A ten-cent nitrate tax cost Bolivia its coastline
From 1879 to 1884 Chile fought a Bolivian–Peruvian alliance for Atacama coastal claims rich in nitrates. A Bolivian tax hike on the Chilean CSFA mining firm violated the 1874 boundary treaty, Chile occupied Antofagasta, and secret Peruvian ties pulled Lima into a desert-and-ocean war Chile won.
The spark was fiscal. In February 1878 Bolivia raised taxes on the Chilean-owned Compañía de Salitres y Ferrocarril de Antofagasta, breaking the 1874 Boundary Treaty that had frozen mining levies. Chile asked for arbitration; President Hilarión Daza called it a domestic matter, revoked the firm's licence and scheduled its assets for auction. On the auction day, 14 February 1879, Chilean troops walked into Antofagasta, a port largely peopled by Chilean miners, without a shot. Bolivia declared war on 1 March and Chile on Peru on 5 April, because Lima had signed a secret alliance with La Paz in February 1873.
Nicknames include the Saltpeter War, the Nitrate War and the Ten Cents War, after the disputed ten-centavo levy. The deeper stakes were chemical: the rainless coast had preserved enormous beds of guano, from the Quechua wanu, and sodium nitrate, prized by the 1840s as fertiliser and as an ingredient of gunpowder. Chileans had been settling the Atacama since a silver rush in the 1830s, and in Peru's Tarapacá region Peruvians were outnumbered by both Chileans and Bolivians.
For five months the contest was naval, as Chile fought to open a sea supply line into the world's driest desert. Its armies then broke the allies on land. Defeat at Tacna on 26 May 1880 knocked Bolivia out of the fighting, so Peru carried on largely by itself, and Chilean forces entered Lima in January 1881. Peruvian irregulars kept up a guerrilla resistance, but exhausted factions in Lima eventually accepted a settlement that surrendered land.
The Treaty of Ancón on 20 October 1883 handed Chile Peruvian Tarapacá plus temporary control of Tacna and Arica, and a 1884 truce took Bolivia's Litoral department, cutting the country off from the sea. Final borders took decades: a 1904 treaty fixed the Chile–Bolivia line, and a 1929 compromise gave Arica to Chile and returned Tacna to Peru.
Source: War of the Pacific
