Under the government of Gomes Freyre, a contract was made for employing six hundred slaves in the work of extracting diamonds, an annual poll-tax to be paid upon the slaves of two hundred and thirty _milreis_. The Crown was to have the option of purchasing stones above a certain size. When, at the end of four years, this contract expired, it had proved so profitable that the capitation was raised to two hundred and seventy _milreis_; whilst the Treasury should each year give the contractor credit for sixty thousand _milreis_ of the two hundred and sixty-two thousand for which he stood engaged. This arrangement fell in with the views of all parties. The European lapidaries kept back their stock until time should have effaced the effects of the sudden glut; and whilst they gave out that the Brazilian diamonds were inferior to the Oriental, they did not fail to pass off the former as the latter. They are even asserted to have sent Brazilian stones to _Goa_ to find thence their way back to Europe, until the equal value of the Brazilian diamonds with those of India was established. The _Serro do Frio_, in which these diamonds were found, had been first explored by two Brazilians probably from the town of _Villa do Principe_, which dates from the beginning of the century. The boundaries of _Minas Geraes_, to the east, lay along the adjacent captaincies of _Rio de Janeiro_, _Bahia_, and _Pernambuco_. Towards the north and west there lay an undefined extent of unappropriated territory. To the south the province is bounded by the captaincies of _S. Paulo_ and _Rio de Janeiro_. The whole captaincy is a portion of an immense mountain-range. A winter of two months’ duration commences in May, when the average temperature is about 50° _Fahrenheit_; in the hot season the heat never exceeds 80°. The rainy season lasts from October till May, the rain sometimes continuing for days together. The captaincy of _Minas Geraes_ was divided into four districts, of which that of _Serro do Frio_, called also the forbidden district, contained the diamond fields. This district boasts innumerable peaks, some of enormous height, which present a scene of alpine grandeur and desolation--a grandeur which is added to by the magnificent cataracts into which the waters of the region are in many places gathered before they fall into the rivers which drain the district.