EXHIBIT E.

THIRD ANNUAL REPORT OF THE EXECUTIVE SECRETARY TO THE CIVIL GOVERNOR.

MANILA, P. I., October 1, 1904.

SIR: I have the honor to submit the following report of the work of the executive bureau for the year ending September 30, 1904.

The scope of the work of this bureau as reorganized was set forth in detail in my last annual report, and, as there has been no material change therein, it will be unnecessary to dwell upon that subject in this report, further than it will be touched upon under the subheads hereinafter following.

BUREAU PERSONNEL.

The feature of this subject that stands out with great prominence is the feverishly unsettled condition of the Philippine civil service as far as this bureau is concerned.

The force at present employed in the bureau consists of 2 officials, 1 chief clerk, 1 recorder, 1 law clerk, 6 chiefs of division, 8 private secretaries, 95 clerks and messengers, and 14 laborers, a total of 128 (52 Americans and 76 Filipinos), as against 123 for the previous year. During the year there have been the following changes:

This statement shows that there has been an aggregate of 47 separations and 84 new appointments in a total force of 128. The result of this state of affairs has been to cast upon the chiefs of division and the older employees the brunt of the work and responsibility, naturally heavier than would have been the case had the entire force been thoroughly trained in the bureau work. In addition to the performance of their official duties, the older employees have been required to instruct and train the constant stream of new appointees, who would very often, at the beginning, be only an additional hindrance instead of rendering material assistance where it was most needed. This difficulty has been more particularly felt in the action divisions, there being even now a dearth of thoroughly trained clerks experienced in the work of the bureau who are able to take the initiative in matters important as well as routinary, and to instruct employees in the lower grades, thereby being of real assistance to the chiefs of division.

Aside from this, the bureau has not even had the benefit, during the entire year, of the services of all of the older employees in the higher grades still on the rolls, the following being at present on leave of absence in the United States: The chief clerk; recorder of the Commission; law clerk (who has just resigned, as mentioned elsewhere in this report); disbursing officer; two private secretaries to Commissioners, and two clerks class 7, in addition to which I have been absent myself for five months, as stated elsewhere. All of the positions mentioned, with the exception of that of the disbursing officer, have been filled temporarily by drawing upon officials and clerks in the next lower grades.

Most of the absences in this bureau, as undoubtedly in other bureaus, are due to the fact that the employees who have served the insular government since the first and second years of its inauguration have earned and are taking a needed rest. The existence in the United States of the St. Louis Exposition has proved an added attraction to draw clerks home.

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However, in spite of these abnormal conditions, it is gratifying to be able to state that the general public business of the bureau has not been delayed, and a source of satisfaction to note the efforts most of the members of the force have made to keep up with the work and the just pride they have felt in their success. Their close application is eloquently testified to by the fact that during the year they have performed voluntarily 24,583 hours of overtime, or 3,782 working days of six and one-half hours each, an average of 315 days per month, for which no extra compensation is allowed.

It was attempted this year again to permit the clerks of the bureau to enjoy the shorter hours provided by law for the heated term," but a few days sufficed to demonstrate the fact that under present conditions the employees of the executive bureau may not hope to come within the provisions of the second proviso of section 1 of Act No. 1040, nor to shorten the office hours at any time of the year while the chiefs and officials of other bureaus that have a continuous session of six and one-half hours continue to pay their respects to this bureau after closing their own offices for the day.

While there has been a steady increase in the quantity of work over the preceding year, the relative increase has not been so great by far as in former years, owing principally to the fact that the insular government is now firmly organized, and further increases in the work will depend naturally upon the economical development of the islands and their prosperity. The unexpected may happen at any time, of course, but it is thought that under normal conditions, with its entire force on duty, the bureau will be able to respond to all calls upon it.

During my absence from the islands for five months dischaging the duties imposed upon me by the provisions of Act No. 1080 (amendatory of No. 1030), referred to elsewhere in this report, Mr. Frank W. Carpenter, assistant executive secretary, had resting upon him the combined duties of his own office and of the executive secretary, and from December 24, 1903, the date of the vacation of the office of secretary of commerce and police, and the assumption of the duties of acting civil governor by the present civil governor, until August 8, 1904, the date of the induction into the office of secretary of commerce and police of the Hon. W. Cameron Forbes, there also devolved upon Mr. Carpenter, to a very large extent, the discharge of the duties of this latter office. That he performed all these duties with ability and efficiency is vouched for by his excellent record and the high standards he has ever set for himself.

RETRENCHMENT THROUGH REORGANIZATION AND SYSTEMATIZATION.

