BOLIVIAN HISTORY FROM 1930 TO 1939

Eindscriptie Cultuurkunde van Spaans Amerika Marten Willem Brienen Student Nr. 9005838 maandag 26 augustus 1996 Rev. 73.8.140697

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Rijksuniversiteit Leiden Faculteit der Letteren Vakgroep Talen en Culturen van Latijns Amerika

PREFACE

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Preface Where to start? So many people have helped me in so many different ways in bringing about this paper, that I feel it would be impossible to thank them all personally. Some, however, specifically deserve to be mentioned here, as their help has been quite instrumental, and without which I never could have reached the results I hold here to-day. First of all, of course, my parents Jaap and Alice, and both my brothers, Arjen and Casper for their continued mental, emotional, financial and other support. Also I would like to thank Hans Vogel, who has guided me through the entire process of researching and writing, as well as making it possible for me to do research in Bolivia and France. In Bolivia, Martha Paredes and Nelly Córdoba, of the Archives of the ministry of foreign affairs, have been most helpful, copying many volumes and documents for me, helping me to find specific information and making me familiar with the structuring of the ministry and its archives. Remain only all the others. So, to anyone who deserves to be mentioned here but wasn’t: thank you, too.

TABLE OF CONTENTS

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Table of Contents

PREFACE ................................................................................................................................................... I

TABLE OF CONTENTS ..........................................................................................................................II

INTRODUCTION ......................................................................................................................................1

BOLIVIAN SOCIETY ...............................................................................................................................3

THE LAND AND THE PEOPLE .....................................................................................................................3 OF SILVER AND TIN: MINING FROM 1860 TO 1900.....................................................................................7 THE TIN INDUSTRY: MINING FROM 1900 TO 1930 .....................................................................................9 THE MINES AND THE STATE ....................................................................................................................11 THE POLITICAL SYSTEM UNTIL 1926.......................................................................................................13 THE MILITARY ........................................................................................................................................18 A SOCIETY OF FRAGMENTS .....................................................................................................................19

THE CRISIS .............................................................................................................................................21

ECONOMIC COLLAPSE: 1926-1932..........................................................................................................21 POLITICAL DEVELOPMENTS: SILES ..........................................................................................................23 POLITICAL DEVELOPMENTS: SALAMANCA ..............................................................................................27 THE POLITICAL LEFT: 1928-1932............................................................................................................29 THE ADVENT OF WAR.............................................................................................................................31

THE CHACO WAR .................................................................................................................................37

THE CONDUCT OF WAR ..........................................................................................................................37 THE WAR AND NATIONAL ECONOMY .....................................................................................................43 THE CHANGING FACE OF POLITICS: 1932-1935.......................................................................................46 ANGRY YOUNG MEN ..............................................................................................................................50 IT ALL FALLS DOWN ...............................................................................................................................54

THE ESTABLISHMENT OF MILITARY SOCIALISM ....................................................................58

BUSCH’ INTERIM GOVERNMENT .............................................................................................................58 THE CONCEPT OF “STATE -” OR “MILITARY SOCIALISM” ........................................................................60 THE BIRTH OF “MILITARY SOCIALISM” ...................................................................................................66 MILITARY SOCIALISM ADVANCES ...........................................................................................................69 TORO STUMBLES AND FALLS ..................................................................................................................73

BUSCH’ MILITARY SOCIALISM........................................................................................................80

BUSCH TOO IS A MILITARY SOCIALIST.....................................................................................................80 THE NATIONAL CONVENTION .................................................................................................................84 COME TOGETHER....................................................................................................................................86 HERO TURNS DICTATOR TURNS MARTYR................................................................................................89 EPILOGUE................................................................................................................................................92

CONCLUSION .........................................................................................................................................94

THE TRADITIONAL SYSTEM AND ITS FAILURE .........................................................................................94 MILITARY SOCIALISM..............................................................................................................................97

BIBLIOGRAPHY...................................................................................................................................100

PRIMARY SOURCES................................................................................................................................100 SECONDARY SOURCES...........................................................................................................................101

INTRODUCTION

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Introduction Bolivia is known, infamous even, for its many and at times violent changes of government. This lies at the basis of the image that many people have of a poor country, plagued by unstable governments and dictatorships. An image, that is not entirely true to reality: the country has also seen its share of relatively stable governments, within a certain democratic process. Two such times are the period of the National Revolution, that started on April 9th 1952 and lasted twelve years, until a military take-over by General Barrientos in 19641, and the Liberal political system which started in 1883 and ended, also with a military take-over, in 1936. Although the most lasting of these two political systems is the Liberal system that lasted for 53 years, it is the period of the National Revolution that has been most conscientiously studied. This is largely due to the fact that the 1952 revolution was one of the most drastic and comprehensive events ever to take place on the South-American continent: a huge project of land-reforms was undertaken, the largest sector of the economy — the tin mining sector — was nationalised and the entire army was dismantled. All things considered, the scope of reforms and revolutionary changes here is second only to its counterparts in Mexico and Cuba. Among historians, the consensus is that the explanation of the events of April 1952 must be sought in the structuring of Bolivian society before 1952, and in the evolution of revolutionary movements from around 1930 onwards2. In general, there is reference to the Generación del Chaco, the Chaco-generation, referring to the Chaco War that raged between Paraguay and Bolivia from 1932 to 1935. The same historians that make note of the Generación del Chaco will make note also of the era of “Military Socialism”, a succession of military governments between 1936 and 1939, as the time when it all began: “Military Socialism” is usually referred to as the first attempt to introduce the social, economic and political changes that eventually resulted from the National Revolution of 19523. Unfortunately, this period of “Military Socialism” has not been the subject of such detailed studies as is the case with the National Revolution4. The studies that do exist are generally limited to the growth of the Leftist movement during the period of “Military Socialism” and a highly politicised debate on the precise political inclinations of the two principle characters of “Military Socialism”: Presidents Dávid Toro and Germán Busch. On the whole, very little is really known of the precise content of reforms and projected reforms

1 On the National Revolution, James Dunkerley’s Rebellion in the veins is but one of many publications, but certainly also one of the most balanced and detailed. 2 Such suggestions are made by most historians occupied with the National Revolution. See Herbert Sanford Klein, Orígenes de la Revolución Nacional boliviana, Herbert Sanford Klein, Parties and political Change in Bolivia 1880-1952, James Dunkerley, Rebellion in the veins, Guillermo Lora, Historia del movimiento obrero boliviano, Alipio Valencia Vega, Historia política de Bolivia and so forth. 3 Certainly the best description of political developments leading up to the National Revolution is to be found in Herbert Sanford Klein’s Parties and Political Change in Bolivia 1880-1952. 4 Literature specifically written on this subject is limited to two articles by Herbert Sanford Klein, One doctoral thesis by Ferrán Gallego and a book by Augusto Céspedes. See: Klein, Herbert Sanford, ‘David Toro and the Establishment of “Military Socialism” in Bolivia’, Hispanic American Historical Review, vol. XIV, no. 1, pp. 25-52, Klein, Herbert Sanford, ‘German Busch and the Era of “Military Socialism” in Bolivia’, Hispanic American Historical Review, vol. XLVII, no. 2, pp. 166-184, Gallego, Ferrán, Los Orígenes del reformismo militar en América Latina; la gestión de Dávid Toro en Bolivia, (Barcelona, PPU, 1991) and Céspedes, Augusto, El dictador suicida, (La Paz, Editorial Juventud, 1979).

INTRODUCTION

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instigated by the Military Socialists, and even less on the origins of the Military Socialist coup d’état of 19365. This lack of knowledge concerning the era of “Military Socialism” is a pity. Although its importance to political developments throughout the rest of Bolivian history is generally accepted and recognised, no detailed studies as to the intentions of the Military Socialists, or the results of their governments have been done. Also, the very fact that this period is noted and studied from the perspective of the National Revolution has made that the picture that has emerged is a relatively one-sided one, for not only is “Military Socialism” the beginning of a new era — one of political instability, eventually leading to the National Revolution — but also it marked the end of another: “Military Socialism” marked the end of the Liberal era, and of a political system that started in 1883. It was the first government to replace the longest-lasting of Bolivian political systems to date. Therefore, when concerning ourselves with “Military Socialism”, perhaps it would more appropriate to approach it in a more chronological manner. Do we wish to find out what the nature of “Military Socialism” is, we need to know whence it came, and where its origins lay. This fairly basic question automatically leads us to the era of Liberalism. It was, after all, this era that ended abruptly with the coming of the first Military Socialist regime. Thus, when asking ourselves what “Military Socialism” really was, we need to find out what brought it forth, and so the first elementary question to be answered is why the Liberal system that lasted so long, collapsed in 1936. The second question is in what ways “Military Socialism” was a breach with the past: in what way was it different from the Liberal system? In order to answer the first question, we must determine what the Liberal system was: how did it function, and what was its goal? Added to this: what factors fostered the Liberal system, and what factors worked against it? As soon as a clear picture emerges of the structure and nature of the Liberal system, we may investigate what changed between 1883 and 1936, that the system was no longer able to survive. Since “Military Socialism” emerged as a result of political, social and economic changes in the years preceding it, the aforementioned is pivotal to determining the causes and effects of “Military Socialism” itself6. The second question, about the nature of “Military Socialism” and the politics of the Military Socialists, is centred around a number of things. First of all, we need to see how Military Socialist politics were different from Liberal politics. What was it, that the Military Socialists wanted for Bolivia and how did they go about introducing change, if any? The true historical importance of “Military Socialism” can only be determined if and when we know what it accomplished or failed to accomplish, and how it affected society during its time. These are the questions that I hope can be answered in this paper. Hopefully, it will provide some new insight into Bolivian contemporary history. The most important goal, however, is to examine two things: how and why did the Liberal era come to an end, and why was it replaced with “Military Socialism”. In the end, to those that lived through the experience of Liberalism and “Military Socialism”, its importance lay with the changes it brought about at that time, and not the fact that it would have major repercussions 16 years later.

5 Unfortunately, most of the studies that have been done are based only on secondary materials of a somewhat auto-biographical nature by Bolivian historians, contemporary newspapers and foreign Archives, especially those in Public Records Office in Kew, London. 6 It is rather interesting to note that many historians that have examined “Military Socialism” have to a degree neglected to examine its origins: the importance of the era is seen in the light of later political convulsions. The other aspect of “Military Socialism”, the fact that it represents the downfall of the longest-lasting system of government the country has known, is often side-tracked. One might say that this is history up-side down.

BOLIVIAN SOCIETY

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Bolivian Society Bolivia is known, infamous even, for its many — and sometimes violent — changes of government. Travel guides and brochures proudly announce that this is the country that has seen more golpes and revolutions than any other on the continent. I will not here debate whether such a statement is exact, as the underlying message, that Bolivia has seen many changes of government outside the democratic process, remains true. But the picture that emerges of a country that is and always has been violently unstable, is not altogether correct. For more than fifty years (1883-1935), Bolivian politics were relatively stable, with only four minor military interventions on behalf of or in conjunction with civilian parties1. Such periods of stability and disorder do not appear out of the blue, and it would therefore be useful to discuss various aspects of Bolivian society between 1900 and 1930 in order to get a clear understanding of the conditions that fostered a Liberal party system for over 50 years, and eventually also led to the destruction of that same system

The Land and the People Bolivia can be divided into two main bodies: the highlands in the west and the lowlands in the east. The highlands include the Cordillera or the Andean mountain ranges, the Altiplano or the Andean plateau and the Yungas or the Andean valleys, that lie between the Altiplano and the lowlands. The lowlands include Amazonia, the Amazon basin; the Llanos, the plains; and the Chaco Boreal, the arid semi-desert. The country borders on Argentina and Paraguay to the south, on Chile to the west, on Peru to the north and Brazil to the east. Throughout its republican history, the country has managed to lose land to each of these neighbours and can call itself the only country on the continent never to have won an armed conflict. At the beginning of this century, the lowlands were very sparsely populated and inhabited mainly by los tribus infieles2, whose numbers are the subject of much speculation and are estimated, for 1900, at between tens of thousands and over 700.0003. Apart from these, only about 200.000 — out of a total of 1.500.000 — people inhabited these lowlands, that represented more than half of national territory4. In fact, the bulk of the population, around 2.000.000 people around 1930, lived in the highlands, particularly on the Altiplano, containing most major cities and the largest part of the rural population5. That so many lived here can be explained by the facts that the indigenous population had lived here for many years before the Spaniards came, but also that the important economic centres, such as the silver-mines, lay in the Cordilleras near the Altiplano. So the Altiplano contained the largest concentration of people, but also of colonial economic activities6. Though it is tempting also to divide the country along racial lines, this is not without danger, since racial terminology can be misleading in a Bolivian context. Two major Indian ethnic groups existed in Bolivia: the Aymara and the Quechua. The Aymara inhabit mainly northern parts of the highlands, especially La Paz and Oruro. The Quechua are dominant in

1 In 1880, 1899, 1920 and 1930-1931. 2 Marie-Danièle Demelas, Nationalisme sans nation? La Bolivie aux XIXe

- XXe siècles, 39. Perhaps most adequately translated with ‘savages’. 3 Ibidem. 4 Ibidem. 5 Cochabamba being the most important exception: it lies in the Cochabamba valley. 6 Unfortunately, exact statistical data are scarce, and not always very reliable. Some censi were taken in the Nineteenth and Twentieth centuries, but their results vary to a considerable degree.

BOLIVIAN SOCIETY

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Potosí, Cochabamba and Chuquisaca. No exact studies are available as to their exact numbers and distribution in the nineteen-thirties. The 1900 census, however, offers us some information about the size of the different population groups: Indians, ± 55 percent; Cholos, ± 22 percent; Whites, ±12 percent. Also there is a very small number of blacks, around half a percent, and some 6 percent ‘unknown’7. These figures are not as straight-forward as they might seem, because of their specific use of racial terminology: with the exception of the term ‘black’, racial terminology is not as rigidly defined as it is in Europe.

