From Tumbez, he advanced in May 1532, to the river Piura, and close to its mouth founded the first Spanish colony in Peru, to which he gave the name of San Miguel, having subdued all the curacas or chiefs in the vicinity. While engaged in founding this city, the general received a message from Huascar, the reigning Inca, informing him of the revolt of Atahualpa, and requesting his assistance in establishing the empire in the hands of its lawful sovereign. Placing a garrison in San Miguel, Pizarro determined to penetrate into the interior, under the guidance of the Inca's messengers; his disposable force consisting at this time, of sixty-two horsemen and 102 foot soldiers, twenty of whom were armed with cross-bows, and three only carrying matchlocks, with two small field-pieces. The Peruvian ambassador directed his march towards the province of Caxamarca, in which Atahualpa then was. On his route he received messengers from the usurper with costly presents, requesting also his assistance.
Pizarro informed these people, that his views were entirely pacific, and that he meant merely to assist in reconciling the difference between the brothers. On his arrival, after a distressing march at Caxamarca, he was shown a house, in which himself and troops were to repose. This building, which was very extensive, was formed into a square, in which stood a temple and a palace, and the whole was surrounded with a strong rampart.
Atahualpa, immediately after the Spaniards had taken possession of their quarters, paid their general a visit, accompanied with an immense train of courtiers and warriors.
Father Vicente Valverde, the chaplain to the army, and bishop of Peru, advanced to meet the usurping Inca, holding in one hand his breviary, and a crucifix in the other, and commenced a long harangue, in which he set forth the necessity of his immediately embracing the Christian religion, related its forms, and told him that the king of Spain, had received a grant from the pope of all the regions in the New World, ending with desiring him to be baptized, to acknowledge the supremacy of the pope, and the authority of the king of Castile, promising in their names, that the general would favour his claims to the empire of Peru, if he submitted, but denouncing war and vengeance if he refused.
The reply of Atahualpa, to such parts of this speech as he could be made to comprehend, was temperate; he said, "he was lord of the territories he had succeeded to by the laws of his country, that he could not conceive how a foreign priest could pretend to dispose of his dominions; he declared he had no intention to renounce the religion of his fathers, and he wished to know where the Spaniards had learnt all the wonderful things which Valverde had been relating;" the bishop answered, "in the book he held," on which Atahualpa requested it from him, and turning over a few leaves, and placing it to his ear, threw it on the ground, saying, "it is silent, it tells me nothing." Valverde turning to the Spanish troops, immediately exclaimed, "To arms! to arms! Christians! the Word of God is insulted, avenge this profanation on these impious dogs." Pizarro being of opinion that the numbers of the Peruvians would overpower him if he waited their attack, gave the signal of assault, advancing at the head of his band to the charge, he pushed directly for the litter in which Atahualpa was borne, the people who carried it were repeatedly slain, and as repeatedly replaced by others, anxious for the honour of rescuing their sovereign. Pizarro at last cut his way through the crowd to the unfortunate prince, and seizing him by the long hair of his head, he dragged him from his seat. In doing this, several soldiers cutting down the people who supported the golden litter, and a sword glancing off, wounded Pizarro in the hand, but regardless of the pain, he held fast his rich prize in spite of the multitude of Peruvians who surrounded him.
As soon as the monarch was secured beyond redemption, universal panic seized his army, and they fled in every direction, night alone putting a period to their pursuit, by the cavalry; 4000 Indians fell in this memorable battle, which decided the fate of a mighty empire; not a single Spaniard was killed, and the plunder of the Indian camp was immense. This action took place on the 10th of November 1532.
The captive Inca finding he had no chance of escape, offered a ransom, which was to be so great a quantity of gold, that it would fill the apartment in which he was confined, as high as he could reach. This chamber was twenty-two feet in length, and sixteen in breadth, and a line was drawn around the walls, to indicate the height to which the treasure was to rise; and Pizarro, acceding to this proposal, the Inca immediately dispatched emissaries to Cuzco, to procure the ransom; with these messengers two Spanish officers were sent, to see that the gold in the treasury of Cuzco was sufficient to answer the demand, as some doubts had been shown by the Europeans on that subject. On their route, they met the captive Inca Huascar, escorted by a party of Atahualpa's troops; conferring with Huascar, they discovered that he possessed treasures to a much greater amount; but as they were concealed, he alone knew where they were; he informed the officers, that if Pizarro would reinstate him in his dignity, he would give three times as much gold as his brother, and promised to swear allegiance to the Spanish king.
Soto and Barco, the two officers, told him it was out of their power to return to Caxamarca, as they were ordered to go to Cuzco, but that they would faithfully relate all that had passed to the general, when they had executed their mission; this they did, but in the interval, the whole conference had been detailed to Atahualpa, who foreseeing, that if Pizarro once got possession of the enormous treasures of Huascar, he should become of no importance, ordered his emissaries to kill his unfortunate brother; and as his will was a law, the order was speedily carried into execution.
Whilst these events were passing, Almagro arrived from Panama, with a large reinforcement, to the great joy of the Spaniards; the treasure from Cuzco also arrived, and consisted of golden utensils and ornaments, used in the temples of the Sun; these, excepting a few which were reserved as curiosities, were melted down; a fifth was set aside for the king; 100,000 dollars were distributed to the followers of Almagro; and the remainder, amounting to 1,528,500 dollars, an enormous sum in those times, was divided among Pizarro and his troops, each horseman receiving 8000 dollars, and each foot-soldier 4000.
After this ransom was paid, instead of releasing his prisoner, Pizarro, who was alarmed on one hand by the exaction of an equal share of the ransom by the troops under Almagro, and on the other by the accounts of large armies forming in the interior determined to kill Atahualpa, which fate that monarch hastened, by professing his contempt of the general, on account of his want of learning. The Inca seeing and admiring the method which the Europeans had of communicating their ideas by writing, was for a long time unable to conceal his astonishment and doubts, whether it was not managed by evil spirits; accordingly he directed a soldier to write the name of God on his thumb nail, and showed it to every Spaniard he saw, in order to observe whether they all gave a similar account of its meaning.