WASON DS | 685 _ A38 1908 ASIA WAR DEPARTMENT : : : OFFICE OF SECRETARY SPECIAL REPORT OF WM. H. TAFT Secretary of War TO THE PRESIDENT ON THE PHILIPPINES WASHINGTON GOVERNMENT PRINTING OFFICE 1908 ‘e SS “ with y 67S = *\ A 3 : ve at 4 / 408 si CORNELL UNIVERSITY LIBRARIES ITHACA, N. Y. 14853 “A John M. Echols Collection on Southeast Asia JOHN M. OLIN LIBRARY Letter of transmittal Sanitation CONTENTS. Condition as to law and order—Their restoration and permanent maintenance. Work of the United States Army.........02. 022.222 e cece cece cece ee eeee Promise of extension of self-government Organization of the Federal party Central, Government, .2g2 enka tena nse sol ode aeecc a sivedaak een Effect on permanent order of municipal and provincial governments and national assembly _._.....2....02220 0022 c eee eee eee eee cece cece cence Establishment of courts Philippine constabulary rams? JANOS). .i Syed teeta ac saen See mina cera ose ea aes a iin Present condition ....:- ereteinrorainlclch gehen se eaie tenae ee ene eeeeece stan Political capacity and intellectual development of the Filipinos under Spain and the steps taken by the Philippine government for their general and political education.........--. 220.2222 2 ee eee ee eee een ee Education inschools. cjg. acca cecaeewaceeocc cco yeaniee deekekacecndcnes Filipino cadets at West Point Practical political education.........--2...-------- 22 eee eee eee eee eee Municipalities and provinces Civil service ..-.....- Fo alae sla peel ap aaa re oe tear eevee Cia aig tS a: cto sete sible nto e bien eeien cetera tiie tineiatan om eA National assembly Benguet—A health resort._....-------2---- 2-2-2 eee eee eee eee eee Comparative mortality from January 1, 1901, to September 30, 1907..... Mortality compared with same period of previous years Material progress and business conditions ........-..--.---22--2------------ Value of Philippine exports, 1903-1907, of American occupation..-....-- Value of Philippine exports in Spanish times, calendar years 1885-1894. . Sugar and tobacco—Reduction of tariff -........------.---------------- HOCMOR ss cise e.s an sciatica cea space me emcee mmeaee Reeeeeaesmecseciaceeas NG We DIAN 8 santo nes cscec acpencenare Ge amie sawed adam ceenem at edoet maaan wants Financial condition of the government...-....--.-.---------2----------- Biriars? land siisw ge eeeesioescec teat ee delecee ease eemekemiocoimaatnese Final settlement in respect to charitable trusts and Spanish-Filipino Bank Railroads in the Philippines .....----------------------e-- eee eee eee eee , General business conditions. .-..-.---------------- eee eee ee eee eee eee Business future of Philippines.....-.-.---.+-....---. 2-22-2222 eee eee Gold=standandicurrencyacas2c45pet te ssitdasercceekeevene mein aoscwaseens Need of capital—Agricultural bank ..-.......-.-..0-----0---- eee eee eens Postal savingsbank. ste wa, ee ais ee eter em eeerele nero ce Post-office and telegraphs ......----.--- 20-2 eee eee ne eee ene eee Mines an Si .2...2.5 aqamaanececcemndatetebe seewessancsemscmueseees United States coastwise trading laws..-.....---.----------------4e+-e- City Of Manila:ccosseninesiinne des enaverdecved senitieebieodeasesaaokes 16 7 19 20 23 23 27 31 31 31 39 40 42 49 56 57 58 58 59 60 60 62 62 62 64 65 65 66 67 67 68 68 69 70 71 71 72 4 CONTENTS. Page. Political fature of the islands......---------2- 2-26 -es2ee nee e eee ee cee eee nee 73 Cost of the present government of the islands ...-..-.------------+---------- 77 Recommendations scccaccnacede occas ste seseogece Seeeee eEesesey soso ss 79 Address of Hon. William H. Taft at inauguration of Philippine Assembly. .-.- 83 Policy of the United States Government ..........-.----------++-+--+--> 83 Time necessary for political preparation.......----.---------------- 84 Criticisms of policy of United States .......-...-..----------+------ 85 What has been accomplished 02-cj.00se5 seees sess eeeciccaucaswe nt eon 85 Establishment of civil government.......--.--..------------------- 85 Result: of Opposition: .. .\. cc -sdeadieaweeecesd oeeaeerscessteeee 85 Tnipatience: for iurther [owen ....<...- 0% 22see seeeaereeeseeee == ++ 86 Obstacles that had to be overcome....-.-----------+-+++--+-+--+--- 86 ROMA cc ncn isceascamaenoseetwaeiebte ss cate eee ee eee s 86 INOWElEY OF TAS Eis ecsierenmnteneutineeacdietaeseatsaencab ease a 86 Reluctance of capitalists to invest money...,------------------- 86 Failure of Congress to open markets of United States.......----- 87 Diseases of cattle net cag ce cecciecae ec ocecictemcina se seeeesens eee 87 Cholera, plague, bubonic plague, and other diseases. ....-..----- 88 Da OROTISI ee oie tee erin deer ise bia cle gig elcid tomcat 88 How the difficulties have been met .....------.--------------4-+--- 88 Promises of Administration carried out..-..--.----.------+------ 88 Establishment of the Assembly. ccc oc. ess ssweccneccecccewssees 89 Suppression of insurrection ---......-- Jos ccleaner Sem meeeen 89 ; PrOgieGe MAU eG) cc, <. cheered ces weaned e Ver cinch en eeeneeeeexeres 89 Peace atid Ofdei can aca cteiees lasso sceedase ls eeseneyte 89 SF CCG OR sey 55a eye es tite a Ae eas Sree eee Soe 89 Freel th-atid San tatlOtiw ec cccmmaccncandantanuoiv)-wietedchese's 90 AUIS VStEM occ. cc ee eemeerenrmeam cemisiawinmerem emcee 91 Constabulary,aid réndéreéd. DY..n.0 sc cece eee eee eane 91 Justices ofthe Peace. ;. = ...eoewe de sasconsecmssee manne 92 Publi¢ improvements acaswnteiee gic: go oesctcleiiss ee eeeke eels ee 92 Harbors a smemsassuecincewa cone ee sieulvensins doce e cheeses S 92 Road buildine....s2cevcewserx ssee cosas wisccmesnsecee sews 92 Benguetiasa, health resort: . .< 2+ scmeuescesecccescee es Death rate computed on population of 219,941 (official census, 1903). ¢ Death rate computed on population of 223,542 (health census, 1907). 5d REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. Mortality compared with same period of previous years. | * First quarter. Second quarter. . Third quarter. | Fourth quarter. si | e J Number} Annual |Number| Annual | Number} Annual | Number| _Annua of | death rate of death rate of death rate of death cae deaths. | per 1,000. | deaths. | per 1,000. | deaths. | per 1,000. deaths. | per 1,000. 2,327 | 42,98 2,410 43,97 2,077 47.49 | 2,561 46, 22 2,936 | 41,25 4,483 S0. 89 5,067 91.46, 2,715 29.00 1, 652 30. 48 1,911 34.87 2.710 48.91} 3,085 oe = 2, 256 | 41.16 | 2,314 42.22 | 2,962 53.46, 2, 769 aoe 1, 856 | 34.24 1, 649 30.09} 2.601 46.94 2,635 - x 1, 932 35.64 | 1,848 33.72 | 3,468 62.59 | 1,984 34. 1,569 | 28.48) 1,280 22.98 | 1,936 BOR a wdarasets MATERIAL PROGRESS AND BUSINESS CONDITIONS. I come now to material conditions in the islands and the progress that has been made in respect to them. While there is reason to hope. . that the mining industry may be very much improved and developed, the future of the islands is almost wholly involved in the development of its agricultural resources, and the business of the islands must necessarily depend on the question of how much its inhabitants can get out of the ground. In bringing about the reforms and making the progress which I have been detailing, the government has had to meet disadvantageous conditions in respect to agriculture that can hardly be exaggerated. The chief products of the islands are abacé, or Manila hemp as it is generally called, the fiber of a fruitless variety of banana plant; cocoanuts, generally in the form of the dried cocoanut meat called “ copra;” sugar, exported in a form having the lowest degree of po- larization known in commerce, and tobacco exported in the leaf and also in cigars and cigarettes. There are other exports of course, but these form the bulk of the merchantable products of the islands. In addition to these, and in excess of most of them except hemp, is the production of rice which constitutes the staple food of the inhabit- ants. Some years before the Americans came to the islands the pro- duction of rice had diminished in extent because the hemp fiber grew so much in demand that it was found to be more profitable to raise hemp and buy the rice from abroad. In the first few years of the American occupation, however, during the insurrection and the contin- uance of the guerrilla warfare, and finally the prevalence of ladron- ism, many of the rice fields lay idle and the importation of rice reached the enormous figure of twelve millions of dollars gold, or about four-tenths of the total imports. With the restoration of better conditions, the production in rice has increased so that the amount of rice now imported is only about $3,500,000 in gold, and the differ- ence between the two importations doubtless measures the increased native production of the cereal. REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 59 During the six years of American occupancy under the civil gov- ernment agriculture has been subject to the violent destruc- tion which is more or less characteristic of all tropical countries. The typhoons have damaged the cocoanut trees, they have at times destroyed or very much affected the hemp production, and drought has injured the rice as well as the cocoanuts. The character of the tobacco leaf has deteriorated much because of a lack of care in its cultivation due to the loose and careless habits of agriculture caused by war and ladronism, and locusts have at times cleared the fields of other crops without leaving anything for the food of the cultivators. The great disaster to the islands, however, has been the rinderpest, which carried away in two or three years 75 or 80 per cent of all draft cattle in the islands. This was a blow under which the agricul- ture of the islands has been struggling for now four or five years. At- tempts were made, under the generous legislation of Congress ap- propriating three millions of dollars to remedy the loss if possible, to bring in cattle from other countries, but it was found that the cattle brought in not being acclimated died, most of them before they could be transferred to the farm, and then too they only added to the diffi- culty of the situation by bringing new diseases into the Philippines. It has been found that nothing can restore former conditions except the natural breeding of the survivors, and in this way it will certainly take five or six years more to restore matters to their normal condi- tion. Meantime, of course, other means are sought and encouraged ~ for transportation and for plowing. The difficulty in the use of horses is that an Indian disease called the “ surra,” which it has been impossible to cure, has carried off 50 per cent of the horses of the islands. Considering these difficulties, it seems to me wonderful that the exports from the islands have so far exceeded the exports in Spanish times and have been so well maintained that last year there was more exported from the islands than ever before in the history of the Philippines, as will be seen from the following table: Value of Philippine exports, 1903-1907 of American occupation. | Tobacco Fiscal year. Hemp. Sugar. |andmanu-| Copra. All other, Total. factures. Dollars. Dollars. Dollars. Dollars. Dollars. Dollars. -| 21,701,575 | 3,955,568 | 1,882,018 | 4,473,029 | 1,107,709 | 33,119,899 ..-| 21,794,960 | 2,668,507 | 2,013,287 | 2,527,019 | 1,246,854 | 30,250, 627 | 22,146,241 | 4,977,026 | 1,999,193 | 2,095,355 ; 1,134,800 | 32,352,615 19, 446, 769 | 4,868,865 | 2,389,890 | 4,043,115 | 1,173,495 | 31, 917,184 21, 085,081 | 3,934,460 | 3,129,194] 4,053,193 | 1,611,429) 83,718,357 21, 234,925 | 4,079,885 | 2,282,716 | 3,438,342 | 1,234,857 | 32,270,726 Notse.—Tota] exports do not include gold and silye coin. 60 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. The largest export showing in Spanish times, during years for which there are official statistics, was as follows: Value of Philippine exports in Spanish times, calendar years 1885-1894. Se a sages an Tobacco tectntt aat Calendar year. Hemp. Sugar. jand manu-| Copra.” | other arti- factures. cles. Dollars. Dollars. Dollars. Dollars. Dollars. 5, 509, 767 | 8,669,522 | 2,297,358 |-..-------.- 20, 551, 434 4 340,058 | 7,019,978 | 2,010,093 5,781 | 20,113, 847 8,161,550 | 6,156,709 | 1,559, 070 36,809 | 19,447,997 099, 6,271,030 | 2,449,181 | 131,847 | 19,404, 434 10,402,614 | 97101'024 | 2,255,494 | 209,820) 25, 671, 822 Average AMMA: «.eisisieishciaceiaieis caine ate 7,302,680 | 7,443,653 | 2, 114, 240 | 76,752 | 21,037, 807 6,925,564 | 7,265,030 | 2,469, 033 85,764 | 21,547, 541 10,323,913 | 5,696,746 | 2,150,306 |...--.--.... 20, 878, 359 6,886,526 | 7/768,595 | 2,535,740} 743,918 | 19, 163,950 7’ 697,164 | 10,368,883 | 2,433,304; 414,652 | 22, 183,223 7043" 342 | 5,476,617 , 1,576,175 | 1,172,191 | 16,541,842 Average annual ...............2--- 7,815,402 | 7,315,174 | 2,232,912 483,305 | 20, 062, 983 a Value of cocoanuts included. _ Nore.—Figures are taken from ‘‘ Estadistica general del comercio exterior de las Islas Filipinas,” issued by the Spanish Government. Total exports include gold and silver coin. The chief export in value and quantity from the Philippines is Manila hemp, it amounting to between 60 and 65 per cent of the total exports. Its value has increased very rapidly of late and the result has been that much inferior hemp has been exported, because it could be produced more cheaply and in greater quantity. That which has made the hemp expensive and has reduced the export of it—for large quantities of it rot in the field still—is the lack of transportation and the heavy expense of the labor involved in pulling the fiber and free- ing it from the pulp of the stem. Several machines have been in- vented to do this mechanically and it seéms likely now that two have been invented which may do the work, although they have not been sufficiently tested to make this certain. Should a light, portable, and durable machine be invented which would accomplish this, it will revolutionize the exportation of hemp and will probably have a ten- dency to reduce its cost, but greatly to increase its use and to develop the export business of the Philippine Islands most rapidly. SUGAR AND TOBACCO—-REDUCTION OF TARIFF. There is a good deal of land available for sugar in the Philippines, but there is very little of it as good as that in Cuba, and the amount of capital involved in developing it is so great that I think the pos- sibility of the extension of the sugar production is quite remote. The moment it expands, the price of labor which has already increased 50 to 75 per cent will have another increase. All that can really be expected REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 61 is that the sugar industry—and this is also true of the tobacco indus- try—shall be restored to their former prosperity in the earlier Span- ish times when the highest export of sugar reached 265,000 tons to all the world. The tobacco industry needs a careful cultivation which, under present conditions, it is very difficult to secure. The carelessness with which the plant is grown and the defective character of the leaves is such as to make the manufacturers of cigars and tobacco in Manila despair of using the Philippine product without the addition of the wrappers either from Sumatra or the United States. All that a friend of the Philippines can hope for is that the sugar and tobacco industries shall regain their former reasonably prosper- ous conditions. The development of the islands must be in another direction. The question of labor and capital both must always seri- ously hamper the growth of sugar production. Nor would I regard it as a beneficial result for the Philippine Islands to have the fields of those islands turned