More than denoting genetic traits, the terms white, cholo and indio denote social status, clothing and linguistic traits: one might very well be 100 percent of (genetic) Indian extraction, and still be considered cholo, or the opposite might be true. In reality, the term white stands for people who speak only Spanish and are well-to-do. To be cholo means that one abandons traditional clothing, but is relatively poor, and speaks both Spanish and an Indian language. An indio speaks a native language only, wears traditional clothing and usually lives on the land8. It is perfectly possible for an indio to become a cholo. This system of ethnic mobility allows for people to define themselves in racial terms as they please; if you wish to retain your culture you may, but you may also choose to become part of another ethnic group. However, it can be said that the process of mestizaje, in purely biological terms, was much stronger in the Cochabamba district than elsewhere9. Precise reasons for this are as yet uncertain, but the presence of haciendas and the incorporation of Indians into the hacienda system is generally hinted at as a possible explanation. Generally, cholos live in the cities and indios on the land. The overwhelming majority of Bolivians, some 70 percent, was rural10, leaving only some 30 percent for the cities. These rural Bolivians lived off three types of landholding: • The Latifundios, or the great estates; in Bolivia, according to a 1950 survey, 8 percent of

owners owned 95.1 percent of all land11. These lands were worked by colonos, the landless peasants that with the decline of traditional communities were forced to work the land of others. In return for a small plot of land (pegujal) to work for subsistence, the colono had to work the land of the latifundista. In addition, colonos were forced to do chores in and around the house of the latifundista, and to bring his produce to the market for sale and so on. This system of unpaid services was commonly known as pongueaje. By the nineteen-thirties the colonos were by far the largest group in Bolivian rural society12.

• The Comunidades Libres, or Ayllus. These were the traditional Indian communities that maintained a system of communal landholding, whereby the land was owned and worked collectively. Though this had been the most prevalent system throughout the colonial period, it came under increasing pressure during the liberal reforms of the nineteenth-century, and the number of comunidades libres had decreased from 11.000, containing some 478.000

7 Demelas, Nationalisme, 51. 8 Marta Irurozqui Victoriano, “¿Qué hacer con el indio? Un análisis de las obras de Franz Tamayo y Alcides Arguedas”, Revista de Indias, vol LII (1992), 559n and Demelas, Nationalisme, 95-99. 9 Florencia E. Mallon, “Indian communities, Political cultures, and the state” in Journal of Latin American Studies, XXIV (1992), 41. 10 Rural Bolivians formed 75.9 percent of the population in 1900 and 66 percent in 1950. Though I have no exact figures for any time in between, the figures available show only little evolution in 50 years, and it can be assumed that around 1930-1940, the percentage would be around 70 percent. The 1900 figure was taken from Demelas, Nationalisme, 82 and the 1950 figure from Klein, Orígenes, 189. 11 Fernando Calderón G., “The Quechua and Aymará peoples in Bolivian society” in: John Rex, Race and class in post-colonial society, 201. 12 Though exact numbers are not available: Calderón, “The Quechua and Aymará”, 199-201, Klein, Parties, 160-161, 392-396 and Klein, Orígenes, 189-191.

BOLIVIAN SOCIETY

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people, in 1847 to 502, containing only some 50.000 people, by 1930. This system of landholding was most common on the Altiplano, in the department of La Paz13.

• The Minifundias. Whereas 8 percent of landowners owned some 95.1 percent of land, 69.4 percent of owners owned no more than 0.4 percent of land: these were the smallholdings. These were especially prevalent in the Cochabamba district. The number of small landowners — less than 500 hectares — in the nineteen-thirties, would be located between 80.000 and 90.000, more than half of which were located in the Cochabamba district14.

With the exception of haciendas15, especially in the Cochabamba district, most of the Bolivian farmers (whether landless or landowning) were engaged largely in subsistence farming, producing only very little surplus, usually just enough to fulfil tax obligations. Most of the smallholders did not possess the capital to invest in equipment, and their farming techniques, as well as those of other landholders may be considered inefficient. Also, as geographical and climatic conditions on the Altiplano are less than favourable, yields on the Altiplano are limited, even with improved farming techniques. Haciendas on the other hand had been established during the colonial period as a means to provide the mining centres with an adequate food supply, and had always been aimed at marketing its crops16. Since climatic conditions in the lower valleys, especially those in the Yungas and the district of Cochabamba, are quite favourable, most of these were to be found in this region. The presence of minifundias in this area can also be viewed as a result of this colonial agricultural economy, as peasants were forced into a money economy and were consequently more acquainted with its advantages17.

A major part of Bolivian rural society was engaged in mere subsistence farming, and did not form part of the monetary system, effectively keeping themselves out of the economy. Also, agricultural production was unable to keep up with the growth of the population, especially in the cities, and thus the need for food imports grew18. Consequently, the agricultural sector, which employed 70 percent of the active population, produced no more than 32.8 percent of the GNP19. It is also important to add that agricultural products were not a main export, due to low production levels and exceedingly high transportation costs; as import and export duties were the most important source of government revenue, and taxes on land and profits (domestic) on agricultural produce were evaded on a very large scale, the entire sector contributed only very little to the treasury, leaving the government highly dependent upon mining20.

13 For details of liberal pressure on the comunidades libres, see Tristan Platt, “The Andean Experience of Bolivian Liberalism” in Steve J. Stern (Ed.), Resistance, Rebellion and Consciousness in the Andean Peasant World, 18th to 20th Centuries and Herbert Sanford Klein, Haciendas and ‘Ayllus’. Figures concerning the exact number of comunidades libres differ greatly: Klein himself states in Orígenes de la revolución nacional boliviana that there were in 1930 only 502 comunidades left, inhabited by 50.000 Indians [Klein, Orígenes, 189], while elsewhere he states that in 1950 there were at least 140.000 Indians living in 3787 comunidades [Klein, Parties, 160 and 161n]. Calderón mentions, also for 1950, that 2799 comunidades owned some 7.000.000 hectares, about 23 percent of all land [Calderón, “The Quechua and Aymará”, 200]. I have used here the figures from Klein, Orígenes, as they are the only ones pertaining to the nineteen-thirties. 14 These numbers seem far more reliable, as estimates from different authors are much closer. Klein, Orígenes, 160n and 160-161 and Calderón, “The Quechua and Aymará”, 201. 15 And also of some specialised farming, such as coca-leaf production, which was grown in the Yungas and sold on the markets. 16 Not including the pegujales worked by the colonos. 17 Florencia E. Mallon, “Indian communities, Political cultures, and the state” in Jornal of Latin American Studies, XXIV (1992), 41. 18 Gallo, Taxes, 49-51. 19 Klein, Parties, 394. 20 Gallo, Taxes, 104-106.

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The urban population was active in many different economic activities, of which commerce, manufacturing, transportation and government service were the most important in economical terms (See Table 1). These urban industries together made up around 43 percent of the GNP, not including the mining sector, which by itself made for around a quarter of the GNP. These cities lay concentrated mainly on the Altiplano.

Table 1. Percentage employment of economically active population, by sector (1950) Source: Herbert Sanford Klein, Parties and Political Change in Bolivia: 1880-1952, 394

Activity Percentage of economically active population in 195021

Percentage of GNP in 1950

Agriculture (Including rural artisans)

72.1 32.8

Mining and extractive industries 3.2 24.4 Manufacturing 4.1 8.9 Urban Artisans 4.0 4.3 Transportation 1.5 5.6 Commerce and banking 4.2 10.3 Government 3.0 4.4 Other 7.9 9.3

So, both in economic and social terms it might be said that the difference between the

cities and rural areas was quite important. In political terms this seems also to be true, as the peasantry was not a political force by itself. By no means does this mean that they could not exert pressure, primarily through rebellion and blockades, but throughout the nineteenth century and the first quarter of the twentieth they seemed unable to effectively influence politics22. Rather, they would be used by political factions, either to instil fear in the urban masses23 or, as in the Federal War, to grab power. The urban masses, however, did seem able to exert true political pressure to get their way, even though they did not have the vote: the mass rallies on the main street of La Paz could seem very threatening, and government would accede to the demands of these urban masses. Their strikes and rallies could halt economic life, and governments were far less willing to send in the army and cause a bloodshed on the city streets24. Especially the nineteen-forties were the scene of such urban violence, that caused major political changes, such as the mob-lynching of President Villarroel in 194625.

21 For 1936, the following figures are available to us: Owners of property: 2 percent; Commerce and banking: 3 percent; urban professionals: 1/5 percent; Factory workers: 5 percent; trabajos circunstanciales: 7 percent; Artisans: 0.01 percent; domestic servants: 1.5 percent; transport & communications: 1 percent; miners: 2 percent; clases improductivas (students &c.): 8 percent; Agriculture: 60 percent. AMR, Min 1 8 Presidencia de la República, f. 103, no number, 28 september 1936. 22 The best examples of Indian rebellion in order to change policy would be the protests against the constant attacks on the comunidades libres. A very notable example of this is the rebellion of 1898-1899 as a part of the Federal War between Liberal and Conservative factions in which the Indian rebellion helped the Liberal Party into power. Immediately afterwards that same party crushed the rebellion, and pressure on the comunidades remained [Platt, “The Andean Experience”, 316-317]. The same rural masses did prove successful to a degree in making use of existing legislation to protect their interests. 23 Notwithstanding the genealogical links between the urban and the peasant masses, there existed great fear for the ‘barbarians’ and ‘cannibals’, as the peasants were viewed. Platt, “The Andean Experience”, 316-317. The main fear was that civilisation would be destroyed in a guerra de castas, if the Indians were not ‘controlled’. In this light, the system of ethnic mobility becomes even more striking. Irurozqui, “Un análisis”, 561-562 and Platt, “The Andean Experience”, 317-318. 24 With a very large exception in the form of mining centres. 25 Augusto Céspedes, El Presidente Colgado, 295.

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Of Silver and Tin: mining from 1860 to 1900 Mining has always been a dominant factor in the Bolivian economy. The silver mines of Potosí are famous to the extent that even in Chinese there is an expression that alludes to Potosí’s legendary wealth, and throughout the colonial period the district of Potosí by itself generated between a quarter and half of total Spanish American silver production26. By the end of the eighteenth century however, production entered into a steady decline, due to the diminishing quality of the ore. The destruction wrought by the wars of independence all but finished the silver-industry off. So by the time of independence (1825) the industry had entered a lasting depression, and the mines outputted only small amounts of silver. Although new technologies were being developed to extract silver from low-grade ores, which would allow for renewed silver-production, the capital needed was not available in the country to reopen the mines, many of which had been flooded or damaged during the struggle for independence. Then, in the eighteen-forties, ‘fifties and ‘sixties, rich deposits of nitrate and guano were discovered in the coastal province of Litoral. Since the Bolivians did not have the resources required to put these fields into production, foreign investors soon took advantage of the opportunity, and above all Chilean and British investors started nitrate and guano-production in the region27. This activity rapidly increased the income of the Bolivian state, as it received more and more from export-duties. Also, these British and Chilean investors were eager to invest excess capital, and so new capital was made available to the Bolivian economy. This new capital allowed for the reconstruction of the silver-industry, which from around 1870 started producing growing quantities of silver28. Soon, the silver-industry was again the leading sector of the Bolivian economy. The newly emerging silver-élite grew not only in economic power, but also in political power. Together with other members of Bolivian polite society, which included many high-ranking military officials, they started pushing for changes on the political front: they wanted to do away with caudillismo and introduce modern Positivist and Liberal ideals to politics. What the industry needed, and therefore the nation, was order and progress. The guerra del Pacífico provided the necessary context to replace the age-old system of caudillismo with such modern notions29. And so, the same circumstances that led to the revival of the Bolivian economy, also led to the loss of its coastal province, as Chilean forces marched into the Litoral and occupied it with fairly great ease. The reasons for this war include, as many historians have already stated, the rich nitrate and guano deposits, all exploited by Chilean and British investors. Also, it is likely that the Chileans felt continually threatened by the attempts to create a close political and military union between Peru and Bolivia. Finally, the province just lay there for the taking, as it

26 B.H. Slicher van Bath, Indianen en Spanjaarden. Latijns Amerika 1500-1800, 156. For an extensive discussion of Bolivian and other Spanish American silver and gold production during the colonial era, see: Slicher, Indianen en Spanjaarden, 139-175. 27 See: Demelas, Nationalisme, 8-10 and Herbert Sanford Klein, Orígenes de la revolución nacional boliviana, 21. 28 Demelas, Nationalisme, 173. 29 In so far as one might actually call the Bolivian version of caudillismo a system. One of the striking aspects of Bolivian nineteenth-century Bolivia is the — often ignored — fact that at times, there was more than one caudillo active at the same time. So when historians make mention of different caudillo-presidents, these in reality held power only over the Altiplano, while at the same time a large part of the Oriente was ruled by the Suárez family. One might even contest the control exerted over the Altiplano and assert that most rural areas as well were beyond the scope of caudillo rule. See, for example: Demelas, Nationalisme and Tristan Platt, “The Andean Experience of Bolivian Liberalism” in Steve J. Stern (Ed.), Resistance, Rebellion and Consciousness in the Andean Peasant World, 18th to 20th Centuries, 280-323.

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was hardly defended at all, and once the war was underway soldiers had to be brought in from across the Andean mountain ranges. By the time they arrived, it was really too late. The loss of the Litoral came as a hard blow and totally discredited the caudillo leadership, paving the way for a Liberal multipartite system to take its place. In this new system, the silver-élite played a very direct role, as the different mine-owners often made a political career30 of their own. In this way, they were able to defend the industry’s interests most directly, with an increase in social standing as an added bonus. The nature of the silver-industry also allowed such direct involvement, as the entire production process was rather straight-forward: after all, once the silver was extracted and coined, it was instant hard cash.

