Mr. Baker to Mr. Gresham.

No. 179.]

Sir: Referring to my dispatch No. 170, of December 9, I beg to say that the troubles between Nicaragua and Honduras still continue.

The Honduranean refugees in this country, about 1,600 strong, and armed and equipped by Nicaragua, crossed the border of Honduras and marched against the Honduranean villages of Cholutua and Corpus. No details are known of their success so far, though there are reports of their defeat by the forces of Vasquez. The Nicaraguans, about 3,000 strong, are on the border as an army of observation, and are awaiting acts of hostility of Vasquez against Nicaragua to cross the frontier also and aid the Honduranean invaders, who are now under the leadership of Policarpo Bonilla.

It is very difficult to obtain authentic news, as the means of communication with the frontier are exceedingly meager, and the Government jealously keeps from the public any information in the least unsatisfactory.

It has been the general impression here, since the time the Honduranean refugees aided the Leon Liberals in taking Managua, that there was an understanding with them to help them in a revolution against Vasquez, and present events seem to justify that belief. I shall keep the Department advised of all authentic news I shall get from the seat of war.

I beg to remain, etc.,

Lewis Baker.