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Guano, Rubber, Oil and Railways

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Part 1 - How Bolivia Lost Half a Country And Gained a Railway

Bolivia is the poorest, and - being landlocked and cut off from its neighbours by mountain, desert and vast rainforest - the most isolated country in the Americas. This was not always the case. When the Republic of Bolivia gained independence in 1825, it was twice its current size, extended west to the Pacific and had access to the Atlantic through ports on tributaries of the Amazon and Parana Rivers.

The Andean cities of Potosi and Oruro had the most productive silver mines in the world, and the country had rich deposits of gold, tin, sulphur, antimony, bismuth, lead, zinc and other minerals. Sadly, these resources were squandered, by corrupt juntas and dictators in a country that had 189 governments between 1825 and 1982, when democracy finally prevailed. Bolivia also had vast reserves of as yet untapped and unrecognised resources, but few in 1825 could have imagined the country's greatest woes would come about as the result of conflicts about bird droppings, the sticky sap of a rainforest tree, and the liquefied remains of pre-historic forest.

The War of The Pacific - How Bird Droppings Caused a War

In 1825, Bolivia could be divided into four zones:

  • The Altiplano (high altitude plateau), highland valleys and mountains of the Andes where most of the population and mineral reserves were located;
  • the vast largely unexplored rainforest of the Bolivian Amazon;
  • in the south-east, the Chaco a huge arid expanse of thorn scrub;
  • and in the west, the vitally important Pacific territory.

Most of this territory was made up of the Atacama Desert, one of the most hostile environments in the world, but it also included the port of Antofagasta, Bolivia's only outlet to the sea. The mule and llama tracks carried the countries mineral wealth to the seaport and imports from the coast to La Paz and the other highland cities. Nearly 360 miles to the north of Antofagasta lay Peru's southern most port Arica, and 440 miles to the south lay the Chilean port of Coquimbo. Apart from a few fishing villages, the desert that separated these Pacific neighbours was regarded as worthless and of little interest, yet the desert held great as yet untapped wealth.

The near lifeless salt pans of the Atacama, which were formed from the desiccated remains of an ancient inland sea, and minerals washed down from the Andes, are particularly rich in Sodium Nitrate (a salt also know as Chile saltpetre), a rich natural plant fertiliser that is also used in the manufacture of explosives. Unlike the interior of the Atacama, the narrow coastal strip teams with life, as the nutrient rich upwellings of the Humboldt Current support some of the richest fisheries in the world, which in turn feed some of the earth's largest seabird colonies. Seabird colonies are messy places, and in the dry conditions of the Atacama, phosphate- and nitrate-rich bird droppings and urine dry out and crystallize, forming guano, another rich natural fertiliser.

Feeding the increasing population

During the first half of the 19th Century, the wealthy nations of the northern hemisphere struggled to feed the populations of their rapidly growing industrial cities, and as competition over trade and resources grew, they also needed chemicals to supply their burgeoning arms and munitions factories. The value of guano as a means of dramatically boosting agricultural production was first recognised in the 1840's, and the value of Sodium Nitrate as a fertiliser and to the munitions industry was realised a little later.

Chilean companies began exploiting and exporting these valuable resources in the 1850's, at first in the Chilean Atacama, and then by agreement from Bolivian and Peruvian territory. At first this shared wealth brought about a period of cooperation between the three nations, which had had a difficult relationship; when Chile and Bolivia had rebelled against Spain, Peru had remained loyal, and after independence Chile had fought Bolivia and Peru to prevent them forming a federation. The new arrangement worked well, the neighbours even formed an alliance to take on and defeat their former imperial master, when Spain attempted to annex the guano rich Chincha Islands.

This largely amicable arrangement started to sour in the 1870's, as Latin America suffered an economic downturn. Chile was particularly hard hit as its copper exporters struggled to compete with cheap ore from new mines in the United States and Spain, and the export of Chilean wheat collapsed as Canadian, Russian, and Argentine grain flooded world markets. Chile became alarmed, as Peru threatened to nationalize its guano and saltpetre deposits, and Bolivia broke treaty agreements to impose a tax on guano exports through Antofagasta. When the Chilean owned Antofagasta Nitrate and Railway Company refused to pay the tax, Bolivia threatened to seize its assets, and Chile responded by landing troops in Antofagasta. Peru tried to negotiate a peace, refusing Bolivian demands that it honoured a mutual defence pact. Angered by the revelation that Peru and Bolivia had secretly signed the pact, Chile declared war on the two countries on 5 April, 1879, beginning the War of the Pacific.

