File No. 723.2515/125.

The American Chargé d’Affaires at Santiago to the Secretary of State.

[Telegram.]

My April 1. Peruvian counter proposal on the basis of dividing territories, received yesterday by Chilean Minister for Foreign Affairs through Brazilian Minister, was found utterly unacceptable as Chile needs both territories for military defense. The Minister for Foreign Affairs says he told Brazil that Chile would be disposed to pay as much as three million pounds sterling indemnity for both Tacna and Arica and that if Peru would accept the decision of a third nation or of the United States, Brazil and Argentina on the basis that Chile will keep Tacna and Arica, Chile would be willing to pay even more should the Powers so decide, and also to cede Tarata.

Pierrepont.