No. 59.
Mr. Partridge to Mr. Fish.
Rio de Janeiro, November 12, 1874. (Received Dec. 24.)
Sir: The legislative chambers failed before their adjournment, (September 12,) to pass the appropriation bills (1875–’76) laid before them, so that an extra session will have to be called, probably in March, and previous to the regular session in May. In my No. 200 I mentioned and explained this neglect. The estimates were laid before the chambers at their meeting in May last, and have since been published in the treasury report, from which I have collated and here set down some facts of interest in relation to the financial condition of Brazil.
The annual receipts from all sources of revenue proper, (excluding loans, &c.,) into the Brazilian treasury have been steadily increasing, almost uninterruptedly, since 1852, and especially during the last eleven years, (since 1863,) with the single exception of 1873–’74.
From 51,480 contos* of reis, ($27,750,000, at 54 cents to 1,000,) in 1862–’ 63, these receipts have gone up to 115,495 contos in 1872–’73, ($62,333,333,) showing an increase at the end (and resulting from additional taxes, as well as increased basis) of that period of 113 per cent.—more than double.
The annual expenses have also increased, and even more regularly (very greatly, of course, during the Paraguayan war, 1866–70) from 59,860 contos ($32,324,400) in 1862–’63, (showing a deficit in that year of more than 8,000 contos,) up to 169,536 contos ($91,500,000) in 1867, during that war, and to 126,240 contos ($68,169,000) in 1872–’73.
Comparing these annual receipts and expenditures during that series of years, there is shown a nearly constant annual deficit, or excess of expenditure, except during three years, 1852–’53, 1856–’57, 1871–’72. This deficit has varied from 1,000 contos ($545,000) in 1862, up to 93,000 contos ($50,000,000) in 1867–’68, in the midst of the war.
The whole amount of deficits during those twenty-two years (1851–1873) is 390,114 contos, ($250,000,000,) from which is to be deducted the amount of surplus during the three years named, 19,642 contos, ($10,000,000,) showing that in the course of twenty-two years the expenditures [Page 93] have exceeded the regular receipts by the sum of 370,472 contos, or over $200,000,000.
In this excess, of course, are included such expenses of the war* as were not met during its continuance from the increased receipts from additional imposts and new taxes. This large sum of deficits has been met, as they have occurred, by the issue of treasury-notes, payable after date, with interest, by the issue of additional paper money, (currency,) and from the proceeds of loans, from time to time.
The amount of the internal (domestic) funded debt, up to 31 March last, was 258,908 contos, ($156,000,000.) The foreign (sterling) debt, up to December 31, 1873, was £15,503,200% sterling, ($73,500,000.) Both these debts have been (apparently) reduced from time to time to their present amount by the redemption of certain bonds (about £3,100,000 in amount since 1856,) ascertained by drawings by lot for that purpose. These funded debts still outstanding thus amount to about $229,500,000, and to this must be added the amount of treasury (promissory) notes on time given in acknowledgment of temporary loans, bearing interest (generally 6 per cent.,) and payable at four, six, eight, or twelve months from date. It is not easy to state the constantly varying amount of this item of indebtedness;† but it may be said that there are from eight to ten millions of dollars thus outstanding, so that the debt of the empire, on which interest is payable, may be set down at about $240,000,000. In addition to this interest-bearing debt, there is the unredeemed paper money, which, like our legal-tender notes, constitutes the legal currency of Brazil, and the amount of which in circulation is declared to be 149,578 contos of reis, ($80,750,000.) This sum adds another third to the interest bearing debt, and sums up the whole debt of the empire to about $320,000,000 United States gold.
The interest on the funded debt, including a small annual redemption, requires 30,000 contos, ($16,000,000 0 the other expenses of the treasury department (expense of collection and administration) being 13,122 contos, ($7,500,000;) of war, 15,374 contos; navy, 11,600 contos; foreign intercourse, 1,194 contos; justice, 5,733 contos; interior, 7,555 contos; agriculture, commerce, and public works, 17.696 contos; making the whole (estimated) yearly expenditure 102,634 contos, ($55,500,000.)
Thus the interest on the debt represents about 30 per cent, of the expenditures; the expense of collection about 13 per cent.; and the cost of the various departments of the government mark also, very nearly, their respective percentages of the whole outlay.
To meet this expenditure the receipts from all sources of revenue proper are estimated at 106,000 contos, so as to show an apparent or estimated, surplus for 1875–’76 of 4,000 contos, ($2,160,000,) derived under the following heads:
| Contos. | |
| From duties on imports | 59,960 |
| From tax on clearances at custom-house | 440 |
| From duties on exports‡ | 19,425 5 |
| From internal revenue, (stamp-taxes) | 24,553 7 |
| From contingencies and extraodinary | 1,620 8 |
| 106 000 0 | |
| $57,240,000 |
It will be seen from this statement that from duties on imports, (including one-half the clearance tax,) more than 566/10 per cent. of the whole revenue is derived, and from duties on exports, (including the other half of the clearance tax,) 18½ per cent., so that three-quarters of the whole revenue of Brazil is received through the customs, and but one-quarter from all other sources, including therein the enormous imposition or tax (6 per cent, of value transferred) on sales and transfer of landed property. This brings in 4,000 contos, and the stamp-tax about as much more. These facts and statistics, although there is shown a constant deficit (from underestimate of expenses,) to meet which there has been a constant recourse to loans, anticipations of revenue and an annual apprehension at least of a continuation and increase of such shifts,) have never disabled this government or embarrassed it to any extent; and it has never found any difficulty, of late years at least, in negotiating its foreign loans at 5 per cent., at or very near the par of issue, or in securing at 6 per cent, at home all the moneys required.
Notwithstanding this annual deficit, (not estimated but experienced) and which, to some economists at least, might cause a suspicion that there was serious default somewhere, either in extent of resources, or in foresight, or in administration, Brazilians daily quote their funds in London at 99, or at par, and their home debt (6 per cent.) at from 4 to 6–per cent, premium, in proof of their assertion that the financial condition of the empire is highly satisfactory. This will probably be admitted as long as they are punctual and constant, as hitherto, to all engagements.
It is possible, however, and now begins to seem even likely, that this facility of borrowing may possibly tempt them too far;* but for some time yet the stability of their government, and the regular though slow development of the country’s resources, and the contrast in favor of Brazil compared with other South American countries, will secure her a credit and confidence perhaps beyond what could be strictly justified by the actual present resources and their management.
I am, &c.,
- The conto (or million of reis, Rs. 1:000,000) is, at par, worth $545.40 U. S.↩
- The cost to Brazil of the Paraguayan war was not less than $300,000,000.↩
- These notes are always paid at maturity and then replaced with additions by the issue of others.↩
- Export duty on coffee 9 per cent, ad valorem; on sugar and cotton, 7 per cent, (proposed reduction) additional (to the province) 4 per cent. ad valorem—in all 13 per cent, and 11 per cent.↩
- A new loan of five million sterling is now about to be pr has just been placed at 98 the rate of interest being 5 per cent.↩