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 page i

Advanced
Financial Accounting
page ii
 page iii

Advanced
Financial Accounting
Thirteenth Edition

Theodore E. Christensen
University of Georgia

David M. Cottrell
Brigham Young University
Cassy JH Budd
Brigham Young University
 page iv

ADVANCED FINANCIAL ACCOUNTING

Published by McGraw Hill LLC, 1325 Avenue of the Americas, New York, NY 10019.
Copyright ©2023 by McGraw Hill LLC. All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced or distributed in
any form or by any means, or stored in a database or retrieval system, without the
prior written consent of McGraw Hill LLC, including, but not limited to, in any
network or other electronic storage or transmission, or broadcast for distance
learning.

Some ancillaries, including electronic and print components, may not be available
to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 25 24 23 22

ISBN 978-1-265-04261-5
MHID 1-265-04261-6

Cover Image: Chones/Shutterstock

All credits appearing on page or at the end of the book are considered to be an
extension of the copyright page.

The Internet addresses listed in the text were accurate at the time of publication.
The inclusion of a website does not indicate an endorsement by the authors or
McGraw Hill LLC, and McGraw Hill LLC does not guarantee the accuracy of the
information presented at these sites.
mheducation.com/highered
 page v

About the Authors

Courtesy Brigham Young University/Photo by Alison Fidel

Theodore E. Christensen
Ted Christensen has been a faculty member at the University of
Georgia since 2015. Prior to coming to UGA, he was on the faculty at
Brigham Young University for 15 years and Case Western Reserve
University for five years. He received a BS degree in accounting at
San Jose State University, a MAcc degree in tax at Brigham Young
University, and a PhD in accounting from the University of Georgia
(so he is now teaching at a second alma mater). Professor
Christensen has authored and coauthored articles published in many
journals including The Accounting Review, Journal of Accounting
Research, Journal of Accounting and Economics, Review of
Accounting Studies, Contemporary Accounting Research, Accounting
Organizations and Society, Journal of Business Finance &
Accounting, Accounting Horizons, and Issues in Accounting
Education. Professor Christensen has taught financial accounting at
all levels, financial statement analysis, both introductory and
intermediate managerial accounting, and corporate taxation. He is
the recipient of numerous awards for both teaching and research. He
has been active in serving on various committees of the American
Accounting Association and is a CPA.

Courtesy Brigham Young University/Photo by Kristen Gudmund

David M. Cottrell
Professor Cottrell joined the faculty at Brigham Young University in
1991. Prior to coming to BYU, he spent five years at The Ohio State
University, where he earned his PhD. Before pursuing a career in
academics, he worked as an auditor and consultant for the firm of
Ernst & Young in its San Francisco office. At BYU, Professor Cottrell
has developed and taught courses in the School of Accountancy, the
MBA program, and the Finance program. He has won numerous
awards from the alumni and faculty for his teaching and curriculum
development. He received the Outstanding Professor Award in the
college of business as selected by the students in the Finance
Society; he received the Outstanding Teaching Award as selected by
the Marriott School of Management; and he is a four-time winner of
the collegewide Teaching Excellence Award for Management Skills,
which is selected by the Alumni Board of the Marriott School of
Management at BYU. Professor Cottrell also has authored many
articles about accounting and auditing issues. His articles have been
published in Issues in Accounting Education, Journal of Accounting
Case Research, Quarterly Review of Distance Education, Journal of
Accountancy, The CPA Journal, Internal Auditor, The Tax Executive,
and Journal of International Taxation, among others.

Courtesy Brigham Young University/Photo by Tabitha Sumsion

Cassy JH Budd
Professor Budd has been a faculty member at Brigham Young
University since 2005. Prior to coming to BYU, she was on the faculty
at Utah State University for three years. She received a BS degree in
accounting at Brigham Young University and a MAcc degree in tax at
Utah State University. Before pursuing a career in academics, she
worked as an auditor for the firm of PricewaterhouseCoopers LLP in
its Salt Lake, San Jose, and Phoenix offices and continues to
maintain her CPA license. Professor Budd has taught financial
accounting at all levels, as well as managerial accounting,
undergraduate and graduate auditing, and partnership taxation. She
is the recipient of numerous awards for teaching and student
advisement, including the BYU Marriott School Teaching Excellence
Award; the Dean Fairbanks Teaching and Learning Faculty
Fellowship, Brigham Young University; School of Accountancy
Advisor of the Year, Utah State University; State of Utah Campus
Compact Service-Learning Engaged Scholar Award; and the page vi
Joe Whitesides Scholar–Athlete Recognition Award from
Utah State University. She has been active in serving on various
committees of the American Accounting Association (AAA), including
serving as president of the AAA Teaching, Learning and Curriculum
section and chairing the annual Conference on Teaching and
Learning in Accounting. Professor Budd is currently serving as the
AAA Council Representative for the Teaching, Learning and
Curriculum Section.
 page vii

Preface

The Thirteenth Edition of Advanced Financial Accounting is an up-to-

date, comprehensive, and highly illustrated presentation of the
accounting and reporting principles and procedures used in a variety
of business entities. Every day, the business press carries stories
about merger and acquisition mania, the complexities of modern
business entities, new organizational structures for conducting
business, accounting scandals related to complex business
transactions, the foreign activities of multinational firms, the
operations of governmental and not-for-profit entities, and
bankruptcies of major firms. Accountants must understand and know
how to deal with the accounting and reporting ramifications of these
issues.

OVERVIEW
As in prior editions, this edition provides detailed coverage of
advanced accounting topics with clarity and integrated coverage
based on continuous case examples. The text is complete with
illustrations of worksheets, schedules, and financial statements
allowing students to see the development of each topic. Inclusion of
recent FASB and GASB pronouncements and the continuing
deliberations of the authoritative bodies provide a current and
contemporary text for students preparing for the CPA examination
and current practice. This emphasis has become especially important
given the recent rapid pace of the authoritative bodies in dealing
with major issues having far-reaching implications. The Thirteenth
Edition covers the following topics:

Multicorporate Entities
Business Combinations
1. Intercorporate Acquisitions and Investments in Other Entities
Consolidation Concepts and Procedures
2. Reporting Intercorporate Investments and Consolidation of Wholly
Owned Subsidiaries with No Differential
3. The Reporting Entity and the Consolidation of Less-Than-Wholly-
Owned Subsidiaries with No Differential
4. Consolidation of Wholly Owned Subsidiaries Acquired at More Than
Book Value
5. Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at
More Than Book Value
Intercompany Transactions
6. Intercompany Inventory Transactions
7. Intercompany Transfers of Services and Noncurrent Assets
8. Intercompany Indebtedness
Additional Consolidation Issues
9. Consolidation Ownership Issues
10. Additional Consolidation Reporting Issues

Multinational Entities
Foreign Currency Transactions
11. Multinational Accounting: Foreign Currency Transactions and Financial
Instruments
Translation of Foreign Statements
 12. Multinational Accounting: Issues in Financial Reporting and Translation
of Foreign Entity Statements

page viii

Reporting Requirements
Segment and Interim Reporting
13. Segment and Interim Reporting
SEC Reporting
14. SEC Reporting

