s to manage their
own concerns, and the organization of the police was placed in their
hands; at a later period, however, it was found necessary to modify this
latter condition.

President Montt next turned his attention towards the question of how
best to repair the damage occasioned to the country by eight months of
civil warfare. The plan of public works authorized in 1887 was
reconsidered, and the construction of portions of the various
undertakings recommenced. The army and navy were reorganized. Additional
instructors were brought from Germany, and all arms of the military
service were placed on a thoroughly efficient footing in matters of
drill and discipline. Several new and powerful cruisers were added to
the navy, and the internal economy of this branch of the national
defence was thoroughly inspected and many defects were remedied.
President Montt then took in hand the question of a reform of the
currency, the abolition of inconvertible paper money, and the
re-establishment of a gold basis as the monetary standard of the
republic. This reform of the currency became the keynote of the
president's policy during the remainder of his term of office. Great
opposition was raised by the representatives of the debtor class in
congress to the suppression of the inconvertible paper money, but in the
end President Montt carried the day, and on the 11th of February 1895 a
measure finally became law establishing a gold currency as the only
legal tender in Chile. In July 1896 the Conversion Act was put in force,
a dollar of 18d. being the monetary unit adopted. In 1895 relations with
the neighbouring republic of Argentina began to become somewhat strained
in regard to the interpretation of the treaty concerning the boundary
between the two countries. The treaties of 1881, 1893 and 1895 left
doubts in the minds of both Chileans and Argentines as to the position
of the frontier line. On the 17th of April 1896 another protocol was
drawn up, by which the contending parties agreed to submit any
differences to the arbitration of Great Britain, at the instance of one
or both governments. President Montt had now fulfilled his term of
office, and on the 18th of September 1896 he handed over the
presidential power to his successor, Senor Federico Errazuriz, who had
been duly elected in the month of June previously.

President Errazuriz.

Crisis with Argentina.

The election for the position of president of the republic wa