The navy, practically annihilated in the war with Chile, has cruisers (two light, one auxiliary), a destroyer, six submarines and four gun-boats on the Amazon. In 1920 an American naval mission began reorganization. In 1927 there were zoo officers and 2,000 men. The Naval academy is at La Punta (Callao) and a school of hydro-aviation is at Las Palmas near Lima. Naval aviation has air-mail and passenger services between Iquitos and San Ramon. It comprised 20 officers and II° men (1927). There is a submarine base at San Lorenzo island (Callao).
The present budget system dates from 1922. While revenues in 1896 were only
they had risen to 11'10,219,547 in 1926, when expenditures were iPio,518,689. Although actual expenditures exceeded actual collections by approximately 3% in 1926, in both years revenues actually ex ceeded the original estimates. Budgetary estimates of receipts and expenditures for the year 1928 are L1)11,113,650. Internal taxes are collected by a Tax Collecting company which makes payments to the Caja de DepOsitos y Consignaciones, so long as any bonds of the Peruvian National Loan (1926) are outstanding. Fiscal agents of the New York banking house which floated the loan are represented on the board of directors.
The foreign debt began with a small loan of £1,200,000 in London in 1822. Lavish expenditures in spite of ample (guano) revenue had raised the total to L49,000,000 in 1872, on which the annual interest amounted to about £2,500,000, a sum wholly be yond the resources of the treasury. Then came the War of the Pacific (1879-83). By 1889 the total foreign debt, including arrears of interest, was nearly L56,000,000. On Jan. 11, 1890, a contract was made whereby the Peruvian Corporation, Ltd. was formed and the entire external indebtedness of the republic was cancelled in return for certain concessions. Among these were operation for 66 years of State railways, free use of certain ports, right of navigation on Lake Titicaca, exploitation of the remaining guano deposits up to 3,000,00o tons and 33 annual payments of L8o,000 each. This contract in modified form is still in force.
On June 3o, 1927, the total national debt of Peru amounted to
of which
was external, loans chiefly in the United States and United Kingdom. Proceeds of recent loans are applied to railway construction, irrigation and sewage systems and the refunding of loans bearing higher service charges. In 1922 the Banco de Reserva del Peru was established; in addition to its rediscounting functions it regulates the currency. It alone issues notes, secured by a gold reserve. On Oct. 31,
1927, the ratio of gold to paper currency in circulation was over 83%. In Jan. 1928, the Mortgage Bank of Peru and its subsidiary, the Agricultural Intermediate Credit Bank, were established. The capital of the former is LPI,50o,000, of the latter LP5oo,000, held entirely by the parent organization. They facilitate both the placing of mortgages and the extending of agri cultural credit.
The single gold standard was established in 1897, silver and copper being used for subsidiary coinage. The monetary unit is the Peruvian pound (libra, abbr. LP) uniform in weight and fineness with the British pound sterling. Half and fifth pounds are also coined. There are gold notes beginning with libra. Silver coinage consists of sol (loo centavos), half sol (5o centavos), silver and nickel pieces of 20 (peseta), io and 5 centavos and copper coinage of one and two centavos. The change from the double standard was effected without any noticeable dis turbance in commercial affairs, but this was in part due to the precaution of making the British pound sterling legal tender in the republic and establishing the legal equivalent between gold and silver at 10 soles to the pound. Intrinsically they are still equivalent. Since 1919, however, no gold has been available in payment of notes and none is in circulation, so the currency is at present depreciated.
The legal standard is the French metric system. It is in use in the custom-houses and in foreign trade, but the old units are still commonly used among the people. These are the ounce (1.014 oz., avoirdupois) ; Spanish libra (1-014 lb. avoirdupois) ; Spanish quintal (101.43 lb. avoirdupois) ; arroba (25.36 lb. avoirdupois) ; wine arroba (6.7o imperial gal lons) ; galon (.74 of an imperial gallon) ; vara (32.91 in.) and the square vara (.835 sq.yd.).
Ruins of vast edifices at Tiahuanaco just south of Lake Titicaca, at Cuzco and at 011antaitambo appear to have been erected by sovereigns with unlimited command of labour. Of their origin nothing is known, for they are entirely unlike the later Inca structures. Settlement of the Cuzco valley by the Incas or "people of the sun" probably took place in the 13th century. They already possessed a considerable civilization. The Peruvian empire dated from the victories of Pachacutec Inca about a century before Huayna Capac, the Great Inca, who died in 1526, one year before Pizarro first appeared. The consolidated empire extended from the river Ancasmayo north of Quito to the Maule in Chile. (See