word. The Government would be entitled to priority in transmission; half the established rate on official matter; a surtax of 5 centimes of a franc per word except for messages transmitted over the Government land lines in Panay, Negros, and Cebu, which tax is claimed by the company's superintendent to have been regularly collected and paid to the Government; and a tax of 10 per cent on receipts in excess of expenses, such expenses not to exceed £6,000 per annum, from date of American governmental responsibility to October, 1917.

In addition to giving the Government priority of transmission and the half-rate privilege over the Visayas cables, the company has deposited the following sums with the insular treasurer for the period from March 1, 1899, to June 30, 1903, on account of the surtax on messages over the Visayan cables and the terminal tax on messages sent and received over the Hongkong-Manila line, the latter beginning November 15, 1901. Deposits in Mexican currency have been reduced to United States currency at the ratio prevailing at the date of deposit:

March 1 to December 31, 1899..

$1,209.78

January 1 to December 31, 1900

1,923.59

January 1 to December 31, 1901, including terminal tax beginning November 15, 1901..

6,066.75

January 1 to December 31, 1902.

34, 161. 57

January 1 to June 30, 1903.

17, 067.73

Terminal charges collected on messages sent from abroad prior to November 15, 1901, deposited June 9, 1903...

34, 368.00

Total

94, 797. 43

Based upon a recognition of the concessions, the following amounts, approximately, were due the Government and the company, respectively, to June 30, 1903:

Which total, reduced to United States currency at $4.866 to the pound sterling, equals $94,887.

DUE UNITED STATES.

Refund of amounts paid August 21, 1898, to June 30, 1903, as per

company's statement:

August 21 to December 31

1898

1899

1900

1901

January 1 to June 30, 1902..

July 1, 1902, to June 30, 1903

Total.

Which total, reduced to United States currency at $4.866 to the pound sterling, equals $144,917.57.

The company has stated its readiness to pay the 10 per cent tax on the gross receipts from the Visayas cables after deducting £6,000 per annum for expenses, as follows:

The Attorney-General, in an opinion rendered January 14, 1902, held that"All the rights, together with the obligations, of the Spanish Government in connection with the concessions of said telegraph company inured to the Government of the United States from the date of the formal delivery of the territory, except the obligation of the Spanish Government respecting the exclusive landing right in all Spanish possessions in the Pacific. This right of the company can not be classed with those private rights which are protected by international comity and the ruling of the American courts. This was distinctly an obligation of Spain, imperial and not local in its nature, and applicable to Spanish possessions as such, and does not follow any island or group of islands into the hands of another sovereign.'

A. L. LAWSHE, Auditor.

THE CONGRESSIONAL RELIEF FUND.

From the appropriation of $3,000,000 by the Congress of the United States the equivalent of $250,000 United States currency was allotted by Act No. 786 for the purchase and distribution of rice, the same to be sent to the various provinces and by them accounted for under the provisions of Executive order No. 64, issued July 31. Prior to June 30, 1903, the sum of $237,481.51 Mexican currency had been expended for rice for distribution to those provinces in which distress prevailed, and to be used in payment of labor on public works.

An additional allotment of $100,000 United States currency was made by Act No. 738 for the preliminary expenses in the purchase and immunization of draft cattle for sale and distribution in those localities devastated by rinderpest.

The application of the Congressional relief fund was only fairly begun at the close of the fiscal year. A special report of the operations under this fund to November 1, 1903, has been submitted to the civil governor.

EXPENDITURES FOR PUBLIC WORKS AND OTHER PERMANENT IMPROVEMENTS.

An analysis of the disbursements of the insular government and the city of Manila shows that a very liberal percentage of the total expenditures were for public works or improvements of a permanent character. A few of the leading items of expenditure of this character are here stated:

Insular:

Character of item.

United States
currency.

Mexican currency.

Construction and purchase of vessels..

Public works, bureau of engineering

Construction of, and additions to, public buildings, bureau of

architecture

Department of engineering and public works..

Total..

1,054, 092.99

654, 429.42 3,074, 712. 23

Reducing the Mexican currency to United States currency, at the average ratio of 2.45 to 1, it is shown that the insular expenditures for permanent improvements were $2,041,963.52, while those of the city of Manila were $267,114.05.

