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I MeKin.ey's mesatí to ■klns viui a tribute lo the ■fcfice Fresiáeni toa: t Ht the cima, pruï.j j.ty úí ■ ise ctien sayo: ■fent reccipts frm all sourceï ■year ei.clea june SU, ISjí), ■ .LiS.G14.i4, part payment of MPaeitic railrcad indebted■ated $61u,'J-,ju4.S5. CusBs were $2ü6.12S,4ül.T5, and ■ internal revenue $273,437, ■al Iyear the expenditures MP4.u2, leaving e. deficit of ■:ary of the treasury estiHjiL receipts for the current ■vill aggregate ?640,95S,112, ■ basis of present appropriHfcpenditures will ageregate ■eaving a surplus f $40,Bcal year ended June 30, ■ial revenue receipts were ■ut $100,000,000. MFgratifyingstrength of the Hown by the fact that on Hie aváilable ca-sh balance ■37.72, of which $239,744,■jold coin and bullion. The confidence which pre■out the country have ■nto more general use and Hpts are now almost enMPthat coin. ■lus of $40,000,000. H,r condition of the treasury Vto cash on hand and the ■owing made by the reve■ade it possible for the secHie treasury to take action Brovisions of section 3694 (reBtes) relating to the sinking feipts exceeded expenditures It five months of the current [by $13,413,2S9.91, and, as menre, the secretary of the treasIte9 that there will be a surfefoximately, $40,000.000 at the bear. Under such conditions Emed advisable and proper Icompliance with the proviI sinking fund law, which for f has not been done because [eiency in the revenue. The ïepartment therefore offêred Ú- during November $25,000,m per cent. loars of 19C4, or, : tent. funded loan of 1&07 at I p market price. The amount i purcbased during November 1,600. The premium paid by kient on such purchases was K the net saving in inter■v- ,$2,SS3.0C0. The success of ■n wes sufficient to induce Kent to continue the offer to I oonds to and including the j f December, unless the j f the $25,000,000 called for presented in the meantime ition. Increased activity in rith its welcome atíendant - iployment of labor at higher I ts to the body of peopíe a I fcr to absorb the circulating i rt is further true that year : Ih arger areas of land under Ithe increasing volume of ; producís, corn, wheat, j I larger volume of money ■s is especially noticeab:e at Bvests and crop-moving peation of Banking: A er. ■nt recommends the modi■e national banking act to ■rvice more responsive to ■eeds. He also urges that ■ of the treasury be given ■o sell bonds, and repeats ■recommendations that a ■ gold holdinsrs shall he ust fund from which Ka:[ be redeemed upon ■ut when once redeemed ■ifter be paid out except ■ president points to the ■merican merchant maBof the activity in our Bject of trusts he says: ■ons of capital organized ■ control the conditions of ■ our citizens, to stifle com■ production and determine l products used and con■fe people, are justly pro■c discussion, and should ■khe attention of the con■lidustrial coimmission, cre■ict of the congress of June ■ been engaged in extended mpn the disputed questions ■he subject of combinations of trade and competition. loot yet completed their inlof this subject, and the conknd recommendations at I may arrive are undeterB subject is one giving rise ■ergent views as to the na■hiety or caus-a and extent ■Ls to the pubüc which may ■rge combinations concen■ or less numerous enter■kblishments. which previ■fcrmation of the com'cina■Lried on separately. If ■r can be extended more ■control ar check these ■rusts, it should be done P,Whatever power the Sssésses over this most imijeet should be promptly asnd asserted." h Sltaragim Canal. IMcKinley devotes considertthe Nicaragua canal, and f importance of this work ■oo cften or too strongly pi the attention of the conkiy message of a year ago P my views of the necessity 'which would link the two ia. to which I again invite Ur:ation. The reasons then lort early action are even ■sage to oi .gress of Dec. ■d that the recommenda■H been made to the speakHuse of representatives by ■} '(of the treasury on the p 1898, for an appropriation fcsion to study the commerfcustrial conditions ín the ■re and report as to the cp■for, and obstacles to, the Y of markets in China for Iducts and manufactures of fcïtates. íjhould receive at ■e consideration which its ■:! timeliness merited, but ■aüed to take action. I ■fc recommendation, as the ■the subject has. steadKy ■ was first submitted to ■me should be lest i:i i studying for ourselves the resources of : th:'s great field for Arr.erican trade anc enterprise." Amurica at Paria Kxposltion. "Freparations ior the representaron of the industries, arts, anti pi'oducts ui ! the Uniied Btates at the wuna's ex; position to be held m Paris ncxi yea.i j continue on an elabórate and comprehensiva scale, thanks to the generous i appropriation provided by congress anc to the friendly interes-t the French govi eminent has shown in furthering a typi icai exhibit oí American progress. ■'Our relations with Germanj ccntinue to be most cordial. The increasing intimacy of direct associatio'n has beei marked during the year by the granting permission in April for the landing on our shores of a cable írom Borkum Emden, on t'ne