Bolivian History 101: The Law of the ten cents

Luis S. Crespo wrote in El Diario, February 14, 1928:

The Law of the “ten cents”

Luis S CrespoThe National Constituent Assembly approved the transaction between the Government of Bolivia and the Nitrate and Railways Company of Antofagasta about nitrate concessions and establishing a tax of ten cents per quintal of nitrate exported; charge which served as a pretext to seize the Bolivian Litoral [sea coast Bolivian department] by Chile.

The government of General Mariano Melgarejo through his powerful minister (“the power behind the throne”), Donato Mariano Muñoz, who was in Santiago de Chile, granted on September 18, 1866, the Chilean prospectors José Santos Ossa and Francisco Puelma the exclusive right to exploit and unlimited export to all discovered or to be discovered nitrate in the department of Litoral, and further to authorize to implement the railways they had deem convenient.

Some time later, Gen. Melgarejo was instructed of the eyesore that had made him commit, for the privilege that had been granted against any law, against all right and justice against all; was no case of privilege, and had been granted unfilled forms or procedures prescribed by applicable laws.

Convinced Melgarejo of the monstrosity, seeking a chance to cancel, or at least to restrict it. Finally it was filed to him, on behalf of Juan Forastal and Severo Melgarejo, a request to the Government to award the nitrate that claimed to have been discovered by them in the department of Litoral.

The Government issued a resolution at the bottom of that document, ignoring the previous concession and encouraging new application of Mssers. Forastal and Melgarejo.

Herein, then, how the same government that gave so monstrous concession,  ignored it soon after.

But falling Melgarejo, 1871 Assembly declared void all grants, sales and awards made by that Government. And under that statement fell the Puelma-Ossa concession.

In 1872, the house Melbourne Clark and Co., who had taken over the rights of Ossa-Puelma, primitive concessions, sent an agent to La Paz, to deal with the government, Domingo Arteaga Alemparte, who after several negotiations obtained Supreme Order of April 30, 1872, in which the Bolivian government, guided by a spirit of fairness, and at the request of the same company, declined to grant only the nitrate that exploded in the “Salar del Carmen” and part of the nitrate of Salinas, with privilege for 15 years. As for the power to build the railway, it was also restricted.

By that time, Melbourne Clark and Co. had transferred their rights to the “Company Nitrate and Railroad Antofagasta” which sent to Sucre, as its agent to procure a new transaction, Belisario Pero, who began to provide the Government, as tempting condition, the ten percent of the net profits of the business. He concluded by arriving at a transaction at November 27, 1873, according to which the Industries Company has remained in possession of the nitrate included a surface ground, based on parallel 34, which was the border between Bolivia and Chile , formed a parallelogram with a height of 15 leagues north latitude and 25 east, starting from the seashore. He also gave 50 stakes of saltpeter of a thousand meters on a side, said parallelogram gives out the points that designate, whose holding, granted for a period of 15 years beginning on January 1, 1874, would be free of tax law.

Nothing was said in this transaction of the ten percent offering of the profits, made spontaneously by the negotiating Pero.

When the transaction was made, the Government of Bolivia, in compliance with the condition imposed by the enabling law, reported to the Assembly of 1874. This assembly could not foresee emergencies for the indefinite future, and it is believed or not need to hurry to discuss what appeared under the mutual interests of the company, or was permeated by the importance of the matter, the case is adjourned the assent, and in this state the transaction remained until 1878.

In November 1877 met in La Paz, the National Constituent Assembly convened by the provisional government of General Hilarion Daza. After dictating a Constitution and deal with several matters of internal administration, the Assembly passed the transaction review on November 21, 1873.

After extensive deliberation, voted on February 14, 1878 the following law:

“The Constituent Assembly.- Decrees: Single item: the transaction concluded by the executive in November 23, 1873 with the attorney for the Nitrate Company Limited and Antofagasta Railway, subject to make it effective, a minimum tax was adopted of ten cents for each quintal of saltpeter exported.- Communicate to executive power. ”

Source: El Diario, February 14, 1928.

So sad to see how we lacked sound, coherent public policies… and we remain like that…

Published by Bolivian Thoughts

Senior managerial experience on sustainable development projects.

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