In 1898 a military expedition arrived in the area to take control of the zone due to increasing border disputes with Chile. The Boundary treaty of 1881 between Chile and Argentina led to disputes whether the main Andean Mountain Range or the continental divide should serve as border in this latitude. Chilean authorities argued that since Lácar Lake drained into the Pacific the area of San Martín should belong to Chile. The Argentine government was also concerned about the zone's dependence on trade with Chile, just like in Bariloche and other parts of the southern Andes. San Martín de los Andes, modeled like a European style alpine village, was founded on 4 February 1898. Following the founding, the main economic activities were wood logging and husbandry.