While it is held to be the right of a conqueror to levy contributions upon the enemy in their seaports, towns, or provinces which may be in his military possession by conquest, and to apply the proceeds to defray the expenses of the war, this right is to be exercised within such limitations that it may not savor of confiscation.  As the result of military occupation the taxes and duties payable by the inhabitants to the former government become payable to the military occupant, unless he sees fit to substitute for them other rates or modes of contribution to the expenses of the government.  The moneys so collected are to be used for the purpose of paying the expenses of government under the military occupation, such as the salaries of the judges and the police, and for the payment of the expenses of the army.

Private property taken for the use of the army is to be paid for when possible in cash at a fair valuation, and when payment in cash is not possible receipts are to be given.

In order that there may be no conflict of authority between the army and the navy in the administration of affairs in the Philippines, you are instructed to confer with the Secretary of the Navy so far as necessary for the purpose of devising measures to secure the harmonious action of those, two branches of the public service.

I will give instructions to the Secretary of the Treasury to make a report to me upon the subject of the revenues of the Philippines, with a view to the formulation of such revenue measures as may seem expedient.  All ports and places in the Philippines which may be in the actual possession of our land and naval forces will be opened, while our military occupation may continue, to the commerce of all neutral nations, as well as our own, in articles not contraband of war, and upon payment of the prescribed rates of duty which may be in force at the time of the importation.

WILLIAM McKINLEY.

EXECUTIVE MANSION, Washington, May 19, 1898.

The SECRETARY OF THE TREASURY.

SIR:  The destruction of the Spanish fleet at Manila, followed by the taking of the naval station at Cavite, the paroling of the garrisons, and the acquisition of the control of the bay, has rendered it necessary, in the further prosecution of the measures adopted by this Government for the purpose of bringing about an honorable and durable peace with Spain, to send an army of occupation to the Philippines for the twofold purpose of completing the reduction of the Spanish power in that quarter and of giving to the islands order and security while in the possession of the United States.  For the command of this expedition I have designated Major-General Wesley Merritt, and it now becomes my duty to give instructions as to the manner in which the movement shall be conducted.