under a contract recently made many shipments are being routed across the country by rail to the Pacific coast and thence shipped via commercial steamship line to Manila. The merchandise is insured on dock and in transit to Manila against all loss or damage, however it may be occasioned, and all ocean freight is prepaid.

Dur

The records of the New York office show in detail every transaction, and the duplication of purchases or excessive charges may be readily detected. The same method has been adopted, which experience has shown to be satisfactory in the disbursing office of this Bureau. ing the period covered by this report requisitions have been received, many of them for large quantities of supplies of various kinds, and many by cable, and have as far as practicable been promptly executed.

DISBURSEMENTS OF PHILIPPINE REVENUES IN THE UNITED

STATES.

All requisitions for supplies are recorded and transmitted to the New York agent for execution. Official copies of orders, contracts, accepted proposals, and letters accepting proposals are prepared, and with the invoices, bills of lading, insurance certificates, and property reports are attached to the respective vouchers.

Invoices and vouchers are checked against the requisition records and proposals for the purpose of ascertaining whether the articles have been purchased in accordance with specifications and the prices charged correct.

Bills of lading and certificates of insurance are examined in order to see that they are made out in proper form; that the consignments, weights, and cubic measurements agree with the invoices; that the proper amount of insurance has been placed; that the correct rates have been applied, and that the charges have been correctly computed.

Five copies of bills of lading and invoices are promptly forwarded to Manila so that they may be received there prior to the arrival of the supplies to prevent delay in passing the goods through the customhouse.

Accounts for transportation of employees and insular freight are carefully checked against the traffic rate. Cablegram and telegram accounts are verified as to the number of words, names of senders and receivers, points between which the messages were transmitted, and are checked against Government rate according to the number of miles transmitted.

The records show the requisition number, date issued, date received, articles required, bureau for which they are intended; date of invoice, name of payee, unit price, total cost; freight charges, name of steamship, date of shipment, name of consignee, nature of consignment, cubic measurement, weight, rate per ton, charges, date of payment, to whom paid; date of insurance certificate, amount of insurance, premium, to whom paid, date of payment, voucher number and check number; also moneys received and disbursed under the several appropriations.

The total payments made by the disbursing agent of Philippine revenues from May 20, 1901, the date that office was created, to the present time amount to $8,796,359.03 and are in payment of 2,928 accounts. The disbursements made since the date of last report aggregate $7,785,

789.39 and are in payment of 1,601 accounts, and were made under the following appropriations:

Purchase of rice.

Insular salary and expense fund

Coupon account (interest on certificates of indebtedness, due August 1, 1903)

Bureau of public printing.

Census expenses.

Philippine exhibit, St. Louis

Expenses International Monetary Commission

Total

Amount disbursed.

$6,615, 128.31 499, 585. 41 104, 198.93 59,635.67 73, 496.69 19, 389.71 293, 694.00 4,722.50 30,000.00

65, 607. 17 4,380.25

10,950.75

5,000.00

7,785, 789.39

Total amount on hand and received for disbursement during the same period, $8,201,394.01. Balance on hand at date of this report, October 31, 1903, $415,604.52.

METHOD OF TRANSFERRING FUNDS.

Aside from the actual shipment of money by army transports to Manila and return, it has hitherto been the custom to transfer funds by cable through the banks having branches in Manila and in the United States or through the banks and the Paymaster-General of the Army.

Shortly after the passage of the currency act of March 2, 1903, the Philippine Commission requested that army funds which were to be shipped to the Philippine treasury, as depository for the United States Government, be sent to Manila in gold and there changed for paper money in the Philippine treasury, thus increasing the Philippine government gold-redemption fund for the new silver coinage required by the currency act. At that time, in April, there was on hand with the treasurer of the Philippine Islands only $400,000 gold and $4,000,000 paper money.

În obedience to this request some $2,000,000 was accordingly shipped by the Pay and Quartermaster's Departments. However, early in August Governor Taft reported that they had enough gold, and suggested to maintain a balance of $2,000,000 in the insular depository in New York, that when money must be transferred to Manila for the use of the Army that the same be credited to the Philippine government in New York on the Philippine Commission's transfer to the credit of the Army in the Philippine treasury at Manila.

After consultation with the Treasury officials and the various bureaus of the War Department the following method of transfer was agreed upon and is now in satisfactory operation:

Upon notification by any bureau of the War Department that it is desired to place on deposit in the treasury of the Philippine Islands, as depository for the United States Government, a certain sum of money, the Bureau of Insular Affairs cables the treasurer of the Philippine Islands to transfer an equal amount from the treasury of the Philippine Islands and deposit said sum to the credit of the department of the Army that desires such deposit. The treasurer of the Philip

pine Islands in turn cables the Treasurer of the United States, and after notification to this Bureau a like sum is transferred to the Guaranty Trust Company of New York as insular depository for the funds of the Philippine government in the United States and there placed to the credit of the treasurer of the Philippine Islands.

The method of transfer of Philippine funds to the United States is by cablegram from the civil governor to the War Department, authorizing this Bureau to direct the Guaranty Trust Company of New York to place the designated amount to the credit of the disbursing agent of Philippine funds in the United States in this Bureau.

These transfers, as they thus become a business transaction for the insular government, are without charge of fiscal agent's commission on such deposits.

DEPOSITORIES OF THE PHILIPPINE FUNDS.

