The election for the position of president of the republic was closely contested in 1896 between Señor Errázuriz and Señor Reyes, and ended in the triumph of the former candidate by the narrow majority of one vote. The father President Errázuriz. of the new president had been chief magistrate of Chile from 1871 to 1876, and his administration had been one of the best the country had ever enjoyed; his son had therefore traditions to uphold in the post he was now called upon to fill. At the beginning of 1897 the public attention was absorbed by foreign political questions. The problems to be solved were the frontier difficulty with Argentina, the question of the possession of Tacna and Arica with Peru, and the necessity of fulfilling the obligation contracted with Bolivia to give that country a seaport on the Pacific coast. The treaty made in 1896 with the Argentine government, referring to the arbitration of disputed points concerning the boundary, became practically for the moment a dead letter, and both Argentines and Chileans began to talk openly of an appeal to arms to settle the matter once for all. The governments of both countries began to purchase large supplies of war material, and generally to make preparations for a possible conflict. In these circumstances no final settlement with Peru and Bolivia was possible, the authorities of those republics holding back to see the issue of the Chile-Argentine dispute, and Chile being in no position at the time to insist on any terms being arranged. So matters drifted until the beginning of 1898. In July of that year the crisis reached an acute stage. Both Chile and Argentina put forward certain pretensions to territory in the Atacama district to the north, and also to a section of Patagonia in the south. Neither side would give way, nor was any disposition exhibited to refer the matter to arbitration under the protocol of 1896. The cry of an acute financial crisis emanating from the fear of war with Argentina was now raised in Chile. The president was advised that the only way of averting the financial ruin of the banking institutions of the republic was to suspend the conversion law and lend from the national treasury inconvertible notes to the banks. Señor Errázuriz weakly gave way, and a decree was promulgated placing the Crisis with Argentina. currency once more on an inconvertible paper money basis until 1902. In August of 1898 the Chilean government determined to insist upon the terms of the protocol of 1896 being acted upon, and intimated to Argentina that they demanded the fulfilment of the clause relating to arbitration on disputed points. This was practically an ultimatum, and a refusal on the part of the Argentine government to comply with the terms of the 1896 agreement meant a declaration of war by Chile. For a few days the issue hung in the balance, and then the Argentine government accepted the provisions made in 1896 for arbitration. The dispute concerning the Atacama district was submitted to an arbitration tribunal, consisting of the representative of the United States in Argentina, assisted by one Argentine and one Chilean commissioner. This tribunal, after due investigation, gave their decision in April 1899, and the verdict was accepted unreservedly by both governments. The dispute regarding the Patagonian territory was submitted to the arbitration of Great Britain, and a commission—consisting of Lord Macnaghten, Sir John Ardagh and Sir T.H. Holdich—was appointed in 1899 to hear the case.

The Argentine difficulty was ended, but Chile still had to find a settlement with Peru and Bolivia. The treaty made with the former country in 1893 was not ratified, as it was thought to concede too much to Peru, and the subsequent ad referendum treaty was rejected on account of Peru claiming that only Peruvians, and not all residents, should have the right to vote in the plebiscite to be taken by the terms of the treaty of 1883 for the possession of Tacna and Arica. By the terms of the armistice of 1883 between Chile and Bolivia, a three years’ notice had to be given by either government wishing to denounce that agreement. By the protocol of 1895 Chile agreed to give to Bolivia the port of Arica, or some other suitable position on the seaboard. On these lines a settlement was proposed. Vitor, a landing-place a little to the south of Arica, was offered by the Chilean government to Bolivia, but refused as not complying with the conditions stated in the protocol of 1895; the Bolivians furthermore preferred to wait and see if Arica was finally ceded by Peru to Chile, and if so to claim the fulfilment of the terms of the protocol.

