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Luzon, the supervisor being relieved and the office at Solano, Nueva Viscaya, being closed by order of the department commander.

Owing to the conditions which existed in the Department of Southern Luzon it was impossible to complete an organization which could successfully carry on the collection of internal revenue throughout the department. Capt. A. L. Parmenter, Twenty-first United States Infantry, department supervisor, faithfully endeavored to perfect the organization, but, owing to his numerous duties, was not able to give his entire attention to the work. The unpacified condition of the inhabitants and the constant change of officers which was necessitated by the withdrawal of volunteer regiments, the changes of stations of other troops, and the lack of officers for detail for this work proved injurious to the organization.

The reports, which are incomplete, show the revenue collected in 135 towns throughout the department. Local and district commanders in this department interfered in several instances with the work of the officers endeavoring to collect revenue and at the same time perform other duties by increasing such other duties to such an extent that the officers were unable to attend to their revenue work, and thus the taxes were uncollected, reports were not submitted, and the officer himself was relieved or his station changed with practically nothing done. Many officers in being relieved carried away the entire records of their offices, including the orders and instructions relating to the work, and many considered their internal-revenue work as not of sufficient importance to call for exertion, and this in the face of the fact that in some instances within the limits of their collection districts insurgent revenue collectors were collecting revenue for the furtherance of the insurrection. At this date the supervisor of internal revenue for this department has been relieved from duty, and the only revenue office remaining is that of the district of Laguna, that being the only province having no provincial treasurer.

The internal-revenue work in the Department of the Visayas was retarded by the changes of supervisors during the year, officers being relieved as soon as they had sufficient experience to supervise the work. The organization in the island of Panay was good, and the collections there made show zeal on the part of the officers detailed. The island of Negros, having its own government under the provisions of General Orders, No. 30, M. G. O., July 22, 1899, was not called upon to furnish revenue for the General Government except from the issue of certificates of registration and the sale of internal-revenue stamps. Capt. F. C. Prescott, Forty-third Infantry, U. S. V., had about perfected the organization in the islands of Leyte and Cebu when these provinces passed under the provisions of the provincial code.

The supervisor of internal revenue for this department was relieved

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some months ago, and the only territory in which collectors of internal revenue still remain is the island of Samar, which has been in such a turbulent state that few collections could be made. These collectors are now acting under the direct supervision of the central office, and the country is in a very poor condition for any extensive work by these officers.

Eliminating the Sulu Archipelago, where no internal revenue has been collected except, from the sale of internal-revenue stamps, the Department of Mindanao and Jolo shows an unorganized, ineffective attempt to carry out the internal-revenue laws. This was caused, first, by the fact that the department commander believed that such taxes should not be levied under existing conditions and so ordered affairs that no extension of work could be made, and, second, from the lack of a supervisor interested in the work. In some towns in Mindanao collections were made; in others some industries were taxed and other industries were allowed to escape taxation. This resulted in unequal taxation, which ought to have been avoided. Either the taxes should have been collected according to the laws or they should have been entirely suspended pending a condition of affairs which would justify their collection. Many Chinese merchants in Mindanao are making large profits and pay no taxes whatever, while others, who have been in business for longer periods, are compelled to pay industrial taxes, such merchants doing business in the same town and under like. conditions.

Reports from subcollectors from this department show that under these conditions no satisfactory work could be done, but it is believed that with the organization of the province under the provincial code conditions will change and that taxation will be equal for all, and considerable revenue will be collected.

The collections in the city of Manila, by quarters up to the date of transfer to the municipal government on August 7, are shown in Appendix Z, under the various subheads which are hereinafter mentioned.

The collections were materially increased, both by the efforts of the assistant collector, Lieut. Ellis Cromwell, Thirty-ninth Infantry, U. S. V., and by the increase of business and value of property. Included in this statement, under "Industrial taxes," are the collections for the years 1899, 1900, and 1901 of the largest corporation in the Philippine Islands, the Compañia General de Tobacos de Filipias, of which specific mention will be hereinafter made.

The industrial taxes for the fiscal year 1901 show an aggregate of $292,806.32. This is an increase of 21 per cent over the industrial taxes for the entire fiscal year 1900, notwithstanding the abolition of all surtaxes under the provisions of General Orders, No. 53, M. G. O., April 17, 1900, thus showing that there would have been a real increase of about 45 per cent in the collections if the surtaxes had been continued.

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There were in force July 1, 1900, 9,071 industrial licenses. After that time and prior to June 30, 1901, there were issued 7,583 and canceled 5,330, leaving extant June 30, 1901, 11,324 industrial licenses. Following the custom of Spanish administration, insurance companies were permitted, in submitting their balance sheets, to carry forward the balance of their losses from one year to the next, until such losses were offset by profits. But as no written decision authorizing this method could be found, either in the office of the collector of internal revenue or in the bureau of archives, the matter was submitted to the military secretary and a decision rendered "that each year's profits must be taxed separately." This decision was held to cover all taxes after the advent of the Americans, and resettlements upon this basis were made with agents of all insurance companies doing business in the islands.

