the President of Paraguay, the following memorandum : Basis of Negotiations proposed to Marshal Lopez, President of Paraguay, by Mr. Gould, British Sec retary of Legation in Buenos Ayres, on mission to the belligerents' camp. 1. A secret previous conference will assure the allied powers of the acceptance, on the part of the Paraguayan Government, of the proposals they might be disposed to make to it. 2. The independence and the integrity of the Republic of Paraguay will be formally recognized by the allied powers. 3. All the questions relative to the territories, or boundaries, in dispute before the present war, will either be reserved for an ulterior conference or submitted to the arbitration of neutral powers. 4. The allied troops will retire from the Paraguayan territory, and the troops of Paraguay will evacuate the positions occupied by them in the territory of the Empire of Brazil, so soon as the conclusion of peace is assured. 5. No indemnification will be required for the expenses of the war. 6. The prisoners of war on both parts will be put immediately at liberty. At the beginning of the year 1868, the main force of the allies was still engaged in carrying on the siege of the Paraguayan fortress Humaita. The forces of the allies and the Paraguayans were respectively estimated at 40,000 and 23,000, the relative advantages of position making the real strength of the Paraguayans about equal to that of the Brazilians. On the 17th of February three monitors passed Curupaity, and on the 19th six ironclads succeeded in forcing the passage of Humaita, which was defended by 180 pieces of artillery. The ships were much battered, bat none lost. Ten men were wounded. On the same day the Marquis de Caxias stormed a work north of Humaita, taking fifteen cannon and a quantity of stores. The loss on each side was about six hundred men. On the 21st of February, three iron-clads steamed on to Asuncion, the capital of Paraguay. On arriving in front of the city they were received by shots from sixty-eigh pounders in the port of Tocubi, to which the vessels responded, shelling the arsenal, the several hours. The division met with no obstacles, and the commodore reported tha: the city could easily be taken by effecting a landing at Santo Antonio, a few miles lower down. The defences of the place he reported to be unimportant, and the garrison to be small. 7. The Paraguayan troops will be dismissed, excepting the number of men strictly necessary to maintain the interior tranquillity of the Republic. 8. His excellency the Marshal-President of the Re-custom-house, and the president's palace, for public will, after the conclusion of peace, or after the preliminaries of the same, withdraw to Europe, delegating the government to the vice-president, who, by the constitution of the Republic, is in like cases the person designated to take charge of it. G. T. GOULD. Headquarters, Tuyucu, September 12, 1867. The reply of Mr. Caminos to this paper is dated headquarters in Paso-Puco, the same day, September 12, 1867. The most important portion of it is as follows: (Signed) In the various clauses of this memorandum, I find a notable difference from those you had shaped to serve as the object of the conference to which you invited me, declaring that the Brazilian Minister in Buenos Ayres, and President Mitre, and the Marquis de Caxias in the allied camp, had previously spoken upon it to you; however, the most salient is the condition, not only of the separation of his Excellency the Marshal-President of the Republic from the government of the State, but likewise, which is more, to exile him to Europe, according to the terms of clause 8 of the memorandum presented to the allied chiefs. For your personal satisfaction I must add that, as the vice-president is named by the President of the Republic, according to our institutions, he is not competent to assume the supreme command of the State in the absence of the President, and his mission is limited, in such a case, to convoke an Electoral Congress. As to the rest, I can assure you that the Republic of Paraguay will never sully its honors and its glories by consenting that its president and defender, who has rendered it so glorious, and who fights for its existence, should be deposed from his charge, and, still less, that he should be expatriated from the land which' is the witness of his heroism and sacrifices, tokens which are a sufficient guarantee of the union that joins the lot of Marshal Lopez to that which God may have reserved for the Paraguayan nation. The other articles of the memorandum shown to the allied chief's may serve as a point of departure for a discussion, as I have already had the honor of declaring to you, although I am not ignorant that in the discussion some difficulties cannot avoid arising, which, however, the interests of peace may reduce to more convenient terms. On the 2d of March the Paraguayans made clads stationed between Curupaity and Hoan attempt to capture the