Stamp account of the chief of the division of stamps and supplies, bureau of posts.

Stock transferred to Third Assistant Postmaster-General for use of Interna

tional Postal Union, March, 1903

Stock lost by theft

Stock on hand June 30, 1903

Total....

A. L. LAWSHE, Auditor.

EXHIBIT NO. 6.

SECOND SPECIAL REPORT BY W. MORGAN SHUSTER, COLLECTOR OF CUSTOMS FOR THE PHILIPPINE ISLANDS, FROM SEPTEMBER 1, 1902, TO OCTOBER 8, 1903.

OFFICE OF THE COLLECTOR OF CUSTOMS

FOR THE PHILIPPINE ISLANDS,
Manila, October 8, 1903.

SIR: In accordance with your instructions of August 2, 1903, I have to submit herewith my second special report of the operations of the Philippine customs service from September 1, 1902, to September 1, 1903, to accompany the Second Annual Report of the Department of Finance and Justice. W. MORGAN SHUSTER, Collector of Customs for the Philippine Islands.

Respectfully,

Hon. HENRY C. IDE,

Secretary of Finance and Justice,

Philippine Commission, Manila.

Since the submission of the special report of this office of October 8, 1902, covering the period from June 1, 1901, to September 1, 1902, the scope of the Philippine customs service has been substantially increased and its organization correspondingly improved.

This office is now charged with performing in these islands, in addition to regular customs work, the duties pertaining to the following bureaus and offices of the Federal Government:

Bureau of navigation; steamboat-inspection service; division of special agents; division of revenue-cutter service; bureau of immigration; harbor commissioners; supervision of fisheries; United States. shipping commissioners; registration of Chinese (internal revenue).

In addition to the above, this office is charged with the supervision of all pilots and their associations throughout the islands.

On November 17, 1902, the "coastwise trade act," No. 520, was passed by the Philippine Commission as a result of the scarcity of vessels to handle the local freight and passenger traffic and of the consequent exorbitant rates, which were also being kept up by an agreement or understanding between nearly all of the local lines.

This act permits any vessel, foreign or otherwise, to obtain a "special coastwise license" and engage in the local trade, upon the payment of a yearly or monthly tonnage tax and compliance with certain other

conditions. So far the following vessels have secured licenses under

The act also makes illegal any agreement on the part of two or more masters, owners, or agents of vessels engaged in the coastwise trade "to fix, increase, or maintain rates of transportation for passengers or merchandise, or to divide the coastwise trade and business of these islands, or between any ports of the islands, for the purpose of restraining and avoiding competition.

Provision is also made for the appointment by the civil governor of a "coastwise rate commission," which is "authorized to classify vessels, merchandise, and passengers for the purpose of carriage in the coastwise trade and to fix the maximum rates to be charged thereunder for the transportation in the several classes of vessels of the various classes of merchandise and passengers from one point to another in the Philippine Islands."

The maximum rates thus fixed must be reasonable and be established only after a public hearing of all common carriers involved.

It is not obligatory upon the civil governor to appoint this commission unless he considers the local freight and passenger rates to be excessive at any time. So far no appointment has been necessary, and shortly after this act was passed the agreement was dissolved and both freight and passenger rates have been considerably lowered, with great benefit to the commerce of the islands.

Upon November 29, 1902, the United States system for the admeasurement of vessels, with certain slight modifications to meet local conditions, was substituted for the rules of the former Spanish and military governments. All vessels in the islands are now admeasured according to the United States laws, thus simplifying their possible future registry so far as admeasurement is concerned.

On December 8, 1902, a complete set of regulations for the government of pilots' associations and pilots throughout the Archipelago, and fixing pilots' fees, were promulgated by this office, with the approval of the secretary of finance and justice. These regulations contain special classifications of vessels and fees for all the large ports and difficult passages or channels in the Archipelago. They have proved generally acceptable.

On December 19, 1902, this office promulgated a set of regulations for vessels engaging in lighterage and other exclusively harbor busi