The guano beds are found on the barren islands of the Guano.
From guano an immense revenue was derived during the third quarter of the 19th century and it is still one of the largest exports.
Lavish expenditure followed and the government was soon anticipating its revenues by obtaining advances from guano consignees, usually on unfavourable terms, and then floating loans.
In 1876 interest payments on account of this debt were suspended and in1879-1882the war with Chile deprived Peru of her principal sources of income - the guano deposits and the Tarapaca nitrates.
In 1889 the total foreign debt, including arrears of interest, was £54,000,000, and in the following year a contract was signed with the Peruvian Corporation, a company in which the bondholders became shareholders, for the transfer to it for 66 years of the state railways,, the free use of certain ports, the right of navigation on Lake Titicaca, the exploitation of the remaining guano deposits up to 3,000,000 tons, and thirty-three annual subsidies of £80,000 each, in consideration of the cancellation of the debt.