Figure 1: Tin Exports: 1900-1930Source: Carmenza Gallo, Taxes and State Power , 33.

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The new age of silver, however, would prove not to be as lasting as its colonial predecessor. Technological developments that had swept the rapidly industrialising nations of Northern Europe and the United States, had created a growing demand for a new industrial mineral: tin. This mineral, or at least the ore that contains it, had always been a by-product of the silver-industry, but was never exploited as the costs of transportation made it unprofitable. The growing demand on the world market and the improved infrastructure — most notably the railroads31 — now made it worth-while to exploit these extremely rich resources, that were concentrated mainly around Oruro and Potosí. This new sector of industry grew very rapidly, and quickly overtook the traditional silver industry, already constituting 53.4 percent of total exports by 190432 in value (See Figure 1). This relative growth of importance of the tin-industry can be explained not only through the rapid growth of its exports, for at the same time silver-production was also at an all time high, reaching up to 396.344 Kilograms in 190033. The silver-industry was ailing, for even though production was at an all-time high, prices continued to

30 Demelas, Nationalisme, 124-125. 31 It is very interesting to see how these railroads were built quite especially to serve the purposes of the mining industries, while the industries themselves contributed quite little to their construction. They were constructed mainly with foreign capital. The very first railway opened, for example, was the “Antofagasta & Bolivia Railway”, opened in 1892. It had been built on the orders of President Arce, who also happened to be the owner of the Huanchaca mining company: Demelas, Nationalisme, 72-75, Gallo, Taxes, 36 and Luís Peñaloza Cordero, Nueva historia económica de Bolivia, 83. 32 Herbert Sanford Klein, Parties and Political Change in Bolivia, 32. 33 Peñaloza, Nueva historia, 79.

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drop, as they had done since the 1880ies34 and the silver industry was very rapidly losing its relative importance to the Bolivian economy, only to be replaced by the tin-industry. Measured in pure volume too, the silver-boom was not lasting, for after 1900 the production itself, less profitable through world-market prices and increasingly troubled by exhaustion of the mines35, started to drop at a remarkable pace: dropping to no more than 72.000 kilos in 1914 and eventually stabilising at between 150.000 and 200.000 kilos annually between 1920 and 193036. And so, tin had replaced silver as Bolivia’s main export.

The Tin Industry: mining from 1900 to 1930 The tin-industry however, had its share of problems. Most importantly the fact that Bolivian tin was expensive to produce, for a number of reasons. First of all, due to the high altitude of the mines, machines and workers were less efficient. Secondly, although railroads now existed, linking the mines to the pacific port of Antofagasta, transportation costs were still quite high. Thirdly, Bolivian mines generally produced low-grade ores, that required special smelting technology, adding to the cost of production. Finally, the geographical conditions made it impossible to build the foundries necessary for smelting on the Altiplano itself, meaning that the ore had to be transported over long distances, whereas other countries such as Malaya and Nigeria could smelt the ores near to the mines, and thus export the mineral itself, saving tremendous amounts on transportation costs37. All of this meant that in comparison to other major tin exporters, Bolivia was in rather a difficult position and fully dependant upon prices remaining sufficiently high to sustain elevated production costs. The fact that the pure volume of tin exports was much greater than that of silver had ever been, and that the ore was smelted abroad38 meant that the structuring of the tin companies was quite different from the silver industry. The new industry was more internationally oriented39: its produce had to be sold on the world market, it was dependent upon international prices and much of the production process took place outside the country40. This also meant that the tin companies had a much more multinational character, and that many of them were in fact run outside Bolivia. So unlike the silver magnates before them, who had actively involved themselves in national politics directly, the tin barons kept themselves occupied with running their large multinational firms, often residing abroad themselves41, and really did not involve

34 Demelas, Nationalisme, 173. 35 Most of which, after all, had been exploited since the sixteenth century, added to only by relatively few and not as rich new deposits. 36 Peñaloza, Nueva Historia, 79-80. 37 See: Gallo, Taxes, 32 and Peñaloza, Nueva historia, 350-352. 38 Above all in Great Britain, Germany and the United States: Peñaloza, Nueva historia, 133, 153-173 and Demelas, Nationalisme, 177. 39 Gallo, Taxes, 33. 40 Ibidem, 32-33. The special installations for founding and smelting of low-grade Bolivian ores were concentrated in Great-Britain. Some 83.74 percent of Bolivian tin was elaborated in Great-Britain. Second on the list are The Netherlands and Germany, where some 15 percent was elaborated. The remainder was shipped to France, the United States and starting from 1938, Japan (Figures valid for 1935-1939): AMR, Cons 2 e384 Consulado General en Gran Bretaña, f. 45, no number, 14 januari 1936 and AMR, Cons 2 e449 Consulado general en Londres, f. 22, No number, 22 januari 1939. 41 Such as Simón Patiño, who owned a large mansion in Paris, and one in London, where the centre of the tin-market lay: Archivo del Ministerio de Relaciones Exteriores y Culto de la República de Bolivia [AMR], volume Min 1 110 Hacienda, folio 721, number 4448, 8 June 1938. Since the pages of the different volumes from this archive sometimes are unnumbered, I shall mention both the page number [when available] and the entry-stamp number [when available]. The first number in the volume title indicates whether it concerns communication to or fro the minister for foreign affairs: a 1 indicates

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themselves in politics personally. Of course, their interests must be looked after and for this purpose these modern companies were able to attract lawyers, economists and other advisors to look after their interests in Bolivia42. Thus, in stead of involving themselves directly in politics they depended on a system of pressure groups and lobbyists, commonly called the Rosca43. The retreat by this new economic élite meant not only that the tin barons could devote all their time to running their companies, but also that politics were now left to professional politicians, who were quite sensitive to the needs and demands of the mining industry. In addition, it meant that the client-patron system, that had been at the basis of the relationship between mine-workers and owners, had now been uprooted; with the owners abroad, personal contact with the workers was now replaced by — often foreign — engineers, managers and administrators, who could be replaced, transferred or promoted away at will44. As personal negotiations were no longer possible, and more distance existed between the management and the workers, the need increasingly existed for the workers to organise45. When tin mining first got underway, in the last decades of the nineteenth century, many different mining corporations popped up in all the different mining areas. Some were more successful than others, naturally, and especially during the first decades of the twentieth century the more successful ones expanded at quite a rapid pace. Consequently, three concerns came to dominate the entire industry by the nineteen-twenties46. The first of these is Patiño Mines, headed by Simón I. Patiño. Its headquarters was in Delaware, in the United States. The company grew from a small mining firm into a large multinational company, that was able to expand into many areas of economic activity, its most important acquisitions being the Zinnerwerke (1912) foundry in Wilhelmsburg, Germany, the Williams Harvey Co. Ltd — which had been the most important smelter for Bolivian low-grade ore for years — in Great Britain (1928) and the Bank of Tarapacá and Argentina47 (1900). This company was by far the largest of Bolivia, controlling around 50 percent of tin exports steadily from the nineteen-twenties until the National Revolution48. The second largest Bolivian mining company was Mauricio Hochschild SAMI, controlled by Mauricio Hochschild, who was an Argentinian national, though German by birth. The Hochschild group remained centred on mining, and controlled around 25 percent of tin exports between 1937 and 195249. The group included several different companies, all of which were based in the United States, Chile and Argentina.

incoming communication, whereas a 2 indicates outgoing mail. The second number [110] indicates the ministry to which communication was sent; this is also mentioned in the name following the number, in this case the treasury [Ministerio de Hacienda]. These letters, memoranda &c are written and signed either in name of the minister, by his personal secretary, or by him personally. 42 Klein, Parties, 32 and Klein, Orígenes, 41. 43 Ibidem. 44 Perhaps this might go some length in explaining the growing unrest among mine-workers during the twentieth century: theses workers played a crucial role in leftist organisation and unionisation throughout the century, culminating in their active and vital support during the April revolution of 1952. Such unrest seems less frequent during the nineteenth century. 45 See: Lora, Historia del movimiento obrero and Alipio Valencia Vega, Historia política de Bolivia, volume 6. 46 For a comprehensible overview of the development of tin-mining in Bolivia, see: Peñaloza, Nueva historia, Klein, Parties, 31-36 and Herbert Sanford Klein, “The creation of the Patiño empire”, Inter American Economic Affairs 19 (2):3-23. 47 Renamed the Anglo-South American Bank Ltd in 1907. And apart from these, Patiño Mines also held shares in many other tin-related and other industries and banking institutions, such as the Bank of London. See: Peñaloza, Nueva Historia, 130 and Klein, Parties, 34-36. 48 Peñaloza, Nueva historia, 229. 49 Ibidem, 329.

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The last of the three great companies was the Compagnie Aramayo de Mines en Bolivie, that controlled just under 10 percent of tin exports, also until 195250. Run by Carlos Víctor Aramayo51, this was the only company that had been started as a silver company and had made a successful transition to tin mining. Its headquarters were in Geneva, Switzerland. In Bolivian historiography, the Bolivian tin industry is often depicted as one mighty block of power, that was able to get its way in every sense and stood united to exploit the Bolivian masses most effectively. Of course, the very nature of the mining sector makes that this portrayal is highly questionable, to say the least: the different companies making up the sector were, after all, highly competitive. They competed on a very unstable world market, in which all of them were in a very vulnerable position, due to relatively high costs of mining, transportation and subsequent elaboration. Given the international and multinational character of the companies, it would seem that the companies viewed each-other as nothing more and nothing less than competitors in much the same way as they viewed their other contendants. The very idea that these companies were united, or formed any single block willingly seems, in fact, quite contrary to the competitive nature of any multinational, where the advantage of one is automatically the disadvantage of the other52. Finally, it is necessary to mention here that even though tin was responsible for quite a large share — more than half, after 1900 — of exports, it was by no means the only export. Most of the other exports that were important to the economy included few agricultural products, such as rubber, to a very small extent oil and other minerals such as copper, tungsten, silver, bismuth, antimony, gold and lead. The three large conglomerates also extracted many of these minerals, especially the Compagnie Aramayo, that was important for both silver and antimony production. Of the non-tin minerals, silver and copper were the most important53.

The Mines and the State It has often been suggested that the dominance of the tin industry over the Bolivian economy automatically meant that this industry could therefore also dominate the government54. Some would have us believe that the relationship between the industry and government was such, that the industry posted its demands and the government merely complied with them, without ever resisting the ever growing demands of the industry55. The picture that emerges is that of a government that is either completely subordinate to the industry, or that is in league with it. Now that more serious research has been done on the subject of state-industry relations56, it is becoming increasingly clear that this relationship was more complicated than that, and that the state and the industry were not allies, nor did the latter dominate the first. Certainly, the industry had certain demands that it wanted to be met, and the government was quite sympathetic to these, as it recognised the importance of the sector that was responsible for

50 Ibidem, 272. This is in fact the only of the three that shows a marked decrease in the percentage of exports it controlled, dropping from 11 percent in 1929 to about 7 percent by 1940: ibidem. 51 By the nineteen-thirties. Before, it had been run by his father, Félix Avelino Aramayo, and his grand-father, José Avelino Aramayo, who started the company in 1868. 52 AMR, Min 1 110 Hacienda, no pagenumber, 4448/721, 8 June 1938. 53 Peñaloza, Nueva historia, 58-80 and Demelas, Nationalisme, 167-173. 54 James M. Malloy, “Authoritarianism and Corporatism: the Case of Bolivia”, in James M. Malloy, Authoritarianism and Corporatism in Latin America, 461 and Gallo, Taxes, 97. 55 This is especially prevalent among those Bolivian historians who were themselves involved directly in politics, either as members of the M.N.R. — the Revolutionary Nationalist Movement that was in power during the National revolution (1952-1964) — or of leftist parties and organisations. Cf. note 4. 56 Most importantly Carmenza Gallo’s study; Gallo, Taxes, that was published in 1993.

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a large share in government revenue. The mining sector had certain requirements that it wanted met by the state: It was looked upon for the exchange rate policy: the mining corporations wanted the exchange rates to fluctuate according to prices of tin in the London markets, without further intervention from the government. Until the nineteen-thirties, governments complied with these wishes, with the exception of a brief interval of experimentation between 1925 and 1927, when a law was introduced to oblige the exporters to sell 25 percent of their foreign exchange to the central bank. This law was repealed after heavy opposition from the mining sector57. Another basic necessity that was left to the state was the construction of a transportation system to allow the mining industries to export their produce. As is the case in other tin-producing countries, the responsibility for such a transportation system lay with the state. Of course, the state did not possess the means to construct these railroads, and was compelled to borrow money from foreign investors and banks and from the tin miners themselves58. Most of these railways, linking the mining-centres to each other and to the outside world were built between 1900 and 1920 at a total costs of £11.000.000; equivalent to twice as much as the total amount of taxes on tin exports paid from 1900 to 192559. Naturally, this growing debt brought with it some increases in taxes. Another important ‘duty’ that the state had to fulfil in order to keep the tin miners happy, was to control the mine-workers: overall, the companies preferred to settle their own problems with the workers and opposed state intervention in the form of labour-legislation and so on60. And until the nineteen-thirties, virtually no such legislation was introduced. However, as we have seen, the relationship between the workers and the managements was such, that the workers became increasingly organised and throughout the nineteen-tens and -twenties workers’ protests against labour-conditions and inadequate pay grew. Whenever serious protests and strikes broke out, the companies relied on the state to settle their problems, often in quite violent a manner; in such cases the army was sent in, at the companies’ request61. The last aspect of the functioning of the mining companies in which the industry needed the state was in resolving conflicts: between the companies themselves, or of companies and the ‘outside world’. Whenever conflicts arose, the state was needed as an arbiter62. Throughout the first thirty years of the twentieth century, governments generally gave in to all of these demands without much ado; railroads were constructed, the exchange rates were left alone and the army frequently used to crush strikes and workers’ rebellions. It could, then, be said that the relationship between the state and the mining corporations was rather a happy one. This does not mean, by any standards, that the state was therefore subjected to the will of these corporations. The state itself had demands to be met, mostly of a fiscal nature. As any other state, the Bolivian state apparatus had to be financed, and it did this mainly through direct and indirect taxes. During the first decades of the twentieth century, most of government revenues sprang from duties on imports and exports, the first being the most important until the nineteen-twenties63. Throughout the period between 1900 and 1930, however, direct taxes on mining-exports remained very low, at between 2 and 10 percent64. Other taxes helped increase the amount that the industry paid, for example the taxes on profits

57 Gallo, Taxes, 35. 58 This in fact being their only contribution to the system. 59 Ibidem, 36. As Gallo states it, one might therefore say that during this period the mining industry was for all intents and purposes, subsidised; ibidem. 60 Ibidem, 37. 61 Ibidem. 62 Ibidem. 63 Ibidem, 103. 64 With an exception for the years 1924-1926, when taxes reached as high as 15.6 percent: Walter Gómez D’Angelo, Minería en el Desarrollo Económico de Bolivia, cuadro 10.

