The accident happened in the early dawn, when many of the people were asleep in their berths, and though the captain had them roused, and lowered the boats to try and take them off the sinking ship, the seas ran so high that the small boats were swamped, and it was impossible to save the unfortunate passengers. The ship went down in one hundred and twenty fathoms of water, so it is not likely that her valuable cargo of arms and money will ever be recovered. The loss is a serious one to Spain at this moment, when she needs every penny she has to help her out of her many difficulties. * * * * * There are disquieting rumors that the Carlists are smuggling large quantities of arms into Spain from France, and it is thought that the long-deferred rising will occur very shortly. Eleven thousand rifles are said to have been purchased in Belgium by the Carlist agents during the month of September. * * * * * There is a vague rumor that the Queen Regent and her new Prime Minister have arrived at the conclusion that the only possible end to the Cuban war will be to let the Cubans purchase the island. There are a good many complications in the way of this action at present, because the European financiers, about whom we have spoken to you before, have advanced a great deal of money to Spain, the sugar and tobacco being taken as security for the return of their money. These people must first be reckoned with before any agreement to free Cuba can be made, but it is hinted by people close to the Government that the Queen and Senor Sagasta are considering a plan whereby they can allow Cuba to purchase her freedom without making bad friends with the financiers, or offending the pride of Spain. It would seem that Senor Sagasta's policy is to put an end to foreign wars, and gather the strength of the Spanish army around the throne of Spain, so that it shall be well protected against the Carlist attack that will undoubtedly be made ere long. A report has been received that the Spanish general in the Philippine Islands is treating with the insurgents for peace. This report is published in one of the reliable Spanish papers, and it states that General Primo de Rivera has been discussing terms of peace with Emilio Aguinaldo, the insurgent leader. The rebels have been so successful that they are not willing to make peace unless they get very good terms, and so they ask that all who have taken part in the revolt shall be given a free pardon, that three million pesetas (a peseta is worth about twenty cents) shall be paid to the insurgent chiefs, that the Philippine Islands shall be represented in the Spanish Cortes, and that half the government offices in the islands shall be held by natives. The insurgents also demand that the power of the priests shall be lessened, as the rebellion was really caused by the disagreements between the friars and the people. * * * * *