sum of 2 per cent. is paid for expense of collection.  The tax is collected at the Tribunal in each pueble, and 20 per cent. is retained for expenses of local administration, and 80 per cent. paid to the General Treasury.  This tax falls heavily on the poor and lightly on the rich.  The tax on industry and commerce is similarly graded according to the volume of business transacted by each merchant or merchantile corporation.  The tax on real estate is absurdly low and levied only on municipal property and on the rent, not the value.

The tax on imports is specific and not ad valorum; it amounts to about 13 per cent. of estimated values.  The free list is very small, nearly everything of commercial value which is imported being subject to duty.  The revenue from imports has increased from $566,143 in 1865, to $3,695,446 in 1894.  It was about the same in 1897.  On the other hand the export tax, which was nothing in 1892, the loading tax, which was nothing in 1893, and the unloading tax, which was nothing in 1894, have all been increased in the last few years in order to meet the expenses of suppressing the insurrection.  These three items yielded nearly $2,700,000 in 1897.

The monopoly of importing and selling opium is sold, by auction, to the highest bidder for a term of three years.  The present contract runs until 1899, and yields $48,000 per month.

Every legal document must be drawn up on paper containing a revenue stamp, engraved and printed in Spain, and every note, check, draft, bill of exchange, receipt or similar document must bear a revenue stamp in order to be valid.  These stamps and stamped paper yielded a revenue of $646,000 in 1897.

The lottery is conducted by the Government—­the monthly drawings taking place in the Treasury (Hacienda) Department.  The sale of tickets yielded $1,000,000 over and above prizes in 1897.

In a report to General Merritt, on August 29th, I recommended that the opium contract be cancelled and the lottery abandoned during our occupation of Manila; and as the poll tax and the tax on industry and commerce had been paid for the most part in the early part of the year, our chief sources of revenue were from the custom house, the sale of stamps and stamped paper, and the sale of such licenses as the law allowed (amusements, liquor saloons, etc.), for the benefit of the city of Manila as distinguished from the general revenue.  I estimated the total at about $500,000 per month.

The expenses of administering the military government of occupation (apart from the expenses of the army) will consist of the current expenses of the office at the Provost Marshal General’s office and its various bureaus—­at the custom house, internal revenue office, and other offices—­and the salaries of interpreters and minor employes who are anxious to resume work as soon as they dare do so.  An estimate of these expenses was being prepared at the time I left, but was not completed.  It can hardly exceed $200,000 per month and may be much less.  This should leave $300,000 (silver) excess of income per month, to go towards the military expenses of occupation.