July 1, 1881, there were in traffic, or very nearly completed, 3,712 kilometers of railway in the empire. About 3,000 kilometers were in course of construction at same date. About 81 per cent. of the completed roads are in the three provinces of Rio de Janeiro, Sao Paulo, and Minas Geraes, and the same ratio will hold good of those in construction. The lines of these three provinces all center at Rio de Janeiro or Santos, and they form the outlet of the great coffee region of Brazil. The Dom Pedro II line and its branches, the Santos and Jundiahy, the Sao Paulo Western, and two or three other lines have a gauge of 1.60 meters; nearly all the others, including those in construction, are of one meter gauge. Capitalists are especially attracted to Brazilian railway enterprises by the government guarantees of from 6 to 7 per cent. interest on capital invested. The capital thus guaranteed now amounts to over $60,000,000. Many of the lines now in construction or projected will probably be unprofitable, thus placing a serious burden on the already overtaxed Brazilian treasury. The high tariffs of the Brazilian railways are an effectual bar to the rapid development of the interior. On the Dom Pedro II road, a government line, the freight charges, being turned into United States coin, are about as follows: Coffee, 14 cents per ton per mile; sugar, 10 cents per ton per mile; cereals, 4 cents per ton per mile; luggage, 2 cents per 100 pounds per mile.' On nearly all the other roads the rates are much higher. Thus, coffee sent from many of the more distant plantations must pay $1.75, $2, or even $2.50, per sack before reaching Rio de Janeiro or Santos, while the same coffee is shipped from this port to New York at rates, varying according to supply of vessels, from $3.25 to $11 per ton, or 20 to 65 cents per bag. Goats, sheep, and other small livestock pay as much as third class passengers, and cattle and horses pay much more. In some parts of the empire the mule trains still compete successfully with the railways. Owing to the status of the population, the number of railway travelers is comparatively small, and the amount of merchandise to be transported to the interior is insignificant as in comparison with roads extending to rural districts in the United States. By an imperial decree of September 10, 1881, the contract guaranteeing interest to the Madeira and Marmore Railway was declared to have lapsed and the government has called for new tenders for that road. Much American capital has been lost on that project, and only remarkably sanguine people believe it will be carried out during the pres ent century. FINANCIAL REVIEW OF THE YEAR 1880–281. The financial year ended June 30, 1881, has, like several preceding ones, been one of much uncertainty to the commercial body of Brazil. Seasons of depression and almost of alarm have alternated with brief periods of a more hopeful character, but on the whole an average business has been done, and some departments of trade have shown a slight improvement. The recognized causes of depression are— 1. The heavy municipal and export taxes. 2. The singular fluctuations in exchange, or, in other words, of the value of the milreis of Brazil as compared with the money of England, on which country the bulk of the exchange is drawn. In this matter the shrewdest financiers confess themselves at fault, exchange falling when the usual indications would seem point to a rise, or vice versa. 3. A decline in the price of coffee, with the consequent failure of several large importers at New York. 4. Uncertain state of the labor question, caused by the workings of the gradual emancipation law, by new anti-slavery movements, and by the schemes for introducing Chinese laborers. 5. The general lack of confidence and cohsequent contraction of credits. The contraction of credits is in itself a healthy feature, although the mmediate results may be unpleasant. A few years ago credits of twelve or even eighteen months were common, and this, combined with a fluctuating rate of exchange, introduced a large element of uncertainty into all commercial transactions. At present most of the large importing houses will not give more than from three to six months' credit, and there is a general tendency to caution, even in the short-time notes. Long credits have been almost universal in retail as well as in wholesale trade, especially in the interior. Most of the smaller provincial dealers receive various kinds of produce in return for goods advanced, and they can only collect their debts when the crops come in. As these small traders carry no reserve capital, the sudden contraction of credits causes much distress among them, but the ultimate result of this contraction must be beneficial; commercial transactions will become less speculative and more secure, and confidence will return when the weak houses are weeded out, as they inevitably must be. The export trade has been especially affected by the evils mentioned, and an uneasy and speculative feeling has been constantly evident in it. The import trade has been less unfavorable, and there have been many features of positive improvement in it. The movement of imports was more irregular than usual, owing to the revisions of the tariff, and during the consideration of its various items the market was uncertain and depressed; but the passage of the tariff was immediately followed by large imports of goods which had been held back to await hoped-for reductions. FOREIGN COMMERCE OF THE EMPIRE OF BRAZIL. Every possible effort has been made to procure statistics of the trade of the whole empire for the two fiscal years last past, but without success. The official returns will not be made public until the minister of finance is ready to make his report to the Chamber of Deputies, which will probably be in the early part of the coming year. But few of the annual reports of subordinate consulates in Brazil have as yet reached me, and it does not appear proper to hazard conjectures without more reliable grounds on which to base an opinion. From the scanty data before me it appears that the direct foreign trade of the province of São Paulo, at its port of Santos, has considerably increased, particularly on the export side, and that the trade of Pernambuco has been growing more rapidly as to imports than as to exports. In taking a retrospective view of the exports of the empire for some thirty years past, the value of the one great staple export, coffee, as compared with the total, struck me as being in a dangerously large pre portion, and induced me to draw up the following: Comparative statement showing official valuation of exports of the whole empire of Brazi from 1851-52 to 1879-'80, and comparison therewith of exports from the port of Rio de Janeiro. [Values in United States gold at average exchange of each year. To simplify the table, every eighth year is taken up to 1875-76.] NOTE.