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 1830 the debt and accumulated interest owing in London amounted to £2,310,767, in addition to which there was a home debt of 17,183,397 dollars. In 1848 the two London loans and accumulated interest were covered by a new loan of £3,736,400, and the home debt was partially liquidated, the sale of guano giving the treasury ample resources. Lavish expenditure followed and the government was soon anticipating its revenues by obtaining advances from guano consignees, usually on unfavourable terms, and then floating loans. There was another conversion loan in 1862 in the sum of £5,500,000 and in 1864 still another loan of this character was issued, nominally for £10,000,000, of which £7,000,000 only were issued. Then followed the ambitious schemes of President Balta, which with the loans of 1870 and 1872 raised the total foreign debt to £49,000,000, on which the annual interest charge was about £2,500,000, a sum wholly beyond the resources of the treasury. In 1876 interest payments on account of this debt were suspended and in 1879–1882 the war with Chile deprived Peru of her principal sources of income—the guano deposits and the Tarapacá nitrates. In 1889 the total foreign debt, including arrears of interest, was £54,000,000, and in the following year a contract was signed with the Peruvian Corporation, a company in which the bondholders became shareholders, for the transfer to it for 66 years of the state railways, the free use of certain ports, the right of navigation on Lake Titicaca, the exploitation of the remaining guano deposits up to 3,000,000 tons, and thirty-three annual subsidies of £80,000 each, in consideration of the cancellation of the debt. Some modifications were later made in the contract, owing to the government’s failure to meet the annual subsidies and the corporation’s failure to extend the railways agreed upon. This contract relieved Peru of its crushing burden of foreign indebtedness, and turned an apparently heavy loss to the bondholders into a possible profit. In 1910 the foreign debt stood at £3,140,000, composed of (1) Peruvian Corporation £2,160,000; (2) wharves and docks, £80,000; (3) loan of 1905, £500,000, (4) loan of 1906, £400,000.

Currency.—The single gold standard has been in force in Peru since 1897 and 1898, silver and co per being used for subsidiary coinage. The monetary unit is the Peruvian pound (libra) which is uniform in weight and fineness with the British pound sterling. Half and fifth pounds are also coined. The silver coinage consists of the sol (100 cents), half sol (50 cents), and pieces of 20 (peseta), 10 and 5 cents; and the copper coinage of 1 and 2 cents. The single standard has worked well, and has contributed much toward the recovery of Peruvian commerce and finance. The change from the double standard was effected without any noticeable disturbance in commercial affairs, but this was in part due to the precaution of making the British pound sterling legal tender in the republic and establishing the legal equivalent between gold and silver at 10 soles to the pound. The coinage in 1906–1907 was about £150,000 gold and £65,000 silver, and the total circulation in that year was estimated at £1,400,000 in gold coin and £600,000 in silver coin. Previous to the adoption of the single gold standard in 1897 the monetary history of Peru had been unfortunate. The first national coinage was begun in 1822, and the decimal system was adopted in 1863. Although the double standard was in force, gold was practically demonetized by the monetary reform of 1872 because of the failure to fix a legal ratio between the two metals. Experience with paper currency has been even more disastrous. During the administration (1872–1876) of President Pardo the government borrowed heavily from the banks to avoid the suspension of work on the railways and port improvements. These banks enjoyed the privilege of issuing currency notes to the amount of three times the cash in hand without regard to their commercial liabilities. A large increase in imports, caused by fictitious prosperity and inability to obtain drafts against guano shipments, led to the exportation of coin to meet commercial obligations, and this soon reduced the currency circulation to a paper basis. The government being unable to repay its loans from the banks compelled the latter to suspend the conversion of their notes, which began to depreciate in value. In 1875 the banks were granted a moratorium, to enable them to obtain coin, but without result. The government in 1877 contracted a new loan with the banks and assumed responsibility for their outstanding emissions, which are said to have aggregated about 100,000,000 soles, and were worth barely 10% of their nominal value. At last their depreciation reached a point where their acceptance was generally refused and silver was imported for commercial needs, when the government suspended their legal tender quality and allowed them to disappear.

