No. 94.
Mr. Osborn to Mr. Blaine .

No. 201.]

Sir: In my No. 198, in speaking of the prospects of peace, I informed you that Mr. Altamirano, one of the ministers authorized to treat with Peru, was on his way to Chili. Since his arrival he has had extended interviews with the government regarding the situation in Lima, and as a result I have good reason for believing that the President’s hopes touching the government of Calderon have been very seriously weakened. The impression seems to be gaining ground that the demoralization prevailing in Peru is so great as to prevent the establshment, at present, of any government with sufficient solidity to warrant Chili in negotiating with it. If this should become the view of the government, as seems probable, the indications are that the policy for the future would involve the removal to Chili of all valuables belonging to the Government of Peru, the destruction of all means of defense, and the withdrawal of the Chilian forces to Arica. From this point, it is inferred, they would watch with interest the movements of the factions in Peru in their struggles for the ascendency. Minister Vergara has been sent for, and is expected in a few days, when it is understood a definite course is to be determined upon.

If the policy which I have outlined should be adopted, all talk regarding a formal peace would be mere speculation.

I have, &c.,