exclusively to the growth of sugar. The social conditions that this would bring about would not promise well for the political and industrial development of the people, because the cane sugar industry makes a society in which there are wealthy landowners holding very large estates with most valuable and expensive plants and a large populatton of unskilled labor, with no small farming or middle class tending to build up a conservative, self- -respecting community from bottom to top. But, while I have this view in respect to the matter, I am still strongly of the.opinion that jus- tice requires that the United States should open her sugar and tobacco markets to the Philippines. I am very confident that such a course would not injure, by way of competition, either the sugar or the tobacco industries of the United States, but that it would merely substitute Philippine sugar and tobacco for a comparatively small part of the sugar and tobacco that now comes in after paying duty. Their free admission into this country would not affect the prices of sugar and tobacco in the United States as long as any sub- stantial amount of those commodities must be imported with the full duty paid in order to supply the markets of the United States. So confident am I that the development, which the sugar and tobacco interests of the United States fear in the Philippines from an admission of those products free to the United States, will not ensue to the injury of those interests that I would not object to a lim- itation on the amount of sugar and tobacco in its various forms, man- ufactured and unmanufactured, which may be admitted to the United States from the Philippines, the limitation being such a reasonable amount as would admittedly not affect the price of either commodity in the United States or lead to a great exploitation of the sugar and 62 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. tobacco interests in the islands. The free admission of sugar and tobacco up to the amount of the proposed limitation, for the purpose of restoring the former prosperity in these two products to the islands, is very important. There are two or three provinces, notably Occt- dental Negros and the island of Panay, the prosperity of which is bound up in good markets for sugar, and this is true also of some parts of Laguna, Cavite, Bulacan, and Pampanga, where sugar was raised. in the old days with success and, profit. In respect to tobacco, the need is not so pressing because the territory in which marketable tobacco culture prevails is by no means so great. Still it does affect three provinces, Cagayan, Isabela, and La Union. FODDER. The agricultural bureau of the government has been devoting 4 great deal of effort and time and money to experimenting in agri- culture. They have made many failures and have not yet succeeded certainly in sowing a grass which will properly cure and may be used for hay. It is hoped that in certain of the higher altitudes alfalfa, and especially clover, may be raised successfully; and if so the very high price which has now to be paid for fodder imported from America may be avoided. This is a question which seriously affects the cost of the Army in the Philippines. NEW PLANTS. Through the agricultural bureau a new industry has been de- veloped, that of raising maguey, a plant, the fiber of which is much less valuable than that of Manila hemp, but which has a good market whenever it is produced in quantities. The rapidity with which a great deal of land in the Philippines that heretofore has not been capable of profitable use is now taken up with the planting of maguey is most encouraging. The plants are being distributed by the agri- cultural bureau in the islands. ‘ THE FINANCIAL CONDITION OF THE GOVERNMENT. The financial condition of the government is as good to-day as it ever has been. The following table shows what it is, and the sur- plus on hand for emergencies is satisfactory : REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 63 ‘ General account Inlunce sheet of the government of the Philippine Islands for the fiscal year ended June 30, 1907. ape and deficiency account: alance from previous years Excess revenues over expenditures . Excess resources over liabilities .. Carried from suspense account insular revenues and expenditures: Customs revenues Internal revenue ....... Miscellaneous revenues Insular expenditures... Payments to provinces ... Losses under section 41, act 1402..........-..2222.--06- Allowances under section dv, act 1402 Inter-bureau transactions Total Resources and liabilities: The insular treasurer’s cash balance Gold-stanGard and oes os 0.5 s:a cee. Siaienrcsciesiod dajoreie me oe Surplus on customs auction sales Invalid money orders.... S Outstanding liabilities . Loans to provinces ..... Refundable export duties. . City of Manila........ Outstanding warran Friar lands funds ... Moro Province . Depositary fund.......... Silver certificate redempt: Refundable internal revenues Public works and permanent improvement fund... Congressional relief fund .............--.--22-.--- Sewer and waterworks construction fund..........-.... Insular treasurer’s liability on unissued silver certificates. . Unissued silver certificates. .......---....22-200220-- Miscellaneous special funds. Ba Provincial governments. ........-. Philippine money-order account United States money-order account............- Bonded indebtedness .......-.-----2--2-2eeeeeeeee Outstanding postal drafts . nea Friar land bond sinking fund.............2.-..---.--- Sewer and waterworks construction bond sinking fund. Rizal monument fund...........2..22-2 cece seen ee eee Baguio town-site improvement fund...... Collecting and disbursing officers. ..........!.--.2-..0- eee sense s Total Suspense account: MransferiOb PUMds jc 6.62.5:4 cciernposersis.cicisiemnecion dataata setae ccicaine eas ae pha General account deposits. }+, Accountable warrants. . «Carried to surplus and de [OP Metal Sox s. senese: eeerens en ractanaxsctleuwhacactaseereanes ress Treasury account: Balance from previous fiscal years ........-.-.----2 0s. eee eee eee Receipts at the treasury....-.-.--.-.-+--2+---+ Withdrawals from the treasury . Available for appropriation ... Appropriations undrawn..... eins sais senee Available for refundment or redemption TOtal a asesswrensestaeaiemamrsaerisews eae eee steainsescmelaetieseiee = Credit. $4, 439, 974. 02 2) 741) 606. 41 319, 201. 86 7, 500, 782. 29 6, 968, 724. 86 1, 438, 440, 40 346, 20 7, 990, 376. 57 2, 684, 579, 24 389, 440. 25 . 85, 223.19 8, 408, U12. 84 2,741, 606. 41 11, 149, 619. 26 11, 149, 619. 25 25, 083, 490. 93 1, 006, 753. 13 2, 384, 404, 42 3, 966, 263. 00 10,770, 354. 00 331,970. 30 Pri 936, 934.79 1, 855; 081. 84 "9702, 600. 60 387,095.17 1, 132) 743. 62 f 182,576. 54 128, 201. 86 14, 600, 000. 00 2) 283. 29 Co 39, 898. 34 1) 413.20 1,525. 19 51, 290, 202. 15 43, 789, 419. 86 7,500,782, 29 51, 290, 202. 15 319, 201, 86 7, 674, 49 195, 263. 24 116, 264, 13 a8 319, 201. 86 --| 22,461, 858. 40 |. «| 112, 780, 022. 27 347; 526.19 5, 218, 817. 54 4/948) 919. 94 14) 726, 617.00 ..| 135, 241, 880. 67 136, 241, 880, 67 64 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. The following statement of revenues and expenditures of the Philip- pine government, exclusive of all items of a refundable character, covers the period from the date of American occupation, August 18, Is9s, to June 30, 1907, Revenues. city e nae Manila. Total, Fiscal year ended June 30— | Insular. Provincial. i 2 etrknenese ! 6, 899, 340. 53 [ersrecenes seco ee ' 10, 753, 459. 95 $1,199,593. 21 | 12) 579, 357. 20 , 527, 252. 93 1, 441,575.85 | 14, 826, 284. 41 3, 295, 839. 47 1; 981, 129.97 15, 476, 233. 42 11, 549, 495. 37 3,107,912.91 | 1,441,165. 82 16, 098, 574, 10 ll, 468, 067. 16 4, 509,572.02 ' 1,995, 289. 85 17, 972, 929. 03 11,149, 619.25 | 4, 604,528.31 | 1,691,341. 93 | 17, 445, 489. 49 9, 800, 096. 63 | 115, 610, 350. 96 3 acts Riatrnarercinee se St | $8, 558, 682. 83 10, 249, 263. 98 | 85, 756, 667. 81 | 20, 058, 586. 52 Baupenditures, G2 810 B07 10 ook uence ntsace | 4, 758, 793. 66 |. 6, 451, BOB Bi is cx meena diac o ae 8, 189,404.59 $1. 633, 158. , 294, 81 | 10, 249, 533.40 | 1, 981, 261. 22 1,177, 611. 67 | 13, 408, 406. 29 11, 122, 562. 38 2, 839, 826. 10 1, 578, 303. 50 | 15, 040, 691. 98 | 16, 297, 280. 54 ‘ 10, 146, 779. 12 4, 335, 091. 32 2, 492, 392. 23 16, 974, 262. 67 &, 408, 012, 84 4,736, 038. 20 1; 560, 801.40 , 14, 704, 852. 44 73, 951, 798. $1 | 16, 499, 695. 49 | 10, 005, 506.39 ' 100, 457, 000. 69 12, 248, 857.88 | 1,474,320.43 | 2,574, 102.78 ' The bonded indebtedness is as follows: Title of bonds. | Authorized by Congress. | amount Date issued. [Fete | Due. Land purchase bonds...... Act of July 1, 1902 .......... 37,000,000 | Jan. 11,1904 | 1914 1934 Philippine publicimprove- v | ‘ment bonds: First issue....-......--- Act of Feb. 6, 1905......--.- 2,500,000 | Mar. 1,1905 | 1915 1985 Second issue ...........]....- COs mas sateeenessotets 1,000,000 | Feb. 1,1906 1916 1936 Manila sewer and water supply bonds: | Elrstissu@.cecseiscsccmce Act of July1,1902, as amend- | 1,000,000 | June 1,1905 | | 1915 . 1985 ed by act of Feb. 6, 1905. Second issue’...cc.iceeslosees Gh "sins zicwiediorcarssleae sic 2,000,000 | Jan. 2,1907 1917 1937 Total 3. ssdoevseseces| eevatavexeseweceeewsacs sxpoxs 13, 500, 000 ' \ To meet the interest and principal on these bonds ample sinking funds have been provided, and the bonds are now held on the market, notwithstanding the present depression, at prices well above those for which they were originally sold. FRIARS’ LANDS. The question of the disposition of the friars’ lands is one which is occupying the close attention of the Secretary of the Interior and the Director of Lands. The price of the lands was about $7,000,000. REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 65 Much delay has been encountered in making the necessary surveys and the disposition of them for the present has largely been tempo- rary and at small rents in order to secure an attornment of all the tenants and the clear definition of the limits of the leaseholds claimed by them. This has involved considerable time and expense in making the necessary surveys. The injury to the sugar industry and the de- struction of draft cattle has affected the price and character of the sugar lands, and they have been allowed to grow up in cogon grass. This will require the investment of considerable capital to put them in sugar producing condition. It is estimated that the salable lands would amount in value to something over $5,000,000 and that the lands, mostly sugar, which are not now salable, and the plants which were bought with the lands, represent the other $2,000,000 of the pur- chase price. It will take some years to work out the cost and it is possible, as already prophesied, that there will be a considerable loss to the islands, but as the purchase was based on political grounds and. for the purpose of bringing on tranquillity, such a loss as that which. was thought not improbable at the time of the purchase is amply com- pensated for in the general result. FINAL SETTLEMENT IN RESPECT TO CHARITABLE TRUSTS AND SPANISH- FILIPINO BANK WITH ROMAN CATHOLIC CHURCH. I have spoken in previous reports of the controversies arising be- tween the Roman Catholic Church and the Philippine government in reference to the administration of certain charitable trusts. The same church was interested as a majority stockholder in the Spanish- Filipino Bank and a dispute had arisen as to the right of the bank to exercise the power conferred on it by its original charter of issuing bank notes in an amount equal to three times its capital stock. A compromise was finally arranged last June with Archbishop Harty of Manila and was consummated during my visit to the Philippines. I submitted to you a full report of this compromise. It received your approval and was then carried into effect by the Philippine Commission. ROADS. The construction of roads by the central government has gone on: each year, but the roads have not been kept up by the municipal gov-. ernments charged with the duty as they ought to have been. The Commission has now established a system by which it is hoped ulti- mately that the whole matter of roads may receive 4 systematic im- petus throughout the islands. Roads can not be kept up in the 33483—08——5 . 66 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. Tropics except by what is known as the “caminero” system, in which a small piece of each road shall be assigned to the repair and control of a road repairer to be known as the “ caminero.” The truth is that good roads will develop as the people develop, because the people can keep up the roads if they will, and it is not until they have a large sense of political responsibility that they are likely to sacrifice much to maintain them. RAILROADS IN THE PHILIPPINES. In my last annual report, I set forth in detail the concessions granted for the construction of railroads in Luzon, Panay, Cebu, and Negros, and showed that within five years we might expect that, in- stead of a single line of railway 120 miles in length which was all that we found when we occupied the islands, we would have a system with a mileage of 1,000 miles. Work has gone on in full compliance with the terms of the concessions of the two companies. Only one of these companies took advantage of-the provisien for the guaranty of bonds. and they have built about 40 miles of road and have earned, under the terms of the concession, the guaranty of $973,000 of bonds, which has already been signed and delivered by the Philippine government. Of course, in this financial panic these com- panies are likely to have difficulty in securing investors in their securi- ties. The roads as constructed have been well constructed, and are admirably adapted to resist the climatic conditions in the islands. There is no reason in my judgment why these roads when constructed should not pay a reasonable percentage upon the invest- ment. It is of the utmost difficulty to secure the coming of capital to the islands, and it would greatly aid us if the dividends earned by these roads were very large. In the Orient two-thirds of the income of railways comes from passenger earnings, and one-third from freight. Of course, the railroads are very essential to the agricultural interests of the country and will directly affect the amount of exports of agricultural products—so we may count on a steady increase in the freight receipts from the moment of their beginning operation. As I say, however, the chief hope for profit in the railways is in the passenger traffic. In the three Visayas in which the railroads are to be constructed, the density of population is about 160-per square mile, whereas the average population per square mile in the United States in 1900 was but 26. The Island of Cebu has a population of 336 per square mile, or a greater density than Japan, France, Germany, or British India. It is, therefore, reasonable to suppose that the pas- senger earnings on these railroads will be very large. It was antici- pated that the labor problem would be a difficult one to solve in the construction of these roads. This has not proved to be true. The REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 67 Philippine labor has shown itself capable of instruction, and by proper treatment of being made constant in its application. Of course, the prices of labor have largely increased, but the companies constructing the roads have found it wise to increase wages, and thereby secure greater efficiency. Even with increased wages the cost of unit of result