National jBanhmtptcy in the Land of Gold. 28 



The sales of guano and the production of gold and silver 

 made Peru a proud and wealthy nation. Everything prospered 

 until the war with Chili, from 1879 to 1883, ending in the defeat 

 of Peru and the loss of a portion of her territory, including a large 

 part of her guano deposit. She was unable to keep her railroads 

 in operation, much less to extend them, or to pay the interest 

 on her bonds ; and thus bankruptcy followed defeat. At last, 

 after fourteen years of default and six years of negotiation, a con- 

 tract was concluded with Peru by Mr. M. P. Grace, of New York, 

 in January, 1890, on behalf of the bondholders. The bond- 

 holders became concessionaires, and in consideration of the release 

 of the bonded debt due to them by Peru, receive valuable 

 concessions, of money, of mines, of railroads, of lands and of 

 guano. These concessions include among other things a govern- 

 ment subsidy of $400,000 a year, secured from the customs of 

 Callao ; the mines of Cerro de Pasco, which have yielded a yearly 

 average of $2,000,000 for over one hundred years ; the entire 

 railway system (769 miles in length) of the state ; a grant of 

 5,000,000 acres for the extension of the Lake Titicaca railroad ; 

 a grant of 4,500,000 acres for the extension of the Central or 

 Oroya railroad to the navigable waters of the Ucayala, one of 

 the main tributaries of the Amazon ; the exclusive control of the 

 guano deposit until 2,000,000 tons have been sold, from which 

 they expect to sell at least 80,000 tons a year, which will net 

 $1,000,000. The concessionaires on their part agree to liquidate 

 the Peruvian debt, to repair the railroads, and construct 974 miles 

 in extension of the existing system at an estimated cost of 

 $16,000,000, and to assume certain other obligations to a limited 

 amount. 



This, perhaps the most remarkable settlement ever made 

 between a bankrupt nation and its creditor, is due largely to 

 Mr. Grace, and cannot fail to develop the resources of Peru and 

 restore her days of prosperity. 



Trade Relations with the United States. 



It appears from the foregoing statement that all the carrying 

 trade to and from South America, by water, is by foreign 

 steamers ; that only four of these are American lines ; that the 

 railroads are generally owned and operated by Englishmen ; that 

 the bankers and merchants are Englishmen or Germans ; that 