Partnerships
Formation, Operation, Changes
15. Partnerships: Formation, Operation, and Changes in Membership
Liquidation
16. Partnerships: Liquidation

Governmental and Not-for-Profit Entities

Governmental Entities
17. Governmental Entities: Introduction and General Fund Accounting
Special Funds
18. Governmental Entities: Special Funds and Governmentwide Financial
Statements
Not-for-Profit Entities
19. Not-for-Profit Entities

Corporations in Financial Difficulty

20. Corporations in Financial Difficulty
NEW FEATURES FOR THE
THIRTEENTH EDITION

Videos. The Thirteenth Edition of Advanced Financial Accounting

continues one of the most student-centered technology
supplements ever delivered in the advanced accounting market by
moving the AdvancedStudyGuide.com into Connect. This content
was created exclusively by the text authors. It contains dozens of
narrated, animated discussions and explanations of material aligned
to key points in the chapter as well as animated problems just like
key problems in the exercises and problems at the end of each
chapter. Within the text, the Advanced Study Guide icon denotes
where materials that go beyond the printed text are available.
Integrated Excel. New assignments pair the power of Microsoft
Excel with the power of Connect. A seamless integration of Excel
within Connect, Integrated Excel questions allow students to work
in live, auto-graded Excel spreadsheets - no additional logins, no
need to upload or download files. Instructors can choose to grade
by formula or solution value, and students receive instant cell-level
feedback via integrated Check My Work functionality.

KEY FEATURES MAINTAINED IN

THE THIRTEENTH EDITION
The key strengths of this text are the clear and readable discussions
of concepts and their detailed demonstrations through illustrations
and explanations. The many favorable responses to prior editions
from both students and instructors confirm our belief that clear
presentation and comprehensive illustrations are essential to
learning the sophisticated topics in an advanced accounting course.
Key features maintained in the Thirteenth Edition include:
Shading of consolidation worksheet entries. The full-color
coordination of all consolidation items allows teachers and students
to see the development of each item and trace these items visually
through the consolidation process. For example, each number in
the Book Value Calculations can be traced to the Basic
Consolidation Entry.
page ix

Likewise, the calculations in the Excess Value (Differential)

Calculations can be traced to either the Amortized Excess Value
Reclassification Entry or the Excess Value (Differential)
Reclassification Entry. In the Computation table, color application
helps users to quickly and clearly distinguish between Amortization
amounts related to the current year and the current year Ending
 Another Random Document on
Scribd Without Any Related Topics
 Hemming saluted, and, wheeling the white stallion, rode alone up and
down the uneven ranks. His face was set in severe lines, but behind the
mask lurked mirth and derision at the pettiness of his high-styled office.

"Commander-in-chief," he said, and, putting his mount to a canter,

completely circled his command in a fraction of a minute.

"I shall begin to lick them into shape to-morrow," he said to Tetson.

The little officers, clanging their big cavalry sabres, marched their little
brown troops away to the barracks. The President looked wistfully after
them, and said: "I can mount three hundred of them, Hemming. I call it a
pretty good army, for all its lack of style."

"I call it half a battalion of duffers," said Hemming to himself.

Later, the new commander-in-chief and the private secretary sat

together in the former's quarters.

"I do not quite understand this Pernamba idea," said Hemming. "Is it
business, or is it just an unusual way of spending money?"

"I don't know what the old man is driving at myself," replied Hicks,
"but of one thing I am sure: there's more money put into it than there is in it.
The army is a pretty expensive toy, for instance. Just what it is for I do not
know. The only job it ever tried was collecting rents, and it made a mess of
that. We don't sell enough coffee in a year to stand those duffers a month's
pay. We get skinned right and left back here and down on the coast. Mr.
Tetson thinks he still possesses a clear business head, but the fact is he
cannot understand his own bookkeeping. It's no fun running a hundred-
square-mile ranch, with a fair-sized town thrown in."

Hemming wrinkled his forehead, and stared vacantly out of the window.
Below him a gray parrot, the property of Miss Tetson, squawked in an
orange-tree.

"If I had money, I should certainly live somewhere else. Why the devil
he keeps his wife and daughter here, I don't see."
 Just then the secretary caught the faint strumming of a banjo, and left
hurriedly, without venturing an explanation. He found Miss Tetson in her
favourite corner of the garden, where roses grew thickest, and breadfruit-
trees made a canopy of green shade. A fountain splashed softly beside the
stone bench whereon she sat, and near by stood a little brown crane
watching the water with eyes like yellow jewels.

The girl had changed from her riding-habit into a white gown, such as
she wore almost every day. But now Hicks saw her with new eyes. She
seemed to him more beautiful than he had dreamed a woman could be.
Yesterday he had thought, in his indolent way, that he loved her. Now he
knew it, and his heart seemed to leap and pause in a mad sort of fear. The
look of well-fed satisfaction passed away from him. He stood there between
the roses like a fool,—he who had come down to the garden so carelessly,
with some jest on his lips.

"Something will happen now," she said, and smiled up at him. Hicks
wondered what she meant.

"It is too hot to have anything happen," he replied.

"That is the matter with us,—it is too hot, always too hot, and we are
too tired," she said, "but Mr. Hemming does not seem to mind the heat. I
think that something interesting will happen now."

This was like a knife in the man's heart, for he was learning to like the
Englishman.

The girl looked at the little crane by the fountain. Hicks stood for a
moment, trying to smile. But it was hard work to look as if he did not care.
"Lord, what an ass I have been," he said to himself, but aloud he stammered
something about their rides together, and their friendship.

"Oh, you can ride very well," she laughed, "but—"

She did not finish the remark, and the secretary, after a painful scrutiny
of the silent banjo in her lap, went away to the stables and ordered his
horse. But a man is a fool to ride hard along the bank of a Brazilian river in
the heat of the afternoon.

From one of the windows of his cool room, Hemming watched the
departure of the President's private secretary. He remembered what Tetson
had said of the boy,—"too young to associate with men."

But youth is a thing easily mended, thought Hemming. Somehow—

perhaps only in size—Hicks recalled O'Rourke to his mind; and back to him
came the days of their good-comradeship. He wondered where O'Rourke
was now, and what he was busy about. He had seen him last in Labrador,
where they had spent a month together, salmon fishing, and up to that time
O'Rourke had found no trace of Miss Hudson. Ellis's information had
proved useless. Disgusted at the deception practised upon him, the poor
fellow had ceased to speak of the matter, even with his dearest friend during
night-watches by the camp-fire.

CHAPTER IV.

THE THING THAT HAPPENED

Hicks came along the homeward road at dusk. Lights were glowing
above the strong walls and behind the straight trunks of the palms. A mist
that one might smell lay along the course of the river. Hicks rode heavily
and with the air of one utterly oblivious to his surroundings. But at the
gateway of the officers' mess he looked up. Captain Santosa was in the
garden, a vision of white and gold and dazzling smile. He hurried to the
gate.