North sea, by way of th? Azores, and also by the conclusión on Sept. 2 of a pareéis post conventior with the Germán empire. In all that promises closer relations of intercourse End commerce and a better understanding between two races having so ir.any traits in common, Germany can be assured of the most cordial co-operaticn of this government and people. We may be rivals in many material pathsbutour rivalry should be generous and open, ever aiming toward the attainment 01 larger results and the mutually beneflcial advancement of each in the line oí its especial adaptability. United States and Canada. "In my last annual message I referred to the pendiiï negotiations with Great Britain in respect to the Dominion of Canada. By means of an executive agreement a joint high cemmission had been created for the purpose of adjustir.g al' unsettled questions between the United States and Canaca, embracing twelve subjects, among which were the questions of the f ur seáis, the fisheries of the coast and contiguous inland waters, the Alaskan boundary, the transit of merchandise in bond, the alien labor laws, mining rights, reciprocity in trade, revisión of the agreement respecting naval vessels in the great lakes, a more complete marking of parts of the boundary, provisión for the conveyance of crimináis, and for Wreeking and salvage. "Much progress had been made by the commission toward the adjustment of many of these questions where it beeame apparent that an irreconcilable difference of views was entertained respecting the delimita tion of the Alaskan boundary. In the fallure of an agreement as to the meaning of artlcles 3 and 4 of the treaty of 1825 between Russia and Great Britain, which defined the boundary between Alaska and Canada, the American commissioners proposed that the subject of the boundary be laid aside and that the remaining questions of difference be proceeded with, some of which were so far advanced as to assure the probability of a settlement. This being declined by the British commissioners, an adjournment was taken until the boundary ' should be adjusted by the two governmentS. The subipp.t has hpen rrpiviner the careful attention which its importance demands, with the result that a modus vivendi for provisional demarcations in the región about the head of Lynn canal has been agreed upon; and it is hoped that the negotiations now in progress between the two governments will end in an agreement for the establishment and delimitation of a permanent boundary. Apart from these questions growing out of our relationship with our northern neighbor, the most friendly disposición and ready j agreement have marked the discussion of numerous matters arising in the vast and intímate intercourse of the United States with Great Britain. The Boer War. "This government has maintained an I attitude of neutrality in the unfortu nate contest between Great Britain and the Boer states of África. We have remained faithful to the precept of I avoiding entangling alliances to to afj fairs out of our direct concern. Had i circumstances suggested that the parI ties to the quarrel would have wel comed any kindly expression of the hope of the American people that war ! might be averted, good offices would 1 have been gladly tendered. The United ; States repreïentative at Pretoria was i early instructed to Eee that all neutral i American intereats be respected by the ! combatants. This has been an easy j task in view of the positive declarations I of both British and Boer authorities that the personal and property rights of our citizens should be observed. Upon the withdrawal of the British agent from Pretoria the United States consul j was authorized, upon the request of the British government and with the assent of the south Afrlcan and Orange Free State governments, to exercise the customary good offices of a neutral for the care of. British interests. In the discharge ofï this function I am happy to say that abundant opportunity has been afforded to show the impartiality of this government toward both the combatants. Lynchiug of Italiana. "For the fourth time in the present decade que.stion has arisen with the government of Italy in regard to the lynching of Italian subjects. The latest of these deplorable events occurred at Tallulah, La., whereby flve unfortunate9 of Italian origin were taken from jail and hanged. The recurrence of these distressing manifestations of blind mob fury directed at dependents or natives of a foreign country suggests that the contingency has arisen for action by congress in the direction of conferring upon th federal courts jurisdiction in this elass of international cases where the ultímate responsibility of the federal government may be involved." The president then refers to affairs in Samoa ard recites the difficulties under the tripartite government, endiig in the treaty dividing the islands between the United States and Germany, which is matter of current news today. COXSIDEKS TUE CAsE Of CUBA. Refera to the Resol ullon Passed by Congres Apnl 19, 1897. The president iken takes up the important question oL our connection with Cuba, and says: "The