There are still troubles ahead in the islands.  The insurrection has become an affair of local banditti and marauders, who deserve no higher regard than the brigands of portions of the Old World.  Encouragement, direct or indirect, to these insurrectors stands on the same footing as encouragement to hostile Indians in the days when we still had Indian wars.  Exactly as our aim is to give to the Indian who remains peaceful the fullest and amplest consideration, but to have it understood that we will show no weakness if he goes on the warpath, so we must make it evident, unless we are false to our own traditions and to the demands of civilization and humanity, that while we will do everything in our power for the Filipino who is peaceful, we will take the sternest measures with the Filipino who follows the path of the insurrecto and the ladrone.

The heartiest praise is due to large numbers of the natives of the islands for their steadfast loyalty.  The Macabebes have been conspicuous for their courage and devotion to the flag.  I recommend that the Secretary of War be empowered to take some systematic action in the way of aiding those of these men who are crippled in the service and the families of those who are killed.

The time has come when there should be additional legislation for the Philippines.  Nothing better can be done for the islands than to introduce industrial enterprises.  Nothing would benefit them so much as throwing them open to industrial development.  The connection between idleness and mischief is proverbial, and the opportunity to do remunerative work is one of the surest preventatives of war.  Of course no business man will go into the Philippines unless it is to his interest to do so; and it is immensely to the interest of the islands that he should go in.  It is therefore necessary that the Congress should pass laws by which the resources of the islands can be developed; so that franchises (for limited terms of years) can be granted to companies doing business in them, and every encouragement be given to the incoming of business men of every kind.

Not to permit this is to do a wrong to the Philippines.  The franchises must be granted and the business permitted only under regulations which will guarantee the islands against any kind of improper exploitation.  But the vast natural wealth of the islands must be developed, and the capital willing to develop it must be given the opportunity.  The field must be thrown open to individual enterprise, which has been the real factor in the development of every region over which our flag has flown.  It is urgently necessary to enact suitable laws dealing with general transportation, mining, banking, currency, homesteads, and the use and ownership of the lands and timber.  These laws will give free play to industrial enterprise; and the commercial development which will surely follow will accord to the people of the islands the best proofs of the sincerity of our desire to aid them.