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during the year been enlarged and multiplied until there are now 4,973 in the service. As command in these bodies requires special qualifications for dealing with the native soldiers, all the appointments of officers (98 in number) have been made upon the recommendations of the commanding officer in the Philippines. The mustering out of these organizations as employees of the insular government, and their reenlistment and reorganization as companies of scouts, under the act of February 2, 1901, is now in progress and is far advanced.

Reduction of expenses.—The War Department has realized the importance and the duty of following the improved conditions by a reduction of expenditures and the enforcement of economy.

War always and inevitably tends toward extravagance. The conditions of active military operations frequently require that things shall be done without regard to cost. The uncertainties of the future make very liberal and often excessive estimates and requisitions the part of prudence. The difficulties of rapid transportation and extemporized storage of supplies make it impossible to enforce the ordinary standards of official accountability. The large sums expended and the greater interests involved, discourage small economies. Habits are acquired which can not be thrown off without a positive and vigorous effort. We are making such an effort and, I think, with success. To call the attention of the Army to this necessity the following order was published on the 1st of May:

GENERAL ORDERS,

HEADQUARTERS OF THE ARMY,

ADJUTANT-GENERAL'S OFFICE,
No. 61.

Washington, May 1, 1901. The following is published to the Army for the information and guidance of all concerned:

The Secretary of War directs that the attention of department commanders and of all officers charged with the duty of making or approving estimates or requisitions for the expenditure of money be called to the importance of careful scrutiny and painstaking to avoid unnecessary expense. The requirements of active military operations always tend toward habits of expense not justified in time of peace. With the gradual disappearance of those military necessities which must be met without regard to cost the Army will be held responsible by the people of the country for a reduction of expenses and a rigid economy. The Secretary desires the assistance of all officers in bringing about this result. By command of Lieutenant-General Miles:

H, C. CORBIN, Arljutant-General, Major-General, U. S. Army.

During the past summer the Adjutant-General, the InspectorGeneral, the Quartermaster-General, the Commissary-General, and the Surgeon-General of the Army have all been sent to the Philippines with instructions to ascertain, each in his own department, what measures of retrenchment can be taken without impairing efficiency, and many such measures have been recommended and undertaken.

The military administration in the Philippines has been simplified and made less expensive by the reduction of the number of military departments in the Division of the Philippines from four to two. The quartermaster's stores and the military hospitals have been concentrated. The quantity of bulky fodder shipped from the United States to the Philippines for the cavalry, artillery, and transportation animals, which now number about 20,000, has been reduced by one-half, and native fodder substituted. The list of sales stores kept by the Commissary Department had been unduly extended in number and variety, and after consideration and investigation it has been materially reduced. The great and constantly increasing number of civil employees in the various insular governments, who were supplied from army stores during the unsettled conditions of military occupation, had much increased this branch of the work of the Subsistence Department. The amounts received from all sales of subsistence stores during the fiscal year have aggregated $3,290,234.52. These sales to officers and enlisted men are under the statute required to be at cost, and to civilians at cost with 10 per cent added.

The price thus fixed by statute does not include the cost of doing the business, of transportation, of loss of goods, of deterioration, or of interest on the moneys invested, and the result is a large annual loss to the Government. An undue extension of the system would inevitably open the door to irregularity and abuses, because the Subsistence Department is not and can not be properly organized for the conduct of a general grocery business all over the world. I have accordingly felt bound, with regret for the inconvenience caused to the great body of civil employees in the Philippines, to direct that the practice of commissary sales should be confined to the persons expressly entitled to the privilege under the statute. At the same time the civil government of the Philippines has been authorized to establish a supply store for the purpose of furnishing officers, employees, and servants of the various departments of the insular and provincial governments, including all teachers in public schools, with

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food supplies and other necessaries of life at reasonable prices; and such a store will hereafter be conducted under the direction of the chief of the Philippine constabulary, in conjunction with an insular purchasing agent. The chief quartermaster and chief commissary of the Division of the Philippines have been authorized to sell in bulk to such purchasing agent a sufficient quantity of surplus sales stores on hand in the Philippines to enable such a supply store to commence business.

A number of improvements in the methods of transacting the business of the supply departments suited to the conditions in the Philippines have been formulated and will he followed. The economical handling of supplies will be greatly promoted by the proposed construction of much-needed storehouses and by the progressive concentration of troops at fewer stations, while the quantity of supplies required will be reduced by the gradual substitution of native troops and civil constabulary for American soldiers in maintaining order.

