No. 67.
Mr. Cabrera to Mr. Evarts.

[Translation.]

Sir: In reference to the subject which I had the honor to broach to your excellency, in the name of my government, on the 3d instant—the conference which you were pleased to accord to me, at my request, having then remained pending—I take pleasure in laying before your excellency’s government the latest intelligence that I have received from the [Page 91]Pacific touching the war subsequently to the occupation of Lima by the Chilian army.

According to this intelligence the government of Peru had retired to the departments of the south. Mr. Pierola, the president, having declared that the seat of government is where the executive is, Mr. Aurelio Garcia y Garcia had been appointed secretary-general.

The government of Peru, on taking its departure for the department of Arequipa, was firmly purposed to continue the war to the utmost extremity. This information is contained in a telegram which has been received by Mr. Ramon I. Garcia, chargé d’affaires of Peru near your excellency’s government.

General Baquedano, moreover, who is in command of the Chilian forces which have occupied Lima, had addressed an official communication to the municipal government of the capital of Peru, apprising it of the necessity of forming a board composed of the principal citizens, that it might designate a provisional government with which an armistice might be concluded or some other arrangement made. The municipal government had replied that, inasmuch as President Pierola’s government was still existing and had received its powers from the nation, no municipal government or board of principal citizens could arrogate to itself the right to appoint another government.

General Baquedano had likewise addressed a communication to the supreme court of Peru, requesting it to re-enter upon the discharge of its functions, but the court had replied declining to do so.

As to Bolivia, it is known that her army was to march against Tacna under the command of General Campero, the president of the republic, and in concert with a portion of the army of Arequipa, on the 15th of last month.

It was also known that she had received a supply of arms, and expected to receive more, through a reliable channel.

All this shows that the occupation of Lima has not ended the war, and that, so far from this being the case, the governments of Peru and Bolivia will continue it with greater activity than ever.

Nevertheless, some solution must be sought that will put an end to the present state of things, and I firmly believe that, an earnest desire existing to secure an honorable peace, and one that will meet all present as well as all future requirements of the belligerent nations, some combination acceptable to all parties is not impossible.

To this effect I beg leave to offer the plan contained in the documents numbered 1 and 2, and herewith inclosed, to the consideration of your excellency’s government.

This plan, if carried out, would, in my judgment, meet all the difficulties that have given rise to the war, they being simply the wealth of Peru and Bolivia.

It would systematize the working and management of that wealth in the interest of universal commerce; in the interest of the markets which purchase guano and saltpeter; in the interest of the owners of the territory containing these valuable substances, and in the interest of modern civilization, which loves peace and detests war.

In a political point of view it would prescribe the right of conquest; and as regards the stability of the South American nations, it would firmly establish the uti possidetis principle, which is the foundation of their nationality and independence.

Moreover, with regard to the manner in which the guano and saltpeter deposits of Peru and Bolivia have hitherto been worked by European [Page 92]capital, long years of experience have shown that there is need of a new element, capable of giving renewed vigor and a different form to the industry and commerce of those republics.

With the most respectful and cordial sentiments, I am, &c.,

LADISLAO CABRERA.
[Document No. 1.]

plan.

1st.
The organization of a company in the United States is suggested, for the purpose of working the guano and nitrate deposits of Peru and Bolivia, the company to consist of powerful capitalists, and the effective capital and organization to meet the approval of the Governments of Chili, Peru, and Bolivia.
2d.
The three governments to turn over to the company, for the period of ——— years, the entire and exclusive control and administration of the districts claimed by Chili by right of conquest, as well as any guano deposits not so claimed, and to guarantee their pacific occupation by the company.
3d.
The United States Government to guarantee that the company shall remain in peaceable and undisturbed possession and administration of the districts to be designated in the contract.
4th.
From the proceeds of the working of the guano and nitrate deposits, the company to retain such amounts as may be indicated in the contract, and to apply the remainder in such proportions as Chili, Peru, and Bolivia may arrange by treaty—
  • First. To the war indemnity which may be agreed upon.
  • Second. To the payment of nitrate certificates.
  • Third. To the existing foreign loans of Peru.
  • Fourth. To the Peruvian Government.
  • Fifth. To the Bolivian Government.
5th.
The company is to establish its own agencies in the various markets of the world, conduct and manage all sales of the guano and nitrate, and manipulate both products within limits to be agreed upon; but the entire operations of the company shall be subject to periodical report and inspection.
6th.
The contract company to have authority to capitalize, in the form of a public loan, the war idemnity and the nitrate certificates; and, if it be found convenient by the company, the Peruvian loans of 1870 and 1872 may be included in a single consolidated issue; the rate of interest, sinking fund, issue-price, commission, &c., to be agreed upon in consultation with the three governments.

Should a loan be negotiated, Chili to be paid the full war indemnity at once, and to release all claim and charges upon the guano and nitrate deposits and districts of both Peru and Bolivia held by the company, but not to retire her obligation guaranteeing the pacific occupation by the company of the districts confided to its administration.

[Document No. 2.]

Financial Statement.

Tons.
Annual guano product of Peru 350,000
Annual nitrate product of Peru 275,000
Annual nitrate product of Bolivia 60,000
£ s. d.
Total cost of the guano delivered to the buyers in Europe, per ton 4 10 0
Lowest selling price 12 10 0
Cost of nitrate delivered in Europe to the buyers, per ton 9 0 0
Average selling price of nitrate for ten years, per ton 14 14 0
From the above data we have on guano a profit of, per ton 7 10 0
Or on 350,000 tons per annum £2,625,000
Profits per ton on nitrate £5 14s. 0d., or on 335,000 tons per annum 1,909,500
[Page 93]Total annual income £4,534,500
Deduct 7½ per cent. for profits of the contract company and contingencies on gross product of £4,200,000 of guano and £4,924,500 of nitrate 684,337
We have net annual income £3,850,163

debts.

Chilian war indemnity, say £6,000,000
Nitrate certificates 4,000,000
10,000,000

Suppose the issue of a loan to pay off the war indemnity and the nitrate certificates, say, including discounts and commissions, £11,000,000. Five per cent. interest and 1 per cent. sinking fund would require as annual service £660,000. The total net income above calculated is £3,850,103. Deduct annual service of loan above estimated, £660,000. Remainder, £3,190,163, applicable to the Peruvian loans of 1870 and 1872 and to the Governments of Peru and Bolivia.