Although the United States occupied the position of conqueror, and was in a situation where it could exact its own terms, still it did not presume upon its advantages, and was exceedingly generous in its treatment of the fallen foe. By the capture of Manila, the capital of the Philippines, the Americans had practically acquired possession of that vast group in Asiatic waters. Nevertheless, the United States agreed to pay the Spaniards the sum of twenty million dollars, and to repatriate all Spanish troops then on service there. By the terms of the protocol, confirmed by the treaty, Puerto Rico and its adjacent islands in the Atlantic were ceded to the victors without reservation, and became American property. In the East the island of Guam, in the Ladrones, was ceded as a coaling station, and the vast archipelagos of the Philippines and Sulus. The island of Cuba, while freed from Spanish tyranny, did not directly become a possession of the United States, as that Government had distinctly disclaimed any intention of assuming sovereignty over it except for its pacification only. “Spanish rule,” declared President McKinley, in his message to Congress of December 8, 1898, “must be replaced by a just, benevolent, and humane government, created by the people of Cuba, capable of performing all international obligations, and which shall encourage thrift, industry, and prosperity, and promote peace and goodwill among all the inhabitants, whatever may have been their relations in the past. Neither revenge nor passion should have a place in the new government. Until there is complete tranquility in the island, and a stable government inaugurated, military occupation will be continued.” The complete transfer of authority was not unaccompanied by disturbance, either in the Philippines or in Cuba. In the former islands the native insurgents, mistrusting the humane intentions of their new masters, manifested a spirit of turbulence which indicated that they would have to be pacified before intrusted with the full measure of freedom. In truth, it would appear that the actual war was a minor matter compared with the gigantic task the United States had undertaken of preparing the diverse peoples to walk in the paths of progress and higher civilization. In Cuba, filling the places made vacant by the withdrawal of the Spanish soldiery, the American army gradually possessed itself of every strategic point, and by the 1st of January, 1899, the island was practically held by the Americans. At noon of that day the Spanish flag was hauled down and the Stars and Stripes hoisted in its place, above the historic Morro Castle, where the banner of Spain had floated (except for a brief intermission) for nearly three hundred years. Captain–General Castellanos, who had succeeded General Blanco in November, and was then in command of the Spanish forces, met the American commissioners at the palace in Havana, and resigned his authority over the island in the following words: