EXHIBIT H. BUREAU OF POSTS. BUREAU OF POSTS, PHILIPPINE ISLANDS, OFFICE OF THE DIRECTOR, The honorable the GOVERNOR OF THE PHILIPPINE ARCHIPELAGO. SIR: I have the honor to submit the following report covering the operations of the bureau of posts for the fiscal year ending June 30, 1902. Herewith will be found tabulated statements covering the various branches of the postal service. The statements relative to finances are not given in as much detail as in the report for the preceding year. Such information, if desired, will be found in the reports of the auditor for the archipelago. PERSONNEL OF THE SERVICE. On July 1, 1901, the employees of this bureau numbered 130, of which 74 were Americans and 56 natives. During the year 135 Americans, 65 natives, and 1 Chinese interpreter, for the Manila post-office, were appointed. Forty-nine Americans and 13 natives were separated from the bureau by resignation, 12 Americans and 31 natives by removal, 4 Americans by transfer to other bureaus, and 3 Americans and 2 natives by death. On June 30, 1902, there were 217 persons employed in the bureau, of which 141 were Americans, 75 natives and 1 Chinaman. With the exception of the assistant director of posts, who was secured from the United States postal service, all of the appointments to the service made during the year were through the Philippine civil service, or under the provisions of sections 3 and 4, act 181, which authorizes the appointment of postmasters at the smaller offices without regard to the civil-service act. REVENUES AND EXPENDITURES. Table A shows an increase over the preceding fiscal year in the postal revenues of $14,979.36, or about 12 per cent. But of this amount $11,462.77 came from money-order fees. Therefore there was an increase of less than 3 per cent in the ordinary postal revenues. On the other hand, the expenditures of the service were slightly less than 16 per cent greater than for the preceding year. This discrepancy between the increase of expenditures and revenues is explained by the fact that during the year the amount of official mail handled has been more than doubled. Act 179 authorizes the use of the official envelope by all provincial as well as insular officials of the government. The many extensions of the civil government during the year have caused so great an increase in its official business that more than one-half of the mail we now handle, with reference to weight, is official business, and consequently carried free of postage. All of our reports relative to interisland business show an increase of more than 20 per cent in the bulk of the mail. In short, as a whole, our records show a greater percentage of increase in the amount of mail handled than in the increase in expenditures over the preceding year. To properly handle the increased mails it was necessary during the year to increase the clerical force in the Manila post-office at an expense of more than $14,600 over the preceding year. It was also necessary to make some additions to the clerical force in other offices. The balance of the increase in salaries and wages is covered by the compensation allowed postmasters at new offices established. Table A shows an apparent decrease in the payments for mail transportation. This is misleading, as the item for the fiscal year ending June 30, 1901, includes WAR 1902-VOL 10-——15 225 payments amounting to $9,833.44 properly chargeable to the fiscal year ending June 30, 1900. The increase of over $12.500 in contingent expenses is chargeable almost entirely to new mail equipment, such as pouches, bags, street letter and package boxes, furniture, and other articks required for the proper handling of the mail. In previous years the Manila post-office has been more than self-sustaining, but such is no longer the case. This change is due to the establishment of new postoffices throughout the islands which draw from the revenue of the Manila office, and also to the fact, as before stated, that a material increase in the clerical force was necessary to properly care for the official mail, from which no revenue is derived. The great reduction of the military forces in the islands, which took place during this year and the latter part of the preceding fiscal year, had a material effect on the revenues and business of this service. It is a well-known fact that one company of American soldiers furnishes more postal business than is derived from 10,000 of the average native inhabitants. The business furnished by the large number of American civilians now in the islands has no more than equaled the loss sustained through removal of the soldiers. While it is also true that the native population is gradually increasing its patronage of the mails, it is nevertheless a fact that we will not derive much revenue from this source for a considerable time to come. In the meantime by far the greater part of the postal business will be with the American and European population. MONEY-ORDER BUSINESS. As stated in my last annual report, our money-order business was, by virtue of act 90. segregated from the money-order business of the United States and placed on an independent basis July 1, 1901. Before this change became effective arrangements were completed whereby we might continue issuing orders payable in the United States (including Hawaii and Porto Rico), Canada, and Cuba, and also to pay orders issued in those countries the same as in the past. We were, however, owing to certain technicalities, obliged to discontinue issuing money orders direct on foreign countries. The public suffered no great inconvenience thereby, as the amount of our