Mr. Frelinghuysen to Mr. Phelps.
Washington, August 25, 1883.
Sir: I transmit herewith for your information a copy of a dispatch* from Mr. Logan, communicating the text of the protocol signed between General Iglesias and the Chilian general Norva leading to a definitive treaty of peace.
An examination of the terms of the protocol shows that the foreign debt of Peru is guaranteed only to a limited extent by a portion only of the guano product, the overplus, as well as all future discoveries of guano, to go to Chili.
This Government does not undertake to speak for any other than the lawful interests of American citizens which may be involved in this, settlement, but as to them it must be frankly declared and unmistakably understood that the United States could not look with favor upon any eventual settlement which may disregard such interests.
It may be difficult for you, in concert with your colleagues, to advocate any determinate solution of the embarrassing questions relating to the other foreign debt of Peru, since this Government cannot undertake to advocate the interests of any class of bondholders or other legitimate creditors of Peru without exercising a like watchful consideration for the interests of all. It seems, however, to be essential to a just and lasting peace either that Peru should be left in a condition to meet obligations toward other Governments which were recognized prior to the war or which may be legitimately established, or that if Chili appropriates the natural resources of Peru as compensation for the expenses of the war she should recognize the obligations which rest upon those resources, and take the property with a fair determination to meet all just incumbrances which rest upon it.
The President would see with regret any insistance by Chili upon a [Page 712] policy which would impose upon Peru heavier burdens than she has been disposed to impose during the past negotiations.
Better terms, if offered, would be appreciated by him as a friendly recognition of the earnestness which this Government has shown in endeavoring to bring about an honorable and equitable end to the painful strife.
A copy hereof is sent to your colleagues, Mr. Logan and Mr. Gibbs, for their information.
I am, &c.,