Part 33

_Finance._--The national revenue is derived largely from the duties on imports, the duties on exports having been surrendered to the states when the republic was organized. Other sources of revenue are stamp taxes on business transactions, domestic consumption taxes (usually payable in stamps) on manufactured tobaccos, beverages, boots and shoes, textiles, matches, salt, preserved foods, hats, pharmaceutical preparations, perfumeries, candles, vinegar, walking sticks and playing cards, and taxes on lotteries, passenger tickets, salaries and dividends of joint-stock companies. Formerly import duties were payable in currency, but in 1899 it was decided to collect 10% of them in gold to provide the government with specie for its foreign remittances. The revenues and expenditures have since then been calculated in gold and currency together, to the complete mystification of the average citizen, and the gold percentage of the duties on imports has been increased to 35 and 50% (in 1907), the higher rate to apply to specified articles and rule when exchange on London is above 14 pence per milreis, and the lower when it is below. The service of the national debt absorbs a very large part of the expenditure, about 45% of the estimates for 1907 being assigned to the department of finance. The department of industry, communications and public works takes the next highest proportion, but about half its expenditures are met by special taxes, as in the case of port works and railway inspection, and by the revenues of the state railways, telegraph lines and post office. The depreciation and unstable character of the paper currency render it difficult to give a clear statement of receipts and expenditures for a term of years, the sterling equivalents often showing a decrease, through a fall in the value of the milreis, where there has been an actual increase in currency returns. This was most noticeable between 1889 and 1898, when exchange, which represents the value of the milreis, fell from a maximum of 27-3/4 pence (27d. being the par value of the milreis) to a minimum of 5-5/8 pence. Since 1898 there has been an upward movement of exchange, the average rate for 1905 having been very nearly 16 pence. In this period the increase in the sterling equivalents would be proportionately greater than that of the currency values. The gold and currency receipts and expenditures for the six years 1900 to 1905, inclusive, according to official returns, were as follows:--

+------+---------+---------------------------+--------------------------+ | | Average | Revenue. | Expenditure. | | Year.| Rate of +-------------+-------------+------------+-------------+ | |Exchange.| Gold | Currency | Gold | Currency | | | Pence. | Milreis. | Milreis. | Milreis. | Milreis. | +------+---------+-------------+-------------+------------+-------------+ | 1900 | 9.50 | 49,955,522 | 263,687,253 | 41,892,150 | 372,753,986 | | 1901 | 11.38 | 44,041,302 | 239,284,702 | 40,493,241 | 261,629,212 | | 1902 | 11.97 | 42,904,844 | 266,584,912 | 34,574,643 | 236,458,862 | | 1903 | 12 | 45,121,844 | 327,370,063 | 48,324,642 | 291,198,960 | | 1904 | 12.28 | 50,566,572 | 342,782,191 | 48,476,413 | 352,292,147 | | 1905 | 15.89 | 64,207,004 | 243,355,396 | 51,606,272 | 265,699,281 | +------+---------+-------------+-------------+------------+-------------+

Reducing gold to a currency basis at 15d. per milreis (the official valuation adopted in 1906), the budget for 1907 provided for a revenue of 353,590,593 milreis and an expenditure of 409,482,284 milreis, showing a deficit of 55,891,691 milreis. These deficits were common enough under the monarchy, but they have become still more prominent under the republic. According to the "Retrospecto Commercial" for 1906 of the _Jornal do Commercio_ (Rio de Janeiro, March 5, 1907), the aggregate deficits for the eleven years 1891 to 1904 were 692,000,000 milreis, or, say, L43,250,000.

