G58 



PORTUGAL. 



1891. In order to save the country from bank- 

 ruptcy, stringent measures had to be adopted. 

 According to the report of the Minister of 

 Finance, Oliveira Martins, who was a member 

 of the new cabinet appointed Jan. 16, 1892, the 

 budget of 1890-'91 had closed with a deficit of 

 1 1.55(). 000 milreis, which was equal to nearly 29 

 per cent, of the receipts, and he calculated a 

 deficit of 10,000,000 milreis for the budget of 

 1891-'92, equal to 25 per cent, of the public re- 

 ceipts. The floating debt, at the time of his en- 

 tering office, he stated to be 23.012,000 milreis, 

 which, however, might be reduced by half if the 

 assets of the Government, consisting of money 

 advances to various commercial undertakings, 

 such as banks, railroads, and an opera company, 

 could be realized. He estimated the sacrifices to 

 be made by the creditors, officials, and taxpayers 

 at 8,500,000 milreis, and administrative econo- 

 mies, together with taxes on the manufacture of 

 matches and alcohol at 1,500,000 milreis, thus 

 covering the deficit of 10,000,000 milreis. The 

 following economics were proposed by the Gov- 

 ernment and passed by the Cortes : (1) To levy 

 from public functionaries 5 per cent, on annual 

 incomes of from 400 to 600 milreis, 10 per cent, 

 on those from 600 to 900 milreis, 15 per cent, on 

 incomes of 900 to 1,500 milreis, and 20 per cent, 

 on incomes of and above 1,500 milreis. Ministers 

 of the Crown, bishops, diplomatists, and con- 

 suls are exempted from this charge, but no public 

 official will be allowed to receive an annual sal- 

 ary exceeding 2,000 milreis after March, 1, 1892. 

 (2)' The supplementary tax of 6 per cent, created 

 in July, 1890, on the amount of every kind of 

 taxes paid is increased on taxes exceeding 10 

 milreis to 10 per cent., on those exceeding 100 

 milreis, to 12 per cent., and on every 100 milreis 

 2 per cent, more, until it reaches 20 per cent, 

 on taxes of and above 500 milreis. (3) The 

 income tax on all lands, including the internal 

 public debt, and also the external when the in- 

 terest on the latter is paid in Portugal, is in- 

 creased to 30 per cent., the internal and exter- 

 nal bondholders to have the option of being ex- 

 empt from this tax if they agree to join the con- 

 vention entered into with the exterior debt bond- 

 holders. (4) To negotiate a convention with the 

 holders of the foreign debt by which, payment 

 in gold being guaranteed and the bonds included 

 in one series or maintained in the existing series, 

 holders could convert them into a maximum of 

 half their capital value, or accept a payment of 

 half their interest in treasury cedulas with their 

 interest amortizabte with or without premiums, 

 the nonconventioned bondholders to be subject 

 to the regime of the interior debt. In order to 

 assure to the national foreign creditors the regu- 

 lar and complete payment of interest and amor- 

 tization, the Government is to assign such state 

 revenues as it considers necessary for this pur- 

 pose. The above-mentioned taxes to be enforced 

 from the date of the publication of these propo- 

 sals until the expiration of the economical year 

 1892-'93, and the Cortes to fix annually new 

 taxes reduced in accordance with the necessities 

 of preserving an equilibrium in the budget for 

 future economical years. While thus serious 

 sacrifices were imposed upon the people, the 

 King, immediately after the passage of the meas- 

 ure, voluntarily relinquished one fifth of his civil 



list, as a contribution to the general effort. As a 

 further measure of economy, the suppression of 

 the Ministry of Public Instruction was adopted. 

 On Sept. 16, 1892, a decree was issued announc- 

 ing that Deputies would in future receive no pe- 

 cuniary indemnity from the treasury. Accord- 

 ing to the power granted to the Government, a 

 convention of the foreign bondholders was called 

 at Paris, and an agreement was reached between 

 Sefior Serpa Pimentel, who acted as commis- 

 sioner for the Portuguese Government, and the 

 bondholders' committees who represented the 

 creditors, who were mostly French, English, 

 Dutch, and German subjects. By this agree- 

 ment the payment of the coupons would be re- 

 duced 50 per cent, for five years, after which 

 time Hie payments should gradually be increased 

 until 1926, when payment in full was to be re- 

 sumed. The Portuguese Government, however, 

 refused to ratify this agreement, and issued a 

 decree on June 13, 1892, reducing the payments 

 on the coupons to one third of their nominal 

 value, until the next meeting of the Cortes, 

 which would regulate the future payments. The 

 report of the ministers, which was published to- 

 gether with the decree, explained that the agree- 

 ment as reached by the convention in Paris 

 would at best only defer the crisis for a few 



?jars, but that it was not even probable that 

 ortugal could live up to its promises under the 

 existing condition of the finances, and that bank- 

 ruptcy would have been the inevitable result had 

 the Government ratified the agreement. The 

 holders of the exterior debt were treated exactly 

 like those of the internal, and that to foreign 

 creditors even facilities were offered to exchange 

 their bonds for those of the internal 'debt. 



The German Government, through its ambas- 

 sador at Lisbon, Count Bray, protested against 

 the action of the Portuguese Government, as 

 violating the rights of the German creditors. In 

 reply, the Portuguese Government stated that it 

 was with sincere regret that it was compelled to 

 take action in regard to the debt, but that it was 

 imperative to do so. 



Cabinet Changes. On Jan. 1, 1892, the Royal 

 Portuguese Railroad neglected to pay its coupons, 

 and at a meeting held by the bondholders it was 

 decided to investigate the management of the 

 company. The Minister of Finance, Marianho 

 de Carvalho, who before his appointment to of- 

 fice had been superintendent of the company, 

 had advanced to the railroad company 13,000,000 

 francs as Minister of Finance, without inform- 

 ing the Government of his action. When the 

 investigation was started his action was discov- 

 ered, and he was obliged to resign. He was ac- 

 cused of it openly in the Cortes, and set up as a 

 defense that without this advance to the railroad 

 company, which was thereby enabled to pay its 

 coupons, the capital for the payment of the in- 

 terest on the public debt could not have been 

 procured ; that he could have saved himself by 

 sacrificing the country, but that he had preferred 

 to follow the course he had taken, and sacrifice 

 himself in order to save the country. Owing to 

 the difficulties connected with the Ministry of 

 Finance, none of the ministers could be induced 

 to undertake that burden, and consequently the 

 whole Cabinet tendered its resignation on Jan. 

 15, 1892. Count Valbom was called upon to 



