Mr. Nelson to Mr. Seward.
Sir: * * * * * * * *
On the 1st instant a brief engagement took place between the Spanish and Chilian forces on the island of Chiloe. The Spanish frigate Blanca anchored within sixty yards of the shore, at a spot called Tubildad. At daybreak, as the crew was mustered on deck, a volley was fired from a body of regular troops on the shore, followed by a brisk fusilade, causing serious loss to the enemy. The latter opened fire from her batteries on the troops, until she was enabled to get underway and escape. The official reports state that the Chilians suffered no loss whatever. Spanish loss unknown.
In accordance with his declaration of January 29th last, that Chilian coal would be by him considered as contraband of war, and as such confiscated, (see despatch 246,) Admiral Mendez, a few days since, captured a number of neutral vessels lying in the port of Lota, laden with coal. Among these are said to be several bearing the American flag, and whose cargoes belong to American citizens. No official information on the subject has as yet reached this legation.
On the 14th the Numancia returned to Valparaiso, having failed in her expedition against the allied squadron in the south. She brought with her, as a prize, the British steamer Paquete de Maule, captured near Lota.
I consulted freely with Commodore Rodgers, during his recent visit to Santiago, upon the state of affairs on this coast in connection with American interests. He coincides with me in the opinion that it is highly important that he should remain with the Vanderbilt and Monadnock in the harbor of Valparaiso for the present. This opinion, I am happy to know, is fully shared by General Kilpatrick. The irritation of the Spanish people, as shown in the peninsular press, the rumors of more energetic hostilities about to be inaugurated, and the constant fears of an attack upon the port of Valparaiso, render this point of the whole South American coast at present most requiring the presence of our naval forces.
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I have the honor to remain your obedient servant,
Hon. William H. Seward, Secretary of State, Washington, D. C.