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The situation which confronted the incoming treasurer is thus imperfectly suggested by a statement of the bare duties assigned by the act of Congress establishing civil government in the island. Matters relating to the custody and disbursement of funds presented no serious difficulties in consequence of the admirable system of accounting introduced under the military government and of the efficient performance of these duties during the same period by the appropriate officers. Similarly, the insular government was relieved after May 1, 1900, of the financial responsibility attending the administration of customs service in Porto Rico, this being assumed by the Federal Government and the net receipts deposited, at intervals, to the credit of the treasurer by the collector of customs for Porto Rico. But the department of the military government in which had been centered the administration of the internal-révenue system of the island and the central administrative control of local finances, i. e., the civil secretary's office, was discontinued on May 1, and the financial bureaus thereof transferred to the new treasurer in the form of an urgent pressure of business, an unsatisfactory personnel, an accumulated mass of records, and a traditional method of procedure which made anything approximating prompt and accurate dispatch of business impossible. These were the essential materials available for the organization of a financial department.

The present organization of the office of the treasurer was effected almost coincident with the introduction of civil government by distributing among the following bureaus the duties and clerical force assigned to the new department: (1) Bureau of accounts, (2) bureau of municipal affairs, (3) bureau of internal revenue, (4) bureau of internal-revenue agents, (5) bureau of tax-law revision.

The bureau of accounts assumed all duties relating to the receipt, custody, and disbursement of public funds, in addition to becoming the administrative center of the department. The bureau of municipal affairs and the bureau of internal revenue were charged, respectively, with corresponding duties vested theretofore in the office of the late civil secretary. The bureau of internal-revenue agents was established and equipped as a supervising and inspecting field force. The bureau of tax-law revision undertook to continue the work of the special commissioner to revise the laws relating to taxation in Porto Rico. A chief clerk was placed in charge of each of the bureaus, and a deputy treasurer was appointed, with the sanction of the governor, for the exercise of the duties of the treasurer in the event of the latter's absence or disability.

The organization of the office of the treasurer remained as thus outlined until January 31, 1901, when the passage of a general revenue act by the legislative assembly necessitated the creation of a new bureau of assessment and extended the duties of the bureau of internal revenue and the bureau of internal-revenue agents. The operations

of the entire department during the period of civil government can thus be most conveniently reviewed by statements of the activities of the several original bureaus from March 1, 1900, to March 31, 1901, supplemented by an account of the new revenue act and of the changes in organization resultant therefrom. Occasion will be afforded thereafter for a general discussion of the financial problems of Porto Rico,

BUREAU OF ACCOUNTS.

The method of financial accounting established on July 1, 1899, and in operation during the period of the military government, was retained in essential matters upon the inauguration of civil government on May 1, 1900, and has continued practically unchanged since that time.

The two local banks-De Ford & Co. and the American Colonial Bank-serving as depositories for insular funds upon the inauguration of civil government, were retained in that capacity thereafter. Each institution was required to execute a new surety bond to the treasurer of Porto Rico, for the benefit of the people of Porto Rico, in the amount of $500,000. An important addition to the relations existing between the insular government and the depositories was the requirement that each depository should establish agencies for the receipt of insular funds in each of the internal-revenue collection districts of the island, and in other places as might from time to time be required. Such agencies were at once established in Ponce, Mataguez, Arecibo, Aguadilla, Humacao, Caguas, Guayama, and Vieques, and the treasurer was thereby relieved of the inconvenient and expensive practice, prevailing during the military government, of sending an officer and armed escort about the island once a month to receive the public funds in the possession of revenue officials. Each depository further agreed, and has since continued, to pay interest at the rate of 2 per cent on daily balances on deposit.

. Payments to the treasurer have been made in the form of deposits to his credit with one or the other of the two depository banks, or to one of their agencies, for which original and duplicate receipts are issued. The original bank receipt is transmitted by the depositor to the treasurer, who issues a treasurer's receipt, in duplicate, therefor to the auditor of Porto Rico. The duplicate bank receipt is retained by the depositor as a temporary voucher. The auditor countersigns both receipts, retains the original, to be attached to the monthly account current rendered by the treasurer, and forwards the duplicate to the depositor for use as a voucher in the settlement of his accounts. Disbursements are made by the treasurer, in the form of drafts upon a depository bank, upon warrants executed by the auditor and countersigned by the governor. Warrants are either "accountable" or "settlement." Accountable warrants are issued by the auditor upon requisitions of bonded disbursing officers, authorized by the head of

a department and approved by the governor, for funds appropriated by law. Disbursing officers account in due course to the auditor by proper vouchers for the amounts drawn. Settlement warrants are issued in the case of claims duly established and allowed. The treasurer renders monthly an account current of receipts and expenditures to the auditor, to the governor, and through the governor to the Secretary of the Treasury at Washington.

The policy of encouraging payments to the insular treasury in the form of bank receipts rather than in actual currency has been pursued throughout. Persons indebted to the treasury are instructed to make payment to an insular depository and to present the bank receipt, rather than the actual funds, to the treasurer in cancellation of the indebtedness. Similarly the thirty or more internal-revenue stamp agents appointed in connection with the new revenue act are required to remit funds directly to one of the insular depositories, notifying the treasurer by letter of advice, and receiving a treasurer's receipt to the amount remitted only after the arrival of the bank receipt from the depository. A corresponding practice has prevailed with respect to disbursements, practically all payments made by the treasurer, whether as special or as general disbursing officer, being in the form of drafts or checks upon a depository bank. With the exception of occasional incidental receipts and small contingent expenditures, no funds whatever pass through the office of the treasurer save in the form of bank checks and receipts. By careful adjustment of drafts and by instructions to revenue officials as to place of deposit public funds of the island remain practically equally divided between the two depositories.

