Their commerce, both internal and external, is all carried on by barter, as they have not adopted the use of money; and this is regulated by a conventional tariff according to which the values of all articles in commerce are appraised under the name of cullen, or payment. Their external trade is with the Spaniards, with whom they exchange ponchos, or Chilese cloaks, and animals, for wine or European articles. The Spaniards of the province of Maule supply the Araucanians with iron ware, bits for bridles, cutlery, grain, and wine; and are paid in ponchos of which they receive above 40,000 yearly, in horned cattle, horses, ostrich feathers, curious baskets, and other trifles; for it has never been possible to induce them to open their gold mines. The Spanish merchant has in the first place to obtain permission from the ulmens or heads of families of a district, after which he proceeds to all the houses, distributing his merchandize indiscriminately to all, who present themselves. When he has completed his sale, he gives notice of his departure, and all the purchasers hasten to an appointed village, where they deliver the articles agreed for with the utmost punctuality.

After the death of Atahualpa and the subjection of the Peruvian empire by Pizarro and Almagro, Pizarro persuaded his companion Almagro to undertake the conquest of Chili then celebrated for its niches, being desirous to enjoy the sole command in Peru. Filled with sanguine expectations of a rich booty, Almagro began his march for Chili in the end61 of the year 1535, with an army of 570 Spaniards, and accompanied by 15,000 Peruvians, under the command of Paullu62, the brother of the Inca Manco, the nominal emperor of Peru, who had succeeded to Atahualpa and Huasear. Two roads lead from Peru to Chili; one of which by the maritime plain, is the arid desert of Atacama, destitute of water and provisions; while the other passes for about 120 miles over the immense ridge of the Andes, and is attended by excessive inconveniences and almost insurmountable difficulties Almagro chose this road because it was the shortest from Cuzco; and in this march his army had to endure infinite fatigue, and almost incessant conflicts with the barbarous tribes in the several districts through which he had to pass. He at length reached the eastern side of the vast chain of the Andes at the commencement of winter, almost destitute of provisions, and ill supplied with clothing to protect his people under the inclemencies of the region he had still to penetrate. At the season of the year which he unfortunately chose, snow falls almost continually among the Andes, and completely fills and obliterates the narrow paths that are even difficultly passable in summer. The soldiers, however, animated by their general, and ignorant of the dangers they had to encounter, advanced with inconceivable toil to the summit of the rugged ascent. But by the severity of the weather, and the want of provisions, 150 of the Spaniards perished by the way; and 10,000 of the Peruvians, less able to endure the rigours of that frozen region, were destroyed. Not one of all the army would have escaped, had not Almagro pushed resolutely forward with a small party of horse to Copaipo, whence he sent back succours and provisions to his army still engaged in the defiles of the mountains. By these means, those of the most robust constitutions, who had been able to resist the inclemency of the weather, were enabled to extricate themselves from the snow, and at length reached the plains of Copaipo, the most northerly province in Chili, where they were kindly received and entertained by the inhabitants, through respect for the Peruvians.

As the Inca Paullu was well acquainted with the object of this expedition, he obliged the inhabitants of Copaipo to deliver up to him all the gold in their possession, which he immediately presented to Almagro, to the value of 500,000 ducats. Almagro was highly pleased with this first fruit of his labours, and immediately distributed the whole among his soldiers, to whom also he remitted immense debts which they owed him, as he had advanced them all the funds which were necessary to fit them out for the expedition. Almagro soon learnt that the reigning Ulmen of Copaipo had usurped the government of that province in prejudice of his nephew and ward, who had fled to the woods. Calling the lawful heir into his presence, he arrested the guilty chief, and reinstated the lawful heir in the government, with the universal applause of the natives, who attributed this conduct entirely to motives of justice and a wish to redress the injured.

When the Spaniards were recovered from their fatigues, through the hospitable assistance of the Copaipins, and were reinforced by an additional number of soldiers brought by Rodrigo Orgonez from Peru, Almagro and his troops commenced their march towards the more southerly provinces of Chili, full of the most flattering hopes of acquiring vast riches and splendid establishments in a fine country, which was interspersed on all sides with numerous villages, evincing an extensive population and fertile soil. The natives every where crowded round them on the march, to examine the wonderful strangers, and to present them with such things as they thought might prove agreeable to beings whom they conceived of a superior order to other men. In the mean time, two soldiers who had separated from the army, proceeded to the river Huasco which forms the boundary between the provinces of Copaipo and Coquimbo, where they were well received at first by the inhabitants; but, in consequence of some acts of violence, they were afterwards put to death, being the first European blood spilt in Chili, which has since been so copiously watered with the blood of the Spaniards. On being informed of this unfortunate accident, calculated to weaken the exalted notion which he wished to inspire into the natives of the character of his soldiers, Almagro hastened his march for Coquimbo, where he immediately ordered Marcando the head ulmen of the province, his brother, and twenty others of the principal inhabitants to be brought before him; all of whom he committed to the flames; This act of cruelty appeared extraordinary and unjust to every one; for even among these adventurers, inured to rapine and bloodshed, there still were some men of humanity and justice. The majority of the army openly disapproved the severity of the general on this occasion, and from this time his affairs ceased to be prosperous.

Some time in the year 1537, Almagro received a considerable reinforcement from Peru under the command of Juan de Rada; who likewise brought him letters patent from the king of Spain, by which he was appointed governor of 200 leagues of territory to the southward of the government which had been granted to Francisco Pizarro. By the same conveyance Almagro received letters from his friends in Peru, urging him to return to that country and to take possession of Cuzco, which they asserted was within the limits of the jurisdiction confided to him by his patent. But, as he entertained very sanguine ideas of the value of the conquest in which he was now engaged, he pursued his march towards the south, and passed the fatal Cachapoal or Rapel, regardless of the remonstrances of his Peruvian allies, who urged him to refrain from attempting to invade the country of the valiant Promaucians63. At the first appearance of the Spaniards, these brave Indians were astonished and terrified by the horses and thundering arms of the strangers; but soon recovering from the effects of their first surprise, they intrepidly opposed their new enemies on the banks of the Rio-claro. Despising their force, and ignorant of their bravery, Almagro placed his Peruvian allies in the first line, now considerably increased by an additional number whom Paullu had drawn from the Peruvian garrisons in Chili. But these troops were soon defeated by the Promaucians, and fell back in confusion on the line of Spaniards in the rear. The Spaniards, instead of remaining spectators of the battle, were now compelled to sustain the vigorous attack of the enemy; and, advancing with their horse, a furious battle was fought with considerable loss on both sides, and continued till night separated the combatants without either party having gained the victory.