The War Begins

As the key city-ports in the conflict were separated by hundreds of miles of waterless desert, it was not possible for the rival armies to meet, until one side gained dominance of the coastal seas allowing it to ferry troops to enemy territory. This gave an advantage to Chile: never wider than 110 miles, with a (pre-1879) coast over 2,000 miles long, protected to the east by the Andes and the north by the desert, Chile looked to its navy for its defence, and the Chilean Navy had a proud history.

Chile's Naval Tradition

Founded during the Wars of Independence, the Chilean Navy had been led by Lord Cochrane, a Scottish earl who had gained a formidable reputation as a Royal Navy captain in the Napoleonic Wars. During these wars, he had captured or destroyed 53 enemy vessels, including a Spanish frigate with a crew five times larger than his own, and led many daring raids on the French and Spanish coast. This earned him the French nickname Le Loup des Mers (the sea-wolf). Cochrane's audacity often verged on recklessness, which led to in a court marshal, a duel, and the displeasure of the Lords of the Admiralty and of the Government during a brief parliamentary career, which ended in him leaving Britain following a financial scandal.

Arriving in Chile in 1818, Cochrane took charge of the fledgling Chilean Navy; he recruited unemployed British and American sailors and imposed strict Royal Navy discipline and traditions. Cochrane personally lead his men in daring raids, including the capture of the Spanish flagship, and captured Valvidia - the most heavily fortified port in the Americas - with just three hundred men. By raiding and blockading the coast of Spanish Peru, the Chilean Navy weakened and demoralized the Imperial forces, playing a major role in their defeat, and ferried Bernado O'Higgin's Liberation Army north, to end Spain's hold on South America. Even after Cochrane departed under a cloud in 1822 (to serve in the Brazilian and Greek Navies before returning to the Royal Navy), the Chilean Navy continued with the traditions and spirit he had given it, defeating a larger joint Peruvian and Bolivian fleet at Casma (1839) during the War of the Confederation, and delivering such a humiliating defeat on the Spanish at the Battle of Padudo (1865), that the shamed Spanish admiral committed suicide.

The Rival Fleets

The nineteenth century was a time of great changes in naval technology, and war ships soon became obsolete as they were replaced by more heavily armoured vessels, with more powerful engines and larger guns. Chile had invested heavily in two powerful state of the art central battery ironclads: Cochrane, and Blancho Encalada - warships with the main guns concentrated the heavily armoured central section. Against this, Peru fielded two seagoing ironclads: the broadside ironclad Independencia, a less heavily armoured ship of an older design than the Chilean ironclads, and the turret ship Huascar - a small ironclad with an armoured ram and two powerful turret mounted Armstrong guns (early breach loading rifled guns more effective, accurate and faster firing than earlier smooth bore muzzle loading guns). Peru also had two coastal monitors: Manco Capac and Atahualpa, small low lying ironclads with large guns mounted in a single armoured turret, but as these slow moving vessels were designed to operate in shallow waters, rather than the open ocean they played little part in the critical phase of the naval war. These ironclads were so powerful that none of the older, less heavily-armed wooden ships in the rival navies could match them, and the outcome of the naval war was dependent on the fate of the sea-going ironclads.

By contrast Bolivia had no navy. Given the vital importance of Antofagasta this is surprising, but this oversight can be ascribed to a series of corrupt inept dictators, who squandered the country's wealth, not least General Mariano Melgarejo (1865-1871), a man so out of touch with reality that he once ordered his army to march overland to Paris to support the French in the Franco-Prussian War.

The War at Sea

The first major naval engagement occurred on 21 May, 1879. The Chilean fleet had sailed north seeking the enemy ironclads, leaving the ageing wooden corvette Esmeralda and schooner Covadonga to blockade the mineral rich Peruvian port of Iquique. The Peruvian ironclads slipped past the main Chilean force, and moved south to break the blockade. Although the battle was technically a Peruvian victory, the actions of the two Chilean captains on that day would decisively swing the war in Chile's favour. The Captain of the Esmeralda, Arturo Prat, choose to stand and fight against overwhelming odds, while the captain of the Covodonga disobeyed Prat's orders and turned tail after the second Peruvian volley. The Peruvian Admiral Miguel Grau onboard the Huascar engaged the Esmeralda and ordered the Independencia to pursue and destroy the fleeing schooner. Prat stationed his ship between the Huascar and the port, coming under fire from the turret ship, and Peruvian coastal batteries. While the shore based guns scored several hits on the Esmeralda, the Huascar's inexperienced gunners, hampered by the fear of hitting the crowds of spectators who had gathered on the shore if they over-shot, failed to send any shots home. The Esmeralda's fire was more accurate but its shots bounced harmlessly off the Huascar's thick armour.

