Highly gratified with being the first who had defeated the Araucanians on the formidable heights of Mariguenu, the governor conducted his victorious army to the sea-shore, where he was saluted by repeated discharges of cannon from the fleet of Peru, then scouring the coast in search of the English squadron, and which had witnessed the victory. These were answered by the army with repeated vollies of musquetry, and the customary demonstrations of joy on so glorious an occasion. Availing himself of the opportunity afforded by the presence of the fleet, the governor sent the quarter-master-general into Peru to solicit the greatest possible reinforcement of troops without delay, to enable him to prosecute the war to advantage in the ensuing campaign. In the mean time, he abandoned the ancient scite of the fort of Arauco, and rebuilt it in a more convenient situation on the sea-shore. Colocolo, son of the celebrated ulmen of that name, but of a very different disposition from that of his father, was lord of that district, and being indignant at seeing his country occupied by the Spaniards endeavoured to drive them off; but being defeated and made prisoner, he solicited for his life, which he obtained on condition of persuading his subjects to return from the mountains and to submit to the authority of the Spaniards. On being urged by his wife Millayene, to fulfil the promise made by their chief, they replied that he ought to endure his misfortunes with the firmness that became his rank and lineage; that they were willing to encounter every danger under his command, and according to his example, or to revenge the outrages he might be subjected to, but could never consent to betray their country by submitting to obey its bitterest enemies. Irritated by this patriotic resolution of his subjects, Colocolo devoted himself in future to the service of the Spaniards, and even served them as a guide in the pursuit of his own people among the fastnesses in which they had taken refuge.
In the year 1592 there happened to be a Spanish prisoner among the Araucanians, who by his ingratiating manners had acquired the confidence and esteem of the principal people of that high-spirited nation. Either by secret instructions from the governor, or from gratitude for the kind treatment he had received while prisoner, this man exerted himself to effectuate a treaty of peace between the nations, and had at one time a fair prospect of bringing it about. But the preliminaries which he proposed as the ground work of a reconciliation did not prove satisfactory to either party, and all his endeavours were abortive. The governor, being irritated at the rejection of his proposals, marched into the province of Tucapel which he laid waste on every side with fire and sword. As Paillaeco, who had been elected toqui in place of Quintuguenu, did not think his force sufficient to oppose the enemy in the open field, he endeavoured to draw them into an ambush. With this view, he placed an hundred horsemen at the entrance of a wood, within which he had concealed the remainder of his troops, giving orders to the horse to counterfeit flight on the coming up of the enemy to draw them within reach of the ambushment. This scheme seemed at first to promise success, but in the end turned against its contriver. The Araucanians took to flight and were pursued by the Spaniards, who soon discovered that it was only a stratagem, and turned back accordingly as if struck with a panic, in hopes of decoying the enemy to quit the wood and attack them in the open field. Not aware of this repetition of their own trick, the Araucanians fell into the snare they had laid for their enemies; and being surrounded on every side, were mostly cut in pieces together with their commander, after selling their lives at a dear rate, a small remnant taking refuge in the marshes from the pursuit of the victors.
These repeated victories certainly cost much blood to the Spaniards, as the governor after this last action withdrew to St Jago to await the reinforcements he expected from Peru, and to raise as many recruits as possible in the northern provinces of Chili. As the reinforcements did not appear to him sufficient for continuing the war with a reasonable prospect of ultimate success, he even went into Peru in person to solicit more effectual succours, leaving the charge of the civil government daring his absence to the licentiate Pedro Viscarra, and the command of the army to the quarter-master. On his arrival at Lima, Sotomayor met with a successor who had been appointed to the government of Chili, by the court of Spain. This was Don Martin Loyola, nephew of St Ignatius, the celebrated founder of the order of the Jesuits, who had acquired the favour of the viceroy of Peru by taking prisoner Tupac Amuru the last Inca of Peru. In requital for this service, he was not only gratified by being appointed to the government of Chili, but was rewarded by obtaining in marriage the princess or coya Donna Clara Beatrix, the only daughter and sole heiress of the former Inca Sayri Tupac. Loyola arrived at Valparaiso, in 1593, with a respectable body of troops, and immediately proceeded to St Jago, where he was received with every demonstration of joy by the citizens; but during his administration the Spaniards experienced the severest disaster that had ever happened to them in Chili.
After the defeat and death of Paillaeco, the Araucanians elected Paillamachu to the supreme command, who was hereditary toqui or prince of the second Uthulmapu. This military dictator was already much advanced in years, yet a man of wonderful activity and resources, and was so fortunate in his enterprises that he far surpassed all his predecessors in military glory, and had the singular felicity of restoring his country to its ancient independence by the entire expulsion of the Spaniards from its territories. Immediately on his elevation to the supreme dignity of toqui, 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.