Origins of the Conflict
Chile-Bolivia's borders were a matter of contention throughout the XIX century. Both countries still shared colonial boundary between the Captaincy General of Chile and the audiencia of Charcas. During most part of the XIX century the common frontier mattered little, but when world demand for mineral deposits increased as result of industrial development, the region became valuable. Peru and Chile also had vague frontiers in richest guano area of the Tarapacá. Under an 1866 treaty, Chile and Bolivia divided the disputed area in the understanding that the nationals of both nations could freely exploit mineral deposits in the region. When Bolivia repudiated the treaty in 1876, and subsequently levied the taxes on a Chilean company operating in the area as a response for Chile's attempt of pushing the frontier northward, a race to arms between Chile and its northern neighbors of Bolivia and Peru started.
Fighting broke out when Chilean troops landed at Antofagasta (then belonging to Bolivia and nowadays a Chilean Province) on February 14, 1879. Bolivian government declared war one month later. On April Chile formally went to war with its northern neighbors (Peru had a mutual pact of defense with Bolivia).
When the war broke out Peru was totally unprepared for the fight. Due to world market conditions, the internal economy was unbalanced since 1873. The Peruvian Guano Company went bankrupt in January, 1879, leaving the country with little funds to wage war. Secondly, the government instability since independence never left the executive branch of the state. Politicians and military forces spent much of their strengh preparing or suppressing repeated coups d'etat. Thus, a well-organized armed forces was impossible by this time. Finally, the uncertainty of politics led to little support of the government by peasants, urban classes and Native Americans (we shall not forget that Peru was the center of the Inca Empire and so the attempt of creating a society under control of Creole elite found much resistance).
Battle of Miraflores
By this time Bolivia was facing the same problems. The indigenous population saw the central power as a meneace to their communal way of life and therefore the concept of a Bolivian nation made not sense for them. The army was ill-trained and disposed of outmoded armaments. The civilian politicians had little support from the urban population and always had to keep the military away from the power.
Chile, for its part, was ethinically and culturally more unified. The indigenous habitants, in terms of number, were of lesser importance than in Bolivia and Peru and represented a smaller problem to Chile's unification when compared with Bolivia and Peru. Besides, the country had developed under a constitutional regime. The armed forces were reputed as the most professional in South America and despite facing economic problems when the war started, the country had a industrial basis, while farming, mining, and commerce grew steadily until the world depression of the 1870s. These facts gave Chile some superiority in the coming war.