War of the Pacific Peruvian nitrate monopoly

at outset of war, 30,000 chilean workers had leave peru within 8 days. later chilean navy blockaded , shelled port. lack of workers , blockade disrupted operations of saltpeter industry. la ilustración española y americana published on 15 june 1879 image (of april 1879) of chileans waiting @ port of iquique ships return home.

in november 1879, during tarapacá campaign, chilean army seized peruvian salitreras , of guano deposits, export ports under blockade chilean navy. on 12 september 1879, 5 months after beginning of war, chilean government had imposed tax of 4 chilean pesos per metric ton upon antofagasta s export of saltpeter finance war effort, despite protest chilean csfa.

after occupation of tarapaca, chilean government had decide nitrate industry. had 2 alternatives: follow peru s way, i.e. pay peruvian debt certificates (₤ 4 millions) , create state company manage production , marketing of nitrate; or return property holder of nitrate certificates , let them restart business. chilean government decided on latter course: on juni 11 1881 (provisionally) , on 28 march 1882 (definitively) allowed bondholders retake properties , continue exploitation.

the decision privatization has been criticized , chile lamented having been duped losing economic future hands of predatory capitalists. william edmundson states:

but difficult see else chilean government have done in current circumstances. there urgent need revive nitrate exports possible in order pay off costs of ongoing conflict.

he cites catastrophic peruvian attempt, uncertainty on property rights, immense fiscal , bureaucratic burden, , public opinion in chile government ownership of means of production regarded beyond ideological pale .

the treaty of ancon in 1883 formally ceded tarapacá chile , finished peruvian control on nitrate fields. court proceedings in peru, chile , europe property rights , debts continued until 1920.

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