is less in the Philippines in the construction of railways than it is in the United States. Of course, the drain on the labor supply of sugar plantations and other places where agricultural labor is employed, is great and the effect upon raising sugar and other products is to increase the cost. But I think the lesson from the construction of the railroads is that Philippine labor can be improved by instruction and can be made effective and reasonably economical by proper treatment. ‘The coming into the islands of the capital to construct railways, of course, has had a good effect in the improve- ment of business conditions, but it is to be noted that in the estimate of importations the railroad material and supplies which are brought in free under the statute are not included in the totals, and there- fore are not to be offered as an explanation for the very good showing in respect to the amount of imports to the islands for the last fiscal year. ; : GENERAL BUSINESS CONDITIONS. Of course, the depression in certain business branches of agricul- ture, like sugar, tobacco and rice, due to lack of markets for the first two, and to a lack of draft animals in the production of sugar and rice has had a direct effect upon the business of the islands of a de- pressing character. Gradually, however, business has grown better. In spite of adverse conditions the importations of rice have decreased from $12,000,000 gold to $3,500,000 gold, and, while the imports as a whole have increased not to their highest previous figure, they have been maintained within four and a half millions of their highest mark, and, as already said, the exports are higher than ever in the history of the islands, the balance of trade in their favor for the last fiscal year being about five millions, exclusive of gold and silver and government and railway free entries. I found in the islands a disposition on the part of both American and Philippine business men and of the leaders of all parties in the Philippine Assembly to make a united effort to improve business and general conditions. BUSINESS FUTURE OF PHILIPPINES. I do not hestitate to prophesy that during the next twenty-five years a development will take place in the agriculture and other business of the Philippine Islands, which will be as remarkable in its benefits to 68 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. the United States and the Philippine Islands as was the development of Alaska during the last ten or fifteen'years. Hope of this is not what has actuated the government in pursuing the policy that it has pursued in the development of the islands, but this is as inevitable a result as if it had been directly sought, and perhaps the absence of selfishness in the development of the islands is a greater assurance of profitable return than if business exploitation by the United States had been the chief and sole motive. The growth in the production of hemp and other fiber products, in cocoanuts, in rubber and many other tropical crops and in peculiar manufactures of the islands may be looked forward to with certainty. GOLD STANDARD CURRENCY. One of the great benefits conferred upon the islands by the Ameri- can Government has been the introduction of the gold standard. This has doubtless prevented the larger profits which were made in the old days by the purchasers of hemp and other agricultural products in the islands, who sold again in European and American markets, because under the system then prevailing, they bought in silver and sold in gold, and by watching the markets they were able to add very much to the legitimate profit of the middlemen by what constituted a system of gambling in exchanges. The same features characterized the banking in the islands. Now, however, with the gold standard the gambling feature in business is very largely eliminated. The coinage is satisfactory to the people, the silver certificates circulate well and are popular, and there seems to be no ground for complaint of the currency. NEED OF CAPITAL—AGRICULTURAL BANK. One of the crying needs of the Philippines is capital, and this whether it be for the development of railroads, wagon roads, manu- factures, or in the promotion of agriculture. The usurious interest which has to be paid by the farmers is so high as to leave very little for his profit and maintenance and ever since we entered the islands the cry for an agricultural bank which would lend money for a reasonable interest, say, 10 per cent, has been urged upon the Com- mission. Last year Congress authorized the government to guar- antee the interest at 4 per cent on a certain amount of capital in- vested in such a bank, but up to this time no one has embraced the opportunity thus offered to undertake the conduct and operation of a bank although negotiations are pending looking to such a result. It is now proposed that the government shall undertake this instead of a private individual. Experimentation has been attempted on the REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 69 friars’ lands by the appropriation of $100,000 for loans to the friar tenants to encourage them to improve agriculture, and the result of this experiment will be awaited with great interest. The reduction of the amount of silver in the silver peso for the pur- pose of keeping it within the 50-cent gold value, which is the legal standard, has gone steadily on and will result ultimately in the accu- miilation 3 in the treasury of a fund of $3,000,000 gold. It is thought that part of this money might be taken to establish an agricul- tural bank on a governmental basis. The treasurer of the islands, Mr. Branagan, who has had large experience in banking in the islands, because his office has brought him closely into contact with it and because he has had to examine all the banks, is confident that an agricultural bank of one or two millions of dollars might be established by the government and managed by the treasury de- partment, together with the provincial treasurers in such a way as greatly to aid the cause of agriculturein the islands. One great dif- ficulty in the operation of an agricultural bank is the uncertainty that prevails to-day in the islands in respect to the titles of the lands which are held. The land law provided a method of perfecting titles through what is called the land court founded on the Torrens land system, which was introduced by law some years ago in the islands. The expense of surveying the lands, due to the shortness of supply of surveyors, and the time taken has made the process of settling titles rather slow, but. as defects have appeared the Commission has changed them and it is hoped that this system of preparing for the business of an agricultural bank may go on apace.” POSTAL SAVINGS BANK. A postal savings bank has been established and was first more pat- ronized by Americans than Filipinos, but Filipinos are now taking it up and the deposits therein amount to upward of 1,000,000 pesos. There have been practically no banking facilities throughout the islands, except in Manila, Iloilo, and Cebu, and this establishment of postal savings-bank offices in a large proportion of the post-otfices throughout the islands offers an opportunity to the people of moder- ate means to put their money in a secure place and to derive a small revenue therefrom. The insecurity of savings by Filipino farmers and others in the country has certainly reduced the motive for saving which an opportunity to deposit their money will stimulate. The exchange business of the islands has also been facilitated by statutory provisions authorizing the sale of exchange by provincial treasurers on the central treasury at Manila and vice versa. 70 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. POST-OFFICE AND TELEGRAPHS. The post-affice department, considering the conditions that exist and the difficulties of reaching remote parts of the island, has been very well managed and the offices are increasing in encouraging proportion each year. The following table shows the increase in postal facilities from year to year of our occupation: ; 3 ih oney or-| Number ; Stamp Pan Agee) Seer Raub eae a0. ee he offices. | employees. sales. NGL eancaeen 113 'P-228, 178. 36 24 | 24 130 , 233,182.96 90 31 331 | 238, 418. 10 209 j 33 570 | 248,414.36 291 63 579 | 224,354. 61 414 | 62° 612 | 222, 701.36 476 | 60 1,003 | 425, 261.50 505 | 63 1, 091 | 607, 203. 44 Under a system devised by Mr. Forbes, secretary of commerce and police. mail subsidies were granted to commercial lines on condition that good service at reasonable rates of transportation should be fur- nished upon safe and commodious steamers. The Government vessels which had previously been purchased in order to promote intercourse between the islands are now used on outlying routes where commercial lines will not take up the traffic, but are used in connection with the commercial lines, and in this way additional routes are being tested and the marine commerce between all the islands is made to increase. By consent of the Secretary of War, and on the recommendation of the commanding general of the Philippines and the agreement of the civil government, all the telegraph lines in the islands have now been transferred to the post-office department of the civil gov- ernment of the Philippines. These telegraph lines reach into the remotest provinces and to all the principal islands of the large archi- pelago. While there were some telegraph lines in the Spanish times, the system has grown to such proportions now as to be almost an entirely new system. It has made the government of the islands much more easy because it brings every province within half a day’s communication of Manila for information and instructions from the central authority. It has furnished a most profitable instru- ment for business communication, and while it entails considerable burden on the civil government, it is well worth for governmental and business purposes all that it costs. I ought to say that the post- office department is rapidly training Filipinos to fill all the positions of telegraph operators, and that this materially reduces the cost of operation and at the same time furnishes an admirable technical school for great numbers of bright Filipino young men. I submit a statement of the mileage of the cables and telegraph lines operated by the Government. REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 71 1906. . Miles. Miles. Lines transferred to the insular government by the Sicnal Corps up to June 30: Telegraph lines). - 2 oa ee 3, 780 @ahile: lines 2-256. 20 oe ewe cn said abner 828 —C, Pelephone: limes. 2 cca See eye ewe eee es 2, 137 CU UC» a a Netter th ware eae 6, 245 Lines operated by the Signal Corps on June 30: Welesraph: Wimes)2.222 sce otk Se et 1, 406 Cables lines 308 =e ee as et ER es a 1, 452 Telephone: lwwes!22 2S se oe ee ae oe, 338 PINOT at a teen hat I rE OLN aie Sk a nO yw 3, 196 Total mileage of telegraph, cable, and telephone lines in operation . JUNC: BO oe oe a ee ee ee ee la 9, 441 Number of telegraph offices__________________-_ en 161 Number of telephones in operation__________________-- ee 450 1907. 7 Lines transferred to the insular government by the Signal Corps since July 1, 1907 oti Se eee eet tea ety --- 1,914.5 Total mileage of telegraph and cable lines in operation by the insular goverment 10 date... .2224seneescsseees eect sscseesse cece secs 6, 951 \ MINES AND MINING. There has been a good deal of prospecting in the islands and gold and copper have been found in paying quantities in the mountains of northern Luzon, the provinces of Benguet and Bontoc and Le- panto, as well as in the Camarines in southeastern Luzon, and in Masbate, an island lying directly south of Luzon; but great complaint is made, and properly made, of the limitations upon the mining law which prevent the location by one person of more than one claim on a lode or vein. Mining is such a speculative matter at any rate, and the capital that one puts into it is so generally lost that it would seem that, in a country like the Philippines where development ought to be had, there should be liberal inducements for the invest- ment of capital for such a purpose. Secretary Worcester of the inte- rior department has frequently recommended that this limitation of the law be repealed. The Commission joins in this recommendation and I cordially concur. While I do not favor large land holdings, I also concur in the recommendation of the secretary of the interior and the Commission that the prohibition upon corporations holding more than 2,500 acres of land be also stricken out. It certainly might well be increased to 10,000 acres if any limitation is to be imposed at all. U. 8S. COASTWISE TRADING LAWS. It is proposed by some to put in force the coastwise trading laws in respect to the navigation between the United States and the islands. I - 72 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. think this a very short-sighted policy. To-day the trade between the United States and the islands, export and import, is about 28 per cent of the total. The proportion of the total export trade from the Phil- ippines to the United States is growing and is certain to grow more rapidly in the future, especially if proper legislation is adopted in respect to sugar and tobacco. Now a coastwise trading law will ex- clude altogether the use of foreign bottoms between the ports of the United States and the ports of the Philippine Islands, and will con- fine that commerce to United States vessels. There is very grave doubt whether there are enough United States vessels to carry on this trade as it is, and even if there were they could not carry on the trade without a very great increase in freight rates over what they now are. The minute that these rates are advanced, while the rates to other countries remain the same, the trade between the islands and the United States will cease to be. There will be no trade for the vessels of the United States to carry, no one will have been benefited in the United States, and the only person who will reap advantage is the foreign exporter to whom the Philippine business house will naturally turn for exchange of products. The only method possible by which the United States vessels can be given the Philippine trade is by voting a reasonable subsidy for United States vessels engaged in that trade. Any other prohibitive or exclusive provision of law will be merely cutting off the nose to spite the face of the interest which attempts it. I feel certain that when the question of applying the coastwise trading laws to the business between the United States and the islands is fully investigated, even those representing the shipping interests that need and ought to have much encouragement will con- clude that the coastwise trading laws applied to the American Philip- pine trade would merely destroy the trade without benefiting the shipping interests. In the criticisms upon the Government’s Philippine policy to be found in the columns of the newspapers that favor immediate sepa- ration, it has been frequently said that the coastwise trading laws of the United States apply as between islands of the Philippines. The truth is that the restrictions upon shipping between ports in the Philippine Islands are what the Legislature of the islands imposes, and Congress has made no provision of limitation in respect to them. The coastwise regulations in force within the Archipelago are as lib- eral as possible. CITY OF MANILA. The city of Manila is the social, political, and business center of the islands. It is the only large city in the islands. Its population is about 