of the Southern Railway to Cuzco, but this extension has not been made. The Peruvian Government agreed to pay an annuity of 80,000l. for 33 years, and the Peruvian Corporation to build 100 miles of railway, but it has not been possible to construct the line or lines in question owing to the nonpayment of the annuity by the Peruvian Government. 8 per cent. of the Customs duties on imports were specially devoted by law to the object of paying the annuities, but the proceeds are applied to other purposes. Thus there are now unsettled disputes as to the fulfilment of the conditions on either side.

The internal liabilities of Peru consist of a debt amounting to 2,660,6457. at 10 per cent. interest, a non-interest-bearing debt of 396,6007. and a floating debt amounting to 836,8147. in June, 1903.

Defence.

It consists of 7 battalions of

The army contains 4,000 officers and men. infantry of 300 men each, 7 squadrons of cavalry with 125 men each, and a regiment of artillery of 590 men with 6 batteries of mountain guns. The army is provided with 20,000 Mauser rifles, 24 Maxim and Gatling guns, and 24 light guns. Six officers have been lent by the French Government for the purpose of reorganising the army. A military school has been opened at Chorrillos, near Lima. There is also a police force numbering 2,500 men.

The Peruvian navy now consists of 4 vessels: the Lima, a cruiser of 1,700 tons displacement, the Constitucion, a transport, the Santa Rosa and Chalaco, small steamers used as transport or despatch boats. All these vessels are practically useless, but the Lima is to be re-boilered shortly. Money is being subscribed by the public for the purchase of a small modern war vessel.

Agriculture and Industry.

The chief agricultural productions of Peru are cotton, coffee, and sugar. For the extension of cotton-growing, irrigation works are in progress on both banks of the river Chira in the department of Piura, where lands are now being irrigated from a canal 22 miles long. Similar works are in construction in the department of Lima, and others are being undertaken on the coast lands. The chief coffee-growing districts are those of Chanchamayo, Pérené and Paucartambo in Central Peru, where the Peruvian Corporation has done much useful colonising work. The concession to the Corporation comprises about 2,750,000 acres, but the labour and transport difficulties in the tropical forest region are serious; much less than half the area conceded for colonisation is as yet occupied. The sugar industry is carried on chiefly in the coast region. The total area devoted to sugar cultivation is about 200,000 acres, of which about half is planted with cane. Cocoa cultivation is extending, about 200,000 cocoa trees having been recently planted in the Pérené region. Rice, (4,391 tons exported in 1903), tobacco, wines and spirits, wheat, olives, ramie, and maize, are also produced. Silk culture is being tried in the coast region. The most important coca growing district is in the province of Otuzco in the department of La Libertad, where there are several coca estates. In 1903 there were exported 1,026 tons of coca and 7 tons 14 cwt. of cocaine, for the manufacture of which there are 24 small factories. Besides, there are in the country cinchona, dyes, and medicinal

plants. There is a large export of alpaca, sheep, and llama wool. Rubber is collected in large quantities and shipped down the Amazon from Iquitos, 1,782 tons in 1902; 2,075 tons in 1903. The exports of the chief agricultural products of Peru in recent years were :—

The guano deposits on Huanillos, Punta Lobos, and Pabellon de Pica, which had been delivered over to the Peruvian Corporation, reverted to the Chilean Government on February 2, 1901; but those on the island of Lobos de Afuera, and at some places on the coast, still remain in possession of the Corporation, whose net guano receipts in 1903-04 amounted to 176,7767.

The number of mining claims of all kinds in 1903 was over 10,000, including gold, silver, copper, lead, zinc, quicksilver, coal, salt, sulphur, and petroleum. One-third of the claims, however, are unworked. Gold is found in most of the departments of Peru, and mining operations are carried on in the Cerro de Pasco region. The annual output varies from 1,500 to 3,500 kilos of gold (23 parts fine). There are important silver mines at Cerro de Pasco, Caylloma, Castrovireina, and Recuay. The production of silver is not known, most of the ores being now exported. Bar silver was exported in 1901, 77 tons; 1902, 35 tons, 16 cwt.; 1903, 106 tons, 10 cwt. Öres, sulphides and matte were exported in 1901, 46,192 tons; 1902, 40,702 tons; 1903, 37,086 tons. The value of the ores of all metals exported from Peru in 1903 was 952,8127. In former years the value had been grossly exaggerated.

Anthracite and bituminous coal and lignite exist in various parts of Peru, but are little worked. The petroleum works at Talara in the department of Piura in 1903 produced 33,000 tons of crude petroleum and 300,000 gallons of kerosene.

In the manufacturing industries Peru is making some progress. In the north straw hats are plaited; at Lima and in the neighbourhood of Cuzco coarse woollen blankets and cloth are woven; there are in Peru over 1,000 looms employed in cotton factories consuming 1,600,000 kilos. of cotton and turning out about 15 million yards of cloth annually. Other articles of manufacture are beer, boots and shoes, candles, cigars, wines, clothing, soap, matches, furniture, saddlery, lard, olive oil, cotton-seed oil cake.

Commerce.

The value of the trade of Peru in 5 years has been as follows (10 soles

17.):

Imports 21,230,040 23,171,330 28,624,070 34,282,830
Exports 33,615,311 44,979,990 47,307,760 37,039,710

38,577,530

37,833,800

The trade statistics are only approximate.