"Ah, my dear Hicks, you are in time for our small cocktails, and then
dinner. But for this riding so hard, I can call you nothing but a fool."
 "Thanks very much," replied the American, dismounting slowly, "and as
to what you call me, old man, I'm not at all particular." The woebegone
expression of his plump face was almost ludicrous.

Santosa whistled, and presently an orderly came and took Valentine's

horse. The two entered the building arm in arm, and the secretary swayed as
he walked.

Five or six of the native officers were already in the mess-room,

swallowing mild swizzles, and talking quietly. They greeted Hicks
affectionately.

"This man," said Santosa, "had his horse looking like a shaving-brush,
and I know nothing in English so suitable to call him as this," and he swore
vigorously in Portuguese.

"Stow that rot," said Hicks, "can't you see I'm fit as a fiddle; and for
Heaven's sake move some liquor my way, will you?" His request was
speedily complied with, and he helped himself recklessly from the big
decanter.

The dinner was long and hot, and Valentine Hicks, forgetting utterly his
Harvard manner, dropped his head on the table, between his claret-glass and
coffee-cup, and dreamed beastly dreams. The swarthy Brazilians talked and
smoked, and sent away the decanters to be refilled. The stifling air held the
tobacco smoke above the table. The cotton-clad servants moved on
noiseless feet.

"These Americans,—dear heaven," spoke a fat major, softly.

"I am fond of Hicks," said Santosa, laying his hand on the youth's
unconscious shoulder. A slim lieutenant, who had held a commission in a
Brazilian regiment stationed in Rio, looked at the captain.

"The Americans are harmless," he said. "They mind their own business,
—or better still, they let us mind it for them. The President—bah! And our
dear Valentine. If he gets enough to eat, and clothes cut in the English way,
and some one to listen to his little stories of how he used to play golf at
Harvard, he is content. But this Englishman,—this Señor Hemming,—he
is quite different."

"Did not you at one time play golf?" asked Santosa, calmly.

"Three times, in Florida," replied the lieutenant, "and with me played a

lady, who talked at her ease and broke two clubs in one morning. She was
of a fashionable convent named Smith, but this did not deter her from the
free expression of her thoughts."

"Stir up Señor Hicks, that we may hear two fools at the same time,"
said the colonel.

"Take my word for it, colonel, that Valentine is not a fool," said Santosa,
lightly. "He is very young."

"Have you nothing to say for me?" asked the slim lieutenant, good-
naturedly.

"You know what I think of you all," replied Santosa, without heat. The
conversation was carried on in Portuguese, and now ran into angry surmises
as to the President's reason for placing Hemming in command.

It was close upon midnight when Hicks awoke. He straightened himself

in his chair and blinked at Santosa, who alone, of the whole mess, remained
at table.

"You have had a little nap," said the Brazilian.

Hicks looked at him for awhile in silence. Then he got to his feet, and
leaned heavily on the table.

"I'll walk home, old tea-cosey. Tell your nigger to give my gee
something to eat, will you?"

"You do not look well, my dear Valentine. You had better stay here until
morning," said Santosa.

Hicks swore, and then begged the other's pardon.

 "Am I drunk, old chap? Do I look that way?" he asked.

Captain Santosa laughed. "You look like a man with a grudge against
some one," he answered. "Perhaps you have a touch of fever, otherwise I
know you would have good taste enough to conceal the grudge. A
gentleman suffers—and smiles."

It was past two o'clock in the morning, and Hemming was lying flat on
his back, smoking a cigarette in the dark. He had been writing verses, and
letters which he did not intend to mail, until long past midnight. And now
he lay wide-eyed on his bed, kept awake by the restless play of his
thoughts.

His windows were all open, and he could hear a stirring of wind in the
crests of the taller trees. His reveries were disturbed by a stumbling of feet
in the room beyond, and suddenly Valentine Hicks stood in the doorway. By
the faint light Hemming made out the big, drooping shoulders and the
attitude of weariness. He sat up quickly, and pushed his feet into slippers.

"That you, Hicks?" he asked.

"Don't talk to me, you damn traitor!" said Hicks.

Hemming frowned, and tossed his cigarette into the night.

"If you will be so good as to turn on the light, I'll get the quinine," he
said.

The secretary laughed.

"Quinine!" he cried; "you fool! I believe an Englishman would

recommend some blasted medicine to a man in hell."

"You're not there yet," replied Hemming. He was bending over an open
drawer of his desk, feeling about among papers and bottles for the box of
pills. Hicks drew something from his pocket and laid it softly on the table.

"Good morning," he said. "I intended to kick up a row but I've changed
my mind. Hand over your pills and I'll go to bed."
 When he awoke next day, it was only to a foolish delirium. The doctor
looked at him, and then at Hemming.

"I suppose you can give it a name," he said.

Hemming nodded.

"I've had it myself," he replied.

The President, followed by his daughter, came into the room. Hicks
recognized the girl.

"Marion," he said, and when she bent over him, "something has
happened after all."

She looked up at Hemming with a colourless face. Her eyes were brave
enough, but the pitiful expression of her mouth touched him with a sudden
painful remembrance. During the hours of daylight the doctor and Miss
Tetson watched by the bedside, moving silently and speaking in whispers in
the darkened room.

The doctor was an Englishman somewhat beyond middle age, with a

past well buried. In the streets and on the trail his manner was short almost
to rudeness. He often spoke bitterly and lightly of those things which most
men love and respect. In the sick-room, be it in the rich man's villa or in the
mud hut of the plantation labourer, he spoke softly, and his hands were
gentle as a woman's.

Hemming had been working with his little army all day, and, after
dining at the mess, he changed and relieved Miss Tetson and the doctor.
Before leaving the room, the girl turned to him nervously.

"Did you see Valentine last night?" she asked.

Hemming told her that Hicks had come to his room for quinine.

"Good night, and please take good care of him," she said.
 The Englishman screwed his eye-glass into place, and glared at her
uneasily. "Hicks is a good sort," he said, "but he is not the kind for this
country. Neither are you, Miss Tetson. But it's nuts for me,—this playing
soldier at another man's expense."

He paused, and she waited, a little impatiently, for him to go on. "What
I wanted to say," he continued, "is that there is one thing that goes harder
with a man than yellow fever. I—ah—have experienced both. Hicks is a
decent chap," he concluded, lamely.

Miss Tetson smiled and held out her hand.

"If he should want me in the night, please call me. I will not be asleep,"
she said.

Hemming, for all his rolling, had gathered a good deal of moss in the
shape of handiness and out-of-the-way knowledge. Twice during the night
he bathed the sick man; with ice and alcohol. Many times he lifted the
burning head and held water to the hot lips. Sometimes he talked to him,
very low, of the North and the blue sea, and thus brought sleep back to the
glowing eyes. The windows were open and the blinds up, and a white moon
walked above the gardens.

Just before dawn, Hemming dozed for a few minutes in his chair. He
was awakened by some movement, and, opening his eyes, beheld Miss
Tetson at the bedside. Hicks was sleeping, with his tired face turned toward
the window. The girl touched his forehead tenderly with her lips.