250,000, while there is no other city that exceeds 40,000 in ‘ REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 73 population. By what now has been proven to be a mistake, the Com- mission purchased a building which was known and used as the Oriente Hotel. It was a hotel not very well conducted, but it was the only important hotel in the city of sufficient size and dignity to induce the coming of tourists. It was hoped that the purchase of this build- ing, which was not. particularly adapted as a hotel, might lead to the construction and maintenance of a better hotel. Such has not been the result, and although there are hotels in the city of Manila, its reputation is that of being unable to furnish to the traveling public a comfortable hostelry for a short stay. This has driven away many travelers of our own country and other countries from a city that in historical interest, in beauty, and in comfort of life will compare favorably with any. Mr. Burnham, the well-known landscape architect of Chicago, some years ago, without compensation, visited the Philippines and mapped out a plan for the improvement of the city, and laid out a plan of construction for Baguio in Benguet as the summer capital. To both of these plans, all improvements which have been attempted in the city have conformed, and if the present efficient city govern- ment continues, there is every reason to believe that Manila will be- come a most attractive city. A contract has been made for the leas- ‘ing of ground immediately upon the Luneta and facing the bay to a firm of capitalists for the construction of a hotel to cost, 500,000 pesos. It is doubtful, however, whether this capital can be raised at the present time, and if it falls through it is proposed, and I think with wisdom proposed, that the government shall erect a hotel as a public investment for the development of the city and the islands, and lease it to the best bidder. There is no city in the world better governed than Manila. The streets are well cleaned, are well policed, there is a most excellent fire department, the parks are being enlarged and improved, the street car system is as good as any anywhere, and with the improvements in the water supply the sewerage system and esteros or canals, which are now under foot and part of which are quite near accomplished, the face which the Filipinos turn toward the world in the city of Manila will be a most pleasing one. POLITICAL FUTURE OF THE ISLANDS. There are in the Philippines many who wish that the government shall declare a definite policy in respect to the islands so that they may know what that policy is. I do not see how any more definite policy can be declared than was declared by President McKinley in his instructions to Secretary Root for the guidance of the Philippine \ 74 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. Commission, which was incorporated into law by the organic act of the Philippine government, adopted July 1, 1902. That policy is de- clared to be the extension of self-government to the Philippine Islands by gradual steps from time to time as the people of the islands shall show themselves fit to receive the additional responsi- bility, and that policy has been consistently adhered to in the last seven years now succeeding the establishment of civil government. Having taken some part and sharing in the responsibility for that government, of course my views of the results are likely to be colored by my interest in having the policy regarded as successful, but elim- inating as far as is possible the personal bias, I believe it to be true that the conditions in the islands to-day vindicate and justify that policy. It necessarily involves in its ultimate conclusion as the steps toward self-government become greater and greater the ultimate inde- pendence of the islands, although of course if both the United States and the islands were to conclude after complete self-government were possible that it would be mutually beneficial to continue a govern- mental relation between them like that between England and Aus- tralia, there would be nothing inconsistent with the present policy in such a result. Any attempt to fix the time in which complete self-government may be conferred upon the Filipinos in their own interest, is I think most unwise. The key of the whole policy outlined by President McKinley and adopted by Congress was that of the education of the masses of the people and the leading them out of the dense ignorance in which they are now, with a view to enabling them intelligently to exercise the force of public opinion without which a popular self-government is impossible. It seems to me reasonable to say that such a condition can not be reached until at least one generation shall have been subjected to the process of primary and industrial education, and that when it is considered that the people are divided into groups speaking from ten to fifteen different dialects, and that they must acquire a common medium of communication, and that one of the civilized languages, it is not unreasonable to extend the necessary period beyond a genera- tion. By that time English will be the language of the islands and we can be reasonably certain that a great majority of those living there will not only speak and read and write English, but will be affected by the knowledge of free institutions, and will be able to understand their rights as members of the community and to seek to enforce them against the pernicious system of.caciquism and local bossism, which I have attempted in this report to describe. But it is said that a great majority of the people desire immediate independence. I am not prepared to say that if the real wish of the majority of all the people, men. women. and children, educated and REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 75 uneducated, were to be obtained, there would not be a very large majority in favor of immediate independence. It would not, how- ever, be an intelligent judgment based on a knowledge of what in- dependence means, of what its responsibilities are or of what popular government in its essence is. But the mere fact that a majority of all the people are in favor of immediate independence is not a reason why that should be granted, if we assume at all the correctness of the statement, which impartial observers can not but fail to acquiesce in, to wit: that the Filipinos are not now fit for self-government. The policy of the United States is not to establish an oligarchy, but a popular self-government in the Philippines. The electorate to which it has been thought wise to extend partial self-government em- braces only about 15 or 20 per cent of the adult male population, be- cause it has been generally conceded by Filipinos and Americans alike that those not included within the electorate are wholly unable to exercise political responsibility. Now, those persons who de- manded and were given a hearing before the delegation of Congress- men and Senators that visited the islands in 1905, to urge immediate independence contended that the islands are fit for self-government because there are from 7 to 10 per cent of intelligent people who are constituted by nature a ruling class, while there are 90 per cent that are a servile and obedient class, and that the presence of the two classes together argues a well balanced: government. Such a proposi- tion thus avowed reveals what is known otherwise to be the fact that, many of those most emphatic and urgent in seeking independence in the islands have no thought of a popular government at all. They . are in favor of a close government in which they, the leaders of a particular class, shall exercise control of the rest of the people. Their views are thus wholly at variance with the policy of the United States in the islands. The presence of the Americans in the islands is essential to the due development of the lower classes and the preservation of their rights. If the American government can only remain in the islands long enough to educate the entire people, to give them a language which enables them to come into contact with modern civilization, and to ex- tend to them from time to time additional political rights so that by the exercise of them they shall learn the use and responsibilities necessary to their proper exercise, independence can be granted with entire safety to the people. I have an abiding conviction that the Filipino people are capable of being taught self-government in the process of their development, that in carrying out this policy they will be improved physically and mentally, and that, as they acquire more rights, their power to exercise moral restraints upon themselves will be strengthened and improved. Meantime they will be able to see, and the American public will come to see the enormous material 76 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. benefit to both arising from the maintenance of some sort of a bond between the two countries which shall preserve their mutually bene- ficial business relations. No one can have studied the East without having been made aware that in the development of China, Japan and all Asia, are to be pre- sented the most important political questions for the next century, and that in the pursuit of trade between the Occident and the Orient the having such an outpost as the Philippines, making the United States an Asiatic power for the time, will be of immense benefit to its merchants and its trade. While I have always refrained from making this the chief reason for the retention of the Philippines, be- cause the real reason lies in the obligation of the United States to make this people fit for self-government and then to turn the govern- ment over to them, I don’t think it improper. in order to secure support for the policy, to state such additional reason. The severe criticism to which the policy of the Government in the Philippines has been subjected by English Colonial statesmen and students, should not hinder our pursuit of it in the slightest. It is of course opposed to the policy usually pursued in the English government in dealing with native races, because in common with other colonial powers, most of England’s colonial statesmen have assumed that the safest course was to keep the native peoples ignorant and quiet. and that any education which might furnish a motive for agitation was an inter- ference with the true and proper course of government. Our policy is an experiment, it is true, and it assumes the risk of agitation and sedition which may arise from the overeducation of ambitious poli- ticians or misdirected patriots, in order that the whole body of the - people may acquire sufficient intelligence ultimately to exercise gov- ernmental control themselves. Thus far the policy of the Philippines has worked. It has been attacked on the ground that we have gone too fast, that we have given the natives too much power. The meeting of the assembly and the conservative tone of that body thus far disclosed, makes for our view rather than that of our opponents, but had the result been entirely different with the assembly, and had there been a violent outbreak at first in its deliberations and attempts at obstruction, I should not have been in the least discouraged, because ultimately I should have had confidence that the assembly would learn how foolish such exhibi- tions were and how little good they accomplished for the members of the assembly or the people whom they represented. The fact that this natural tendency was restrained is an indication of the general conservatism of the Filipino people. Though bearing the name of immediate independistas, the mem- bers of the controlling party of the assembly are far from being in favor of a policy which those words strictly construed would mean. REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 77 Moreover, the recent election held, since the Assembly was organized, in which fifteen progresista and fifteen nationalista governors were elected, is an indication that the nationalist feeling is by no means so overwhelming as was at first reported when the returns from the election of the assembly were published in the press. The fact that Filipinos are given an oportunity now to take part in the forming of the governmental policies in the islands, will I hope satisfy many of them that the United States is in earnest in attempting to educate them to self-government, will so occupy their ambitions and minds as to make the contention for immediate in- dependence more of an ideal than of a real issue, will make more permanent and lasting the present satisfactory conditions as to peace and tranquillity in the islands, and will turn their attention toward the development of the prosperity of the islands by improvement of its material conditions and the uplifting of the people-by their educa- tion, sanitation and general instruction in their political, social and material responsibilities. There has been in the United States in the last year a recurring disposition on the part of many of the press and many public men to speak of the Philippine policy as if foredoomed to failure, and the condition of the islands as a most deplorable one. No one who knew the islands in 1900, and who has visited them during the present year and especially during the meeting of the assembly can honestly and fairly share such views. To one actually responsible in any degree for the present conditions by reason of taking part in the government of those islands, the changes made and the progress made under: the circumstances are most gratifying. COST OF THE PRESENT GOVERNMENT OF THE ISLANDS. The most astounding and unfair statements have appeared in the press from time to time and have been uttered by men of political prominence who should know better, in respect to the cost to the United States of the Philippine Islands. The question of the cost of the islands to the United States as affecting its future policy can not of course include the cost of a war into which the United States was forced against its will, and which whether it ought to have been car- ried on or not, was carried on and was finished more than five years ago. The only question of cost that is relevant to the present dis- cussion is the cost to the United States of the maintenance of the present Philippine government, including in that the cost of the maintenance of that part of the army of the United States which is in the Philippine Islands. Nor is it fair to include the entire cost of the army of the United States in the Philippine Islands for the rea- gon that even if we did not have the Philippines, we should certainly 78 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. retain the present size of our standing army which hardly exceeds 60,000 effective men, a very small army for 80,000,000 people. More- over, it is worthy of note that the greatest increase in the Army of recent years has been in that branch of the service—to wit, the coast artillery—which has not been used in the Philippines for some years. The only additional cost therefore that the maintenance of the army can be said to entail upon the United States is the additional cost of maintaining 12,000 soldiers in the islands over what it would be to maintain the same number of soldiers in the United States. This has been figured out and roughly stated amounts to about $250 a man or $3,000,000, together with the maintenance of 4,000 Philip- pine Scouts at a cost of $500 a man, or in all $2,000,000, which makes a total annual expenditure of $5,000,000. The United States at present contributes something, perhaps $200,000, to the expense of the