The values of the principal imports and the quantities of the principal exports in two years were :

The distribution of the trade was mainly as follows (10 soles = 17.) :

Peru has signified its adhesion to the Sugar Convention, and the sugar duties have been reduced to the prescribed limits. The free list now includes sugar-bags, motor cars, type-writers, and certain forms of iron, steel, copper, and brass work. For special purposes additional duties are levied of 10 per cent. at Callao, and 8 per cent. at other ports. Those at Callao include 1 per cent. for the erection of a theatre at Lima, which is to cost 50,000. At Loreto, on the Amazon, there is a special tariff under which cereals, sugar, provisions, agricultural and nautical implements and machinery are free, while export duties ranging from 8 to 20 cents. per kilo. are levied on rubber. Under the treaty of 1850 there is reciprocal "freedom of commerce and navigation between the United Kingdom and Peru. The commerce between the two countries, according to the Board of Trade Returns, for 5 years was as follows:

The difference between the Peruvian and British statistics is probably due to difference in manner of valuation.

The chief imports into and exports from the United Kingdom from and to Peru in 2 years were :

The imports into and exports from the United States from and to Peru, according to U.S. statistics, in 4 years ending June 30, were as follows:

In 1903 the chief imports from Peru were sugar, 1,517,514 dollars, and cotton, 476,571 dollars; the chief exports to Peru were breadstuffs, 428,852 dollars, and iron work, 713,837 dollars.

Shipping and Navigation.

At Callao, Mollendo, and Salaverry there entered in 1903 940 vessels of 1,734,379 tons, and cleared 939 of 1,733,020 tons. The vessels of the Pacific Steam Navigation Company and of the Chilean Company are mail steamers plying between Chile and Panama; they call at every Peruvian port. The Pacific Steam Navigation Company has also a passenger line and a cargo line to and from the United Kingdom. The vessels of the Gulf line, Lambert and Holt, New York Pacific Company, West Coast line (of New York), and the Kosmos line, all trade with Peru. A beginning has been made towards regular direct communication across the Pacific by a steamer of the Occidental Maritime Steamship Company, which sails from Callao to Panama and then to Japan and China. The vessels of the Red Cross and Booth lines run up the Amazon as far as Iquitos. Since 1886, foreign sailing vessels may not engage in Peruvian coasting trade; but foreign steamers, with special authorisation, may.

The merchant navy of Peru in 1902 consisted of 1 steamer of 19 tons, and 29 sailing vessels of over 50 tons, and 86 under 50 tons, the aggregate tonnage being 10,629 tons.

Internal Communications.

Good roads and bridges are required all over the country, and efforts are being made for their construction. In 1903 bridle roads and a cart road in the rubber districts of an aggregate length of 1,300 miles were officially stated to be either under construction or contracted for. The work will be paid for by grants of land. The construction of a carriage road from Sicuani, the railway terminus, to Cuzco, 90 miles, has been completed. Steam traction engines and cars, made in Leeds, as well as mule waggons, are used on this road.

In 1902 the total working length of the Peruvian railways was 1,146 miles, of which 844 miles was worked by the Peruvian Corporation. The gauge of the railways is 4ft. 8in. except that of the Chimbote and Trujillo line which is 3ft. The railway from Oroya to Cerro de Pasco (68 miles) is open for traffic. Electric railways connect Lima with Chorillos and with Callao. For the construction of new Government railways, or as guarantee of interest on invested capital, money is to be set aside as follows:-100,000l. in 1904, 150,0007. in 1905, and 200,000l. annually in subsequent years. The Peruvian Corporation works a navigation system on Lake Titicaca and the Desaguadero river. The railway between Guaqui on Lake Titicaca and La Paz, 45 miles, has been completed with some financial assistance from the Peruvian Corporation. Several concessions for new railways have been granted. In the year 1903-04 the gross receipts from railways and steamers amounted to 587,4117.; the working expenses to 368,0747.; the net receipts being 219,3367.

The length of State telegraph lines in 1903 was 2,130 miles, and of the Corporation lines, 1,090 miles. The government telegraph lines have recently been widely extended, and Peru and Ecuador are now connected by land lines. There are 48 telegraph offices. In 1901, 152,808 telegrams were despatched. The telegraph cables laid on the west coast of America have stations at Paita, Callao, Lima, Barranco, and Mollendo, and thus Peru is placed in direct communication with the telegraphic system of the world. A telephone system has a network of 3,000 miles.

In 1902, 11,666,799 letters, post-cards, &c., passed through the Post Office; there are 369 offices.

Money and Credit.

=

A decree was issued by the President of the Republic on January 10, 1898, to give effect to the law of December 29, 1897, establishing a gold currency. By Act of December 14, 1901, gold became the only standard. The national gold coin, the libra, is of the same standard and weight as the pound sterling, which is also legal tender; 10 soles £1 sterling. Silver is legal tender up to 100 soles. The coinage of Peru in the six years 1898-1903 amounted to the nominal value of 527,1947. 16s., of which the value of 422,7117. was in gold, and 104,9837. 16s. (1,049,838 soles) in fractional silver coin. The coinage of silver soles has been suspended since 1898.

Peru has no paper currency of any kind.

In Peru the commercial banks (December 31, 1903) are the Bank of Peru and London, with a paid-up capital and reserve fund of 275,9007; the Italian Bank, paid-up capital and reserve fund of 139,2831.; the International Bank of Peru, paid-up capital and reserve fund of 126,500l., and the Banco Popular, recently established, with a capital and reserve fund of 86,3851. There is also a Savings Bank, with deposits amounting to over 200,000l.