The Philippine Commission, during the discussion of the last appropriation bill, suggested the necessity of retrenchment in the matter of the fixed charges of the government. This bureau at once set about to devise a plan whereby the wishes of the Commission in the premises might be realized. Having evolved what it considered the most feasible plan, it was at once put into practice in a tentative way, and its workings have been such that it emboldens me to submit it to the civil governor, as also the advisability of extending its scope, should it meet his approval and that of the heads of the executive departments, so as to include all the bureaus of the insular government. It is not claimed that the plan hereinbelow outlined has any of the elements of novelty; but as it seems to meet the ends sought, and hence commends itself to me, I submit it for what it is worth.

With the gradual extension of administrative organization there necessarily has been a continual increase in the fixed charges of the government for salaries and wages and contingent office expenses, and the present time seems opportune for calling a halt, as the preliminary formative period has ended.

There still remains of the present fiscal year a sufficient period within which to prepare for reorganization upon a more economical and no less efficient basis with the beginning of the next year, July 1, 1905, when it is believed there should be a general reorganization in the clerical and other nontechnical personnel of all bureaus.

In view of the falling off in the revenues of the government and the recognized necessity for retrenchment, the executive bureau is prepared to contribute its share toward the reduction of expenses, and to submit estimates for current expenses for the fiscal year 1906 looking to a considerable decrease in authorized expenditure for salaries and wages and contingent expenses. It is expected that this may be accomplished by reorganization of personnel and because of the fact that the office equipment, while not so complete or elaborate as is desired, is nevertheless adequate for the present and until conditions shall have changed to a degree warranting further considerable expenditures on this account. This does not mean to say that the work of the bureau has decreased during the past year, nor that there is any decrease expected during the coming year, but that by a redistribution of work in recognition of the increasing capacity of Filipino clerks and the discontinuance of several positions above class 9, a reduction may be effected in the estimated expenditure for salaries and

wages.

The course now being followed in pursuit of this end is a reassignment of duties and redistribution of work, the theory of which is that no duty which may be performed by a messenger shall be assigned to a clerk; that no employee of Class H shall perform duties which may be performed by an employee of Class K; nor that an employee of class 7 shall be permitted or required to occupy his time with duties which may be discharged by an employce of a lower grade; in other words, a progressive distribution of the work of the bureau, beginning with employees in the lowest classes and working upward, assigning each higher class duties requiring knowledge or responsibility which properly may not be exacted of any lower class. This leaves a greatly reduced amount of work for assignment to employees above class 9, and therefore certain positions in classes above this latter may be discontinued gradually without detriment to the efficient and prompt discharge of business. Certain of these positions in the executive bureau have become vacant through the ordinary casualties of service and the vacancies will not be filled; other positions will be vacated during the next half year, and, should it become apparent, when the last quarter of this fiscal year arrives that by the end of the year the office force will not reach the contemplated reduction, the names of individuals whose positions it is desired to discontinue will be reported to the civil service board with the necessary statement of efficiency and qualifications, in order that they may be transferred to vacancies that must be filled in other bureaus.

To carry this plan out requires continuous intelligent and loyal effort on the part of the chief clerk and the chiefs of divisions and sections. The value of each of these assistants, like that of a bureau chief, is determined by the ratio of work results to expenditures.

The reduction of fixed charges in office expenses may be effected only by a clear understanding on the part of all responsible officials and employees that the government is not an eleemosynary institution, but a corporate body bound to give the public the highest degree of service and benefits possible at the lowest cost in taxes upon private funds and conveniences, and to this end no expense not essential to such service and benefits may be tolerated. It is the duty of every employee having the immediate supervision and direction of subordinates to instruct and prepare each of the latter to fill the position next higher than that he holds, and any official or employee who fails to pursue conscientiously this course of imparting and receiving instructions should be required to seek employment elsewhere than in the government service.

In this way only-by forming a competent personnel from the local supply-may the government hope to escape the heavy expense occasioned by reliance upon the large proportion of imported employees at present utilized for nontechnical positions.

As complementary to the foregoing plan, and in the conviction that economy in time and expense is secured by having a concise and uniform set of rules for the conduct of business in all the offices of the insular government and its dependencies (which is not now the case), there is attached hereto, marked “Appendix A," a draft of proposed rules prepared by the assistant executive secretary, which is respectfully submitted for the consideration of the civil governor and heads of the executive departments.

THE NEW LAW AS TO "VACATION LEAVES."

The provision of law authorizing the granting of vacation leave (Act No. 1010, sec. 3) and abolishing the sick-leave privileges heretofore authorized has, in a general way, proven entirely satisfactory to this bureau and is considered an improvement upon former legislation upon the subject of leave.