coast survey of the islands. With this exception, there is not one cent expended from the treasury of the United States for the maintenance of the government in the islands. The additional cost of the 12,000 men in the islands, figured above at $250 a man, includes the cost of transportation and the additional cost of food supplies and other matters. There is an item of cost, which perhaps may be charged to the Phil- ippine Islands. I refer to the expense of fortifying the bay of Manila, the port of Iloilo and the port of Cebu, so that in holding the islands the United States shall not be subject to sudden and capricious attack by any ambitious-:power. This may reach a total of ten millions. But it is hardly fair to charge this to the Philippine policy; for almost everyone concedes the necessity of maintaining and fortifying coal- ing stations in the Orient whether we have the Philippines or not. The question is, therefore, whether, in order to avoid the expendi- ture of $5,000,000 a year, the United States should pursue the humili- ating policy of scuttle, should run away from an obligation which it has assumed to make the Philippines a permanently self-governing community, and should miss an opportunity at the same time of build- ing up a profitable trade and securing a position in the Orient that can not but be of the utmost advantage in obtaining and maintaining its proper proportion of Asiatic and Pacific trade. From time to time there has been quite severe criticism of the present Philippine government on the ground that it is such an ex- pensive government as to be burdensome to the people. The facts are that the taxes which fall upon the common people are much less than they ever were under the Spanish régime. The taxes which fall upon the wealthy are considerably more, because as a matter of fact the Spanish system of taxation was largely devised for the pur- pose of avoiding taxation of the wealth of the islands. I have not at hand and am not able to insert in this report the figures\and statistics REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 79 which demonstrate this fact. They are now being prepared in Manila, and I hope at some future date to submit them for your con- sideration. Not only is the comparison to be instituted with the con- ditions existing under the Spanish régime, but also with the taxa- tion of other dependencies. The data with respect to these are difficult to get and frequently liable greatly to mislead when the conditions of each particular colony are not fully understood and stated. But my information is derived from Governor Smith and Mr. Forbes that the cost per capita of the government of the Philippines will compare most favorably with that of colonial governments presenting sub- stantially similar conditions. The reports from the governor-general, the heads of departments and of bureaus have not reached Washington. I was able before I left the islands to read informal drafts of some of them and much of the information as to the last year’s operations I have derived from them. I shall submit the reports immediately upon their arrival. RECOMMENDATIONS. I therefore recommend: First. That legislation be adopted by Congress admitting the prod- ucts of the Philippine Islands to the markets of the United States, with such reasonable limitations as may remove fear of interference with the tobacco and sugar interests in the United States; Second. That the present restrictions be removed as to the acquisi- tion of mining claims and the holding of lands by corporations in the Philippines; Third. That further legislation be passed authorizing the Philip- pine government, if it chooses, to open and conduct an agricultural bank, with a capital not exceeding $2,000,000; and Fourth. That the coastwise laws of the United States be made per- manently inapplicable to the trade between the ports of the islands and the ports of the United States. Sincerely, yours, Wn. H. Tart. Tue PRESIDENT. ADDRESS BY WM. H. TAFT, SECRETARY OF WAR, AT THE INAUGURATION OF THE PHILIPPINE ASSEMBLY, OCTOBER 16, 1907. \ 33483—08——6 81 ADDRESS BY WM. H. TAFT, SECRETARY OF WAR. GENTLEMEN OF THE ASSEMBLY: President Roosevelt has sent me to convey to you and the Filipino people his congratulations upon another step in the enlargement of popular self-government in these Islands. I have the greatest personal pleasure in being the bearer of this message. Itis intended for each and every member of the Assem- bly, no matter what his views upon the issues which were presented in the late electoral campaign. It assumes that he is loyal to the gov- ernment in which he now proposes, under oath of allegiance, to take part. It does not assume that he may not have a wish to bring about, either soon or in the far future, by peaceable means, a transfer of sovereignty; but it does assume that while the present govern- ment endures, he will loyally do all he lawfully can to uphold its authority and to make it useful to the Filipino people. I am aware that, in view of the issues discussed at the election of this Assembly, I am expected to say something regarding the policy of the United States toward these Islands. Before attempting any such task, it is well to make clear the fact that I can not speak with the authority of one who may control that policy. The Philippine Islands are territory belonging to the United States, and by the Constitution, the branch of that Government vested with the power, and charged with the duty, of making rules and regula- tions for their government is Congress. The policy to be pursued with respect to them is, therefore, ultimately for Congress to determine. Of course, in the act establishing a government for the Philippine Islands passed by Congress July 1, 1902, wide discretion has been vested in the President to shape affairs in the Islands, within the limitations of the act, through the appointment of the Governor and the Com- mission, and the power of the Secretary of War to supervise their work and to veto proposed legislation; but not only is the transfer of sovereignty to an independent government of the Filipino people wholly within the jurisdiction of Congress, but so also is the extension of any popular political control in the present government beyond that conferred in the organic act. It is embarrassing, therefore, for me, though I am charged with direct supervision of the Islands under the President, to deal in any way with issues relating to their ultimate disposition. It is true that the peculiar development of the government of the Islands under American sovereignty has 83 84 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. given to the attitude of the President upon such issues rather more significance than in most matters of exclusively Congressional cog- nizance. After the exchange of ratifications of the treaty of Paris in April of 1899, and until the organic act of July 1, 1902, Congress acquiesced in the government of the Islands by the President as Commander in Chief of the Army and Navy without interference, and when it passed the organic act it not only confirmed in every respect the anomalous quasi-civil government which he had created, but it also made his instructions to the Secretary of War part of its statute, and followed therein his recommendation as to future exten- sion of popular political control. This close adherence of Congress to the views of the Executive in respect to the Islands in the past gives ground for ascribing to Congress approval of the Philippine policy, as often declared by President McKinley and President Roose- velt. Still, I have no authority to speak for Congress in respect to the ultimate disposition of the Islands. I can only express an opinion as one familiar with the circumstances likely to affect Con- gress, in the light of its previous statutory action. The avowed policy of the National Administration under these two Presidents has been and is to govern the Islands, having regard to the interest and welfare of the Filipino people, and by the spread of gen- eral primary and industrial education and by practice in partial political control to fit the people themselves to maintain a stable and well-ordered government affording equality of right and opportunity to all citizens. The policy looks to the improvement of the people both industrially and in self-governing capacity. As this policy of extending control continues, it must logically reduce and finally end the sovereignty of the United States in the Islands, unless it shall seem wise to the American and the Filipino peoples, on account of mutually beneficial trade relations and possible advantage to the Islands in their foreign relations, that the bond shall not be com- pletely severed. How long this process of political preparation of the Filipino people is likely to be is a question which no one can certainly answer. When I was in the Islands the last time, I ventured the opinion that it would take considerably longer than a generation. I have not changed my view upon this point; but the issue is one upon which opinions differ. However this may be, I believe that the policy of the Administration as outlined above is as definite as the policy of any government in a matter of this kind can safely be made. We are engaged in working out a great experiment. No other nation has attempted it, and for us to fix a certain number of years in which the experiment must be- come a success and be completely realized would be, in my judgment, unwise. As I premised, however, this is a question for settlement by the Congress of the United States. a REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 85 Our Philippine policy has been subjected to the severest con- demnation by critics who occupy points of view as widely apart as the two poles. There are those who say that we have gone too fast, that we have counted on the capacity of the Filipino for polit- ical development with a foolish confidence leading to what they regard as the disastrous result of this election. There are others who assert that we have denied the Filipino that which is every man’s birthright—to govern himself—and have been guilty of tyranny and a violation of American: principles in not turning - ‘the govern- ment over to the people of the Islands at once. With your permission, I propose to consider our policy in the light of the events of the six years during which it has been pur- sued, to array the difficulties of the situation which we have had to meet and to mention in some detail what has been accomplished. The Civil Government was inaugurated in 1901 before the close of a war between the forces of the United States and the control- ling elements of the Philippine people. It had sufficient popular support to overawe many of those whose disposition was friendly to the Americans. In various provinces the war was continued intermittently for a year after the appointment of a Civil Governor in July, 1901. This was not an auspicious beginning for the organi- zation of a people into a peaceful community acknowledging alle- giance to an alien power, Secondly, there was, in the United States, a strong minority party that lost no opportunity to denounce the policy of the Government and to express sympathy with those arrayed in arms against it, and declared in party platform and in other ways its intention, «should it come into power, to turn the Islands over to an independent gov- ernment of their people. This not only prolonged the war, but when peace finally came, it encouraged a sullenness on the part of many Filipinos and a lack of interest in the progress and development of the existing government, that were discouraging. It offered the hope of immediate independence at the coming of every national election by the defeat of the Administration at the polls. This was not of assistance in carrying out a policy that depended for its work- ing on the political education of the people by their cordial partici- pation, first, in the new municipal and provincial governments, and finally in the election of a National Assembly. The result has been that during the educational process there has been a continuing con- troversy as to the political capacity of the Filipino people. It has naturally been easy to induce a majority of the electorate to believe that they are now capable of maintaining a stable government. All this has tended to divert the people’s attention from the existing government, although their useful participation in that must measure their progress toward fitness for complete autonomy. 86 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. The impatience of the popular majority for further power may be somewhat mitigated as the extent of the political control which is placed in the hands of the people increases, and’ as they, become more familiar with the responsibilities and the difficulties of actual power. The difference between the attitude of an irresponsible critic who has behind him the easily aroused prejudices of a people against an alien government, and that of one who attempts to formulate. legislation which shall accomplish a definite purpose for the good of his own people is a healthful lesson for the ambitious statesman to learn. Other formidable political obstacles had to be overcome. There still remained present in the situation in 1901 the smoldering ashes of the issues which had led the people to rebel against the power of Spain—I mean the prospective continuance of the influence of the regular religious orders in the parochial administration of the Roman Catholic Church in the Islands and their ownership of most valuable and extensive agricultural lands in the most populous provinces. The change of sovereignty to a Government which could exercise no control over the Church in its selection of its agents made the new régime powerless, by act or decree, to prevent the return of the friars to the parishes, and yet the people were disposed to hold the Government responsible whenever this was proposed. It would have been fraught with great danger of political disturbance. It was also essential that the religious orders should cease to be agricultural landlords in order to eliminate the agrarian question arising between them and sixty thousand tenants which had played so large a part in the previous insurrections against Spain. These results were to be attained without offending, or infringing upon the rights of, the Roman Catholic Church, the influence of which for good in the Islands could not be denied. Other political difficulties attending the transfer of a sovereignty from a Government in which the interests of the State andthe Church were inextricably united to one in which they must be absolutely separated, I need not stop to elaborate. The religious and property controversies arising out of the Aglipavan schism, and the disturbances caused, added much to the burden of the Gov- ernment. The novelty of the task tor the United States and her people, the lack ot the existence of a trained body of colonial administrators and civil servants, the dependence for a time upon men as govern- ment agents who had come out in a spirit of adventure to the Islands and some of whom proved not to be fitted either by character or expe- rience for the discharge of responsible public duties, gave additional cause for discouragement. Another great difficulty in working out our policy in these Islands has been the reluctance of capitalists to invest money here. Political REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 87 privileges, if unaccompanied by opportunities to better their condi- tion, are not likely to produce permanent contentment