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and income, which were levied from 1924 onwards, resulting in a marked increase of the industry’s contribution to the treasury65. The companies, however, quickly found ways to evade this particular tax66. When we combine the export duties on mining and the other taxes levied on mining — such as the income and profits taxes — we find that the mining sector contributed around a fifth to a quarter67 to government revenues. Considering that a large part of these revenues emanated from import-duties, this was rather a large share. This while the largest sector of the Bolivian economy (according to number of people active in it), agriculture, contributed relatively little68. So, in conclusion, even though the mining sector paid low taxes, it still paid more, even in percentages, than any other, even though it was able to evade very large portions of the taxes. With respect to the largest sector of the Bolivian population, or indeed the GNP69, agriculture was hardly an important exporter, and therefore not as important to government revenues by far. This meant not only that such a large share of the population was virtually excluded from the monetary system, but furthermore that this entire sector remained relatively unimportant for the state and therefore quite independent from it. Most of the wishes of the landed class concerned the repression of rebellion, and means to keep the colono population in its place and it managed this through direct participation in local government70. Since the landed class had very little to offer the state in the form of taxes, an interdependence such as can be seen between the state and the mining sector did not exist. Really, the state was not very interested in the rural areas, and not much possible cause for conflicts existed, so they were largely left left to their own devices71. What we see is not an industry controlling the state, nor the reverse. A picture emerges of reciprocity between the miners and the state during the first decades of the century, until around 1930; the state provided for the industry, and in return the industry provided a large part of government revenue. Still, the vulnerability of the mining sector made that any taxes further weakened its international position and so there was only a limited willingness to provide. As long as government did not claim too much, but met the requirements of the industry, the relationship was mutually beneficial. Thus, we see a certain reciprocity, but between two independent players. Should the requirements of either one change, without the other getting something in return, these players would stand on opposite sides.

The Political System until 1926 The modern system of government that had been introduced in the eighteen-eighties as an answer to caudillismo, came under increasing pressure towards the end of the nineteenth century. The growth of the tin exports went accompanied by a desire of the Liberal Party to reign; since the eighteen-eighties, the conservative party had been in power, many of its

65 Gallo, Taxes, 109. 66 Patiño, for example, decided at this time to move his headquarters to Delaware: Peñaloza, Nueva historia, 176-177. This event also coincided with the massacre of striking workers at Uncía, controlled by Patiño. 67 With a peak of 40.1 percent in 1924; Gómez, Minería, cuadro 10. 68 Gallo, Taxes, 104-105. 69 Cf. table 1. 70 As Gallo correctly points out, the hacendados possessed the means to direct local elections in such a way that they themselves or those sympathetic to them could take up important posts locally; Gallo, Taxes, 79. 71 An excellent sketch of relations between the landed class, the mining sector and the state is given by Gallo; Gallo, Taxes, 76-86.

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members being silver magnates, and it had been able to maintain its power only through rigged elections. The growing discontent among Liberal factions led to violent uprisings, especially in the eighteen-nineties, but they did not succeed in overthrowing Conservative Party rule72. It was the unusual geography of the capital that finally lead to a break-through. Although Sucre was the constitutional capital, both congress and the President alternated between it and La Paz, which was economically more powerful and was more linked into international life. This situation led to the growing dissatisfaction of those members of Congress that tied to Sucre and in 1898 they passed a law to the effect that both Congress and the President must fix their residence in Sucre permanently73; the ley de radicatoria. This infuriated congressional members from La Paz, as well as the economic community, since La Paz was the axis of the new tin trade and economy was more and more centred around the city. The issue divided congress, and when Conservative President Severo Fernández Alonso signed the law — though under severe pressure from both sides —, all hell broke loose. Liberal Party leaders were quick to make use of the battle between the two most important cities of the country and quickly sided with the paceños as La Paz revolted in a federalist rebellion. Suddenly, the Liberals adopted federalist ideals74, and also made use of another discontent part of society: the Altiplano Indians, who’s traditional communities had been under increasing pressure from Conservative governments and land reforms. Liberal agitators promised the Indians the abolition of the Indian Tribute75 and relief from the attacks on comunidades libres in return for their support of the Liberal effort. And so the Conservatives and Liberals now faced each other in the Guerra Federal, while a large Indian uprising was also taking place on the Altiplano76. The fighting between the two parties continued from December 1898 to April 1899, when the Conservatives were beaten in the battle of Los Cruceros, near Oruro77. Once the dust had settled, the Liberal Party, now firmly in control, immediately dropped their federalist cloak and came down hard on the very same Indian uprising that had helped them into power, and crushed it78. The promises made to the Indians were very soon forgotten, and in fact, the Liberal Party now used the fear that existed in the cities for the

72 Klein, Parties, 27. 73 Ibidem, 29 and Valencia, Historia política, 1539. 74 These had not been present before in the Liberal Party’s programmes. 75 Which was still a significant amount of government revenues, although rapidly decreasing in importance as revenues from mining continued to grow: Platt, “The Andean Experience”, 296 and Tristan Platt, Estado tributario y librecambio en Potosí (Siglo XIX). Mercado Indígena, proyecto proteccionista y lucha de ideologías monetarias. 76 For a detailed account of the reasons behind the Indian uprising, which are far more complex than I have presented here, and an in depth description of the uprising itself, see: Platt, “The Andean Experience” and Ramiro Condarco Morales, Zarate, el “Temible” Willka, historia de la rebelión indígena de 1899. 77 Klein, Parties, 29 and Valencia, Historia política, 1539. In most of historiography, the explanation for the transition from Conservatives to Liberals is supposed to be found in the dominance of tin over silver [Especially Herbert Klein adheres to such a view]. It is my view that the truth must be rather more complex than only that, even though this economical factor must have played a role of importance. No detailed studies have been done so far to adequately explain what has happened and why the Conservatives lost control. A very important difference was the result of the transition of power: unlike the silver magnates, the tin barons did not occupy themselves directly with politics, and therefore, politics were now left to professional politicians, other than to the members of the economic élite themselves. 78 In fact, there were still those within the ranks of the Liberals that wanted federalism, but their numbers declined very rapidly after the Federal War. The centralists within the party got the upper hand in the 1899 convention and were able to retain the centralist constitution of 1880: Klein, Parties, 37-38.

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“cannibals” and “communist savages” to strengthen their control, as they pointed out that a strong government was now needed to suppress the Indian uprising79. The Conservative Party did not survive the effects of the Federal War. Its ranks declined from 1899 until 1905, when it became ‘extinct’. This meant that the Liberal Party could stay in power unopposed by any well organised political organisation, until the formation of the Republican Party in 1914. This new party was formed by discontent members of the Liberal Party, as well as members of the old Conservative guard, and was partly intended against President Ismael Montes, who clearly dominated the Liberal Party. Within the new organisation, two men stood out: Daniel Salamanca and Bautista Saavedra. As soon, however, as the party was officially formed, Montes declared a state of siege and exiled the leaders of this new opposition. Over time, the Liberals came to accept their contestant somewhat more, although they continued to rig elections to their own benefit80. With the Liberals constantly cheating the Republicans of power, this party also split as many more radical members recognised that only violence would get them the desired results. As a result of this movement towards radical means, Salamanca left the party and ‘retired’, while Saavedra was left to plot against the Liberals. Again it were external factors that helped a new regime into power: the growing industrialisation and the post-war depression, especially harsh between 1918 and 1922, led to a growth in workers’ organisations. Syndicates and federations rose up here and there, and this development expressed itself in a wave of strikes in 1920. Amidst all this violence — as the government crushed strikes with an iron hand — the Republicans seized their chance and organised revolts in all major cities of the country on July 12th 1920. Catching the government off-guard, the Republicans were able to grab power in only a few hours, with the help of the military, and with very little bloodshed81. The party had been heavily divided, as factions had been built around all four of its leading members82. When Saavedra won the presidency, his two main opponents — Escalier and Salamanca — left the party to form a new party in October 1921; the Genuine Republican Party83. The political scene was further complicated during the nineteen-twenties, when Hernando Siles rose against Saavedra within the Republican Party. Much against Saavedra’s will, Siles managed to get himself elected President on December 1st 1925; Saavedra then left for Europe. Siles then went on himself to tying himself to a group of young intellectuals and actively encouraged and supported the creation, in January 1927, of the Nationalist Party84. So by the mid-nineteen-twenties, some four major parties existed, all competing for political power.

The differences between these remained very slight. It might in fact be stated that the main difference lay with their respective leaders, all of the parties being centred around one, or maybe two, dominant individual. So, the Liberal Party had been dominated quite successfully by Ismael Montes; the Republican Party by Bautista Saavedra and Hernando Siles; the Genuine Republican Party by José María Escalier and Daniel Salamanca and finally, the Nationalist

79 Platt, “The Andean Experience”, 316-318 and Irurozqui, “Un análisis”, 562. 80 Rather an easy thing, as elections were not secret, and were carried out in the main plaza of each city: Klein, Parties, 50. 81 Ibidem, 62-63. 82 Hernando Siles, Bautista Saavedra, Daniel Salamanca (officially retired from public life) and José María Escalier. 83 Partido Republicano Genuino. 84 The most important of these idealistic intellectuals being: Enrique Baldivieso, José Tamayo, Humberto Plaza and Augusto Céspedes. When the party was finally created, it soon became dominated by more traditional politicians, including: Rafael Taborga, Enrique Finot, Fabián Vaca Chávez and Luís Fernando Guachalla: Klein, Orígenes, 110-113. Interestingly enough, Siles did not in fact abandon the Republican Party, for all his involvement with the Nationalist Party.

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Party by Enrique Baldivieso and Rafael Taborga. The development of the different parties clearly shows how they were formed mostly as a reaction to the dominant factions in politics and were very heavily dependent upon a single person; when no such a person was available, a party withered and died, as for example the Conservative Party did in 1905. All of the parties we have seen were the result of personal conflict and schisms within existing structures, with the exception of the Liberal Party, which had been founded in 1880 as the very first of professional political organisations in Bolivian history85.

It is certainly not so, that no programmatic differences existed between the parties. Especially Saavedra’s Republican Party took some action against the mining industry in the form of a 1923 tax reform, that would drastically increase government revenues86. Apart from this step, which was taken especially to counter the effects of the post-war depression (1918-1922) that had left the government without sufficient revenues, Saavedra’s government also took a somewhat new stand on social issues, and was active in designing very minimal labour legislation, in particular pertaining to women and children. Where strikes and syndication were concerned however, Saavedra was no more tolerant than his predecessors and repressed syndicates and unions, crushing strikes with extreme violence87. The Nationalist Party too had some innovative elements to its programme: most importantly it wanted decentralisation of government, economic diversification, the creation of a Health ministry and a professional diplomatic service, and the introduction of university autonomy and of new labour-legislation88.

In no way however, did any of the parties foresee any drastic changes to Bolivian society as a whole. All agreed that new leftist ideals, such as Socialism, were a threat to the very survival of a political system that was unanimously recognised as valid. Also the growing strength of unions and syndicates was seen as a threat to be dealt with severely. The very idea of an agrarian reform, other than the destruction of the comunidad libre, was totally absent, and the Indian population was still perceived mainly as a ‘problem’89. All of these parties, then, differing mostly on details and based on personalism, pertained to the same mode of liberal thinking, with the highest regards for private property and the status quo. For these traditional parties, very little had changed since 188390. The common characteristics of these parties far outweighed their differences, and for all their in-fighting they can be seen as a whole: as different members of a single unit91. As the political left grew and a new opposition was born, this became especially clear. The opposition was not so much to government, nor to a single party, but to the whole of the traditional parties and the system of exclusion they represented92.

85 The importance of these dominant party leaders is such, that Herbert Klein actually refers to them as caudillos, even though the term implies a direct link to the military which is not always existent. Klein, Orígenes and Klein, Parties. 86 See also page 13. Saavedra even promised not to raise taxes on mining for a five-year period in return for a £600.000 loan from Patiño: Klein, Parties, 81. 87 As for example the Uncía massacre, where soldiers fired into the crowd, claiming many lives: Klein, Parties, 81 and Peñaloza, Nueva historia, 173. 88 Klein, Parties, 93. 89 See: Irurozqui, “Un análisis”. 90 From here on, when referring to the ‘traditional parties’ or the ‘traditional system’ I am therefore referring to these four parties and the liberal political system they represent. 91 It is unfortunate that no clear picture exists of the demographic make-up of congress or the government apparatus itself. Apart from biographies and autobiographies of the most prominent politicians, no studies have been made to find out who exactly were the politicians and high ranking bureaucrats. Demelas does, however, sketch the demographics of politics at the end of the nineteenth century; Demelas, Nationalisme, 123-125. It does seem clear that all members of government until the nineteen-thirties were upper-class members, from the landed classes and urban professionals. 92 Exclusion not only from the earnings and benefits of industry and exports, but also of the vote itself: the requirements were such that the number of registered voters never grew much beyond 90.000; to be able to vote, one had to be male, 21 years of age (Unless married, when the age of consent was set at 18),

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On the other side of the political spectrum very much was changing, and at an increasingly rapid pace. The changing relationship between the mines and the workers, the industrialisation — however minimal — and the coming of modern services such as railroads, telegraphs and newspapers, produced an entirely new group of labourers, some of whom were far better educated than before. A small urban work force grew, that received regular pay and had access — however limited — to some means of communication and organisation. A difference must be made between the miners and the urban labourers, since the mine companies offered very effective resistance to any form of organisation; though many strikes did occur in the mines from 1900 onwards, they were more spontaneous than among the well organised other sectors of society93. Also, many of the miners performed only seasonal labour, being comunidad Indians that went back to their communities when the work was done94.