At the close of September of this year (the above-cited act having been in force about eight and one-half months) 17 per cent of the total bureau personnel had used all vacation leave due for the year; 164 per cent had used one-half and over; 18 per cent had used one or two weeks; 32 per cent a few days only, and 16 per cent none. Some of the latter will be able to use all or a portion of their vacation before the close of the year, about one-half of them having signified their intention not to use any unless ill.

The advantage of the new system over the former is that it encourages travel in the islands, thereby broadening the views of the clerks and giving them a keener interest in their work, and affords them an opportunity to take rest and recreation, which formerly was impossible without utilizing a portion of the accumulated accrued leave, which, to the American clerks, at least, was obnoxious in that they were anxious to save the latter for a visit to the United States, the consequence being that they often remained tied down to their desks until actually too ill to continue. This naturally impaired their efficiency and often resulted in the permanent loss of the services of a good clerk.

Under the present system, if a clerk happens to desire a few days of rest or recreation, even while enjoying good health (and occasional “breathing spells" tend to put every clerk in a better frame of mind and improved physical condition, enabling him to withstand better the effects of the climate or of overwork), he may do so without the loss of pay or accrued leave. If he happens to be indisposed or physically run down, it is only necessary for him to get informal permission from his chief to be absent for a few days, and, either before leaving

the office or after returning to duty, fill out the required application for vacation leave covering the period, thus doing away with the medical certificate nuisance, which was one of the concomitants of the "sick leave" provision of the former system, the abolishment of which was a move in the right direction.

The present system does away with all investigation into the question of whether the absence of a clerk is due to illness, and repugnant and inquisitorial examination into the nature and cause of the same. So long as a clerk has vacation leave to his credit and informal permission to be absent, no further questions are asked.

The law requires that vacation leave must be taken within the calendar year for which granted, and it can not accumulate in the same manner as accrued leave.

If a clerk is absent on account of illness after he has exceeded his vacation leave, such absence is charged against his accrued leave. As a consequence, clerks are naturally reluctant to take their vacation leave during the first half and middle portion of the calendar year, fearing they might be taken ill later and before the close of the year and have the absence occasioned thereby charged to accrued leave. In view of this natural propensity of the clerks, and recognizing the tendency on the part of the majority of those in this bureau to work overtime, and in order to preserve their health and keep their mental vigor unimpaired and to prevent many absences within a short period from seriously embarrassing the work of the bureau, the clerks were given to understand, after the passage of the act, that the chances of an application for vacation leave being approved decreased with the approach of the closing months of the year. Each chief of division likewise was told that he must arrange the granting of vacation leaves with respect to the work and personnel of his division independent of the other divisions. The results have been that some clerks take all their vacation leave early, others take only a portion, reserving the balance for use during possible illness, and still others decide to reserve all against possible illness, and that, while a number of clerks have been absent from the bureau at the same time at various periods, there were never so many absent from any one division as to seriously interfere with the work thereof, though it undoubtedly increased somewhat the amount of overtime work put in by those remaining on duty.

There is, of course, the possibility of a clerk falling prey to a serious malady which would necessitate his absence from the office for a period longer than the law allows for vacation leave, but there are unfortunately always unavoidable cases of individual hardships arising under every general provision of law.

Another thing in favor of the vacation leave is that it may be taken in connection with accrued leave, and thus enables clerks to plan for more extended trips, either home or to neighboring countries.

In short, it is believed that the law as administered in this bureau, and in its beneficial results with respect to its force, has done "the greatest good to the greatest number."

MUNICIPAL AND PROVINCIAL ELECTIONS.

The general municipal elections for the year 1902 were postponed until the first Tuesday in May, 1903, by executive order of the civil governor dated November 17, 1902, so as to prevent a change of municipal officials during the taking of the census; and again by Act No. 730, enacted April 8, 1903, until the first Tuesday in December, 1903, on account of the consolidation of municipalities in a large number of provinces. These general elections were the second held since the establishment of civil government in the islands.

The bureau for some weeks prior to the date of the same was flooded with mail and telegraphic inquiries as to the manner of conducting them, which inquiries covered a wide range of subjects, showing that the provisions of the municipal code regarding elections and the subsequent laws passed relating to the same had not been well digested by either the municipal authoritics or the great body of electors. It was not surprising, therefore, that for some time subsequent to the date of the election protests against the action of the provincial boards on contested election cases should have been submitted to the civil governor on appeal. There were 64 of these cases that passed through the hands of the law clerk of the bureau and were submitted with full memoranda to the civil governor for decision. Of these cases there were 2 in the municipalities of Albay; of Antique, 1; Batangas, 3; Bulacan, 2; Cagayan, 5; Capiz, 3; Cavite, 3; Cebu, 1; Ilocos Norte, 3; Ilocos Sur, 3; La Laguna, 5; La Union, 1; Leyte, 1; Occidental Negros, 3: Oriental Negros, 1: Nueva Vizcaya, 2; Pampanga, 5; Pangasinan, 11; Rizal, 1; Samar, 3; Sorsogon, 2; and Tarlac, 3.