among a people. Hence the political importance of developing the resources of these Islands for the benefit of its inhabitants. This can only be done by attracting capital. Capital must have the prospect of secur- ity in the investment and a certain return of profit before it will be- come available. The constant agitation for independence in the Islands, apparently supported by the minority party in the United States, and the well-founded fear that an independent Philippine government now established would not be permanent and stable have made capitalists chary of attempting to develop the natural resources of the Islands. The capital which has come has only come reluctantly and on terms less favorable to the public than would have been exacted under other conditions. Another difficulty of the same character as the last in preventing material progress has been the failure of Congress to open the mar- kets of the United States to the free admission of Philippine sugar and tobacco. In every other way Congress has shown its entire and generous sympathy with the policy of the Administration; and in this matter the popular branch of that body passed the requisite bill for the purpose by a large majority. Certain tobacco and sugar interests of the United States, however, succeeded in strangling the measure in the Senate committee. I have good reason for hope that in the next Congress we may be able to secure a compromise measure which shall restore the sugar and tobacco agriculture of the Islands to its former prosperity, and at the same time by limitations upon the amounts of importation allay the fears of injury on the part of the opponents of the measure. Still, the delay in this much-needed relief has greatly retarded the coming of prosperous times and has much discouraged supporters of our. policy in America who have thought this indicated a lack of national purpose to make the present altruistic policy a success. r But the one thing that interfered with material progress in the Islands, more than all other causes put together, was the rinder- pest which carried away from 75 to 80 per cent of the cattle that were absolutely indispensable in cultivating, reaping, and disposing of the agricultural products upon which the Islands are wholly dependent. The extent of this terrible disaster can not be exag- gerated and the Islands have not yet recovered from it. Attempts to remedy the evil by the importation of cattle from other countries have proved futile, and the Islands can not be made whole in this respect except by the natural reproduction of the small fraction of the animals that escaped destruction. This is not a matter of a year, or of two years or of three years, but a matter of a decade. Then, too, there were in these years surra, locusts, drought, destruc- 88 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. tive typhoons, cholera, bubonic plague and smallpox, ladronism, and pulajanism. The long period of disturbance, of guerrilla war- fare and unrest, which interfered for years with the carrying on of the peaceful arts of agriculture and made it so easy for those who had been used to work in the fields to assume the wild and loose life of predatory bands claiming to be liberating armies, all made a burden for the community that it was almost impossible for it to bear. When I consider all these difficulties, which I have rehearsed at too great length, and then take account of the present conditions in the Islands, it seems to me that they present an occasion for pro- found satisfaction and that they fully vindicate the policy which has been pursued. How have we met the difficulties? In the first place, we have car- ried out with entire fidelity the promises of Presidents McKinley and Roosevelt in respect to the gradual extension of political control in the Government as the people should show themselves fit. In 1901 the Commission adopted the Municipal Code, which vested complete autonomy in the adult male citizens of every municipality in the Islands, except that of Manila, which for special reasons, like those which have prevailed with respect to the government of the city of Washington, was preserved for control by the Central Government. The electorate was limited to those who could speak English or Spanish, or who paid a tax of #15 a year, or who had filled municipal office under the Spanish régime, and did not exceed 20 per cent of the total adult males of the population. Very shortly after this a form of provincial government was established in which the legislative and executive control of the province was largely vested in a provincial board consisting of a governor and treasurer and supervisor. Pro- vision was made for the election of a governor and the appointment under civil-service rules of a treasurer and supervisor. Subsequently it wag found that the government was too expensive and the office of supervisor was finally abolished, and after some four vears the board was made to consist of a governor and treasurer, and a third member elected as the governor was, thus effecting popular autonomy in the provincial governments. And now comes the Assembly. It is said by one set of critics, to whom I have already referred, that the franchise is the last privilege that ought to be granted in the development of a people into a self-governing community, and that we have put this into the hands of the Filipinos before they have shown themselves to be industrially and in other ways capable of exercising the self-restraint and conservatism of action which are essential to political stability. I can not agree with this view. The best political education is practice in the exercise of political power, unless the subject is so ignorant as to be wholly blind to his own REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 89 interests. Hence the exercise of a franchise which is conferred only on those who have qualifications of education or property that prove intelligence and substance, is likely to teach the electorate useful political lessons. The electorate under the Philippine law are suf- ficiently alive to their own interests to make the exercise of political power a useful training for them, while the power to be exercised is subject to such limitation as not to be dangerous to the community. More than this, the granting of the franchise was most useful in pro- ducing tranquillity among the people. The policy has been vindi- cated by the fact. The importance of the agency of the Army of the United States in suppressing insurrection I would not minimize in the least; but all who remember clearly the succession of events from 1901 to 1903 will admit that the return to peace and the acquiescence of the Fili- pino people in American sovereignty were greatly influenced and aided by the prospect held out to the Filipinos of participation in the government of the Islands and a gradual extension of popular self-control. Without this and the confidence of the Filipino people in the good purposes of the United States and the patience with which they endured their many burdens that fate seemed to increase, the progress which has been achieved would have been impossible. Let us consider in some detail what progress has been made: First. To repeat what I have said, the Islands are in a state of tranquillity. On this very day of the opening of the National Assembly, there has never been a time in the history of the Islands when peace and good order have prevailed more generally. The difficulties presented by the controversies arising with and concern- ing the Roman Catholic Church have either been completely settled or are in process of satisfactory adjustment on a basis of justice and equity. Second. Most noteworthy progress has been made in the spread of general education. One of the obstacles to the development of this people speaking half a dozen or more different native dialects was a lack of a common language, which would furnish a medium of sympathetic touch with modern thought and civilization. The dense ignorance of a very large proportion of the people emphasized the necessity for a general educational system. English was the language of the sovereign power, English was the business language of the Orient, English was the language in which was thought and written the history of free institutions and popular government, and English was the language to which the common people turned with eagerness to learn. A system of education was built up, and to-day upward of half a million children are being taught to read, write, and recite English. It is not an exaggeration to assert that now more native Filipinos speak English than Spanish, although Spanish 90 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. was the language of the ruling race in these Islands for more than two hundred and fifty years. English is not so beautiful as the Spanish language, but it is more likely to prove of use to the Fili- pinos for the reasons I have given. The strongest basis for our confidence in the future of the Filipino people is the eagerness with which the opportunities extended for education in English have been seized by the poor and ignorant parents of these Islands for their children. It is alike pathetic and encouraging. T am not one of those who believe that much of the public money should be expended here for university or advanced education. Perhaps one institution merely to form a type of higher education may be established at Manila or at some other suitable place in the Islands, and special schools to develop needed scientific professions may be useful, but the great part of the public funds expended for education should be used in the spread of primary education and of industrial education—that education which shall fit young men to be good farm- ers, good mechanics, good skilled laborers, and shall teach them the dignity of labor and that it is no disgrace for the son of a good family to learn his trade and earn his livelihood by it. The higher education is well for those who can use it to advantage, but it too often fits a man to do things for which there is no demand, and unfits him for work which there are too few to do. The enlagrement of opportunity for higher education may well await private beneficence or be postponed to a period when the calls upon the Island Treasury for other more important improvements have ceased. We have laid the foundation of a primary and industrial educational system here which, if the same spirit continues in the Government, will prove to be the most last- ing benefit which has been conferred on these Islands by Americans. Third. We have introduced here a health department which is grad- ually teaching the people the necessity for sanitation. In the years to come, when the great discoveries of the world are recited,that which will appear to have played as large a part as any in the world’s prog- ress in the current hundred years will be the discovery of proper sani- tary methods for avoiding disease in the Tropics. The introduction of such methods, the gradual teaching of the people the simple facts affecting hygiene, unpopular and difficult as the process of education has been, will prove to be another one of the great benefits given by Americans to this people. The efforts of the Government have not been confined to preserving the health of the human inhabitants of these Islands, but have been properly extended to doing what can be done in the matter of the health of the domestic animals which is so indispensable to the mate- rial progress of the Islands. The destruction by rinderpest, by surra, and by other diseases to which cattle and horses are subject, I have already dwelt upon. Most earnest attention has been given by REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 91 men of the highest scientific attainment to securing some remedy which will make such widespread disasters in the future impossible. Much time and effort and money have beenjspent and much has been accomplished in this matter. The people are being educated in the necessity for care of their cattle and for inviting in public,aid at once when the dread rinderpest shows its presence. Serums have been discovered that have been effective to immunize cattle, and while the disease has not disappeared, it is not too much to say thatisuch an epidemic as that which visited the Islands in 1900, 1901, and 1902 is impossible. Fourth. A judicial system has been established in the Islands which. has taught the Filipinos the possibility of the independence ofja judi- ciary. This must be of enduring good to the people of the Islands. The personnel of the judges is divided between Americans and Fili- pinos, both for the purpose of aiding the Americans to learn and administer civil law and of enabling the Filipinos to learn and admin- ister justice according to a system prevailing in a country where the judiciary is absolutely independent of the executive or legislative branches of the Government. Charges have been made that individ- ual judges and particular courts have not been free from executive control and have not been without prejudices arising from the race of the particular judge who sat in the court, but on the whole an impar- tial review of the six years’ history of the administration of justice will show that the system has been productive of the greatest good and that right has been sustained without fear or favor. It is entirely natural that a system which departs from the principles of that in which one has been educated should at times attract his severe animadversion, and as the system here administered partakes of two systems, it is subject to the criticism of those, trained in each, Another agency in the administration of justice has been the Con- stabulary. When I was here something more than two years ago, ‘the complaints against that body were numerous, emphatic, and bitter. I promised, on behalf of the Philippine government and the Washington Administration, that close investigation should be made into the complaints and that if there was occasion for reform, that reform would be carried out. It gratifies me on my return to the Islands now to learn that a change has come, that the complaints against the Constabulary have entirely ceased, and that it is now conceded to be discharging with efficiency the function which it was chiefly created to perform, of sympathetically aiding the provincial governors and municipal authorities of the Islands in maintaining the peace of each province and each municipality, and that there is a thorough spirit of coéperation between the officers and men of the Constabulary and the local authorities. 