Most importantly the railway and tramway workers, the artisans, the graphical workers, the postal workers and the telegraphical workers — even the construction workers, the chauffeurs and so on — were able to organise themselves in unions and syndicates: the Federaciones Obreras del Trabajo (FOT’s), Federaciones Obreras Locales (FOL’s), Federaciones, Gremios and Sindicatos. These different structures all pertained to different political ideologies; generally the FOT’s were communist and FOL’s anarchist95. Many of these organisations appeared, especially after 1910, but just as many were no more than ephemeral organisations and lasted only very shortly. After the first world war however, more and more appeared that were of a more lasting nature, such as the FOT of La Paz (1918) and the Federación ferroviaria de Oruro, which was the first to go national, in 191896. So, very slowly, the labour movement began to take on a more permanent shape and became stronger by the day during the nineteen-twenties.

Internal differences still played a very obstructive role to the common goals of the different movements, and kept the movement as a whole from gaining much political influence. Workers were organised in very small units, that lacked efficient communication with the others. Also, the different political signatures of many organisations led to tension within the movement, and kept it from getting organised on a bigger scale, meaning that only few national movements came into existence in these years. It would still take time and effort, and also some external additives in the form of economical, social and political crisis, for the movements to unite and form a strong and adequate powerstructure. Increasingly during the twenties, though, the pressure was on97.

literate (reading and writing), economically independent (Either through owning property, or earning 200 pesos or more annually with an exception for domestic servants, who were never allowed the vote) and also in possession of identification. AME, vol. 5, f. 3, May 11th 1933. 93 This is not to say that no organisation among the miners took place: at Uncía, for example, it was the Federación central de mineros de Uncía that organised the strikes that led to the massacre of 1923. These unions were generally short-lived, and did not survive for more than months or years. It took until the nineteen-forties for the miners to become truly organised and unionised. Valencia, Historia política, 1626 and 1822. 94 Klein, Parties, 61. 95 Valencia, Historia política, 1619-1621. 96 Klein, Orígenes, 66-68. The structuring of the growing labour movement was much as in Chile, and often centred around departmental capitals, usually in the form of a FOT. 97 While the urban workers were beginning to organise in unions and syndicates, the peasantry really stayed out of politics until much later. Peasants would, now and again, rise in revolt claiming land, better pay or protesting the hacendado rule, but true organisation would come only after 1940, which lies beyond the scope of this paper; Gallo, Taxes, 134.

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The Military The role of the military in all of this is rather interesting, especially compared to its active participation in public life during the nineteenth century, until the creation of the ‘traditional’ political system. From 1883 to 1930, military presence in politics remained limited to intervention on behalf of civilian parties, that had been denied power for too long and were able to find allies among high ranking officials. So only in 1899, 1920 and 1930 did provisional military juntas exist and then only to smooth the transition from one government to another. Apparently, the military were not interested in playing a very direct role in politics98. The army was now and again allied with a particular political faction, and might help put it in power, but as we have seen from political developments in the first decades of the twentieth century, they have only helped into power those factions that were able to maintain it, and keep order and stability. The army seems not to have been a player itself in the political game, but certainly could be a decisive force. The military in fact prided themselves in their professionalism, especially after German military missions to reorganise the military were invited during Montes’ first presidency (1904-1909)99, and recognising the primacy of civilian rule. That the military themselves were not wholly united, seems not surprising. Different governments did include, especially in times of need, military officials in order to show that it still had the backing of the military and it was standard practice to surround oneself with loyal and befriended officials, in order to retain as much support as possible. Therefore, it was also easier to make a career, when a President was on good terms with you100. The fact that the army remained in the background during the Liberal era (1883-1935) makes it difficult to understand precisely how the interaction between the state and the military functioned. However, the German training missions did have a great impact on the organisation of the armed forces, as would become clear after the Republicans took power in 1921. From that time onwards, the importance of the military in politics grew steadily. Most of all, Hans Kundt would come to play a very active, and highly ambiguous role in Bolivian politics between 1920 and 1933101.

Detailed studies on the functioning and make-up of the Bolivian armed forces in this period are not available to us, and therefore our view is very limited as to the precise intentions of the High Command or as to the different factions within its ranks. How did the relationship between the government and the military work exactly? Unfortunately, we do not yet know. What we do know, is that it never intervened on its own behalf, or to install a military government, and that when the army did install a government, this was at the request of a civilian party. There was indeed an important interaction between the government and the military, but its precise nature remains unknown. As for the interaction with the rest of society, it can be said that for many middle-class members, joining the army formed the only form of social mobility. It is unknown however, how many lower class members were involved before the Chaco war. Clearly, the military also formed a part of the entire system that existed. A role that was recognised by the civilian parties, when they requested intervention on their behalf, or when the

98 Klein, Parties, 411. 99 We do know, that it was trained by German missions during the nineteen-tens, and in particular by Major Hans Kundt. The precise influence of these missions, how they were set up and what was accomplished by them has not been thoroughly investigated as yet. The military missions that reorganised the Bolivian armed forces were headed by Kundt and Captain Ernst Röhm, who later founded the National-Socialist party in Germany, and was head of the Sturm Abteilung. Klein, Parties, 173n. The best description of Kundt’s role in the Bolivian military is to be found in Stefan Rinke, “General Kundt und der Deutsche Militäreinfluss in Bolivien, 1920-1933” in Stefan Rinke, “Der letzte freie Kontinent”: Deutsche Lateinamerikapolitik im Zeichen transnationaler Beziehungen, 1918-1933, vol. 2, 618-638. 100 Gallo, Taxes, 129-130. 101 Rinke, “General Kundt”, 621.

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army was sent in to crush Indian rebellions, or strikes and demonstrations. Until the nineteen-thirties, it seems they were content with this role. So, on the one hand it recognised the primacy of politics, and would do as ordered by the constitutional government, and on the other hand it was also, at times, willing to overthrow that very same government in order to install another. One might say that the armed forces were an almost legitimate means of coming in to power, due to a lack of other possibilities within a system that allowed for legal and organised opposition, but not for free elections102.

A Society of Fragments Perhaps Bolivia between 1880 and 1930 is best characterised as, at best, a very fragmented society, if such a word is at all applicable. Very sharp divisions existed between, and indeed within, the different sectors of society, many of them indeed completely cut off from the others. Within the economic élite we find two dominant groups, the landed class and the tin-barons. Among the rural poor we find smallholders, free community Indians, colonos and finally the ‘savage’ tribes of the lowlands. The urban population includes government officials, servants, factory workers, miners and urban professionals such as journalists, lawyers, bankers &c. The only thing near to a binding factor, apart from mere geography, seems to be government, with which most of these groups had at least some dealings. The rural and urban poor knew government mostly through its repressive violence, on behalf of the two major economic sectors. Between the different groups however, there seem to have been mostly vertical structures and hardly any horizontal ones: the landed class succeeded in retaining its colonos firmly under control, and in encroaching ever further upon the free community lands. Likewise, the mine-owners were connected only to its employees (whether urban professionals, or miners), and hardly to any other parts of society other than government. Apart from such vertical lines, there seems to have been very little communication horizontally; rather than having goals and aims in common, we find that the interests of different groups of the rural poor are opposite. Not only the large landholders encroached upon community lands, but also the smallholders, a situation that could lead to large conflicts between these groups. Between the urban poor and the rural poor as a whole, the same pattern of opposite interests can be discerned also: the urban poor feared the godless barbarians of the Altiplano103. In fact, it might be said that the hacienda-system, that was so oppressive to colonos, was beneficial to the urban poor, who did enjoy the cheap produce of the haciendas. So it might be said that most of the different fragments of society either had very little in common, or had opposing interests. Within this entire structure, the state, and the military had a special place. On a national level (i.e. an urban level) it depended heavily on the tin-barons for economic support, and in return provided most of the necessities for the mining-companies: basic infrastructure, and a means to keep workers in line. On a more local (i.e. rural) level, it was the prime instrument for hacendados to get their way: local officials were often hacendados themselves, or closely related to them and serving their interests well. For these too, government provided a means of keeping colonos in line, and a means to expand through constant encroachment upon free community lands. For both the hacendados and the mine-owners the relationship with government was mutually beneficial. How was it possible, given such a social framework, characterised by sharp divisions, contradictory interests, and an almost complete lack of unity between or within sectors, that the political structure erected in 1883 survived for so long? The answer to this question lies within

102 As long as this opposition came only from within the framework of the system itself, excluding non traditional parties. 103 Platt, “The Andean Experience”, 316-318 and Irurozqui, “Un análisis”, 562.

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the fragmentation itself. The interests of the economic élites were never in conflict: labour for the mines was usually attracted from the comunidades libres, on a seasonal basis and foodstuffs for the mines were imported from abroad; the hacendados and mine-owners had virtually nothing but power in common, and their interests were so far apart that they never led to conflict. The lack of confrontation between these two powerful groups meant that there was no great inter-élite powerstruggle throughout these years. All efforts could be concentrated on maintaining law and order. This most important task of government was relatively easy. The workers were so divided amongst themselves, that they never formed a mighty block of power. The rural poor also, were so engaged in internal strife, that no organised resistance to the utterly exclusive political system existed. The political system survived for so long, simply because of a complete lack of either organised opposition to it104 or disasters from the outside. Workers and farmers were not organised, and hacendados and mine-owners both had mutually beneficial relationships with government.

104 It is rather fascinating to see how government was truly reflected society for so long; the political parties that governed between 1883-1899 and 1899-1920 also survived for so long, simply because there was no adequate opposition.

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The Crisis During the nineteen-twenties, the first major signs of change appeared. For nearly forty years, only two parties had reigned virtually unopposed. In the nineteen-twenties, however, the traditional political arena began to diversify quite rapidly. Where in 1910 there was only one party, by 1927 there were four, all seriously competing for power. This diversification also reflected the rest of society, as political organisation mounted among the working classes and radicals, both on the left and the right of the political spectrum. In the universities also, students began to form small organisations. Increasingly, as the end of the nineteen-twenties was nearing, these new organisations were able to pull together and form ever more powerful and extensive parties and syndicates. So in effect, the new parties grew in strength, while growing division among the traditional parties weakened the existing political system from within. It would still take some years, though, before new parties, unions and syndicates were eventually able to unite in an effective opposition and truly started to threaten the rule of the traditional parties. At the same time, the relationship between politics and industry began to turn sour, as growing expenses and decreasing revenues put a heavy, and very unequal, weight upon the mining sector. As more and more fragments of society obtained a means to exert pressure on government, and the political system was weakened through internal strife, the existing powerstructure showed signs of weakness and stress. Eventually, it would fall apart completely as a direct result of this process of disintegration. Let us examine this conjunction of circumstances that brought the system to its end.

Economic Collapse: 1926-1932 During World War I, the demand for tin on the world market increased dramatically, and as a result so did tin-mining around the globe. During the nineteen-tens and -twenties, heavy investments were made by tin-companies to increase production as prices remained high in the post-war period. The demand for tin continued to grow somewhat, but was by far outgrown by world-wide production, in particular in the Netherlands East Indies, British Malaya, Nigeria and Bolivia: between them, these countries controlled 84 percent of the world market for tin by 19311. Throughout the nineteen-twenties production continued to grow, while stagnating demand caused prices to slide down just as continually [See figure 2]. Then, in 1929, the peak of production was reached: Bolivia exported over 50.000 metric tons of tin2. After 1929 world market prices dropped drastically, producing an immediate crisis for Bolivian producers of tin. Given that Bolivia was already in a somewhat unfavourable position, due to the high costs of transportation and mineral elaboration, the Bolivian tin companies were now in great difficulties as the low prices, combined with world-wide overproduction, made it very hard to compete with other producers. Fortunately, the tin-crash rapidly took on a devastating shape for

1 Gallo, Taxes, 40. 2 Peñaloza, Nueva historia, 266: The Aramayo group exported 5945 tons in 1929, which was around 10 percent of total Bolivian exports. These figures however can not be exact, as figures for the other great companies suggest different total exports. The year 1929, however, was certainly the year in which the highest level of production was reached. See also: Gallo, Taxes, 41-42. Also, information as to the prices of tin diverge somewhat: Whereas Gallo mentions £118 per ton in 1931, Peñaloza mentions different figures between £101 and £105 for that same year. The difference in the years after 1935 is even greater. Gallo gives £226 for 1936, and Peñaloza £124 [Gallo, Taxes, 43 and Peñaloza, Nueva historia, 182, 201].

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all producers, including those that had lower costs of production, and the tin exporting countries agreed to establish the International Tin Control Scheme (ITCS); the Netherlands, Great-Britain and Bolivia signed an agreement to drastically cut tin-production so that prices would be forced up3. The cut in production was to be regulated by the ITCS, that would assign quotas to each of its members. The respective governments would then distribute the quotas among different producers under their jurisdiction. Luckily for Bolivia, the quotas were to be based on the 1929 production levels, which had been Bolivia’s highest ever4. The establishment of the ITCS did, however, give the Bolivian government a powerful instrument to control the tin companies, as it could distribute quotas at will; any company unwilling to comply with demands made by government could be denied a favourable quota.