Hemming closed his eyes again, and kept them so until he heard her
leave the room,—a few light footsteps and a soft trailing of skirts. Then, in
his turn, he bent above the sleeper.

"If this takes you off, old chap, perhaps it will be better," he said.

But in his inmost soul he did not believe this bitter distrust of women
that his own brain had built up for him out of memory and weariness.
 CHAPTER V.

CHANCE IN PERNAMBUCO

While Hicks tossed about in his fever dreams, and Hemming shook his
command into form, away on the coast, in the city of Pernambuco, unusual
things were shaping. From the south, coastwise from Bahia, came Bertram
St. Ives O'Rourke. This was chance, pure and simple, for he had no idea of
Hemming's whereabouts. From New York, on the mail-steamer, came a man
called Cuddlehead, and took up his abode in a narrow hotel near the
waterfront. He arrived in the city only an hour behind O'Rourke. He was
artfully attired in yachting garb, and had been king-passenger on the boat,
where his English accent had been greatly admired, and his predilection for
card-playing had been bountifully rewarded. In fact, when he went ashore
with his meagre baggage, he left behind at least one mourning maiden heart
and three empty pockets.

O'Rourke, upon landing, had his box and three leather bags carried
across the square to the ship-chandler's. He would look about before
engaging a room, and see if the place contained enough local colour to pay
for a stop-over. He fell, straightway, into easy and polite conversation with
the owner of the store. From the busy pavement and dirty square outside
arose odours that were not altogether foreign to his cosmopolitan nose.
Three men greeted one another, and did business in English and Portuguese,
speaking of the cane crop, the rate of exchange, the price of Newfoundland
"fish," and of gales met with at sea. Bullock-carts creaked past in the aching
sunlight, the mild-eyed beasts staggering with lowered heads. Soldiers in
uncomfortable uniforms lounged about. Cripples exhibited their ugly
misfortunes, and beggars made noisy supplication.

O'Rourke decided that there was enough local colour to keep him, and,
turning from the open door, contemplated the interior of the establishment.
The place was dim and cool, and at the far back of it another door stood
open, on a narrow cross-street. Cases of liquor, tobacco, tea, coffee, and
condensed milk were piled high against the wall. Baskets of sweet potatoes
and hens' eggs stood about. Upon shelves behind the counter samples of
rope, canvas, and cotton cloth were exhibited. Highly coloured posters,
advertising Scotch whiskey, brightened the gloom. The back part of the
shop was furnished with a bar and two long tables. At one of the tables sat
about a dozen men, each with a glass before him, and all laughing, talking,
swearing, and yet keeping their eyes attentively fixed on one of their
number, who shook a dice-box.

O'Rourke, who had by this time made his name known to the ship-
chandler, was given a general introduction to the dice-throwers. He called
for a lime-squash, and took a seat at the table between a dissipated-looking
individual whom all addressed by the title of "Major," and a master-mariner
from the North. There were several of these shellback skippers at table, and
O'Rourke spotted them easily enough, though, to the uninitiated, they had
nothing in common but their weather-beaten faces. Their manners were of
various degrees, running from the height of civility around to nothing at all.
There was the first officer of a Liverpool "tramp" with his elbows on the
board, his gin-and-bitters slopped about, and his voice high in argument.
Next him sat a mariner from one of the Fundy ports, nodding and starting,
and trying to bury in whiskey remembrance of his damaged cargo and
unseaworthy ship. Nearer sat a Devonshire man in the Newfoundland trade,
drinking his sweetened claret with all the graces of a curate, and talking
with the polish and conviction of a retired banker. O'Rourke glanced up and
down the table, and detected one more sailor—a quiet young man clad in
white duck, with "Royal Naval Reserve" marked upon him for the knowing
to see. These four men (each one so unlike the other three in clothes,
appearance, and behaviour) all wore the light of wide waters in their eyes,
the peace bred of long night-watches on their tanned brows, and the right to
command on chin and jaw. O'Rourke felt his heart warm toward them, for
he, too, had kept vigil beside the ghostly mizzen, and read the compass by
the uncertain torch of the lightning.

The other occupants of the table were residents of the country—two

English planters, the major, a commission-merchant, a native cavalry
officer, and several operators of the South American Cable Company. The
major remarked upon the rotten state of the country to O'Rourke, in a
confidential whisper, as he shook the dice in the leather cylinder. O'Rourke
replied, politely, that he wasn't an authority.

"But I am, sir," blustered the major. "Dear heaven, man, I'd like to know
who has been American consul in this hole for the last seven years, only to
get chucked out last May by a low plebeian politician."

The speaker's eyes were fierce, though watery, and his face was red as
the sun through smoke. He drained his glass, and glared at O'Rourke.

"Couldn't say. Never was here before," replied O'Rourke. He counted

his neighbour's throw aloud, for the benefit of the table.

"Three aces, a six, and a five."

He was about to recover two of the dice from a shallow puddle on the
table, and replace them in the box, when he felt a hand on his arm.

"I was American consul," hissed the major, "and, by hell, I'm still sober
enough to count my own dice, and pick 'em up, too."

O'Rourke smiled, unruffled. "You don't mean you are sober enough,
major—you mean you are not quite too drunk," he said. The others paused
in their talk, and laughed. The major opened his eyes a trifle wider and
dropped his under jaw. He looked the young stranger up and down.

"Well, I hope you are ashamed of yourself," he said, at last.

"I am sorry I was rude, sir," explained O'Rourke, "but I hate to be

grabbed by the arm that way. I must have a nerve there that connects with
my temper."

A tipsy smile spread over the ex-consul's face.

"Shake hands, my boy," he cried. They shook hands. The others craned
their necks to see.
 "You've come just in time to cheer me up, for I've been lonely since
Hemming went into the bush," exclaimed the major.

"Hemming! Do you mean Herbert Hemming?" asked O'Rourke, eagerly.

"That's who I mean," replied the major, and pushed the dice-box toward
him. O'Rourke made nothing better than a pair, and had to pay for thirteen
drinks. If you crave a lime-squash of an afternoon, the above method is not
always the cheapest way of acquiring it. As the dice-box went the rounds
again, and the attention of the company returned to generalities, the
newcomer asked more particulars of Hemming's whereabouts.

"He started into the bush more than a week ago, to find some new kind
of adventure and study the interior, he said," explained the major, "but my
own opinion is that he went to see old Tetson in his place up the Plado. Sly
boy, Hemming! Whenever we spoke of that crazy Tetson, and his daughter,
and his money, he pretended not to take any stock in them. But I'll eat my
hat—and it's the only one I have—if he isn't there at this minute, flashing
that precious gig-lamp of his at the young lady."

O'Rourke had read stories about this eccentric millionaire in the

newspapers some years before.

"Hemming is safe, wherever he lands," he said. "He's a woman-hater."

A look of half-whimsical disgust flashed across the old man's perspiring

face. He leaned close to O'Rourke.

