The National Debt of Brazil dates from 1824, when the imperial government contracted a loan of 1,000,000_l._, 5 per cents, at the price of 75, in order to defray the expenses of the war of independence. In the following year, the government contracted a second loan of 2,000,000_l._, also 5 per cents, at the price of 85, with the further advantage of a year’s dividend, to provide for the expenses attendant on the suppression of the revolt in the northern provinces; and in consideration of the recognition of Brazilian independence by Portugal, they undertook the liability of the loan of 1,500,000_l._ 5 per cents., which the mother country had contracted at 87 in 1823. The expenditure was seriously increased by the subsequent war with Buenos Ayres, and scarcely was this brought to a conclusion when the government was led into fresh liabilities by the assistance which Dom Pedro I. gave the constitutional party in Portugal, on the usurpation of the crown of that country by his brother, Dom Miguel. In 1829, two 5 per cent. loans, 392,584_l._, were contracted at 54; and the Regency, ten years later, were compelled to contract another 5 per cent. loan of 312,512_l._ at 78, in order to meet the deficit in the revenue, which then embarrassed the government. During the usurpations of Dom Miguel, the payment of the dividends on the Portuguese loan of 1823 was suspended; but as soon as the authority of Donna Maria was established, her government provided for the arrears, and in 1842 a financial treaty was concluded between Brazil and Portugal, under which the former delivered to the Portuguese agents stock to the amount of 732,600_l._, which at 85, the price at which it was issued, was equal to 622,702_l._, the sum agreed to be paid by Brazil, in liquidation of this and all other claims.
The National Debt of Brazil, therefore, amounted in 1853 to 6,999,200_l._, the interest on which, throughout all the difficulties and embarrassments of the government, has been punctually paid, though, at times, the measures necessary to provide for its payment have been severely felt by the people. The several loans specified were contracted on the terms of a sinking fund, which were fully carried out until 1828, when the increased expenditure compelled the government to put a period to its operations. But as soon as the expiration of the commercial treaty with England in 1844 allowed the government of Dom Pedro II. to revise the tariff of customs duties, and by that means to obviate the pressure of a deficiency in the revenue, the provisions of the sinking fund were revived. The Portuguese loan was thus reduced to 954,250_l._, and in 1852 it was paid off by a new 4½ per cent. loan of that amount, contracted at 95. Reductions of the other loans have been effected in the same way, and the foreign debt of Brazil now stands at only 5,900,000_l._ Further reductions are being gradually effected, and if the provisions of the Sinking Fund continue to be carried out, as doubtless they will be, the time cannot be far distant when the foreign debt of the empire will be entirely liquidated.