Figure 2 : Tin Production and Prices 1900-1930; 1929-1935Sources: Carmenza Gallo, Taxes and State Power, 33

Luis Penaloza Cordero, Nueva historia economica de Bolivia, 201, 266

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The fact that the companies were already in a very vulnerable position, added to this power, for although the quota assigned to Bolivia was very high, prices were still such that the three great companies all stayed well below that level of production: Patiño mines reported heavy losses for the years 1930, 1931 and 1932. Apparently, even though the quota had been set very highly the ITCS, it was agreed that production would be cut even further voluntarily as the total of quotas assigned to the tin companies was far below the production level of 19295. But even with such low quotas, the companies were unwilling or unable to meet even these quotas for the first years of the depression. It was not until prices had risen sufficiently that companies met their respective quotas and naturally, once the business became profitable again, companies started competing with each-other for favourable quotas. It was then, after 1934, that the system of quotas gave the state some extra power over the mining sector.

The tin crash had some very drastic results on Bolivian economy and state finances. Reduced exports automatically meant reduced tax revenues, and given the reliance of government on the mining sector for revenues, the blow to state finances was very hard. State income from taxes on the mining industry plummeted from 23 percent in 1928 to 12 percent in

3 The Netherlands representing the Dutch East Indies and Great-Britain representing British Malaya and Nigeria 4 Gallo, Taxes, 40. 5 Quotas were set at: 26508 tons for 1930, 19293 tons for 1931, 14853 for 1932, 19928 tons for 1933 and 27762 tons for 1934; Peñaloza, Nueva historia, 266.

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19306. This left the government with a deficit of around 33 percent in 1930, rising to just under 50 percent in 19317. The other Bolivian industries were not as hard-hit as the mining sector, but the entire economy suffered from the depression. Unemployment rose, and throughout the country people lost their jobs. Of course, this was most prominently an urban phenomenon.

It would be hard to say just how many lost their jobs, but if the overall situation is to be judged by the standards of the tin industry, the picture must have been gloomy: Patiño mines cut the number of workers from 6688 in 1929, down to 4390 in 1930 and only 2008 in 1933, partly as a result of the drastic cuts in production, but also as direct measures to reduce costs8. Still, many of these workers had been hired on a seasonal basis.

So, the years after 1928 were years of extreme hardship for those involved in the Bolivian monetary economy. Many were laid off, wages decreased and the government was in less and less of a position to alleviate problems, and had to attract big foreign and internal loans to close the gap in its budget. It had had such loans before, but the dramatic decline in income forced it to loan ever more: by 1931, the total debt amounted to some 214.000.000 Bs, of which some 137.700.000 Bs in foreign debts. Much of the internal debt came directly from the tin miners, who were more or less coerced into loaning money to government on ‘special’ terms: such terms included stipulations that no timetable was set for repayment, and no interest was due. For all intents and purposes, they were little more than covert taxes on the industry, collectible whenever the government was in dire straits9.

The already grave crisis was worsened when Great-Britain decided to let go of the gold-standard in September of 1931. As Bolivia was firmly within the sterling block, the move dealt a hard blow, and emergency measures had to be taken immediately; the national currency became inconvertible, all exports of gold were stopped and measures had to be taken to stop the rapid increase in prices throughout the nation10. The newly arisen situation meant that the government could no longer allow the national currency to be dependant upon international fluctuations, and would have to set the exchange rates itself. The consequences of this new situation would prove to be manifold, as it not only divided the export-élite and the commercial groups (Who both needed opposite rates, as they depended on imports), but would also eventually provide the state with new means to extract money from the export sector11.

Given the decrease in revenues and the mounting debt, the government declared a moratorium on the debt service in 1930 and again in 1931, as debt services would take up so much of the budget, that nothing would be left for other needed services12.

Political Developments: Siles On the political front also, some changes were fast in coming. When Hernando Siles came to power in 1925, the economy was still on a roll: average tin exports were growing steadily, as

6 Wálter Gómez D’Angelo, Minería en el desarrollo económico de Bolivia, cuadro 10. 7 Government income in 1930 and 1931: 36.000.000 bs and 22.600.000 bs, with deficits of 12.900.000 bs and 9.700.000 bs respectively. AMR, Min 1 8 Presidencia de la República, f. 105, no number, 28 september 1936. These deficits increased dramatically after 1932, as a result of the war with Paraguay. 8 Peñaloza, Nueva historia, 202. 9 Gallo, Taxes, 110. In 1931, the foreign debt of 137.700.000 equalled US$60.300.000. 10 Klein, Parties, 137. 11 Gallo, Taxes, 112 and Klein, Parties, 148-149. 12 Ferrán Gallego, Los orígenes del reformismo militar en América Latina: la gestión de Davíd Toro en Bolivia, 1991, 14.

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was government income13. In this atmosphere of relative prosperity, Siles went ahead with his flirtations with the newly erected Nationalist Party. In 1927, this led to a confrontation between the two Republican parties; the Genuine Republicans no longer wished to support Siles’ Republican government. An already tense situation became worse with the congressional elections of May 1927; seven seats were up for election, but the Genuinos boycotted the elections as Siles refused to give in to their demands. As a result of the boycott, the new Nationalist party was able to obtain four of the seven seats, while the Liberals came in second with two seats, and finally the last seat went to the Republican Party — which was still Siles’ own party. Shortly after the elections students’ and teachers’ strikes broke out in La Paz; the situation became so violent that Siles declared a state of siege. The traditional parties were now all at odds: both Republican parties were estranged, and Siles actually used the state of siege to exile Genuino leaders, along with a number of Liberals and leftist leaders. Even within the Republican Party itself, there was trouble as Siles’ loyalty was now uncertain because of his strong ties to the Nationalist Party. With the Genuine republicans no longer willing to support Siles’ government, he had lost majority rule and for a while the country was governed through a minority government. Only in June did the Nationalist Party and the Republican Party come to an agreement to form a coalition backing Siles14. The tension between the parties in government and the legal opposition, grew steadily and reached a mini-climax in October and November 1928, when both the Liberals and the Genuine Republicans announced that they would boycott the municipal elections planned for December 9th 1928. On December 8th, however, a Paraguayan assault was launched on the Bolivian Fortín Vanguardia, in the Chaco-region disputed by Bolivia and Paraguay. The attack prompted massive popular clamour in favour of the government, and also put an end — albeit temporarily — to the political tension until international tension and the threat of war subsided15. In response to the attack and with the full backing of all the traditional parties, Siles ordered the retaking of the Fortín Vanguardia and also the capture of Paraguayan Fortín Boquerón in reprisal. Both actions succeeded, but in an effort to avoid all-out war with Paraguay, Siles accepted mediation in the conflict by the United States and refused to order general mobilisation. The mediation ended with an Act of Conciliation in September 1929, and Boquerón was returned to the Paraguayans16. As tensions subsided on the international level, on a political level things were getting back to normal rapidly; the pact between the Nationalists and the Republicans was under much strain, as Silista factions bitterly fought the Saavedrista factions. In the end, the Silista faction won and the coalition remained intact, but very unstable. Between government and opposition, tensions were such that the state of siege was maintained throughout 1928 and 1929 and both Liberals and Genuine Republicans refused to participate in the Municipal elections of December 192917. One of the major stumbling blocks for the Liberals and Republicans of all persuasions was not just Siles’ relationship with the Nationalist Party, but also his ‘cowardice’ in the Chaco conflict: many claimed that Siles should have done more, perhaps even declaring all-out war on the Paraguayans18.

13 As inflation was relatively low, and income from taxes on mining was actually declining rapidly as the mining companies were learning to cope with the 1924 tax-law that introduced new taxes on profits, we can not but assume that the rest of the economy was thriving as well. Cf. page 13. 14 Klein, Parties, 94-96. 15 Valencia, Historia política, 1676. 16 Klein, Parties, 106. 17 Klein, Parties, 107. 18 Klein, Parties, 125-126.

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It was around this time that the effects of depression were beginning to show also. As people lost their jobs, exports declined rapidly and government revenues went down, political agitation grew. In this climate of financial and social pressure, the leftist movements that had been growing steadily throughout the nineteen-twenties, were able to consolidate somewhat, into more unified units: especially among groups of university students, there existed a growing desire for social and economic change, according to leftist theories. This tendency finally expressed itself when students from all over the country organised the first University Students’ Congress on August 17th 1928. It was resolved that there should be a national students’ organisation: the Federación Universitaria Boliviana (FUB). The goal of the FUB was to promote social reform, and its leaders were strictly of Marxist persuasion19. The message sent by the ‘Programme of Principles’ of the FUB was very clear:

“In these times of social upheaval, the university would not be doing its part if it were to limit itself to problems of strictly academic nature, and abstain from making itself heard in social matters. …. It is logical, therefore, that the university’s young men proclaim their social ideologies: it is not only their right, but their duty to proclaim this among the people…”20.

Among the different goals envisioned by the FUB’s leaders were the University Autonomy21, the nationalisation of the country’s natural resources, social and labour legislation to protect the ‘proletariat’, land reforms, the ‘socialisation of private wealth’ and finally, the creation of a new political party based on these principles22. Siles’ government had actively supported the Students’ Congress, but in the end the results were far more radical than Siles had himself envisioned. The Nationalist Party, fostered by Siles, also wanted changes but nothing quite as radical as the various proposals made by the FUB, which unlike the Nationalists wanted to alter the very structure of Bolivian society as a whole and not to ‘improve’ the existing structures. Not surprisingly, the government and the FUB were soon at odds with each-other.

Leftist activities were not limited to the students’ bodies, of course. Throughout the nineteen-twenties, many different movements sprang up, sometimes resulting in a political party; this was the case with the first Socialist Party, founded in 1927. It soon broke up, and out of the remains came another party, the Labour Party23, also in 1927. These parties were very unstable, and rarely lasted for longer than one or two years. Apart from such political parties, other forms of organisations, mainly unions and syndicates, also kept popping up. These were generally as short-lived as the parties. Somehow, all the different currents within Bolivian socialist movements brought with them great internal opposition; many small groups existed and were formed in the nineteen-twenties, but on the whole they were unable or unwilling to co-operate in order to form a more powerful unit. Apparently the differences were still too great, and the direct need too small for any such venture. Siles’ government was having increasing difficulties in managing the country’s social and economic affairs, as the onslaught of depression started setting in between 1928 and 1929. Revenues had shrunk tremendously, unemployment was on the rise and the government was faced with an enormous public debt it could no longer support. Siles, who had certainly been

19 Including radical leftists such as Ricardo Anaya and José Antonio Arze: Klein, Parties, 99. 20 “La universidad en estos tiempos de dinámica social intensa, no cumpliría su función si, restringida en el campo de los problemas esencialmente educativos, se abstuviese de pronunciarse acerca de la cuestión social. […] Lógico es, pues, que la juventud universitaria diga su ideología sociológica: más que un derecho, es un deber suyo el propagar entre su pueblo […]”: Primera Convención Nacional de Estudiantes Bolivianos, Programa de principios, estatuto orgánico y reglamento de debates de la Federación Universitaria Boliviana, p. 3. 21 Modelled on the Argentine University Reforms: Klein, Parties, 99. 22 Primera Convención Nacional de Estudiantes Bolivianos, Programa de principios, estatuto orgánico y reglamento de debates de la Federación Universitaria Boliviana, p. 36-40. 23 Partido Socialista and Partido Laborista, respectively.

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more sympathetic to the plight of workers than previous governments, was also frustrated by the fact that in four years he had been able to accomplish virtually nothing and wanted to continue as President. The constitution, however, did not allow two consecutive terms, and so another way had to be found since the end of Siles’ term was nearing. The solution, he thought, lay in a Presidential prorogue, meaning that elections would be delayed indefinitely; the idea was introduced in the National Party’s newspaper, El Norte of La Paz, in February of 1930. With the exception of the National Party, the traditional parties objected to any such move, but notwithstanding the opposition to it, Siles decided to go ahead and announce the prorogue in April24. The step was taken on May 28th 1930 when Siles handed over power to a council of ministers, with the full backing of the EMG, controlled by Colonel Dávid Toro and General Hans Kundt25; military approval was made known through the nomination of several military officers to ministerial posts. The council then called for elections for a constituent assembly, which was to amend the constitution so that Siles might serve another term in office. The whole undertaking was in itself unconstitutional, as Siles had passed by his vice-President, Abdón Saavedra26. The move provoked a strong response, especially from students, who took to the streets on June 12th. Students’ protests continued for ten days, until the council decided to take firm action and suppress the demonstrations; on June 22nd troops were sent in, and true violence broke out as the troops were ordered to shoot at the protesters. The bloodshed of June 22nd caused an outrage, and protests quickly spread across the nation, culminating on June 25th, when the students were joined by cadets from several military academies. A true revolution broke out, as large contingents of cadets revolted against the government, and together with armed students took one city after another. Oruro and Cochabamba fell on the first day, Sucre and Potosí on the second and finally, La Paz was taken after three days of bitter fighting. The council of ministers, Siles, Kundt and Toro fled to foreign embassies, whence they fled the country27.