Weights and Measures.—The French metric system is the official standard of weights and measures and is in use in the custom-houses of the republic and in foreign trade, but the old units are still commonly used among the people. These are the ounce, 1·104 oz. avoirdupois; the libra, 1·014 ℔ avoirdupois; the quintal, 101·44 ℔ avoirdupois; the arroba, 25·36 ℔ avoirdupois; ditto of wine, 6·70 imperial gallons, the gallon, ·74 of an imperial gallon; the vara, ·927 yard; and the square vara, ·859 square yard.

History.—Cyclopean ruins of vast edifices, apparently never completed, exist at Tiahuanaco near the southern shore of Lake Titicaca. Remains of a similar character are found at Huaraz in the north of Peru, and at Cuzco, Ollantay-tambo and Huiñaque between Huaraz and Tiahuanaco. These works appear to have been erected by powerful sovereigns with unlimited command of labour, possibly with the object of giving employment to subjugated people, while feeding the vanity or pleasing the taste of the conqueror. Of their origin nothing is historically known. It is probable, however, that the settlement of the Cuzco valley and district by the Incas or “people of the sun” took place some 300 years before Pizarro landed in Peru. The conquering tribe or tribes had made their way to the sierra from the plains, and found themselves a new land sheltered from attack amidst the lofty mountains that hem in the valley of Cuzco and the vast lake basin of Titicaca, situated 12,000 ft. above the sea level. The first historical records show us these people already possessed of a considerable civilization, and speaking two allied languages, Aymara and Quichua. The expansion of the Inca rule and the formation of the Peruvian Empire was of modern growth at the time of the Spanish conquest, and dated from the victories of Pachacutic Inca who lived about a century before Huayna Capac, the Great Inca, whose death took place in 1526, the year before Pizarro first appeared on the coast. His consolidated empire extended from the river Ancasmayu north of Quito to the river Maule in the south of Chile. The Incas had an elaborate system of state-worship, with a ritual, and frequently recurring festivals. History and tradition were preserved by the bards, and dramas were enacted before the sovereign and his court. Roads with post-houses at intervals were made over the wildest mountain-ranges and the bleakest deserts for hundreds of miles. A well-considered system of land-tenure and of colonization provided for the wants of all classes of the people. The administrative details of government were minutely and carefully organized, and accurate statistics were kept by means of the “quipus” or system of knots. The edifices displayed marvellous building skill, and their workmanship is unsurpassed. The world has nothing to show, in the way of stone-cutting and fitting, to equal the skill and accuracy displayed in the Inca structures of Cuzco. As workers in metals and as potters they displayed infinite variety of design, while as cultivators and engineers they excelled their European conquerors. (For illustrations see, Plate V.)

The story of the conquest has been told by Prescott and Helps, who give ample references to original authorities; it will be sufficient here to enumerate the dates of the leading events. On the 10th of March 1526 the contract for the conquest of Peru was signed by Francisco Pizarro, Diego de Almagro and Hernando de Luque, Gaspar de Espinosa supplying the funds. In 1527 Pizarro, after enduring fearful hardships, first reached the coast of Peru at Tumbez. In the following year he went to Spain, and on the 26th of July 1529 the capitulation with the Crown for the conquest of Peru was executed. Pizarro sailed from San Lucar with his brothers in January 1530, and landed at Tumbes in 1531. The civil war between Huascar and Atahualpa, the sons of Huayna Capac, had been fought out in the meanwhile, and the victorious Atahualpa was at Cajamarca on his way from Quito to Cuzco. On the 15th of November 1532 Pizarro with his little army, made his way to Cajamarca, where he received a friendly welcome from the Inca, whom he treacherously seized and made prisoner. He had with him only 183 men. In February 1533 his colleague Almagro arrived with reinforcements. The murder of the Inca Atahualpa was perpetrated on the 29th of August 1533, and on the 15th of November Pizarro entered Cuzco. He allowed the rightful heir to the empire, Manco, the legitimate son of Huayna Capac, to be solemnly crowned on the 24th of March 1534. Almagro then undertook an expedition to Chile, and Pizarro founded the city of Lima on the 18th of January 1535. In the following year the Incas made a brave attempt to expel the invaders, and closely besieged the Spaniards in Cuzco during February and March. But Almagro, returning from Chile, raised the siege on the 18th of April 1537. Immediately afterwards a dispute arose between the brothers, Francisco, Juan and Gonzalo Pizarro and Almagro