The natural result of such a regime is increasing indebtedness. In 1888, a year before the republic was proclaimed, the internal and external national debts amounted to L74,000,000 sterling, with the currency at par. Ten years later, when the currency had fallen to 5-5/8 pence per milreis, the government found itself unable to meet the interest obligations on its debt and railway guarantees, and an arrangement was made with its creditors in London for the issue of a 5% funding loan to an amount not to exceed L10,000,000, and the suspension of all amortization for thirteen years. On the other hand the government agreed to withdraw currency, which had reached a total of 788,364,614 1/2-milreis, _pari passu_ with the issue of the loan, the milreis being computed at 18 pence. The purpose of this condition was in order to improve the value of the paper milreis in order to increase the specie value of the revenues. The scheme came into operation in June 1898, and not only was a complete suspension of payments avoided but the financial situation was greatly improved. The government even withdrew more of its currency issues than required by the agreement, and the value of the milreis steadily improved. At the same time the government carried out the forced conversion of the national loans into lower interest-bearing issues, which greatly reduced the annual interest charges. These measures would have put the financial affairs of the nation on a solid footing in a very few years had the government been able to keep its expenditure within its income. The naval revolt of 1893-1894, however, had aroused the spirit of militarism in the ruling classes, and the effort to perfect the organization and equipment of the army, strengthen the fortifications of Rio de Janeiro, and increase the navy, have kept expenditures in excess of the revenues. The purchase of guaranteed railways owned by foreign companies likewise added largely to the bonded indebtedness, though the onus was in existence in another form. The result of these measures was a large addition to the public debt, which on 31st December 1906 was approximately as follows (_apolices_ being the name given to bonds inscribed to the holder):--

External debt: L s. d. Loans of 1883, 1888 and 1889. 26,478,500 Oestede Minas R.R. loan 3,388,100 Loan of 1898 7,331,600 Funding loan of 1898 8,613,717 9 9 Railway rescission loan of 1901 15,467,015 16 1 Port works loan of 1903 8,500,000 ------------------- L69,778,933 5 10 ===================

Internal debt, funded: Milreis 5 % apolices, Law of 1827 483,546,600 4-1/2% " " 1879 20,548,000 6 % " " 1897 37,082,000 5 % " " 1903 17,300,000 ----------- Total, funded 558,476,600 (at 15d. L34,904,787) ===========

Internal debt, not funded: Milreis Paper money 664,792,960 Savings bank and other deposits: In paper 246,812,407 In gold, 19,053,861 r (say) 34,296,950 Floating indebtedness (a/cs current, bills, &c.) ? ----------- Total, not funded, approx. 945,902,317 (at 15d. L59,118,895 stg.) ===========

Approximate total indebtedness L163,802,675

In addition to these, the government was still responsible for interest guarantees on fourteen railways, or sections of existing lines, with an aggregate capital of about L4,900,000 held in Europe and 12,055,440 milreis held in Brazil, on which the national treasury paid in interest L191,324 and 1,398,493 milreis.

The paper currency of Brazil consists of both treasury issues and bank-notes, the latter issued under government supervision. Its fluctuations in value have been not only a serious inconvenience in commercial transactions, but also the cause of heavy loss to the people. Under the provisions of the funding loan of 1898 a scheme for the withdrawal of the paper money was carried into effect, and by the end of December 1906 the amount in circulation had been reduced from 788,364,614 1/2-milreis (the outstanding circulation 31st August 1898) to 664,792,960 1/2-milreis. Two funds were created for the redemption and guarantee of paper issues, the latter receiving 5% of the import duties payable in gold. Up to 1906 the Caixa da Amortisacao (redemption bureau), which has charge of the service of the internal funded debt, superintended the redemption of the currency, but in that year (December 6, 1906) a Caixa de Conversao (conversion bureau) was created for this special service. It is modelled after the Argentine Conversion office, and is authorized to issue notes to bearer against deposits of gold at the rate of 15 pence per milreis although exchange was above 17d. when the scheme was proposed. The notes are to be redeemable in gold at sight, the Caixa de Conversao to keep the gold paid in for that express purpose. The coffee producers of Sao Paulo and other states found that the appreciation in value of the milreis was reducing their profits, and they advocated this measure (at first with a valuation of 12d.) to check the upward movement in exchange. Metallic money is limited to nickel and bronze coins, but in 1906 the government was authorized to purchase bar silver for the coinage of pieces of the denomination of two milreis, one milreis and 500 reis (1/2-milreis). Gold is the nominal standard of value, the monetary unit being the gold milreis worth 2s. 2-1/2d. at par. The 10-milreis gold piece weighs 8.9648 grammes, 916 fine, and contains 8.2178 grammes of pure gold. There is no gold in circulation, however, and gold duties are paid with gold cheques purchased at certain banks with paper money. The banking facilities of the republic have undergone many changes under the new regime. A fruitful cause of disaster has been the practice of issuing agricultural and industrial loans under government authorization. Commercial business at the principal ports is largely transacted through foreign banks, of which there are a large number.

