unrestricted powers to lease or sell the railways, and to reduce. expenses by economy of administration in the several governmental services.

The estimates in the Budget for 1899 were for expenditure 328,000 contos of reis (45,000 contos less than in 1898), and for revenue 351,000 contos. A surplus of 63,000 contos was confidently looked for through the gold premium on 10 per cent. of the customs duties.

The Swiss Federal Council accepted in September the mission of arbitrating on the French Guiana frontier question.

British Guiana. For the year ended June 30 the production of gold was considerably less than in the previous year. Gold miners were of the opinion that the falling off was owing to the Government regulations by which unworked claims were forfeited to the Government after a certain time, but were not thrown open for relocation. The verification of newly located claims was also very slowly carried out, and moreover there was a royalty of ninety cents per oz. exacted by the Government on all gold produced.

Chili. The long-pending boundary dispute between Chili and the Argentine Republic was at last in a fair way of settlement. On September 22 an agreement was signed by the Argentine Minister at Santiago and the Chilian Minister for Foreign Affairs, submitting the boundary question to arbitration, with the exception of the dispute affecting the territory of Puna Atacama, which would be treated separately. Both countries desired the arbitration of Great Britain. The Puna Atacama question was settled in October by Chili acknowledging that the territory in dispute belonged to Argentina. The British Government appointed arbitrators to examine the questions at issue remaining unsettled. At one time the two republics were on the point of going to war over these differences.

When the Congress met (June 1) President Errazuriz stated in his Message that the estimated expenditure for the coming year was $76,000,000, and the estimated revenue $83,000,000. The Chamber of Deputies passed a bill in July for the issue of $50,000,000 paper money. The Cabinet resigned in October, but after an interval of two months a new Cabinet was formed, December 19, with Señor Martinez as Premier.

A treaty with Great Britain was ratified on April 14 for the mutual surrender of fugitive criminals.

Colombia.-An indemnity of 60,000l. was awarded in March, 1897, by the arbitrator, President Cleveland, of the United States, to Signor Cerruti, an Italian subject who had been imprisoned and robbed by the Colombian authorities. The money was paid; but a condition of the Cleveland award provided that the Colombian Government should arrange with all Cerruti's creditors at the time he was ruined, and this the Colombian Government declined to do, and Cerruti's creditors placed an embargo upon the indemnity. The Italian Government sent a

squadron with an ultimatum to demand satisfaction, and complete compliance with the Cleveland award within twenty days, or Cartagena would be bombarded. The Government were forced to yield, and paid to the Italian Admiral in August 20,000l. as a guarantee that within eight months Signor Cerruti would be released from all the claims of his business creditors.

The Colombian Government having declined in September to recognise the British Minister as representative of Italian interests during the absence from Bogota of the Italian Minister, the Italian Government replied that, in that case, the mission of the Colombian Minister to Italy must be regarded as at an end. Diplomatic relations between the two countries were thus suspended.

Peru. The proposals for the retrocession to Peru by Chili of the provinces of Arica and Tacna were adopted by the Legislature of Chili on September 26. The Peruvian Congress authorised the President to suspend the Habeas Corpus Act on account of the presence of armed bands in different parts of the republic.

Uruguay. Several military officers were arrested in February for alleged conspiracy against the Government of acting-President Cuestas. The political situation was for a while critical. The Chambers were dissolved and a provisional Government was proclaimed to act until the November elections. A Junta of eighty-eight leading men was formed, chiefly creatures of Cuestas, and Cuestas was chosen provisional chief or dictator. A revolt, July 5, in favour of ex-President Herrara was suppressed after considerable bloodshed, and the instigators, including eight generals, were banished.

The Congress voted in July to restore the 2 per cent. additional customs duty which was abolished in January, in order to guarantee the conversion of Treasury certificates. These outstanding certificates amounted to about $4,000,000, and would be converted into 6 per cent. internal debt guaranteed by a tax on Government officers' salaries.

The elections in November took place without any disturbance, and gave a strong majority to the established Government, which could hardly be called republican. All fears of a revolution, however, were for the time dispelled-but the political weather is very uncertain in South American States.

Venezuela.-In March Great Britain and Venezuela communicated the first part of the historical documents and maps in support of their respective claims to Professor Martens, of St. Petersburg, the chief arbitrator. The British case was in eight large volumes with an immense atlas, and the Venezuelan in four volumes with an atlas. In August each Government presented a counter case against the first arguments and historical papers of its opponent. Venezuela sent three new volumes and Great Britain two large new volumes. In all

more than 2,200 documents in the English, Spanish and Dutch languages were communicated to the members of the arbitration court, which, it was arranged, would meet in May, 1899, at Paris, to hear the verbal arguments and to give the final decision.

An Italian colonisation society had undertaken in July to bring not less than 1,000 families per annum for fifteen years and settle them on lands in Venezuela ceded to the company.

Ex-President Crespo was killed on April 18 in a skirmish with the rebels under General Hernandez in the province of Zamora. The revolution ended June 12 with the capture of General Hernandez.

The Government resumed payment in December of interest on the internal and external debt.

CHAPTER VIII.

AUSTRALASIA.

