lien of the original Advance of 1900, the new Advance to be collaterally secured by

(a.) Treasury Bills for the amount of the new Certificates from time to time outstanding.

(b.) Argentine Government Northern Central Railway Five per Cent. Bonds, Second Issue (Lucas Gonzales Bonds), to the nominal amount of £2,076,960, of which £692,320 may be released on 1st October, 1903. See below "1903.Northern Central Railway Bonds."

(c.) Argentine Government Rescission Four per Cent. Bonds to the nominal amount of £892,000.

1901. In accordance with the Romero Arrangement of 1893, the Sinking Funds on the Loans included therein were resumed in this year.

1903.-Port of Buenos Ayres Five per Cent. Debentures. In this year the advance of £800,000, made to the Argentine Government in 1899 (see above) against a deposit of the then outstanding amount of these Bonds was paid off, and the £1,430,700 Debentures thus released were issued to the public at 89 per cent. The prospectus of the Loan stated that an amount of £502,600 of these Debentures were already in the hands of the public, making the total in circulation £1,933,300.

1903.--The Northern Central Railway Bonds (2nd Issue-see above, 1890) which had been reduced to £2,770,720 by the operation of the Sinking Fund, and were under deposit as collateral security for an advance made to the Government (see above, "1900.-Six per cent. Advance Certificates ") were in this year offered to the public at 87 per cent., the outstanding Advance Certificates to be repaid from the proceeds on 1st November, 1903. The Sinking Fund, of 1 per cent., can be increased at the option of the Government. The Bonds are the direct obligation of the Argentine Government, with a charge on the extensions of the Northern Central Railway as defined in the General Bond.

1886-1901.-Cedulas of the National Mortgage Bank. These are Certificates to bearer issued by the National Mortgage Bank, in lieu of cash, to borrowers on real estate. They were first

issued in 1886, when $50,000,000 Currency were emitted in
Cedulas, Series A, B, and C. In 1888 a second issue was
made (Series D and E), of $40,000,000 Currency, and a
Gold Series A, of $20,000,000 Gold. Series F amounting
to $15,000,000 Currency, and Series G, to $10,000,000, were
issued from 1896 to 1899, and the issue of Series H com-
menced in the last-named year, and is still proceeding.
The Currency Series bear 7 per cent. and the Gold Series
5 per cent. interest. Interest on the latter, from October,
1891, to April, 1893, inclusive, was paid in Five per Cent.
Internal Gold Bonds, which, with their Coupons, have since
been redeemed in full. In October, 1893, cash payments
were resumed. The principal is redeemable by a Sinking
Fund not exceeding 2 per cent. These Cedulas are guaran-
teed by the Nation.

REPORT.

The present year has witnessed an important revival in Argentina, and according to all accounts the industries of the country are in a flourishing and improving condition.

It is to be hoped that the Government may turn its early attention to the introduction of the administrative and economic reforms which are so much required, and without which the progress of the Republic must, in spite of its wonderful natural resources, inevitably be retarded.

In connection with this subject, the remarks of Mr. F. S. Clarke, late H.M.'s Chargé d'Affaires at Buenos Ayres, contained in a recent Report to the Foreign Office, are well worth attention.

Mr. Clarke says:—

The prospects of the Argentine Republic as regards the future have, perhaps, never been more favourable than at the present time.

Undisturbed by any serious internal dissensions, freed from all danger of a war with the neighbouring States, with her frontier line in the Andes (the cause of such long and angry litigation) soon to be definitely marked out, and with the promise of a rich harvest, this country can now turn all her energies to the development of her great agricultural and pastoral resources, to the increase of her trade and commerce, and to the general improvement of her economic condition.

Certain reforms, more especially in the Departments of Finance and Justice, are, however, urgently needed, and without them progress will be impeded, if not stayed altogether. The great cost of provincial combined with national government, and the incidence and weight of taxation, are at present serious obstacles in the path of prosperity.

Trade has been burdened with imposts to the utmost limit. Imported goods are, as a rule, subjected to such high customs duties that commerce has fallen off very considerably. Home industries, on the other hand, are fostered at the expense of the consumer. Owners of landed property are but lightly taxed. Leagues upon leagues of fertile country are allowed, in many cases, to lie uncultivated and to remain uninhabited, thus giving no revenue to the Exchequer. Only a small land tax is levied and no income tax exists.

The judicial system calls for very prompt attention on the part of the Government. Founded as it still is on cumbersome and antiquated codes of laws, it is now no longer in keeping with, nor worthy of, the progressive spirit of the Argentine nation.

Once the financial condition has been placed on a satisfactory footing and taxation made lighter, once judicial reforms have been brought about, capital and labour will flow into the country and add strength and vitality to the healthy and rapid growth of a rich and flourishing Republic.

In view of the improvement that has taken place in Argentine national credit, it is greatly to be regretted that the Cedulas of the Province of Buenos Ayres and certain of the Debts of the Municipalities still remain, in default.

INTERNAL DEBT.

The latest available details of the Internal Debt are given in the following Table, which shows the amounts outstanding on 31st December, 1901 :

INTERNAL DEBT.

ON 31ST DECEMBER, 1901.

* The $16,348,500 of this Loan in circulation is made up as follows :-Bonds in the power of the Banco Nacional in liquidation corresponding to the Banks of the Provinces of Rioja $3,000,000, Salta $4,432.000, Santiago del Estero $3,766,400, and Banco Buenos Aires $1,500,000-total $12,698,400. To this must be added:-Banks eliminated from the Law $3.018.000, British Bank of South America $250,000, and the Province of Tucuman with a balance in its favour of $382,100.

†The service of this Loan is at the charge of the National Mortgage Bank.

According to the President's Message of May, 1903, during 1902 a further amount of $2,892,600 Currency was issued, and amortisation to the amount of $8,028,993 Currency and $459,600 Gold was effected. The position at the end of 1902 would therefore appear to have been as shown below

It should, however, be borne in mind that, according to recent Reports of the Finance Department, a considerable portion of the Internal Debt, amounting in 1901 to $8,200,000 Currency and $14,172,900 Gold, does not stand at the charge of the nation.

REVENUE AND EXPENDITURE.

In the following Table are shown the official returns of Revenue and Expenditure for 1901, and the Estimates for 1902 and 1903 in detail. In the case of the official returns of Revenue and Expenditure for 1902, only the totals of the former (which are taken from the President's Message) are available.