In addition to the indebtedness of the national government, the individual states have also incurred funded debts of their own. The aggregate of these debts in 1904 was L20,199,440, and the several loans made during the next two years, including those of the municipalities of Rio de Janeiro, Santos, Bahia and Manaos, add fully two and a half millions more to the total. (A. J. L.)

HISTORY

The Portuguese in Brazil.

Brazil was discovered in February 1499 (o.s.) by Vicente Yanez Pinzon, a companion of Columbus. He descried the land near Cape St Augustine, and sailed along the coast as far as the river Amazon, whence he proceeded to the mouth of the Orinoco. He made no settlement, but took possession of the country in the name of the Spanish government, and carried home, as specimens of its natural productions, some drugs, gems and Brazil-wood. Next year the Portuguese commander, Pedro Alvares Cabral, appointed by his monarch to follow the course of Vasco da Gama in the East, was driven by adverse winds so far from his track, that he reached the Brazilian coast, April 24, and anchored in Porto Seguro (16 deg. S. lat.) on Good Friday. On Easter day an altar was erected, mass celebrated in presence of the natives, the country declared an apanage of Portugal, and a stone cross erected in commemoration of the event. Cabral despatched a small vessel to Lisbon to announce his discovery, and, without forming any settlement, proceeded to India on the 3rd of May. On the arrival of the news in Portugal, Emanuel invited Amerigo Vespucci to enter his service, and despatched him with three vessels to explore the country. The navigator's first voyage was unsuccessful; but, according to his own account, in a second he discovered a safe port, to which he gave the name of All-Saints and where he erected a small fort. Vespucci's narrative is, however, suspected of being apocryphal (see VESPUCCI, AMERIGO).

The poor and barbarous tribes of Brazil, and their country, the mineral riches of which were not immediately discovered, offered but few attractions to a government into the coffers of which the wealth of India and Africa was flowing. For nearly thirty years the kings of Portugal paid no further attention to their newly-acquired territory than what consisted, in combating the attempts of the Spaniards to occupy it, and dispersing the private adventurers from France who sought its shores for the purposes of commerce. The colonization of Brazil was prosecuted, however, by subjects of the Portuguese monarchy, who traded thither chiefly for Brazil-wood. The government also sought to make criminals of some use to the state, by placing them in a situation where they could do little harm to society, and might help to uphold the dominion of their nation.

First organization in Brazil.

The first attempt on the part of a Portuguese monarch to introduce an organized government into his dominions was made by John III. He adopted a plan which had been found to succeed well in Madeira and the Azores,--dividing the country into hereditary captaincies, and granting them to such persons as were willing to undertake their settlement, with unlimited powers of jurisdiction, both civil and criminal. Each captaincy extended along fifty leagues of coast. The boundaries in the interior were undefined. The first settlement made under this new system was that of Sao Vicente Piratininga, in the present province of Sao Paulo. Martim Affonso de Sousa, having obtained a grant, fitted out a considerable armament and proceeded to explore the country in person. He began to survey the coast about Rio de Janeiro, to which he gave that name, because he discovered it on the 1st of January 1531. He proceeded south as far as La Plata, naming the places he surveyed on the way from the days on which the respective discoveries were made. He fixed upon an island in 24-1/2 deg. S. lat., called by the natives Guaibe, for his settlement. The Goagnazes, or prevailing tribe of Indians in that neighbourhood, as soon as they discovered the intentions of the new-comers to fix themselves permanently there, collected for the purpose of expelling them. Fortunately, however, a shipwrecked Portuguese, who had lived many years under the protection of the principal chief, was successful in concluding a treaty of perpetual alliance between his countrymen and the natives. Finding the spot chosen for the new town inconvenient, the colonists removed to the adjoining island of Sao Vicente, from which the captaincy derived its name. Cattle and the sugar-cane were at an early period introduced from Madeira, and here the other captaincies supplied themselves with both.

