Melquiades Valderrama to Thomas O. Osborn, December 24, 1880

Mr. Valderrama to Mr. Osborn.

Sir: On the 10th of November ultimo I had the honor of addressing you informing you of the result of the conference held on board the Lackawanna in the bay of Arica, in the last days of October.

In view of the instructions given to our plenipotentiaries in the event of certain contingencies arising in connection with the conference, I then stated that the ceding of the territory claimed by Chili would have implied on the part of Chili a recognition of the mortgages executed by Peru to her foreign creditors. This expression has not been properly understood, as appears from the interpellations directed to the government in both houses of Congress.

By some, without taking into consideration the special circumstances of the case, the circular of the 10th of November was understood to be an absolute definition of the rights of creditors in the nature of an assertion of a principle; such an interpretation of it is not correct. The statement referred to is intimately connected with the instructions given to our plenipotentiaries, and both refer to the occurrences of certain contingencies that never took place.

It is known that the conference at Arica was productive of no result, and that matters continued in the same condition they were before the said conference was held. This statement thus becomes merely an expression of a fact which might have occurred had the allies accepted all the conditions with which it was connected. It might also have been a result of certain compensations or advantages provided for in the instructions, but it embraces no recognition of a right as has been supposed by some.

It was not intended in the circular alluded to, to define the rights of creditors. Its scope was confined to certain facts that had already occurred and others that might have grown out of the Arica conference if certain circumstances then in view had taken place. The failure of the negotiation left matters in the same condition in which it found them, and consequently the rights alleged by certain parties with regard to the Tarapacá district will be settled according to the precepts of international law. This is the line of conduct which the Government of Chili has observed from the beginning, and in which it has the purpose of continuing.

With this explanation of the true meaning of the statement which has been so imperfectly understood, I avail myself of the opportunity of offering to you the sentiments of high consideration with which I am, &c.,