"Bah—you make me sick," he cried, "with your silly commonplaces.

Woman-hater—bah—any fool, any schoolboy can say that. Call a man an
ice-riding pinapede, and you'll display the virtue of originality, at least. At
first I suspected you of brains."

O'Rourke was embarrassed. How could he explain that, in using the

term woman-hater, he had meant to suit his conversation to the intellect of
his hearer. It was commonplace, without doubt, and meant nothing at all.
 "Do you think, Mr. O'Rourke," continued the other, "that simply
because I'm stranded in this hole, on my beam-ends (to use the language of
our worthy table-mates), that my brain is past being offended? You are
wrong, then, my boy, just as sure as my name is Farrington. Hemming
would never have called a man a woman-hater. Why, here am I, sir, sitting
as I have sat every day for years, getting drunk, and with never a word to a
woman, white or black, for about as long as you have used a razor. But I
don't hate women—-not I. I'd give my life, such as it is, any minute, for the
first woman who would look at me without curling her lip—that is, the first
well-bred white woman. Ask Hemming what he thinks, and he will tell you
that, in spite of the men, women are still the finest creatures God ever
invented. No doubt he seems indifferent now, but that's because he has
loved some girl very much, and has been hurt by her."

"You are right, major, and I gladly confess I used a dashed stupid
expression—so now, if you don't mind, please shut up about it," replied
O'Rourke. To his surprise Farrington smiled, nodded in a knowing way, and
lapsed into silence.

While one of the mariners was relating a fearsome experience of his

own on a wrecked schooner, Mr. Cuddlehead entered the place and seated
himself at the unoccupied table. He sipped his peg, and studied the men at
the other table with shifting glances. He thought they looked easy, and a
vastly satisfied expression came to his unhealthy, old-young face. Though
well groomed and well clothed, Mr. Cuddlehead's deportment suggested,
however vaguely, a feeling on his part of personal insecurity. He glanced
apprehensively whenever a voice was raised high in argument. He started in
his chair when the man who served the refreshments came unexpectedly to
his table to deposit a match-holder.

To O'Rourke, who had an eye for things beyond the dice, Mr.
Cuddlehead's face hinted at some strange ways of life, and undesirable traits
of character. In the loose mouth he saw signs of a once colossal impudence;
in the bloated cheeks, dissipation and the wrecking existence of one who
feasts to-day and starves to-morrow; in the eyes cruelty and cunning; in the
chin and forehead a low sort of courage.
 Gradually the crowd at the long table thinned. First of all the cavalry
officer arose, flicked imaginary dust off the front of his baggy trousers, and
jangled out into the reddening sunlight. The planters followed, after hearty
farewells. They had long rides ahead of them to occupy the cool of the
evening, and perhaps would not leave their isolated bungalows again inside
a fortnight. Next the operators announced their intentions of deserting the
giddy scene.

"Come along, major, you and Joyce promised to feed with us to-night,"
said one of them, "and if your friend there, Mr. O'Rourke, will overlook the
informality of so sudden an invitation," he continued, "we'll be delighted to
have him, too."

"Great heavens, Darlington," exclaimed the major, "you are still as

long-winded as when you first came out," and, before O'Rourke could
accept the invitation for himself, he concluded, "of course O'Rourke will
honour you, my boy."

"Thank you, very much, it's awfully good of you chaps," stammered
O'Rourke, disconcerted by the major's offhand manner.

Darlington smiled reassuringly. "Don't let this old cock rattle you," he
said, and patted Major Farrington affectionately on the shoulder.

After dinner that night, in the palatial dining-room of the house

occupied by the staff of the South American Cable Company, O'Rourke
learned something of the major's past life. It was a sad and unedifying story.
The major had been trained at West Point, and led his class in scholarship
and drill, and had risen, with more than one distinction, to the rank of
major. But all the while he had made his fight against drink, as well as the
usual handicaps in the game of life. He had married a woman with wealth
and position superior to his own, who had admired him for his soldierly
qualities and fine appearance, and who, later, had been the first to desert
him. Then followed the foreign consular appointments, the bitter and ever-
increasing debaucheries, and at last the forced retirement from his country's
service. Now he lived on a small allowance, sent him weekly, by his family.
O'Rourke began to understand the old man's fretful and disconcerting
moods.
 At a late hour the superintendent of the staff ushered O'Rourke to a big,
cool room on the second floor.

"Make this your home," he said, "and we'll let you in on the same
footing as ourselves. Hemming occupied this room last. There is his bed;
there is his hammock; and, by Jove, there are his slippers. You can have
your traps brought up in the morning."

Thus did Bertram St. Ives O'Rourke become an inmate of an imposing

mansion in Pernambuco, with moderate charges to pay and good company
to enliven his hours.

CHAPTER VI.

CUDDLEHEAD DECIDES ON AN ADVENTURE

Toward noon of a stifling day, the major and Mr. Cuddlehead met in the
square by the waterfront. Cuddlehead greeted the major affably. As the
major was very thirsty he returned the salutation. A glance through the door
at his elbow displayed, to Mr. Cuddlehead's uncertain eyes, a number of
round tables with chairs about them. He took out his watch and examined it.

"Eleven-thirty—I always take something at half-past eleven. I hope you

will join me," he said.

"I seldom drink before lunch," replied Farrington, "but as this is an

exceptionally dry day—"

They passed through the doorway and sat down at the nearest table.

"Now I will find out what is doing," thought Cuddlehead, and gave his
order. But for a long time the major's tongue refused to be loosened. He
sipped his liquor, and watched his companion with eyes of unfriendly
suspicion. Cuddlehead, in the meantime, exhibited an excellent temper, put
a few casual questions, and chatted about small things of general interest.

Now Cuddlehead had heard, from the captain of the mail-boat,

something about a wealthy American with a bee in his bonnet and a pretty
daughter, somewhere within reach of Pernambuco. The story had grown
upon him, and a great idea had taken shape in his scheming mind. Why
shouldn't he, if all that people said and wrote about American girls was
true? By gad, he'd make a shot at it. He'd show them how to spend their
money in more interesting places than the back of nowhere. As soon as the
major began to look more friendly, under the influence of the crude
whiskey, he produced his cigar-case,—a fat black leather affair, with an
engraved silver plate on the front of it,—and offered the old man an
excellent weed of Havana. The major took it, glancing keenly, but swiftly,
at the initials on the case as he did so. "P. doesn't stand for Cuddlehead," he
thought, but said nothing.

"Tell me something about the man who owns a whole country,

somewhere back here, in the bush," urged Cuddlehead, lightly. The old
man's muddled wits awoke and jerked a warning. Here was some scum of
Heaven knows where, wanting to interfere in a better man's business.

"What's that, my boy?" he asked, looking stupidly interested.

"Oh, it is of no importance. It just struck me as being a bit out of the

way," replied the other.

"What?" inquired the major.

"The place Mr. Tetson hangs out," laughed Cuddlehead.

"It's all that, my boy," replied Farrington, gleefully; then he stared,

open-mouthed. "At least," he added, "it may be, but what the hell are you
gabbing about?"