After the accession to office of President Errázuriz there was no stability of any ministry. Political parties in congress were so evenly balanced and so subdivided into groups that a vote against the ministry was easy to obtain, and the resignation of the cabinet immediately followed in accordance with the so-called parliamentary system in vogue in Chile. The president of the republic has no power to dissolve the chambers, to endeavour to remedy the evil by one or another political party obtaining a substantial working majority, but must wait to see the results of the triennial elections. As a consequence of these conditions Conservative, Liberal and coalition ministries held office at short intervals. These unsettled political circumstances checked any continuity of policy, and tended to block the passage of all useful legislation to help forward the economic development of the country and inhabitants; on the other hand, the financial situation was better by the end of 1899 than in the previous year, since all proposals for a fresh paper issue had been vetoed; and the elections for congress and municipal office at the opening of 1900 returned a majority favourable to a stable currency policy.

In September 1900 a fresh outburst of hostile feeling against Chile was created in Argentina by a note addressed by the Chilean government to Bolivia, intimating that Chile was no longer inclined to hand over the port of Arica or any other port on the Pacific, but considered the time ripe for a final settlement of the questions connected with the Chilean occupation of Bolivian territory, which had now been outstanding for sixteen years. The foreign policy of Chile, as indicated by this note, was considered by Argentina to be grasping and unconciliatory, and there were rumours of an anti-Chilean South American federation. Chile disclaimed any aggressive intentions; but in December the Bolivian congress declined to relinquish their claim to a port, and refused to conclude a definite treaty of peace. The year closed with a frontier incident between Chile and Argentina in the disputed territory of Ultima Esperanza, where some Argentine colonists were ejected by Chilean police; but both governments signed protocols agreeing not to take aggressive action in consequence.

At the opening of 1901 the country was chiefly interested in the forthcoming presidential election, for which the candidates were Don Pedro Montt (Conservative and Clerical) and Señor German Riesco (Liberal). The relations President Riesco. between President Errázuriz and congress became rather strained, owing to the former’s inclination to retain in office a ministry on which congress had passed a vote of censure; but Errázuriz had been in ill-health for more than a year, and on the 1st of May he resigned, and died in July. At the ensuing election Riesco was elected president. The attitude of Chile towards the Pan-American Congress at Mexico became a matter of interest in the autumn, particularly in connexion with the proposal for compulsory arbitration between all American governments. The Chilean government made it quite clear that they would withdraw from the congress if this proposal was meant to be retroactive; and their unyielding attitude testified to the apprehensions felt by Chile concerning United States interference. In October the Chilean government announced that the contemplated conversion scheme, for which gold had been accumulated, would be postponed for two years (till October 1903), the gold being held as a reserve fund pending the result of the arbitration over the Argentine frontier. This was generally considered to be a reasonable and statesmanlike course. Unfortunately, a recrudescence of the excitement over the boundary dispute was occasioned by the irritation created in Argentina by the fact that, pending a decision, Chile was constructing roads in the disputed territory. During December 1901 relations were exceedingly strained, and troops were called out on both sides. But at the end of the month it was agreed to leave the question to the British arbitrators, and the latter decided to send one of their number, Sir T.H. Holdich, to examine the territory.

The survey occupied some eight months, and it was not until the autumn that Sir T.H. Holdich returned to England to make his report. The difficulty of ascertaining the true line watershed had been very great, but the result Argentine boundary award. was eminently successful. The award of King Edward was signed on the 20th of November 1902, and both parties to the litigation were satisfied. In order that future disputes might be amicably settled, a treaty was signed by which it was agreed that any question that might arise should be submitted to the arbitration of Great Britain or in default of that power to the Swiss Confederation. The removal of this source of irritation and the restoration of friendly relations between the two republics was a great relief to the finance of Chile. Had it not been for the political instability of the country, the effects of the diminution of expenditure on military and naval preparations would have effected a rapid improvement in its financial position. The constant change of ministry (there being no stable majority in the congress) prevented during 1903 any settled policy, or that confidence in the government which is the basis of commercial prosperity. In 1904, however, both trade and revenue showed signs of improvement, and the sale of the warships “Esmeralda” and “Chambuco” for £1,000,000 furnished a surplus, which was devoted to the improvement of the port of Valparaiso. This was the beginning of a period of steady industrial growth and development. The settlement of the long outstanding dispute with Bolivia in a treaty of peace signed on the 17th of October 1905 was very advantageous to both countries. By this treaty Bolivia ceded all claims to a seaport and strip of the coast, on condition that Chile constructed at her own charges a railway to Lapaz from the port of Arica, giving at the same time to Bolivia free transit across Chilean territory to the sea. A cash indemnity of £300,000 was also paid, and certain stipulations were made with regard to the construction of other railways giving access from Chile to the Bolivian interior.

