No. 286.
Mr. Phelps to Mr. Frelinghuysen.

No. 86.]

Sir: A few days since I telegraphed that the negotiations for a truce between Chili and Bolivia had failed.

* * * * * * *

Renewal of hostilities between Chili and Bolivia was expected by the Government here and by the Chilians at headquarters. Preparations were making. The Peruvian minister had returned from La Paz to represent to his Government the feeling existing in Bolivia concerning the continued occupation by the Chilians of Puno, and their stoppage of intercourse by that route. These serious complications have been removed by the signature of the truce, bereft, however, of two important provisions which it is known were insisted upon by Chili, viz, exclusive trade of Bolivia with the Pacific through the port of Arica, and the right to construct a railway from the vicinity of Antofagasta to the interior of Bolivia. Chili doubtless found it politic to recede.

Combinations looking to the submission of Caceres, coupled with an influential support of the Government hoped for, failed, largely so because of the pretensions of Chili to further indemnity in the event of having to assume Peruvian indebtedness for Tarapacá.

I observed a feeling that, cost what it might, these parties thought it necessary to assist Caceres with funds, that he might still retain the only force in Peru that would protest against further spoliation. But the Chilians are to attack him as soon as the rains pass, and he will be unable to offer effective resistance.

I have, &c.