eight Brazilian iramaita. Before daylight, 48 boats with 1,200 picked men, armed with carbines, revolvers, hatchets, and hand-grenades, pulled quietly from the river bank, after covering themselves with boughs so as to resemble a floating islet. A guard-boat detected the artifice, but before the crew of the nearest vessel could ensconce themselves inside the towers, 14 boats were alongside, and the Paraguayans boarding: a captain and first officer were severely wounde short hand-to-hand fight ensued, in which the The Cabral was also boarded from 12 boats, but her crew had time to enter the casemate. On both vessels the desperate struggle was cotinued through the port with fire-arms, every shot of the defenders telling in the dense mass of the assailants, and the former suffering se verely from grenades thrown in. The plan of simultaneous attack had, however, been frastrated in the excitement, and by the current and the iron-clads Silvado and Herval opened grape with deadly effect upon the boats, while the Brazil swept the decks of the boarded ve sels. The Paraguayans leaped into the bosts or the river, and sought to escape. The boats of the squadron were sent off to save the swi mers, but they refused to surrender, and only 13 prisoners were taken. The Paraguayan loss was estimated at 400 men, 140 bodies being found on the decks of the two vessels. On the part of the Brazilians, 32 were reported kiled and wounded. On the morning of the 3d of March the two wooden gunboats Beberibe and Mage forced the pass of Curupaity with trifling injury, and only one man wounded. Marshal Lopez, seeing that after the passage of Humaita it was necessary to change his tactics, transported all his war material and all his guns to the Tebicuari, fortifying this inland position. On the 21st of March the Brazilians took possession of the fortifications at Tuyuti, and, on the 23d, Curupaity, having been abandoned by the Paraguayans, was occupied by the allies. The works taken possession of by the allies were found to be very strong. At Paso-Pocu these consisted of: First line, a ditch 18 feet wide and as deep. The parapet within was 6 feet 3 inches high and so much in breadth on top, and was covered with sods. Behind this parapet were the deposits for powder, extending for about four miles, at a distance of 36 to 42 feet from each other. Between each was a well-constructed terrepleine, 14 feet 6 inches square and 3 feet 6 inches high, intended for a cannon, but on which, for some time before the advance was made, a palm-tree log covered with hides was placed to simulate the real military engine. The second line was more or less the same, and the ditches of both were full of water, and had a few bridges thrown over them. The redoubt called Sauce, at the angle nearest Tuyuti and Lake Piris, besides its natural defences of overflowed lands and ponds, had an antefosse, through which ran a watercourse that drained those overflowed tracts, whose waters were shut off by a sluice. This antefosse was over half a mile long, about 30 feet wide and 17 feet deep. Between this and the fosse of the intrenchment was a space about 130 yards wide and half a mile long. This inner ditch was 7 feet 6 inches deep and wide, with its parapet the same height above the terre-pleine, and with a banquette of 20 inches in height. Fortunately for the Brazilian assailants they came upon the antefosse soon after the defenders had raised the sluice to fill t, and they were thus able to cross it, but lost nuch ammunition. The Paraguayans had there our or five hundred men and two light fieldpieces, and its assault cost 13 officers and 184 ank and file in killed and wounded. On the morning of the 23d of March three Brazilian steamers, the Barroso, Rio Grande, nd Pará, descended below the Paraguayan attery of Timbo in the Chaco. The Paraguayn steamer Igurey was seen hidden behind in n inlet, and after several shots were fired at ter a seventy-pound shot from the monitor Rio rande struck her below water, and in two or hree hours she sunk in very deep water, which overed even her chimney. On going further n, the other steamer, the Taquary, was pereived in the narrow channel between the sland of Araca and the Chaco. The Bahia ntered the channel, and in a short time her ire sunk the Paraguayan steamer, thus leaving the garrisons of Humaita and Timbo only boats to effect their communications with. On the same day all the shipping at Curuzu was brought up to Port Elisiario above Curupaity. On the 8th of May General Rivas, having been informed that the Paraguayans were constructing an advanced redoubt, sent a Brazilian battalion to dislodge them. In the engagement, which lasted an hour and a half, the Argentines did not take part, and the result was the complete defeat of the Paraguayans, leaving one hundred and eleven corpses on the field. Their total losses were calculated at two hundred and fifty to three hundred men put hors de combat. The Brazilians had nine killed and sixty-five