The dispute with Argentina over the southern boundary had by this time become acute. Public feeling in both republics had reached such a stage that peace was threatened. A previous treaty had declared that the boundary should be the same as in colonial times. This was hazy and uncertain, because that section had been and still was uninhabited. No one had ever been concerned about it. Chile had always claimed the Andes to the east and Cape Horn to the south. Punta Arenas had been founded thirty-five years previously without serious opposition from Argentina. For years this controversy continued between the two countries, but impending war with Peru hastened a treaty. The territorial limitations were finally decided upon and Chile practically got all that she had contended for. Chile obtained practical control of both ends of the Straits, although the channel was declared neutral and neither nation can erect any fortifications along it.

A severe economic crisis, due to the depression in the mining industry, also disturbed this administration, but this situation was met as well as it could be. But all the troubles of President Pinto pale before the sanguinary war conducted against the combined forces of Peru and Bolivia, in which the lives of twenty thousand of his subjects were sacrificed.

CHAPTER XV
THE NITRATE WAR

The early Spaniards were very little interested in geography, and the boundaries between the provinces were often very vaguely described. Since the independence of the various provinces these boundary lines have been the cause of many disputes, and, in many instances, have nearly plunged neighbouring republics into bloody war. The most serious dispute still unsettled is between Peru and Ecuador, which involves a large part of the territory of the latter republic.

The older readers will remember that, when they studied geography, Bolivia had a stretch of sea coast along the desert of Atacama. For a considerable time after independence was secured little attention was paid to Atacama, since it was regarded as worthless for colonization. Chile claimed sovereignty, and its jurisdiction was generally recognized. The year 1840 brought a change. In that year the wealth of fertilizer along that coast began to be exploited. Disputes soon arose between Chile and Bolivia as to the boundary line. The various claims made by Bolivia were inconsistent. War threatened, and diplomatic relations between the two countries were broken off. The outbreak of hostilities between Spain and Peru united the two countries against what they considered a common enemy. A treaty was drawn up in 1866 by which the 24th degree of south latitude was agreed upon as the actual boundary, although the Chileans were allowed to continue their operations in the nitrate regions beyond that line. Furthermore, Chile was to pay over to Bolivia half the customs received between the 24th and 25th degrees, and Bolivia was to hand over to Chile half the customs received between the 23rd and 24th degrees, south latitude. It was also provided that neither party to the treaty could alienate its rights to a foreign government.

DIGGING NITRATE.

This treaty gave rise to continual disputes. Chile regarded this settlement as a final solution of the dispute, but Bolivia refused or neglected to live up to her part of the agreement. By a later treaty Chile renounced her claims between these two degrees, with the agreement on the part of Bolivia that the export duties on mineral products from that zone should not be increased, and that Chilean industries and citizens should not be subjected to higher taxes than then prevailed. This treaty was to remain in force for twenty-five years. The capital invested in that zone was almost exclusively Chilean, and the labourers employed were also of that nationality. Peru had large interests in the nitrate industry and began to intrigue with Bolivia, in order to prevent a ruinous competition in the market. So long as Chilean enterprise was left free this monopoly was impossible. As the interests of Peru and Bolivia were opposed to those of Chile, these two republics, in 1872, entered into a secret treaty of alliance. Like many state secrets this one became public, and Chile began to prepare for a conflict, which seemed impending, by purchasing ironclads and in other ways strengthening her navy.