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 with the outcome of this settlement of a difficult international question that they

"in June, 1903, concluded a treaty by the terms of which they pledged themselves for a period of five years to submit all controversies arising between them to arbitration, the first general arbitration treaty ever concluded. In a further treaty they agreed to reduce their armies to the proportions of police forces, to stop the building of the great battleships then under construction, and to diminish the naval armaments which they already possessed.

The provisions of these treaties which have now been in force nearly two years, were carried out as fast as practicable. The land forces have been reduced, the heavy ordnance taken off the war vessels, and several of the vessels of the marine turned over to the commercial fleets. Work on the four great warships was immediately arrested, and some of them have been sold. One or two of them, unfortunately, went into the Japanese fleet off Port Arthur, in spite of the fact that both governments had, in the treaty, pledged themselves not to sell any ships to nations engaged in war. The vessels were bought under disguise by a firm in New York, and then turned over to Japan; after which neither of the governments would sell any vessels to either Russia or Japan.

The results of this disarmament—for it is a real disarmament—have been most remarkable. With the money saved by the lessening of military and naval expenses, internal and coast improvements have been made. Good roads have been constructed. Chile has turned an arsenal into a school for manual training. She is building a much needed breakwater in the harbor of Valparaiso, and has commenced systematically the improvement of her commercial facilities along the coast. One or two of Argentina's previous war vessels have gone into her commercial fleet and are now plying back and forth across the Atlantic in honorable and lucrative business. The great trans-Andean railway through the heart of the mountains, which will bring Buenos Ayres and Santiago within eighteen hours of each other and