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Washington, October 31, 1908.

SIR: I have the honor to submit the following report of the Bureau of Insular Affairs for the past year:




By the act of March 8, 1902, Congress provided for suspension of the application of the coastwise laws of the United States to the Philippine Islands until July 1, 1904. By subsequent enactments of April 15, 1904, and April 30, 1906, application of these laws to the Philippines was further postponed to July 1, 1906, and April 11, 1909, respectively. Finally, during the last session of Congress, this temporary suspension was made permanent by the following act:

AN ACT To repeal an act approved April thirtieth, nineteen hundred and six, entitled "An act to regulate shipping in trade between ports of the United States and ports or places in the Philippine Archipelago, between ports or places in the Philippine Archipelago, and for other purposes," and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That until Congress shall have authorized the registry as vessels of the United States of vessels owned in the Philippine Islands, the government of the Philippine Islands is hereby authorized to adopt, from time to time, and enforce regulations governing the transportation of merchandise and passengers between ports or places in the Philippine Archipelago.

SEC. 2. That on and after the passage of this act the same tonnage taxes shall be levied, collected, and paid upon all foreign vessels coming into the United States from the Philippine Islands which are required by law to be levied, collected, and paid upon vessels coming into the United States from foreign countries.

SEC. 3. That the provisions of law restricting to vessels of the United States the transportation of passengers and merchandise directly or indirectly from one port of the United States to another port of the United States shall not be applicable to foreign vessels engaging in trade between the Philippine Islands and the United States. SEC. 4. That the Philippine Commission shall be authorized and empowered to issue licenses to engage in lighterage or other exclusively harbor business to vessels or other craft actually engaged in such business at the date of the passage of this act and to vessels or other craft built in the Philippine Islands or in the United States and owned by citizens of the United States or by inhabitants of the Philippine Islands. SEC. 5. That such of the navigation laws of the United States as are in force in the Philippine Islands in regard to vessels arriving in the Philippine Islands from the

mainland territory and other insular possessions of the United States shall continue to be administered by the proper officials of the government of the Philippine Islands. SEC. 6. That the act entitled "An act to regulate shipping in trade between ports of the United States and ports or places in the Philippine Islands, between ports or places in the Philippine Islands, and for other purposes," approved April thirtieth, nineteen hundred and six, and all laws and parts of laws in conflict with the provisions of this act, are hereby repealed

Approved, April 29, 1908.

In this act no new legislation was embodied beyond that contained in section 3, excepting, as indicated, the Philippines from the coastwise laws of the United States. The necessity of this legislation was set forth regularly for a number of years in the annual reports of the Secretary of War, the Chief of the Bureau of Insular Affairs, and the Philippine Commission, and in the hearings before the committees of both Houses of Congress. The application of the coastwise laws to the Philippines would have restricted to vessels of the United States all transportation of freight and passengers between the United States and the islands a restriction that, if put into effect, must have worked serious injury to commercial and industrial interests both in the Philippines and in the United States. The prior acts, providing for the temporary suspension of these laws, did not seem to take into account that freight and passengers between United States and Philippine ports could not be transported wholly in American bottoms without substantial increase in the number of American vessels available for this trade, or that such increase within any reasonable time under present conditions was unlikely. As matters of fact, notwithstanding the notice to American shipping interests through the acts of 1902, 1904, and 1906, only a fraction more than 7 per cent of the value of the products of the Philippines coming to the United States during the fiscal year ended June 30, 1908, was carried in American bottoms, and of the 366 steam vessels clearing with cargo from Manila during the same period only 13 were American. Nothing further appears necessary to establish the wisdom of this legislation.


The Philippine Scouts are by law a part of the Regular Army of the United States, and as such do not come within the administrative control of this bureau. Nevertheless, as an important factor in the education of the Filipino people and in the creation of a higher standard of living in the islands, as well as in the extension of American influence, they fall under its direct concern.

