importance of the new government was the granting of control to the municipalities, which hitherto had possessed little power to direct local affairs and were not even permitted to make spending decisions of the municipal revenues to any important amount without first obtaining the consent of the central government. Almost absolute power was now given these corporations 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 to best repair the damage caused 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; many defects were remedied. President Montt then took in hand the question of a reform of the currency, the abolition of nonconvertible paper money, and the re-establishment of a gold monetary standard for 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 nonconvertible paper money, but in the end President Montt carried the day, and on February 11, 1895 a measure finally became law establishing a gold currency as the only 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 April 17, 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.