The taxes of the Compañia General de Tobacos de Filipinas, the largest corporation doing business in the Philippine Islands, were considered as being collected upon a wrong basis under the industrial tax regulations, and this company was advised in May, 1900, that it must pay its taxes on its dividends and not, as had been customary under the Spanish administration, as a private firm. The company replied, stating that it believed it to be unjust for them to pay on their entire dividends, as much of its capital was invested in Europe. This was found, however, to be untrue, and, on the representation to the military secretary of these facts, this company was called upon to pay as a corporation, but to be credited with all taxes paid as a private firm since the advent of the Americans. This settlement was not consummated until April, 1901, on account of the various records that had necessarily to be prepared. The company presented its statements, showing the total taxes to be paid to the Government on the dividends declared since August 13, 1898, to the amount of $46,991.10, from which there was deducted the taxes paid as a private firm in Manila, or $6,798.13, and settlement was made with the company accordingly, but it was authorized to present a claim for refund of all industrial taxes actually paid by it for the conduct of its business in the provinces. This was estimated by the company to be less than $2,500, but the claim therefor has not yet been presented. This settlement covers the dividends of the company for the years 1898, 1899, and 1900.

This year has been one of unusual industrial activity, large numbers of industries having been started, and large increases in the amounts of the income tax on salaries, etc., due to the increase in salaries and number of employees, are noted. The item of delinquent taxes has been practically eliminated during the year, and the only delinquents now are those taxpayers whom it has not been possible to find, in order properly to assess the taxes.

The urbana taxes for the twelve months ending June 30, 1901,

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amounted to $73,885.694, an increase of 18 per cent over the collections for the fiscal year 1900, notwithstanding the reduction caused by the abolition of the surtaxes, amounting to 13.3 per cent. This increase is caused by the rebuilding of the properties burned in 1898 and 1899, which have completed their year of exemption under the law, and are now paying taxes with increased rents throughout the city. In this department 400 fines, to the amount of $3,100.50, have been levied and collected under the law on account of false declarations, and in all cases have been paid without compulsion. At the turning over of the internal-revenue office to the city assessor and collector on August 7, all urbana taxes due since August 13, 1898, had been paid, and there are thus no delinquents.

The following is a brief statement of the stamp accounts of the internal-revenue office, in Mexican currency, for the year ending June 30, 1901:

By referring to Appendix Z it will be seen that the stamp sales in Manila show an increase of 43 per cent over the sales for the fiscal year 1900. Attempts have been made to extend the use of internalrevenue stamps as provided by law, and during the year 126 fines for the nonuse of stamps have been levied and collected, amounting to $2,804.50 in Mexican currency.

On an examination of the Banco Español-Filipino it was discovered that several new corporations, then recently organized, had omitted to place documentary stamps on their certificates of stock, as provided in the regulations, and had advanced such stock as collateral security to the bank for loans. As the absence of these stamps invalidated the stock the bank took immediate measures to protect itself, and each corporation was advised that unless immediate steps were taken to place the proper stamps on all their issues of stock the fine applicable in such cases would be levied. This resulted in the sale of upward of $6,000 worth of internal-revenue stamps, and since that time inspectors have failed to find any certificates not properly stamped.

The sale of certificates of registration during the past fiscal year was a continuation of the work begun in January, 1900, as no new certificates were authorized for the calendar year 1901, and under the provisions of General Orders, No. 2, M, G, Q., January 2, 1901, the PC 1901-PT 1-9

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certificates of this series held good until further legislation. This has proven very satisfactory, inasmuch as a new issue of certificates for the calendaryear 1901 has, by recent legislation of the commission, been authorized, and the revenue derived from the sale of these certificates will materially aid both municipal and provincial governments. The receipts from forestry products in Manila alone for the year ending June 30, 1901, were $54,170.63, but this amount includes a certain quantity of such products obtained from nearly all parts of the islands.

THE PUBLIC RECORDS.

By reference to the documents contained in the archives formerly belonging to the Spanish Government it has been possible to settle all questions and claims that have hitherto arisen bearing on the recognition of rights acquired under Spanish legislation. Aside from their importance in this respect, the documents referred to contain the history of somewhat more than two centuries of Spanish rule in these islands, and they are a source of information necessary in the formation and administration of laws relating to the Filipino people. In order to their better preservation and use, it was thought proper to bring together, within the limits of the intendencia building, all of the records and other papers formerly belonging to the several offices of the Spanish Government kept in many buildings throughout the city.

The destruction and loss of many records and documents, resulting in want of order in the arrangement and preservation of those remaining, were caused in part by the fact that the buildings where they were formerly kept were occupied, although for only a short time, by soldiers who, not knowing their value, used them for fuel in the preparation of their food or threw them into the streets. The arrangement and classification of the existing records and papers have required much painstaking and laborious effort on the part of the employees, who have been able to make progress in their task by reason of their familiarity with the organization of the different bureaus of the Spanish Government, acquired by many years in the Spanish service, and by their familiarity with the subjects treated in the records.

This great collection of records is made up of royal orders, emanating from the Madrid Government, covering a period of between two and three centuries.

It embraces papers referring to all subjects connected with the Spanish administration and all institutions affected by Spanish legislation. It embraces papers relating to the general administration of the archipelago, the municipalities, civil and religious corporations, colleges, hospitals, pious foundations, banks and mercantile corporations, consulates, printing offices, colonies, penal institutions, Chinese immigration, patents and trade-marks, personal records of officials,