War of the Pacific (Saltpeter War), 1879–1883

Contested borders after independence

Alto Perú, as Bolivia was called during its colonial period, was initially part of the Viceroyalty of Peru. According to a decree of the Spanish crown, it only had access to the sea via Arica, which was Peruvian at the time. In 1776, Spain transferred Alto Perú's territorial dependence to the newly created Viceroyalty of La Plata, later Argentina. Alto Perú thus officially lost any claim to access to the Pacific, as Spain divided the viceroyalties by oceans, meaning there was a Viceroyalty of Peru on the Pacific and a Viceroyalty of La Plata on the Atlantic.

After the end of Spanish colonial rule in South America between 1810 and 1830, the course of the borders between the new states was unclear in many regions, and conflicts were the result. The affiliation of the Atacama region on the Pacific coast between the newly formed states of Chile (founded in 1818), Peru (founded in 1821) and Bolivia (founded in 1825) was also disputed. The doctrine Uti possidetis provided for the adoption of the old boundaries of the Spanish colonies. Contrary to this doctrine, Bolivia, since the declaration of independence in 1825, claimed the largely uninhabited desert region as part of its national territory and founded the port city of Cobija there in 1830, which was tolerated by Chile. Chile, however, continued to consider the region, 95% of which was populated by Chileans, as its territory.

The Border Treaty between Bolivia and Chile of 1866

In the border treaty of 1866, Chile and Bolivia agreed on 24° south latitude as the north-south border and the "watershed line" as the east-west border. The zone between 23° and 25° south latitude became the "Common Profit Zone" (Zona de beneficios mutuos). Taxes from the extraction of minerals from this zone were to be shared equally between Chile and Bolivia. This agreement turned out to be difficult to implement, as differences soon arose over the terms "minerals", over the zoning of the rich silver mines of Caracoles, and over Bolivia's difficulties in remitting 50% of the tax collected to Chile.

In 1873, both governments sought a solution and the Corral-Lindsay Protocol was negotiated to resolve the known disagreements. This agreement was ratified by Chile, but the Bolivian parliament, under Peruvian pressure, refused to approve it.

The secret alliance treaty between Peru and Bolivia of 1873 and the position of Argentina

In view of the growing influence of Chilean companies and further Chilean immigration to Bolivia and Antofagasta, Peru saw its supremacy in the South Pacific threatened and formed a secret alliance with Bolivia with the aim of using military force to force Chile to revise its borders in favor of Peru and Bolivia.

The treaty also provided for the inclusion of Argentina in the alliance. In 1873, the Argentine lower house approved the project and granted 6,000,000 pesos in additional funds for the War Ministry. However, due to territorial disputes with Bolivia over Tarija and Chaco, the three states were ultimately unable to agree on joint action, so the Argentine Senate did not sign the agreement. Argentina rejected a war effort for the militarily weak Bolivia, and Peru did not want to risk a war with Chile over Patagonia.

In 1875 and 1878, as tensions increased between Chile and Argentina over territorial disputes over Patagonia, Tierra del Fuego, and the Straits of Magellan, Argentina attempted to join the alliance, but in the meantime Peru refused. At the start of the war in 1879, Peru and Bolivia offered Argentina the Chilean territories between 24° and 27° south latitude in exchange for joining their alliance, but Argentina refused due to the weakness of its navy.

The Border Treaty between Bolivia and Chile of 1874

Bolivia changed its policy in 1874 and reached agreement with Chile on a new border treaty. The region north of the 24th parallel south was to continue to belong to Bolivia and the joint economic zone was to be dissolved on condition that Bolivia was not allowed to increase the export tax on Chilean companies now based in its territory for a period of 25 years.

The Peruvian saltpetre monopoly

Peru mined guano in the Tarapacá region and financed large parts of its state budget with it since the 1840s. In the 1860s, however, state revenues fell as a result of low quality and quantity of guano exports. At the same time, interest in the region grew when extensive deposits of nitrate (saltpeter) were found there during these years. This raw material was valuable and necessary for the production of fertilizer and explosives (until the Haber-Bosch process became operational in 1913). Because of increasing trade in saltpetre on the world market, Peru had considerable difficulty selling its guano from 1877 onwards; more than 650,000 tons were eventually stored in the ports.

To compensate for the decline in guano exports, the Peruvian government attempted to establish a state monopoly over the extraction and trade of saltpetre from 1873 onwards. In 1875, Peru nationalized all the salitreras (saltpetre factories), thus ensuring the state direct control over production in its own country. But there were also nitrate deposits further south, in Antofagasta off the then Chilean border. From 1876, the Peruvian state had the straw man Henry Meiggs buy licences to extract saltpetre in Chile.

The Compañía de Salitres y Ferrocarriles de Antofagasta

The Compañía de Salitres y Ferrocarriles de Antofagasta (CSFA for short) was a Chilean joint stock company based in Valparaíso. CSFA had received a license from the Bolivian government under José Mariano Melgarejo to mine nitrates in Antofagasta. This first license was revoked after a coup and, after negotiations between the CSFA and the new Bolivian government, was granted again tax-free for 15 years on December 27, 1873. At the time, it was disputed whether this new license grant required parliamentary approval. This left the CSFA as the only saltpetre producer not under the control of the Peruvian state.

