New-York tribune., 1890-04-13

have made their bargains "ion reru Oil" N
without diplomatic aid Mr. Grace was COIL
vinced that the opposition OF Chill, which hau
rroved fatal to the previous agreements, could
no counteactcd lie returned TO London, be-
came associated with Lord Donoughmore, one
Of the leading bondholders and a bright and
canablc Irish peer, and' received full power Of
attorney to represent them in negotiations at
Santiago and Lima. The jcalouses and resent
ronts Of the two nations operated in opposite
d;roctions Chilli was unwilling to make any
concessions TO the bondholdcrs, or to enter into
onv dealings with them but insisted upon treat
;ro with Peru on the basis of the Treaty OF
Ancun Perm desired to negotiate directly with
,b. bondholder> and TO have nothing to do with
.f,hui What is known as fine diplomatic work
,vas reoured in order to effect the general re-
suIt OF settling the guano claims against Chill,
nuttino Peru into liquidation, and transferring it's
railways and other property TO the bondhoders
Tho settlement with Chill was brought about
n few weeks ago, without the active lntcrven-
ton of the British Foreign ONCE and the Amerl-
can State Department. 1t was in the form of
nrotocol disp, SIM of various questions left open
in the T.Yaty cf Ancun ChlI persisted TO the
end in refusing to recognize the pondholders,
hut virtua1lv made concessions to them while
ossumin, the attitude of befricnding Peru, and
f ono HING it, TO reorganizc its shattered finances.
Rr tho treaty of peace the Province Of Tarapaca
was uncondtionally surrendered to chin. by
the protocol the guano beds OF liuanlllos, fun'a
dc I.obos and Pabelon are surrendered to feru
for the period of eight years, win the uhder-
standing that after four years Chll snail pe
free TO develop all the remaining 3uaio deposits
in its territory and to obtain supplies at all times
for its own agricultural uses. Under the treaty
Of peace the guano beds Of tie Lobos IS
lands were TO be worked by Chilli one-half OF
the proceeds being paid into the Bank OF Eng
Iaad for the benefit Of creditors OF Peru, whose
loans were based on that security, and the re-
naming one-half being reserved for the Gov
ernmcnt. Under the protocol Chln restores the
Iobos Islands to Peru By the Treaty Of Peace
Chill enjoyed monopoly Of the guano trade and
WAS AZ liberty TO work the Tarapaca beds on its
own account. BY the protocol Chill returns so
per cent Of the proceeds of all guano sales which
have been made since February %, 1882. All
these concessions, representing an estimated
valuation Of l,125, ,OO0-these figures are fur
nished by the Eyres. representing Grace Brothers
are offered nominally to Peru, but under the
contract now in force the bondhoders will
receive this sum, and will operate the guano beds
at the Lobos Islands and the three stations in
for the Lobos product amounts TO 5000 900; the
30 per cent OF the Tarapaca sales Will reach
G7OO, 900; and the valuation Of the product which
may be taken under the contract is Ei2J.000,
making g. 225, 900 available for the bondholders,
which they Will probably receive in dividends.
These concessions from Chilli cleared the ground
Cor final action upon the new contract which Lord
Donoughmorc meanwhile had been pressing upon
the attention Of the Government. President Ca
ceres advocated its acceptance, but three success
sye Congresses rejected it. Then followed char
actcristc episode in South American politics. A
number of elections were invaldated. the seats OF
the members were declared vacant, and special
elections were ordered and carried by tie Govern
mcnt With the help of the new members the
contract was ratified on October :. The President
signed the act, which was officially promulgated
on January !. \ meeting of the bondhOlders was
held on February IL in London, AT which Mr.
Grace was present. The contract as ratified by the
Peruvian Congress was accepted and measures were
taken 10 organize company in order 10 carry
ont its provisions in detail The bOndhoders who
have entered into this compromise with the Gov
rrnmcnt represent Sf55. 600. 600 or the original
$50 oOO. 900 Of railway Indebtedness. The hold
ers Of the remaining 81 600. 900 known as the
French or Drcyfus malcontcntS. who have been
opposing the settlement and employing diplomatic
influence here and in Paris 10 prevent the con-
summation Of tie Grace scheme. This has been
done in the intcrcSt"of the Drcyfus claims, based
upon guano concessions made by the Picrola Gov
crnmcnt There are no American claimants who
standing against the execution of the Grace
contract. John L. Ihorndlke, representing the
Mcggs interest in the construction accounts Of the
Southern railways. and +. {. Dubois, possessing
claims against the Government in connection with
the Salavcrry line, were the largest American
creditors aside from the Graccs Their claims
were practically funded in the common stock by
private arrangements with Mr.. Grace: but the
Government has persisted in cxcmpting Mr. Thorn
diilc's obligations from the operation of the con-
tract and in rctaining il, own ground Of action
against him This does not disturb him. because
ne does not believe that il ha, any valid claims
against him. He heartily favors the Grace con-
tract. | have learned after a long conversation
with him. So far from antlgonizing the settle
mcnt, he has done everything in his power 10
facilitate Mr.. Gracc's work. and believes that the
welfare Of Peru will be promoted by the contract
He has had serious grievances but no longer cares
to discuss the unwarrantable seizure of his railway
Ills interests have evidently been protected by
private arrangement
By the terms II the Grace contract Peru is ab-
bllitv for the loans Of 1869. 1870 and 1872 This
debt was incurred in the construction of rail
ways and the bulk of il secured by the
cuano deposits which have been in the possession
Of Chilli. The issue of 1870 amounted TO
cll.14l,jSO at per cent; the issue of 1872 in
volvcd f2o.i37 800 at ; per cent. and the issue
Of lSG9 was inconsidcrablc. The total debt in
round numbers. was $3.50. .o0o.0 600. on which no
interest has been paid since 1876. This was cx-
elusive of SlOO.OO0.O0 of rrcdccmable paper
currency, which has virtually been repudiated.
The arrears Of interest amounted at the time of
the settlement 10 $l3j.OOO. .OOO making the az.
/ grcgatc Indebtedness. principal ana interest,
G5g. .O0O 900, or $295. 100000. This has been
wiped out by the contract. Peru. unable 10 pay
it's public debt, has surrendered the railways which
we're built with the loans OF 1870 and 1872. lis
Government has practically said TO the bondhold-