The presidency of Hilarión Daza was landmark in Bolivian history. During his administration, the legislature approved the historic Liberal Constitution of 1879 (the county’s ninth since independence), which remained, with slight modifications in 1880, Bolivia’s fundamental governing charter until the 1930s. It protected private property rights and the economic concerns of Bolivia’s Big Silver industrialists and their Chilean interests.
General Daza’s rule, however, figures most tragically in the nation’s collective memory because it marked the loss of Bolivia’s access to the Pacific Ocean. His government and Congress of 1878 passed the infamous 10¢ tax on the nitrates exported by the British-Chilean Nitrates and Railroad Company of Antofagasta. This tax, which the bankrupt Bolivian treasury desperately needed, provided Chile with the perfect pretext to occupy Bolivia’s seacoast and launch a war with its neighbors.
President Daza cannot be blamed entirely for the war and the loss of the seacoast. Years before his government, Chilean, British, and U.S. capital had extended financial tentacles into virtually every profit-generating enterprise available to Bolivia: guano, nitrates, borax, even silver. The economic concessions of the Bolivian Litoral province produced an estimated 28 million pesos annually, according to historian José Fellman Velarde. By his calculations, this bonanza exceeded 14 times the Bolivian budget and eight times that of Chile at the time. This appropriation and Bolivia’s semicolonization by domestic and foreign capital caused the War of the Pacific as much as the incompetence and venality of Daza and earlier Bolivian regimes did. Already, on the eve of Daza’s military coup of May 1876, Chile in effect controlled the bulk of Bolivia’s coastal assets demographically and financially. By the time General Daza was overthrown in December 1879, the Chilean forces had also militarily occupied the entire Bolivian Litoral.