For the first time since the political system had been established, the government was brought down in a truly revolutionary way. The movement that had ended Siles’ regime started

24 Klein, Parties, 109. 25 The role that Kundt came to play around this time is very interesting: After the training missions during Montes’ presidency, the German General had returned to Bolivia, at the request of the Republicans in 1921, when he was made head of the EMG itself. Saavedra appointed him, as he saw in Kundt a reliable force that could help keep the army in check, as the army was not wholly united in its support of Saavedra. As Saavedra’s popularity declined, so did Kundt’s as he was seen as his main ally in the armed forces, while the European Allies of WW I also protested at Kundt’s position on the grounds that it was in conflict with article 179 of the peace-treaty of Versailles. Within the military, resistance to Kundt also grew, as his very position was seen as an insult to the capacities of the Bolivian military corps. Around the time that Siles’ took over from Saavedra as President, Kundt was on vacation in Germany, and some 150 officers signed a petition asking Siles’ not to let Kundt return to the country, a petition signed also by the other German officers. But when pressure started mounting in 1927, and Siles’ had increasing difficulty controlling the nation, he asked Kundt to return to his duties as head of the EMG, this time accompanied by Ernst Röhm and a number of other German officers, though all on a personal title, as of not to breach the Versailles-treaty. Kundt had come to know Röhm and his fellow-Nazis through his own involvement in the failed Nazi-Putsch of 1923. Rinke, “General Kundt”, 618-629. 26 Valencia, Historia política, 1679-1681. Since Siles had stepped down, Abdón Saavedra should have become acting President. 27 Valencia, Historia política, 1680 and Klein, Parties, 111. A number of other German officers attached to the Bolivian military did in fact stay on, most notably Ernst Röhm, who only left the country when Adolf Hitler invited him to return to Germany in order to lead the Sturm Abteilung, in November 1930: Rinke, “General Kundt”, 632.

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with the students, but spread and gained the backing of some workers’ movements28 and most importantly, of the military cadets. Although the protests had been organised to a certain extent, most of the events that led to Siles’ downfall had been spontaneous, and certainly not a well orchestrated revolutionary movement. The events of 1930 had not even been intended to overthrow government, but merely to maintain the constitution and impede Siles’ prorogue. It certainly showed how popular discontent could lead to revolution, and started a pattern that would eventually lead to the 1952 revolution, which was similar to the 1930 revolt in that it too, had not been intended as it eventually turned out. A lack of cohesiveness within the armed forces was also made painfully clear, as the members of the Estado Mayor General (EMG) proved unable to keep military cadets in line; this time, the army had not helped a new party in to power, but saw major officers ousted by cadets. The fact that no political party was behind the revolution also meant that there was now a problem: it was not immediately clear who would, or should, enter the government. It was only for a lack of internal cohesion between the leftist movements that they were not able to fill the gap, as the public mood and the show of strength of the cadets and the students certainly would have allowed for such an intervention.

Political Developments: Salamanca After the 1930 revolution, a new government had to be installed, to make possible a return to order and normality. A military Junta was set up, which co-operated very closely with civilian politicians of the traditional parties. Its purpose was to bridge the gap between the revolution and the election of a new traditional civilian government, but for the first time in years, elements within the military wanted not to return to the old ways, and to install a more permanent and exclusively military Junta. The threat was soon recognised, and the Junta exiled the leaders of this movement very quickly29. It was obvious that the large majority of the military wanted only to return to the status quo ante, and that the rule of the traditional parties was still recognised, generally, as valid. The true opposition, the many leftist splinters, were still far from being organised to such an extent that they could truly influence the political arena and bring about true change. The political crisis that the prorogue-affair had wrought, did bring about the return of Siles’ exiled and retired rivals, most especially Bautista Saavedra and Daniel Salamanca, both of whom returned to politics and to the country during and after the revolution. Given the severe economic crisis and the rather tense situation that the revolution had created, the party-leaders accepted that they needed to join forces in order to solve the many problems they faced: The Liberals, Republicans and Genuine Republicans had two enemies in common: the Nationalist Party and the crisis. The result was a so-called candidatura única, allowing Daniel Salamanca the nomination for presidency, and both Ismael Montes and Bautista Saavedra vice-presidencies. Apart from these functions, all three parties would enter their own candidates for Congress separately. The Junta decreed that elections be held in January 193130. For all the signs of cohesion between the three, all was not well. It became clear that, in reality, neither the Genuinos nor the Liberals wanted the Republicans to join, and the common slate was dropped. A new slate now appeared, where Genuino Salamanca was nominated for President, and Liberal Tejada Sorzano for vice-President; Republican Saavedra and Nationalist Baldivieso now had to run their own, separate campaigns31. Interestingly, this led to three

28 Especially in Potosí and Oruro; Klein, Parties, 111. 29 Klein, Parties, 114. 30 Klein, Parties, 115n. 31 Precisely why neither the Liberals nor the Genuinos wanted Saavedra out, is not fully understood: probably it would have to do with Salamanca’s and Saavedra’s conflicts over the Republican Party in the

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slates: the Liberal-Genuino formula, the Nationalist formula — nominating Escalier for President — and the Republican slate nominating Daniel Salamanca for President and Saavedra for vice-President; apparently, the Republicans felt that they would not stand enough of a chance for the presidency itself, and would content themselves with the vice-presidency. As a result, Salamanca was quite certain of winning the election, being able to count on the Republicans, the Liberals and the Genuine Republicans for support. He ran virtually unopposed for the presidency32. The elections finally came on January 4th 1931, and Salamanca won a landslide victory, being elected almost unanimously with 38,282 votes. The joint Liberal-Genuino slate obviously got the result that was intended with it, as Tejada Sorzano was elected vice-President with 24,039 votes, against Saavedra’s 9,608. Congress was reinstated on February 27th and the new President and vice-President were inaugurated on March 5th33. In Congress however, the Liberals had won a great victory, controlling 38 seats, over the Genuinos (19 seats) and the Republicans (5 seats)34. Salamanca’s victory therefore turned out to be a rather questionable one. Salamanca had come into office in relative political calm, and with the co-operation of the Liberals. The calm was not to last very long, as Salamanca immediately tried to counter the nations’ problems, which he identified as the doings of ‘foreign communists’ and he immediately started his reign by promising a clamp-down on such agitation35. He would find ways to suppress the leftist danger. As for the economy, which he recognised was in very dire straits, he proposed to solve this through austerity and not spend any money: as far as he was concerned, all problems could be solved through enforcing law and order. Salamanca’s first major step to managing the crisis lay in a reduction by 15 percent of the number of public employees, causing an uproar with this sector of society36. This step almost immediately led to strike organised by the FOT of La Paz and the National Union of postal and telegraph workers37, which started on April 10th. Salamanca took this opportunity to prove his stance on worker agitation; the leaders of the strike were incarcerated, and the workers informed that they either return to work within 24 hours or be fired. With these drastic steps, the strike turned out a complete failure, and Salamanca had proven once and for all how he felt about unions and workers’ rights. These events had a greater impact than even Salamanca could have hoped, as the refusal of many unions to join and support the strike because of Salamanca’s repressive measures, split the unions and syndicates in even more fragments. This single move, at this particular time, had set the unions back years, and it would be a while until they regained their strength38. During the rest of 1930 and 1931, the government tried in increasingly desperate ways to cope with the growing economic crisis, as tin exports were still very low and the government had lost much of its income. Within the Genuino-Liberal coalition there was rising disagreement on how to fight the adverse conditions the country and many of its people were suffering. Salamanca thought the answer lay in austerity and introduced many more cutbacks on government expenditures, mostly on the incomes of civil servants, including decrees to the effect that they might be paid out in promissory notes, or, if funds were insufficient, not at all. These steps directly weakened government itself, and affected all services and led to great

late nineteen-tens and early ‘twenties. Also, Saavedra’s tendency to be more active on the field of social legislation could probably be referred to as a source of conflict. 32 Valencia, Historia política, 1694. 33 Valencia, Historia política, 1695. 34 Klein, Parties, 121n. 35 Klein, Parties, 131. 36 Valencia, Historia política, 1703. 37 The Federación Nacional Postal Telegráfica y Radiotelegráfica. Valencia, Historia política, 1703. 38 Klein, Parties, 133.

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conflict within the coalition. The last major step before the Chaco War came when it was announced in July 1931, that Bolivia would default on its external debt39. A further strain on the national budget was placed by the fact that tension in the Chaco-region was again high, and Salamanca could not afford to cut the military budget: as total revenues shrank by the day, and the military budget was kept intact, the remainder of the budget became even smaller [see figure 3]. As the crisis dragged on, political opposition to Salamanca grew by the day; the leftist parties, unions and syndicates were repressed quite successfully by sworn anti-Communist Salamanca, but within his coalition opposition especially to his economic measures grew. At first, he was able to keep the Liberals — who still were the largest party in Congress — in line by threatening to start a new coalition with the Republican Party, but by and by the Genuinos were forced to give in to Liberal demands to include more Liberals in cabinet. Finally, when in the first months of 1932 tension had got so great that the coalition was about to fall apart, the Genuinos had no choice but to give in drastically; in March, Liberal and Genuino party-leaders came together and signed a pact to jointly rule Bolivia, leaving all economic matters to Liberal members of the newly established cabinet40. For now, political stability had been guaranteed, but within months of the Liberal-Genuino pact, the Chaco War would begin and put an end to traditional politics.

The Political Left: 1928-1932 In the late nineteen-twenties, many unions and syndicates already existed, and the first leftist political formations had already been created, such as the Partido Socialista Revolucionario and the Partido Laborista. Disagreement between all of these very different organisation, however, was such that none were able to unite. On the contrary, many of the parties and unions were very short-lived, and disappeared after a few years, only to be replaced by new versions of the same. Fragmented political organisations were mostly manned by young intellectuals and students, while unions and syndicates involved both these intellectuals and workers. It is interesting to note that above all, it was the communications sector where strong unions developed; the postal services, the telegraphers, the printers and the railroads41. To a far lesser extent the miners, partly due to the fact that many of these were seasonal workers42. The depression changed things somewhat, accelerated the growth of the left at the very least, and more and more small organisations developed. Unfortunately for them, they remained bitterly opposed to one another and engaged in battling each-other more than anything else. Still, as the depression claimed job after job, and real incomes dropped dramatically, the unions were able to wreak havoc in a number of demonstrations, mostly in La Paz, Oruro and Potosí. In La Paz, the social unrest reached a point where bankers and merchants organised their own ligas aimed at defending their property against the mob-violence43. The most important change in the composition of the unions came also with the depression: as more and more white-collar workers were also affected, they too started to organise. With the syndication of these middle-

39 Klein, Parties, 133-134. 40 Klein, Parties, 141. Much of the trouble with the Liberals was caused by Salamanca’s insistence to include Demetrio Canelas in his cabinet, with the financial portfolio. The most important issues that caused turbulence were Canelas’ suggestions of inconvertibility of Bolivian currency and inflationary tactics in order to combat the country’s financial crisis. The gold standard, convertibility and maintaining hard currency were special strongholds of the Liberal Party, and most especially of Ismael Montes who at the time was also head of the Central Bank. 41 Gallo, Taxes, 134. And Klein, Parties, 143. 42 Klein, Parties, 61. 43 Klein, Parties, 142.

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class citizens, unions and syndicates no longer contained only young intellectuals and factory workers44. Salamanca’s heavy clamp-down on leftist organisations and unions temporarily impaired these movements in 1931, but slowly they managed to reorganise. Only now with a growing consciousness of the need to co-operate in the face of depression and government repression. Also the mere fact that so many leaders were exiled, meant that they came into contact with each-other, and also with their foreign counterparts, especially in Chile, Peru and Argentina. So by 1932, the unions, syndicates and political organisations were back on their feet, stronger than ever before and coming to the realisation that in order to achieve anything, they must unite. The realisation itself, however, was not yet enough. Although more attempts were made to cross party-lines and engage in serious debate, the divisions were still in place, and the Marxist FOT’ were still competing with Anarchist FOL’s for the preference of the workers45. The most ‘popular’ currents were the Socialists, Communists and the Anarchists, but apart from these there were also others, such as for example Indigenistas. Exact differences between these groups in the Bolivian context are rather difficult to pinpoint exactly. Some dogmatic groups adhered to Socialism and Communism in their European forms, without any alterations, while others recognised the fundamental difference between European and Bolivian realities and altered political theories to fit these different realities. The Indigenistas generally took Bolivia as the starting point and focused on the traditional Andean communities as a model for future development. Especially the ancient Inca Empire drew attention from these idealists as the ultimate Heilstaat. The differences of opinion on how to implement changes and where they should eventually lead were the greatest sources of discord, while most of these groups in reality had very similar views on what should be done there and then. The Anarchists, Socialists and Communists concentrated their programmes mainly on the nationalisation of national resources (Especially tin and oil), the expropriation of foreign capitalist companies46, social and labour legislation and the creation of jobs for the many unemployed through public works. They were, therefore, centred mostly on urban workers, giving far less attention to the rural populace, save for the odd article calling for land reforms. For the Indigenistas, this last point was the centre-piece of their respective programmes; given the fact that most worker agitation was urban and most of the rural population still unorganised, it is hardly surprising that these Indigenistas remained for a long time only a small portion of the leftist movement as a whole47. Apart from these groups, directly tied in with different currents of political thought, there were also the students, who were eventually able to organise themselves in a single national congress48, the FUB. The FUB proved to be a very political organisation that joined most, if not all, politically active students. It would turn out to be an important factor in the evolution of the Bolivian left, as many of its members were also active in different political 44 Klein, Parties, 143. 45 Valencia, Historia política, 1703. 46 Including Patiño Mines, The Standard Oil Company of Bolivia — a daughter of The Standard Oil Company of New Jersey — and the Canadian owned Bolivian Power Company of La Paz. 47 Although such a sentiment was never stated publicly, one might consider the fact that especially in times of crisis, when prices were on the rise, the furthering of rural causes might in fact interfere with the goals set for the urban proletariat, as the bettering of living conditions in the countryside would result in higher prices. Also, Socialism and Communism by definition take the urban proletariat as a starting point [see Karl Marx, Das Kapital]. Attention was therefore directed towards the cities, and only to a very limited extent to the countryside where 70 percent of the population still resided. This very fact led to the formation of Indigenista movements throughout Latin America; one might possibly compare the situation in the Andean countries to China. On the slow development of Indigenista Movements see: Klein, Parties, Valencia, Historia Política and Guillermo Lora, Historia del movimiento obrero boliviano 1933-1952. 48 See page 25.

