500 Chilian troops, there would have been a hostile demonstration; whilst the majority in Congress refused to consent to any cession of territory, and a portion of the few remaining troops disbanded themselves or openly mutinied. The town of Piura was for some time in the hands of a colonel named Negron, and for protection the inhabitants applied to the Chilians to assume the government. In Yea things were still worse. It had been for several months in the hands of the Chilians, who at length quitted it. Rioting commenced, the Chinese were murdered, and then other foreigners were threatened. A committee of public safety, formed by those in danger, established a strictly municipal authority, and at last succeeded in maintaining order. The Chilian troops continued in Lima, and Calderon, with no police to support him, and exercising no real power, remained President only in name. On its becoming known that Montero with his troops had abandoned Pierola and given his adhesion to Calderon, the latter was deposed by General Lynch, but, persisting in his duties as provisional President, he was arrested on November 6 and sent in a Chilian ironclad to Valparaiso. Montero then agreed to accept the Presidency if supported by the United States Government. The announcement in Europe of Calderon's arrest and removal caused the Peruvian Legation to publish a general intimation that the President of Peru-i.e. Pierola-had not left Peru, and continued to exercise his functions. Early in December the United States Government sent a special envoy to Chili, and another to Peru, with instructions that would, it was hoped, bring the two Powers into friendly relations. At the close of the year the situation was little changed, though in spite of vigorous protests on the part of the mayor, the Chilian army had suppressed the municipality of the city, and substituted Chilian authorities, who had undertaken the administration of the post offices and revenue departments in Peruvian territory occupied by them.

A new phase in this unsatisfactory war was the strong desire of the United States Government to terminate the war, and what looked at one time like a disposition to dictate to Chili. It seems that at an interview in Lima between Mr. Hurlbut, the United States Minister there, and General Lynch, the Chilian commander, the former stated that his Government considered the time had arrived for a conclusion of hostilities, but would view with displeasure the annexation of any part of the Peruvian territory, though recognising the rights of Chili to compensation for the costs of the war and to exact guarantees for its payment. This caused considerable excitement in Chili, and General Kirkpatrick, the United States Minister at Santiago, subsequently modified the statement by declaring that it had been unauthorised, that Chili had nothing to fear from the United States, and that, though the latter felt an offer of intervention just then would not be agreeable to Chili, their good offices would be ready whenever desired.

The despatches from the United States Secretary at Washing

ton to his representative at Lima in Je last were pressed so Congress in December, and it then became a puretro whether biz Hurlbut had exceeded his instructions or DIC

that the primary object of the United States or remment was the conclusion of peace between the belligerents It was als tr that it did not approve of Chili antering any of the moquezet territory, and it was most anxions to Ergela pove voodid mediate between the two countries. - The United wane Cry ment seeks only to perform the office of a friend to all part this unhappy conflict, and would regret to be expeled to enge sider how far that feeling might be afected, and a more aerone interposition forced upon it, by any attempted emplanine d this question with European politics. The attitude of the Dialnet States with regard to the affairs of Chili and Port was all to be viewed with dissatisfaction by all the South American Beg Sila; but the subsequent explanation received from Waiting removed much of the misunderstanding whieh Mr. Blaine's despates had in the first instance aroused.

The diplomatic relations between Spain and Chili, wilch had been interrupted since 1866, were formally renewed under a treaty of peace signed in the month of August.

Bolivia appears throughout the year to have taken little active interest in the war, but has left Peru to carry it on single-handed. The Convention, nevertheless, decided in July to continue the war with Chili, and then, so as to secure unanimity in the public press, arrested the editors of the newspapers advocating peace. Sibeequently the Bolivian troops bestirred themselves efficiently to occupy Tarapaca, and to cause a force of 1,200 Chilians to be sent from Valparaiso to dislodge them. No serious opposition was offered, and the Bolivian commander was captured. The President of Bolivia and Pierola were present together at a parade of several thousands of Bolivians at La Paz, thus testifying to the supposed common action of the two countries; and later in the year, further evidence of their sympathy was shown in a revolution, which, spreading from Peru, broke out also in Bolivia.

