in carrying the mails ler such regulations and effective, and to see that ommodations on vessels, The chief of bureau is onstabulary in the transabulary and of quarterervice, in the opinion of

as thus consolidated into and light-house service. ship between these sevgrouped in the United ely the system as adopted giving the matter careful uld be reached at a much

- from the admiral comhese waters the detail of reau, and also to request zers as heads of the divilight-house service and. he Philippines a compeepartment of light-house

The introduction of a cheap and regular n lines, will undoubtedly prove to be here, as of immense benefit to the people, and wil supporting.

The department, with the concentration of sons, will no longer be able to utilize the Qu of the Army to carry its mails nor army office ters, but will be compelled to establish ro masters of its own. The lack of good road ities will no doubt prove in the future, as serious drawback to anything like a really u not only true as to interior points, but applic towns upon the coast, owing to the irregulari It is believed, however, that with the esta mental transportation system hereinbefore tion, to a considerable extent, of the service of constabulary, school-teachers and other masters a fairly efficient service can be prov built and highways improved, it is of course ideal service.

For the past fiscal year, the expenditures e sum of $36,470.06. It was inevitable that deficit, but, all things considered, it is remarl it will be necessary for several years to co priation for this department to meet its

certain that the yearly deficits for a considerable period in the future will steadily increase in proportion as the system is extended and perfected. As the masses of the people become better educated, however, and with the general growth and development of all forms of social, industrial, and commercial activities, which must come with the establishment of American methods in government and business, the service will be more extensively patronized, and the department ought to become gradually self-sustaining.

The report of the director-general of posts for the past year is herewith filed, marked "Appendix O."

HARBOR IMPROVEMENT.

The last report of the commission set forth the importance of improving the harbor of Manila. It further mentioned the fact that the Spanish Government had prepared elaborate plans and specifications for this work and had partially carried them into execution. It was further stated that the chief engineer, division of the Philippines, had these plans in his possession and had carefully examined them and pronounced them to be well adapted, with some minor modifications, to the end in view, and that, in his judgment, it would cost about $2,500,000, gold, to carry out the project in its entirety. It was further stated that the commission had enacted a law appropriating $1,000,000, gold, for the purpose and that the work would be let, after advertisement both here and in the United States, to the lowest responsible bidder.

The chief of engineers, after consultation with other experts, has made considerable modification of the original Spanish plans, retaining, however, their most salient features. The commission has further legislated so as to, in effect, pledge that appropriations would be made to an amount not exceeding $2,000,000 additional whenever the same should be necessary, and has authorized the chief of engineers to make contracts, within that limit, for the entire work. In pursuance of this act he has gone forward and after duly advertising, both here and in the United States, as he was required to do by the terms of the act, he has let the main work to the Atlantic, Gulf and Pacific Company of New York for about $2,150,000. The contractor is now engaged in collecting here the necessary outfit for the vigorous prosecution of the work and will begin active operations within the next thirty days.

It is estimated that it will require about two years to complete the contract. When completed Manila will have a commodious and thoroughly protected harbor, with a depth of 30 feet. This will enable vessels of the largest size to anchor within the harbor and at all times to safely and rapidly discharge and take on cargo. The value of this improvement to the commerce of the islands can hardly be overestimated.