"Sorry. Had no idea it was a secret," retorted the younger man.

 The major's potations flooded to his head. His face took on a darker
shade of crimson. His hands twitched on the table.

"Secrets! You d—n little sneak," he roared, staggering up and

overturning his chair. The expression of insolence faded from Cuddlehead's
face. He dashed out of the place without paying for the bottle of whiskey.
On the pavement he paused, long enough to compose his features and
straighten his necktie. Then he went to the ship-chandler and gathered a
wealth of information concerning Harris William Tetson. But he heard no
mention of Hemming being in the country, which was, perhaps, just as well.
He was certainly a sneak, as more than the major had called him, but he was
not altogether a duffer. He could look after himself to a certain extent. He
decided to keep Pernambuco until later, and go now for bigger game. He
made his plans speedily, fearing another meeting with the major, and early
next morning started along the coast, inside the reef, as a passenger aboard
a native barcassa. The voyage to the mouth of the river Plado would take
the better part of a day. He would wait in the little village for Mr. Tetson's
steam-launch, which made weekly runs to the coast for mail and supplies.

CHAPTER VII.

HEMMING LEARNS SOMETHING ABOUT HIS

ARMY

In Pernamba, up the Plado, life had taken on a brighter aspect for at

least two of the inhabitants. Marion Tetson was thankful beyond the power
of speech, because the fever had left Hicks. True, it had left him thin and
weak as a baby, but his very helplessness made him dearer in her eyes. That
one who had been so big and strong should ask her to lift his head whenever
he wanted a drink, and should have his pillow turned for him without
displaying a sign of rebellion, stabbed her to the innermost soul with
wonder and pity. Hicks was happy because she was near him all day, her
eyes telling what her lips were longing to say, if his dared to question. Then
he could half remember some things which were as part of his dreaming—
wonderful, magic things with all the glamour of dreams, free from the
weariness of the fever. But he said nothing of these just then to Marion,
though she read his thoughts like a book while he lay there very quiet,
smiling a little, his gaze following her every movement. To Hemming also
he wore his heart on his sleeve. Of this fact he was blissfully ignorant. Mrs.
Tetson often came to his room and gave him motherly advice about not
talking too much and not thinking too hard. Hicks felt no desire to talk, but
as for thinking, Lord, she might as well have told him to stop breathing. He
thought more in ten minutes now than he had before in any three hours.
They were comforting thoughts, though, for the most part, and Marion
knew that they did him more good than harm.

Hemming kept up a show of interest in the army. He lectured the

officers and drilled the men, and dined almost every night at the mess,
which he had remodelled on the English plan. But most of the time he kept
his eye on the President. It was a job he did not care about,—this prying
into another man's business,—but somehow he could not put it by him,
things were so obviously out of order. He kept his monocle polished, his
ears open, and his mouth shut. He was always willing to listen to the
President's dreary conversations. The life lacked excitement for one who
had run the gauntlet of a hundred vital dangers. He had given up all special
correspondence, but did a good deal of fiction when the mood was on him.
The longing to return to a more active existence grew stronger every day,
but his friendship for the Tetsons and for Hicks kept him at his post.

Hemming's morning coffee was always served in his room at six

o'clock. That left him about two and a half hours of the cool of the day in
which to work. Breakfast, with its queer dishes of hot meats, and claret, tea,
and coffee to drink, came on about nine. Breakfast was a family affair, and
after it every one retired for a nap. Hemming usually drank his coffee
before he dressed, but one morning Smith found him pacing the room,
booted and spurred, and attired in stained breeches and a faded tunic. There
were cigar ashes on the floor beside the bed. A volume of Stevenson's "Men
and Books" lay open on the pillow.
 "Fill my flask," he said, "and let the President know that I may not be
back until evening."

"Very good, sir," replied the valet. "Will I order your horse, sir?"

While the man was out of the room Hemming pulled open a drawer in
his desk, in search of revolver cartridges. The contents of the drawer were
in a shocking jumble. In his despatch-box at large among his papers he
found half a dozen cartridges, a cigarette from the army and navy stores at
home, and a small bow of black ribbon. He picked up the bow, kissed it
lightly, and instead of restoring it to the box put it in his pocket.

"She liked me well enough in those days—or else she did some—ah—
remarkable acting," he said.

Turning on his heel he found Smith in the doorway.

Your horse is ready, sir," said the man. Hemming blushed, and, to hide
his confusion, told Smith to go to the devil. He rode away with an unloaded
revolver in his holster.

"It must be a pretty rotten country," soliloquized the valet, "when a

single-eye-glassed, right-about-turn, warranted-not-to-shrink-wear-or-tear
gent like that gets buggy before breakfast."

The commander-in-chief rode from the gardens by the same gate at

which he had entered for the first time only a month before. He did not
return the salute of a corporal in the door of the guard-house. He did not
notice the little brown soldier at the gate, who stood at attention upon his
approach, and presented arms as he passed—which was, perhaps, just as
well, for a freshly lighted cigarette smoked on the ground at the man's feet.
He turned his horse's head northward. On both sides of the street arose the
straight brown boles of the royal palms, and high above the morning wind
sang in the stiff foliage. At the end of the street he turned into the path by
which he had first entered the town. The country folk urged their horses into
the bush that he might pass, and he rode by unheeding. In their simple
minds they wondered at this, for the fame of his alert perception and
flashing eye-glass had gone far and near. Of his own accord the white
stallion came to a standstill before a hut. Hemming looked up, his reverie
broken, and his thoughts returned to Pernamba.

A woman came to the narrow doorway and greeted him with reverence.
He recognized in her the woman who had first welcomed him to the
country. He dismounted and held out his hand.

"How is the little fellow?" he asked. At that the tears sprang into her
eyes, and Hemming saw that her face was drawn with sorrow. He followed
her into the dim interior of the hut. The boy lay in a corner, upon an untidy
bed, and above him stood the English doctor. The two men shook hands.

"I can clear him of the fever," said the doctor, "but what for? It's easier
to die of fever than of starvation."

"Starvation," exclaimed Hemming, "why starvation?"

"The señor does not know," said the woman. "It is not in his kind
heart to ruin the poor, and bring sorrow to the humble."

"But," said the doctor, looking at Hemming, "to Englishmen of our

class, a nigger is a nigger, say what you please, and the ends-of-the-earth is
a place to make money and London is the place to spend it."

The soldier's face whitened beneath the tan.

"Don't judge me by your own standards, Scott, simply because you were
born a gentleman," he said.

"Oh," laughed the doctor, "to me money would be of no use, even in

London. I find the ends-of-the-earth a place to hide my head."

"But what of starvation and ruin?" asked the other.

"I thought," replied the doctor, "that you were in command of the army.
Ask those mud-faced soldiers of yours why this woman has nothing to feed
to her child."
 "I will ask them," said the commander-in-chief, and he ripped out an
oath that did Scott's heart good to hear. He turned to the woman.

