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for the first quarter of the fiscal year of 1902, from June 30 to September 30, 1901. The receipts are as follows for the three months:

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The withdrawals of revenue from the Treasury for disbursements for the same period were as follows:

For customs service

For internal revenue (the internal revenue having been largely withdrawn from the Treasury and disbursed to provinces appearing under

this head as a disbursement).

For post-office...

For miscellaneous purposes

For the city of Manila.

Total.

$103, 826.68

164, 650. 88 39, 011. 88 2, 426, 154. 89

320, 427.63

3,054, 071.96

On the 30th day of September the balance in the treasury, including Spanish seized funds, amounted to $7,460,175.70, United States money, of which the balance available for appropriation has been elsewhere stated. In view of the foregoing fact, the statement of the budget for the ensuing year must necessarily contain large elements of uncertainty; but making the best use practicable of the materials at hand the following is submitted as an approximate statement for the ensuing quarter:

Receipts from customs.

Internal revenue..

Post-office.

Miscellaneous..

Municipality of Manila

Insular ice plant

Total estimated income...

$2,000,000.00 17,500.00 30,000.00 150,000.00

300, 000. 00

60,000.00

2,557,500.00

The estimated disbursements for the ensuing quarter are based upon the official estimates, submitted to the commission by all the departments, for appropriations, and are as follows:

United States Philippine Commission, executive bureau, Philippine

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Included in these disbursements are $441,115.16 for the insular purchasing agent; for native scouts, approximately $250,000, and for extraordinary supplies and the purchase of launches, $18,000. The disbursements to the insular purchasing agent will all be reimbursed, and the sum included for native scouts will only in small part be needed, in view of the pending enlistment of these scouts into the United States service. These items aggregate $709,115.16, which are not properly disbursements for current expenses. Deducting this aggregate, $709,115.16, from the aggregate estimate of expenditures for the quarter, we have a net estimate of expenses for the quarter of $1,788,802.82. The total estimated income for the quarter being $2,557,500 and the total estimated disbursements being $1,788,802.82, the apparent surplus for the quarter is $768,697.18.

It is hoped that the remaining quarters of the fiscal year will show as favorable a balance in favor of receipts, leaving a substantial sum, aside from the present available surplus, for permanent improvements. We inclose copy of the report of the insular treasurer for the fiscal year ending June 30, 1901, together with the exhibits thereto annexed, which is marked Appendix X, and the report of the collector of customs of the islands and of the chief port for the same period, which is marked Appendix Y.

BUDGET FOR THE CITY OF MANILA.

The budget for the city of Manila is exceedingly difficult to state. The city has been under the operation of its charter for less than two months. Its land values for the purposes of taxation have not yet been ascertained, nor are its other sources of income yet known with certainty. The expenses of the city under the administration of the provost-marshal-general were very large, and the accounts were kept in such manner that it was impracticable to distinguish with clearness the expenditures that were purely for the benefit of the city and those that were for the benefit of the military government at large. It appears from the report of F. G. Downey, major and paymaster, U. S. A., chief of the department of receipts and disbursements in the provost-marshal's office, copy of which is hereto annexed and marked Appendix GG, that the total expenditures in his department for the last fiscal year were $1,626,107.81, of which $288,423.11 was for special improvements, $164,964.52 for insular purposes, $33,823.13 for military purposes, and $1,139,092.05 for current city expenditures, while the total income of the city was $434,880.38, all in money of the United States; but during that period large sums collected in the city as internal revenue were treated as insular receipts and not as city income. Thereafter such receipts inure to the city treasury. The income and expenditures under the Spanish régime were very much less than under the American, but under the latter the streets have

been cleaned and macadamized, great sums have been expended in the health department in improving the sanitary condition of the city, large salaries have been paid, and in every respect far more efficient service has been rendered. The following budget, showing the estimated receipts and disbursements for the fiscal year ending June 30, 1902, has been prepared by the municipal board of the city and undoubtedly furnishes the most satisfactory data available:

Estimate of receipts and expenditures of the city of Manila from August 7, 1901, to June 30, 1902.

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Estimate of receipts and expenditures of the city of Manila, etc.—Continued.

ESTIMATE OF EXPENDITURES-Continued.

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Estimate of receipts and expenditures of the city of Manila, etc.-Continued.

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All the revenues that have accrued to the insular treasury from the collection of customs duties since the American occupation have been based upon the tariff laws which were in force under the Spanish régime, and revised, with minor modifications, by order of MajorGeneral Otis. The duties thus imposed have been, in some respects, burdensome, and, while producing a large revenue, have yet been unjust in their operation upon many classes in the community. The duties upon necessaries of life were generally high, while those upon luxuries were usually low. The tariff in its practical operation was not adapted to encourage the importation of goods produced or manufactured in the United States. The commission entered upon the work of its revision in the fall of the year 1900, intrusting the preparation of the first draft to George W. Lyon, who had had large experience as surveyor of the port of New York. After Mr. Lyon had completed his draft it was revised by the commission, with his aid, and then printed and widely distributed in the islands. Public sessions of the commission were held for discussion of the various schedules, and the views of all local importers and consumers who wished to be heard were received and considered. As a consequence of these public sessions modifications were made in the bill as first drawn, and after its completion it was forwarded to Washington for your correction, modification, and approval.

The theory of the tariff as constructed by the commission was to give reasonable encouragement to the productions and manufactures of the Philippine Islands, greatly to reduce the cost of importing the necessaries of life, particularly those produced or manufactured in the United States, to increase the duties upon luxuries, to give substantial or entire freedom from the imposition of all duties upon certain articles imperatively needed in the islands, and to make the duties specific instead of ad valorem to the fullest extent that was practicable. In Washington, as we understand, measures were taken to secure suggestions from all citizens of the United States interested in trade with the Philippines, and modifications were made in the schedules as submitted by the commission, the most important being the introduction of a minimum ad valorem duty in many of the schedules where it seemed that a strictly specific duty would prevent discrimination in the assessment of duties between articles of high cost and great perfection of workmanship and those of the same class which were far inferior in quality, workmanship, and value.

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