Mr. Thompson to Mr. Gresham.

No. 3.]

Sir: In confirmation of my telegram same date I am sorry to report that on September 6 a note was received from the foreign minister informing me that a part of the squadron had revolted, manifesting open hostility against the legal government of Brazil, and is still in progress, this being the sixth day. Admiral José Custodio de Mello, of the Brazilian navy, is commander of the revolting squadron. He has possession of the Brazilian warships Aquidaban, Jupiter, and Republica, and a number of merchant vessels which have been seized in the harbor of Rio.

The Government has possession of Fort Santa Cruz, which commands the entrance to the harbor of Rio de Janeiro, and the army is apparently loyal to the legally constituted authorities. The revolting squadron controls the inner harbor to within a limited distance of the shore line, which is defended by artillery, infantry, and police forces. Some desertions are reported from the revolting naval forces. Foreign powers are represented in the harbor by ships of war as follows: England, 3; France, 1; Italy, 1; Portugal, 1. Congress is supporting the Government. Local trade on land continues as usual; foreign commerce has been entirely suspended until to-day, when restrictions on telegraphic communications were partly removed. One French ship commenced to discharge cargo to-day. No shipments to foreign ports have been made since the revolt commenced. Desultory firing has been kept up between the opposing naval and land forces, resulting in some deaths and considerable damage to property. No interference with railroad communication has occurred. The supply of coal is limited.

I have, etc.,

Thos. L. Thompson.