So much for the eastern boundary. North lay the Desert of Atacama, declared by Darwin to be a “barrier far worse than the most turbulent ocean.” The desert was known from early Spanish times as the boundary of Chile, but while it remained apparently worthless it was to no one’s interest to decide whether the north, centre, or south of the desert formed the line. Peru’s southern limit was fixed as far back as 1628 at 22° 33′ south latitude, the border of Tarapacá, near the present port of Tocopilla; between the parallels of twenty-two and twenty-five was the old Province of Atacama, extending from Tocopilla southward, including then but one port, Cobija, and all the large northerly part of the Atacama Desert. In 1770 Dr. Cosme Bueno, the Chief Cosmographer of Peru, wrote in the valuable Conocimientos de los Tiempos that “Peru extends to 25° 10′ in the centre of the Atacama desert, and here touches Chile”—Atacama then, as part of Charcas or Alto Peru being included in the Peruvian Viceroyalty—and in 1776 the northern edge of Chile seems to have been accepted as touching the little town of Paposo, in almost the same latitude. But that there was haziness regarding the precise border is indicated by the fact that Fitzroy’s map of 1836, and Ondanza’s of 1859, and that of Pissis, 1860, all show differing boundary lines for northern Chile. Had the Paposo latitude been definitely accepted by Chile and her sisters, it is inconceivable that Bolivia would have failed to denounce energetically in 1866 the Chilean claim to territory as far north as parallel 23.
By this time the South American countries were prosperous in the huge development of commerce with the world at large, and the West Coast had entered upon a new era; there was an enormous extension of copper and silver mining, guano was feverishly exploited by Peru with great profit from 1841, and there was a developing business in nitrate, shipped chiefly from Iquique and Pisagua, in Tarapacá. In the attack by Spain upon Peru the four countries of Ecuador, Peru, Bolivia and Chile were united in resistance, and causes for trouble appeared remote. It was now that a glimpse of the hidden wealth of Atacama was revealed. Two enterprising Chilean engineers, Ossa and Puelma, seeking copper in the burning desert, obtained from President Melgarejo of Bolivia a wide concession to operate in the territory, which was neither surveyed nor utilised by Bolivians at that time, commerce to and from Bolivia still following the Arica, or Arequipa and Mollendo, route. With industrial development in sight the question of boundaries became acute, and Chile laid a formal claim to all land south of parallel 23.
Bolivia admitted the prevailing lack of certainty concerning limits by compromising; Chile’s boundary was fixed at 24° s. l., while the two countries were to share customs receipts from the belts 23° and 24°, and 24° and 25° s. l. The arrangement did not work well, and was eventually revised in 1874 and a new arrangement made by which Bolivia agreed not to levy taxes upon Chilean industries, nor to impose new customs dues on exports for the next twenty-five years.
For meanwhile a great development was taking place. In 1870 the silver mines of Caracoles were discovered, a rush to the locality ensuing. With 4000 claims recorded and a tremendous stream of miners, transport was needed, and a British-capitalised and operated company registered in Chile, the Cia. de Salitres y Ferrocarriles de Antofagasta, took over the rights granted originally to Ossa and Puelma, built a port at Antofagasta and a railway to the mines, and was also presently working newly discovered fields of nitrate in the same once-despised territory. Its concession was extensive, covering all the great Salar del Carmen, and something like a boom in nitrate followed; engineers poured into Atacama, and in Tarapacá the energies of foreign companies, chiefly Chilean and British, began to alarm Peruvians, who saw the supremacy of guano threatened. Peru and Bolivia formed a secret pact (1873), of defensive military alliance, and later tried to legislate against the foreign companies. The Peruvian President, Dr. Pardo, decided to make nitrate a government monopoly, passed a law enforcing the acquisition of all nitrate works and strictly limiting its output, while President Daza in Bolivia first rented all the undeveloped nitrate deposits in Antofagasta to Henry Meiggs, an American railroad builder in Peru, and, disavowing the agreements made by Melgarejo, decreed a duty of ten centavos per hundredweight on all nitrate exported. Both Bolivia and Peru were, it is frequently contended, within their rights in making laws dealing with their own territory: the duty suggested by Bolivia was, it is true, but a fraction of what the industry subsequently yielded. But the developing companies were exasperated at what they considered attempts to revoke rights already conceded, and to stifle nitrate production in Antofagasta. The fact that Bolivia and Peru were financially embarrassed following periods of internal disturbance and large spending did not ease the situation.