THE year 1898 was for the colonies of Australasia one of continuous and equable progress, though unmarked by any incident of importance. Their financial prosperity remained undisturbed, and no great political changes have to be recorded. On one of the greatest of political questions affecting the general interest, namely, confederation, unhappily no progress is to be reported. Once more the colonial delegates met in conference to settle the bases of Australian union, and once more, after an agreement had been arrived at on all the essential points of a federal scheme, the commonwealth remains as far off from accomplishment as ever. The situation, in fact, is not greatly changed from what it was in 1897, when after meeting to cement their union for ever, the representatives of the colonies separated only to discover that their rival interests and ambitions were irreconcilable. The stone, which after great labour had been pushed to the top, has once more rolled back, while they who had lent their shoulders to the job, are found to be quarrelling as to who should bear the blame of failure. Meanwhile federation remains as much outside the sphere of practical politics as when Sir Henry Parkes, in burning accents, urged on the great patriotic work, to desert and defeat it when he got back to Sydney.

The convention met at Melbourne in the beginning of the year to settle the details of the Commonwealth Bill. Many sittings were devoted to the discussion of a federal scheme, at which all the leading points of controversy, the constitution of the Upper House, whether on a population basis or by equal representation of the States, the respective powers of the two Houses, the provision for a deadlock, the questions of the tariff and taxation, the control of the rivers, the common defences and

the choice of the federal capital, were debated by the delegates at great length. Considerable differences of opinion on some of these points were disclosed in the process of the discussion. Local and party jealousies were revealed. The eastern colony, which as the foremost in wealth and population, and as carrying Queensland, which as yet had not declared its adhesion to the convention, in its train, was the most powerful, was found to be strongly opposed to the southern and western on the question of the constitution of the Senate, while very suspicious of the tariff and financial arrangements, as being the only free-trade member of the proposed confederacy, with the largest revenue. But at length, after a long deliberation, the delegates who had been elected by the several colonies for this special purpose agreed upon a Federal Bill, to be voted upon by their constituents. On March 16 the conference closed its labours with the unanimous resolution "that now finally this convention adopts this constitution."

In conformity with the acts passed the year before by the various Legislatures, a plebiscite was held in four of the colonies on June 3, for the purpose of obtaining the popular vote on the Commonwealth Bill, as framed by the delegates in convention. The result showed that public opinion was largely in favour of confederation. In Victoria the numbers were 100,520 for the bill and 22,099 against. In South Australia there were 35,803 for and 17,320 against. In Tasmania there were 12,700 for and 2,700 against. In Western Australia the Federalists were in a large majority, and in New South Wales the numbers were 71,596 against 66,228. The Federalists thus were able to claim a majority of nearly two to one in favour of the Commonwealth Bill as framed by the convention. But their victory was neutralised through a provision which the enemies of federation had succeeded in introducing into the New South Wales bill for giving effect to the land plebiscite. According to which the Government were dispensed from adopting the federal scheme if the majority in its favour was less than 80,000. As the majority fell some 10,000 short of this minimum, the New South Wales Federationists, although successful at the polls even beyond their expectation, had the mortification of seeing their scheme defeated. And as New South Wales did not accept the commonwealth, all the labours of the Melbourne convention were nullified, and Australian federation once more relegated to a dim and remote future.

A good deal of feeling was excited throughout Australia by the news of the collapse of the federal scheme, the effects of which, it is to be feared, will not be favourable to the cause of political unity. The politicians of New South Wales, and especially Mr. Reid, the Premier, are blamed for once again, as before, preferring their own selfish interests or the individual interests of the colony to those of that united Australia of which they had once pretended to be the most earnest

champions. Mr. Reid, in his defence, declared that the Federal Bill was not one he could recommend to his people. It violated some of the essential principles of democracy. It ignored the principle of government by a majority. It disregarded the population test. It would give too much power to the smaller colonies, and would put a strain upon the financial resources of New South Wales, while endangering her free trade.

Mr. Reid, in inviting the Prime Ministers of the other colonies to another conference, formulated the demands on which New South Wales will insist before joining in another federal scheme. His ultimatum includes nine points: First, that the federal capital shall be within the territory of New South Wales; second, that there shall continue to be a power of appeal to the Privy Council; third, that New South Wales shall have complete control over her rivers and water-courses; fourth, that the clause regulating the contributions of the several colonies to the federal revenue (known as the "Braddon clause") shall be eliminated; fifth, that the distribution of any surplus shall be per capita; sixth, that any deficiency must be made good by the State in which it arises; seventh, that the provision for equal representation in the Senate be amended, or else a bare majority of both Houses sitting jointly to have power to settle disputes, with a referendum to the whole people, voting as one nation. instead of as separate States, on the ultimate decision; eighth, that bounties shall be paid by the States granting them and not by the commonwealth; ninth, that if railways are taken over by the commonwealth the debts must be assumed also.

These points, none of which are new, do not constitute in themselves any insuperable obstacle to confederation. They have been discussed before, and presumably have occupied the attention of the delegates before they agreed on their Commonwealth Bill. The Federalists maintain that there is nothing in Mr. Reid's demands which is inconsistent with the adoption of some federal bill. A great many who voted for the adoption of the bill did not pledge themselves to an approval of all its principles. They contend that, if absolute unanimity on all points is necessary as a condition precedent to federation, then there will be no confederation at all.

been the subject of That he has pre

Mr. Reid's attitude towards the bill has a good deal of acrimonious controversy. ferred his own political convenience to the ambition of being a federalist leader is very probable; but it is a condition of mind not unusual in a colonial statesman, from which no very happy auguries need be drawn of the future of federation.

Immediately after the voting on the Commonwealth Bill, when the majority in New South Wales was seen to be insufficient to secure its passage, Mr. Reid addressed a message to the Premiers of the other colonies suggesting that a meeting should be held to confer and exchange views as to the improvement of those provisions in the bill which affected most seriously its