withdrawal of the authority oí Spain from the island of Cuba was effected by the lst of January, so that the full re-establishment of peace found the relinquished territory held by us in trust for the inhabitants, maintainíng under the direction of the executive Buch government and control therein as should conserve public order, restort the productive conditions of peace so long disturbed by the instability and disorder which prevailed for the greater part of the preceding three decades and build up that tranquil development of the domestic state whereby alone can be realized the high purpose as proeLVimed in the joint resolution adopted by the congress on the 19th of April, 1898. by which the United States disclaimed any disposition or intention to exerci?e sovereignty, jurisdiction or control over Cuba, except for the pacification thereof, and asserted its determination when that was accomplished to leave the government and control of the island to its penple. "The pledge contained in this resolutlon is of the highest honorable oblis-ation and must be sacredly kept. I br- lieve that substantial progress ha? been made in this direction. All the admiristratlve measure? aöopted ir, Cuba have aimed to fit it for a rr-gererated existence by er.forcing the supremacy of the law and justice; by placing wherever practicable the rrnchinery of administratinn in the hard of the inhabitants: by instituting needed sanitary reforms; by fpreading fducation; by fostering Industry and trade; by inculcating: public morality, and, in short, by taking every rationa 1 step to aid the Cuban people to attain to that plane of self-conscious respect ar.d self-reliant unity whieh fits an enüghtened community for self-crovernment within its own sphere, while enablir.g it to fulfill all outward Qbligatlons. "This nation has assumed before the world a grave responsibility for the future good government of Cuba. We have acceptfid a t-ust the fulfillment of which calis for the sternest integrity of purpose ar.d the exercise oí the high est wisdom. The new Cuba yet to arise from the ashes of the past mus r.eeds be bound to us by ties of singular intirr.acy and strength if its enduring- welfare is to be assured. Whether those ties shall be organic or conventional the destinies of Cuba are in some righfu! form and manner irrevocably linked with our own, but how and how far is for the future to determine in the ripeness of events. Whatever be the outcome we must see to it that free Cuba be a reality, not a name; a perfect entity, not a hasty experimen within itself the elementa of Tailure. "Our mission, to accomplish which we took up the wages of battle. is no' to be fulfilled by turning adrift any loosely framed commonwealth to face the vicissitudes which too often attend rvealthier states whose natural wealth and abunaant resources are offset by the incongruities of their political organization and the recurring occasions for internal rivalries to sap their strength and dissipate their energies The greatest blessing which can come to Cuba is the restoration of her agricultura! prosperity, which will give employment to idle men and re-establish the pursuits of peace. This is her chief and immediate need. "On the 19th of August last an order was made for the taking of the eensus in the island, to be completed on the SOth of November. By the treaty of peace the Spanish people on the island have until April 11, 1900, to elect whether they will remain citizens of Spain or become citizens of Cuba. Until then it cannot be definitely ascertained who shall be entitled to particípate in the formation of the government of Cuba. By that time the results of the census will have been tabulated and we shall proceed to provide for elections which will commit the municipal govarnments of the island to the officers elected by the people. The experience thus acquired will prove of great value in the formation of a representative convention of the people to draft a constitution and establish a general system of independent government for the Island. In the meantime and so long as we exercise control over the island the products of Cuba should have a market in the United States on as good terms and with as favorable rates of duty as are given to the West India islands under treaties of reciprocity which shall be made." Reference is then made to the relief work done in the island, the payments to the Cuban army, Cuban revenues and resumption of diplomatic relations with Spain. POLICY IN THE PHILIPriNES. I Relieves the Mas of Filipinos Are wiih the United States. The Philippine islands and our policy therein are treated of as follows: "On the lOth of December, 189S, the troaty of peace between the United Statea and Spain was signed. It provided among other things that Spain shouid cede to the United States the archipelago known as the Philippine islands, that the United States should pay to Spain the sum of $20,000,000, and that the civil rights and political status of the native inhabitants of the territories thus ceded to the United States should be determined by the congress. In this manner the Philippines came to