BUREAU OF INSULAR AFFAIRS

The Philippine Islands.-The first report of the United States High Commissioner to the Philippine Islands for the fiscal (and calendar) year 1936 shows general conditions to be excellent. A marked improvement was shown in commerce and industry. Expansion in the production of gold was the outstanding feature, its export value having gone ahead of all other industries except the sugar, abaca (Manila hemp) and the coconut group. Peace prevailed throughout the year, with the exception of tribal differences between Kalingas and Christians and sporadic minor disturbances in Lanao among Moro outlaws. The finances of the Commonwealth government were in excellent condition. The public debt was small. The sinking funds for all outstanding indebtedness had been regularly provided for and segregated. The total income for the fiscal year exceeded expenditures by $3,970,214.03. The net reduction in total amount of bonded indebtedness for the year 1936 was $1,639,500. The net amount of outstanding bonds on December 31, 1936, was $57,935,000, of which $20,902,500 were owned by the Commonwealth government, having been purchased from sinking or other funds.

The external trade of the islands during the year 1936 showed an increase both in volume and in total value over the year 1935. The balance of trade in favor of the islands amounted to $35,325,877 (exclusive of gold and silver bullion) due chiefly to shipments of sugar, coconut oil, copra, cigars and cordage to the United States. It is of interest to note that of imports into the islands in 1936, the United States furnished 60.81 percent and Japan 13.12 percent, while, of Philippine exports, 78.8 percent went to the United States and 5.68 percent to Japan.

The first anniversary of the establishment of the Commonwealth of the Philippines was celebrated throughout the islands on November 15, 1936. Other events of interest were the Thirty-third Eucharistic Congress held in Manila from February 3 to 7, 1937; the opening on April 28 by the Pan American Airways of commercial air service between Manila and Hong Kong; the establishment on October 21 of regular weekly commercial air service between Manila and the United States; and the plebiscite on woman's suffrage on April 30, resulting in 447,681 affirmative votes and 44,307 negative.

With respect to Federal legislation directly or indirectly affecting the Philippines, the efforts of the War Department have been directed primarily to the prevention of any legislation which would infringe or mend the provisions of the Independence Act.

Upon the suggestion of the senatorial committee which visited the Philippines in the latter part of 1934, the President of the United States directed the appointment of an interdepartmental committee to study United States-Philippine trade relations in order to facilitate the work of the joint conference provided for in the Independence Act, and also suggested that the Philippine Government inaugurate similar

studies in the Philippine Islands. Special committees of the United States and of the Philippine Interdepartmental Committees rendered preliminary reports in 1935.

In November 1936 the Philippine National Assembly, by Commonwealth Act No. 191, authorized the President of the Commonwealth of the Philippines to negotiate with the President of the United States for the holding of an economic and trade conference between the United States and the Philippines and appropriated funds to defray the necessary expenses. The Filipino committee, headed by the President of the Philippines, arrived in Washington in February 1937 and on April 14 there was appointed a joint preparatory committee of American and Philippine experts to study trade relations between the United States and the Philippines and to recommend a program for the adjustment of Philippine national economy to a position independent of preferential trade relations with the United States.

The committee began its work under the direction of the chairman of the Interdepartmental Committee on Philippine Affairs, the Honorable Francis B. Sayre. It held its first meeting on April 19, 1937. The committee has held hearings and completed the first phase of its work in the United States and is preparing to leave for the Philippine Islands in July to carry on its studies there.

On May 13, 1936, High Commissioner Murphy left the Philippines for the United States, having been called to Washington by the President. Mr. J. Weldon Jones, financial expert, acted as High Commissioner during his absence and until the arrival in Manila of his successor. High Commissioner Murphy's resignation was accepted by the President, effective December 31, 1936. Hon. Paul V. McNutt was appointed by the President February 17, 1937, to succeed High Commissioner Murphy. He took his oath of office in Washington on February 27 and arrived in Manila on April 26.

Besides the functions of the High Commissioner outlined in the Independence Act, additional duties vested in his office include the issuance of passports; matters relating to the documentary requirements of aliens desiring to enter the Philippines; the deportation of aliens and proceedings involving the extradition of fugitives from justice; the issuing of licenses for the export and import of arms, ammunition, and implements of war from and into the Philippines; and duties relating to his office as "The United States Sugar Authority in the Philippine Islands."

The retaining wall for the site in Manila for the residence and office building for the United States representative in the Philippine Islands was completed in November 1936. The work of filling in the area is nearing completion and construction of the building itself will begin at an early date. Pending its completion, quarters for residence and offices in Manila have been leased. At Baguio, the summer capital, the High Commissioner, through the courtesy of the Commonwealth government, occupies temporarily the Mansion House, which had formerly been used as the summer residence of the Governor General. Plans are being made for the early construction of a residence and office for the United States representative in the Philippines at Camp John Hay, a United States military reservation at Baguio.

Dominican customs receivership.-The annual inspection of the Dominican customs receivership was made in December 1936. The receivership has continued to maintain a high degree of efficiency, and the accounts were found in satisfactory condition.

The customs collections for 1936 amounted to $2,878,789.07, an increase of $39,725.72 over the customs collections for 1935. While the percentage of increase is only nominal, it is believed to indicate a definite upturn in the country's foreign trade movement.

Internal revenue taxes, independent of customs duties but collected at the customhouses under administration of the receivership by virtue of a special agreement with the Dominican Government, amounted to $3,108,514.18, an increase of $291,726.77, or 10 percent, compared with 1935.

