struction having been formerly held ex-officio by the Minister of Foreign Affairs, who received his salary as such Minister. The annual salary of the Commissioner of Public Lands is three thousand dollars, that of the Commissioner of Agriculture and Forestry is two thousand one hundred dollars, that of the Surveyor is three thousand dollars, while the President of the Board of Health receives nothing.

As will be seen in the estimates, I have placed the four leading executive officers in a class by themselves with an annual salary of four thousand five hundred dollars each; such reduction of pay being consonant with the rates established for such Territorial officers as are paid by the Federal Government.

The Commissioner of Public Lands, the Commissioner of Agriculture and Forestry and the President of the Board of Health are placed in another class, with salaries corresponding to that of the Auditor. It is a question in my mind whether the President of the Board of Health should not receive four thousand five hundred dollars.

The reasons for these changes are as follows: The Commissioner of Public Lands has now the whole work and responsibility formerly divided among the Commissioner of Public Lands and the Agent of Public Lands under the Republic. In regard to the Commissioner of Agriculture and Forestry, it is desired to develop the scope of his department to an extent far beyond the field of the old Bureau of Agriculture and Forestry, in which case the present pay is clearly inadequate. Both of these officers are recommended by the Federal authorities who are working for the establishment of an agricultural experiment station in the Territory, for appointment as Commissioners in the management of such station.

The President of the Board of Health is an officer having at times great and most critical responsibilities in relation to the protection of the public health. It is obvious that no one would be able to perform the duties of this position as thoroughly without pay as if his time and efforts were reasonably compensated.

I recommend that the beginning of the first biennial period of the Territory be set for the first day of July, 1901, and that appropriations be made accordingly. My reasons for this are: First, the financial year of the Government of the United States begins on the first day of July of each year, under which rule our former practice of beginning the financial period on the first day of January would, if continued, be extremely inconvenient and unsuitable, for several reasons, particularly in the matter of statistics and official reports to the Federal Government; second, it would, for obvious reasons, be an improvement in our system to

have our financial period follow the biennial appropriations instead of beginning several months before their passage, as heretofore.

Such an arrangement was evidently contemplated by Congress in enacting Section 53 of the Territorial Act, as appears by the words which refer to the regular sessions of the Legislature as preceding the biennial periods for which they make appropriations.

The loss of the tariff and postal revenues incident to annexation has been a serious shock to our financial condition. In the period of 1898 and 1899 the revenue from these sources was $2,399,167.87 and the expense $331,270.22.

This reduction of revenues makes it necessary that a considerable sum of money should be borrowed for public improve

ments.

The reports on the financial requirements for the coming period contain statements of estimates of the Government income for 1901 both by the Treasurer and the Auditor---the total estimate of the former being $2,314,000, and that of the latter $2,175,550. These estimates assure the Government sufficient funds for the satisfactory conduct of the affairs of the Territory, excepting in the matter of public improvements, unless some unforeseen public misfortune should occur calling for larger expenditures.

As the authority of the Territory to incur indebtedness is limited and finally subject to the approval of the President, it is desirable that the Legislature should study the question of increasing the current revenues by methods which will distribute the burden of taxation as fairly as possible and gradually reduce the necessity of borrowing money for public improvements.

The present public debt, not including deposits in the Postal Savings Bank of the Republic of Hawaii, which have been assumed and paid by the United States, is $4,186,400. The United States have still to pay $3,235,429.69, leaving as the public deb of the Territory $950,970.31.

The provision of the Territorial Act---Section 55, relating to loans, limits the amount of indebtedness that may be incurred in any one year by the Territory to one per centum upon the assessed value of the taxable property of the Territory as shown by the last general assessment. The assessment for the year 1960 showed a total valuation of $97,491,584, consequently the indebtedness that may be incurred in the first year of the next biennial period is $974,915.84, and the same amount or more for the second year. The total loan suggested in the Estimates is $1,946,900, one-half of which may be incurred in each year of the coming period.

The report of the Treasurer shows that the sum of $799,000 has been advanced to loan accounts from current funds since the legislative session of 1898. The Estimates provide for the return of this amount to the current account and its appropriation as current funds. Although this course is not absolutely necessary, yet it is very desirable that it should be followed, for this reason: A very large part of the revenues are received from taxes on property during the latter part of October and the first two weeks of November. With our present surplus and the monthly revenues from other sources, the Government will be out of funds, as shown by the Treasurer, several months before property taxes are collected, unless the return to the current account of loan advances as above suggested be adopted.

I recommend the passage of a loan act for a larger amount than at present required, under which the Legislature at each session may appropriate funds as may be required, thus obviating the necessity of passing a new loan bill at each session. Such a course was adopted by the Legislature of 1896 and has been satisfactory.

