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CHILE

dispute, and Chile being in no position at the time to insist on any terms being arranged. So matters drifted until the beginning of 1898. In July of that year the crisis reached an acute stage. Both Chile and Argentina put forward certain pretensions to territory in the Atacama district to the north, and also to a section of Patagonia in the south. Neither side would give way, nor was any disposition exhibited to refer the matter to arbitration under the protocol of 1896. The cry of an acute financial crisis emanating from the fear of war with Argentina was now raised in Chile. The President was advised that the only way of averting the financial ruin of the banking institutions of the republic was to suspend the conversion law and lend from the national treasury inconvertible notes to the banks. Seftor Errazuriz weakly gave way, and a decree was promulgated placing the curCrisis with rency once m0re on an inconvertible paper Argent aa. money In August of 1898 untd 1902. the Chilian Government determined to insist upon the terms of the protocol of 1896 being acted upon, and intimated to Argentina that they demanded the fulfilment of the clause relating to arbitration on disputed points. This was practically an ultimatum, and a refusal on the part of the Argentine Government to comply with the terms of the 1896 agreement meant a declaration of war by Chile. For a few days the issue hung in the balance, and then the Argentine Government accepted the provisions made in 1896 for arbitration. The dispute concerning the Atacama district was submitted to an arbitration tribunal, consisting of the representative of the United States in Argentina, assisted by one Argentine and one Chilian commissioner. This tribunal, after due investigation, gave their decision in April 1899, and the verdict was accepted unreservedly by both Governments. The dispute regarding the Patagonian territory was submitted to the arbitration of Great Britain, and a commission (consisting of Lord Macnaghten, Sir John Ardagh, and Sir T. H. Holdich) was appointed in 1899 to hear the case. The Argentine difficulty was ended, but Chile still had to find a settlement with Peru and Bolivia. The treaty made with the former country in 1893 was not ratified, as it was thought to concede too much to Peru, and the subsequent ad referendum treaty was rejected on account of Peru claiming that only Peruvians, and not all residents, should have the right to vote in the plebiscite to be taken by the terms of the treaty of 1883 for the possession of Tacna and Arica. By the terms of the armistice of 1883 between Chile and Bolivia, a three years’ notice had to be given by either Government wishing to denounce that agreement. By the protocol of 1895 Chile agreed to give to Bolivia the port of Arica, or some other suitable position on the seaboard. On these lines a settlement was proposed. Yitor, a landing-place a little to the south of Arica, was offered by the Chilian Government to Bolivia, but refused as not complying with the conditions stated in the protocol of 1895; the Bolivians furthermore preferred to wait and see if Arica was finally ceded by Peru to Chile, and if so to claim the fulfilment of the terms of the protocol. After the accession to office of President Errazuriz there was no stability of any ministry. Political parties in Congress were so evenly divided that a vote against the ministry was easy to obtain, and the resignation of the Cabinet immediately followed in accordance with the so-called parliamentary system in vogue in Chile. The President of the republic has no power to dissolve the Chambers, to endeavour to remedy the evil by one or another political party obtaining a substantial working majority, but must wait to see the results of the triennial elections. As a consequence of these conditions Conserva-

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tive, Liberal, and coalition ministries held office at short intervals. These unsettled political circumstances checked any continuity of policy, and tended to block the passage of all useful legislation to help forward the economic development of the country and inhabitants; on the other hand, the financial situation was better by the end of 1899 than in the previous year, since all proposals for a fresh paper issue had been vetoed ; and the elections for Congress and municipal office at the opening of 1900 returned a majority favourable to a stable currency policy. In September 1900 a fresh outburst of hostile feeling against Chile was created in Argentina by a note addressed by the Chilian Government to Bolivia, intimating that Chile was no longer inclined to hand over the port of Arica or any other port on the Pacific, but considered the time ripe for a final settlement of the questions connected with the Chilian occupation of Bolivian territory, which had now been outstanding for sixteen years. The foreign policy of Chile, as indicated by this note, was considered by Argentina to be grasping and unconciliatory, and there were rumours of an anti-Chilian South American federation. Chile disclaimed any aggressive intentions; but in December the Bolivian Congress declined to relinquish their claim to a port, and refused to conclude a definite treaty of peace. The year closed with a frontier incident between Chile and Argentina in the disputed territory of Ultima Esperanza, where some Argentine colonists were ejected by Chilian police; but both Governments signed protocols agreeing not to take aggressive action in consequence. At the opening of 1901 the country was chiefly interested in the forthcoming Presidential election, for which the candidates were Don Pedro Montt presi(lent (Conservative and Clerical) and Sehor Ferman Riesco (Liberal). The relations between President Errazuriz and Congress became rather strained, owing to the former’s inclination to retain in office a ministry on which Congress had passed a vote of censure; but Errazuriz had been in ill-health for more than a year, and on 1st May he resigned, and died in July. At the ensuing election Riesco was elected President. The attitude of Chile towards the Pan-American Congress at Mexico became a matter of interest in the autumn, particularly in connexion with the proposal for compulsory arbitration between all American Governments. The Chilian Government made it quite clear that they would withdraw from the Congress if this proposal was meant to be retroactive; and their unyielding attitude testified to the apprehensions felt by Chile concerning United States interference. In October the Chilian Government announced that the contemplated conversion scheme, for which gold had been accumulated, would be postponed for two years (till October 1903), the gold being held as a reserve fund pending the result of the arbitration over the Argentine frontier. This was generally considered to be a reasonable and statesmanlike course. Unfortunately, a recrudescence of the excitement over the boundary dispute was occasioned by the irritation created in Argentina by the fact that, pending a decision, Chile was constructing roads in the disputed territory. During December 1901 relations were exceedingly strained, and troops were called out on both sides. But at the end of the month it was agreed to leave the question to the British arbitrators, and the latter decided to send one of their number (Sir T. H. Holdich) to examine the territory ^c- E- A-) The Civil War of 1891.—The military aspects of the conflict between President Balmaceda and Congress of the Chilian republic, which began in 1890, and led, early in the following years, to civil war, are worth considering separately. The merits of the original dispute