After almost four hours of this ineffectual exchange, a frustrated Grau ordered his ship to close on the corvette and ram. The Huascar's armoured ram smashed into the side of the corvette, and its massive guns, fired at point blank range, killed many Chilean sailors. At this Prat leapt aboard the Peruvian ship followed by a petty officer, who was immediately shot down. Sword in hand, Prat coolly walked towards the Huascar's armoured conning tower, cutting down a Peruvian signal officer. Hit by a sniper's bullet Prat fell to one knee and before he could rise, he was clubbed down with a rifle butt and fatally wounded. Moved by this incredible display of courage, Grau backed his ship off and offered the remaining crew of the Esmeralda the chance to surrender and save their lives - they refused. When the Huascar rammed a second time, twelve Chilean sailors boarded her, and were cut down by fire from a Gatling gun (an early machine gun). At the third attempt the turret ship's ram finished the stricken corvette, the Esmeralda's crew continued firing up to the moment she slipped below the waves, her battle ensigns still flying.

The captain of the fleeing Covadonga hugged the rocky coast, hoping the commander of the much larger Independencia would break off the chase, for fear of grounding his ship on one of the many hidden reefs so close to shore. Frustrated by the failure of his inexperienced gunners to hit the fast moving schooner, the Peruvian captain recklessly gave the order to ram the Covadonga. As the Independencia surged forward, it struck a submerged rock and as a result sank.

The loss of Peru's most powerful ship gave Chile a major advantage, and the courage of Prat and his men galvanized the Chilean nation and fostered a spirit that ultimately lead them to victory. In many cultures the suicidal courage of Prat and his men would be regarded as a futile gesture, throwing away their lives when there was no chance of victory. Had they fled they could have fought on, and ironically in military terms the Covadonga's less than heroic actions led to the greatest Peruvian loss. That Prat's sacrifice inspired the Chilean armed forces to fight on to victory in his name, and that he remains one of Chile's greatest heroes to this day, says much about the South American psyche.

On board the Huascar, Grau fought on for another six months, skilfully avoiding the Chilean ironclads, carrying out daring raids and capturing enemy transports, until he lost his life when his ship was trapped and captured by the Cochrane and Blancho Encalada. Although the Peruvian Navy fought several more desperate actions, with the loss of both its sea-going ironclads, it was no longer an effective force, and Chile's domination of the sea enabled it to begin the land war.

The Land War

On paper, the allies had the advantage as their forces outnumbered the Chilean army, and were fighting on their own ground. In reality, the great surge of nationalism that followed Prat's death gave the Chileans an edge over the demoralised, poorly led allies, and political turmoil in Peru and Bolivia hampered their war effort. This was particularly true of Bolivia's small army, which was so poorly equipped, that while Chilean and Peruvian troops had the latest rifles, many of its men carried antiquated flintlock muskets, dating back to the colonial period, and much of its cavalry was mounted on mules. Having failed to retake Antofagasta, Bolivian forces moved north to link up with the Peruvians near Iquique, and it was in this area the first major land battles took place. The Chilean forces won a major victory against a larger allied force at San Francisco, forcing the Bolivians to flee, and scattering the Peruvian Army. When the allies regrouped, an overconfident Chilean general attacked a force three times greater than his own, and was defeated. In spite of this victory, the allied armies were so badly organised and supplied, they were forced to fall back on Arica, surrendering the nitrate rich Tarapaca province to Chile.

Anger at these defeats caused rioting in Peru, and when the country's President was abroad, trying to buy replacement warships and weapons, military officers seized control of the country - neither the President nor the substantial proportion on the country's gold reserve he had taken with him ever returned. When Bolivia's President was overthrown in a coupe d'├ętat, he fled with more than half a million dollars.

The Chilean Navy blockaded Arica, and landed 11,000 troops cutting off the strategically important port. During the bombardment of this port, the Chilean flagged Huascar was engaged by the Peruvian monitor Manco Capac, and the Chilean Captain Manuuel Thompson became the third commander to lose his life on the deck of the turret ship. What followed were two decisive Chilean victories, at Tacna (26 May, 1880) both the Peruvian and Bolivian armies were destroyed, and the Battle of Arica saw the loss of that city. After Tacna, Bolivia was out of the war, but in spite of the loss of its standing army, Peru stubbornly fought on. After the fall of the capital Lima in January 1881, a protracted guerrilla war followed, until the Peruvians finally conceded defeat in October 1883. Although they had paid no part in the war since the defeat at Tacna, Bolivia did not sue for peace until 1884.

