After this second success Zeballos was preparing to advance on _Rio Grande_ when he received official information that a preliminary treaty of limits had been signed at Madrid. By it Portugal ceded _Colonia_ with all its claims upon the northern bank of the _Plata_, and acknowledged the exclusive right of the Spaniards to the navigation of that stream and likewise of the _Uruguay_ as far as to the mouth of the _Pepiri Guazú_. The Spanish line of frontier was to begin at the mouth of the _Chui_, where fort _S. Miguel_ stood. Thence it went to the sources of the _Rio Negro_, which, with all other rivers flowing into the _Plata_ or into the _Uruguay_ below the mouth of the _Pepiri Guazú_, now belonged to Spain. The _Rio Grande_ was assigned to Portugal. The _Uruguay_ missions were to remain as they were, and a line was drawn fixing the frontier so as to protect them, the commissioners being instructed to follow the line of the tops of the mountains and so to arrange the boundary that the rivers from their source should flow always within the same demarcation. The lakes _Mirim_ and _Manqueira_ and the land between them, and the narrow strip between the latter and the sea, became neutral territory, which was not to be occupied by either people. The Portuguese were not to go further south than the river _Tahim_, nor the Spaniards further north than the _Chui_. The artillery taken at _Rio Grande_ was to be restored, as was _Sta. Catherina_. This treaty was looked upon with much pride by Florida Blanca as having settled a dispute which had lasted for two centuries and a half. The demarcation between the two territories from the mouth of the _Pepiri_ northwards was in every respect the same as in the former Treaty of Limits which had been cancelled. It should be stated that by this time Pombal had fallen into disgrace, on the death of King Jozé. Many of the measures of that minister were now annulled, amongst them the companies of _Maranham_ and _Pernambuco_. These had, however, done their work by the increased impulse which they had given to commerce, more especially to the growth of cotton, which they had promoted at _Maranham_, and which was extended to _Pernambuco_. It is scarcely necessary to refer to the hostilities which, simultaneously with those of _Colonia_, had broken out between the Portuguese and the Spaniards on the _Matto-Grosso_ frontier, and in which the _Guaycurús_ were involved. This powerful tribe, however, soon made peace with the Spaniards, and at a later period this peace was extended to the Portuguese. [Sidenote: 1789.]