wounded. A column of Paraguayan cavalry that was coming to protect the first one was also driven back, and in their retreat toward Timbo the two columns, who took the road by the river side, were decimated by the grape-shot of one of the iron-clads that followed them in a parallel line. On the 16th of July the allies suffered a severe repulse before Humaita. An account written from Paso-Pocu on the evening of the 16th, states that Osorio, with 10,000 men, attacked the part of the works of Humaita known as the "triangle;" that the two battalions forming the vanguard got close to one of the redoubts without opposition, but when within short range received a terrible fire of grape and musketry, which threw them into disorder; that two other battalions were then brought up to their support, and the redoubt was carried with the bayonet, but with considerable loss; that he then sent word to the Marquis de Caxias that he held a redoubt, and wanted all the reserves at once to enable him to hold it and pursue the advantage gained so dearly, but that Caxias ordered him to retreat; that on this order being given the troops fell into confusion, and in their retreat were swept by grape, falling dead in hundreds, and that Osorio, who had two horses killed under him, and lost most of his staff, was unable to control them in their retreat. Two battalions were almost entirely destroyed in less than 40 minutes, and the writer says the Brazilian loss was at least 1,000 men, most of them killed. Another repulse was suffered by the allies on the 18th of July. A new Paraguayan battery of two guns opening upon the allied position in the Chaco, and, thus placing it between two fires, that of the battery and that of Humaita, the Marquis de Caxias ordered General Rivas to attack and dismantle the new work. By General Gelly y Obes's dispatch to General Mitre it appears that the battery lay beyond a deep stream, and that the ground was almost flooded. Colonel Martinez was ordered to advance and reconnoitre the ground with the Rioja battalion, forty or fifty skirmishers, and two Brazilian battalions, with instructions not to pass the bridge which the Paraguayans had on the stream. Rivas, with the main forces, had not started when he received word from Martinez that he had arrived at the point indicated, and had killed forty or fifty Paraguayans, and had learned from prisoners that the Paraguayans were in force. Rivas sent word that he was coming, but before he had mounted received information that Martinez had advanced. Orders were sent to him to retire, but when Rivas arrived he found the vanguard already routed and pursued. Checking the pursuit, he obtained reënforcements of two battalions, and drove the Paraguayans over the bridge, after a severe fight. The loss es of the allies were severe, being stated in the dispatch at 350 killed and wounded. Martinez and Campos were either killed or prisoners. General Rivas's dispatch states the loss to have been as follows: Argentines, 94 killed and 224 wounded; Brazilians, 60 killed and 208 wounded; total, 586. Notwithstanding these repulses, the allies, only a few days later, on the 25th of July, obtained possession of Humaita. The events, in connection with the evacuation of Humaita by the Paraguayans and the subsequent surrender, after a struggle of more than a week's duration of the remainder of the garrison, are thus described by the Anglo-Brazilian Times of Rio (August 22): battery, and from infantry posted in the woods, that they were forced to retire after losing 400 men in the vain attempt. Fights continued daily and nightly be tween the allies and the garrison, aided in their attempts to escape by the Paraguayans of Timbo, and on the night of the 29th the last sent over some 20 boats to transport part of the garrison across and carry cooked meat to the rest. Only a few succeeded in getting over, because of the fire poured in from eleven cannon and a large number of troops. On the night of the 31st some 12 boats made an attempt to escape, but were beaten back by the armed boats stationed on the lake. They, however, returned suddenly, and and escaping. At midnight of the 1st of August an overpowering one of the boats, succeeded in passing other affair occurred: eight or ten Paraguayan boats making the attempt to pass the line of armed boots, their movements were seen, and the one in which Colonel Hermosa went was run down and destroyed their crews mostly killed or drowned. On bringing with all its crew. Eight boats were captured, and the boats to land and examining the bodies, some dead women were found dressed in soldiers' clothes. Of the 25 or 30 wounded two or three were women, one with an infant, whose arm was traversed by a ball. Some other young children were likewise among the saved. Up to the 4th, the night fighting continued, but on that day Father Ignacio Esmerats, a chap lain in the Brazilian hospitals, obtained permission to try if he could effect communication with the Paragımyans, as