The excise taxes are imposed upon the manufacture and shipment and importation of proprietary medicines,. playing cards, firearms, oleomargarine, matches, alcoholic liquors, and tobacco of all kinds; the taxes are paid by means of stamps, and, temporarily at least, surcharged internal-revenue stamps of the United States are being used. Fortunately for the manufacturers of rum and tobacco and for the insular treasury, the organic act specifically exempts Porto Rico from the operation of the internal-revenue laws of the United States, and the legislative assembly of Porto Rico, in imposing excise taxes upon the above-named articles, has taken into account the fact that the rum and tobacco industries, while relatively much more important, are much weaker than the corresponding industries in the United States. In consequence, the rate of the excise taxes is just about one-half that collected in the United States.

The inheritance tax is slightly progressive, varying in accordanee with the relationship of the heir and the value of each separate inheritance or bequest. The first $200 in value of every inheritance and all property passing to the wife, child, adopted child, or grandchild of the deceased is exempt; from $200 to $5,000, husbands and lineal descendants pay 1 per cent, other heirs 3 per cent; from $5,000 to $20,000, husbands and lineal descendants pay 14 per cent, other heirs 4 per cent; upon the next $30,000, 2 per cent and 6 per cent, respectively; and upon the value in excess of $50,000, 3 per cent and 9 per cent, respectively.

The revenue act annuls all octrois or municipal consumo taxes upon the articles subjected to excise taxes, and the territorial and industrial taxes, in so far as insular taxation is concerned. The insular territorial tax at present is probably about 4 per cent of the net income from property. Capitalizing this at the high rate of interest obtainable here certainly as high as 12 per cent—and it is seen that the present insular rate of one-half per cent upon the value of the property will be very little more burdensome than the territorial tax upon those property owners who are actually paying upon an honest assessment, assuming that the assessment of property conformed to the letter of the law and the appraisement is made at its actual value. The industrial and commercial tax is placed by the ordinary property tax upon the stock and other assets of business concerns. The abolition of the industrial and commercial system is possibly the most beneficent feature of the whole law. The inheritance tax simply replaces the heavier and more complex tax of the same kind imposed by the Spanish Government and unfortunately abolished by the military government. The excise taxes are, in general, somewhat higher than the consumo and excise taxes existing at the time of the passage of the revenue bill. But there can be no calamity in diverting into the public treasury an increased portion of the money that would be spent for

rum and tobacco, to be applied by the government to the building of roads and the better education of the people. The property tax as provided in the new law does not take effect until the beginning of the next fiscal year, on the 1st of July. The other taxes are now being collected and have been effective since the passing of the act on the 31st of January last.

We can safely consider the financial condition of Porto Rico to be favorable. In taking stock we have the following:

But by far the greater part of this is to be held in reserve for the construction of schoolhouses and roads, of which the island is in such very urgent need.

For the next fiscal year, beginning on the 1st of July, 1901, the last legislative assembly approved a budget amounting to $1,887,902.21. To this we may add probable deficiency and special appropriations aggregating $112,097.79, which will swell the expenditures for the next fiscal year to $2,000,000. To meet this we may reasonably expect the following revenues:

As custom-house revenues after March 1 will probably be reduced to $300,000, there will be $450,000 which the next legislative assembly must provide for in the fiscal year of 1902-1903; but the resources of the island are ample if honestly and economically administered.

The custom-houses of Porto Rico are of course under the control of the Secretary of the Treasury of the United States, and the local government has no authority over them in the transaction of their business. However, the amount of exports and imports is a subject having an intimate connection with the financial prosperity of the island, and on that account deserves a brief review. Under the Spanish régime the tariff was so arranged as to benefit the Peninsula regardless of its effect on the island. On the arrival of the American army

and the assumption of full possession of the territory, the Spanish tariff laws were modified by executive and military orders as from time to time experience showed to be necessary under the new conditions. It is interesting to note briefly the amount of exports and imports during the military occupation. The different ports were taken possession of by the Americans at different dates as the army advanced from point to point in the conquest of the island. These dates began with Ponce on July 28, 1898, and ended with San Juan on October 18, 1898. The American authorities, under the military government, had complete possession of some of the custom-houses from the date of landing, and all of them from October 18, 1898, until April 30, 1900, making an average of about twenty months. During this period the values of the imports and exports were as follows:

This gives as the monthly average value of imports $801,225 and the monthly average value of exports $694,793 during the administration of the military government.

By the act of Congress of April 12, 1900, providing a revenue for Porto Rico, the tariff laws of the United States entirely superseded those of Spain, and the duties on all merchandise passing between Porto Rico and the United States was fixed at 15 per cent of the ordinary rates. This, of course, greatly changed the course of commerce with this island. During the first ten months of the existence of civil government in Porto Rico-that is to say, from May 1, 1900, to February 28, 1901, inclusive-the values of the imports and exports and the duties collected were as follows:

This shows a monthly average value of imports of $780,245 and of

revenues $89,382.