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encourage agriculture and to relieve from the burden of taxation people who are too poor to pay the tax with ease.

The principal persons who pay occupation license taxes are brokers, lawyers and other professional men, and proprietors of places of public amusement, such as cockpits.

Expenditure of Internal Revenue Taxes.-The taxes on theatres, cockpits, etc., are expended exclusively for the benefit of the municipality where they are assessed and collected.

The internal revenue receipts are divided in a certain proportion between the insular, provincial and municipal governments, whereas the import duties go wholly to the Insular government.

The provinces and municipalities do not receive equal shares of the internal revenue receipts, but the share of each province and municipality is proportioned to its population. The reason for this is, of course, that the provinces and municipalities with the largest population have, as a rule, paid a larger share of the taxes than those of small population, and so should receive a larger share of the profits.

The rule by which the internal revenue receipts. are distributed among the Christian provinces and municipalities is as follows. Ten per cent of the total receipts are devoted to general provincial purposes. If a province has increased the cedula tax to two pesos an additional ten per cent of the internal revenue receipts is assigned to it to be spent wholly on roads and bridges.

Twenty per cent of the internal revenue receipts are devoted to the expenses of the municipalities, of

which ten per cent, or half, must be devoted to the support of free public primary schools.

In making this distribution the city of Manila receives a share as a province and also as a municipality. The Road Law.-There is still another sort of tax, provided for by the "road law." This tax is not made compulsory by the Insular government, but is left to the judgment of the provinces and municipalities adopt, if they see fit. This law provides that every male inhabitant of the province or municipality which adopts it who is subject to the poll tax shall labor on the public highways, bridges, wharves, or trails, five days of eight hours each for every calendar year, or pay the equivalent in cash of such labor. This law does not apply to the non-Christian provinces. and settlements, nor to the city of Manila, the members of the Constabulary, or the municipal police.

This law does not take effect in any province as a whole until it has been adopted by the provincial board and a majority of the municipalities of the province. Any single municipality may, however, adopt this law.

There is no material need of the Philippines greater than that of good roads and bridges. This matter is of such importance that it is well to quote here. the statement of Governor-General Smith in his message to the First Philippine Assembly.

'The Executive is sorry to say that today, owing to the negligence and indifference of municipal officials the roads and highways of the Islands have fallen into such a disgraceful condition that in the rainy season they are better suited for boats than for land transportation,. Exclusive of the Benguet road, the Insular government has constructed some 500 miles of road, and expended for the purpose more than three million pesos; and for what?-to see the highways go to ruin

thru the indifference of the very people for whose benefit they were constructed. To enable municipalities to keep their roads in repair the Commission passed a road law, and, recognizing the autonomy of the local governments, made the law effective on its acceptance by the convention of municipal officers.... To build all the roads which are necessary for the development of the Philippine Islands and to put the existing highways into proper condition would cost somewhere in the neighborhood of $65,000,000 gold. The Philippine Government probably has less income in proportion to its population than any other government on earth and unless the people are willing to make some sacrifices for their own welfare and prosperity, the development of the resources of the Islands will be long delayed. Indeed, in one province during the last year the cost of transporting a picul of abaca a distance of five miles was three pesos and this contribution to bad roads was paid willingly and without a murmur, while the imposition of a tax of the same amount for the purpose of securing good roads and a reduction of the cost of transportation by seventy-five per cent would have been considered by those most concerned as an intolerable act of tyranny and oppression.'

The forced labor law under the Spanish regime, by which forty days labor on public works was exacted of every adult (later reduced to sixteen days) was accompanied by so many abuses and the labor produced such poor results that great opposition is felt to any forced labor law. It is believed that today, with a moderate requirement of forced labor and an honest and capable administration of the law, a labor tax of this sort would be of inestimable benefit to the country. Few greater services to their country could be performed by those who understand the purpose and proper administration of taxation than to work for the removal of this prejudice against a moderate labor law, and to awaken the people to the fact that such labor would be spent for their own highest profit.

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CHAPTER XVIII

THE POSTAL SAVINGS BANK AND THE HOMESTEAD LAW

Value of Savings.-A savings bank is a place where people may deposit from time to time sums of money which they wish to save. Money deposited in a savings bank bears interest and may be withdrawn when the depositor wishes. The object of placing money in a savings bank is to accumulate money against the coming of old age, sickness, or for some. other special need of the future.

Experience shows that people who cultivate the habit of laying up money in a savings bank are more contented and prosperous than those who have nothing laid aside for the future. Money set aside in this way becomes capital; that is, a form of wealth that is reproductive.-A savings bank deposit is not only a fund which contributes to the security of the individual who owns it, but it is also a source from which the state may obtain loans in time of war or other national distress. Savings deposits are sources from which great business corporations may obtain funds to develop the resources of a country. Thus the savings of a people form the foundation of national wealth. No people can hope to attain a great place among the nations of the world who have not laid by in savings banks large sums of money. Financial independence is the foundation of political independence.

The Philippine Postal Savings Bank.-For these reasons the government has established the Philip

pine Postal Savings Bank. This .bank is administered by the Bureau of Posts. The main office of the bank is in the central post-office at Manila, while the larger post-offices of the Islands are branches of the Postal Savings Bank. The object of the government is not its own immediate financial gain, but to provide for the safety and increase of the savings of individuals, and so to guarantee the financial independence of the state.

The

Safety. The Postal Savings Bank is the safest place in the world in which to deposit money. Philippine government guarantees absolutely to return the money of the depositor. If the money is stolen, burned, or in any other way lost, the government makes good to the depositor the loss. The depositor cannot fail to recover his money, unless the government fails and the credit and resources of the nation are destroyed.

Interest. The government lends at interest the money deposited in the Postal Savings Bank and from the earnings of the money pays the depositor a small rate of interest. The principal advantage of depositing money in the Postal Savings Bank is not, however, the amount of interest to be gained, but the availability and safety of the deposit. It is easy to lend money at a high rate of interest in the Philippines, but frequently difficult or impossible to get back the money that has been loaned. A peso where you are sure you can have it any time is worth several pesos that you may get some time when your debtor is able and willing to pay you.

Conditions of Deposit.-Any person living in the Philippine Islands (not under legal disability) may

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