The British company Antony Gibbs & Sons had a minority shareholding of 34 % in the CSFA and was the only seller of Peruvian saltpetre in Europe at the time. The government in Lima urged the Gibbs company to put pressure on the Chilean management of the CSFA to cut production. Henry Gibbs warned CSFA that maintaining current production levels would cause problems with Peru and Bolivia, which saw this as a violation of their interests.

The 10 centavos tax

To finance the state treasury, the Bolivian government decided in 1878 under President Hilarión Daza to impose a special tax of 10 centavos on every hundredweight of saltpetre mined, thus violating the Treaty of 1874. Chile lodged a protest against this breach of the treaty. Bolivia then initially refrained from levying the tax, but did not withdraw the law. In February 1878, due to a financial emergency following a drought year and lack of funds to repair earthquake damage, Bolivia decided to collect the tax from the profitable saltpetre industry CSFA retroactively from 1874. After CSFA refused to pay the tax, citing the treaty, in January 1879 Bolivia expropriated the premises owned by CSFA and offered them for sale. Chile considered this an open breach and nullification of the 1874 treaty and sent troops to the city of Antofagasta, originally founded by Chileans (Juan López and José Santos Ossa).

Conclusion: Causes of the war

Ronald Bruce St. John says in The Bolivia-Chile-Peru Dispute in the Atacama Desert:

The US-American historian William F. Sater names the following reasons for the war:

• Chilean interests in the production sites in the region and the plan to usurp them by occupying the territory in question to compensate for the loss of export revenues. Many of CSFA's shareholders were members of the Chilean government and exerted massive pressure on President Anibal Pinto, influencing public opinion to adopt a more confrontational political course towards Bolivia. Sater adds, however, that parts of the Chilean business elite had also made extensive investments in Bolivia and were therefore opposed to an escalation of the conflict because they feared the possible loss of their property in Bolivia.
• Peru and Chile's geopolitical interests in the South Pacific. Both Peru and Chile tried to get Bolivia on their side with the promise of a cheaper export port. Since the actual Bolivian export port was in Arica and not Antofagasta, Peru ultimately offered more favorable terms. At the same time, Chile offered Bolivia to occupy the Peruvian territories of Tacna and Arica and then hand them over to Bolivia.
• Peru's economic interests in a monopoly on saltpetre extraction to compensate for its reduced revenues from guano mining. Peru made an unsuccessful attempt to control the saltpetre trade through a state monopoly as early as 1873 and nationalised the saltpetre industry in 1875. In 1876, Peru began to acquire Bolivian licenses for the mining of nitrates, and the government put pressure on the British firm Antonny Gibbs & Sons to curb CSFA's saltpetre production.
• The compulsion resulting from domestic and public pressure on governments - both in Chile and Peru - to be intransigent in the dispute over the region, and the fear of the governments of both countries - in case of hesitation - to be overthrown by a coup.

Antofagasta occupation

Chilean units occupied the port city of Antofagasta on February 14, 1879, the day the auction of the company was to take place. Since only five percent of the population was Bolivian, there was no resistance. On February 22, 1879, Peru sent a group of diplomats, led by José Antonio de Lavalle, to Chile to mediate between Bolivia and Chile and find a peaceful solution. Meanwhile, Peru mobilized its armed forces. On February 27, the Bolivian parliament authorized the government to declare war, but it was not initially issued.

Declarations of War

On March 1, Bolivian President Hilarión Daza ordered by decree various measures, including a ban on trade and communication with Chile "as long as the state of war continues" and the departure of all Chileans within ten days (except in cases of serious illness or disability). Chilean mining companies were allowed to maintain operations under the supervision of a government overseer. The embargo measures were to be temporary unless hostile actions by the Chilean military "require a vigorous counterstrike by Bolivia." Although Daza spoke of a "state of war," a formal declaration of war had not yet been made. On March 4, the Peruvian legation under de Lavalle arrived in Valparaíso.

At an international meeting in Lima on 14 March, Bolivia declared that it was in a state of war with Chile. This was intended to make it more difficult for Chile to continue to procure arms abroad. Peru's mediation efforts in Chile were thus undermined. That same day, Chilean Foreign Minister Alejandro Fierro sent a telegram to Chile's ambassador in Lima, Joaquin Godoy, seeking an immediate declaration of neutrality from Peru. On March 17, Godoy personally presented the Chilean request to Peruvian President Prado. The Peruvian government wanted to wait for the decision of the parliament.

Bolivia, in turn, asked Peru to recognize the case of alliance that Chile had caused. When the Peruvian mediator de Lavalle was officially and directly asked in Chile whether Peru and Bolivia maintained a secret defensive alliance and whether Peru intended to recognize the case of alliance, he could no longer evade and answered both questions in the affirmative. Chile then declared war on Peru and Bolivia on April 5, 1879. On April 6, Peru proclaimed the case of alliance and declared war on Chile.