y by a revolution headed by Colonel Augustin Morales. The
latter, becoming president, was himself murdered in November 1872 and
was succeeded by Colonel Adolfo Ballivian, who died in 1874. Under this
president Bolivia entered upon a secret agreement with Peru which was
destined to have grave consequences for both countries. To understand
the reasons that urged Bolivia to take this step it is necessary to go
back to the above-mentioned treaty of 1866 between Chile and Bolivia. By
this instrument Bolivia, besides conceding the 24th parallel as the
boundary of Chilean territory, agreed that Chile should have a half
share of the customs and full facilities for trading on the coast that
lay between the 23rd and 24th parallels, Chile at that time being
largely interested in the trade of that region. It was also agreed that
Chile should be allowed to mine and export the products of this district
without tax or hindrance on the part of Bolivia. In 1870, in further
consideration of the sum of $10,000, Bolivia granted to an Anglo-Chilean
company the right of working certain nitrate deposits north of the 24th
parallel. The great wealth which was passing into Chilean hands owing to
these compacts created no little discontent in Bolivia, nor was Peru
any better pleased with the hold that Chilean capital was establishing
in the rich district of Tarapaca. On 6th February 1873 Bolivia entered
upon a secret agreement with Peru, the ostensible object of which was
the preservation of their territorial integrity and their mutual defence
against exterior aggression. There can be no doubt that the aggression
contemplated as possible by both countries was a further encroachment on
the part of Chile.

Upon the death of Adolfo Ballivian, immediately after the conclusion of
this treaty with Peru, Dr Tomas Frias succeeded to the presidency. He
signed yet another treaty with Chile, by which the latter agreed to
withdraw her claim to half the duties levied in Bolivian ports on
condition that all Chilean industries established in Bolivian territory
should be free from duty for twenty-five years. This treaty was never
ratified, and four years later General Hilarion Daza, who had succeeded
Dr Frias as president in 1876, demanded as the price of Bolivia's
consent that a tax of 10 cents per quintal should be paid on all
nitrates exported from the country, further declaring that, unless this
levy was paid, nitrates in the hands of the exporters would be s