business with European countries is very small, and arrangements were made for the transaction of this business through an exchange office of the United States. Negotiations are now under way looking to the reestablishment of direct money-order exchanges, not only with European countries, but with Japan and other eastern administrations. There is considerable demand for a money-order business between the Philippines and Japan, as well as with Hongkong, Singapore, and other points in the extreme east. It is believed that these extensions of the service will be greatly appreciated by the public. The chief benefit derived from the change in the service caused by act 90 is that our money-order accounts are now audited in Manila by the auditor for the Philippine Archipelago. At the same time, the fees collected on money orders issued are now transferred to the postal revenues of the islands. The amount of these fees for the last fiscal year was $12,587.90. The first and only loss in the moneyorder business sustained by the Government since American occupation of the islands was in the robbery of the Jolo post-office, February 15, 1902, when moneyorder funds to the amount of $443.73 were stolen. The regulations provide for the payment of such losses out of fees collected, leaving the net revenue derived from the money-order business amounting to $12,144.17. Of this amount, $11,462.77 was transferred to the postal funds during the year. The exact total amount of fees collected during the year could not be determined in time to make a transfer of the balance before the close of business June 30. At the beginning of the fiscal year 24 post-offices were authorized to transact the money-order business. During the year this service was extended to 9 new offices, and discontinued at 2 offices. It has been my policy to extend the moneyorder service to new offices, wherever there was a demand for it, as soon as the conditions would permit. Table I gives a brief summary of our money-order business during the fiscal year. This statement shows an increase of over 39 per cent in the number of orders issued, as compared with the previous year, and an increase of 57 per cent in the number of orders paid. In the United States the money-order business is used chiefly for the remittance of small amounts. This is shown by the fact that the average amount of each order issued there is less than $8. In the Philippines money orders are made use of for large transactions. The average amount of each order issued in the islands during the last fiscal year was $49.37, and the average amount of each order paid was $51.84. In previous years the money-order service was made use of chiefly by Americans, who understood its value. Through persistent efforts we are gradually convincing the native and Chinese population of the benefits of this branch of the postal service, and they are now making use of it to a great extent for the remittance of funds throughout the islands. The Chinese merchants are more susceptible to our arguments than the natives, and they are now our best and largest customers. It is believed that the present fiscal year will produce a much greater increase over last year in the money-order business than is shown by this report over the preceding year. During the fiscal year postmasters at money-order offices throughout the islands made remittances to Manila amounting to $1,070,937.97. Remittances were made to the United States in the amount of $648,125.05. This sum represents the difference between the amount of orders issued in the United States and paid in the Philippines and the total amount of orders issued in the Philippines and paid in the United States. This is an indication of the extent to which the money-order business is used by Americans in sending money home. Our money-order service is also made use of to a great extent by Americans as a means of depositing their surplus funds for safe-keeping. A careful investigation of this point shows the amount so deposited at this time to be between $500,000 and $600,000. This amount is constantly increasing. The handling of Mexican or insular currency in the money-order business has caused not only a great amount of extra work and inconvenience, but at times much complaint on the part of the public. During the first four months of the fiscal year, when insular currency passed freely at the ratio of 2 for 1, this money was handled without difficulty. When the commercial value of insular currency started to go down during the latter part of November, 1901, we began to experience difficulty in paying out this money at the Government ratio of 2 for 1 in the payment of money orders issued in the United States and presented for payment here. At the same time the efforts were made to purchase money orders with insular currency, in large amounts, payable in the States. After a conference with the acting civil governor and the secretary of finance and justice, an order was issued directing postmasters to discontinue accepting insular currency for money orders payable outside of the Philippines. The establishment of the new ratio of 2.10 for 1, January 1, 1902, made it possible to again take a limited amount of insular currency in the money-order business. Postmasters were therefore authorized to accept small amounts from employees of the insular government, who were receiving their salaries in insular currency. This was continued until the latter part of March, 1902, when a still further drop in the commercial value of insular currency made it again impossible to dispose of such money accepted at the government rate of