ates.

Ever since the war with Paraguay the financial credit of Brazil had been
impaired. The chronic deficit in the treasury had been further increased
by a serious lowering in the rate of exchange, which was due to an
excessive issue of paper money. In order to save the nation from
bankruptcy Manoel Ferraz de Campos Salles, a distinguished jurist, was
commissioned to effect an adjustment with the British creditors. As a
result of his negotiations a "funding loan" was obtained, in return
for which an equivalent amount in paper money was to be turned over
for cancellation at a fixed rate of exchange. Under this arrangement
depreciation ceased for awhile and the financial outlook became
brighter.

The election of Campos Salles to the presidency in 1898, as a reward for
his success, was accompanied by the rise of definite political
parties. Among them the Radicals or Progressists favored a policy of
centralization under military auspices and exhibited certain antiforeign
tendencies. The Moderates or Republicans, on the contrary, with Campos
Salles as their candidate, declared for the existing constitution and
advocated a gradual adoption of such reforms as reason and time might
suggest. When the latter party won the election, confidence in the
stability of Brazil returned.

As if Uruguay had not already suffered enough from internal discords,
two more serious conflicts demonstrated once again that this little
country, in which political power had been held substantially by one
party alone since 1865, could not hope for permanent peace until either
the excluded and apparently irreconcilable party had been finally and
utterly crushed, or, far better still, until the two factions could
manage to agree upon some satisfactory arrangement for rotation in
office. The struggle of 1897 ended in the assassination of the president
and in a division of the republic into two practically separate areas,
one ruled by the Colorados at Montevideo, the other by the Blancos.
A renewal of civil war in 1904 seemed altogether preferable to an
indefinite continuance of this dualism in government, even at the risk
of friction with Argentina, which was charged with not having observed
strict neutrality. This second struggle came to a close with the death
of the insurgent leader; but it cost the lives of thousands and did
irreparable damage to the commerce and industry of the country.

Uruguay then enjoyed a respite from party upheavals until