maintained, and a watch kept constantly against enemies, who are enumerated, "especially the English Lutherans." Reports as to the possibility of new conquests are desired, but no such enterprises must be undertaken without circumspection and justification. As the soldiers are now fairly paid, there is no need of spoliation in conquests. The regions nearest Manila must be conquered, for there is rebellion now in the heart of Luzón. Encouragement is given to extend conquests from the Liu Kiu Islands to Java, Borneo, and the Moluccas. The expense is to be borne by the royal exchequer, so far as shall be necessary, although the plan of rewarding the conquerors from the conquered territory is to be followed. The Indians are to have the right of paying their tributes in any goods at their own option, to avoid extortion. The religious must not go to China or elsewhere, but must do the work among the Indians for which they were sent to the islands. The Chinese suffer oppression and extortion from the customs officers; this must be corrected. Encomenderos and citizens are not to leave the islands without permission, on pain of confiscation of encomiendas. Trade between the islands and China is not to be given up, in spite of objections made by the Portuguese. Effort shall be made to teach the Castilian language to the Indians. The governor must maintain cordial relations with the new Audiencia and with the ecclesiastics. Luis Perez Dasmariñas prays the king (June 30, 1596) for permission to lade a small vessel for Peru, that he may make enough to pay off his debts. An answer is deferred until after the residencia in his case and his father's be taken. Morga writes to Felipe II (July 6, 1596) a general report. The country in general is at peace, and fears from Japan have been removed by the calming influence of the Franciscans there. Figueroa has been killed in Mindanao, leaving an estate sufficient to carry on the expedition, and infant heirs to his prospective rewards. The expedition to Camboja has gone--the tone of Morga's report evidently disapproving this; and an expedition to China has been forced to return. There has been uneasiness as to the presence of so many Chinese, and many have been sent out of the country. The lines of Manila have been newly drawn, making it easier of defense. Financial affairs require complete reform. The officials of the treasury are under suspension, pending investigation; and the revenue has been wasted for needless salaries and sinecures. The soldiery devote themselves to trade, losing their military efficiency and interfering with the business of the citizens. The city of Manila is well provided with funds, and the fiscal arrangements are just. Internal affairs are in a bad way, because of the facility and youth of Luis Perez Dasmariñas, and the lack of a regularly-appointed governor. Morga complains of the meddlesomeness of ecclesiastics. He prays for the reëstablishment