exchange. Therefore, another order was issued limiting the acceptance of insular currency to the purchase of money orders payable in the Philippines. When the ratio of 2.35 for 1 was established, July 7, 1902, postmasters were again authorized to take this money in payment for money orders payable outside of the Philippines. So long as the government ratio is kept below or equal to the commercial rate of exchange, insular currency can be handled in the money-order business without serious difficulty, as it is in great demand for general use, and no one objects to receiving it in payment of an order which was purchased with United States currency. It was only during the periods when the commercial value of this money was less than the value placed upon it by the government that objections were made by the public to receiving it in payment for money orders which should have been paid in United States currency. It is understood, of course, that all of the insular currency accepted in the money-order business for orders payable outside of the Philippines had to be used in the payment of orders issued in other countries, and to avoid loss to the service it had to be paid out at the same ratio at which received. REGISTRY BUSINESS. The total number of articles registered during the year, when compared with similar report for the preceding year, shows an increase of 12 per cent. The records of the Manila post-office show an increase of 13 per cent over the previous year in the total number of pieces of registered mail handled. There was an increase of 20 per cent in the total amount of registered mail received from the United States, and of 13 per cent in the amount received from foreign countries. The total amount of registered mail sent to the United States shows a decrease of 4 per cent over the preceding year, while there was an increase of 18 per cent in the amount sent to foreign countries. The reports further show an increase of 95 per cent in the number of pieces of official mail registered free. This large increase is due almost entirely to the provisions of act 179, which requires the free registration of all official mail of insular and provincial officials, when the sending official so requests. DEAD-LETTER OFFICE. Tables F, G, and H show in detail the transactions of the dead-letter office of this bureau. Comparison of these statements with last year's report shows an increase of 18,037 in the total number of pieces of mail matter handled in this office. During the year, 10,277 more pieces were returned to the United States than during the previous year, and 2,563 more pieces were received from the United States. The number of pieces returned to foreign countries during the year was 2,268 greater than during the preceding year, while the number of pieces received back from foreign countries was 100 less. The large increase over the previous fiscal year in the number of pieces of mail returned to the United States must not be taken as an indication of any relaxation of our efforts to make delivery to the addressees. The greater part of the mail returned to the United States is for persons who return home before their mail reaches them. Furthermore, all undeliverable mail originating in the United States, as well as in foreign countries, is returned to the senders through the deadletter offices of the postal administrations concerned. This is the case even though the returned matter bears the name and address of the sender. By means of the directory mentioned elsewhere, we succeed in delivering a large amount of mail that would otherwise be returned to the country of origin. INTERISLAND TRANSPORTATION. During the year there has been a material increase in interisland communication, as will be seen by reference to Table M, which shows the number of mails received and dispatched to the provinces by the Manila post-office, and to Table K, which gives the number of mails received at and dispatched from each office. The present service is. however, still far from satisfactory, although the best possible use has been made of all water transportation. In addition to transports and other Government boats carrying the mails, all commercial steamers have, as heretofore, been required to carry the mails. On the whole, each important office has had a fairly frequent service, as will be seen by reference to Table K. It is the irregularity of the service and the inability of the people to know in advance when mails will be dispatched to or received from a certain place that causes the complaint. The prevalence of cholera during the past seven months caused a material reduction in the available steamship transportation, thus seriously affecting the postal service. The inauguration within the next few months of a regular steamboat service throughout the islands, under the supervision of the chief of the bureau of coast guard and transportation, by means of the steamers now in course of construction by the government, will make a very material improvement in the means of interisland communication, and will doubtless remove practically all of the complaint now lodged against this branch of the Philippine postal service. No permanent system of land transportation has as yet been adopted. This question was discussed at a meeting of the Commission last June. At that time the chief of the Philippines constabulary stated that he would be able to furnish all of the land transportation for mails which would be required by this bureau. However, but little has been accomplished in this direction, owing to the loss of a great many of the horses owned by the constabulary and the inability of