Nitrate Crises, Combinations, and the Chilean Government in the Nitrate Age

Abstract

( HILE' S CONQUEST of the Atacama Desert from Bolivia and Peru in the War of the Pacific (1879-1883) completely transformed her economy. Within the confines of this rainless and remote region lay the only commercially productive nitrate deposits in the world; and the exploitation of this resource immediately became Chile 's most important enterprise. For forty prosperous years Chilean nitrate retained a virtual monopoly in the world market. So great was the impact of the expanding nitrate industry that the era extending from 1880 to 1919 has been termed Chile's Nitrate Age. Producers reaped immense profits while the government obtained the bulk of its revenues from a tax on nitrate exports. Their rich harvest aroused the awe and envy of the world. Nevertheless, despite the exceedingly prosperous aura surrounding nitrates, producers often encountered serious difficulties in realizing profits from their endeavors. Their greatest difficulty, at least until 1900, stemmed from a succession of depressions or crises, as they were called in Chile. Crises occurred even though Chile enjoyed a world monopoly of nitrate production because the consumption of nitrate failed to advance as rapidly as the industry's productive capacity. The quantity of nitrate purchased by farmers, who provided the main market, depended upon its price, their knowledge of its qualities as a fertilizer, and prevailing economic conditions. Throughout the Nitrate Age the chief obstacles to greater consumption was the fact that nitrate prices remained at relatively high levels. Both the government and producers bore partial responsibility for the high price of nitrate. The export tax, representing no less than thirty and as much as seventy per cent of the price of nitrate in Chile, and production restrictions imposed by producers for almost half of the Nitrate Age exacted a heavy tribute in the marketplace.' The industry, ultimately