the United States. The islands were ceded by the government of Spain, which had been in undisputed possession of them for centuries. They were accepted not merely by our authorized commissioners in Paris under the direction of the executive, but by the constitutional and well considered action of the representatives of the peopl of the United States In both houses of congress. I had eyery reason to believe, and I still .believe, that this transfer of sovereigrnty was In accordance with the wishes and the aspirations of th great mass of the Filipino people. "From the earliest moment no opportunity was lost of assuring the people of the iflar.ds of our ardent desire for their welfare and of the intention of this government to do everything possible to advanre their interests. In ray order of the 19th of May, 1898. the oommander of the military expedition dispatched to the Philippines was instructed to declare that we came not to rraV-e war upon the people of that country, 'nor upon any party or faction amone them. but to profeet them in their homes, in their emrloyroents and in their personal and reügious righ.ts.' That there should be no doubt as to hp paramount authority trere. n th 17th of Auerust it was directed that 'Tberp must be no joint oorupp+'on witb thp insurgents:' that the United Stntps must preserve the penr and proteot persons and nroperty within the territory oceupipd by their militprv and naval force=: that the insureerts pnd all ofHers ri"t rerofrri'ze the m';t3rv rccupation ard author'ty of tb TTnifpfl States. As early as tipf. 4. before thp. eesion. and in antiripatirn of that event. the commander in Manila was urged to restore peaee and trsnqullitv and to urdertake the establihmrnt o' a hpeftoent s-overnment. which ?.hoi7id afrord the fullest security for life and pronerty. "On the 21st of December, after the treaty was signed. the commander of the forces of occupatfon was instructed 'to announce and proclaim in the most public manner that we come not as invaders and conquerors, but as friends to protect the natives in their homes, in their employments, and in their personal and religious rights.' On the same day, while ordering General Otig to see that the peace shouid be preserved in Iloilo, he was admonished that 'It is most important that there should be no conflict with the insurgents.' On the first day of January, 1899, urgent orders were reiterated that the kindly intentions of this government should be in every possible way communicated to the insurgents. "On the 21st of January I announced my intention of dispatching to Manila a commission composed of three gentlemen of the highest character and distinction, thoroughly acquainted with the Oriënt, who, in association with Admiral Dewey and Major General Otis, were instructed to 'facilítate the most humane and effective extensión of authority throughout the islands, and to secure with the least possible delay the benefits of a wise and generous protection of Jife and property to the inhabitants.' These gentlemen were Dr. Jacob Gould Schurman, president of Cornell university; the Hon. Charles Denby, for many years minister to China, and Professor Dean C. Worcester, of the University of Michigan, who had made a most careful study of life in the Philippines. While the treaty of peace was ur,der consideration in the senate these eonnnissionerg set out on their m'ssion ' of gcod wül and liberation. Their I acter was a suffic-ient guaranty oí the ! benefictnt purpose with whkh they went, even if they had not borne the i instructlops of this government which made the:r errarni pre-eminently one of and friendship. "Bu.t i l furo their arrival at Manila : t'i. sinisLer ambltion of a few leadera of the Filipinos had created a situatlo full of eiii 3arrassment9 for us and mo.-.! grievous in its consequences to theni selves. The clear and impartial prelirr. inary report of the commissioners, which I transmit herewith, gives so lucid and comprehensive a history of the present insurrectionary movement that the story need not be here repeated. It is enough to say that the claim of the rebel leader that he was promissd indeplr.dence by any officer oí th-e United States in return for his assistance has no foundation in fact. a ; is eategoricrilly denied by the very witnesses who were called to prove it. The most the ir.surgent leader hoped for when he can-.e back to Manila was the ljberation of the islands from the Srai.ish control, which they had been laboring for years without success to throw off. "The prompt aceomp-lishment of this work by the American array and navy gave him other ideas and ambitiona. and insidious sugg-estions from various quarters perveited the purposes and intentióus witli -u-rucn he had taken up arms. No sooner had our army captured Manila than the Filipino forcea began to assume an attitude of suspicion and hostility which the utmost efforts of our offlcers and troops were unable to disarm or modify. Their kindness and forbearance were taken as a proof of cowardice. The aggressions of the Filipinos continually increased until flnally, just before the time set by the senate of the