Argentine – Chilean naval arms race In the late nineteenth and early twentieth centuries , the South American nations of Argentina and Chile engaged in an expensive naval arms race to ensure the other would not gain supremacy in the Southern Cone . Although the Argentine and Chilean navies possessed insignificant naval forces , with zero and five warships , respectively , Argentina ' s concern over a strong Brazilian Navy and the Chilean war against Spain caused them to add capable warships to their fleets in the 1870s . During this time , diplomatic relations between Argentina and Chile soured due to conflicting boundary claims , particularly in Patagonia . By the beginning of the 1880s , after the War of the Pacific , the Chilean government possessed possibly the strongest navy in the Americas . They planned to add to it with an 1887 appropriation for one battleship , two protected cruiser s , and two torpedo gunboat s . Argentina responded a year later with an order for two battleships of its own . The naval arms race unfolded over the next several years , with each country buying and ordering vessels that were slightly better than the previous ship , but the Argentines eventually pulled ahead with the acquisition of multiple " Garibaldi " - class cruiser s . The race ended in 1902 with the British - arbitrated Pacts of May , which contained a binding naval - limiting agreement . Both governments sold or canceled the ships they had ordered , and three major warships were mostly disarmed to balance the fleets . The pacts proved to be the answer to the Argentine and Chilean disputes , as the countries enjoyed a period of warm relations . This did not last , though , as the Brazilian government ' s attempt to rebuild its own naval forces sparked another naval arms race , involving all three countries ' orders for revolutionary new " dreadnought s " , powerful warships whose capabilities far outstripped older vessels in the world ' s navies . Background . Conflicting Argentine and Chilean claims to Patagonia , the southernmost region in South America , had been causing tension between the two countries since the 1840s . Both countries were incapable of enforcing these claims with a seaborne force , though : in 1860 , the Chileans had only five small vessels , while the Argentine Navy had no seagoing ships . These attitudes quickly changed when the circumstances warranted ; when Chile joined Peru against Spain in the Chincha Islands War , the Spaniards blockaded and bombarded Valparaiso , leading the Chilean government to strengthen the navy . The Argentine government , under President Domingo Sarmiento , decided to build a navy in the 1870s to counter Brazilian naval acquisitions . Two large monitors , " Los Andes " and " La Plata " , were ordered from Laird Brothers , a British company , along with two gunboats . They were delivered in 1874 and 1875 . The Patagonian tensions heightened in 1872 and 1878 , when Chilean warships seized merchant ships which had been licensed to operate in the disputed area by the Argentine government . An Argentine warship did the same to a Chilean - licensed American ship in 1877 . This action nearly led to war in November 1878 , when the Argentines dispatched a squadron of warships to the Santa Cruz River . The Chilean Navy responded in kind , and war was only avoided by a hastily signed treaty . Both countries were incapable of enforcing these claims with a seaborne force in the next few years , as the Argentines were occupied with internal military operations against the indigenous population ( 1870 – 84 ) , and the Chileans involved in the War of the Pacific ( " Guerra del Pacífico " , 1879 – 83 ) against Bolivia and Peru . Still , several warships were ordered by both nations : the Argentines commissioned a central battery ironclad , , and a protected cruiser , , in 1880 and 1885 , respectively . For their part , the Chileans ordered a protected cruiser , , to bolster its fleet , which was centered around two central battery ironclad s , and . With these ships , the Chilean Navy emerged from the War of the Pacific as the preeminent navy in the Americas , surpassing even the navy of the United States , which had fallen into steep decline after the American Civil War . The Chilean government utilized this advantage when it deployed " Esmeralda " to Panama in 1885 to block the U . S . from attempting to annex the region . Arms race . The Chilean government moved first to begin the naval arms race when it ordered a modern ironclad battleship , , two protected cruisers , and two torpedo boat s from the United Kingdom . Bought with a £3 , 129 , 500 appropriation in the 1887 budget , the ships would have upset the balance of naval power in Latin America — while the Argentines had more vessels , the Chileans had larger warships with far more experienced crewmen . This purchase was made worse , from the Argentine perspective , by a large order for rifle s , field gun s , saber s , and carbine s , enough to arm an 80 , 000 - strong army . The Argentine government responded with two battleships — and , though they were smaller than their Chilean counterpart — and two protected cruisers , one purchased on the stocks in 1890 ( ) and a new - build of the same design in 1891 ( ) . The purchases were funded largely through export - related windfall , Chile through nitrates and Argentina through grain and cattle . The Chilean Civil War ( 1891 ) , rather than calming the naval ambitions of Chile , escalated them . In that conflict , the Chilean Navy played a significant role on the congressional