During the last year the Philippine Islands have been slowly recovering from the series of disasters which, since American occupation, have greatly reduced the amount of agricultural products below what was produced in Spanish times. The war, the rinderpest, the locusts, the drought, and the cholera have been united as causes to prevent a return of the prosperity much needed in the islands. The most serious is the destruction by the rinderpest of more than 75 per cent of the draught cattle, because it will take several years of breeding to restore the necessary number of these indispensable aids to agriculture. The Commission attempted to supply by purchase from adjoining countries the needed cattle, but the experiments made were unsuccessful. Most of the cattle imported were unable to withstand the change of climate and the rigors of the voyage, and died from other diseases than rinderpest. The income of the Philippine Government has necessarily been reduced by reason of the business and agricultural depression in the islands, and the government has been obliged to exercise great economy, to cut down its expenses, to reduce salaries, and in every way to avoid a deficit. It has adopted an internal-revenue law, imposing taxes on cigars, cigarettes, and distilled liquors, and abolishing the old Spanish industrial taxes. The law has not operated as smoothly as was hoped, and although its principle is undoubtedly correct, it may need amendments for the purpose of reconciling the people to its provisions. The income derived from it has partly made up for the reduction in customs revenue. There has been a marked increase in the number of Filipinos employed in the civil service, and a corresponding decrease in the number of Americans. The government in every one of its departments has been rendered more efficient by elimination of undesirable material and the promotion of deserving public servants.