CHAPTER VIII.

AUSTRALASIA.

IN Victoria the principal event of the year was the overthrow of the Berry administration. Notwithstanding the difficulties of the situation, the crisis was surmounted by ordinary constitutional methods, and in a manner highly creditable to the colony. The Reform Bill,

which had so long engaged the attention of the two Chambers, at length reached a stage which, owing to the exhaustion of party spirit and the assertion of common sense, ended in a reasonable compromise. The Legislative Council offered to reduce the qualification of its members to 100l. per annum, and to waive its claim to two Ministers in the Cabinet. A conference took place between the two Chambers on this basis, and the Bill was agreed to. No sooner, however, had the Bill become law, than Sir Bryan O'Loghlen proposed a vote of want of confidence in the Berry Government, and through the joint action of Constitutionalists and Democrats this vote was carried, and a coalition Ministry, with Sir Bryan O'Loghlen as its head, took office on July 9. The members who had to vacate their seats on accepting office were, with one exception, re-elected. The new Premier, in a speech to his constituents, announced his watchword to be "Peace and Progress,” and stated that it was intended to redeem outstanding 6 per cent. loans to the extent of 8,000,000l., and convert them into an equivalent 4 per cent. stock, and, at the same time, to issue a fresh loan for 4,000,000l. for public works. Any remission of taxation was declared to be impossible, but the land tax would be amended so as to include under it both town and country property; selectors' areas would be enlarged to 640 acres instead of 320, and other facilities were to be granted to investors. This programme found expression in the Governor's speech on the reassembling of Parliament, on August 4, after a brief prorogation of only two days. This step had been rendered necessary in order to vote the unpaid salaries of the civil servants, and to despatch various matters requiring immediate legislation; but in a few days the session, which had lasted over a period of fourteen months, was brought to a close. The new Ministry, on taking office, was generally regarded as weak-the portentous outcome of an "immoral alliance," as Mr. Berry termed it, which had effected the downfall of Berryism, and which, called into existence for that one purpose, would tumble to pieces as soon as it was attained; but, as the year advanced, Sir B. O'Loghlen's Ministry gradually acquired strength and public confidence. The large majorities at the re-elections moreover indicated that the public were tired of Mr. Berry's wrangling over the Reform Bill, and had found to their cost that he had done. little for them beyond the imposition of new taxes. After a short recess, to enable the Government to prepare their new measures, Parliament met again, and Sir B. O'Loghlen made his financial statement on September 23. The year 1881-2 had opened with an "apparent" credit balance of 188,780., and the estimated revenue from all sources was 5,257,000l., against an estimated expenditure of 5,398,000l. Of this latter sum, 200,000l. went to recoup "the railway loan liquidation account," and 166,000l. more as the first instalment of 500,000l. borrowed by Mr. Berry from the Banks, and for which Treasury bonds had been given. With these debts on hand it was impossible to promise any reduction of

For

taxation. The Government therefore announced its intention of applying in London for a loan of 4.000,00% of this, 2.500,000L would go in constructing railways and the remainder in supplying water in the country districts in improving barbours opening the Gippsland lakes, and erecting patile ballänge, de be. Sir B. O'Loghlen did not think this beswold and materially to the burdens of the colony. In the period 1883-5, neats 306.500. of the original railway debt would become due, on what 6 per cent. has been paid, and the benefits to be derived from a 4 per cent. loan, spread over a long term. would more than compensate for the extra charge. Exclusive of the back loan of 500,000!. before referred to, the entire debt of the colony at the clow of the year stood at 22,593,000!, of which 152519000 Lad been spent on railways, though their actual est had been 18,041,2951, the difference having been defrayed out of eurent revenue. many years these railways neither paid nor were expected to pay; but the traffic having rapidly increased of late, they bow wow a net return of 4 per cent. on the money spent in their excarucion and maintenance. As a set-o to all the labelity, bir B. OLoguen was careful to explain that the clay possessed weet, in the Phape of valuable dividends in railways and Yan Yeas reverve, belde "ten millions of acres" of crown lands for selection, wolen be valued at 15,000,000l. After a short dismedor, the Budget passes without alteration. Parliament was occupied for some wo in th a motion brought forward disapproving of the Fluxion Comule sion as endangering the secular principles of the Bavation Act, As that Commission was an inquiry to wileh the Premier thought the Government was pledged, for the purpose of examining the Catholic grievance about schools and the genera working of the Education Act, he looked upon the motion as my dvalent to a vot of want of confidence, and it was consequently rejected.

