Mr. Christiancy to Mr. Evarts
Lima, Peru , May 21, 1879. (Received June 16.)
Sir: Since my last dispatch of May 21 (No. 16), viz, on the morning of the 22d, the Chilian fleet (with the exception of the Esmeralda and Covadonga) appeared off the harbor of Callao and remained for several hours, when, without attempting anything, it sailed for the South, having, as is supposed, learned from some fishermen the previous departure of the first division of the Peruvian fleet (mentioned in my last). Their expedition to Calico had given the Peruvian fleet time to transport in safety a considerable part of their army here, with munitions and supplies to the towns along the southern coast of Peru—Mollendo, Pis-agua, Arica, and Iquique—and also to transport a part of the Bolivian army from Arica as far as Pisagua, and to form a junction of the Peruvian with the Bolivian army.
Since that time, and while the Peruvian and Chilian fleet were mutually ignorant of the whereabouts of the other, it is reported here, and I think correctly, that the Huascar (Peruvian) attacked and sank the Chilian steam-corvette Esmeralda at or near Iquique; and the steam frigate [Page 880] Independencia, chasing the Chilian Covadonga, and when on the point of reaching her (on her flight for the shore) ran aground or upon a reef, from which it was found impossible to get her off, and she was abandoned and burnt or blown up by the Peruvians themselves.
This is a serious loss to Peru, but does not, in my estimation, overbalance the advantages gained by Peru in this expedition to the South. But this may yet depend much upon what the Huascar may have been able to accomplish before the arrival there of the Chilian fleet, and upon her success in avoiding the Chilian fleet. But unless she waits too long she will probably easily evade that fleet, as it is composed of very slow vessels; and some of the Peruvian transports which went south have returned without seeing the fleet.
The effect of the war upon the finances becomes every day more disastrous. Exchange on England is now quoted at 16 pence per sole, and an American double eagle is worth to-day 62 soles.
I inclose a copy of the act of the Peruvian Congress passed for the purpose of providing ways and means by loan and taxes. This is taken from the South Pacific Times, but is translated with substantial accuracy.
I have, &c.,