Once the Spaniards had been expelled, relations between the two nations soured primarily due to a border dispute: both claimed to have inherited overlapping parts of Patagonia.

Pedro de Valdivia subsequently founded several cities through southern Chile with the goal of reaching the Strait of Magellan.

[9] This view was shared by Diego Barros Arana and was inspired by Charles Darwin's description of the area as a useless moorland.

[10] Mapuches and araucanized Indians had for a long time ranged the Argentine southern frontier in search for cattle that were later taken to Chile through the Camino de los chilenos.

The U.S. administration declared immediately before the negotiations leading to the treaty: Prior to the U.S. statement, in 1873, via a diplomatic letter to major shipping nations, Chile had already promised freedom of navigation through and neutralization in the strait.

[citation needed] Jules Verne described in The Survivors of the "Jonathan" his view of Tierra del Fuego: Regarding the position of the USA towards the region, on 28 December 1831, the US Navy Captain Silas Duncan with the USS Lexington destroyed the Port Louis, Falkland Islands settlement in response to Argentine activities.

Therefore, the treaty emphasized the delineation of land boundaries including islands but did not stipulate the offshore limits, which have since been expanded to 200 nautical miles (370 km).

Chile has never accepted that and the Chilean view was confirmed by the Court of Arbitration in the Beagle dispute :[20] Some errors that would allow a Pacific coast for Argentina in Última Esperanza Sound and an Atlantic coast to Chile in San Sebastián Bay were later corrected, the border in Tierra del Fuego was moved from 68°34'00"W (as FitzRoy erroneously marked the "Cabo del Espiritu Santo") to 68°34'40"W (true longitude of the Cabo) giving 626 km2 to Argentina.

Argentina argued that previous documents referring to the boundary always mentioned the Snowy Cordillera as the frontier and not the continental divide.

Argentine explorer Francisco Perito Moreno suggested that many Patagonian lakes draining to the Pacific were part of the Atlantic basin but had been moraine-dammed during the quaternary glaciations, changing their outlets to the west.

Because each side was convinced of the legitimacy of its own claim, the pretensions of the other party were considered usurpatory, an ill-omened beginning that burdened the relations of both countries.

Michael Morris observes about the Argentine policy: The Southern Patagonian Ice Field is the last still pending issue to apply the 1881 Boundary Treaty.