No. 562.
Mr. Cashing to Mr. Fish.

No. 34.]

Sir: The raising of the siege of Bilbao by the republican forces under the command of General Serrano and General Manuel de la Concha, was a political as well as a military triumph for the government, and to the Carlists it was not only a military defeat, but also a political disaster, inasmuch as it obstructed, if it did not absolutely prevent, their obtaining further pecuniary resources in France and England; but it did not suffice to subdue the spirit or overcome the tenacity of the Car-lists, although it has produced material change in the strategy as well of them as of the republicans.

At the present time the republicans continue to hold the most important positions on the sea-coast of the Bay of Biscay, including uninterrupted communication by rail between Madrid and Santander. But scattered parties of Carlists are still operating in all parts of Vizcaya, as well as of Guipuzcoa and of Alava. The same general state of facts occurs in Navarre, and also in a very considerable part of Catalonia, Aragon, and Valencia. From time to time these detached parties sally from their fastnesses in the mountains to levy contributions, depredate, kidnap, and murder in the contiguous regions of Old Castile, and in those of Catalonia, Aragon, and Valencia not permanently occupied by them.

Meanwhile the Carlists occupy the entire land frontier on the side of France, and the adjoining districts of France from Pau to Bayonne are their place of refuge, their source of supplies, and their seat of military and political conspiracy against the government of Spain.

Carlists also control, or interrupt when they please, all the lines of railroad from Madrid to the northern land frontier and to the northeastern or eastern sea frontier. The direct line from Madrid to France, by the way of Iran, is permanently stopped, and the line from Barcelona, by Saragossa to Madrid, has been stopped repeatedly during my short residence at Madrid, as also has been the line from Valencia to Al-mansa.

Most of these detached parties of Carlists are of a relatively small [Page 888] number of persons, headed by petty chiefs, cabecillas, as they are called; but some of them are of very respectable numbers, amounting to several thousands, such as one at least of the parties operating in Aragon and Valencia. Over two of the larger of these parties the government has lately gained victories.

But the Carlists have been compelled to concentrate the mass of their forces in the southern part of Navarre by reason of the movements of General Manuel de la Concha, who, starting from Bilbao, and leaving garrisons on the way at selected strategic points, has traversed Vizcaya and Alava, and proceeded along the general line of the Ebro, for the purpose of thus advancing on Navarre, so as to cut off that province from the three Basque provinces, and to attack the Carlists in what is called their stronghold, namely, Navarre.

As the result of this movement Concha now has a large force of all arms, and especially well provided with artillery, echeloned from Logronõ by Lodosa and Sesma, threatening Estella, which is the present military headquarters of the Carlists.

Here the advanced posts of the respective armies are already in sight of one another, in daily expectation of engagement. The Carlists, uncertain at what point or on which side the republicans may attack Estella, have been driven to the necessity of extending and therefore greatly weakening their line, so as to defend the various possible points of attack; while Concha, throwing out parties to threaten the different points of the long line of the Carlists, is preparing, in his own time, to bring up the mass of his forces against some selected point of that line, and thus light to advantage and enter Estella.

The people in Madrid are all now in daily and solicitous expectation of the impending battle, which, if gained by the government, may not at once terminate the war, but caunot fail to constitute a fatal blow to the hopes of the Pretender. I have, &c,