United States for a vote upon the treaty. an attack- evidently prepared in advance - was made all along the American lines, which resulted in a terribly destructive and sanguinary repulse of the insurgenta PiOTTED A GIÏNliKAL fllASSACIUS. Schemeofthe Ksbels t Extermínate All (he Americana ïti _Jíiii;í. "Ten days later an order of the insurgen t government was issued to its adherents who had remained in Manila, of which Genei al Otis justly observes that 'For barbarcus intent it ia unequaled in modern times.' It directs that at 8 o'clock on the night oí the 15th of February, the territoria militia 'ghall come together in the streets of San Pedro, armed witn their bolos, wUh guns and ammunition where convenient; that Filipino families only shall be respectad; but that all othei individuáis, of whatever race they may be, shall be exlerminated without any eompassion after the extermination of the army of occupation, and adds: 'Brothers, w-e must avenge ourselve on the Americans ar,d extermínate them, that we may take our revenge for the infamies and treacheries which they have committed upon us. Have u o compassion upon them; attack with vigor.' "A copy of this feil by good fortunp into the hands our offlcers, and they were able to take measures to control the rising, which was actually attempted on the night of Feb. 22. a week later than was originally contemplated. Considerable numbers of armed insurgents prtered the city by waterways ard swamps and in concert with confedérate1; inside attmpted to destroy Manila by fire. They were kept in check during the night. ard the next day driven out of the city with heavy loss. "This iva= the unhappy condition of affairs whirh confronted our commiss'oners on thcir arrival in Manila. They had come with hope and intention of co-operating with Admiral Dewey and Ma.ior General Otis in establishingpeace and order in the archipelago and the largest measure of self-government compatible with the true welfare of the people. What they actually found can best be set forth in their own words'Deplorable as war is the one in ■whieh we are now engaged was unavoidabl? by us. We -were attacked by a bold. adventurous. ar.d enthusast'C army. No alternative was left us except ignominous retreat. It is not to be conceived of that any American would have sanctioned the surrendpr of Manila to the insurgents. Our obl:gation to other nations and to the friendly Filipinos ard to ourselve? and our flag demandedthat force should be mèt by force. Whatevyr the future of the Philippines may be there is n'o course open to us now except the prosecution of the war until the insurgents are reduced to submiasion. The commission is of the opinión that there has been no time since the destruction of the Spanish squadron by Admiral Dewey when it was possible to withdraw our forces from the islands, either with honor to ourselves or with safty to the inhabitants.' "The course thus clearly indicated has been unflinchingly pursued. The rebellion must be put down. Civil government cannot be thoroughly established until order is restored. With a devotion and gallantry worthy of its mosrt brllliant history the army, ably and loyally assisted by the navy, has carried on this unwelcome but most righteous campaign with richly deserved succeas. The noble self-sacrifice with which our soldiers and sailors whose terms of service had expired refused to avail themselves of their right to return home as long as they were needed at the front forms one of the the brightest pages in our annais. Although their operations have been somewhat 'interrupted and checked by a rainy season of unusual violence and duraron they have gained ground steadiiy in every direction, and now look forward confidently to a speedy ccmpletion of their task. WOBK OF KECON.STKUCTION BEGÜN Ferm f Government Adcipted for the Jsland of NeiiroM, "The unfavorable circumstances connected with an active campaign has not been permitted to interfere with the equally important work of recon-' struction. Ag-ain I invite your attention to the report of the commissioners for the interesting and encouraging details of the work already accomplished in the establishment of peace and order and the inauguration of self-governing municipal Ufe in many portions of the arehipelaso. A notable beginning has been made in the establishment of a goyernment in the island of Negros, which is deserving of special ccnsideration. This was the first island :o accept American sovereignty. lts people unreservediy proclaimed allegiance to the United States and adopted a constitution looking to the establishment of a popular government. It was impossible to guarantee to the people of Negros that the constitution so adopted should be the ultimate form of government Such a question carne exclusive!