The Chilean Nitrate Railways Controversy
-N THE LATTER nineteenth century one of the major economic enterprises in South America was the rapidly growing nitrate industry of Tarapaca. Nitrate was in great demand in the world market as a substitute for the dwindling supply of guano found in Peru. Since the nitrate fields were separated from the sea by a twenty to fifty mile wide coastal range, expansion was impossible without adequate rail facilities. In 1870, when the first railway line was opened, four million Spanish quintals of nitrate were being exported; by 1890, when the lines had been constructed, that figure had grown to twenty-three millions. The company which developed these lines was Nitrate Railways Company, Limited, and because it held a monopoly on transportation its policies were pervasive. A bitter controversy between the company and the government of Chile resulted from the control the railway exercised upon the growth of the industry. This conflict not only influenced nitrate operations but was a factor in the dispute leading to the Revolution of 1891, and had a significant influence upon other internal and external policies of the country. After ownership of the railway passed into the hands of British capitalists, the implications of the controversy widened. Then, the status and power of British capital in Tarapaca and the nature and extent of British economic diplomacy in a Latin American country were at stake. The controversy can be traced directly to the terms of the concessions establishing the railroad when Tarapaca was a province of Peru. Nitrate Railways had been organized originally as a Peruvian venture owned by Ram6on Montero and Brothers. The first concession (1868) provided for a railroad connecting the port of Iquique with La Noria in the southern part of the nitrate field. The second concession (1869) authorized a railroad from the port of Pisagua to Zapiga, another nitrate center. The third concession (1871) re-