per cent., had fallen by the second half-year of 1902 to between 26.32 and 28.18 per cent., which was tantamount to a decrease of 6.569 to 5.684 milreis in the price that Portugal had to pay for an English pound sterling.

The situation of the Banks and the scope of their operations denoted an increased amount of activity in commercial and financial transactions, and, in the majority of instances, the average quotations of the stocks of these institutions had advanced considerably. The price of most of the different External and Internal Loans had also improved.

The Conversion of the External Debt, which had been the most important financial event of the year, was commenced in August, 1902, and had been carried out most satisfactorily, the proportion of Bonds presented for exchange up to the end of January, 1903, having been as follows:

The results shown by the statistics relating to foreign trade continued favourable, and it might be said that, apart from sundry adverse influences, the dependence of Portugal on foreign markets was decreasing, and exports of national products were increasing.

The figures contained in the Statement of Revenue and Expenditure showed, it was true, as regards the former, a decrease, and, as regards the latter, an increase, as compared with the corresponding figures for 1900-1. The Minister contended, however, that for the purposes of a just comparison of the results of these years it was essential that the amounts collected in respect of the Taxes levied upon the Importation of Cereals and upon the Manufacture

of Alcohol should be eliminated from the Statement, inasmuch as the former was liable to great variations, whilst the latter had been reduced by special legislation.

If the accounts for the last three years were adjusted in this manner the following results would appear :

6,792,147

Deduct to compensate decreased Receipts from Taxes on Cereals and
Alcohols, and from Loans, etc., applied to special purposes... 3,880,274

Net Balance applicable to the reduction of deficit of 1899-1900... 2,911,872 Or the equivalent of an annual increase of 1,455,936

The Minister added that the deficit in the Budget had been considerably reduced, as, while the aggregate deficit for the two years 1898-9 and 1899-1900 amounted to 10,805,783 milreis, the aggregate deficit in the two succeeding years, 1900-1 and 1901-2, was only 4,880,344 milreis.

As regards the Floating Debt, the formal Statement of Account showed at first sight that the amount of the increase in 1901-2 was, in round figures, 5,477 contos of reis, as compared with an increase of 3,596 contos in 1900-1. The Minister, however, stated that if the results shown by the aggregate figures of the biennium 1898-9 and 1899-1900 are compared with those of the biennium

1900-1 and 1901-2 the importance of the above increase loses much of its significance.

Taking the figures for these periods, in each biennium the total increase in the Floating Debt was as follows:—

With regard to the foregoing figures and statements, which are far from satisfactory as affording any clear indication as to the real financial condition of Portugal, it would appear that the only conclusion that can be drawn is that deficits occur with regularity in every year, and the extent of these deficits is concealed or explained away by a complicated system of accounts intended to minimise the unsatisfactory position of affairs.

REVENUE AND EXPENDITURE.

The following Tables show in detail the Revenue and Expenditure in each of the last four financial periods, and are stated in the Finance Minister's Report to be the

revised and corrected accounts for each of the years in