of both treasury issues and
bank-notes, the latter issued under government supervision. Its
fluctuations in value have been not only a serious inconvenience in
commercial transactions, but also the cause of heavy loss to the
people. Under the provisions of the funding loan of 1898 a scheme for
the withdrawal of the paper money was carried into effect, and by the
end of December 1906 the amount in circulation had been reduced from
788,364,614 1/2-milreis (the outstanding circulation 31st August 1898)
to 664,792,960 1/2-milreis. Two funds were created for the redemption
and guarantee of paper issues, the latter receiving 5% of the import
duties payable in gold. Up to 1906 the Caixa da Amortisacao
(redemption bureau), which has charge of the service of the internal
funded debt, superintended the redemption of the currency, but in that
year (December 6, 1906) a Caixa de Conversao (conversion bureau) was
created for this special service. It is modelled after the Argentine
Conversion office, and is authorized to issue notes to bearer against
deposits of gold at the rate of 15 pence per milreis although exchange
was above 17d. when the scheme was proposed. The notes are to be
redeemable in gold at sight, the Caixa de Conversao to keep the gold
paid in for that express purpose. The coffee producers of Sao Paulo
and other states found that the appreciation in value of the milreis
was reducing their profits, and they advocated this measure (at first
with a valuation of 12d.) to check the upward movement in exchange.
Metallic money is limited to nickel and bronze coins, but in 1906 the
government was authorized to purchase bar silver for the coinage of
pieces of the denomination of two milreis, one milreis and 500 reis
(1/2-milreis). Gold is the nominal standard of value, the monetary
unit being the gold milreis worth 2s. 2-1/2d. at par. The 10-milreis
gold piece weighs 8.9648 grammes, 916 fine, and contains 8.2178
grammes of pure gold. There is no gold in circulation, however, and
gold duties are paid with gold cheques purchased at certain banks with
paper money. The banking facilities of the republic have undergone
many changes under the new regime. A fruitful cause of disaster has
been the practice of issuing agricultural and industrial loans under
government authorization. Commercial business at the principal ports
is largely transacted through foreign banks,