admitted that great contrast in mating of types tends to produce monstrosities and abnormalities-in other words, that the size of the horse that is desired must be gradually gained through generations.

Carefully selected Arab stallions of greater size than the Filipino ponies manifestly fulfill the conditions in the Philippines.

The next type, Morgan, the horse of Vermont, also fulfills the requirements.

Next is the Denmark type of Kentucky, which in the Blue Grass region for sixty years has been bred and become a type for a family to which belong the majority of the prize winners in American horse shows to-day. Only two of these were selected-excellent specimens. They are too large for service to any but the especially large native mares, and they should be reserved for breeding to picked American mares to keep in the islands a new supply of this excellent blood.