116 



CHILI. 



was grave, against Chili and Peru, and fastened 

 upon ner the exclusive responsibilities for all the sad 

 consequences of the war in which she involved four 

 republics. Appealing to the judgment of one ar- 

 bitrator, Chili and her allies would not be able to 

 renounce the reparations which their enemy owes 

 them, nor the right of fixing by themselves the 

 character and magnitude of those reparations. Such 

 are the reservations which my government, in con- 

 currence with her allies, has believed it indispensable 

 to make in order to be able to lend its adhesion to 

 the propositions of settlement of the cabinet at 

 Washington. 



On March 31st and April 1st the election of 

 representatives for Congress took place. The 

 government carried its ticket in a majority of 

 the districts. The Conservatives have, in the 

 new Congress, a large majority ; a considerable 

 number belong to the Moderate Liberals, and 

 only a few are memhers of the Radical, or, as 

 it is called in Chili, the National party. The 

 new Congress was opened on June 1st. The 

 following are a few of the most important 

 points in the President's message : 



The mediation of France and England* for a per- 

 manent peace could not be accepted, as it did not 

 meet the requirements deemed necessary by the 

 allies, but for an indefinite truce negotiations are 

 still going on. While the proposal made by the 

 United States for a Congress at Washington to settle 

 the difficulties between Spain and the allied republics 

 was acceptable to Peru, Chili saw grave objections to 

 such a Congress, and so in order not to interrupt the 

 good feeling existing between the two countries, she 

 sent her Minister of Foreign Affairs to Peru, who, in 

 conference with her cabinet, effected a complete 

 unison between the views and determinations of the 

 two republics. 



The relations between Chili and Peru are of the 

 most satisfactory character. 



The treaty of boundaries between Chili and Bo- 

 livia has been ratified by the contracting parties, 

 and exchange of these ratifications has given force 

 to a treaty which destroys every germ of discord 

 in the mutual relations of the two States. 



The treaties recently signed at Lima by the min- 

 isters of Chili, Bolivia, and Ecuador, will shortly be 

 submitted to Congress. The establishment of free 

 trade by the suppression of custom-house dues, and 

 in general the tightening and strengthening of all 

 the ties of intercourse between the contracting re- 

 publics, are the essential aims and objects of these 

 treaties. 



Peru was a^sked to take part in these treaties, but 

 from transient circumstances was prevented. Nego- 

 tiations are going on for a postal arrangement with 

 Great Britain, which Americans truly hope will be 

 followed by one with the United States, as the 

 greatest confusion exists in the postage and quick 

 delivery of the mails. . 



The 'revenue of 1866, compared with that of the 



* The substance of the propositions made by England and 

 Trance was as follows : 



1. The demand for the salute to the Spanish flag to be 

 withdrawn. 



2. A reestablishment of the treaty of January 27, 1S65, 

 between Peru and Spain. 



3. A declaration by Bolivia and Ecuador, establishing the 

 same relations with Spain as existed previous to the decla- 

 ration of war. 



4. .A revocation of the edict expelling residents of Spanish 

 birth, from the allied republics, and the conditions imposed 

 upon them in case of a continued residence. 



5. A reciprocal indemnification for the injuries sustained 

 by the belligerents prior to the declaration of war. 



6. An exchange of prisoners. 



7. A reciprocal restitution of prizes, and no indemnifica- 

 tion for such as may have been destroyed. 



preceding year, shows a falling off, which does not 

 amount to $100,000. The blockade of Valparaiso 

 and the consequent free importation of foreign goods, 

 which produced a decrease of more than $700,000 in 

 the custom-house receipts, would have made the 

 falling off alluded to much greater, had it not been 

 for^the compensation offered by the natural augmen- 

 tation in the produce of the other branches of reve- 

 nue. 



In the present year Chili has raised a loan in Lon- 

 don, of the nominal amount of 2,000,000 sterling, 

 the net product of which will be nearly 1,600,000 

 and will be applied principally to the redemption of 

 the Anglo-Chilian loan, and to the covering of the 

 deficit occasioned by the purchase of war material. 



The sum remaining from the last loan, the increase 

 in the receipts of the custom-houses, and the rail- 

 way between Santiago and Valparaiso receipts 

 which during the first four months of thisyear have 

 exceeded those given in a similar period of former 

 years, by $600,000 the greater yield to be expected 

 from the reform of the tax on the licenses to exer- 

 cise any profession or trade, and stamped paper, and 

 the future tax on legacies, concur to assure an easy 

 position to the public treasury for some time. 



Affected by the blighting influence of war, com- 

 merce was last year in an unsatisfactory state. Im- 

 ports had diminished, and exports had only increased 

 by $1,000, 000. At the present moment, circumstan- 

 ces have happily completely changed. Exports have 

 taken a development unknown in this country, and 

 the increase of imports shows itself in the increased 

 receipts at the custom-houses. 



Through the friendly mediation of France an ex- 

 change of prisoners with Spain has been arranged, 

 and the vessel taking them to France has left our 

 harbor. About the Chilian prisoners nothing is 

 known, but it is to be supposed that they are on 

 their way home, in accordance with the terms of 

 the agreement. 



Notwithstanding the willingness of the Chilian 

 Government conditionally to accept the proffered 

 mediation of the United States in the war of 

 the allied republics against Spain, no formal 

 agreement with Spain was arrived at. Hos- 

 tilities were, however, not resumed, and the 

 nominal continuance of the war did not deter the 

 Chilian Government from carrying on its public 

 works in Valparaiso, as they presumed their 

 defensive works to 06 of such a nature as to 

 inspire the Spaniards with sufficient fear to 

 respect them, or at least convince them that a 

 second visit would not be so much to their ad- 

 vantage as the first was. Of the fortifications 

 of Valparaiso, a Belgian engineer, who had had 

 charge of the fortifications at Callao, made a 

 report, which says : " They not only afford the 

 advantage of engaging the enemy at a very con- 

 siderable distance on the sea side, thus render- 

 ing a bombardment almost impossible, but from 

 the beginning of the engagement the fire of the 

 assailants against the city and the batteries 

 which defend its approaches will be ineffectual. " 

 While preparing for defence, the Chilian Gov- 

 ernment refrained from any aggressive act. 

 A member of the cabinet officially stated in 

 Congress, on July 28th : " There has never 

 existed a truce between the Spaaish Govern- 

 ment and the Governments of the allied South 

 American republics ; neither have the offices 

 of any other government been accepted to bring 

 about a settlement of our difficulties. But the 



