he appointed two officers of great valour and merit, Pelantaru and Millacalquin to the important employments of vice-toqui, deviating from the usual custom of the nation, which allowed only of one lieutenant-general.  And, as the military force of the confederacy had been greatly diminished by the late unfortunate incidents in the war, he followed the example of Antiguenu, a former toqui, by withdrawing into the almost inaccessible marshes of Lumaco, where he used his utmost efforts to collect and discipline an army for the execution of the extensive plans he had formed for the entire liberation of his country.

After having regulated the police of the capital and the civil government of the kingdom of Chili, Loyola proceeded to the city of Conception, where he established his headquarters in order to be at hand for conducting the operations of the war.  The toqui of the Araucanians, on hearing of his arrival, sent an intelligent and sagacious officer named Antipillan to compliment him, but charged at the same time to obtain information of his character and designs.  In frequent conferences with this person, the new governor endeavoured to impress him with an idea of the vast power and immense resources of the Spanish monarchy, against which it was impossible as he said for the Araucanians to contend successfully, and insinuated therefore the necessity of their submitting to an accommodation.  Pretending to be convinced by the reasoning of Loyola, the ambassador acknowledged the prodigious power of the Spanish monarchy in comparison with the Araucanian state; which, notwithstanding the vast disproportion, had hitherto been able to resist every effort of the Spaniards.  He acknowledged even the propriety of his nation entering into negotiations for peace, but alleged that the Spaniards affixed wrong ideas to that word; as, under the semblance of peace, they sought to subject the Araucanians to their authority, which they would never agree to while one of them remained alive.  And finally, that the only peace to which they would consent, must consist of an entire cessation of hostilities, a complete restoration of all the lands which were occupied by the Spaniards within the Araucanian territory, and an explicit renunciation of every pretence to controul or interfere with their independent rights.

As Loyola was of a generous disposition, he could not avoid admiring the noble and enlightened sentiments of the barbarian ambassador, and dismissed him with the strongest demonstrations of esteem.  Yet so far was he from any idea of abandoning the posts already established in the Araucanian territory, that he crossed the Biobio in 1594, and founded a new city at a short distance from that river, giving it the name of Coya in honour of his wife a Peruvian princess.  This place was intended to protect the rich gold mines of Kilacoyan, and to serve as a place of retreat for the inhabitants of Angol in case of need; and in order to render it more secure, he constructed two castles