Manila, P. I., January 16, 1899.

First Separate Brigade, Eighth Army Corps,
Iloilo, Island of Panay.

SIR: Replying to the letter of Captain Evans of January 13, forwarded by you on same date, I am directed to state that the case is well put by Captain Evans under the President's recent proclamation, except the President directs in that proclamation that all the ports in the actual possession of the land and naval forces of the United States will be open to the commerce of the world. The port of Iloilo is not in the actual possession of the United States forces, as they merely occupy the harbor.

The objections which present themselves to the course recommended by Captain Evans are:

1. Until the ratification of the treaty of peace the United States has not the legal right to occupy the port of Iloilo, except by the consent of Spain. Spanish authority over the southern islands of the Philippines remains intact until the treaty is ratified. If, however, Spain had turned over the port of Iloilo to the United States, then the question of legal right as between the United States and Spain would have been settled and the United States would then have succeeded to the rights of Spain in so far as the collection of duties is concerned. Spain did not turn it over to the United States authorities. Her action, viewed in the mildest light, was that of simple abandonment, for which she is responsible. As far as the United States are concerned, Spain, under a strict interpretation of international law, has still the right to enter that port and collect duties until "that right is terminated by treaty ratification.

2. The closing of the port and the collection of duties on merchandise taken from the island would be an acknowledgment on our part that the self-constituted authorities at Iloilo stand in the position of belligerents or enemies of the United States, which position we do not recognize. They are (Spanish subjects really until the ratification of the treaty) recognized as a friendly community with whom we are at peace.

3. Should foreign vessels accept clearancs papers from the Iloilo captain of the port, it would be difficult to understand the position in which they would place themselves. Undoubtedly such action would give rise to grave questions, possibly involving international complication; and should they seek to clear through your authorities after having acknowledged the insurgents at Iloilo by paying duties to them, then they would recognize either Spanish or insurgent authority at Iloilo and that of the United States in the harbor.

They probably would do everything that both the insurgent and United States authorities would demand of them and make under protest any payment which might be demanded. Conditions are so complicated that these headquarters do not feel at liberty to give positive instructions for your guidance, and they will be sought from Washington, which as soon as received will be transmitted to you.

In the meantime you will not make any demands on the merchants nor interfere by any overt act of force with the commerce of the port. It might be well to assert United States right to conduct the commerce of the port, but you can state that you have represented the case to the proper authorities and are waiting instructions. Any forcible act of detention or seizure might produce most unsatisfactory results.

I inclose your prepared communication intended for the British vice-consul. It is unobjectionable and should be sent to him.

Since writing the above I understand from Captain Montgomery, of the British navy, who has just returned from Iloilo, that he discussed all these matters with the Iloilo merchants, endeavoring to come to some arrangement which would be satisfactory to the United States. He reports that he advised the merchants and the English consul to give a promise in writing to pay duties in the future upon all goods now taken out to whomsoever they might be due after affairs had become adjusted.

Very respectfully, your obedient servant,

Assistant Adjutant-General