Accordingly he proceeded to pick a quarrel by ordering the deposits in Tarapaca to be expropriated with scant respect for the concessions made to the Chilean miners.

Realizing, however, the possible consequences of such an action, he entered into an alliance with Bolivia.

This country thereupon proceeded to levy an increased duty on the exportation of nitrates from the Atacama region.

Chile, already aware of the hostile combination which had been formed, protested so vigorously that a year later Bolivia agreed to withdraw the new regulations and to submit the dispute to arbitration.
Such were the relations of these three states in 1878, when Bolivia, taking advantage of differences of opinion between Chile and Argentina regarding the Patagonian region, reimposed its export duty, canceled the Chilean concessions, and confiscated the nitrate deposits.

Chile then declared war in February, 1879, and within two months occupied the entire coast of Bolivia up to the frontiers of Peru.