CHAPTER XII. EXECUTIVE MANSION, San Juan, P. R., May 1, 1900. . A PROCLAMATION BY THE GOVERNOR. Pursuant to the obligations imposed upon me by the act of Congress establishing a civil government for Porto Rico to "faithfully execute the laws," it is hereby announced that pending the permanent appointment by the President and confirmation by the Senate of the officers recognized in the act of Congress above referred to the civil officers now holding positions by virtue of the appointment of the military governor will continue to hold such offices and will perform all the duties thereto legally pertaining until their successors are appointed and duly qualified. Whereas the budget of the revenues and expenditures of the government of Porto Rico for the fiscal year ending June 30, 1900, as heretofore adopted and approved by Brigadier-General Davis, United States Army, and published by his order, as more fully appears by General Orders, No. 102, dated San Juan, P. R., April 30, 1900, together with any amendments thereto made and authorized by order of the said Brigadier-General Davis, and published by his authority, is insufficient to meet the requirements of the government of Porto Rico from and after July 1, 1900, and during the fiscal year of 1900-1901 and to carry out the provisions of the laws and orders obtaining in Porto Rico; and Whereas it is necessary to make suitable provision to carry on the government from and after said date of June 30, 1900, to meet the provisions of the said laws and orders so aforesaid obtaining and until otherwise provided by law; and Whereas there has been and is no law now in force enacted by the legislative assembly of Porto Rico changing the aforesaid budget or the amendments thereto: Now, therefore, by virtue of the authority in me vested as the gov ernor of Porto Rico, the executive council acceding hereto, I do hereby amend the budget of 1899-1900 as hereinafter set forth, and do hereby publish and declare the budget for the year 1899-1900 as so hereinafter amended to be the general budget for the fiscal year of 1900–1901, and that the same as so hereinafter amended shall be published and continued in force until changed in pursuance of law. All departments of the government and others affected hereby are charged to govern themselves accordingly. Given under my hand at San Juan, P. R., this 28th day of June, A. D. 1900. By the governor: CHARLES H. ALLEN, Governor. WILLIAM H. HUNT, Secretary. CHAPTER XIV. MESSAGE OF THE GOVERNOR TO THE LEGISLATIVE ASSEMBLY. Members of the legislative assembly of Porto Rico: For the first time in the annals of this island you, the representatives of the people, gather as a legislative body under American sovereignty. To-day, in the name of the people of Porto Rico, you undertake legislation by means of which it is hoped the island will rise to a position of influence and prosperity worthy your highest hopes. At the threshold of this great opportunity I urge you to approach the task with patriotic devotion to your country, with unselfish regard for the best results, with conscientious heed to the rights of all, so that your statute book may be strong and respected and stand for the comfort, happiness, and well-being of every inhabitant. In the general election just passed you closed the door upon old methods and customs. You have indicated to the world your ability to conduct yourselves with order and merit. Henceforth you must move forward with the light of modern experience to guide your way. But the direction is clear. Remember, always, your work is of the utmost moment; no carelessly considered law should, under any circumstances, find its way upon your statute book. You may never know the anxiety with which your experiment is being watched. Let its results be such that your country and lawabiding people everywhere will approve. It is a long-established custom in the United States for the Executive to submit to an incoming legislature a statement of the condition of the finances, and to suggest such general recommendations for legislative action as he thinks necessary. Following this custom, I submit such statement to you, reserving the right, later in the session, to make other recommendations, if any occur which seem of importance. FINANCES. On the 1st of May, 1900, the day upon which civil government for the island of Porto Rico was established by law, the military government turned over its cash on hand, amounting to $285,339.25, to the treasurer of the island; this was later increased by deposits aggregating $65,566.37, making altogether, $350,905.62. But this amount must not be confused as representing a cash balance. As stated, it represented the cash on hand in the safe of the military government, against which were various obligations, the amount of which when finally settled no one can say, since among these claims are those belonging to the provincial diputacion and submitted to the commission for adjudication. Already over $40,000 has been paid upon outside claims, so that it is. barely possible that when all settlements are completed the larger part of the $350,000 will have been exhausted in settlement of obligations incurred prior to May 1. This statement seems proper to be made lest it should appear that the civil government started with a clear net cash balance of $350,000, when as a matter of fact it assumed with that sum obligations of a very large amount. But whatever the amount, the civil government started in to pay its way with no debts and with little money, but with unbounded faith in the productive ability of the island to produce sufficient revenue for its needs. The budget for the fiscal year ending June 30, 1900, amounts to $1,984,645.31. To meet this budget the civil government received from customs the first week in May $1,508.34. This source of revenue, however, increased week by week, until it reached the sum of nearly $46,000.00 for one week. From May 1 to November 1, there has been collected from all sources $1,041,696.94, and there has been expended $832,028.34, showing that we are well within our means and with every prospect of sufficient income to meet the current demands of our budget. In addition to our ordinary and natural sources of income, there is still remaining to the credit of the island, from the "two