Trouble might have been averted with mutual concessions had it not been for the high-handed act of Bolivian officials who, in December, 1878, demanded a large sum in back taxes from the Antofagasta company, and upon the refusal of the English manager, ordered the seizure of the company’s property. The match had been set to the gunpowder. Chile immediately seized the ports of Antofagasta, Cobija and Tocopilla, and by February, 1879, all the Bolivian coast was in Chilean hands militarily as, previous to that time, it had been in Chilean hands economically.
Peru offered to mediate, suggesting neutralisation of Antofagasta port under the triple guarantee of Bolivia, Chile, and Peru, and new disposition of the territorial revenues; but Chile, aware of the secret treaty of 1873, demanded first the abrogation of that pact, and next the cessation of all warlike preparations by Peru and a declaration of her neutrality. Peru declined, and war was declared upon her in April, 1879.
At this time the population of Peru and Bolivia jointly was double that of Chile, and she was comparatively a poor country, without either mineral or great agricultural wealth. But the Chilean navy was excellent and her men were hardy campaigners and fighters, as Peru, aided by Chilean troops in the war of independence and at the time of the forcible seizure of Peruvian territory by Santa Cruz in 1837, well knew.
The course of the war was disastrous from the beginning to the two allied states. Bolivia was never able to recover a foot of the coastal strip, and was forced to confine her efforts to contributions of men and material in the series of battles in which Chilean armies were almost invariably successful. When Chile had broken the small naval power of Peru by the sinking of the ironclad Independencia and the capture of the Huascar, the allies had but two wooden vessels, the Pilcomayo and the Union, with which to defend the coast. The former was taken late in 1879, the latter evaded seizure until the end of the war: but practically the sea-ways were in control of the Chilean navy, headed by the Blanco Encalada and the Almirante Cochrane, two British-built ironclads, as well as six smaller armed vessels, six months after the war began.
Sea control rendered all the Chilean forces mobile. They were henceforth able to strike at any given spot with speed and certainty, while the harassed allies were obliged to transport troops across deserts to a score of poorly supplied coastal points; they were further hampered in December, 1879, by the strange flight of President Prado from Peru, and the Bolivian Revolution which deposed President Daza. The new leaders in Peru and Bolivia, Pierola and Campero, could not stem the tide of disaster; by February, 1880, the Chileans held the littoral as far as Arica, and in April began the nine-months’ blockade of Lima’s port, Callao, together with Ancon and Chancay. Inland the allies held out, notably at Tacna, captured after a desperate struggle at the end of May. Arica was finally taken in June, the north coast held in submission, and the blockade of the chief ports rigorously maintained. This war was the first in which torpedos and torpedo-boats were actively employed, and while the new inventions enabled Chile to carry out naval operations with marked effect, Peru did her best to protect Callao by mooring hundreds of torpedos in the bay, and succeeded in blowing up two Chilean ships, the Covadonga and the Loa.
North American attempts at mediation resulted in October, 1880, in Chile stating her terms—the cession by Peru of Tarapacá, the relinquishment by Bolivia of all claims upon the coast, and payment of an indemnity; and occupation by Chile of Tacna, Arica and Moquegua until the first-named conditions were carried out. Years later, after much more bloodshed, ruin and misery, the allies accepted terms practically similar; but they rejected them in 1880, and Chile organised for the taking of Lima. After a fierce battle in which the Chileans are said to have lost 1300 and the Peruvians 6000 dead, the capital was captured in January, 1881, and occupied by Chile until terms were arranged by the Treaty of Ancon in 1883. This arrangement was made only between Chile and Peru, followed by a truce with Bolivia in 1884 and a definite peace treaty signed in 1904.