Mr. Bowen, the United States Minister at Caracas. President Castro issued a furious manifesto denouncing the action of the two Powers as "barbarous, ignoble, cowardly and perfidious," and, landing parties having been put ashore for the protection of foreigners, complained that "the insolent feet of foreigners had profaned the sacred soil of Venezuela "; and he massed Government troops on the mountains behind La Guayra to resist any further measures. It was not, however, the intention of the allied Powers to enter Venezuela, and, the fleet of the Republic being in safe custody, action was restricted to the enforcement of the blockade.

On December 13 it was announced that Mr. Bowen had forwarded to the State Department at Washington a request by President Castro that arbitration should be proposed to England and Germany. Meanwhile United States and Italian warships were in Venezuelan waters, the French Government standing aloof, their claims having been referred to arbitration under a Protocol agreed upon in February. With regard to the suggestion for arbitration it was stated that the two Powers were agreeable to that course if President Roosevelt would consent to act; but opinion in the United States was unfavourable to this method. Later in the month it was reported that President Castro had given Mr. Bowen a free hand to effect a settlement with the Powers, and it was suggested that a mixed Commission might be formed to control the Venezuelan Customs and pay off the claims. President Castro's position was that his Treasury was empty, and that in view of the revolution which he had been endeavouring to suppress he was powerless to meet the demands the fleets sought to enforce. At the end of the year the position was that Mr. Roosevelt had declined to act personally as arbitrator and had suggested a reference by all parties to arbitration under the Hague Convention, the Monroe doctrine being excluded from consideration by that Tribunal. The States concerned agreed to this solution, but President Castro pressed for the immediate raising of the blockade, and at the end of the year the negotiations were proceeding.

Argentine Republic and Chile.-The most important event for these Republics was the settlement of the boundary dispute under the reference to the arbitrament of the British Sovereign. Early in the year Sir Thomas Holdich and a staff were despatched to survey the Southern Andes, where they spent several months, returning to England in the autumn. The award of King Edward was issued on November 27, and for the purposes of reference the geographical points should be placed on record:

"Article I.-The boundary in the region of the San Francisco Pass shall be formed by the line of water-parting extending from the pillar already erected on that pass to the summit of the mountain named Tres Cruces. Article II.-The basin of

Lake Lacar is awarded to Argentina. Article III.-From Perez Rosales Pass, near the north of Lake Nahuel Huapi, to the vicinity of Lake Viedma, the boundary shall pass by Mount Tronador, and thence to the river Palena by the lines of water-parting determined by certain obligatory points which we have fixed upon the rivers Manso, Puelo, Fetaleufu, and Palena (or Carrenleufu); awarding to Argentina the upper basins of those rivers above the points which we have fixed, including the valleys of Villegas, Nuevo, Cholila, Colonia de 16 Octubre, Frio, Huemules, and Corcovado; and to Chile the lower basins below these points. From the fixed point on the river Palena, the boundary shall follow the river Encuentro to the peak called Virgen, and thence to the line which we have fixed crossing Lake General Paz, and thence by the line of water-parting determined by the point which we have fixed. upon the river Pico, from whence it shall ascend to the principal water-parting of the South American Continent at Loma Baguales, and follow that water-parting to a summit locally known as La Galera. From this point it shall follow certain tributaries of the river Simpson (or southern river Aisen), which we have fixed, and attain the peak called Ap Ywan, from whence it shall follow the water-parting determined by a point which we have fixed on a promontory from the northern shore of Lake Buenos Aires. The upper basin of the river Pico is thus awarded to Argentina, and the lower basin to Chile. The whole basin of the river Cisnes (or Frias) is awarded to Chile, and also the whole basin of the Aisen, with the exception of a tract at the head-waters of the southern branch, including a settlement called Koslowsky, which is awarded to Argentina. The further continuation of the boundary is determined by lines which we have fixed across Lake Buenos Aires, Lake Pueyrredon (or Cochrane) and Lake San Martin, the effect of which is to assign the western portions of the basins of these lakes to Chile, and the eastern portions to Argentina, the dividing ranges carrying the lofty peaks known as Mounts San Lorenzo and Fitzroy. From Mount Fitzroy to Mount Stokes the line of frontier has been already determined. Article IV. From the vicinity of Mount Stokes to the fifty-second parallel of south latitude, the boundary shall at first follow the continental water-parting defined by the Sierra Baguales, diverging from the latter southwards across the river Vizcachas to Mount Cazador, at the southeastern extremity of which range it crosses the river Guillermo, and rejoins the continental water-parting to the east of Mount Solitario, following it to the fifty-second parallel of south latitude, from which point the remaining portion of the frontier has already been defined by mutual agreement between the respective States. Article V.-A more detailed definition of the line of frontier will be found in the report submitted to us by our tribunal and upon the maps furnished by the experts of the Republics of Argentina and Chile, upon which the boundary