92 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. In respect to the administration of justice by justices of the peace, reforms have been effected, but I am not sure that there is not still great room for improvement. This is one of the things that come. home close to the people of the country and is a subject that will doubtless address itself to the wise action and consideration of the National Assembly.. Fifth. We come to the matter of public improvements. The port of Manila has been made into a harbor which is now as secure as any in the Orient, and which, with the docking facilities that are now being rapidly constructed, will be as convenient and as free from charge and burden as any along the Asiatic coast. The improve- ments in Iloilo and Cebu harbors, the other two important ports of the Islands, are also rapidly progressing. Road building has pro- ceeded in the Islands, both at the instance of the Central Government and through the agency of the provinces. The difficulties of road building and road maintaining in the Philippines are little understood by those not familiar with the difficulty of securing proper material to resist the enormous wear and tear caused by the torrential down- pours of the rainy season. Progress in this direction must necessarily be gradual, for the Islands are a poor country, comparatively speak- ing, and roads are expensive. Early in the history of the Islands we began the construction of a road from Pangasinan to the mountains of Benguet in order to bring within the reach of the people of the Islands that healthful region where the thermometer varies from 40 to 80 degrees, and in which all the diseases of the- Tropics are much more easily subject to cure than in the lowlands. Had it been supposed that the road thus to be con- structed would involve an expense of nearly two millions of dollars, the work would not have been begun, but, now that the road has been constructed, I would not undo what has been done even if it were possible. As time progresses, the whole Province of Benguet will be settled; there will be made the home of many educational institutions,’ of many sanitariums, and there will go, as transportation becomes cheaper, the Filipino people to obtain a change of air and acquire a renewed strength that is given to tropical peoples by a visit to the temperate zone. When the Americans came to the Islands there ‘as one railroad 120 miles long, and that was all. In spite of circumstances, which I have already detailed, making capital reluctant to come here, contracts have now been entered into, that are in the course of fulfillment, which in five years will give to the Islands a railroad mileage of 1,000 miles. The construction of these roads will involve the investment of twenty to thirty millions of dollars, and that in itself means an added pros- perity to the country, additional demands for labor, and the quicken- ing of all the nerves of trade. When the work is finished, it means a REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 93 great additional profit to agriculture, a very great enlargement of the export capacity of the Islands, and a substantial elevation of the material condition of the people. In the matter of municipal improvements, which directly concern the people, that which has taken place in Manila is most prominent. The improvement of the streets, the introduction of a satisfactory street railway system 35 miles in length, the improvement of the general appearance of the city and its hygienic condition, the con- struction of new waterworks and a new sewage system, all strike one who knew the city in 1900. The improvements of other municipali- ties in the Islands have not kept pace with those in Manila, and of course they were not so imperatively needed; but the epidemics of cholera and plague and smallpox which have prevailed have con- vinced those in authority of the necessity of bettering the water sup- ply of all municipalities and for improving this by the sinking of artesian wells and other means, so that bad water, that frightful source of the transmission of disease, should be reduced to a mini- mum. The government now maintains and operates a more complete sys- tem of posts, telephones, and telegraphs than ever before in the history of the Islands. Seventy-five per cent of the 652 municipali- ties now established in these Islands have post-offices, in 235 of which there are now opened for business postal savings banks. The telegraph or telephone now connects all of the provincial capitals with Manila and more than 90 offices are now open for business. Appropriation has been made to provide for a system of rural free delivery. In less than one year of operation the Postal Savings Bank has deposits exceeding 600,000, and the number of Filipino depositors now exceeds 1,000, and the proportion of their deposits is steadily increasing. Sixth. We have inaugurated a civil service law for the selection of civil servants upon the merit system. On the whole it has worked well. It has grown with our experience and has improved with the disclosure of its defects. One of the burning questions which constantly presents itself in respect to the civil service of a Government like this is, how far it shall be American and how far Filipino. In the outset it was essential that most of the civil servants of the government should be Americans. The government was English speaking, and the practical difficulty of having subordinates who did not speak that language prevented large employment of Filipinos. Then their lack of knowledge of their American governmental and business methods had the same tendency. The avowed policy of the government has been to employ Filipinos wherever, as between them and Americans, the Filipinos can do equally good work. This has given rise to frequent and bitter criti- cism, because it has been improperly assumed that every time that 94 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. there has been a vacancy, it could be filled by a Filipino. There are two great advantages in the employment of Filipinos—one is that this is the government of the Filipinos and they ought to be employed where they can be, and the other is that their employment is a matter of economy for the government, because they are able to live more cheaply and economically in the Islands than Americans and so can afford to receive less salary. There has therefore been a constant reduction of American employees and an increase of Filipinos. This has not been without its disadvantage because it makes competent American employees feel an uncertainty of tenure, and materially affects their hope of promotion and their interest.in the government of which they are a part. This disadvantage I believe can be largely obviated. There are many American civil servants in this government who have rendered most loyal, difficult, and efficient service, in season and out of season, through plague and epidemic, in sickness and in health, in tull sympathy with the purposes and policy of the government. Without them our government would have been a complete failure. They will never receive adequate reward. Their interest in their work has prevented their return to their native land, where the same energy and efficiency would have earned them large return. They are most valuable public servants who have done a work that, had they done it in the English colonial service-or at home, would have been certain to secure to them a permanent salary and entire freedom from anxiety as to the future. I would be glad to see adopted a system of permanent tenure and retirement on pensions for the smal] and higher classes of civil employees. Their continuance in the government indefinitely is a public necessity. I sincerely hope the Philippine Assembly will exhibit its spirit of justice and public interest to the point of concurring in such a measure even though this, at present, will be of benefit to more Americans than Filipinos. Seventh. In the progress which has been made, I should mention the land system, the provision for homestead settlement, for free patents, and for perfecting of imperfect titles by land registration. The homestead settlements under the law were very few for several years, but I am delighted to learn that during 1907 they reached 4,000 and the free patents applied for were 10,600. It is probable that the machinery for land registration, though necessary, is too expensive, and it will be for you to decide whether, in view of the great public benefit that good land titles will bring to the country, it may not be wise to reduce the cost of registration to the landowner and charge the expense to the government. Capital will not be advanced to the farmer unless his title is good, and the great benefit of an agricultural bank can never be realized until the registration of titles is greatly increased. REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 95 This naturally brings me to the subject of the Agricultural Bank. After much effort Congress was induced to pass an act which author- izes the Philippine Government to invite the organization of such a bank with private capital by guaranteeing an annual income of a cer- tain percentage on the capital invested for thirty years. Negotia- tions have been opened and are pending with some American capital- ists in the hope of securing the establishment of such a bank. The condition of agriculture in the Islands while generally much improved in the last three years is still unsatisfactory in many parts of the Islands, due not only to the continued scarcity of cattle but also to the destructive effect of the typhoon of 1905 upon the hemp culture. This has properly led to the suspension of the land tax for another year and the meeting of half the deficit in provincial and municipal treasuries thus produced, out of the central treasury. .The production of rice has, however, materially increased. It is also a source of satisfaction to note that the exports from the Islands, which are wholly agricultural, are larger in value by half a million gold dollars than ever in the history of the Islands. One of the chief duties of this Assembly is to. devote its attention and practical knowledge to measures for the relief of agriculture. Eighth. The financial condition of the Philippine government is quite satisfactory, and so, too, is the state of the money and cur- rency of the Islands. There is a bonded indebtedness for the pur- chase of the friar lands amounting to $7,000,000, for the waterworks and sewage of Manila of $3,000,000, and for public works amounting to $3,500,000. Sinking funds have been established for all of these. The price paid for the friar lands was a round one and may result, afterthe lands are disposed of, in somenet pecuniary loss to the Govern- ment, but the political benefit of the purchase was a full justification. The lands will be disposed of to the tenants as rapidly as the public interest will permit. The only other permanent obligation of the government is the contingent liability on the guaranty of interest for thirty years on the bonds issued to construct 300 miles of railroad in the Visayas. We may reasonably hope that this obligation will soon reduce itself to nothing when the roads come into successful operation. The Governor-General reports to me that the budget for 1908 will show an income and surplus from last year, without any land tax, from which it will be possible to pay all the interest on the -bonds and guaranties, all the insular expenses, the proper part of the expenses of Manila, $2,000,000 in permanent improvements, and still have on hand for contingencies $1,000,000. I am further advised that the condition of most of the provinces is excellent in respect to income and surplus. It has been necessary to reduce the silver in the Philippine peso to keep its intrinsic value within the value of 50 cents, gold, at which 96 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. it is the duty of the government to maintain it, and this change is being rapidly carried through without much difficulty. The benefit to the people, and especially the poorer and working classes, in the establishment of the gold standard is very great. It eliminates a ~ gambling feature from the business of the Islands that always worked for the detriment of the Philippine people. We are just carrying through a settlement with the Spanish-Filipino Bank which I hope will provide a meahs of safely adding to the currency of the country and increasing its elasticity. In recounting these various evidences of progress in the last six years I am not unmindful that the business of the Islands is still far from prosperous. -Indeed, it is noteworthy that so much progress has been made in the face of continued business depres- sion due to the various causes I have elsewhere enumerated; but it is a long lane that has no turning and I look forward to the next decade in the history of the Islands as one which will be as pros- perous as this one has been the reverse. Business is reviving, the investment of foreign capital is gradually increasing and only one thing is needed to insure great material improvement, and that is the continuance of conservatism in this Government. I feel confident that the inauguration of this Assembly, instead of ending this conservatism as the prophets of evil would have it, will strengthen it. Before discussing the Assembly, I wish to give attention to one report that has been. spread to the four corners of the globe, and which, if credited, might have a pernicious effect in these Islands. I refer to the statement that the American Government is about to sell the Islands to some Asiatic or European power. Those who credit such a report little understand the motives which actuated the American people in accepting the burden of this Government. The majority of the American people are still in favor: of carrying out our Philippine policy as a great altruistic work. They have no selfish object to secure. There might be a grim and temporary satisfaction to those of us who have been subjected to severe criti- cism for our alleged lack of liberality toward the Filipino people and of sympathy with their aspirations, in witnessing the rigid governmental control which would be exercised over the people of the Islands under the colonial policy of any one of the powers to whom it is suggested that we are about to sell them; but that would. not excuse or justify the gross violation, by such a sale, of the implied obligation which we have entered into with the Filipino people. That obligation presents only two alternatives for us—one is a permanent maintenance of a popular government of law and order under American control, and the other, a parting with such con- trol to the people of the Islands themselves after they have become REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 97 fitted to maintain a government in which the right of all the inhabit- ants to life, liberty, and property shall be secure. I do not. hesi- tate to pronounce the report that the Government contemplates the transfer of these Islands to any foreign power as utterly with- out foundation. It has never entered the mind of a single person in the Government responsible for the Administration. Such a sale must be the subject of a treaty, and the treaty power in the Government of the United States is exercised by the President and the Senate, and only upon the initiative of the President. Hence an Executive declaration upon this subject is more authoritative than an Executive opinion as to probable Congressional action. Coming now to the real occasion of this celebration, the installa- tion of the National Assembly, I wish, for purposes of clearness, to read the section of the organic act under which this Assembly has been elected: That two years after the completion and publication of the census, in case such condition of general and complete peace with recognition of the authority of the United States shall have continued in the territory of said Islands not inhabited by Moros or other non-Christian tribes and such facts shall have been certified to the President by the Philippine Commission, the President upon being satisfied thereof shall direct said Commission to call, and the Commission shall call, a general elec- tion for the choice of delegates to a popular assembly of the people of said Territory in the Philippine Islands, which shall be known as the Philippine Assembly. After said Assembly shall have convened and organized, all the legislative power hereto- fore conferred on the Philippine Commission in all that part of said Islands not inhab- ited by Moros or other non-Christian tribes shall be vested in a legislature consisting of two houses—the Philippine Commission and the Philippine Assembly. Said Assembly shall consist af not less than fifty nor more than one hundred members, to be apportioned by said Commission among the provinces as nearly as practicable according to population: Provided, That no province shall have less than one member: And provided further, That provinces entitled by population to more than one member may be divided into such convenient districts as the said Commission may deem best. Public notice of such division shall be given at least ninety days prior to such elec- tion, and the elections shall be held under rules and regulations to be prescribed by law. The qualification of electors in such election shall be the same as is now provided by law in case of electors in municipal elections. The members of Assembly shall hold office for two years from the first day of January next following their election, and their successors shall be chosen by the people every second year thereafter. No person shall be eligible to such election who is not a qualified elector of the election district in which he may be chosen, owing allegiance to the United States, and twenty-five years of age. The Legislature shall hold annual sessions, commencing on the first Monday of Feb- ruary in each year and continuing not exceeding ninety days thereafter (Sundays and holidays not included): Provided, That the first meeting of the Legislature shall be held upon the call of the Governor within ninety days after the first election: And provided further, That if at the termination of any session the appropriations necessary for the support of the government shall not have been made, an amount equal to the sums appropriated in the last appropriation bills for such purposes shall be deemed to be appropriated; and until the Legislature shall act in such behalf the Treasurer may, with the advice of the Governor, make the payments necessary for the purposes aforesaid. 