About a week after the Custom House was opened certain parties came to me representing that Consul General Wildman, of Hongkong, had informed them that United States goods would be admitted free of duty in Manila, that acting on this they had purchased a cargo of American illuminating oil in Hongkong, and that the payment of the heavy duty on it ($30 per ton, or about 8c per gallon) would ruin them. On consulting Lieutenant Colonel Crowder, Judge Advocate of the Eighth Army Corps, he pointed out the language of paragraph 5 of General Merritt's proclamation, which followed literally the instructions of the President, viz: "The Port of Manila will be open 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."
Under this there was clearly no authority for discriminating in favor of American goods, either coming direct from a United States Port or by transshipment at Hongkong.
The Collector of Customs was directed to act accordingly.
Another question was in regard to the importation of Chinamen into Manila. The Consul at Hongkong telegraphed to know if they would be admitted. As there had been no time for examining the treaties and laws in force on this subject, I replied with General Merritt's approval that for the present it was not practicable to admit Chinese laborers into Manila.
Another very important question which arose was in regard to trade with the other Philippine islands. Nearly all the hemp and the greater part of the sugar is grown in the Visayas. The hemp is bought by foreign merchants in Manila, who bring it there from the other islands, and export it, paying large duties to the Manila Custom House. These merchants were anxious to bring up their stock, of which a large amount had accumulated during the war, and ship it abroad. The ships engaged in this island trade were idle in the Pasig. They belonged to a Spanish corporation, owned entirely by Scotch capital, and had a Spanish Register. The owners were ready to transfer them to the American flag. Could these vessels be allowed to clear for the ports of Cebu and Iloilo, which were in Spanish possession? The Judge Advocate advised me that they could not, without the express authority of the President. I so notified the owners of the ships and the hemp merchants. The day before I left Manila, however, Admiral Dewey received a cable from the Navy Department stating that Spanish ships had been granted the privilege of trading to American ports during the suspension of hostilities, and that American ships could be granted a similar privilege for Spanish ports. I understood that on the strength of this cable General Otis intended to allow the United States Consul at Manila to grant these vessels an American Register and then allow them to clear for the other islands. I do not know what the arrangement, if any was made, in regard to the payment of export duties at Iloilo. Clearly the hemp cannot pay export duties at both Iloilo and Manila, and the Spaniards are not likely to allow it to leave Iloilo free while we collect an export duty on it at Manila. Incidentally, this illustrates the complications and loss that will arise if the islands are subdivided. The principal merchants for all the islands are at Manila, and 90 per cent, of the duties in imports and exports are collected at its Custom House. A large part of the imports are redistributed through the islands; and all the hemp and sugar, which form the principal exports, come to Manila from other islands. If, then, we retain Luzon and give the other islands back to Spain or some other nation, that nation will impose import and export duties on everything coming from or to Manila. The foreign trade of that city as a distributing and collecting point for all the islands will be lost, and its prosperity will be destroyed; moreover, the Government revenue from that trade will be lost.
In view of the fact that Spanish officials declined to co-operate or assist in any way in the American government of Manila, the ease and rapidity with which order was maintained, the machinery of government put in operation and business reestablished, after our entry into Manila is very remarkable. For every position in the Government service, legal, administrative, financial, mechanical, clerical, men could be found in our volunteer ranks who were experienced in just that class of work at home, and they took charge of their Spanish positions with promptness and confidence.
Even in the matter of language no serious difficulty was encountered, for no less than 30 good interpreters were found in the California and Colorado regiments.
The Military Government as now organized and administered, fulfills all the requirements of preserving order and collecting the public revenue.
The civil courts, however, have yet to be organized, and their organization will present many difficulties.