An unpleasant taste left by the War of the Pacific: the Compañía Salitrera del Perú (1878-1912)

Abstract

Founded in 1878, the Compañía Salitrera del Perú [Peruvian Nitrate Company] sought to manage the production and sale of saltpetre after the company's risky nationalization process. Far from constituting an advantageous trade alliance, in practice this was nothing more than a mechanism to guarantee compliance with fiscal obligations with the banks of Lima, where the mineral became a means to subordinate public finances to private interests, in a structured deal on the assignment of credits under onerous conditions in a devalued currency, payable with sales of the resource in pounds sterling. The unpaid debts resulting from the loss of the nitrate region after its transfer to Chile led company shareholders to claim their financial rights, suing the Chilean State in the courts of that country as mortgagee and consignee of the resource. The Compañía Salitrera del Perú symbolizes a stage in Peruvian history characterized by diffuse links between public and private interests, absolute centralism in strategic decisionmaking and the corruption of public institutions.