-I acknowledge my indebtedness for the greater part of the above table to Counselor Herman Haupt, consul of the German Empire at this port. From the foregoing it will be seen that the planters who find a market for their produce at Rio de Janeiro, from which port is shipped more than half the total exports of Brazil, have, like our Southern people, devoted their efforts mainly to the cultivation of a single article. As cotton was formerly "king" in our Southern States, so coffee has long been "king" here, and the economical blunder committed in thus crowning the Arabian berry will have to be atoned for. In my last annual report I referred to the lack of diversified industries in Brazil, and now, as no marked change has occurred in that respect, it may be well, for those who contemplate entering upon any important enterprise here, to provide beforehand against the possible contingencies which may follow a blight of this one great industry by a failure of the crop, a change in the system of labor, a sudden fall in prices, or the competition of countries which, like the Central American States, give promise of rapid development. IMPORTS OF THE EMPIRE OF BRAZIL. With great labor and most painstaking care I have sought to find out how large a proportion of the imports of Brazil come from the United States, and how our sales to this empire compare with those of England and France, and I am pleased to find that we have been absolutely and relatively gaining ground since 1872, as will be seen by the following: 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 Years. Statement of value of Brazilian imports coming from the United States, England, and France from 1870 to 1880. COMMERCE OF THE PORT OF RIO DE JANEIRO. Exports.-The tabular statement herewith shows that the exports from this port during the fiscal year 1879-'80, the latest returns available, amounted to $43,176,379, being a slight falling off from the preceding year. It is proper to note, however, that the custom-house return from which this table was compiled made the amount larger, as said return included the value of gold coupon bonds sent abroad in the return of gold shipped, making the item read "gold and gold coupons." I have thought that gold, in the form in which sent from the mines to England, might be taken as a legitimate product to be included in the export tables; but as coupon bonds may be produced to any extent with the aid of a paper mill and printing press, I have taken the liberty of eliminating "coupon bonds " from the exports, and my table is thus short of the official return by upwards of six millions of dollars. On the other hand, it must always be borne in mind that the official valuation of exports here is as a rule slightly under the actual market price and does not include cost of bags for coffee and the various shipping expenses, which make the cost of the produce exported, by the time it is in the ship's hold, about twenty per cent. above the official figures. This will be shown more clearly by reference to the annexed table showing the value of exports from Rio de Janeiro to the United States as declared in invoices verified at this office. As the material for this table is in the consulate, I have been able to bring it up to the end of the last fiscal year and give comparison of same with preceding years, showing exports from Rio de Janeiro to the United States, as follows, viz: Year ending June 30, 1881 $31,537, 329 09 32, 639, 548 18 30,083, 709 85 Of the exports from Rio de Janeiro to foreign countries, the United States takes 60 per cent., consisting almost entirely of coffee, of which article we purchased at Rio de Janeiro during the last fiscal year 2,133,179 bags, of 60 kilograms or 1324 pounds each. Percentage of the im- IMPORTS. From one of the tables hereto appended it will be seen that the value of imports of foreign merchandise at the port of Rio de Janeiro during the fiscal year 1879-'80 (latest returns) amounted to $41,809,536 against $39,146,610 in the preceding year, and that of said imports Great Britain furnished 41 per cent.; France, 17 per cent.; Germany, 9 per cent.; the United States, 8.5 per cent.; Portugal, 6.8 per cent.; Uruguay, 6.3 per cent.; the balance being divided amongst other nations in small amounts. The imports from the United States are stated at 8,160,768 milreis, say, $3,590,738, being an increase over the preceding year of $372,466. Our great competitor for the trade of Brazil is Great Britain, and of the imports from that country more than one-half of the total value is in textile fabrics and a large proportion of the remainder is made up of coal, leather and leather goods, iron, steel and iron mongery, machinery tools, beer, spirits, salt meats and fish, chemicals, and earthenware. Flour.-Although a wide extent of territory in Southern Brazil is well adapted to the cultivation of wheat, rye, maize, and other cereals, I am informed by a prominent dealer in flour that he is not aware that a single barrel of wheaten flour made in Brazil from native grain has appeared in this market. There is one flour mill in this city which works on imported grain, but it has not proved a success, and does not affect the American flour trade. A tabular statement appended hereto shows the flour trade of Rio de Janeiro for the crop year ended 30th of September, 1881, and the following statement shows Comparison of receipts of wheat flour at Rio de Janeiro during the last three years and countries from which imported. It has been found very difficult to obtain correct statistics of the shipping arriving at this port. Such information as was obtained from the custom-house and published by the commercial association has proved to be very defective and unreliable, when compared with the records of the foreign consulates of this port. The value of correct statistics to the statesman, the political and social economist, and the merchant does not appear to be properly appreciated here. It is but two months ago that this government issued the statistics of the maritime commerce of Brazil for the fiscal year of 1871-72. With the assistance of some of my consular colleagues and the best information from other sources, I have prepared the accompanying tables showing the foreign navigation of this port, from which it will be seen that during the year 1880 there entered the port of Rio de |