}' within the jurisdiction of congress. The government actually set up by the inhabitants of Negros eventually proved unsatisfactory to the nativts tlíemselves. A new system was put into force by order of the major general commanding the department, of which the following are the most important elementa: "It was ordered that the government of the island of Negros should consist of a military governor appointed by the United States military governor of the Philippines, and a civil governor and an advisory council elected by the people. The military governtir was authorized to appoint secretaries of the treasury, interior, agriculture, public instruetion, an attorney general and an auditor. The military governor exercises the supreme executive power. He is to .sce that the laws are executed, appoint to office, and fill all vacancies in office not otherwise provided for, and may, with the approval ot the military governor of the Philippines, remove any '■ officer from office. The civil governor advises the military governor on a.'.', j public civil questions and presides ovev i.he Bdvisory counci!. He, in generai, performs the duties whtch are pert'ormed by secreiaries oL state in our own system of government. "The advisory council conastsof eiht members elected by the peorrte within territorial limits which are delineo in I the order of the commandinr, general. I The times and places of holding eiecUons are to be flxed by the military . rovernor of the is'.and of Negros. The qualifications of voters are as follcws: (1) A voter must be a ms.!e citizer. of the island of Negros. (2) Of the agi oí 21 years. (3) He shall be al e to spealf, read and write the English, Spanish oï Visayan language, or he must own r.:u property worth $55, or pay a rental n real property of the value of $1,000. (1) He must have resided in the island not ies9 than one year preceding, and in the district in which he offers to register as a voter not less than three months in-.mediatelypreceaingthe time he offers to rpg-ister. (5) He must register at a time fixJ. by law before voting. (6) Prior to such regisiration he shall have paid all taxes due by him to the government. Provided, that no insane person shall be allowed to register or vote. "The military governor has the rignt to veto all bilis or resolutions adopted by the advisory council, and nis veto is final if not disapproved by the military governor of the Philippines. The advisory council discharges all the ordinary duties of a legislature. The usual duties pertaining to said offices are to be performed by the secretarles of the treasury, interior, agriculture, public instruction. the attorney general, and the auditor. The judicial power is vested in three judges, who are to be appointed by the military governor of the island. Inferior courts are to be established. Free public schools are to be established throughout the populpus districts of the island, in which the English language shall be taught, and this subject will receive the careful consideration of the advisory council. "The burden of government mus-t be distributtd equally and equitably among the people. The military authorities will collect and receive the customs revenue, and will control postal matters and Philippine inter-island trade and commerce. The military governor, subject to the approval of the military governor of the Philippines, determines all questions not speciflcally provided for, and which do not come under the jurisdiction of the advisory council. FUTURE GOVERNMENT OF JSLANDS Rests with Congrega, but the Prenident Oppuses Gxttlktlng Independence. "The fut.ure government of the Philippines rests with the congress of the biiued btaie. iew graver re3onsibilities have ever been confided to us. If we accept them in a Epint worthy oí our race and our traditiuns a great opportunity comea with them. The ïsiands lie under the shelter of our flag. They are ours by every title of law ai.d equity. They cannot abandoned. lf we desert them we ,cave them at once to anarchy and to barbarism. We flmg them- a goleen apple of discord - among the rival powers, no one of which coula permit another to seize them unquestioned. Their rich plains and valleys would be the scène of enclesa strife and bloodshed. The advent of Dewey's fleet in Manila bay, instead of being - as we hoped - the dawn of a new day of freedom and progress, will have been the beginning of an era of misery and violence, worse than any which has darkned their unhappy past. "The suggestion has been made that we could renounce our authority over the islands, and giving them independence could retain a protectorate over them. This y.ropoition will not be found, I am sure, worthy of your serious attention. Such an arrangement would involve at the out?et a cruel breach of faith. It would place the peaceable and loyal majority - who ask nothing better than to accept our authority - at the mercy of the minority of armed insurgents. It would make us responsible for the acts of the insurgent leaders and give us no power to control them. It would charge us with the task of protecting them against each other and defending them against any foreign power with which they chose to quarrel. In short, it would take f rom the congress of the United Statts the power of declaringr war and vest that tremendous prerogative in the Tagal leader of the hour. "It does not seem desirable that I should recomrafnd at this time a specific and final form of government for these islands. When