The two English corporations, the Hongkong and Shanghai Banking Corporation and the Chartered Bank of India, Australia, and China, as well as the Guaranty Trust Company of New York and the International Banking Corporation of Connecticut, mentioned in last year's report, still continue to act as depositories of insular revenues outside the Philippine treasury.

By successful competition between the Guaranty Trust Company and the International Banking Corporation at the instance of this Bureau, in March last, the former received on deposit to the credit of the Philippine treasury the $3,000,000 relief appropriation (act of March 3, 1903) and the proceeds from the sale of the two separate issues of $3,000,000 each in Philippine certificates of indebtedness. For such special deposits is paid 34 per cent on daily balances. Other minor amounts have been placed throughout the year with this company, among them being the tariff fund collected in the United States on Philippine products and held for the benefit of the islands as provided in the act of March 8, 1902.

The treasury of the Philippine Islands still remains the only depository designated under the act of July 1, 1902, for the public money of the United States in those islands.

Statement of business at New York of the Guaranty Trust Company of New York, as depositary of the civil government of the Philippine Islands.

SEPARATE FUNDS IN THE TREASURY OF THE UNITED STATES TO THE CREDIT OF THE PHILIPPINE TREASURY.

Section 2 of an act temporarily to provide revenue for the Philippine Islands, and for other purposes, reads as follows:

SEC. 2. That on and after the passage of this act there shall be levied, collected, and paid upon all articles coming into the United States from the Philippine Archipelago the rates of duty which are required to be levied, collected, and paid upon like articles imported from foreign countries: Provided, That upon all articles the growth and product of the Philippine Archipelago coming into the United States from the Philippine Archipelago there shall be levied, collected, and paid only seventy-five per centum of the rates of duty aforesaid: And provided further, That the rates of duty which are required hereby to be levied, collected, and paid upon products of the Philippine Archipelago coming into the United States shall be less any duty or taxes levied, collected, and paid thereon upon the shipment thereof from the Philippine Archipelago, as provided by the act of the United States Philippine Commission referred to in section one of this act, under such rules and regulations as the Secretary of the Treasury may prescribe, but all articles the growth and product of the Philippine Islands admitted into the ports of the United States free of duty under the provisions of this act and coming directly from said islands to the United States for use and consumption therein shall be hereafter exempt from any export duties imposed in the Philippine Islands.

Since the passage of this act to and including August, 1903, the collections on Philippine products imported into the United States, according to the monthly receipts given below, have amounted to $295,685.92, which sum, with the amount received from tonnage dues, has been set aside.

The duty collections have varied, comparatively large receipts being shown in the last two months as well as in December, 1902, and March of the present year, being the result of sugar and tobacco shipments, principally the former, although the trade in both commodities is irregular. During these periods the distribution of dutiable imports. and the amount collected under each article was as follows:

PHILIPPINE CONSTABULARY.

Upon the assembling of Congress at its last session the Secretary of War presented the draft of a bill to promote the efficiency of the Philippine constabulary and to establish the rank and pay of its commanding officers, which was enacted into law, and approved January 30, 1903, in the following language:

[PUBLIC NO. 37.]

AN ACT to promote the efficiency of the Philippine constabulary, to establish the rank and pay of its commanding officers and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That officers of the Army of the United States may be detailed for service as chief and assistant chiefs, the said assistant chiefs not to exceed in number four, of the Philippine constabulary, and that during the continuance of such details the officer serving as chief shall have the rank, pay, and allowances of brigadier-general, and the officers serving as assistant chiefs shall have the rank, pay, and allowances of colonel: Provided, That the difference between the pay and allowances of brigadier-general and colonel, as herein provided, and the pay and allowances of the officers so detailed in the grades from which they are detailed shall be paid out of the Philippine treasury.

SECTION 2. That any companies of Philippine scouts ordered to assist the Philippine constabulary in the maintenance of order in the Philippine Islands may be placed under the command of officers serving as chief or assistant chiefs of the Philippine constabulary, as herein provided: Provided, That when the Philippine scouts shall be ordered to assist the Philippine constabulary, said scouts shall not at any time be placed under the command of inspectors or other officers of the constabulary below the grade of assistant chief of constabulary.

Approved, January 30, 1903.

At the time this bill, drafted by the Secretary of War, was under consideration by Congress Hon. Luke E. Wright, who held the portfolio of secretary of commerce and police in the Philippine Islands and who was also the vice-governor and had acted as governor for practically one year previous, was in the United States on leave of absence. Governor Wright had drafted the legislation for the Philippine Commission, organizing its constabulary forces, and his admirable presentation of the advantages of this bill undoubtedly had great influence in securing its passage.

It was hoped that the trial authorized by this act of Congress might demonstrate the best organization for a permanent native or Filipino auxiliary force. The time elapsed (less than one year) is not sufficient to permit the complete accomplishment of the desired purpose.

The annual report to the Philippine Commission of the chief of constabulary makes a wonderful showing of the work already accomplished by this native contingent. In my opinion experience has definitely demonstrated the fact that the natives under American officers are equal to any police work that will arise in the islands.

APPOINTMENT OF MILITARY COLLEGE GRADUATES AS THIRD LIEUTENANTS.

During the present year the civil governor of the Philippines for warded with his approval the recommendation of the chief of the Philippine constabulary that this office take the necessary steps to secure annually at least ten graduates from the best State military schools in the United States for appointment as officers of the constabulary.

It was believed that the appointment of a number of young men who have completed the course at the best military institutions in this