r of fact, the total exports showed a fair average
when compared with previous years. The sugar production was, however,
slightly less than in 1896, owing to a scarcity of hands, because, in
the ploughing season, the young labourers in Negros were drafted off
to military service. Total imports somewhat increased, notwithstanding
the imposition of a special 6 per cent. _ad valorem_ tax.

But the probability of an early pacification of the Islands was
remote. By the unscrupulous abuse of their functions the volunteers
were obliging the well-intentioned natives to forsake their allegiance,
and General Primo de Rivera was constrained to issue a decree, dated
August 6, forbidding all persons in military service to plunder,
or intimidate, or commit acts of violence on persons, or in their
houses, or ravish women, under penalty of death. In the same month
the General commissioned a Filipino, Don Pedro Alejandro Paterno, to
negotiate terms of capitulation with the rebels. By dint of bribes and
liberal expenditure of money (_vide_ Paterno's own letter at p. 410)
Paterno induced the minor chiefs in arms to accept, in principle,
the proposal of peace on the basis of reforms and money. Paterno was
appointed by the Gov.-General sole mediator in the discussion of the
terms to be made with Emilio Aguinaldo, and the General's private
secretary, Don Niceto Mayoral, was granted special powers to arrange
with Paterno the details of the proposed treaty. From Paterno's lips
I have the following account of the negotiations:--

On August 4, 1897, he started on a series of difficult journeys
into the rebel camps to negotiate severally with the chiefs, who,
one after the other, stoutly refused to capitulate. On August 9 he
interviewed Aguinaldo at Biac-na-bato, situated in the mountains, about
a mile north of San Miguel de Mayumo (Bulacan). Aguinaldo withheld his
decision until Paterno could report to him the definite opinions of his
generals. Thereupon Paterno returned to the rebel chiefs, some of whom
still tenaciously held out, whilst others were willing to capitulate,
subject to Aguinaldo's approval. Paterno's mission was daily becoming
more perilous, for the irreconcilable leaders regarded him as an
evil genius sent to sow discord in the camp. After many delays the
principal warriors assembled at Biac-na-bato on October 31 and held a
great meeting, which Paterno, who is a fluent speaker, attended and
harangued his audience in eloquent phr