the chief of that bureau to obtain other necessary transportation. Mails between the smaller offices are generally carried by the municipal authorities, under the requirements of paragraph (gg), section 39 of the municipal code. But wherever a satisfactory service can not be obtained by this means, temporary contracts have been made for regular transportation, if the constabulary could not furnish it. The courier system of mail carriers established for inland towns has proven unsatisfactory when put in operation to and from places where a number of Americans are located. This is caused by the fact that the bulk of the mail varies greatly, and is frequently heavier than the regular courier can carry. But as soon as this condition arises additional allowances are made for the use of horses. Furthermore, the courier service furnished by municipal authorities has proven unsatisfactory in some cases on account of frequent irregularities and delays. In such cases, if the faults could not be regulated, the municipal carriers have been dispensed with, and if the constabulary was unable to furnish the necessary transportation, other carriers were employed. In this connection it is proper to state that the hearty cooperation by officials of the army, as well as by other departments of the insular government, has been of material assistance in transporting the mails. This is especially true of the quartermaster's department, which in many cases has come to our relief and furnished transportation that could not otherwise have been secured. MAIL COMMUNICATION WITH THE UNITED STATES AND FOREIGN COUNTRIES. The total amount of mail received from and dispatched to the United States during the year, as shown in Table N, when compared with the reports of the preceding year, shows a decrease of 10 per cent in the amount received and a decrease of 3 per cent in the amount dispatched. The somewhat irregular mail service between the United States and the Philippines has been the cause of some criticism; yet a reference to Table N of this report will show an average of more than 7 mails per month received from and of more than 5 mails per month dispatched to the United States during the last year. The irregularities complained of refer more to uncertainty as to dates of arrival and departure than to infrequency of service. It is needless to say that not only this bureau, but the postal officials of the home government, have made the best possible use of every opportunity to dispatch mails to the United States and to the Philippines. In addition to the transport service, the China liners and the Canadian Pacific Steamship Line to Vancouver, B. C., are made use of whenever mails can be advanced by so doing. Of the 89 mails received from the United States, 59 were by liner. While it is true that many of the mails coming on liners consisted of no more than one or two bags, the figures are given to show the policy pursued. Of the 64 mails sent to the States, 29 were dispatched on liners. The necessity for a regular steamship service, with schedule dates of arrivals and departures which can be relied upon, is very apparent, not only to the government, but to all business concerns. To improve the present service, either large subsidies will have to be paid or sufficient commercial business developed to justify steamship companies in operating steamers between the United States and the Philippines direct and on a fixed schedule. The service to and from foreign countries is gradually increasing and becoming better. There was an increase of 10 per cent over the preceding year in the number of mails sent to foreign ports, and of 11 per cent in the amount of such mails. The service to Japanese ports is good, but there is often much delay to mails coming from Japan. This is due to the fact that but a few steamers come direct to Manila. Mails from Japan are of necessity generally sent via Hongkong, where frequent delays occur owing to lack of close communication with Manila. EXTENSIONS AND IMPROVEMENTS. On July 1, 1901, there were 24 post-offices in operation throughout the islands. These offices were located principally at the larger military posts. On July 31, 1901, the post-office at the First Reserve Hospital, located within the city limits of Manila, was discontinued, it being no longer necessary. After the passage of act 181, authorizing the establishment of new post-offices and fixing the compensation of the postmasters, 66 new offices were established. Since the close of the fiscal year 70 additional offices have been opened, and other new ones are being established as fast as the preliminary arrangements can be completed. As a rule, the persons appointed as postmasters at the smaller offices are already in the employ of the government. These appointments are made under the special provisions of section 4, act 181. With very few exceptions it has been found impossible to secure suitable persons not otherwise employed by the government who would accept appointments as postmasters at the small compensation authorized. The American school-teachers stationed throughout the islands have taken much interest in the establishment of post-offices at their respective stations, and with very few exceptions have accepted appointments as postmasters when asked to do so. In a few instances provincial treasurers and constabulary supply officers have been given these appointments. With a few exceptions, natives of the islands have not been given first appointments as postmasters. Americans have been given preference in appointment, believing that by so doing our American postal system can be more |