The provinces of Abra, Ambos Camarines, Bataan, Bohol, Iloilo, Isabela, Masbate, Mindoro, Misamis, Nueva Ecija, Paragua, Romblon, Surigao, Tayabas, and Zambales distinguished themselves by having no protested elections.

The papers in these cases make it clear that the law as it now stands needs amendment in some particulars, more especially if it is the intention of the Philippine Commission to leave the provincial boards as final arbiters of election protests, for the experience of this bureau shows that substantial justice, as a rule, will not be done the contestants in an election case

by these boards. This statement is partly based upon the admission of several provincial boards in cases arising out of the last municipal elections, as also upon other facts adduced from the papers in such cases, which conclusively prove that in nine of the sixty-four cases the provincial boards proceeded unlawfully.

One objection to the present law is that it does not afford the provincial boards sufficient time to investigate and decide such cases, and some of the irregularities attributable to them are doubtless due to the haste with which they must act. The memoranda referred to above, prepared by the law clerk, contained the following paragraph on this subject:

"The law allows the board only seven days from the date of the receipt of election returns within which to make an investigation. As all protests must be forwarded to the board within three days after the election, the protests all reach the provincial capital at about the same time. When the uncertainty of mail communications and the difficulties of transportation in the provinces are recalled, it will be apparent at once that the time allowed is too short. In many cases provincial boards have found themselves compelled, in justice to the electors, to revise their findings and annul decisions reached in haste."

That the present law at least is not clear to those who are to put it into execution is borne out by the fact that over 200 opinions and rulings in regard to elections were rendered by the attorney-general and this bureau within the few months preceding and succeeding the last municipal and provincial elections.

It would therefore seem that if the Philippine Commission is of opinion that the present law should remain on the books, or should enact new legislation upon the subject of elections, in either event it would be well to prepare and publish in a printed form certain general instructions pertaining to the proper conduct of both municipal and provincial elections in the effort to introduce certainty and uniformity in the methods of conducting the same, and to furnish provincial boards and other persons interested in the elections information which the experience of this year shows them to need and to be desirous of obtaining.

The gubernatorial elections were held on the first Monday in February of this year, and a number of communications upon the manner of conducting them were received by this office. Despite the fact that two or more telegrams of instructions in the premises, which were thought to thoroughly cover the field, had been sent out to all provinces interested some weeks before the election, the bureau was in receipt of inquiries regarding it almost up to the hour of opening the polls. The nature of these inquiries developed some peculiar facts. The law requires that every councilor, to be eligible for such an office, must know how to write, and yet from at least two provinces came the question whether councilors who could not write could vote at the election for provincial governor. Obviously, ineligible men had been elected as councilors.

Another governor wished to know what ought to be done in order to avoid greater transportation expenses for councilors and vice-presidents when no candidate for governor received a majority of the votes, evidently believing that should the first ballot result in no election the convention should adjourn until convened again by due proclamation.

The provincial secretary of the same province followed the governor's inquiry, when answered, by propounding the question whether a recess could be taken between the different ballots.

These questions and others no less rudimentary are not surprising when it is considered that elections and their machinery were absolutely unknown until the establishment of civil government here a little over three years ago.

Of the 40 provinces in the islands, in 6 the governorship is appointive; in 2 the gubernatorial elections were postponed by the civil governor, which left 32 provinces in which they were held. The result of the elections was as follows: Incumbent reclected in 17 provinces, acting governor elected in 2 provinces, and new governor elected in 13 provinces. În 21 of the 32 conventions one ballot was cast; in 8 two were cast, and in 3 three were cast. There were 19 elections unprotested and 13 protested. All of the unprotested elections have been confirmed by the civil governor under Act No. 336. Of the 12 protested cases acted on, the former incumbent was seated in 6 and a new man in 6. The other case has not been decided, owing to the absence in the United States and Europe of the governor against whose election the protest was filed.

PROVINCIAL AND MUNICIPAL ORGANIZATIONS.

At the time of my last report the archipelago was divided into 40 provinces, 34 of which were organized under the provincial government act (Act No. 83) and the remaining 6 under special acts. There has been no change in the number of provinces since then, nor material change in their forms of government. The organized municipalities, however, have been reduced through consolidations from 1,035 at the time of my last report to 706 at the present date, their forms of government remaining the same. The consolidations were made by the Commission for reasons of economy, one set of municipal officials now being sufficient where formerly several were required. Small and sparsely populated towns lying