s closely
contested in 1896 between Senor Errazuriz and Senor Reyes, and ended in
the triumph of the former candidate by the narrow majority of one vote.
The father of the new president had been chief magistrate of Chile from
1871 to 1876, and his administration had been one of the best the
country had ever enjoyed; his son had therefore traditions to uphold in
the post he was now called upon to fill. At the beginning of 1897 the
public attention was absorbed by foreign political questions. The
problems to be solved were the frontier difficulty with Argentina, the
question of the possession of Tacna and Arica with Peru, and the
necessity of fulfilling the obligation contracted with Bolivia to give
that country a seaport on the Pacific coast. The treaty made in 1896
with the Argentine government, referring to the arbitration of disputed
points concerning the boundary, became practically for the moment a dead
letter, and both Argentines and Chileans began to talk openly of an
appeal to arms to settle the matter once for all. The governments of
both countries began to purchase large supplies of war material, and
generally to make preparations for a possible conflict. In these
circumstances no final settlement with Peru and Bolivia was possible,
the authorities of those republics holding back to see the issue of the
Chile-Argentine 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.
Senor Errazuriz weakly gave way, and a decree was promulgated placing
the currency once more on an inconvertible paper money basis until 1902.
In August of 1898 the Chilean government determined to insist upon the
terms of the protocol of 1896 being acted upon, and intimated to
Argentina that they demand