million dollars customs refunding act," a balance of $1,373,827.97. To summarize, then, we have Received from all sources. Expended.. Leaving a balance of receipts above expenditures of Balance $1,041, 696.94 832, 028.34 209,668.60 1,373, 827.97 1,583, 496.57 It is difficult to say what a fair valuation of the island would be, but good judges approximate it at $100,000,000 against which there is no outstanding obligation, and it is therefore in a satisfactory financial condition, which it is is our duty to guard, and, if we can, to improve. The income, thus far, has been derived in a large measure from the customs receipts, and these receipts are likely to continue to be the largest source of income in the absence of further legislation on the part of Congress; but the law expressly provides that "whenever the legislative assembly of Porto Rico shall have enacted and put into operation a system of local taxation, to meet the necessities of the government of Porto Rico, and shall, by resolution duly passed, so notify the President, he shall make proclamation, and thereafter all tariff duties of merchandise and articles going into Porto Rico from the United States, or coming into the United States from Porto Rico, shall cease, and from and after such date all such merchandise and articles shall be entered at the several ports of entry free of duty," and that “in no event shall any duties be collected after the 1st day of March, 1902." Inasmuch, therefore, as there remain but fifteen months under which, by the terms of the organic act, customs revenues may be depended upon as a support to the government, it devolves upon the legislature at as early a date as it can conveniently do so, to devise a system of taxation sufficient to meet the necessities of the government, to the end that such system may be well understood and in good working order prior to the date fixed in the law when such system shall become the source of revenue for the support of the government. As an aid and suggestion in this direction, I have the honor to recommend to your attention the following general scheme of taxation, subject to such regulations, limitations, and changes as your judgment shall deem wise and sufficient. Pending a possible loss of customs receipts in 1902, it will be necessary, as I have before stated, for the legislature to supply the means of providing a sufficient income to meet the needs of the government. This, I take it, will at once suggest to your minds the application of some just and equitable system of taxation which will not only establish new sources of insular revenue, but will also correct serious defects in existing tax laws. Such a bill, I take it, should embrace the results of careful consideration, and should be founded upon accounts and plans of modern taxation with special reference to the conditions obtainable in this island. Legislation on this subject should provide for a direct tax on the assessed value of real and personal property, an excise tax on liquors, alcoholics, and certain other articles consumed or imported in Porto Rico, and an inheritance tax on the devolution of property. The direct tax on property would be designed to replace the present crude and inequitable territorial tax now in force. Provisions should be made for a general assessment of all property in Porto Rico, and upon this valuation a tax of moderate amount would be levied for insular purposes. The same basis would naturally be employed for the levying of such local taxes as may be hereafter authorized. Insular and local taxes should be collected by a force of salaried collectors and deputy collectors, in place of the inefficient and out-of-date system of commission-paid tax collectors. Such property tax would be essentially similar to the property tax in use in the United States. Exemptions, such as are found in American States whose conditions approximate those of Porto Rico, might be appropriately made of churches, charitable institutions, and public buildings. With these exceptions, every person, association, and corporation would be subject to taxation, according to ability, as represented by the net value of capital or wealth, or the nearest approximation that can be obtained. Under the provisions of the act of Congress, approved April 12, 1900, Porto Rico was specfically exempted from the operations of the internal-revenue laws of the United States. The purpose of this generous exemption was to allow the adoption of an insular excise system based on local conditions and requirements. With this in view, it would be well to impose an excise stamp tax on alcoholics, tobacco, and certain other articles, manufactured or imported in Porto Rico, together with a specific license tax on the sale of such articles. Moderate stamp taxes should also be imposed on notarial documents and bills of lading. The rates of taxation proposed in the bill perhaps need not be more than one-half in amount of those imposed by the internal-revenue laws of the United States. The present inconvenient and annoying "consumo" taxes collected by the municipalities should be replaced by a single insular excise tax, a portion of the proceeds of which should be apportioned among the local bodies. Provision should be made for the extension and improvement of the present useful force of internal-revenue agents, with a view to reproducing in Porto Rico the efficiency and fidelity of the internal-revenue service in the United States. The inheritance tax should be a moderate tax upon the privilege of inheritance, increasing in rate with the remoteness of relationship, and the amount of the bequest. Such a measure would be in harmony both with fiscal usage in Porto Rico and with the trend of the best financial experience in the United States. Your careful and earnest attention is directed to such a measureperhaps, in all respects, the most important piece of legislation which can occupy your attention-and the subject should be treated with the conservatism and care which its importance demands. EDUCATION. Schools for the children of Porto Rico have been opened throughout the island. Each district has been given its equitable allotment based upon the population. Eight hundred schools are now in operation, a gain of 184 over last year. These schools are taught by less than 100 |