Brazil in 1915 confronted the absolute neces sity of mending the national finances, but de clined to make the mistake of marking up taxes and imposts on the supposition that higher charges would necessarily produce greater revenue. During the five years, 1910 to 1914, inclusive, every year had brought a deficit of increasing size. Excellent judgment was shown by those who favored the lowering of export duties and the reduction of the rate of port-charges exacted by companies hav ing, concessions for operating port-works, the position being taken that Brazil's products should be allowed to compete effectively in foreign markets with those of other lands. At this time it was stated that the general expenses of moving goods through certain Brazilian ports were five times to twenty times greater than those of moving goods through North American to European ports.
The Brazilian budget law for 1917 estimated the general receipts at 116,310,204 gold milreis ($62,807,510) and 327,300,333 paper milreis ($78,552,080) ; the revenue with special applica tion was placed at 12,025,000 gold milreis ($6, 493,500) and 12,838,000 paper milreis ($3,081, 120). The total revenue, when expressed in American currency, showed an increase of $7, 365,839 over 1916. The budget law fixed the expenses for 1917 at 98,532,945 gold milreis ($53,207,790) and 407,426,730 paper milreis ($97, 782,408), showing a deficit of $55,995 for the year, and an increase of $8,169,205 over the ex penses of 1916.
The European War did not by any means originate the critical depression. The with drawal from Brazil of British supplies of capi tal in the Balkan money stringency (1913-14) had occasioned a financial revulsion before the shock of war was added. °Brazil was feeling the depression badly in the first six months of 1914,° says a writer in The Americas (Vol. I, No. 8, page 33). °The foreign trade of Santos port, which is typical of all Brazil, showed a decline of per cent in imports for those months as compared with the corresponding period of 1913, and the second half of the year showed a drop of 603 per cent as compared with the corresponding period of 1913. In exports, the decline of the first half of the year had been only per cent. The drop in the second half — the war period—was 48.2 per cent. Very heavy declines in the imports of machinery of all kinds (60 per cent) show the effect of the cutting off of the European capital supply"— that is, Continental as well as British. Moreover, Brazil's chief commodities held a less controlling position in the markets of the world at that time. "Plantation rubber undercut in price the wild rubber of the Am azon. Coffee dropped sharply in export price from 1912 on. In 1914 it was nearly 40 per cent below the 1912 In view of the hard facts that the Federal government had large debt maturities and that its revenues (chiefly derived from imports) had fallen off nearly one-half, owing to the derangement of trade resulting from the war, there was nothing to occasion surprise in the circumstance that a settlement was made with the holders of Brazilian securities by which the maturities were extended for 13 years..
Credit was then granted only with the great est reserve. °The Federal, state and municipal governments figured in the mercantile credit situation very gravely because it was necessary during the most critical part of the months just subsequent to the declarations of war for these to extend official help to the general situ ation and to finance the orderly continuation of their (own) necessary activities through re ciprocal mercantile credits. The government was said to owe about $75,000,000 distributed among leading business houses over the coun try, and these were severely handicapped by its inability to settle accounts in a way to per mit them to realize without loss of principal. The Rio de Janeiro Chamber of Commerce held several largely attended meetings in which protesting resolutions were sent to the govern ment, against the latter's payment of local accounts for supplies in treasury notes when these could not be disposed of at more than 75 per cent of face value. . . . Profes sional and party politics were as active in Bra zil, and with the same effects, as they have been during like trying times in the United States. It was, however, gratifying to note a dis tinctively forward movement in which