two officers previously sent to summon thin to surrender had been driven off with bullets. In that he was successful, and on the 5th the Paraguayans on the peninsula surrendered, to the number of 98 officers and 1,230 men, the commander, Coloud Martinez, being among the number. They were three days without food, and some 200 were prostrated by tions of capitulation stipulated that the garrisen » exhaustion; 300 were sick or wounded. The conshould not be forced to serve against Lopez, and that the officers might keep their swords and choose the allied nation in which to reside. The commander says that the effective force of the garrison, when it evacuated Humaita, was 2,500 men. The abandoned fortress of Humaita was described as inferior in its position and construe tion to Curupaity. The form was an irregular. almost circular, polygon, with a perimeter of some 7 miles in length, mounted with about 200 cannon. The works followed the course which the nature of the soil pointed out and rendered so defensible. The ditch was 16 feet To evacuate Humaita the Paraguayans had 80 or 100 boats, and the evacuation was going on for a week before it was completed. First, the families were removed; then, the sick, the prisoners, a large quantity of munitions, the remainder of their food, and finally the garrison, the outposts being maintained to the last moment to deceive the allies. Almost all the non-combatants, and probably at least a third of the garrison, passed through the lake in the middle of the narrow peninsula without exciting suspicion; and it was only on the withdrawal of the outposts at Humaita that the allies became aware of the fact that the garrison was withdrawing to Timbo. The allied forces in the Chaco were then raised to 10,000 men, and the gunboats were brought up, and grape was poured into the narrow peninsula, which, however, being covered with bush, thickets, and tall reeds, favored the concealment of the Paraguayan movements. Hidden in the thickets, the Paraguayans had some heavy cannon, which played on the vessels; while, opposed to the allied position, they had a strong bat-wide and 13 feet deep, in general. The pars tery which guarded them from attack on that side. They transported boats overland to the lake, and armed some with small cannon, and during the night of the 25th of July no doubt many escaped, being assisted by the Paraguayans in Timbo. During the 26th the escape continued, but the allies made great exertions to open space for their fire, and to carry small cannon over to the commanding points. In doing this they were frequently attacked by the armed boats. At night on the 26th a great effort was made by the Paraguayans to escape in the darkness, with 30 to 40 boats and 600 to 800 men. Being discovered a heavy fire was kept upon them, and some of the boats were forced to return; but others, with the support of the armed boats of the Timbo Paraguayans, suceeded in passing, but with heavy loss. Gelly y Obes says they lost 500 out of 1,000. Two more flats with cannon were brought from Timbo and placed in the lake, and on the 27th the Brazilians dragged over some from the river to contend with them on the lake. After a reconnoissance on the 27th, in which loss was experienced, on the 28th an assault was attempted by the Brazilians, to the number of 3,000 to 4,000 men, upon the battery which the Paraguayans had, but they were received with so severe a fire from the pet was 63 feet wide, and, on the side of the al- side a very large exercise-ground, round which buildings were ranged, with barrack-room for 6,000 men. Furniture was found in all, and in the officers' houses quantities of preserves, oil, wines, and pickles, were left behind. As the buildings were in comparatively good condition, all the hospitals and deposits were being moved from Corrientes to it, and it was made the basis of future operations. The works were immediately razed to the ground. On the 26th of August the vanguard of the Brazilian army crossed the Jacaré, a stream flowing into the Tebicuari, and routed a force of 300 Paraguayan cavalry on the other side, killing forty-five men and making some prisoners, together with 126 equipped horses. On the 28th the same force attacked and carried a redoubt on the bank of the Tebicuari, which was defended by some 400 Paraguayans with three small cannon. It was also protected by abatis, secured to the ground by stakes. The assaulting force consisted of two brigades of infantry, a brigade and two half corps of cavalry, six cannon, and a contingent of sappers. The struggle, though short, was severe, and the official report gives the Paraguayan loss at 170 killed and 81 prisoners, and that of the Brazilians at 21 killed and 132 wounded. The three cannon were captured, together with arms, ammunition, horses, and oxen. Four monitors were then ordered to enter the Tebicuari, which were able to go up two leagues without difficulty, and on the 1st of September the crossing of the Tebicuari