Captains of scout companies. For this reason the provision made by Congress during its last session for the promotion of officers of scout companies to include the grade of captain is a source of both interest and satisfaction to the bureau.

Filipino cadets at the Military Academy.-In the same connection the provision contained in the act of May 28, 1908, for the support of the United States Military Academy, authorizing the designation by the Philippine Commission of one Filipino cadet for each class at the Academy was not only a measure in which the Bureau was more directly interested, but the enactment of which it urged in every proper way. Under the law such Filipinos both at entrance and while at the Academy will stand on the same footing in every way as cadets appointed from the United States; but on graduation they will be eligible only for commissions in the Philippine Scouts. No

appointments have as yet been made under this authority, but it is expected that one will be designated in time to enter at West Point with the next fourth class.

A bill of similar tenor, authorizing the appointment of five Filipinos to receive instruction at the United States Naval Academy, was also introduced in Congress during the last session, but further than reference to the Committee on Naval Affairs received no action.


On the earnest recommendation of the Secretary of War Congress provided in the act of May 11, 1908, for the increase of the Philippine Commission from eight to nine members, and for the creation of a new executive department. For several years previously the commission had consisted of the governor-general, four American members presiding over executive departments, and three Filipino members without portfolios, but sharing in the legislative duties of the commission. Under the new law five members still constitute a quorum as before and with the additional member a quorum is more readily obtainable and the embarrassment that has sometimes arisen due to the impossibility of securing the presence of sufficient members for the transaction of business rendered less likely of occurrence in the future. The absence of members from Manila is at times unavoidable. the proper discharge of their duties and for the better understanding of local conditions it is frequently necessary for them to visit parts. of the archipelago remote from the capital. Under present conditions journeys of this character may require six weeks or more for completion, which, with absence caused by illness or by authorized leave, has been sufficient at times to interfere with the proper conduct of public affairs.


The new executive department authorized by the law has not yet been created, but the first step in the direction contemplated by Congress was taken on July 1, 1908, when Mr. Gregorio Araneta, attorney-general of the Philippine Islands, was appointed to the existing departmental vacancy as secretary of finance and justice. Two legislative vacancies in the commission have also been filled by the appointment of Judge Newton W. Gilbert, of Indiana, and of Mr. Rafael Palma, of the Philippine Islands.


By an act approved March 26, 1908, Congress appropriated $403,030.19, payable to the representative of the Roman Catholic Church in the Philippine Islands, the Archbishop of Manila, as trustee, in full satisfaction of all claims arising out of the use of church property by the troops of the United States during and following the war with Spain and the Philippine insurrection. These were claims of the Catholic Church proper and bore no relation to the problem of the "friars' lands," already satisfactorily solved by the purchase of the lands of the religious orders by the Philippine government. The claims in this case arose out of the occupation of church buildings by the United States forces during and following active military operations throughout the islands, and covered both the rent of the property while occupied and the damage resulting from such occupancy.

This appropriation was based upon the recommendations of a board composed of officers of the Army convened at Manila August

1, 1905, and known as the board on church claims. Under rules laid down by the Secretary of War, June 12, 1905, this board made an exhaustive investigation, continuing for the better part of six months, of all the claims in question. It examined many witnesses under oath, and its members visited numerous towns where buildings involved were situated in order to determine the value of the property and the amount of damage due to occupation by United States troops. The claims presented to the board amounted in total to $2,442,963.13 and the award recommended was $363,030.19, with a further conditional recommendation of a payment of $40,000 for the spoliation and loss of sacred ornaments, images, and vestments, provided that Congress should, as a matter of equity, desire to render such compensation to the church. After a full hearing before the committees of both Houses, where all the witnesses examined were united and positive in the opinion that the recommendations of the board were conservative, Congress approved of the awards as recommended and provided for the appropriation as indicated. Payment has been made to the representative of the church and the claims, so far as the Government is concerned, are settled.


