DEFENCE 4^*^
Milrci.s.
External, 34, 697, 300^. (at par =) . . . 308,420,444
Internal 637,425,600
Government paper money in circulation (December
31, 1897) 439,614,276
Banknotes 315,344,330
Floating debt 299,473,041
Total 2,000,277,691
To these debts there should be added the Western Minas loan of 3,606,000^.
To meet the deficit existing at the eml of 1S97 an internal loan of 00,000,000 niilreis G per cent, bonds redeemable in 10 years and a 5 per cent, gold loan of 2,000,000i. a-edeem- able in 2 years by half-yearly instalments were issued.
An arrangement has since been concluded by which the interest on the Foreign Loans and the Internal Gold Loan of 1870 is paid from" July 1, 1808, to June .30, 1901, in bonds of a new Funding Loan bearing interest at the rate of 5 per 'Cent., limited in amount to ]O,O00,000L, and secured on the Custom House receipts. The interest guaranteed by the Government on the capital of 17 railways, amounting to about 1,T30,000L, is included in tins arrangement. As the funding lo.ni is issued, paper money to a corresponding amount (exchange calculated at ISS) must be deposited by the Government in stated banks at Riode Janeiro. In 1807 bonds to the value of 504,400?.' were redeemed, but the sinking fund and redemption of Foreign Bonds will be suspended for 13 years from July 1, 1808.
In addition to this measure the Government have converted the Internal 4 "per cent. Gold Loan, requiring 560,987?., per annum into a 5 per cent, paper loan, requiring 7,790,9.37 inilreis i)er annum.
The rate of interest on the Foreign Debt varies from 4 per cent, to 44 per cent., that on the Internal Funded Debt from 4 per cent, to 6 per cent. The redemption of the foreign loans is to be effected by a sinking fund of 1 per cent, per annum, to be applied by purchase of bonds in the market when the price is under par, and when at or above par by drawings by lots. The internal debt is chiefly represented by bonds, called Apoliccs, inscribed to the holder, and the payment of its cajiital and interest, which is provided for by an annual vote of Congress, is under the charge of the sinking fund department {Caixa da Ainortisactw), independent of the (lovernment, directed by a committee, presided over by the Minister of Finance, and composed of a general inspector and five large Brazilian bondholders.
For 1897 the revenues of all the States except San Paulo, Sergipe, and Parahyba amounted to 102,286,000 milreis, and their expenditure to 101,977,000 milreis; of the 17 States reported on, the accounts of 2 exactly balanced, those of 3 showed a deficit, and those of 12 a surplus. The revenue of Sam Paulo amounted to 48,571,165 milreis, and the expenditure to 58,819,895 milreis, the year's deficit being 10,248,730 milreis. At the end of the year the funded and floating debt of the State amounted to 19,889,724 mihvi.s.
The debts of the States in 1895 amounted to 91,706,736 milreis, of which 85,027,659 was funded, and 6,679,077 floating.
Defence.
The active army consists of 40 l)attalions of infantry, with 1 transport company and 1 depot company ; 14 regiments of cavalry, each of 4 squadrons, 1 cavalry corps of 4 companies ; 6 regiments of horse artillery and 6 battalions of foot artillery ; 2 pioneer battalions of engineers. In 1897 the army con- sisted of 28,160 men, of whom 4,000 were oflicers. The gendarmerie numlier.s 20,000 men. The national guard is being re-organised. Military service (3 years ia the active army and 3 in the reserve) is compulsory.
The Brazilian navy includes the third-class battleships HiacMcelo and