"I am sorry for this," he said, "and will see that all that was taken from
you is safely returned. The President and I knew nothing about it." He drew
a wad of notes from his pocket and handed it to her. Then he looked at the
doctor.

"If I did not like you, Scott, and respect you," he continued, "I'd punch
your head for thinking this of me. But you had both the grace and courage
to tell me what you thought."

"I don't think it now," said Scott, "and I don't want my head punched,
either, for my flesh heals very slowly. But if I ever feel in need of a
thrashing, old man, I'll call on you. No doubt it would be painful, but there'd
be no element of disgrace connected with it."

Hemming blushed, for compliments always put him out of the game.
The woman suddenly stepped closer, and, snatching his hand to her face,
kissed it twice before he could pull it away. He retreated to the door, and the
doctor laughed. Safe in the saddle, he called to the doctor.

"My dear chap," he said, "you have inspired me to a confession. I, too,

have soured on London."

"Let me advise you to try your luck again. A girl is sometimes put in a
false light by circumstances—-the greed of parents, for instance," replied
Scott.

Hemming stared, unable to conceal his amazement.

"I have not always lived in Pernamba," laughed Scott, "I have dined
more than once at your mess. Fact is, I was at one time surgeon in the Sixty-
Second."

"You are a dry one, certainly," said Hemming.

 "It is unkind of you to remind me of it when the nearest bottle of soda is
at least three miles away, and very likely warm at that," retorted the doctor.
Hemming leaned forward in his saddle and grasped his hand.

"I will not take your advice," he said, "but it was kind of you to give it.
Forgive me for mentioning it, Scott, but you are a dashed good sort."

"Man," cried the other, "didn't I tell you that I am hiding my head?" He
slapped the white stallion smartly on the rump, and Hemming went up the
trail at a canter.
 CHAPTER VIII.

CAPTAIN SANTOSA VISITS HIS SUPERIOR

OFFICER

Hemming got back to the village in time to change and dine with the
family. The President's mind was otherwhere than at the table. He would
look about the room, staring at the shadows beyond the candle-light, as if
seeking something. He pushed the claret past him, and ordered rye whiskey.
His kind face showed lines unknown to it a month before. Mrs. Tetson
watched him anxiously. Marion and the commander-in-chief talked together
like well-tried comrades, laughing sometimes, but for the most part serious.
Marion was paler than of old, but none the less beautiful for that. Her eyes
were brighter, with a light that seemed to burn far back in them, steady and
tender. Her lips were ever on the verge of smiling. Hemming told her all of
his interview with the peasant woman, and part of his interview with Scott.

"There will be trouble soon," he said.

She begged him not to stir it up until Valentine was well enough to have
a finger in it.

"You may not think him very clever," she said, "but even you will admit
that he shoots straight, and has courage."

"I will admit anything in his favour," replied Hemming, "but as for his
shooting, why, thank Heaven, I have never tested it."

"Wasn't he very rude to you one night?" she asked.

He laughed quietly. "The circumstances warranted it, but he was rude to

the wrong person, don't you think?"

"No, indeed," she cried, "for no matter how minus a quantity your guilt,
or how full of fault I had been, it would never have done for him to threaten
me with a—" She paused.

"Service revolver?" said Hemming, "and one of my own at that."

"Fever is a terrible thing," she said, gazing at the red heart of the claret.

"My dear sister," said the Englishman, "a man would gladly suffer more
to win less."

They smiled frankly into one another's eyes.

"Then you do not think too badly of me?" she asked.

"I think everything that is jolly—of both of you," he replied.

"I like your friendship," she said, "for, though you seem such a good
companion, I do not believe you give it lightly."

After the coffee and an aimless talk with Tetson, Hemming looked in at
Hicks and found him drinking chicken broth as if he liked it. The invalid
was strong enough to manage the spoon himself, but Marion held the bowl.
Hemming went to his own room, turned on the light above his desk, and
began to write. He worked steadily until ten o'clock. Then he walked up and
down the room for awhile, rolling and smoking cigarettes. The old ambition
had him in its clutches. Pernamba, with its heat, its dulness, its love and
hate, had faded away. Now he played a bigger game—a game for the world
rather than for half a battalion of little brown soldiers. A knock sounded on
his door, and, before he could answer it, Captain Santosa, glorious in his
white and gold, stepped into the room. The sight of the Brazilian brought
his dreams to the dust. "Damn," he said, under his breath.

Then he waved his subordinate to a seat.

The captain's manner was as courteous as ever, his smile as urbane, his
eyes as unfathomable. But his dusky cheek showed an unusual pallor, and
as he sat down he groaned. Hemming eyed him sharply; men like Santosa
do not groan unless they are wounded—maybe in their pride, by a friend's
word, maybe in their vitals by an enemy's knife. There was no sign of blood
on the spotless uniform.

"A drink?" queried Hemming, turning toward the bell.

"Not now," said the captain, "but afterward, if you then offer it to me."
He swallowed hard, looked down at his polished boots, aloft at the ceiling,
and presently at his superior officer's staring eye-glass. From this he seemed
to gather courage.

"I have disturbed you at your rest, at your private work," he said, with a
motion of the hand toward the untidy desk, "but my need is great. I must
choose between disloyalty to my brother officers, and disloyalty to you and
the President. I have chosen, sir, and I now resign my commission. I will no
longer ride and drink and eat with robbers and liars. It is not work for a
gentleman." He paused and smiled pathetically. "I will go away. There is
nothing else for my father's son to do."

"I heard something of this—no longer ago than to-day," said Hemming.

Santosa lit a cigar and puffed for awhile in silence.

"I winked at it too long," he said, at last, "for I was dreaming of other
things. So that I kept my own hands clean I did not care. Then you came,
and I watched you. I saw that duty was the great thing, after all—even for a
soldier. And I saw that even a gentleman might earn his pay decently."

Hemming smiled, and polished his eye-glass on the lining of his dinner-
jacket.

"Thank you, old chap. You have a queer way of putting it, but I catch
the idea," he said.

The captain bowed. "I will go away, but not very far, for I would like to
be near, to help you in any trouble. Our dear friend Valentine, whom I love
as a brother, is not yet strong. The President, whom I honour, is not a
fighter, I think. The ladies should go to the coast."
 "You are right," said Hemming, "but do not leave us for a day or two. I
will consider your resignation. Now for a drink."

He rang the bell, and then pulled a chair close to Santosa. When Smith
had gone from the room, leaving the decanter and soda-water behind him,
the two soldiers touched glasses and drank. They were silent. The Brazilian
felt better now, and the Englishman was thinking too hard to talk. A gust of
wind banged the wooden shutters at the windows. It was followed by a
flash of lightning. Then came the rain, pounding and splashing on the roof,
and hammering the palms in the garden.

"That's sudden," said Hemming.

"Things happen suddenly in this country," replied Santosa.

Hemming leaned back and crossed his legs.

"Have you seen Hicks since the fever bowled him?" he asked.

"No," replied the captain, "no, I have not seen him, but he is my friend
and I wish him well. Is it not through our friends, Hemming, that we come
by our griefs? It has seemed so to me."