Victory and The Nitrate Boom

The Chilean victory gave it control of Bolivia's former province of Antofagasta, Peru's former provinces of Tacna, Carapace and Arica, and vast deposits of nitrate, guano and copper. What followed was a nitrate boom that gave the country forty years of prosperity, however it was not to last. By the early twentieth century Germany had become convinced that war with France, Russia and Britain was inevitable, and fearing a naval blockade would cut of vital supplies including nitrates, looked for alternatives. In 1909, German chemist Fritz Haber demonstrated the Haber-Bosch process which synthesises ammonia from atmospheric nitrogen, and large scale production began in 1913, in time to supply German munitions and fertiliser factories during the First World War. This process was a closely guarded secret until Germany's defeat, when its widespread adoption ended Chile's profitable nitrate trade.

The Allies remained dependent on Chilean nitrate throughout the war, and this resulted in a naval battle that in many ways echoed Prat's heroic failure 35 years before, when Sir Christopher Craddock's squadron of antiquated Edwardian cruisers met Vice-Admiral Von Spree's faster, better armed, cruisers off Valparaiso on 1 November, 1914. Craddock had orders to defend Britain's vital nitrate supplies, and was so determined to follow those orders through, he desperately tried to close with the vastly superior enemy. The Germans stood off, sinking both of Craddock's heavy cruisers with the loss of 1,570 men. The action was so unequal, the Germans only suffered three wounded, although the Royal Navy avenged the loss a month later, when the battle cruisers Inflexible and Invincible annihilated Von Spree's whole squadron off the Falkland Islands.

The Floating Shrine

One of the most iconic vessels of the war, the turret ship Huascar, still survives as one of the few remaining examples of an early ironclad, and is greatly revered by both Chileans and Peruvians. Designed by British naval Captain Cowper Coles, she was launched in Birkenhead in 1865, and named after an Inca emperor. She survived the War of the Pacific, was in action in during the 1891 Chilean Civil War, and remained in service in the Chilean Navy until 1949. She was restored as a memorial ship in 1952, and underwent further restoration, including having her engines rebuilt to their original design in 1972. She is berthed in Talcahuano port, Chile, where she serves as a floating museum, and as a shrine to the three commanders who lost their lives on her decks - Arturo Prat, Admiral Grau and Manuel Thompson, and to 'the glory of both the Chilean and Peruvian Navies'.

Defeat and A New Railway

For Peru, the loss of three mineral rich provinces was a major blow, and the country did not sign a permanent treaty formally conceding the loss of Tarapaca and Arica until 1929, and only then in exchange for the return of Tacna.

For Bolivia, the economic impact of the loss was dire, as it had lost its access to world trade. This situation was resolved in 1904, when Chile and Bolivia signed a permanent treaty with Bolivia, conceding the loss of its Antofagasta province, in exchange for Chile allowing Bolivia free access to its ports at Arica and Antofagasta. As part of this treaty, Chile built a railway from Arica to La Paz, and in 1913 an older railway, that had been built from Antofagasta to Ouro in southern Bolivia, was extended to La Paz, giving Bolivia the beginnings of a rail network.

Humiliation and The Navy With No Ships

Both defeated countries keenly felt the loss and humiliation, and still do 130 years later. In spite of signing treaties conceding the loss of their former provinces, Peru still regularly demands the return of Arica, and Bolivia demands the return either all of Antofagasta, or at least a corridor to the sea. Newly commissioned Peruvian military officers still swear they will give their lives fighting to regain Arica as part of their oath. Perhaps the most bizarre consequence of this situation is the Bolivian Navy. In 1879, when Bolivia had a vulnerable mineral rich coastal province and a vitally important port, it had no navy. Modern Bolivia is landlocked, and unsurprisingly has no warships, yet it has a navy with more than 5,000 personnel, which regularly parades, to demonstrate the countries determination to regain Antofagasta.

It is notable that all the Andean states have similar long running grievances against neighbours, which they will one day resolve to restore their nations honour - Columbia and Ecuador have a border dispute that has rumbled on since independence, Chile long disputed a group of desolate islands in the Beagle Passage with Argentina, and of course Argentina still claims the Falkland Islands. The true nature of these 'matters of honour' is less than noble, and sheds some light on the nature of South American culture and politics. Historically the Andean states have been made up of a largely indigenous and mixed raced population of desperately poor landless labourers and peasants, ruled by a small elite of extremely wealthy land owners of Spanish and other European descent, supported by an officer corps recruited from their ranks. This elite has retained its wealth and power by maintaining a large military, ready to seize power if the rulers are threatened. As none of these countries face any real external threats, the 'matters of honour' are used to justify the existence of large expensive military machines, and are also used to rally and distract the masses, when politicians and juntas feel threatened by their own people.


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