The prosperity of Chile was to suffer a rude shock. On the 17th of August 1906 a terrible earthquake visited Valparaiso and the surrounding district. The town of Valparaiso was almost entirely destroyed, while Santiago and Valparaiso earthquake. other towns were severely shaken and suffered much damage. It was estimated that about 3000 persons were killed, a still larger number injured, and at least 100,000 rendered homeless. The loss of property was enormous. The fire which broke out after the earthquake shock had subsided added to the horror of the catastrophe. Measures were, however, promptly taken for succouring the people, who had been driven from their homes, and the task of restoration was vigorously taken in hand. Before the end of the year the rebuilding of the city was rapidly progressing.

In 1906 Señor Pedro Montt was elected president and entered upon his office on the 17th of September. The personality of the president, however, had become of much less importance in modern Chile than in earlier days. Up to 1870 the government was in the hands of a small oligarchy of Santiago President Pedro Montt. families, but the president enjoyed large powers of initiative. Nowadays the congress has virtually absorbed the executive power, with the result that the cabinet is often changed many times in one year. This prevents indeed any continuity of policy, for the majority in congress is perpetually fluctuating, and ministerial crises rapidly follow one another. Chile, however, except in the Balmacedist civil war, is happily distinguished by its freedom from revolution and serious political unrest. Its history in this respect is in marked contrast to that of the neighbouring South American states. The completion of the Trans-Andean railway between Valparaiso and Buenos Aires was bound to be of immense commercial and industrial value; and eventually the making of a longitudinal railway route uniting the nitrate province of the north with Santiago, and Santiago with Puerto Montt in the distant south, opened up further important prospects. Such a line of through communication, binding together the different provinces forming the long narrow strip of territory stretching along more than 2000 m. of the Pacific littoral, could only be looked forward to, both politically and economically, as an inestimable benefit to the country.

Bibliography.—General History.—The most valuable authority is D. Barros Arana’s Historia jeneral de Chile (15 vols., Santiago, 1884), from the earliest days up to 1830. Smaller handbooks covering the whole period are: A.U. Hancock, a History of Chile (Chicago, 1893), the only general history in English, and containing a bibliography; Gaspar Toro, Compendio de la historia de Chile (Santiago, 1879), a good clear abstract of Chilean history; and F. Valdes Vergara, Historia de Chile (Valparaiso, 1898), written primarily for schools, but containing useful sketches of leading figures in Chilean history.

Works on Special Periods.—Colonial Period: M.L. Amunátequi, Descubri miento y conquista de Chile (Santiago, 1885), a valuable detailed account of the Spanish conquest; by same author, Los Precursores de la independencia de Chile (Santiago, 1870), a clear useful description of the evils of the Spanish colonial system; Horacio Lara, Cronica de la Araucania (Santiago, 1889), a history of the Araucanian Indians right up to recent dates; Abbé Eyzaguirre, Histoire du Chili (Lille, 1855), mainly dealing with the position of the Church during the colonial period. Perez Garcia’s Historia del reino de Chile (Santiago, 1900), an old history by a Spanish officer written about 1780, and Molina’s History of Chili in the English translation (London, 1809), will also be found useful. Useful material for research exists in J.T. Medina’s Coleccion de documentos para la historia de Chile (Santiago, 1888), a collection of despatches and official documents; his Cosas de la colonia (Santiago, 1889), an accumulation of undigested information about life in the colonial period; and Historiadores de Chile (21 vols., Santiago, 1861), a collection of ancient chronicles and official documents up to the early part of the 17th century.