We have made an advance to each province of $2,500 gold, to be repaid January 1, 1903. As the governments all began without any money whatever, this seemed necessary to give them a start, though several provinces have declined the loan. No complaint has been made to the commission from any province that it is running behind. In Ambos Camarines, Capiz, and Iloilo danger of suffering from starvation was reported to be imminent because of the death of the carabaos. Accordingly, we have authorized each of those provinces to borrow from the insular treasury $25,000 gold to build needed roads in the vicinity of towns where suffering was greatest, so as to furnish money to the people, the money to be paid back in five annual installments, beginning in two years.

The provincial board of Iloilo has since advised the commission that it will not borrow the money, for the reason that its revenues are large enough to do the work without it. The other two provinces have drawn the money.

THE LABOR PROBLEM.

The commission is not prepared to make recommendations in regard to the admission of Chinese as laborers. It is very difficult to secure good labor in the islands, especially skilled labor. Labor such as is secured is irregular, poor, and much more expensive for work done than in the United States. There is not the slightest danger of pauper competition in these islands with the laborers of the United States. How much of the difficulty is due to unsettled conditions and how much is inherent in the race we can not say; but we think the tranquilizing of the provinces will certainly make labor better and easier to get, though it will long be unsatisfactory when measured by American standards. Throughout the archipelago wages have doubled and in many cases trebled since 1898. In too many instances the immediate result of doubling the wage is to induce the laborer to work just half as many days.

THE COMMISSARY.

Upon September 1, 1901, the privilege of buying supplies from the army commissary was withdrawn from civilians. While this greatly increased the cost of living of American civilians in Manila, it was a wise step, for civilian use of the commissary had interfered with legitimate trade and delayed the opening of grocery, meat, and other supply shops. In the country, however, the case is different for American employees of the civil government. There necessary supplies for the living of an American can not be obtained at all, and we could not hope to keep American provincial officers, school teachers, post-office employees, customs men, constabulary inspectors, and others in the provinces, many with their families, unless they could

obtain the necessaries of life. We have therefore established, through the Philippine constabulary, a civil commissary for the provinces, through which we expect to furnish certain staple supplies which will enable our employees in the provinces to eat American food, supplemented by the fruit and fish of the country.

TARIFF RELATIONS WITH THE UNITED STATES.

The new tariff, to which more detailed reference will be made hereafter, will go into effect on the 15th of November, and it is hoped that it will cause a great reduction in the cost of living in the islands. The tax on necessities for living and for improving and developing the resources of the islands has been reduced below 25 per centum ad valorem. Many American products heretofore excluded by a prohibitory tariff will now come in, and the food of the people will be reduced in cost and gradually increased in variety. If Congress will reduce by 50 per cent the United States duty on tobacco, hemp, and sugar and other merchandise coming from these islands, it is certain that the trade between them and the United States under the new tariff will increase by leaps and bounds. Such generosity would much strengthen the bonds between the Filipino and American people, and it is earnestly recommended.

THE CITY OF MANILA.

On the 7th of August the charter of Manila went into effect and the provost-marshal-general turned over the city government to the municipal board of three members appointed under the charter by the civil governor with the consent of the commission. The charter follows closely in its general lines the plan of the legislation by which the city of Washington is governed. In its preparation we were greatly assisted by a draft of a charter made by Brig. Gen. George W. Davis, the last provost-marshal-general of Manila. The new charter was adopted only after a full public discussion. Instead of requiring the insular government to pay one-half of the expenses of the city-the proportion paid for Washington by the Federal Government-the proportion is reduced to three-tenths.