peace shall be restored it will be the duty of congress to construct a plan of government which shall estab'ifh ard maintain freedom and order and peace in the Philipplnes. The insurrection is still existing. and when it terminates furtrer information will be required as to the actual condition of affairs before inaugurating a oermanent scheme of civil government. The full report of the commission. now in preparation. will oontain information ard suggestions which will be of value to congress, and which I will transmit as soon as it is completed. As long as the insurrection continúes the military arm must necessarily be supreme. But there is no reason why steps should not be taken from time to time to inaugúrate governments popular in their form as fast as .territory is held or controlled by ourtroops. To this end I am oonaiderlng the pdvisability of the return of the commiF=ion - or of such members thereof as can be secured- to aid the existing authorities and facilítate this work throughout the islands. T have believed that reconptruction should not begin by the establishment of o-re civil government for all the is'ards with its seat at Manüa, but rather that the work rhould be eommenoed by building up municipal e-overnrrents and then provincial governrrpr'ts, a central governmert at last to follow. "T'rtil eonsrress shall have made known the fnrmal exprepsion et its will I shall use (he authorUy vested in me by the constitution and the statutes to unhold the soveret?nty of the TJnited States in those distant is'ands. as in all other places where our "a? rií?htfuily floats. I shall pu+ at the di=posal of the army and navy all the means which the liherality of congreps and the peorjlp have provided to cause this unrrovoke and wanteful insurrection to cense. If any orders of mine werp requ'rel to insure the merciful corduct of military and naval operations they would not b"p lacking; but every step of the proeress of our troops has been marked by a humanity which has surpr'sed evrn'thp miFguided insurgents The truest kindness to them will be a sw,ift and I effective defeat of their present leader. The hour of victory will be the hour of r.lemen-cy and reconstruction. "No effort will be spared to build up the waste place? depnlated by war anrl by long years of misgovernment. We shall not walt for the end of strife tn begin the heneflrient work. We shall continue, as we have besrun, to oppn the schools and the churches. (o set courts in operatton, to foster industry and anv way in our power to mske thpe people whom Providence has hrought wlth'n our jurisdiction feel that It is their liberty and not our power, their welfare and not our pain, we are seeking to enhance. Our flag has nevpr waved over any comn-i'nity but in blef-sing. I helieve the Filipinos will soon reoosriizp the fpet that it. has rot lost its gift nf benedlction in its worldwlde journey to thptr scores." The Sulu islands are referrprl to as having accepted our authority. The provisión in the agreement with the Bultan permitting the exi'pnce of slavery Ir. thoso islands, as well. in fact, as the whole agreement with the sultan, the president explains, is made subject to conflrmation by congress, and the sultan was 'informed that the agreement is not to be construed in any wuy as giving the consent of the United States to the existence of slavery in I the Sulu archipelago. I GOVJ5KNME.NT FOlt POSTO EICO, Time Is Eipo tliO Pn-sfdent Says iur a. Temporary IT.U'in. With reference to Porto Rico the president says: "The time is ripe tor the adoption of a temporary form of goveniment for this island. The system of civil jurisprudence now adopted by the people of this island is d.escribed by competent lawyers who are familiar with it, as thoroughly rr.odern and scientiflc so far as it relates tu matlers of internal business, trade, production, and Bocial and private right in general. The cities of the island aregoverned under charters which probably require very little or no change. So that with relation to matters of local concern and private right it is not probable that much, if any, legislation. is desirable. "But with reference to public administration and the relations of the island to the federal government there ara many matters which are of pressing urgency. It must be borne in. mind that since the cession Porto Rico has been denied the principal markets she had long enjoyed and our tarifts. have been continued against her products as when she was under Spanisli sovereignty. The markets of Cpain are closed to her producto excepc upon. terms to which the commerce of all nr.tions is subjected. The island, which used to buy her cattle and tobáceo without customs duties, now imposes the same duties upon these producís as from any other country entering her ports. She has therefore lost her free intercourse with Spain and. Cuba without any compensating benefits in this market. "It is desirable that the government of the island under the law of beüigerent right, now maintained through the executive department, should be superseded by an administration entirely civil in its nature. For present purposes