256 CHAPTER 11 THE TRIUMPH OF NEOCOLONIALISM AND THE LIBERAL STATE, 1870–1900
Tarapacá. By 1875, Chilean enterprises in Peru-
vian nitrate fi elds employed more than ten thousand
workers, engineers, and supervisory personnel. At
this point, the Peruvian government, on the brink
of bankruptcy as a result of a very expensive pro-
gram of public works, huge European loans, and
the depletion of the guano deposits on which it had
counted to service those loans, decided to expro-
priate the foreign companies in Tarapacá and es-
tablish a state monopoly over the production and
sale of nitrates. Meanwhile, Peru and Bolivia had
negotiated a secret treaty in 1874 providing for a
military alliance in the event either power went to
war with Chile.
Ejected from Tarapacá, the Anglo-Chilean
capitalists intensifi ed their exploitation of the ni-
trate deposits in Antofagasta. In 1878, Bolivia,
counting on its military alliance with Peru, chal-
lenged Chile by imposing higher taxes on nitrate
exports from Antofagasta, in violation of the treaty
of 1874. When the Chilean companies operating
in Antofagasta refused to pay the new taxes, the
Bolivian government threatened them with confi s-
cation. The agreement of 1874 provided for arbi-
tration of disputes, but the Bolivians twice rejected
Chilean offers to submit the dispute to arbitration.
In February 1879, despite Chilean warnings
that expropriation of Chilean enterprises would
void the treaty of 1874, the Bolivian government
ordered the confi scation carried out. On February
14, the day set for the seizure and sale of the Chil-
ean properties, Chilean troops occupied the port of
Antofagasta, encountering no resistance, and pro-
ceeded to extend Chilean control over the whole
province. Totally unprepared for war, Peru made
a vain effort to mediate between Chile and Bo-
livia. Chile, however, having learned of the secret
Peruvian-Bolivian alliance, charged Peru with in-
tolerable duplicity and declared war on both Peru
and Bolivia on April 5, 1879.
In this war, called the War of the Pacifi c, Chile
faced enemies whose combined population was
more than twice its own; one of these powers,
Peru, also possessed a respectable naval force. But
Chile enjoyed major advantages. By contrast with
its neighbors, it possessed a stable central govern-
ment, a people with a strong sense of national iden-
tity, and a disciplined, well-trained army and navy.
Chile also enjoyed the advantage of being closer to
the theater of operations, because Bolivian troops
had to come over the Andes and the Peruvian
army had to cross the Atacama Desert.
All three powers had serious economic prob-
lems, but Chile’s situation was not as catastrophic
as that of its foes. Equally important, Chile had the
support of powerful English capitalist interests,
who knew that the future of the massive English
investment in Chile depended in large part on the
outcome of the war. The prospect of Chilean acqui-
sition of the valuable nitrate areas of Antofagasta
and Tarapacá naturally pleased the British capital-
ists. British capital was also invested in Bolivia and
Peru, but whereas the Chilean government had
maintained service on its debt, Bolivia and Peru
had suspended payment on their English loans.
Besides, the Peruvian nationalization of the nitrate
industry in Tarapacá had seriously injured British
interests.
With British assistance, Chile won the war in
1883 and imposed its terms. By the Treaty of An-
cón (October 20, 1883), Peru ceded the province
of Tarapacá to Chile in perpetuity. The provinces
of Tacna and Arica would be Chilean for ten years,
after which a plebiscite would decide their ultimate
fate. But the plebiscite was never held, and Chile
continued to administer the two territories un-
til 1929, when Peru recovered Tacna, and Arica
went to Chile. An armistice signed in April 1884
by Bolivia and Chile assigned the former Bolivian
province of Antofagasta to Chile, but for many
years no Bolivian government would sign a formal
treaty acknowledging that loss. Finally, in 1904,
Bolivia signed a treaty in which Chile agreed to pay
an indemnity and to build a railroad connecting
the Bolivian capital of La Paz with the port of Arica.
That railroad was completed in 1913.AFTERMATH OF THE WAR OF THE PACIFIC
Chile took advantage of the continued mobilization
of its armed forces during the negotiations with
Peru to settle scores with the Araucanians, whose
struggle in defense of their land against encroach-
ing whites had continued since colonial times.