Mr. Thompson to Mr. Gresham.

No. 220.]

Sir: Since the surrender and escape of Saldanha da Gama, in military operations the utmost quiet has prevailed at Rio de Janeiro, and business has resumed its usual channels. The Portuguese war vessels, Mindello and Albuquerque, with da Gama and other refugees on board, went from here to Montevideo and from there to Buenos Ayres, where a number of the refugees landed from the ships, it is stated, without the consent of the commander. A demand for them is reported to have been formally made afterwards by the representative of Portugal, and the Argentine Government refused to give them up. This, it was believed, would make an issue between the governments of Portugal and Argentina similar to the question of asylum pending between Portugal and Brazil; but later advices indicate that the entire number of refugees taken on board the Portuguese vessels will be transported to Portugal, and thus the issue may be avoided.

Authentic information has been received confirming the reported successes of the Government forces at Rio Grande do Sul, wired you on the 12th instant. The rebels were driven from the shore back to their ships, with heavy losses, and left the port before the Government fleet arrived.

Confirming my cipher telegram of yesterday, authentic information has been received from Buenos Ayres and Montevideo announcing an engagement at Desterro on the 16th, between the Government squadron and the Aquidaban, which resulted in the sinking of the Aquidaban near the shore by torpedo boats, under the command of Admiral Gonçalves of the Brazilian navy, whose flagship is the Nictheroy. Also, the arrival of Mello with, five ships, the Republica, Esperança, Iris, Meteoro, Uranus, and 1,200 men, who asked and were granted an asylum by the Government of Argentina. The ships were taken possession of by the Argentine Government, and, it is stated, will be turned over to Marechal Peixoto when called for. The Government having now gained complete control of the three southern States lately in rebellion, viz, Paraná, Santa Catharina, and Rio Grande do Sul, and driven the revolters from the territory of Brazil, the revolution seems to be practically at an end. Gumacindo, having fled to the mountains of Uruguay, may continue his raids upon the people of Rio Grande do Sul for a [Page 59] time. It is stated that 4,000 rebels have taken refuge in Argentina and Uruguay. President Peixoto has been gloriously triumphant in all his undertakings against the insurgents, though the odds at times seemed to be largely against his success. His splendid executive ability and dauntless courage have won the victory. The permanency of Brazil as an American Republic is now assured.

I have, etc.,

Thos. L. Thompson.