The governor thinks that the customs duties heretofore levied in the islands—­three per cent on both imports and exports—­are too small; and he has decided to raise the rate to five per cent for merchants in the Philippines, and seven for those in Mexico.  He is endeavoring to extend the commerce of the islands, and for this purpose is sending ships with goods to Panama and Peru.  He has sent one piece of heavy artillery to the viceroy of Peru, who asks Penalosa for more; this is for the defense of the Strait of Magellan.  The commerce between the Philippines and New Spain is increasing.  Penalosa commends the Jesuit missionaries who have come to the islands, and advises that more of them be sent thither.  He is building forts and ships for the defense of the islands.  He remonstrates against the recent royal decree which ordered the liberation of all Indian slaves held by Spaniards in the Philippines; and closes by asking some personal favors.

By the same mail which conveys the governor’s letter is sent an account of the islands and their people, written by a soldier named Miguel de Loarca, Who was one of the earlier conquerors and settlers there.  Beginning at Cebu, as the first settlement was made therein, he describes each island then known to the Spaniards in that group—­noting its size, contour, and population; and enumerating the encomiendas assigned therein, the officials in the Spanish settlements, the products of the island, etc.  With this information Loarca incorporates many interesting details regarding the social and economic condition of the natives.  After this preliminary survey, he describes at some length the religious beliefs of the Pintados or Visayan Indians; these vary, as held by the coast dwellers and those of the mountains.  He relates their notions about the creation of the world and the origin of man, the condition of departed souls, and the deities who control their destiny.  Many of these beliefs are, of course, childish, crude, and superstitious; yet some indicate considerable imagination and poetic fancy.  They have various deities, and their priests are usually women; their religious traditions are preserved in songs.  Their mortuary and mourning customs are described.  A chapter is devoted to the institution of slavery among these peoples—­its nature and causes, and the value and status of the slave.  Their marriage customs are described at length, with the status of women among them, the penalties for unfaithfulness, the causes for divorce, etc.  There is considerable curious information regarding the fauna and flora of the islands.  Loarca then proceeds to relate similar particulars about the Moros of Luzon; they adore a divinity called Bathala, “the lord of all,” or Creator.  His ministers, who are deities of rain, harvest, trees, the sea, etc., are called anitos, and worshiped and invoked accordingly; they intercede for the people with the great Bathala.  These Moros are governed by chiefs, who enact and administer such laws as seem necessary for the preservation of good order—­adultery, murder, and theft being the chief crimes, which are punished by a system of fines, or by the enslavement of those who are without means to pay them.