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the promise they had made of keeping its territory intact. Argentina,
however, consented in 1878 to refer certain claims to the decision of
the President of the United States. When Paraguay won the arbitration,
it showed its gratitude by naming one of its localities Villa Hayes.
As time went on, however, its population increased and hid many of the
scars of war.

On the western side of South America there broke out the struggle known
as the "War of the Pacific" between Chile, on the one side, and Peru and
Bolivia as allies on the other. In Peru unstable and corrupt governments
had contracted foreign loans under conditions that made their repayment
almost impossible and had spent the proceeds in so reckless and
extravagant a fashion as to bring the country to the verge of
bankruptcy. Bolivia, similarly governed, was still the scene of
the orgies and carnivals which had for some time characterized its
unfortunate history. One of its buffoon "presidents," moreover, had
entered into boundary agreements with both Chile and Brazil, under which
the nation lost several important areas and some of its territory on the
Pacific. The boundaries of Bolivia, indeed, were run almost everywhere
on purely arbitrary lines drawn with scant regard for the physical
features of the country and with many a frontier question left wholly
unsettled. For some years Chilean companies and speculators, aided by
foreign capital mainly British in origin, had been working deposits
of nitrate of soda in the province of Antofagasta, or "the desert
of Atacama," a region along the coast to the northward belonging to
Bolivia, and also in the provinces of Tacna, Arica, and Tarapaca, still
farther to the northward, belonging to Peru. Because boundary lines were
not altogether clear and because the three countries were all eager to
exploit these deposits, controversies over this debatable ground were
sure to rise. For the privilege of developing portions of this region,
individuals and companies had obtained concessions from the various
governments concerned; elsewhere, industrial free lances dug away
without reference to such formalities.

It is quite likely that Chile, whose motto was "By Right or by
Might," was prepared to sustain the claims of its citizens by either
alternative. At all events, scenting a prospective conflict, Chile had
devoted much attention to the development of its naval and military
establishment--a state of affairs which did not e