No. 392.
Mr. Christiancy to Mr. Evarts.

No. 13.]

Sir: I have the honor to acknowledge the receipt of your dispatch to me (No. 145 series of dispatches to my predecessor) in reply to that of Mr. Gibbs, No. 317.

You will have seen by the dispatch of Mr. Gibbs of April 2, No. 326, [Page 875] as well as mine since that time, that prior to the date of your dispatch Peru had become a party to the war, Chili having declared war against Peru.

On looking over the dispatches of my predecessor, I find that he had given you a very correct and clear statement of the causes which led to the war. But aside from and back of all avowed causes of hostility between Chili and Peru, it is not difficult to discover a bitter prejudice and traditional animosity, originating with the conquest of Peru and Chili, between the Pizarros and the Almagros, a feud which resulted in the mutual extermination of both these families of butcher “conquistadores,” the retributive justice of which result will be equally accepted by the verdict of history, whether attributed to the working out of natural laws or to the dispensations of Providence, but the beneficence of which, to the present limited scope of human vision, would have been more apparent had it been accomplished before these monsters had been permitted to land on the shores of the New World, to extinguish a civilization more humane than their own, and to destroy (at least in Peru) useful improvements which the conquering race have never been able to equal or replace.

But little progress has been made in the prosecution of the war since my former dispatches, except in the raising of troops, which goes vigorously on. Chili thus far appears to have command of the sea.

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The Chilian fleet has completely put an end to the shipping of guano and nitrates, both held as government monopolies until now, and worked by neutrals on government account, the proceeds of which constituted the principal source of public revenue. The same fleet has bombarded some of the small towns along the southern coast, and established a blockade, which, however, is not kept up by the presence of an adequate force. They have also cut the cable, first at Iquique, and a few days past at Arica; and now, as the papers report, have prohibited the sending of messages in cipherby the cable, over which they have control, by any parties but the officers of their government.

Many of the operations of the Chilian fleet have probably been carried on, in part at least, for the purpose of provoking the Peruvian fleet to come out from the harbor of Callao and meet them on the open sea, away from the protection of the powerful forts and batteries by which this port is protected.

The Peruvians have been constantly repairing, strengthening, and fitting out their fleet, and there are now some indications of their undertaking some enterprise at sea.

While matters remain in their present condition upon the water, there is very great difficulty in bringing the opposing land armies near enough to each other to inflict any injury upon either. The desert of Atacama separates them, and it is very difficult, if not impossible, to transport an army or its supplies across it. This difficulty, while the Chilians dominate the sea, operates most injuriously upon Peru and Bolivia, as, from the nature of the country between the Andes and the sea, and that in the interior, among or between the two ranges of the Andes, the march of armies and the transportation of supplies are necessarily tedious.

The great need of Peru, especially, seems to be fast-sailing steam transports to carry her land forces, now concentrated here and at Callao, to the seat of war without being liable to be captured by the Chilian fleet. To supply this need, Peru has recently purchased from the Pacific Steam Navigation Company the steamers Casma and Oroya, [Page 876] and there are indications that one, if not both, of them is preparing for leaving port.

In the mean time, the delay in taking the offensive, and making their army actively efficient, seems to have produced a feeling of impatience, and charges of incapacity against the Peruvian Government, much like those which prevailed in our own war just previous to the battle of Bull Run, and the government will be compelled soon to make a forward movement of some kind or lose the confidence of the people, the great masses of whom are ignorant and impulsive, and easily led by demagogues or ambitious aspirants into any revolutionary movement.

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In the mean time, the effect of the war upon the finances has been most disastrous. Government paper, which is practically the only currency known here, and had sunk to less than 50 per cent of its nominal value before the war, has been sinking very rapidly since. The greatest reliance for its redemption was upon the guano and the nitrates, and these being cut off at the same time that immense expenditures are called for, for the support of the war, it is difficult to find methods of keeping up the public credit or supporting the operations of war.

The citizens have in great numbers enthusiastically tendered a large proportion of their wealth to support the war; but help from this source will be but temporary, or not in sufficient amount, though the war is popular with all classes.

The plan which seems just now most likely to be adopted by the government is that of issuing 8,000,000 of paper soles, in addition to the 17,000,000 already out.

Under the influence of all these causes, the paper sole (whose nominal value was equal to five francs in silver) had, when I arrived here, a month since, so far depreciated that it was worth slightly less than 20 pence in exchange on London, which consisted of drafts at ninety days’ sight, equal to 120 days’ date, and to-day the paper sole is worth, in that kind of exchange, only 16 pence, and even a little less. The American double eagle will, for limited amounts of a few thousand dollars, to-day purchase from 58 to 60 soles paper.

The effect upon neutral shipping, especially that engaged in the shipment of the guano and nitrates, has been still more disastrous; nothing short of ruinous. The whole business is utterly destroyed; the loss falls heaviest, it is true, upon British ship owners, most of these products being shipped to that country; but a large number of American ship owners were engaged in the same trade, under charter parties taken from an English company, describing themselves as agents of the Peruvian Government, by which the ship owners were made to assume all the risks of war. Some of these had part of a cargo on board, some waiting to begin loading; but all were compelled to leave, and the works were destroyed.

The government seems to wish to act in entire good faith, and gives notice that all these vessels may abandon the contract with the government or wait till the government can open other deposits, which they are attempting to do $ that any vessel partly loaded may proceed to deliver at the port of destination in England what it has on board or put it on any other vessel for that purpose, &c.; or it may abandon the contract.

Neutral commerce in every form along this coast is suffering severely, and most of the business employing much capital is carried on by neutrals. In short, neutrals are losing more heavily by this war than citizens of [Page 877] any of the belligerents, because they had much to lose and the belligerents very little.

The Government of Peru is doing all it can to encourage neutral commerce. Some days since a prominent member of Congress introduced a measure to prohibit all vessels touching at Chilian ports from landing in Peruvian ports, and all touching at Peruvian ports from proceeding to Chili. But the British and French and the Italian minister and myself contrived, in an informal manner, to suggest that such a measure would conflict with the eighteenth article of our treaty, and like provisions of the French and Italian treaties, and even with the British, which under a peculiar “favored nation” clause, gave the same rights as ours. The measure contemplated (by the member) has not been pushed. The government never favored it, and now an act has just been passed by Congress and approved and promulgated by the executive, May 9th, which throws open the coasting trade of Peru to foreign vessels on the same terms as allowed to the vessels of Peru, until otherwise ordered by Congress.

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Peru was drawn into this, war in consequence of her treaty with Bolivia, and because the latter when attacked by Chili claimed of Peru the fulfillment of her treaty stipulations.

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Since writing the above, the lower house of Congress has by a decisive vote, rejected the proposition to issue more government paper, and seems now disposed to resort to a loan for $15,000,000; $8,000,000 of which to be applied to the redemption of government currency now outstanding, and the balance to meet war expenses.

The two houses have also just resolved, by a vote of 77 to 44 to put on only 2 per cent. ad-valorem export duty on sugar, and by an absolute majority reject the plan recommended by the executive for increasing all custom-house duties 25 per cent.

I have, &c.,