It was not thought wise to leave the control of the city government to popular selection. The population of Manila is of a most miscellaneous character. There are 60,000 Chinese, perhaps 7,500 Americans, as many more Spaniards and other Europeans, and of Filipinos. of all tribes and languages 175,000. The criminal and turbulent classes are well represented in Manila. The municipal problems presented in the necessity for doubling the water supply, for constructing a sewerage system, for dealing with the noisome moat surrounding the walled city, for filling up part of the small creeks or esteros that now intersect the city and are but open sewers, and for dredging out

and walling the banks of others useful for navigation are so full of difficulty that they need the best men that can be found to solve them, and popular election would not have resulted in furnishing good material. The charter has not been long enough in operation to justify an opinion as to its sufficiency. The city of Manila has no debt, but it has many expensive requirements, and until a debt is created these requirements can not be met. We think that it may be necessary to issue bonds to an amount not exceeding $4,000,000 with which to double the water supply and to institute a sewer system. General Davis, the able provost-marshal-general, made so complete and elaborate a report on the city of Manila, which is included in General MacArthur's report, that it is unnecessary for us to attempt an addition to it after only two months' experience in civil government of the city. A reference to the income and expenditures of the city will hereafter be made.

There is no city in the world which is so much in need of electric railways as the city of Manila. The cab system is most defective, and it is necessary for the government to maintain a large number of government cabs for the use of the public offices during business hours. A stringent law has been passed forbidding the use of such conveyances after hours or for the purpose of conveying employees from their homes to their offices. If we had an adequate system of street railways there would be no need of maintaining such an establishment as the government must now maintain. Of far greater importance, however, is the inconvenience to the public arising from a lack of proper street transportation. There is one street railway company, whose right to use electricity or anything but horsepower is in doubt, and whose line is divided into seven different divisions, over each of which it is permitted to charge a regular fare. The line is very poorly conducted and affords little if any accommodation. The reasons for conferring upon some authority the power to grant franchises in this country are manifold, but there is no better illustration of the overwhelming necessity for such a power than is shown in the case of streetrailway facilities in Manila.

It is earnestly recommended that Congress confer upon the commission, with such restrictions as may seem wise, including the necessity for confirmation by the Secretary of War or the President, the right to grant franchises of this kind in the towns and cities of the archipelago.

PUBLIC LANDS.

In the development of these islands it is essential that opportunity shall be afforded for the sale and settlement of the enormous tracts of public lands. The system of public-land surveys provided by the statutes of the United States might well be carried out here, though,

of course, it would be years before they could be completed. Meantime, provision should be made for homestead disposition and public auction sale of the lands, with a provision for a preliminary survey at the expense of the applicant, the land obtained to be held subject to a reconformation on the completion of the official survey. Homestead entries, of course, should be for limited amounts; but in order to encourage investments of capital and the introduction of modern methods of agriculture, we think public auction sales of comparatively large tracts should be authorized upon proper conditions and at not less than fixed minimum prices. The islands of Mindanao, Paragua, and Mindoro are almost wholly undeveloped, and will remain so until capitalists are offered an inducement to go there and make large investments.

Persons in possession of land and actually cultivating the same for a number of years ought to be given an opportunity to perfect their titles. The difficulties likely to attend the disposition of the public domain in these islands are set forth in a paper prepared by our commissioner of public lands, Mr. William M. Tipton. He has been in the Philippines only about two months, but he has had eighteen years' experience in the office of the surveyor-general of public lands in New Mexico, and some eight or nine years' experience as an assistant in the office of the United States attorney in the Court of Private Land Claims. He shows clearly the necessity for the establishment of a court of private land claims here, for conditions are not very different from those obtaining in New Mexico. In another paper he states, in a summary way, the provisions by law for the alienation and acquisition of public lands under the Spanish dominion in the Philippines. The two papers are attached hereto as Appendices F and G.

We recommend that the commission be authorized to enact a publicland law, with such limitations as to quantities, prices, and conditions of purchase as to Congress may seem wise. In the last years of Spanish rule provision was made by law for turning over to each pueblo a common from the public lands. It is understood that no such commons have been surveyed or taken possession of; but at several places in our provincial journeys questions were asked as to whether the American Government intended to fulfill the Spanish promise in this regard. In any general authority conferred upon the commission in regard to disposition of public lands, it is suggested that power be given to grant commons to each town from the puplic domain.

MUNICIPAL GOVERNMENTS.

The municipal code was enacted on January 21, 1901. It had been the plan of the commission to organize the municipalities of the several provinces and then proceed in each case to the establishment of a provincial government; but conditions were improving so rapidly at