No. 447.
Mr. Phelps to Mr. Frelinghuysen.

No. 2.]

Sir: It is as difficult to obtain reliable information as to form an opinion respecting the status of affairs generally in this country, and I shall confine myself to relating what appears to be fairly reliable respecting current events.

The Chilians are steadily pursuing the intention of attaining peace through Iglesias, whom they are supporting to that end. The battle of Hanamachuco, as I understand it, was fought solely in his interest. General Caceres was threatening Cajamarca, and probably expecting to capture Iglesias. A Chilian force, penetrating the interior from the northern posts, intercepted Caceres and defeated him, the loss upon both sides having been heavy. This result left Iglesias free to organize his movement and to leave the interior for Trujillo, on the coast, where he will, I am informed, prepare for the occupation of Lima, his family having already arrived here.

General Lynch told me that Iglesias could not safely occupy the city with less than 1,500 troops, and that a Chilian force would be disposed in the vicinity to assist should the need arise in maintaining peace.

It is probable the authorities of Chili do not anticipate permanency for a Government so established, but if it can make peace with them, and maintain itself until the troops are embarked, it will have served the purposes of Chili. The commanding general certainly expresses the utmost confidence in the installment of the proposed Government in Lima, and he stated that entire quiet had reigned at Cajamarca and in the north since the departure thence of General Iglesias.

There is a growing feeling here in favor of the Iglesias movement, arising in the sentiment that peace must be made upon any terms that can be obtained. It is admitted that Iglesias is an honest man, is not ambitious of presidential power, that he is really pursuing a patriotic purpose, having left his estates at the north to enter upon a mission that will be, to a greater or less degree, a sacrifice of himself to his country.

Señor Calderon’s course in the negotiations with Chili drew to him the sympathy of a large portion of intelligent Peruvians. * * * The following he has is personal, not extending to Montero. General Caceres, now second vice-president of the Calderon government, is reputed a soldier.

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Some of the most reputable men, however, are coming to the support of Iglesias, in many instances because it is affirmed that the authorities of Chili refuse absolutely to treat with the Calderon government at Arequipa.

A Chilian force of some 4,000 men is moving directly from this city back into the interior, as is surmised, to cut off any attempts at operations by Montero, or otherwise, undertaken with a view to interference, with the organization by Iglesias of local governments where his supporters are able to move.

It will thus be seen that the power of the Chilians is so great here that they will not only succeed in establishing Iglesias, but that the desperate necessity for peace will give him, it is probable, supporters enough to form a Government at least as constitutional in character as was either that of Piérola or of Calderon. It is also understood that a committee left here yesterday for Arequipa, for the purpose of urging upon Montero to unite with Iglesias in the selection of some third party to be placed in power, to make a treaty of peace, or should the Chilians, having gone so far with Iglesias, refuse to treat with any other person, then to unite with him to secure a peace.

Montero has some 4,000 well-armed troops at Arequipa, and would be a most dangerous person if refusing to take part in or to recognize a peace made without his participation.

I have been well received by the Chilian authorities here, and am told by the officers of our squadron at Callao that improved relations exist between them and the officials of Chili, both ashore and afloat.

Mr. Gibbs is not yet entirely re-established in health, and I have encouraged him in remaining here until he shall be really fit to encounter the rigors of a La Paz winter, and meanwhile am quite sure he is doing-good service here and obtaining information that will be of value in Bolivia.

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I have, &c.,