Pero Lopes de Sousa received the grant of a captaincy, and set sail from Portugal at the same time as his brother, the founder of Sao Vicente. He chose to have his fifty leagues in two allotments. That to which he gave the name of Santo Amaro adjoined Sao Vicente, the two towns being only three leagues asunder. The other division lay much nearer to the line between Parahyba and Pernambuco. He experienced considerable difficulty in founding this second colony, from the strenuous opposition of a neighbouring tribe, the Petiguares; at length he succeeded in clearing his lands of them, but not long afterwards he perished by shipwreck.

Rio de Janeiro was not settled till a later period; and for a considerable time the nearest captaincy to Santo Amaro, sailing along the coast northwards, was that of Espirito Santo. It was founded by Vasco Fernandes Coutinho, who having acquired a large fortune in India, sank it in this scheme of colonization. He carried with him no less than sixty fidalgos. They named their town by anticipation, Our Lady of the Victory (Victoria); but it cost them some hard fighting with the Goagnazes to justify the title.

Pedro de Campo Tourinho, a nobleman and excellent navigator, received a grant of the adjoining captaincy of Porto Seguro. This, it will be remembered, is the spot where Cabral first took possession of Brazil. The Tupinoquins at first offered some opposition; but having made peace, they observed it faithfully, notwithstanding that the oppression of the Portuguese obliged them to forsake the country. Sugar-works were established, and considerable quantities of the produce exported to the mother country.

Jorge de Figueiredo, _Escrivam da Fazenda_, was the first donatory of the captaincy Ilheos, 140 m. south of Bahia. His office preventing him from taking possession in person, he deputed the task to Francisco Romeiro, a Castilian. The Tupinoquins, the most tractable of the Brazilian tribes, made peace with the settlers, and the colony was founded without a struggle.

The coast from the Rio Sao Francisco to Bahia was granted to Francisco Pereira Coutinho; the bay itself, with all its creeks, was afterwards added to the grant. When Coutinho formed his establishment, where Villa Velha now stands, he found a noble Portuguese living in the neighbourhood who, having been shipwrecked, had, by means of his fire-arms, raised himself to the rank of chief among the natives. He was surrounded by a patriarchal establishment of wives and children; and to him most of the distinguished families of Bahia still trace their lineage. The regard entertained by the natives for Caramuru (signifying _man of fire_) induced them to extend a hospitable welcome to his countrymen, and for a time everything went on well. Coutinho had, however, learned in India to be an oppressor, and the Tupinambas were the fiercest and most powerful of the native tribes. The Portuguese were obliged to abandon their settlement; but several of them returned at a later period, with Caramuru, and thus a European community was established in the district.

Some time before the period at which these captaincies were established, a factory had been planted at Pernambuco. A ship from Marseilles took it, and left seventy men in it as a garrison; but she was captured on her return, and carried into Lisbon, and immediate measures were taken for reoccupying the place. The captaincy of Pernambuco was granted to Don Duarte Coelho Pereira as the reward of his services in India. It extended along the coast from the Rio Sao Francisco, northward to the Rio de Juraza. Duarte sailed with his wife and children, and many of his kinsmen, to take possession, of his new colony, and landed in the port of Pernambuco. To the town which was there founded he gave the name of Olinda. The Cabetes, who possessed the soil, were fierce and pertinacious; and, assisted by the French, who traded to that coast, Coelho had to gain by inches what was granted him by leagues. The Portuguese managed, however, to beat off their enemies; and, having entered into an alliance with the Tobayanes, followed up their success.

Attempts were made about this time to establish two other captaincies, but without success. Pedro de Goes obtained a grant of the captaincy of Parahyba between those of Sao Vicente and Espirito Santo; but his means were too feeble to enable him to make head against the aborigines, and the colony was broken up after a painful struggle of seven years. Joao de Barros, the historian, obtained the captaincy of Maranhao. For the sake of increasing his capital, he divided his grant with Fernao Alvares de Andrade and Aires da Cunha. They projected a scheme of conquest and colonization upon a large scale. Nine hundred men, of whom one hundred and thirteen were horsemen, embarked in ten ships under the command of Aires da Cunha. But the vessels were wrecked upon some shoals about one hundred leagues to the south of Maranhao; the few survivors, after suffering immense hardships, escaped to the nearest settlements, and the undertaking was abandoned.