The new Commissioner of Custome, les favourane to protection than his predecessors, has already sabetlozed several modifications of the tariffs, whilst the Tarif Committee, appointed late in the year to inquire into the various anomalle, and absurdities existing in the Customs' regulations, promises to be productive of good results. They tabulated the articles jest to Customs duties under (1) Necessaries of life, and (2) Luxuries: dividing these heads again so as to show which articles are tazed for revenue purposes and which for protection.

On December 1 the new Act to resist the infux of Chinese into Victoria" came into force; but as they have been steadily and rapidly leaving the colony for some yeare part, the necessity for such an Act is not apparent. In 1871 there were about 18,000 Chinese in the colony; there are now warcely one-third of that number. Content with low wages, they do much work that, but for them, would remain undone; but the labouring classes, dreading Chinese competition, and crediting them with bringing small-pox from China, clamoured for restriction, and the Lower House accordingly

passed this Act, by which shipmasters are forbidden to bring into Victorian ports more than one Chinaman to every 100 tons of the vessel they command, and a tax of 10l. per head must be paid before landing. Unnaturalised Chinese may not vote at elections, but British-born subjects and naturalised Chinese are not deprived of the franchise, though the onus is thrown upon them to prove their qualification before they can obtain registration.

An outbreak of small-pox found the Government unprovided for the emergency, and in their zeal to stem it they made some mistakes. They began by quarantining every medical man who had visited a small-pox patient, the consequence of which was to deprive the authorities of the services of all men in good practice; the inferior ones bungled, and some people got sent into quarantine who were not afflicted with the disease. Taught by experience, the Government at last established a Board of Health, organised a disinfecting staff to cleanse properly all infected houses, and erected a hospital in an unfrequented spot about eight miles from Melbourne.

In New South Wales the abundance of money in the revenueas shown by an excess over the estimates of one million-and the prosperity of the squatters, stimulated the demand for land to such an extent, that during the first six months of the year 1,750,000 acres were sold. Sheep-farming was most prosperous, the season being good and the London market favourable; whilst the mining industry revived considerably, and, a large amount of money being spent on public works, a high rate of wages was maintained. From the financial statement which the Colonial Treasurer introduced in the Legislative Assembly in November, the revenue for the current year was estimated at 6,440,000l., and the expenditure at 5,960,000l.; but by December 31 the revenue had reached 6,710,000l., as compared with an estimated income of 5,440,000l., the increase being distributed over almost all branches of the revenue. Notwithstanding the surplus, however, there was no intention to pay off any of the public debt, which had been considerably augmented since the close of 1879, when it amounted to 16 millions. The income of 1881 was made up roughly as follows:-(1), 2 millions from the sale and rental of land; (2), 2 millions from public works, &c., the railways contributing nearly 14 millions; and (3), 13 millions from taxation proper, nearly 14 millions being furnished by the customs and excise, and 170,000l. by stamps. The State thus draws less from taxation than from the sale of Crown lands. The future is therefore being compromised for the sake of the present, since the land sales must have a limit, and because the extensive public works are being paid for out of loans, which are repayable at very remote periods. The general prosperity, however, of the colony has shown itself in many ways; customs revenue, excise and stamps, have become more remunerative, and railway revenue shows an increase of 74,000l. above the estimates. During the