was made, and it was found that the Paraguayans had abandoned all the lines there, leaving a dismounted cannon, large deposits of munitions. and food, etc. The battery on the Paraguay was also dismounted, the pieces being thrown into the river. In the march of the Brazilian army from Humaita to the Tebicuari no less than 900 draught oxen were killed in the transporting of the baggage and munitions, notwithstanding that much was sent by water. After abandoning the position on the Tebicuari, Lopez established his headquarters at Villeta. His army, at this time, was reported to number about 15,000 men. The new position was of considerable strength, owing to the dense woods, deep ravines, and the extensive marshes that surround it. The natural position of Villeta was in fact much stronger than it was at first generally anticipated. The Paraguayans were posted upon high hills, where they mounted their artillery. The allies threw up earthworks to fortify their positions. On September 23d, a fight took place for the possession of the bridge on the stream Piciquires, which lasted several hours, and ended in the defeat of the Paraguayans, the allied forces taking full possession of the bridge, as well as of a very important position beyond The losses of the allies on this occasion are announced by General Caxias, in his order of the day to the army, dated September 26, 1868, as follows: "Our losses are: 234 men put hors de combat-being, officers killed, 12; it. wounded seriously, 18; slightly, 8; soldiers killed, 78; wounded seriously, 169; slightly, 9." The loss of the Paraguayan troops was estimated to have been 400 killed, wounded, and prisoners. Another engagement occurred on the 1st of October. The allied army, under General Viscount de Herval, was ordered to effect a reconnoissance of the positions occupied by the Paraguayan forces at Villeta. The viscount pushed forward, and engaged the enemy at several points, took a redoubt at the point of the bayonet and drove the Paraguayans before him. The object of the reconnoitring expedition being successfully accomplished, the allied forces returned to their encampment. On the 15th of November, the allied forces, under the command of Marshal Caxias, made a desperate attack on Villeta, the stronghold of President Lopez, but were repulsed with a loss of 1,500 killed and wounded. After the failure to carry Villeta, the Brazilian iron-clads attacked, but with no better success, and were obliged to retreat beyond range of Lopez's batteries. The month of December witnessed some of the severest and most decisive fighting of the whole war. On the 6th of December, the Brazilians, under the command of Marshal Caxias, fell upon the rear-guard of the Paraguayans, composed of about 4,000 men, and commanded by General Caballero. The attack was very impetuous, and the defence very brave. After several hours of severe fighting, the Paraguayans were completely routed. General Caballero himself was killed. A Paraguayan colonel, taken on the 11th, stated that the Paraguayan forces consisted of four brigades of infantry of about 900 men each, and about 1,000 cavalry, making a total of about 4,600 men, with 12 cannon. Of these forces he estimated the loss at 1,200 killed and wounded on the 6th. This force was instructed to withstand the Brazilian advance wherever practicable, and received orders to maintain the bridge of Itororo. Lopez ordered them to retire on the night of the 10th to Lomas Valentinas, but the commander, fearing to be cut off by the numerous Brazilian cavalry, determined to hold the ground, on which consequently another battle was fought on the 11th. The Paraguayans were again defeated, and Lopez was thus compelled to leave his camp at Villeta and to withdraw to Cerro Leon. The occupation of Villeta by the Brazilians was on the 17th of December. On this occasion another cavalry engagement took place, in which the Paraguayans again lost about 100 men killed, and 50 taken prisoners. The Marquis de Caxias was delayed by the necessity of receiving supplies by the Chaco. He united with his other forces three battalions stationed in the Chaco, fearing no attack on that side of the river. In a reconnoissance of the batteries of Angostura, Captain Augusto Netto de Mendonça, commander of the iron-clad Mariz e Barros, was killed by a splinter which struck his head. On the morning of the 21st, how ever, the three Brazilian army corps prepared to attempt the assault of the Paraguayan positions, and orders had been sent to the squadron and to the forces, principally Argentines, left in the camp at Palmas, to coöperate as far as possible. The Paraguayans were posted in their intrenchments on the hills called Lomas Valentinas, about nine miles from Villeta, and among the works connecting the Lomas with Angostura, which lies on the river Paraguay at a distance of six miles from Lomas Valentinas. About 50 cannon were mounted in the various works, and some 7,000 Paraguayans were ready to defend