These conditions prescribed, among other things, a maximum rate for commercial messages and that the company should construct a line from the Philippine Islands to China, there being at present, as is well known, a British line from Manila to Hongkong.

The representatives of the cable company kept these conditions long under consideration, continuing, in the meantime, to prepare for laying the cable.  They have, however, at length acceded to them, and an all-American line between our Pacific coast and the Chinese Empire, by way of Honolulu and the Philippine Islands, is thus provided for, and is expected within a few months to be ready for business.

Among the conditions is one reserving the power of the Congress to modify or repeal any or all of them.  A copy of the conditions is herewith transmitted.

Of Porto Rico it is only necessary to say that the prosperity of the island and the wisdom with which it has been governed have been such as to make it serve as an example of all that is best in insular administration.

On July 4 last, on the one hundred and twenty-sixth anniversary of the declaration of our independence, peace and amnesty were promulgated in the Philippine Islands.  Some trouble has since from time to time threatened with the Mohammedan Moros, but with the late insurrectionary Filipinos the war has entirely ceased.  Civil government has now been introduced.  Not only does each Filipino enjoy such rights to life, liberty, and the pursuit of happiness as he has never before known during the recorded history of the islands, but the people taken as a whole now enjoy a measure of self-government greater than that granted to any other Orientals by any foreign power and greater than that enjoyed by any other Orientals under their own governments, save the Japanese alone.  We have not gone too far in granting these rights of liberty and self-government; but we have certainly gone to the limit that in the interests of the Philippine people themselves it was wise or just to go.  To hurry matters, to go faster than we are now going, would entail calamity on the people of the islands.  No policy ever entered into by the American people has vindicated itself in more signal manner than the policy of holding the Philippines.  The triumph of our arms, above all the triumph of our laws and principles, has come sooner than we had any right to expect.  Too much praise can not be given to the Army for what it has done in the Philippines both in warfare and from an administrative standpoint in preparing the way for civil government; and similar credit belongs to the civil authorities for the way in which they have planted the seeds of self-government in the ground thus made ready for them.  The courage, the unflinching endurance, the high soldierly efficiency; and the general kind-heartedness and humanity of our troops have been strikingly manifested.  There now remain only some fifteen thousand troops in the