side against the president and the army . The resulting victory of the congressional side and subsequent presidency of Admiral Jorge Montt led to a large increase in prestige and consequent funding for the navy . Argentine naval units assisted failed revolts in Argentina , but the continuing acrimony with and naval acquisitions of Chile meant this had little effect . The Chilean government purchased a protected cruiser , , on the stocks in 1892 , while the Argentines purchased one , , being built for the British in late 1893 . The Chileans sold their oldest protected cruiser , " Esmeralda " , in late 1894 to finance the order of an armored cruiser . This materialized in May 1895 with a new , along with four torpedo boats ; a Brazilian protected cruiser , , was purchased while under construction in August 1895 . The Argentines purchased an Italian armored cruiser , , on the stocks on 14 July 1895 . In April 1896 , Chile ordered another armored cruiser , , and six torpedo boats . Naval historian Robert Scheina states that Argentina replied in the same month with , a near - sister ship to " Garibaldi " which was under construction in Italy . However , he notes that the small time lapse between the orders makes it difficult or impossible to know if this , the opposite , or either are true . As historian Jonathan Grant writes , the Argentines may have moved first to secure a definite , if momentarily tenuous , advantage over the Chilean Navy . In May 1898 , the Chilean government found that the Argentines were planning on acquiring one , then two , " Garibaldi " - class cruisers . With tensions extremely high and war seemingly imminent , the two countries agreed to submit their boundary disputes to the British , which led to the Cordillera of the Andes Boundary Case 1902 ( Argentina , Chile ) . They also signed pacts which led to the resolution of the " Puna de Atacama " dispute . As the former arbitration took much time , the naval arms race , though it slacked during the time of eased tension which came with the agreements , continued . The Argentines did acquire the two additional armored cruisers , which were named and , that were more powerful than the previous two . To counter them , the Chilean government ordered two new battleships , " Constitución " and " Libertad " , using its gold reserve to pay for them . These battleships ' fast speed would make them suitable for opposing the new Argentine armored cruisers . The Chileans also purchased the protected cruiser , which had been built on speculation , on the stocks in late 1901 . The Argentines responded in May 1901 with an inquiry , possibly a full order , to Ansaldo for a new battleship design . This would mount a main battery and be capable of steaming at . The increased tensions and near state of war between Argentina and Chile caused the British to intervene , lest their economic interests in the region , which included the export of British goods and the import of Latin American raw materials , be disrupted . Talks were held in the Chilean capital , Santiago , between the British ambassador to Chile , the Argentine ambassador to Chile , and the Chilean foreign minister and President Germán Riesco . This led to the three Pacts of May on 28 May 1902 , which ended the dispute . The third limited the naval armaments of both countries . Argentina and Chile were barred from acquiring any further warships for five years , unless they gave the other eighteen months of advance notice . The warships under construction were sold to the United Kingdom , with Chile ' s battleships becoming the , and Japan , with Argentina ' s armored cruisers becoming the . The two planned Argentine battleships were never ordered , and " Garibaldi " and " Pueyrredón " , along with Chile ' s " Capitán Prat " , were disarmed with the exception of their main batteries , as there was no crane capable of removing the former ' s gun turrets . Aftermath . The Argentine – Chilean naval arms race was extremely expensive for both countries . The Argentine government was able to purchase £4 , 534 , 800 worth of ships between 1890 and 1898 with large foreign loans , which were given to them despite the country ' s role in the Baring crisis of 1890 . The government ' s total foreign debt reached 421 million gold pesos by 1896 . As for Chile , it was forced to take out a £2 million pound loan in order to purchase Krupp weaponry , and this combined with its other loans led the banking industry to suspend loans to Chile until the diplomatic crisis with Argentina was solved . Both the Argentine President Julio Argentino Roca and American ambassador to Argentina William Paine Lord ascribed the ending of the arms race to the diminished credit of Argentina and Chile . By all measures , the Pacts of May were an unmitigated success . Both Argentina and Chile enjoyed a period of lessened tensions , leaving the near state of war they were in , and the pacts ended their expensive naval buildups . However , the third major country in South America , Brazil , brought this to a crashing halt in 1904 , when its congress passed a large naval construction plan . This culminated in 1907 with a Brazilian order for three " dreadnought s " , a new form of warships whose advanced armament and propulsion capabilities far outstripped older vessels in the world ' s navies . Two would be laid down immediately , with a third to follow . The Argentine and Chilean governments quickly moved to cancel the remaining months of the naval - limiting Pacts of May , and both eventually responded with orders for their own dreadnoughts .