The cost of operating the receivership was kept well below the 5percent allowance provided in the convention, being 4.54 percent of the customs receipts for the year. The cost of internal revenue collections made through the receivership was 3.27 percent of the gross collections, the allowance under the agreement with the Dominican Government being 4 percent. The combined cost of operating the two services was 3.88 percent of the total receipts.

THE PANAMA CANAL

While the Secretary of War has general supervision over the administration, maintenance, and operation of the Panama Canal, the immediate supervision of these activities is a responsibility of the Governor of the Panama Canal.

The primary function of the Panama Canal is to provide and maintain a waterway across the Isthmus of Panama through which vessels of all nations may pass quickly and safely from one great ocean to the other. To accomplish this involves the operation and maintenance of the canal itself, the conduct of auxiliary enterprises to serve the ships and canal operating personnel, and the government of the Canal Zone, with a considerable civilian and military population.

During the fiscal year ending June 30, 1937, Panama Canal traffic was adversely affected by the maritime strike in the United States which lasted from November 1936 to February 1937. Were it not for this interruption of the normal flow of traffic the Canal would have had one of the best years in its history.

It is probable that the present capacity of the Panama Canal will prove ample for interoceanic shipping for a number of years. Nevertheless, in accordance with congressional authority, studies are being made of the possibilities of increasing the capacity of the Canal to provide for future needs. This investigation will extend over a period of years.

The dual measurement system for determining the amount of tolls to be charged vessels passing through the Canal has been the outstanding administrative problem of the Panama Canal for many years. In accordance with a congressional enactment a neutral committee of distinguished citizens was appointed by the President which made a thorough study of the question and rendered a report which was transmitted to Congress on February 26, 1937, with the recommendations "(1) That tolls for the use of the Panama Canal shall be based upon vessel tonnage determined by the Panama Canal rules of measurement as prescribed by the President. (2) That the tolls upon commercial vessels, Army and Navy transports, colliers, supply and hospital ships, shall not exceed $1 per Panama Canal net ton, when such vessels are laden. (3) That a rate of tolls lower than is levied on laden vessels may be prescribed for vessels in ballast, without passengers or cargo.'

The required legislation to give effect to these recommendations was enacted by the Congress (Public, 350, 74th Cong., approved Aug. 24, 1937) and on August 25 and 31, 1937, the President issued the necessary proclamations prescribing and proclaiming the rates of tolls to be paid by vessels using the Panama Canal and the Rules for the Measurement of Vessels for the Panama Canal, to become effective on March 1, 1938. The rates to be assessed are $0.90 per net ton for laden vessels and $0.72 per net ton for ballast vessels, based on new rules of measurement of the Panama Canal. The principal

changes in the rules are as follows: Double-bottom compartments will be exempted from gross tonnage unless available or used for cargo. Peak tanks will be deductible when used for fresh water for ship's use. An engineer's workshop not to exceed 5 percent of actual machinery space, or 50 tons in any case, will be deductible. Accommodations for all personnel inscribed on the ship's rolls as crew, regardless of service, will be deductible. Spaces for use of passengers solely as public rooms will be deductible.

Auxiliary services for the Panama Canal are furnished largely by the Panama Railroad Co., originally a privately owned corporation, but now entirely Government-owned. This company operates the Panama Railroad, harbor terminal facilities, commissaries, and a steamship line from the United States.

In May 1937 the Panama Railroad Co. entered into a contract with the Bethlehem Shipbuilding Corporation for the construction of three new passenger-cargo steamers. When completed the new vessels will provide regular weekly passenger and freight service between New York and Cristobal and will replace the present fleet of four vessels, which have been in use for many years and which provide weekly freight service, but only biweekly passenger service, over this route. The first new steamer is scheduled for completion in January, the second in March, and the third in May, 1939. The cost of the three new vessels will be approximately $12,000,000.

During the 23 years that the Panama Canal has been in operation 92,990 large, ocean-going commercial vessels have passed through the Canal. Of this number 40,372 were of United States registry. This number is in addition to 8,588 transits of vessels owned by the United States Government which passed through the Canal without payment of tolls.

During the year 5,387 ocean-going commercial vessels passed through the Canal, as compared with 5,382 in 1936 and 5,180 in 1935. There was a substantial increase in the volume of cargo carried, as compared with the previous 2 years. Tolls collected were slightly less than in 1936 but more than 3 percent higher than in 1935.

The more important trade routes served by the Canal and the tons of cargo moving over these routes during the past fiscal year were: Between the Atlantic and Pacific coasts of the United States, 6,540,157 tons; between the United States and the Far East, including the Philippine Islands, 4,953,988 tons; between Europe and South America, 3,122,475 tons; between Europe and Canada, 2,574,170 tons; between the east coast of the United States and the west coast of South America, 2,567,649 tons; between Europe and the United States, 1,969,752 tons; between Europe and Australasia, 1,143,525 tons; between the United States and the Hawaiian Islands, 690,837 tons; and between the United States and Australasia, 552,263 tons.

During the past year Panama Canal revenues from tolls amounted to $23,147,433.54, from postal and miscellaneous receipts $98,775.74, while the net revenues from business enterprises amounted to $917,360.14, a grand total of $24,163,569.42. Net operating charges amounted to $10,109,624.05, thus leaving a balance of $14,053,945.37 revenue in excess of operating charges, exclusive of interest. However, including interest charges at the rate of 3 percent per annum on the capital investment of the Canal, the operations for the year show a deficit of $2,442,299.43 as compared with a deficit of $947,254.93