Through the sundry civil act approved May 27, 1908, Congress authorized and directed the Secretary of War to aid the people of the Philippine Islands in providing and maintaining an appropriate and creditable exhibit of the resources and products of those islands at the Alaska-Yukon-Pacific Exposition to be held at Seattle, Wash., in 1909, and for this purpose provided for an appropriation of not to exceed $25,000.



On the opening day of the Sixtieth Congress a bill was introduced providing for free entry into the United States of Philippine products, excepting, for the present, sugar, tobacco, and rice, on which, under the proposed measure, 25 per cent of the United States tariff duty would be collected, and providing for free entry of United States products into the Philippine Islands, and for free trade between the United States and the Philippine Islands, without exceptions, after April 11, 1909. This bill is identical with the bill introduced at the first session of the Fifty-ninth Congress, and the merits of which, as well as the effect of the United States tariff on Philippine sugar and tobacco, have been covered in previous reports. In view of the fact that all interests involved in the proposed legislation had already received consideration, no congressional hearings were had during the last session. Adjournment was reached without action on this bill.

So confident are the friends of the measure in the belief that it can not injure similar interests in this country, that they are entirely agreeable to the inclusion of a clause limiting the amount of Philippine sugar to be admitted under its provisions to 400,000 tons annually. This, the sugar people here admit, could not injuriously affect their interests, while it would, nevertheless, be sufficient to restore some of the former prosperity to the sugar interests in the islands and to develop those provinces where sugar has been produced for many

years and where the depression in its production now affects the prosperity of the whole archipelago.

The United States now receives about one-fourth of 1 per cent of the cigars exported from the Philippine Islands, but if the entire product were received here, it would form only a little over 1 per cent of the total consumption. There has been a fairly regular increase of over 2 per cent annually in the number of cigars consumed in the United States, and the entire Philippine production could supply this natural increase for only about five months. But even if there were absolutely free admission of the Filipino-made cigars only a comparatively small proportion of those produced would seek the American market. The greater number of the cigars made in the Philippines are of inferior quality and would not find purchasers here, while many of the better grades would still continue to go to other countries, since comparatively few people here have acquired a taste for them. Any increased demand, therefore, would be a matter of gradual growth, but a reduction of the present duties would afford the moral encouragement of which producers in the islands now stand so seriously in need.

The other principal products of the Philippine Islands, hemp, copra, and rice, have the advantages over sugar of not requiring such enormous capital for development and of not entering into competition with interests of this country.


In accordance with the recommendations of the Philippine Commission a bill was introduced during the last session providing for the following changes in the Philippine tariff act of March 3, 1905:

First. To reduce the duty on silvered copper foil, largely used in the packing of buttons, from $2 to 50 cents per kilo (2.2046 pounds), net weight, subject to a minimum charge of 25 per cent ad valorem; to increase the rate on buttons of bone, porcelain, composition, and similar materials from 20 to 30 cents per kilo, and to increase the rate on mother-of-pearl buttons from $1 to $1.30, subject to a minimum rate of 50 per cent ad valorem. The present specific rate on silvered copper foil is equivalent to approximately 140 per cent ad valorem, which is abnormal. The Philippines are a large producer of mother-of-pearl shells, which heretofore have been exported to other countries, manufactured and shipped back to the Philippine Islands. Several years ago a number of Filipinos started a factory where about 100 hands are employed for the manufacture of these shells into buttons, and it was to protect this infant industry and to encourage others along other lines that this bill was introduced. These buttons have been manufactured at a distinct loss for several years.

Second. To put on the free list agricultural machinery and implements, machinery and apparatus for making or repairing roads, steam and other motor plows, and all materials for exclusive use in construction or repair, in the Philippine Islands, of vessels of all kinds. Practically all of these articles are purchased in the United States. On agricultural machinery the present customs duty is only 5 per cent, and is a tax for revenue only. The only objection, therefore, to the removal of the duties would be the loss of revenue to the insular government, but the advantages which would accrue to the islands through the additional facilities and stimulus

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