The bureau of accounts forms the administrative center of the office of the treasurer. All departmental correspondence is received here, briefed, registered, and referred to the appropriate bureau for action. The daily mail averages some 50 pieces, and the total number of pieces received from May 21, 1900, to March 31, 1901, aggregated 14,088 pieces, almost all of which have been in Spanish. The cumbrous docket or "expediente" procedure of the Spanish administration has been superseded by an expeditious system of typewritten briefing and registration, so that practically every communication has been recorded and is receiving attention within three hours after its receipt. The incidental duties imposed upon the treasurer by various general orders of the late military government, such as the issue of license to bear firearms, the grant of authority to foreign insurance companies to transact business in the island, and the issue of postage stamps to such insular officials as are not in enjoyment of the franking privilege, have been exercised in the bureau of accounts. All requisitions for internal-revenue stamps from collectors and deputy collectors of internal revenue and from internal-revenue stamp agents, and all disbursement accounts transmitted from other bureaus

of the departments are examined and approved in the bureau of accounts.

Certain noteworthy reforms have been effected with respect to the custody and issue of internal-revenue stamps. The transfer of the stock on hand from the military to the civil government was made the occasion for the removal from scattered places to a single secure depository in the treasury building, for a careful recount under certificate and seal, and for the assignment of all matters relating to their custody and issue to a bonded stamp clerk. On several occasions additional supplies of certain denominations were required, and were prepared by a local engraving establishment and delivered to the bureau under the direct supervision of a vigilant detail of insular police.

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The series of internal-revenue stamps introduced by the military government, and necessarily continued after May 1, 1900, was crude in design, unperforated, ungummed, easy of imitation and reuse. The larger place of excise taxation in the revenue system of Porto Rico resulting from the passage of the revenue act of January 31, 1901, made inevitable an improved series of stamps. In anticipation of this necessity, correspondence had been had with the Treasury Department at Washington, and, through the courteous offices of the Secretary of the Treasury, the Bureau of Engraving and Printing undertook to design and print an independent series of revenue stamps for use in Porto Rico, in such denominations and amounts as might be required. An even more generous cooperation was the willingness of the Treasury Department to supply, for temporary use, such amounts of surcharged United States internal-revenue documentary stamps as might be required in connection with the revenue act until such time as the independent series should become available. January a supply of such stamps in the denominations, respectively, of 1 cent, 10 cents, 25 cents, 50 cents, $1, $3, $5, $10, and $50, aggregating some $4,000,000 in nominal value, was received from Washington. The entire consignment was submitted to careful recount, resealed under certified signature, and the aggregate value thereof transmitted to the auditor as a charge against the treasurer. Arrangements were made whereby a sentry post of the insular police was established at the entrance of the stamp vault and the stock of stamps thus placed under efficient protection at all hours of the day and night. On February 1, 1901, coincident with the inauguration of the revenue act, the new series of stamps went into use and the old series was recalled, provision being made for the exchange in the bureau of accounts of the unused stamps of the old series in the hands of the public. On March 29, 1901, a special committee was appointed by the governor of Porto Rico to arrange for the recount and destruction of the remaining stock of the old series, and this action will be taken at once.

The present supply of stamps is kept in two forms: (1) The general

stock in sealed, certified packages, in a special safe in the general stamp vault, accessible only to the treasurer and deputy treasurer; (2) the current stock, in amounts and denominations required to fill daily requisitions, in the immediate custody of the stamp clerk, to whom additional amounts from out the general stock are issued by the treasurer or deputy treasurer as required. On the first day of each month an inspection of the general stock and an actual recount of the current stock is made. All internal-revenue stamps are issued by the stamp clerk upon requisitions of the collectors and deputy collectors of internal revenue and of internal-revenue stamp agents, examined in the bureau of accounts, and approved by the treasurer. Monthly account is rendered by such officials of the stock on hand, accompanied by itemized statements of the persons to whom and the purposes for which sold.

The treasurer received from his predecessor under the military government a large number of surety bonds of disbursing and other fiduciary officers of the insular government. These were subsequently supplemented by certain securities remaining in the possession of the retiring civil secretary, as the successor of the department of finance, and as the liquidator of the diputacion provincial. Careful inventory was made of all such bonds and securities, and a copy thereof was transmitted to the auditor. Upon the introduction of civil government steps were at once taken by the auditor of Porto Rico to require new bonds, in favor of the treasurer of Porto Rico for the benefit of the people of Porto Rico, of all insular officials occupying fiduciary relations.

In the interval since elapsed there has been filed in this office by every disbursing officer, collector of internal revenue, deputy collector of internal revenue, taxgatherer, and internal-revenue stamp agent either a bond or a preliminary binding receipt, approved as to form and execution by the auditor and as to sufficiency of surety by the treasurer. In the case of personal bonds, two sureties, each possessing unencumbered real property of twice the amount of the bond, have been required. In the case of surety company bonds, the corporation must have been authorized to transact business in Porto Rico. The amount of the bond is reasonably adjusted to the amount of financial obligation involved in each particular case.

The books of the bureau comprise a general ledger, two depository bank ledgers, a draft book, a treasurer's receipt book, a budget-appropriation ledger, a ledger and a cashbook of the treasurer as special 'disbursing officer, an internal-revenue stamp ledger, an internalrevenue stamp receipt book, a license to carry firearms record book, a surety-bond record book, a mail register book, and a financial-statistics record book. On May 1, 1900, none of these books, containing essential evidence of the financial integrity of the island, were under fireproof protection: The surety bonds and securities deposited with the

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