By these adventures the whole line of Brazilian coast, from the mouth of La Plata to the mouth of the Amazon, had become studded at intervals with Portuguese settlements, in all of which law and justice were administered, however inadequately. It is worthy of observation, that Brazil was the first colony founded in America upon an agricultural principle, for until then the precious metals were the exclusive attraction. Sufficient capital was attracted between the year 1531 (in which De Sousa founded the first captaincy) and the year 1548 to render these colonies an object of importance to the mother country. Their organization, however, in regard to their means of defence against both external aggression and internal violence, was extremely defective. Their territories were surrounded and partly occupied by large tribes of savages. Behind them the Spaniards, who had an establishment at Asuncion, had penetrated almost to the sources of the waters of Paraguay, and had succeeded in establishing communication with Peru. Orellana, on the other hand, setting out from Peru, had crossed the mountains and sailed down the Amazon. Nor had the French abandoned their hopes of effecting an establishment on the coast.

The obvious remedy for these evils was to concentrate the executive power, to render the petty chiefs amenable to one tribunal, and to confide the management of the defensive force to one hand. In order to this the powers of the several captains were revoked, whilst their property in their grants was reserved to them. A governor-general was appointed, with full powers, civil and criminal. The judicial and financial functions in each province were vested in the _Ouvidor_, whose authority in the college of finance was second only to that of the governor. Every colonist was enrolled either in the _Milicias_ or _Ordenanzas_. The former were obliged to serve beyond the boundaries of the province, the latter only at home. The chief cities received municipal constitutions, as in Portugal. Thome de Sousa was the first person nominated to the important post of governor-general. He was instructed to build a strong city in Bahia and to establish there the seat of his government. In pursuance of his commission he arrived at Bahia in April 1549, with a fleet of six vessels, on board of which were three hundred and twenty persons in the king's pay, four hundred convicts and about three hundred free colonists. Care had been taken for the spiritual wants of the provinces by associating six Jesuits with the expedition.

First Jesuit missions.

Old Caramuru, who still survived, rendered the governor essential service by gaining for his countrymen the goodwill of the natives. The new city, to which the name of Sao Salvador was given, was established on the heights above the Bay of All Saints (Todos os Santos), from which its later name of Bahia is taken. Within four months one hundred houses were built, and surrounded by a mud wall. Sugar plantations were laid out in the vicinity. During the four years of Sousa's government there were sent out at different times supplies of all kinds. Female orphans of noble families were given in marriage to the officers, and portioned from the royal estates, and orphan boys were sent to be educated by the Jesuits. The capital rose rapidly in importance, and the captaincies learned to regard it as a common head and centre of wealth. Meanwhile the Jesuits undertook the moral and religious culture of the natives, and of the scarcely less savage colonists. Strong opposition was at first experienced from the gross ignorance of the Indians, and the depravity of the Portuguese, fostered by the licentious encouragement of some abandoned priests who had found their way to Brazil. Over these persons the Jesuits had no authority; and it was not until the arrival of the first bishop of Brazil in 1552, that anything like an efficient check was imposed upon them. Next year Sousa was succeeded by Duarte da Costa, who brought with him a reinforcement of Jesuits, at the head of whom was Luis de Gran, appointed, with Nobrega the chief of the first mission, joint provincial of Brazil.

Nobrega's first act was one which has exercised the most beneficial influence over the social system of Brazil, namely, the establishment of a college on the then unreclaimed plains of Piratininga. It was named Sao Paulo, and has been at once the source whence knowledge and civilization have been diffused through Brazil, and the nucleus of a colony of its manliest and hardiest citizens, which sent out successive swarms of hardy adventurers to people the interior. The good intentions of the Jesuits were in part frustrated by the opposition of Costa the governor; and it was not until 1558, when Mem de Sa was sent out to supersede him, that their projects were allowed free scope.

Settlement of Rio de Janeiro.