Early in the year a number of small peculations by persons concerned in the business of the commissary department at Manila were discovered and received great prominence in the public press. Thorough investigation proved that the demoralization which they indicated was confined to a few individuals, who were promptly tried, convicted, and sentenced, and are now undergoing punishment. The whole amount of loss to the Government proved to be less than $1,000.

THE GOVERNMENT OF CUBA.

The government of the island of Cuba during the past year has been peaceful and orderly. There has been no occasion for interference by the United States forces with the ordinary administration of law. Following the plan of steadily training the people in performing the duties of government, the organization of the rural guard has been perfected, and that body has been placed under one head, and now includes a total of 1,300 men and officers, armed with modern carbines and well mounted. The municipal police, which during the formative stage were supported from the general fund, have been placed finally upon the proper and intended footing of support by the municipalities themselves. In order that upon the withdrawal of our troops the island may not be without a force competent to take charge of her coast fortifications, several companies of Cuban troops have been organized,

which, while maintained at insular expense, are assigned to our coast artillery companies in the island as second platoons for the purpose of instruction and discipline, and to fit them for the duties of coast defense.

A gradual reduction is being made in the excessive number of municipalities in the western provinces for the purpose of lightening taxation and increasing efficiency. There has been a great reduction in the number of asylums and pauper institutions. Beggars are practically unknown in the island. There are supported by the state 34 hospitals, containing 2,844 beds. Six training schools for female nurses have been established under the tuition of American trained nurses, with Cuban girls as pupils, with regular courses, examinations, and degrees. The Government training schools for boys and girls have been enlarged. The bureau for placing indigent children, mentioned in my last report, has been thoroughly established, and has during the year returned over 1,200 children to their relatives and placed 437 in other families. There are still 2,010 orphans under the care and supervision of the state. The lepers of the island have been gathered into two institutions, and the total number under treatment is now 134.

Six private institutions assisted by the state contain 362 aged poor. Extensive improvements have been made in the insane asylums, and they now contain 835 inmates. The prisons have been repaired and improved, and each jail has been provided with a physician and the necessary medicines. School instruction has been inaugurated in the larger jails. Extensive repairs of streets and sanitary work have been done in Habana, Santiago, Cienfuegos, and Santa Clara. Sewerage and paving plans for Habana have been completed and advertised for, and the contract has been awarded. Plans have been prepared for harbor improvements at Matanzas, and a contract for $550,000 has been awarded for the deepening of the harbor at Cardenas. Important first-class lights have been established at Colorado Reefs and Bahia Honda on the north coast of Cuba, and many harbors have been buoyed and properly marked. Public schools have increased in efficiency. The school law, of which a copy was annexed to my last report, has proved thoroughly successful. Its democratic character and the local control which it gives, combined with efficient central supervision, are satisfactory.

There are 121 boards of education elected by the people, and as

these boards become familiar with their duties the administration of the school law improves. The system has been kept entirely out of politics. The work of changing the old cuartels or barracks throughout the island into schoolhouses has progressed, and $250,000 have been expended upon this work during the year with good results. A thoroughly modern school is now under construction at Santiago to cost $50,000. One in Habana has 33 rooms, with a modern kindergarten, manual-training branch, 2 gymnasiums, and baths. Large schools have been established by changes in Government buildings at Guines, Pinar del Rio, Matanzas, Ciego de Avila, and Colon. The first exhibit of Cuban school work ever made was at the Pan-American Exposition at Buffalo, where it received over 30 medals. There are now over 3,600 teachers employed, with an average enrollment of 180,000 and an average attendance of 140,000 scholars. The teachers have improved. All are subjected to examination, and approximately 6,000 persons have been examined for teachers. For six weeks during the summer vacation 4,000 teachers were collected in teachers' institutes, 100 teachers were sent during the summer to the Harvard Summer Normal School, and 60 women teachers are now in the State Normal School at Newpaltz, N. Y.

A number of scholarships are contemplated, to take advantage of the bill passed by the Connecticut legislature permitting Cuban teachers to attend the normal school of that State. There has been a large increase in the number of pupils in the universities and the provincial institutes, which have been provided with new laboratorieschemical, bacteriological, and histological and well equipped with the best modern appliances. Generally, the schools now in existence are well supplied with modern books and the most modern furniture. There is still, however, great need for additional schoolhouses and thoroughly instructed teachers. There has been a general improvement in the administration of justice, but the courts are still far from what they should be. There is difficulty in obtaining the proper personnel. The number of men suitable for the judicial career is limited. One of the greatest dangers which confronts the new government is the difficulty in obtaining an absolutely sound judiciary. Trials, however, are in general shorter and more prompt than formerly, and witnesses are more willing to testify.

The correctional courts mentioned in my last report are giving excellent results, but the working of the jury system is not as yet

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