President Castro has yielded to all the demands of the powers, even to the payment of large sums of money before arbitration; but the powers which insisted upon this condition are now doubting his ability to do what they had demanded that he promise to do. United States Minister Bowen has been empowered by the government of Venezuela to represent its interests in the negotiations, and is now on his way to America to prepare his case for presentation to The Hague. Venezuela demands that the blockade shall be raised at the beginning of the arbitration proceedings, and the United States and Italy both give their support in this; but the latter government can not act without the agreement of Great Britain and Germany. In the meantime there is much distress in Venezuela, and a financial panic is reported at Caracas, while lawless soldiery are inflicting great hardships upon the people. On January 18 the German gunboat Panther began shelling Fort San Carlos. The fort replied and the despatches state that the Panther lost two men; that two explosions occurred on her deck which compelled her to retire. The Venezuelans are congratulating themselves over the outcome.