The foreign debt recognised in this statement formed the basis for the Spanish Securities subsequently introduced into the London Money Market, which were arranged under the following titles: 1. Five per Cents. (Active). 2. Five per Cents. (Deferred). 3. Passive Debt, without interest. 4. Three per Cents. 5. Indemnity Bonds at 5 per cent.

The Five per Cent. Active Bonds originated in a Loan of about £4,000,000, contracted in London and Paris in 1834, at 60 per cent., when the old Cortes' Loans of 1821 and 1823 were recognised, and twothirds of them were converted into active debt, and consolidated with the above Loan.

The Five per Cent. Deferred Bonds arose out of the arrears of interest due on the Cortes' Bonds at the time of their conversion in 1834, and amounted to 55 per cent., no dividends having been paid for eleven years. In exchange for the coupons, the holders received Deferred Bonds, which were to be gradually converted into Active Debt, commencing on the 2nd May, 1838, when one-twelfth of this Deferred Debt was to be converted into Active Debt, the Bonds to be determined by lot, to be continued on the same day in each year until the 2nd of May, 1849.

The Passive Debt originated in the conversion of the Cortes' Bonds in 1834, and was made up of the onethird of the debt not converted into Active Debt in that year. By the decree of 1834 this debt was not to bear interest, but a sufficient amount was to be converted annually to replace the amount of Active, cancelled by the Sinking Fund, to commence 2nd May, 1836.

The Three per Cents. originated in 1831 by the con❤ version of about £4,000,000 of Cortes' Bonds.

The Indemnity Bonds, at 5 per cent., were first issued in 1828, to liquidate certain claims made on Spain by British and foreign merchants. The amount was about £600,000, with a reservation for the Spanish Government to redeem them at 60 per cent.

The above arrangements comprise the settlement of the Spanish debt according to the decree of 1834. We have now to show the position of this debt as it stands at present.

The Spanish securities now negotiated in the London Money Market consist of the following descriptions:— 1. The Three per Cents. Consolidated. 2. The New Three per Cents. Deferred. 3. The Passive (Converted). 4. The Certificates of Coupons, not funded.

The Three per Cents. Consolidated, arose out of arrears of interest from 1st November, 1837, to Ist November, 1840, as well as the coupons respectively of four drawings of the Deferred, which together amounted to £7,105,066, and an annual interest of £213,151, since regularly paid.

The Three per Cents. Deferred arose from the conversion of the Active Five per Cents. by the law of the 1st August, 1851, which at that date was composed of the following items :

above amount to a very considerable sum; but we have not been able to ascertain the amount of this part of the Spanish debt, the particulars being obtainable only at Madrid.

The Passive Bonds arose out of the conversion of the foreign debt, according to the decree of 1834, and amount at the present time to about £12,696,450, of which £1,554,600 was cancelled, as advertised 7th August, 1850, leaving a balance of £11,141,850.

The Certificates of Coupons, not funded, represent the half of the 10 years' interest on the Active Bonds as above, which the Spanish Government repudiated under the law of 1851. These Certificates have been issued by the London Committee and the Dutch Committee at Amsterdam for the following amounts:

By the law of 1st August, 1851, the public debt of Spain was divided into two parts perpetual and redeemable. The first was formed into Consolidated Annuities from the 3 per Cents., interior and exterior, and into Deferred. The second was formed from the 5 per cent. and 4 per cent. nominal capitals, reduced by one-fifth, or 20 per cent., and from interest capitalized of both these debts, reduced by one half. There are various other amounts and claims that enter into this debt, which increase the total amount to about 6,000,000,000 reales, or £62,500,000, the greater portion of which is owing to England, as we have shown above. But of this amount of debt only on the 3 per Cent. Consolidated has the interest continued to be paid.

The Deferred Debt has a claim to interest at I per cent. during the first four years, with an increase of one quarter per cent. every two years afterwards until 1870, when the interest will reach 3 per cent. The decree of

August fixes the sums allocated to the payment of interest on this portion of the debt; and the amount set forth for the second six months of 1851 was 27,000,000 reales, or £281,250, to be gradually increased to 145,000,000 reales, or £1,510,467, in 1869; and to 76,000,000 reales, or £791,667, for the first six months of 1870.

With regard to the Redeemable Debt, which is composed of other amounts, including the debts not bearing interest, and the Passive and Deferred of 1831, the redemption is guaranteed by the property of the State, the sale of which is to take place by public auction, by assigning for that purpose 12,000,000 reales annually in the Budget, and the 20 per cent. per annum charged on the corporation property of towns for State purposes, which amount to about 6,000,000 reales per annum. These sums were to be appropriated every six months to the purchase of the Bonds which represent this debt. This comprehends the substance of the law of 1851 respecting the public debt of Spain.

The following statement of the total debt of Spain was made in the Session of the Cortes by Manuel Bermudez de Castro in April, 1851; but the capitals of the debt, as given in the Budget to January, 1851, amounted to 10,979,180,998 reales, or £114,366,469, and the interest to 2,925,177,566 reales, or £30,470,600:

Total Debt subject to Interest 5,522,756,249 £57,533,709 It must be borne in mind that the above is only a Spanish version of the public liabilities of the Government. Nor does it include the debt of the Treasury since 1828, which was arranged at the same time by the issue of Treasury Bonds to the extent of 10,000,000 reales, to bear interest at 3 per cent., with the privilege to convert them into perpetual annuities.

To this has to be added the floating debt of Spain, which comprise the annual deficits of the Treasury, and which at that date amounted to 340,000,000 reales, or £3,591,665; making the total indebtedness of Spain at this rate £61,125,374.

The following instructions respecting the conversion of the debt in 1851 were issued :—

DEPARTMENT OF FINANCE.

"THE Queen has been pleased to approve the Articles of the Regulations, and the instructions drawn up for carrying into