Waterbury evening Democrat., 1905-08-18
ARGUE ON INDEMNITY
Peace Envoys Reach Crucial Point, but Pass It Over.
OBSERVERS ARE ALL GUESSING
Whether the Portsmouth Negotia. lions Are to Succeed or Fail No One Can Tell Now-Article
 II Next on List.

PORTSMOUTH. N. H., Aug. 1S.- The peace conference at the mornings session, which began at 10 o'clock, took up for consideration article g. which deals with the very important ques. tion of an indemnity. At the end of three hours work it was found that there was no prospect of an agreement. Both sides held their ground, as it was expected that they would dO It was tacitly decided to avoid break by falling back on the method which had been followed in the case of the Sax halin article, and discussion of the art- cle was suspended. note having been taken of the fact that the parties were not able to reach a decision. The fol lowing is the official statement of the afternoon session:
 Articles 10 and II have been dis cussed. Regarding article 10. the plen- ipotentiaries have shown a divergence of opinion which has not been settled. The discussion of article II has been reserved for further discussion"
 Article 10 is believed to be the dis position of the informed Russian yes sels. Article II refers, it is said to the limitation of Russian power in the far east.
 The interest here has reached high pitch. for it is felt that day or two more will tell the tale If the confer ence continues over this week 1t will be taken as a fair chance of an agree nent. The success of the negotiations has all along been said to depend on the duration of the conference, and as day after day has passed without a break there has been a tendency to interpret it as auguring well for peace, when. as matter of fact. the envoys were merely clearing away questions on which there was little difference and pilng up trouble for the day now at hand and for those to come.
 No one here who Is really wise would care to risk much in prediction as to the outcome. The pessimistic observer finds grounds for his attitude in the fact that Japan has made moderate demands and can hardly afford to give way very much. while Russians here and at home have loudly declared that on some points they will never give in. But this pessimist is always confront ed by the possibilities of bluff.
 The Russian, wishing to give as lit tie as possible in diplomatic trade. would likely let it be known by a dozen different channels that he was firm in his intention to cede no terri tory and pay no indemnity. The chance is always present that if Japan holds to her demand for an indemnity the negotiations might go through by q sudden reversal of Russia's whole at titude.
 It is hard to keep consistent view of the situation here. The men who watch the proceedings and form their opinion from an intimate knowledge of the situation in the east have been from the first very frank in express ing their belief that at this time a peace treaty is impossible. They came here with that view and have seen no reason to change it.
 Mir. Sato declares that he is still ey- tremely hopeful. MT. Witte always says he is hopeful of peace. but the members of his suit do not cease to affirm that on four points they will never give in.