The establishment of a gold standard fund to maintain the parity between the gold and silver dollar was quickly effected by the sale of exchange on the United States in accordance with the established law, at a cost estimated to be the same as the transportation of the gold coin itself.

The army, by direction of the secretary of war, ceased to pay in United States money, and its paymasters were given credit at the Insular Treasury, where they obtained the necessary funds in Philippine currency.

The government also authorized, in addition to the coinage of silver, the issuance of paper money in two, five, and ten peso notes.  All of the coins and bills were readily interchangeable with the United States coins in common use, the dollar being worth two pesos, the half dollar one peso, the twenty-five cent piece a half peso, the ten-cent piece a peseta, the five-cent piece a media peseta and the cent two centavos.

Unfortunately the silver value of the new peso was such that when the price of silver again rose, its bullion value was greater than its money value, and in consequence coins of this denomination were hoarded and exported.  It proved necessary to prohibit their exportation, and to issue new coins of less bullion value, but this was the only really serious difficulty attending a fundamental reform which put the currency on a sound basis.  The original pesos were recoined and a handsome profit made on the transaction.

No one who has not lived in a country where the circulating medium is constantly fluctuating in value can fully appreciate the enormous benefit conferred on the Philippine Islands by this important reform.

Another reform of far-reaching importance was the readjustment of the burden of taxation so that it should bear lightly on the necessities of life, and heavily on its luxuries.  This was a complete reversal of the scheme which we found in force, under which wheat flour and kerosene oil paid very heavy import duties while cigars and champagne were lightly taxed.

We imposed export taxes on certain products of the country.  Such taxes are objected to by many political economists, but were approved of by the Filipinos, who strongly opposed the imposition of a logical and very necessary personal tax to provide funds for the construction and maintenance of highways and bridges.  It is usually wise, when practicable, to obtain funds for necessary governmental purposes by the imposition of taxes which are willingly paid.

Mr. Taft resigned the governorship of the Philippines to become secretary of war, his resignation taking effect January 31, 1904.  He had performed a monumental work for the Filipinos, and for humanity at large, during his years of service in the islands, and carried with him the good will of most of the people whom he had so faithfully, efficiently and self-sacrificingly served.  He had at one time very gravely impaired his health by hard work, and when the opportunity