which we have decided upon has been delineated by the members of our tribunal and approved by us. Given in triplicate under our hand and seal, at our Court of St. James's, this 20th day of November, 1902, in the second year of our reign. "EDWARD R. & I."

The award was represented to be satisfactory to both sides. Chile considered that she had obtained the larger portion of the disputed territory, while Argentine thought the richer and more valuable lands had fallen to her. Meanwhile an important treaty had been arranged between the parties, consolidating good relations. It provided that all future disputes should be referred to the arbitration of the British Government, or, in the event of a rupture with Great Britain, to the Swiss Government. Mutual conditions were also settled for a limitation of armaments for a period of five years. The Treaty of Arbitration was to be operative for ten years after ratification, which occurred in August. Argentine delegates visited Chile, arriving at Santiago on September 18, the anniversary of Chilian Independence, and the enthusiasm with which they were received was confidently interpreted as a further sign that fears of a rupture between the two Republics need no longer be entertained.

Other political events are of minor importance, but agitation is now begun in Argentina in connection with the Presidency, Señor Roca's term expiring in October, 1904. In opening Congress on May 8 President Roca gave some particulars of the financial position of the country. The revenue had exceeded the estimates by $6,000,000 paper. The services of the external debt would be scrupulously continued. External debt stood on December 31, 1901, at $386,451,295 gold, and the nation also owed $20,858,371 gold in bonds, so the total foreign debt, other than provincial debts, stood in round figures at $400,000,000 gold. The internal debt was $81,410,983 paper and $3,268,000 gold. The Budget Estimates for 1903 showed an expenditure of $29,496,172 gold and $95,206,215 paper; and revenue was estimated for 1903 at $44,021,371 gold and $61,800,000 paper. But Argentine finances are unintelligible even to experts, and those who understand them best are the severest critics of their management. The dishonesty of Argentine municipalities in repudiating debt-the reference is to Cordoba and Santa Fé— remains unremedied. A petition has been presented through the British Foreign Office to President Roca asking him to bring the defaulting corporations to account, but it has led to no result so far. Considerable irritation was also caused against Argentina by the failure to bring to justice the murderer of Mr. Barnett, an English subject in the Province of Cordoba, the representations of the Foreign Office having thus far had no effect.

Commercially Argentina has been somewhat depressed, though the statistics for the first nine months of 1902 show a decrease of imports and an increase in exports. Immigration has fallen off,

and here it may be mentioned that many of the settlers in the Welsh Colony of Chubut have left the country for Canada, under facilities given by the Dominion at the solicitation of Mr. Chamberlain. There have been awkward labour troubles in Buenos Ayres during the year, and the general administration of the country cannot yet be regarded as even moderately satisfactory. With regard to the cattle trade, arrangements were made at the close of the year for reopening British ports to Argentina live cattle, under safeguards imposed on Argentine exporters by the Government at the instance of the British Minister for Agriculture.