33483—08——7 98 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. The Legislature may be called in special session at any time by the Civil Governor for general legislation, or for action on such specific subjects as he may designate. No special session shall continue longer than thirty days, exclusive of Sundays. The Assembly shall be the judga of the elections, returns, and qualifications of its members. A majority shall constitute a quorum to do business, but a smaller number may adjourn from day to day and may be authorized to compel the attendance of absent members. It shall choose its Speaker and other officers, and the salaries of its members and officers shall be fixed by law. It may determine the rule of its proceed- ings, punish its members for disorderly behavior, and with the concurrence of two- thirds expel a member. It shall keep’a journal of its proceedings, which shall be pub- lished, and the yeas and nays of the members on any question shall, on the demand of one-fifth of those present, be entered on the journal. I can well remember when that section was drafted in the private office of Mr. Root in his house in Washington. Only he and I were present. J urged the wisdom of the concession and he yielded to my arguments and the section as then drafted differed but little from the form it has to-day. It was embodied in a bill presented to the House and passed by the House, was considered by the Senate, was stricken out in the Senate, and was only restored after a conference, the Sena- tors in the conference consenting to its insertion with great reluctance. I had urged its adoption upon both committees, and, as the then Governor of the Islands, had to assume a responsibility as guarantor in respect to it which I have never sought to disavow. I believe that it is a step and a logical step in the carrying out of the policy an- nounced by President McKinley and that it is not too radical in the interest of the people of the Philippine Islands. Its effect is to give to a representative body of the Filipinos a right to initiate legislation, to modify, amend, shape, or defeat legislation prdposed by the Com- mission. The power to obstruct by withholding appropriations is taken away from the Assembly, because if there is not an agreement as to appropriations between the Commission and the Assembly, then the appropriations of the previous year will be continued; but the power with this exception, absolutely to veto all legislation and initiate and shape proposed laws is a most substantial one. The con- currence of the Assembly in useful legislation can not but command popular support for its enforcement; the discussion in the Assembly and its attitude must be informing to the executive and to the other branch of the legislature, the Commission, of what are the desires of people. The discharge of the functions of the Assembly must give to the chosen representatives of the Philippine electorate a most valuable education in the responsibilities and difficulties of practical govern- ment. It will put them where they must investigate not only the theoretical wisdom of proposed measures, but also the question whether they can be practically enforced and whether, where expense is involved, they are_of sufficient value to justify the imposition of a financial burden upon the people to carry them out. It will bring the members of the Assembly as representatives of the people into close REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 99 relations with the Executive, who will be most anxious to preserve a harmony essential to efficient government and progressive, useful measures of reform. Critics who do not sympathize with our Philippine policy, together with those who were reluctant to grant this measure of a legislative assembly to the Philippine people at this time, have not been slow to comment on the result of the election as an indication that we are going too fast. I differ entirely from the view of these critics as to the result of this election and the inferences to be drawn from it. The small total vote as compared with the probable number of the total electorate shows that a considerable majority of those enti- tled to vote did not exercise the privilege. This indicates either an indifference or a timidity that we would not find in a people more used to the wielding of political power; but it affords no reason for supposing that as the Assembly proves its usefulness and important power, the ratio of votes to the total electorate will not rapidly increase. The election was held without disturbance. In many districts there were bitter controversies, but the complaints of fraud, violence, or bribery are insignificant. Although the Government was sup- posed to favor one party, and was subject to much criticism in the campaign, no one has been heard to say that the power of the Execu- tive was exerted in any way improperly to influence the election. This furnishes a good object lesson. A popular majority of those who exercise the franchise have voted for representatives announcing a desire for the immediate separation of the Islands from the United States. This majority is a small one when the returns are carefully considered and is much less than the ratio between the party representatives in the Assembly would lead one to suppose. However, assuming a decided majority tor imme- diate independence, the result is one which I thought possible even while I was urging the creation of the Assembly. It is not a disap- pointment. If it indicated that a majority of the representatives elected by the people were a body of irreconcilables determined to do nothing but obstruct the present government, it would indeed be discouraging; but I am confident from what I know and hear of the gentlemen who have been elected that while many of them differ with me as to the time in which the people of the Islands will become fit for complete self-government, most of them have an earnest desire that this government shall be carried on in the inter- ests of the people of the Philippines and for their benefit, and shall be made for that purpose as effective as possible. They are thus generally conservative. Those whose sole aim is to hold up the government to execration, to win away the sympathy of the people in order to promote disturbance and violence, have no proper place 100 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. in this Assembly. Had the Filipino people sent such a majority, then I should have to admit that the granting of the Assembly was a mistake and that Congress must abolish it. It has been reported in the Islands that I was coming here for the purpose of expressing, in bitter and threatening words, my disap- pointment at the result of the election. Nothing could be further from my purpose, nothing could be less truly descriptive of my con- dition of mind. I am here, filled with a spirit of friendship and encouragement for these members, who now enter upon a new field in which they have much to learn, but where everything can be learned and this duty most efficiently discharged if they are led by an earnest desire to assist and guide the government in aiding the people. I have no right to appeal to the members of this Assembly to conduct themselves in the discharge of their high duties in a manner to vindicate me in the responsibility I assumed in urging Congress to establish this Assembly, because they should find a stronger reason for so doing in their sworn duty; but it is not inap- propriate for me to touch on this personal feature of the situation, because my attitude has been misconstrued and my sympathetic interest in, and hope for, the success and usefulness of this National Assembly have not been properly stated. I venture to point out a number of things that you will learn in the course of your legislative experience. One is that the real object of a legislature is to formulate specific laws to accomplish specific pur- poses and reforms and to suppress specific evils; that he makes a use- ful speech who studies the question which he discusses and acquires and imparts practical information by which theremedies offered can be seen to be applicable to the evil complained of; that the office of a legislator for a great country like this is one that can be discharged conscientiously only by the use of great labor, careful, painstaking investigation and hard work in the preparation of proposed measures. One of the most necessary traits in a successful legislator or executive is patience. Where the sudden change in that which is regarded as a wrong system may paralyze a necessary arm of the government, ways and means must be devised to bring about the change gradually. There will be a temptation to take up measures which will invite the support of popular prejudice rather than measures which will really accomplish good for the body politic. Such a temptation exists in older legislative bodies than this, and we can not hope that it will be absent from here; but, in the end, the man who exerts the most influence in this body and among the people will be the man who devotes most conscientiously his time to acquiring the information upon which legislation should be based and in explaining it to his colleagues and his people. The man who is seeking to put his adver- sary or the government in an embarrassing situation may win tem- REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. 101 porary triumph; but the man who himself feels responsibility of government, and who, while not concealing or failing to state the ,evils which he considers to exist in the government, is using every effort to reform those evils, will ultimately be regarded as the bene- factor of his country. T have not the time and doubtless not the information which would justify me in pointing out to the Assembly the various subjects- matter to which they may profitably devote their attention with a view to the formulation of useful legislation. They will properly feel called upon to devote their attention to public economy in the matter of the numerous governmental bureaus which have been made the sub- ject of criticism. It is quite possible that they may find in their irivestigations into these matters reasons for cutting off officers and bureaus, but I sincerely hope that no such effort will be made until a full investigation is had into the utility of the functions which the bureau performs and the possibility of dispensing with them. I can remember that while I was Governor there was much outcry against the extravagance of maintaining certain bureaus which in subsequent crises in the public welfare proved their great usefulness beyond cavil. Of course we shall encounter in this investigation and discus- sion a radical difference between legislators and others as to the func- ‘tion which a government in these Islands ought to perform. It is ‘entirely easy to run an economical government if all that you do is ‘to maintain order and if no steps are taken to promote health, to promote education, and to promote the general welfare of the inhab- itants. It is of course the object of the person charged with the duty of governing a country to reach the golden mean—that is, to make governmental provisions for the welfare of the people without imposing too great a tax burden for the purpose. The taxes in this country are imposed partly by the legislature and partly by Con- gress. The former will constantly have your attention. In so far as the welfare of the country is affected by the latter, to wit, the lpustoms duties, and can be improved by a change of them, it would 'bé wise for the Legislature to devote much time and thought to recommendations to Congress as to how they should be changed, for I doubt not that Congress will be willing and anxious to take such steps as may commend themselves to the people of the Islands in the matter of adjustment of duties, having regard to the raising of sufficient revenue on the one hand and to as little interference with iseful freedom of trade as possible on the other. As you shall conduct your proceedings and shape your legislation m patriotic, intelligent, conservative, and useful lines, you will show aore emphatically than in any other way your right and capacity to ake part in the government and the wisdom of granting to your ssembly and to the people that elected you, more power. There 102 REPORT OF SECRETARY OF WAR ON THE PHILIPPINES. are still many possible intervals or steps between the power you now exercise and complete autonomy. Will this Assembly and its successors manifest such an interest in the welfare of the people and such clear-headed comprehension of their sworn duty as to call for & greater extension of political power to this body and to the people whose representative it is? Or shall it, by neglect, obstruction, and absence of useful service, make it necessary to take away its existing powers on the ground that they have been prematurely granted? Upon you falls this heavy responsibility. I am assured that you will meet it with earnestness, courage, and credit. In closing, I can only renew my congratulations upon the auspi- cious beginning of your legislative life in a fair election, and to express to you my heartfelt sympathy in the work which you are about to undertake, and my confidence that you will justify in what you do, and do not do, the recommendations of those who are respon- sible for that section in the organic act that has given life to this Assembly. 3B 10 oe Library ia Special report o | i I All books are subject to recall after two weeks. Olin/Kroch Library DATE DUE GAYLORD PRINTED IN U.S.A. eed ils se