A great drop in the price of coffee began, and the financial situation of the government grew worse and worse. Brazil grows about two-thirds of the world's coffee and her crop was enormously increasing. Consequently the production of coffee was outrunning the world's consuming capacity. The enormous profits of preceding years and the abundant supply of good Italian labour had stimulated planting beyond all reason. New and fertile districts were opened up in the interior of Sao Paulo, with which the older plantations of Rio and the coast regions could not compete. The poorer districts were reduced to poverty, while even the more fertile could not hold their own. In government finances the lowest point was reached in 1898. The paper money had fallen to seventy-nine per cent. below par and it had become clearly impossible to continue payments on the foreign debt. The last act of Prudente's administration was to make an agreement by which the foreign creditors consented to waive the receipt of their interest for three years and the government pledged itself to reduce the volume of paper currency and to accumulate a fund for the resumption of interest payments. No contest was made against Campos Salles's election in the spring of 1898. He took office finding an empty treasury, a government without financial credit, and the country in the midst of a severe commercial crisis. He showed great shrewdness in maintaining an ascendancy over the politicians and controlling a majority in both branches of Congress, and, through his minister of finance, relentlessly followed the policy of contracting the currency and increasing taxes. In 1901 the payment of interest on the foreign debt was resumed, and though that debt had been increased fifty million dollars the currency had doubled in value and become relatively stable. The state governments are more dependent on the Union than in the days of their wealth; there is little present danger of disintegration; no real sentiment for the re-establishment of the empire exists. The same habits of political subordination which have kept Brazil together so long are increasing rather than diminishing in force. [Illustration: CAMPOS SALLES. [From a wood-cut.]]