them against the assailants, who numbered only 15,000 to 18,000 men after the heavy losses in the previous fights. On the 21st the fighting commenced, and a division of Brazilian troops assaulted the lines of Pequisiri, uniting Angostura with Lomas Valentinas, and forced them, cutting off the communication between those two works, and capturing 30 cannon. At the same time a column of cavalry encircled the Paraguayan right at Lomas Valentinas, and, falling upon Potreiro Marmoré, captured 3,000 head of fat cattle. In the afternoon a reconnoissance in force was made on the heights of Lomas Valentinas, where the Paraguayans were intrenched on the summit of a high and extensive hill. By 6 P. M. the Brazilians succeeded in overpowering the defence at the first line, and in crossing the ditch, but the terrain, being covered with groves of wood and with huts, rendered it impossible for the cavalry to proceed. It was determined to maintain the position reached, and all through the night continued fighting went on in the endeavors of the Paraguayans to recover it. However, after severe fighting, the Brazilians succeeded in their purpose, and captured 14 cannon, including the 32-pounder Whitworth, and two others captured at Tuyuti. During the same night also, 650 head of cattle were cut off while leaving the Paraguayan camp. From the 22d to the 26th bombardments of Angostura and Lomas Valentinas were kept up, and the Argentine, the Uruguayan, and Brazilian forces left at Palmas were brought to headquarters, their cannon coming afterward. On the 24th Lopez was summoned to surrender, to prevent unnecessary effusion of blood, but his reply was, that he and all his troops were determined to defend the cause of Paraguay to the last. On the morning of the 27th, all the cannon and rockets of the allied armies opened upon Lomas Valentinas. Marshal Caxias, with 6,000 Brazilians and Argentines, marched at daybreak to attack the rear, while Generals Gelly y Obes and Castro seconded the attempt by attacking the front. A storm of missiles was rained on Lomas Valentinas, and all the allied troops advanced against its works. Ground was war. gained on all sides, and the chief redoubt in the rear was carried, the enemy retreating into his last defence, leaving 14 cannon, large quanti ties of food, powder, and other munitions, arms etc., together with the personal baggage of Lopez. Lopez, however, escaped toward Cerro Leon, with Mrs. Lynch, General Resquin and a small escort of cavalry. Among the many who came in and surrendered were Dr. William Stuart (English), and Colonel Cister (Hungarian), who brought his family with him Colonel Ernesto Augusto da Cunha Mattos, e artillery, taken prisoner at Tuyuti on Novem ber 3, 1867, succeeded in making his escape and rejoining the Brazilian forces. On the 28th a summons to surrender within 12 hours was sent to the Paraguayans in Angostura but the flag was refused reception. Orders were then given for an assault next morning. As, however, a flag of truce came out of Argostura, advantage was taken to send a sunmons to surrender by 4 P. M., and by noon are ply came that the commandants wished to send five officers to verify whether Lopez had been driven from his position. This was grantel and the commissioners were escorted throug the camps, hospitals, and works. At 5 A. next morning (30th) a reply came offering to yield, and at 11 A. M. the garrison marched of with the honors of war and stacked arms ai the appointed place, the officers retaining the swords upon parole not to serve in the presen Lieutenant-Colonels Lucas Carillo and George Thompson (English) were respectivar first and second in command of the garrison which numbered 1,200 men, exclusive of s wounded and sick, and women. A Brazin corps occupied Asuncion on the 2d of January 1869, finding it deserted, and on the 5th the main body of the Brazilian forces entere also, the Argentines being left in charge Angostura. All the Paraguayan wounded sa non-combatants had been transported to As cion, and many families were returning thi and to Villeta; but the Marquis de Cariss posed holding Asuncion as a fortress for the present. A naval expedition set out fr Asuncion on the 4th of January, 1869, Matto-Grosso, to expel any Paraguayans s in the province, and, if practicable, prevent th possible flight of Lopez to Bolivia. Vese were also searching the lakes and rivers ab the Paraguay, to capture or destroy the six Paraguayan steamers remaining of Lopez's de tilla. Of Lopez himself nothing was know since his escape after the rout at Lomas Va entinas, except that he had passed through Cerro Leon with a small escort. Leon no garrison was found by the Brazi cavalry corps in pursuit, only a large nun ef of wounded, and many families from Vile Asuncion, and the country round about the General McMahon, the United States minister was reported to be resolved on supporting Lopez, and on establishing the seat of th American Legation wherever Lopez's head At Cer |