In connection with efforts for the suppression of the bubonic plague, which was epidemic in Honolulu during the winter of 1899 and 1900, a number of buildings and other property were destroyed by the Board of Health, and a large number of buildings and a greater amount of other property were destroyed by the great fire of January 20th, 1900, which was the accidental result of a fire started by the Board of Health as a measure for the suppression of the plague. By this disaster a large number of people were rendered homeless and suffered serious loss of property.

In response to a suggestion of the Executive Council, the following telegram was received from the Secretary of State:

"The President approves the appointment of the Court of Claims to consider losses caused by the burning of Chinatown and to make awards and judgments on such losses to be paid out of appropriations made by the Council of State in conformity with the Hawaiian law.”

Such a Court was appointed on the second day of April, 1900, and principles and rules established for its government. The Court began operations at once, but the Council of State, upon being called together, refused to appropriate funds for the expense of such Court on account of a disagreement of the Council with the principles and rules for the government of the Court adopted by the Executive Council. The Court thereupon ceased operations.

tory.

The matter is now referred to the Legislature of the Terri

Although, as a rule, sovereign States are not, and the Republie of Hawaii by its own laws was not legally bound to recognize in damages claims arising from such cases; and there is nothing in the brief message from the Federal Government which makes it clear that the President intended to authorize a departure from the usual rule and Hawaiian law, my view of policy in this matter is as follows: The bubonic plague with the resulting deaths, the losses by fire and the danger which for four months menaced the whole Island population, was a national misfortune, which should as far as possible be borne approximately by the whole community. Consistently with this view the tax payers should assume a reasonable proportion of the losses of the sufferers in this calamity, but no logical theory requires them to assume the whole of such losses, as the sufferers are equally called upon to bear their share also. What that proportion should be is difficult to say; it can only be decided arbitrarily.

The fact, however, that many householders and proprietors of premises that became infected by their own culpable neglect of cleanliness in their surroundings not only invited infection, but gave plague germs a foothold from which it was most difficult to dislodge them, is a circumstance that should greatly reduce awards of damages to such persons if not indeed cause their claims to be refused altogether.

The matter of awarding damages is one of such difficulty and delicacy that provision should be made for the establishment of a court or commission composed of persons of integrity and conservative judgment for this work.

The project of recognizing these claims in damages being one of Government bounty rather than of legal requirement, the Legislature is not called upon to impede the progress of the country in its treatment of the subject, but simply to extend reasonable and appropriate relief to the innocent sufferers in this great disaster.

Although the Estimates cover an aggregate amount near to the limit of prospective revenues, a large part of the item for interest on Government indebtedness will probably not be required, as the Federal Government may be expectd to carry out the provision of the joint resolution of annexation assuming the payment of interest on four million dollars of the indebtedness of the Republic of Hawaii. This reduction of that item will amount to $381,726.96. For the same reason the interest paid by the Territorial Government since the 14th day of June, 1900, on this account may be expected to be refunded by the Federal Government. This amounts to $106,069.44. There will therefore be a saving in the Estimates of $487,796.40, which will be available. toward the settlement of the fire claims.

Since the cessation of the bubonic plague the health of the community has, with the exception of one or two localities, been generally good.

With regard to the unfortunate class, confined for the public safety in the settlements of Kalaupapa and Kalawao, it is a satisfaction to be able to report that their condition as to their surroundings and the comforts of life is improving from year to year. It is probable that more can be done to alleviate the hardships of their situation. Legislation providing for appeals from the decisions of the District Magistrate whose jurisdiction includes the settlement would doubtless add to the content of the community. Such appeals, except upon points of law, should be heard in the settlement. Any other arrangement would seem to be impracticable under the circumstances. It is to be hoped that the Legislature will during this session send a Committtee of its members to visit the settlement and report on its condition.

While the sanitary state of Honolulu has been growing worse for several years, owing mainly to the entire absence of a system of sewerage, and the rapid increase of population, and to some extent to the unhealthy character of that portion of the drinking water which is supplied from the Nuuanu reservoirs, the prospects for an immediate improvement are most encouraging. A system of sewerage covering a large portion of the city has been nearly completed, at a cost of $400,000, and is already partly in use. Estimates necessary for its completion and extension are before you. I recommend this vital matter to your faithful consideration.

Estimates are also submitted for the construction of a filter plant for the filtration of all the water supplied to the mains from Nuuanu Valley. It is the experience of all cities that have required the filtration of their drinking water that a marked decrease of a certain class of diseases and the death rate is the immediate result of such precaution.

One of the valuable lessons of the bubonic plague was the importance of the removal of garbage from the vicinity of human habitations. It was decided that the most effective way of getting rid of this menacing material was to destroy it. The machinery of a crematory for this purpose has been purchased and the building begun. The completion of this important enterprise requires a further appropriation.

I would call your attention to the important work accomplished by the Board of Health through the Food Commissioner. I deem this service to be most vital to the public health. Invalids and children are especially susceptible to food adulterations. The recent decision of the Board to publish the names both of vendors and manufacturers of adulterated foods, drinks and drugs is most.