PERU. 



tracts concluded during this period of eight 

 /ears. We shall, therefore, only take up the 

 thread of events as directly bearing on this 

 complicated question at the moment when 

 Chili, as the conqueror of Peru, took possession 

 of the territory in which the guano deposits 

 are situated. 



In December, 1879, Chili gave official notice 

 of her occupation of the guano and nitrate-of- 

 soda districts, and warned the French bank- 

 ing-houses with which Peru was negotiating 

 not to enter into contracts with the Peru- 

 vian Government, nor make advances on such 

 contracts. The Peruvian' agents applied at 

 once to the English bondholders, through the 

 Credit Industriel of Paris, after abandoning 

 the Soci6te Ge 116 rale and Dreyf uss, and offered, 

 under certain conditions, to transfer to them 

 the guano deposits. By doing so, they en- 

 gaged to do what they were unable to carry 

 out ; Chili consequently immediately took the 



atter into her own hands. The Chilian Gov- 

 ment offered the bondholders, on condition 

 f payment of a tax of 1 a ton on guano of a 

 low grade, and 30 shillings a ton for a higher 

 grade selling over 11, to put them in actual 

 possession of the guano, and that she would 

 hold herself responsible for having the agree- 

 ment maintained in the treaty of peace, when- 

 ever this was restored. The bondholders, at a 

 general meeting held on Feb. 2, 1880, accepted 

 the proposition unanimously. The committee 

 of Mr. Croyle and the one of Sir Charles Rus- 

 sell were thereupon blended into one, and a 

 few weeks later the joint committee began 

 chartering vessels for the loading of guano. 

 In the summer of 1880 it was ascertained that 

 Chili had resolved to turn the guano deposits 

 in the province of Tarapaca to her own use, 

 and that the tax on guano shipments from Pa- 

 bellon de Pica, Lobos, and Huanillos islands 

 was to be, without distinction, 30 shillings a 

 ton. But this was not all, for Chili virtually 

 shipped a number of cargoes for her own ac- 

 count, and informed the committee of bond- 

 holders that proof would have to be furnished 

 that the committee was a representative one in 

 fact. This proof was furnished early in 1881, 

 when, out of 33,000,000 outstanding bonds, 

 no less than 23,000,000 were registered at Mr. 

 Martin's bank, London. A temporary con- 

 tract, which the Chilian Government had made 

 with Messrs. MacKellar & Co., was supple- 

 mented in the spring of 1881 by a formal ar- 

 rangement with Messrs. Anthony Gibbs & Co. 



Toward the close of 1881, Anthony Gibbs & 

 Co. announced that 120,000 worth of guano 

 sales effected only netted to the credit of 

 the bondholders 17,829. The latter thus 

 perceived that, with the high tax on low-, 

 grade guano, there was little prospect of their 

 ever realizing much, if anything, from the 

 sales. The bondholders then made direct ap- 

 plication at the seat of government, and the re- 

 sult was the Chilian decree of Feb. 9, 1882, 

 agreeing to share equally with the bondholders 



in the proceeds of sales, and at the same time 

 ordering Messrs. Gibbs and MacKellar to liqui- 

 date their claims. Simultaneously tenders 

 were invited by the Chilian Government for 

 the conclusion of a fresh guano contract em- 

 bracing 1,000,000 tons, the Government declar- 

 ing its readiness to deposit 50 per cent, of the 

 net proceeds in the Bank of England. This 

 contract was made with a French syndicate of 

 capitalists. In May, 1883, it was estimated 

 that 260,000 had thus accumulated, and that 

 75 per cent, thereof ought to be distributed 

 among foreign creditors as the result of three 

 years' accumulations. 



On Oct. 20, 1883, the treaty of peace was 

 signed at Lima, in which it was provided that 

 the net proceeds of Chili's sale of 1,000,000 

 tons of guano, u after deducting the expenses 

 and other charges specified in Article XIII of 

 the said decree, shall be equally divided between 

 the Government of Chili and the creditors of 

 Peru whose claims may be found to be sup- 

 ported by the guarantee of the guano. When 

 the sale of this 1,000,000 tons is concluded, the 

 Government of Chili will continue paying over 

 to the Peruvian creditors 50 per cent, of the 

 net proceeds of the guano, as established by 

 the said Article XIII, until the debt is covered 

 or the deposits now being worked are exhaust- 

 ed. The products of the deposits or beds that 

 may hereafter be discovered in the ceded ter- 

 ritory are to be the property of Chili." 



Peru began the year 1884 with her finances 

 in a most deplorable condition. The additional 

 protocol of the treaty stipulates that " to meet 

 in part the expenses to be incurred by Chili in 

 maintaining the army of occupation, the Gov- 

 ernment of Peru will deliver monthly to the 

 general-in-chief of those forces the sum of 

 $300,000 in current silver coin, which sum 

 shall be appropriated from the national reve- 

 nues of Peru, with preference to the payment." 

 On Jan. 1, 1884, $100,000 had been paid to 

 the Chilians out of the $600,000 then due. It 

 was said that Chili would not press for the re- 

 mainder, but would hold Mollendo, the port 

 of Arequipa, and appropriate the customs due 

 there, then about $150,000 monthly, until the 

 monthly payments were satisfied. 



The Postal Service. In 1878 there were about 

 300 post-offices, and they forwarded inland 

 2,753,829 letters, and by the sea route, 2,051,- 

 202, besides 2,360,249 newspapers. 



Railroads. In 1878 there were in operation 

 1,581 miles of railroad, of which 1,210 miles 

 were Government property. Chili declined to 

 sanction the building of any new railroads in 

 Tarapaca prior to the ratification of the trea- 

 ty of peace. The famous Oroya Railway is a 

 stupendous work of engineering skill. It was. 

 originally intended to connect the Peruvian 

 sea-coast with the head-waters of the Amazon, 

 and establish communication with the rich sil- 

 ver-mines of Cerro de Pasca. The Peruvian 

 Government bore the expense, $25,000,000, 

 although only 86 miles have been completed, 



