Major Bolivian Territorial Losses

The War of the Pacific resulted from a dispute between Bolivia and Chile over sovereignty of the mineral-rich coastal area of the Atacama Desert. In the mid-1860s, the two nations had come to the brink of war because of disagreement over their boundaries. In 1874 Chile agreed to fix the border at 24° south latitude in return for Bolivia's promise not to increase taxes on Chilean nitrate enterprises for twenty-five years. But in 1878, Daza imposed a slight increase on export taxes. Chile immediately objected, and when Daza refused to revoke the tax hike, Chile landed troops on February 14, 1879. Bolivia, in alliance with Peru, declared war on Chile on March 1, but Bolivia's troops in the coastal territory were easily defeated, in part because of Daza's military incompetence. Driven from office by a popular revolt, Daza fled to Europe with a sizable portion of Bolivia's treasury. The attempt of General Narciso Campero Leyes (1880-84) to come to the aid of Peru, Bolivia's ally in the war, was unsuccessful, and t he combined armies were defeated by Chile in 1880. Having lost its entire coastal territory, Bolivia withdrew from the war. It ceded the territory officially to Chile twenty-four years later, in 1904, under the Treaty of Peace and Friendship.

The War of the Pacific was a turning point in Bolivian history. Bolivian politicians were able to rally Bolivians by blaming the war on Chilean aggression. Bolivian writers were convinced that Chile's victory would help Bolivia to overcome its backwardness because the defeat strengthened the "national soul." Even today, Bolivia has not relinquished the hope of regaining an outlet to the Pacific Ocean.

After the war, a vigorous debate among civilian elites spawned the development of new political parties. Mining entrepreneurs, who had become the most important economic group in the country because of increasing production, created the Conservative Party (Partido Conservador). Conservatives favored reaching a quick peace settlement with Chile that would include indemnification for lost territories and enable Bolivia to construct a railroad for mining exports. The Liberal Party (Partido Liberal) denounced the pacifism of the Conservatives. It also resented the economic dependence of the mining sector on Chilean and British capital and hoped to attract United States investment. Despite these differences, both parties were primarily interested in political and economic modernization, and their ideological outlooks were similar. Civilian politicians reorganized, reequipped, and professionalized the discredited armed forces and tried to subject them to civilian control. Still, both Conservatives and Liberals initially supported military candidates for the presidency. The governments in power from 1880 to 1920--elected by a small, literate, and Spanish-speaking electorate--brought Bolivia its first relative political stability and prosperity