The trade of Chile has improved with the certainty of peace with Argentina. In opening Congress in June President Riesco stated that the revenue of the Republic in 1901 was $110,059,497, which with a surplus made a total of $128,636,326. The expenditure, including an amount carried to the Conversion Fund, was $131,913,990-a deficit of $2,277,664, or, with sundry additions, $2,809,338. The revenue for 1903 was estimated at $107,000,000 and the expenditure at $105,665,546. But since then there have been reductions of expenditure on armaments in consequence of the understanding with Argentina. The general elections were due in March, 1903, and it was hoped that they would result in a stable Government and put an end to the many changes of Ministry which of recent years have had so bad an effect upon the fortunes of the Republic.

In Uruguay there has been the customary political unrest, and in July a plot was frustrated for the assassination of President Cuestas, whose term of office expires in 1903. The popular candidate is Señor Don E. MacEachen, who has several times been a Minister of State. The trade for the first nine months of 1902 showed a considerable increase, but there has since been a fall. In Peru little of consequence has happened beyond the reference of the Acre territory question, as between Peru and Brazil, to arbitration by the Argentine Republic.

Brazil has remained peaceful, and though the year closed with the prospect of trouble in the Acre region, where the Bolivian Republic has leased territory to an American syndicate under conditions regarded as infringements of Brazilian rights, the outlook for the Republic is more hopeful. Dr. Campos Salles' Presidential message to Congress in May last was a final pronouncement, and chiefly devoted to a financial review of the work done during his term of office. The Budget, as voted, showed an anticipated surplus for 1902 of about 2,000,0007. The total revenue was put at 42,876,667 milreis in gold, and 257,461,000 milreis paper; and the expenditure at 33,592,000 milreis gold, and 237,921,000 milreis paper-figures which those who can find their way through the mazes of Brazilian finance declare attest, with others, the improvement in the financial position of the country. The election of a successor to Dr. Campos Salles passed off quietly in March, and Dr. Rodrigues

Alves assumed office in that month. He is regarded as a sound financier and cautious statesman, whose previous work as Minister of Finance and Governor of the San Paulo Province justifies confidence in his integrity and ability. In his manifesto to Congress he outlined a programme of electoral and financial reform, of rigid economy in administration, of much-needed improvement in the sanitation of Rio de Janeiro, and of the attraction of capital and immigrants. His Cabinet was composed of Senhor Leopoldo Bulhoes, Minister of Finance; Senhor Seabra, of the Interior and of Justice; Senhor Lauro Muller, of Industry; Marshall Argollo, of War; Vice-Admiral Julio Noranha, of Marine; and Baron de Rio Branco, for Foreign Affairs-the last-named being a successful and popular statesman, well known in Washington and in Europe for the skill with which he managed sundry frontier questions referred to outside arbitration. A general election will take place in 1903.

As to the dispute with Bolivia, which had alienated a territory as large as Great Britain to an American syndicate, which was to administer and exploit it on the lines of a British Chartered Company, Brazil demanded a rescission of the concession, claiming, in common with Peru, international rights in the area, and having a considerable Brazilian population there. The demand was not complied with. Brazil then endeavoured to effect a purchase of the Acre territory, or, failing that, an exchange of territory, and agreed with Peru to arbitrate upon any differences regarding the region as between Peru and Brazil. The Bolivian Government, however, would have none of these proposals. The next development was in collisions between the Brazilians in the territory and Bolivian troops, and at the end of the year the Bolivian Government were sending more forces into the Acre region, while Brazil was concentrating troops in the native States of Mallo Grosso and Amazonas.

CHAPTER IX.

AUSTRALASIA.

H. WHATES.

I. THE AUSTRALIAN COMMONWEALTH.

THE second year of the Commonwealth was one fruitful of incidents bearing upon the welfare and unity of Australian Federation. That great scheme, which had been ushered in under auspices so brilliant, in its working disappointed the expectations of the people. The hope that it would tend to a larger life was not fulfilled. The doubts and fears of those who believed that the experiment in unity was premature found only too much appearance of justification. While at the beginning of 1902 it might be said that only one State (Queensland) was discontented, before the end hardly a single State had failed to