I reeommend that congress pass a law for the organization of a temporary government, which shall provide for the appointment by the president- subject. i to confirmation by the senate - of a governor and such other offleers as the general administration of the island may 1 require, and that for legislative purposes on subjects of a local nature not partaking of a federal character a legislative council, composed partly ot ■ Porto Ricans and partly of citizens of the United States, shall be nominated and appointed by the president, subject to confirmaticn by the senate, their acts to be subject to the approval of the congress or the president prior to going into effect. "In the municipalities and other local sub-divisions I raommend that the principie of local self-government be applied at once, so as to enable the intelligent citizens of thé island to particípate in their own government and to learn by practical experience the duties and reauirements of a self-con4ained and a self-govcrning people. I have not thought it wise to commit the entire government of the island to offieers selected by the peonle, becaus?e I doubt whether in habits, training and experience they are such as to fit them to exereise at once so large a degree of self-goverrment; but it is my jür'gment and expectation that they will Foon arrive at an attainment of experienre and wisdom and self-control that will justify conferring upon them a much larger participa tion in the choice oí their insular offieers. "The fundamental requirement for these roplp. as for all neople. is eduration. The free school house is the bst preceptor for itizenship. In the intr"duction of modern pdueatïonal mthodí care. hovever. must be exercised that changes be not made too abruptlv and that the hi?tory and racial pecu'arit'es of the inhhitants shall be given dus weight." AS TO CIVIL SEKVICE AFFAIRS. Reasons for tïift Promulgatinn of the Order of May 89, 1899. Of the order exempting certain civil service positions from the classifled list the president says: "The executive order of May 6, 1896, extending the limits of the classifled service brought within the operation oí the civil service law and rules nearly all of the executive civil service not previously classified. Some of the inclusions were found wholly illogical and unsuited to the work of the several departments. The application of the rules to many of the places so included was found to result in frictlon and embarrassment. After long and very careful consideration it became evident to the heads of the departments responsable for their efficiency that in order to remove these difficulties and promote an efficiënt and harmonious administration certain amendments were necessary. "These amendments were promulgated by me in executive order dated May 29, 1899. The principal purpose of the order was to exempt from competitive examination certain places involving fiduciary responsibilities or duties of a strictly confidential, scientific, or executive'charaeter, which it was thought might better be fllled either by noncompetitve examination or in the discretion of the appointing officer than by open competition. These places were comparatively few in number. The order provides for the fllling of a much larger number of places, mainly in the outside service of the war department, by what is known, as the registration system, under regulations to be approved by the president, similar to thosewhich have produced such admirable results in the navy yard service. "All of the amendments had for their main object a more efficiënt and satisfactory administration of the system of appointments established by the civil service law. The results attained show that under their operation the public service has improved and that the civil service system is relieved of many obje-ctionable features which heretofore subjected it to just criticism and the administrative offieers to the charge of unbusinesslike methods in the conduct of public affairs. It is believed that the rr.erit system has been greatly strengthened and its permanence assured. It will be my constant aim in the administration of government in our mew possessions to make fitness, character, and merit essential to appointment to ffice. and to give to the capable and deserving inhabitants preference in appointments." The message closes as follöws: "Presented to this congress are great opportunities. With them come great responsibilities. The power confided to us inereases the weight of our obligations to the people, and we must be profoundly sensitive of them as we contémplate the new and grave problems which confront us. Aiming only at the public good, we cannot err. A right interpretation of the people's will and of duty cannot fail to insure wise measures for the welfare of the islands which have come under the authority of the United States, and inure to the common interest and lasting honor of our country. Never has this nation had more abundant cause than during the past year for thankfulness to God for manifold blessings and mercies, for which we make reverent acknowledgment. "iüxecutíve Mansion, Dec. , 1899."