"Ask me another, my boy," rejoined his companion. "They gave out that they were for maintaining friendly relations with the Republics of San Benito and San Valodar; or, in other words, those battleships are guarantees for a free passage between Rioguay and the open sea. They're building others like them over there. A couple of thousand skilled Japanese artisans were brought over eighteen months ago. I did hear that they can turn out a fully equipped battleship for three million dollars.... There's the submarine base."

Peter looked in the direction indicated. All he could detect was a solitary submarine, bearing a strong resemblance to the late unlamented Unterseebooten that played such an important part in the downfall of the German Empire.

"There are others," continued his mentor. "About twenty, I believe; but where their base is actually, I don't know. It's somewhere about here, but where exactly I've never been able to find out."

Slowing down, the little steamer entered one of the creeks comprising San Antonio harbour. It was not the largest, but its shores were occupied by at least half a dozen building slips on which were craft in all stages of construction.

"For passenger and cargo traffic between Rioguay and the West Indies and Brazil," explained Mackenzie. "A sort of national enterprise. The capital was issued in five-dollar shares, giving each holder the chance of winning a big prize. That sort of thing, anything of the nature of a lottery, appeals to the Rioguayans. The required capital was over-subscribed in less than a week."

As soon as the steamer berthed alongside the wharf, Mackenzie bade Peter "au revoir" and went ashore together with half a dozen other passengers, mostly Brazilians.

Five hours later Peter Corbold set foot on Rioguayan soil at the busy little port of Tepecicoa, being in the awkward position of knowing no word of Spanish and having no one to act as an interpreter.

But that troubled him very little. His previous experience of foreign ports stood him in good stead; while having previously provided himself with a large-scale map of the district on which El Toro, his uncle's abode, was plainly marked, he had no great difficulty in finding himself upon the right road. He travelled light, his baggage having been detained at the Custom House for examination.

Peter had cabled out to his uncle from England, stating that he was sailing in the Royal Mail steamer Tagus, but the date of his arrival at El Toro was a matter for speculation. Nor was the ex-naval officer aware that there was direct telephonic communication between Tepecicoa and his destination, and that electric cars passed within two hundred yards of the place.

It was undoubtedly a day of surprises. Peter had expected to find a tenth-rate South American republic, peopled, for the most part, by swarthy ruffians, with long knives conspicuously carried in bright-coloured sashes. He had imagined the town of Tepecicoa to be dirty, squalid, swarming with beggars. Instead, he found broad, tree-planted streets and spacious plazas, lighted by electricity and provided with broad, shady, and remarkably clean pavements. There were Indians and half-castes in profusion, looking certainly far from being poverty-stricken. In fact, he did not see a single beggar. There were plenty of people on horseback, and quite a number of motor-cars that obviously had been imported from the United States.