File No. 838.00/1176.

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Government forces were badly defeated near Cape Haitien yesterday. More than 100 reported killed and a number wounded and made prisoners. Government troops have retreated about 25 miles abandoning arms and ammunition. It is currently reported that ammunition is being supplied to revolutionary forces by Dominicans, a large quantity having been delivered to them by sailboat from Monte Christi on May 11. New paper currency in circulation here today.

Davis.