Hemming glanced at him quickly, but said nothing. Santosa was a

gentleman, and might safely be allowed to make confessions.

"When I first came here," continued the captain, "I was poor, and the
Brazilian army owed me a whole year's back pay. I had spent much on
clothes and on horses, trying hard to live like my father's son. Mr. Tetson
offered me better pay, and a gayer uniform. I was willing to play at
soldiering, for I saw that some gain might be made from it, outside the pay.
My brother officers saw this also, and we talked of it often. Then Miss
Tetson came to Pernamba. I rode out with her to show her the country. I told
her of my father, and of how, when they carried him in from the field, they
found that the Order of Bolivar had been driven edgewise through his tunic
and into his breast by the blow of a bullet. And when I saw the look on her
face, my pride grew, but changed in some way, and it seemed to me that the
son of that man should leave thieving and the crushing of the poor to men
of less distinction.

"Sometimes my heart was bitter within me, and my fingers itched for
the feel of Valentine's throat. But I hope I was always polite, Hemming." He
got lightly to his feet, and held out his hand.

"Young ladies talk so in convent-schools," he said.

"Not at all," replied Hemming, gravely, "and I can assure you that your
attitude toward all concerned has left nothing to be desired. I will look you
up at your quarters after breakfast."

Captain Santosa went through the gardens, humming a Spanish love-

song. He turned near a fountain and looked up at a lighted window. His
white uniform gleamed in the scented dusk. He kissed his finger-tips to the
window. "The end of that dream," he said, lightly, and his eyes were as
unfathomable as ever. The water dripped heavily on to the gold of his
uniform.

Hemming went in search of the President, and found him in the billiard-
room, idly knocking the balls about with a rasping cue.

"Have a game, like a good chap," urged the great man.

The commander-in-chief shook his head.

"Not now, sir. I came to tell you something about the army," he replied.
He was shocked at Tetson's sudden pallor. The yellow cigar was dropped
from nerveless fingers and smeared a white trail of ash across the green
cloth.

"What do they want?" asked Tetson, in a husky voice.

"Oh, they take whatever they want," replied Hemming; "the taxes that
are due you, and something besides from the unprotected." Then he retailed
the case of the poor woman. When he had finished Tetson did not speak
immediately. His benevolent face wore an expression that cut Hemming to
the heart.

"I must think it over," he said, wearily, "I must think it over."

CHAPTER IX.

MR. CUDDLEHEAD ARRIVES

Mr. Cuddlehead's trip, though free from serious accident, had been
extremely trying. The barcassa had cramped his legs, and the smell of the
native cooking, in so confined a space, had unsettled his stomach. He had
been compelled to wait three days in the uninteresting village at the mouth
of the Plado, unable to hurry the leisurely crew of the launch. But at last the
undesirable journey came to an end, and with a sigh of relief he issued from
beneath the smoke-begrimed awning, and stretched his legs on the little
wharf at Pernamba. He looked at the deserted warehouses along the river-
front, and a foreboding of disaster chilled him. The afternoon lay close and
bright in the unhealthy valley, and the very peacefulness of the scene awoke
a phantom of fear in his heart. What if the President were a man of the
world after all, with a knowledge of men and the signs on their faces? Why,
then, good-bye to all hope of the family circle.

A black boy accosted Cuddlehead, awaking him from his depressing

surmises. The nigger gabbled in the language of the country. Then he
pointed at the traveller's bag.

"Take it, by all means," said Cuddlehead.

There is one hostelry in Pernamba, on a side street behind the military

stables. It is small and not very clean. To this place the boy led Cuddlehead,
and at the door demanded five hundred reis—the equivalent of sixpence.
Cuddlehead doubled the sum, for after all he had done very well of late, and
a favourable impression is a good thing to make in a new stamping-ground,
even on a nigger. The proprietor of the inn bowed him to the only habitable
guest-chamber. Here he bathed, as well as he could with two small jugs of
water and his shaving-soap, and then changed into a suit of clean white
linen. With a cigarette between his lips and a light rattan in his hand,
Cuddlehead was himself again. He swaggered into the narrow street and
started in search of the President's villa. He passed a group of soldiers
puffing their cigarettes in a doorway, who stared after him with interest and
some misgivings. "Was the place to be invaded by Englishmen?" they
wondered. He saw a brown girl of attractive appearance, rolling cigars
beside an open window. He entered the humble habitation, and, after
examining the samples of leaf, in sign language ordered a hundred cigars.
Then he embraced the girl, and was promptly slapped across the face and
pushed out of the shop.

"What airs these d—n niggers put on," he muttered, "but maybe I was a
bit indiscreet."

Here, already, was the hand of Hemming against him, though he did not
know it; for Hemming, also, had bought cigars from the girl, and had
treated her as he treated all women, thereby establishing her self-respect
above the attentions of men with eyes like Cuddlehead's.

Cuddlehead found the gates open to the President's grounds without

much trouble, and was halted by the sentry. He produced his card-case. The
sentry whistled. The corporal issued from the guard-house, with his tunic
open and his belt dangling.

Just then Captain Santosa entered from the street, with, in the
metaphorical phrase of a certain whist-playing poet, "a smile on his face,
and a club in his hand." He swore at the corporal, who retreated to the
guard-house, fumbling at his buttons. He bowed to Cuddlehead, and
glanced at the card.

"You would like to see the President?" he said. "Then I will escort you
to the door." He caught up his sword and hooked it short to his belt,
wheeled like a drill-sergeant, and fitted his stride to Cuddlehead's.
 Mr. Tetson received the visitor in his airy office. He seemed disturbed in
mind, wondering, perhaps, if this were a dun from some wholesale
establishment on the coast. He had been working on his books all the
morning, and had caught a glimpse of ruin, like a great shadow, across the
tidy pages. But he managed to welcome Cuddlehead heartily enough.

"You must stay to dinner, sir,—pot-luck,—very informal, you know," he

said, hospitably. He leaned against the desk and passed his hand across his
forehead. He could not keep his mind from working back to the sheets of
ruled paper.

"Ten thousand," he pondered, "ten thousand for April alone, and nothing
to put against it. The army wanting its pay, and robbing me of all I have.
Gregory's coal bill as long as my leg. Sugar gone to the devil!" He sighed,
mopped his face, and looked at Cuddlehead, who all the while had been
observing him with furtive, inquiring eyes. He offered a yellow cigar, and
lit one himself.

"Excuse me a moment," he said. "I have something to see to. Here are
some English papers. I'll be back immediately, Mr. Cuddlehead, and then
maybe we can have a game of billiards."

He went hurriedly from the room.

"You are a foolish old party," remarked Cuddlehead to the closed door,
"and, no doubt, you'll be all the easier for that. Hope your daughter is a
better looker, that's all."

He tossed the offensive cigar into the garden, and seated himself in the
chair by the desk. His courage was growing.

At the hall door Mr. Tetson met Hemming entering. The commander
was booted and spurred.

"Are you busy?" inquired the President. "There's a visitor in here."

The Englishman glared.