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organisations and it could therefore perform as a constant in deliberation and negotiation between these parties. Without a doubt, it played a crucial role in the formation of a more unified leftist block in Bolivian politics. So, even though the leftist currents of thinking remained internally divided, we can take note of a significant rise in its following, and a growing awareness that these internal differences should be made subordinate to the differences with the traditional block. The slow, but sure, rise of the left was duly noted by the traditional parties, who each took diverging stands on these issues; the Liberals and the Genuinos both saw the left as a menace to law and order, and actively went after it in both word and deed. The Nationalists had some ties with moderate leftists, as did the Republicans. It was Saavedra’s Republican Party that most clearly recognised the power that lay hidden behind the quarrelling leftist leaders and their followings and in an attempt to attract some of these — mostly young — idealists, it adopted, in March 1932, a very moderate programme calling for social innovation under the banner of social revolution and in accordance with this shift in proclaimed ideologies, changed its name to Partido Republicano Socialista (PRS)49. The new programme of course included little more than references to Socialist ideologies and certainly did not call for social revolution, or the uprooting of the system in place, of which it was still firmly a part. It merely proclaimed, as it had done in the past, some moderate social reforms, mostly in labour and social legislation; for all intents and purposes, the Socialist content of this ‘new’ party lay only in its rhetoric, and the move was quite clearly aimed at co-opting some of the less radical young blood of the Leftist movements50.

The Advent of War While Salamanca was introducing government cutback after cutback, he was always proud to announce that he was able to spare the military [see figure 3]51. In hindsight, it is very difficult to ascertain exactly why he did this, but in all probability the explanation lies in a combination of factors. For one, the situation in the Chaco-region had remained tense even after the 1929 Act of Conciliation and border clashes between Paraguayan and Bolivian troops were increasingly frequent after 192952. The source of the conflict was the disputed Chaco-region53. Both Bolivia and Paraguay made claims to parts of the same semi-arid waste and had done since the very formation of the two independent countries54. However, neither country had the resources, or the incentive, to actually fortify its claims; the Chaco region had few roads, and almost no population whatsoever, and there was nothing there of economic importance. Primarily, from the Bolivian point of view, the two rivers that encompass the region were regarded as important, especially after 1883, when Bolivia lost access to the sea. Thence, the rivers, and most especially the Río

49 Klein, Parties, 143. 50 Valencia, Historia política, 1693. The fact that only the well-to-do had the vote, illustrates the fact that so many young intellectuals from exactly such families were becoming active in the revolutionary movements; Saavedra’s dramatic move was intended to attract the votes of these young men. 51 Klein, Parties, 136. 52 No direct proof of it exists, but the lack of cutbacks on national defence might also be considered as evidence of the unreliability of the military, now that Salamanca was under such pressure from all sectors of society. 53 Encompassing the area between the rivers Pilcomayo and Paraguay, limited to the North by the Chiquitos region; It was this last border that was disputed, as it had never been properly set during the colonial period. The Paraguayan claim stretched no further than 22° 05’ southern latitude. Miguel Mercado Moreira, Historia internacional de Bolivia, 163. 54 Jorge Escobari Cusicanqui, Historia diplomática de Bolivia, 241-243.

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Pilcomayo, were seen as possible alternatives as they led to the Atlantic Ocean and might, at some point, be used as a means of exporting Bolivian produce. But even though Bolivian governments had been planning to use the river since the late nineteenth century, nothing much had come of these plans by the nineteen-twenties55. The conflict over the region had existed since the mid eighteen-hundreds, but by the nineteen-twenties it had started to grow significantly as both countries now actively sought to occupy and fortify portions as large as possible of the disputed area and both countries engaged in the erection and occupation of fortifications [Fortines] throughout the Chaco. Mostly, these fortines were built at strategic sites, most importantly along the rivers and at oases — given the climatic conditions the most important resources. Still, even for the active exploration of the region and subsequent occupation of it, Bolivia was at a marked disadvantage in this conflict. The great majority of its population and military presence was to be found on the Altiplano, hundreds of kilometres away, while communications were at best insufficient. Few roads went to the Chaco, and none of them paved, making it hard to adequately supply the fortines at a regular basis: the transport of men and materials from the Altiplano to the distant fortines literally took months56. For the Paraguayans, the situation was different: not only was the region within reach of Paraguayan forces, also the Paraguayans disposed of many in its armed forces who were familiar with the terrain and used to the climatic conditions, unlike the Quechua and Aymara Indians who made up the bulk of the Bolivian armed forces57. That Bolivia was in a troublesome position in this conflict was recognised by the country’s leaders throughout the nineteen-twenties as the conflict grew, and was beginning to escalate. When armed clashes started in February 1927 around Bolivian fortín “Sorpresa”, and subsequently in 1928, when fortín “Vanguardia” was captured by the Paraguayans and the Bolivian occupants massacred58, the Bolivian government, directed by President Siles, took a conciliatory attitude, despite very heavy pressures from opposition parties — both from traditional parties and the new left-wing parties — and the public, and succeeded in settling the matter through diplomatic channels; in fact, Siles had made his own situation very, very difficult through his refusal to go to war over the incidents59 and he made it very clear that would go to almost any length to avoid war, in the firm awareness that such a conflict would not only be disastrous, but it would also be lost60. Siles’ ‘cowardice’ was condemned by nearly all parties, left or right, and this certainly played a role in his downfall few years later. One of the politicians who had been so harsh in his criticism of Siles in the matter of the Chaco conflict was Daniel Salamanca, who had for years claimed that Bolivia needed to stand firm (“Pisar firme”) in the Chaco. So, when Salamanca became President in 1931 he had to prove his point, and ordered the Estado Mayor General (EMG) to devise a plan for the further penetration and occupation of the Chaco region. The plan was finished on January 15th 1932 and symbolised Salamanca’s wish to stand firm. It was an elaborate plan, hoping to guide more and more soldiers into the area in order to occupy as many strategic places as possible in a relatively short period of time. The first phase was that of reconnaissance in the uncharted region61.

55 Escobari, Historia diplomática, 244-245. 56 Klein, Parties, 171. 57 Klein, Parties, 187-188. 58 Escobari, Historia diplomática, 244-245. 59 See page 24. 60 When angry mobs stood chanting cries of war outside the presidential palace, Siles addressed the crowd and stated that he would under all circumstances avoid war, defying the publics angry cries. “Soy enemigo de la guerra; pondré todos mis esfuerzos por evitarla”: Miguel Mercado Moreira, Historia diplomática de la guerra del Chaco, 47. 61 Klein, Parties, 147.

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As a result of this somewhat aggressive stand, tension in the Chaco grew, and Paraguay made allegations of Bolivian aggression in the international press, as well as to the League of Nations. All such charges were denied by the Bolivian government, but nevertheless talk of war grew in all sectors of society, adding fuel to the already heated political discontent. Still, faced with tremendous difficulties in all other matters, Salamanca insisted on standing firm in the Chaco conflict, even though he publicly admitted that going to war would be a serious mistake62 given the financial circumstances the country was in. Also, there were only some 1.500 Bolivian soldiers stationed in the region63. Salamanca’s project of penetration was kept a secret, for obvious reasons of military nature, but rumours of Bolivian advances did abound; as the conflict dragged on, different political parties started to take either pro-war or anti-war stands. These differences of opinion grew, when Paraguay and Bolivia entered into talks to resolve the conflict in Washington in May 1932, where a proposal for a non-aggression pact was tabled by the mediators. Some parties, especially the PRS protested the proposal as dishonourable and took a more militant position in the international conflict, while others (especially to the left of the political spectrum) applauded the fact that serious negotiations were under way64. At the same time however, and very much in secret, Bolivian forces under command of a Major Oscar Moscoso Gutiérrez had been ordered to do a reconnaissance of Laguna Chuquisaca65. At least, those were the orders that Salamanca had given the EMG; the lagoon was about half ways between the Bolivian 3rd and 4th divisions, and along the route for a road that was being built in order to link the two divisions. It was known that a small Paraguayan force had already taken possession of the lagoon, and the EMG was under strict orders to undertake no aggressive action that could undermine the negotiations. Local army command however recognised that the lagoon was crucial to the construction of the proposed road and ordered Moscoso to take the lagoon, which he did, by force, on June 15th 193266. Next, the same local commanders — including Colonel Enrique Peñaranda — again ignored orders from the EMG, calling for the immediate withdrawal from the lagoon, and started reinforcing the position, enabling Moscoso to fight of the first Paraguayan counter-attack on June 29th67. While all of this was happening, both the Bolivian and the Paraguayan governments kept silent about the events in the Chaco. On the Altiplano people had other worries, and so did government: as the ITCS was not immediately having the desired effect, and prices failed to rise significantly, a new scheme (the Byrne Scheme) was proposed and accepted by the ITCS member states. The scheme was intended, in a desperate effort, to raise prices by further reducing production to 33.3 percent of the 1929 levels, and cutting production altogether for July and August, leaving government with even less income than before and seriously hurting the country’s prime industry. At the very same time, new exchange rates, favouring the export sector, caused an uproar among commercial groups and unions alike, and both the FOL’s and the commercial groups organised joint demonstrations against the mining sector and the government. Salamanca could, given these pressures, not possibly announce that the armed forces under his command were disobeying him and possibly provoking war to add to the country’s miseries68.

62 “Basta una ojeada sobre esta situación financiera para comprender que sería una locura de nuestra parte el provocar perturbaciones internacionales de carácter bélico”, Salamanca stated: Dionisio Foianini Banzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBanzer, Misión CBae

n

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The Paraguayans, who faced very similar problems at home, were not out for war either, and viewed the matter of Laguna Pitiantuta-Chuquisaca as just another incident in a series of border clashes, and were, as before, preparing to retake the position69. Salamanca was finally persuaded by members of the EMG that the lagoon was of such great importance that it should be held, but at the same time he made it clear that he was not prepared to go to war over it; he therefore chose to allow the EMG to fortify the position but also ordered the EMG to use moderation70. Difficulties of transportation and communication, however, made that the Bolivian military was unable to adequately strengthen and supply the position before the next Paraguayan assault, which came on July 15th and lasted for two days; at the end of July 17th the lagoon was retaken by Paraguayan forces71.

It was not the retaking of the lagoon itself, nor the heavy fighting that occurred that ultimately drove the two countries to war; now that the position had been retaken by the Paraguayans, they officially notified the United States, who mediated in the ongoing conflict, of the Bolivian aggression of June 15th. It was this action that forced Salamanca between a rock and a hard place. Given the problems that his government faced, and the fact that Paraguay had now officially complained of Bolivian aggression, Salamanca and his ministers had to come out with their own communiqué and publicly announce the events in the Chaco. In an effort to save face, and before the Paraguayan government went public with its statement, a message was sent to the Bolivian newspapers that Paraguayan forces had forcibly occupied a Bolivian outpost in the Chaco. The message clearly denied that Bolivian forces had taken it from Paraguay, and that all Paraguayan allegations of Bolivian aggression were false72.

The news of this offence hit like a bombshell and caused an immediate public outcry. Mass demonstrations were held, in support of the government, and calling for a response to this outrage. Salamanca was now faced with a terrible dilemma: any failure to meet with public demands for action, as Siles had done before him, would seriously endanger his further rule, while going to war would equally spell disaster given the military and economic conditions the country was in. The EMG was quick to point out that the military was in no position to go to war at this point, and that it would take six months at least to prepare for all out war in the Chaco73. On the other hand, political parties and mass demonstrations all called for retaliation: not responding to this call, would inevitably spell Salamanca’s downfall, especially after his public promise to ‘stand firm in the Chaco’, and given the current mood among the opposition, it seems unlikely that any new government would have avoided going to war under the political and social pressures of the day. Almost the entire country was, at this point, out for blood74.

Still Salamanca did not want an all-out war, as he knew as well as anyone that this would cause tremendous bloodshed and destroy what little was left of the national economy. He sat down with the EMG to discuss retaliatory action, and ordered that the 4th division be used to take several Paraguayan positions. The EMG pointed out that they were in no position to do so successfully, and that they feared this would unleash total war. The President however insisted that his orders be carried out, and made preparations for the impending conflict: a state of siege was put into effect, immediately exiling many leftist leaders, and general mobilisation was also ordered on the 20th. The plan, devised by Salamanca, to take several Paraguayan positions was

69 Klein, Parties, 150. 70 It would seem that the EMG had failed to inform the President of the fact that, contrary to his direct orders, the Bolivians had actually taken a Paraguayan fort, in stead of building a new one on the Western (opposite) shore of the lagoon: Eduardo Arze Quiroga, Documentos para una historia de la guerra del Chaco, seleccionados del Archivo de Daniel Salamanca, vol. I, 239. 71 Escobari, Historia diplomática, 249. 72 Klein, Parties, 150-151. 73 This statement came only now that war was really at hand; before then, the army had boasted its ability to destroy the Paraguayans with ease:: Klein, Parties, 152. 74 Klein, Parties, 154.

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put into effect at the end of the month, and the 4th division, taking the Paraguayans completely by surprise, were able to quickly take possession of fortines Boquerón, Corrales and Toledo on the 31st75.

On August 2nd, the President ordered that hostilities be stopped and was ready to enter into renewed negotiations with Paraguay, indicating that he did, after all, wish to avoid total war. Now that the public thirst for blood had been stilled, and he had ‘stood firm’ as promised, it was time to settle affairs with Paraguay. This would, however, not prove so easy as the Paraguayans demanded the immediate retreat from all of its positions by Bolivian troops: the same conditions that drove Salamanca into this situation, meant also that he could not possibly do this: also, the quick conquest carried out in the Chaco on July 31st made it seem that the Bolivian army was stronger after all. Salamanca’s tactics might possibly have worked, were it not that the Paraguayan government was facing very similar problems at home, and under just as much pressure to take action again this Bolivian attack. Now that Bolivia was unwilling to negotiate the return of the three fortines they had no choice but to retaliate themselves. The attack came on September 7th 1932, as some 6000 Paraguayan soldiers stormed fortín Boquerón76. With this, the Chaco War had begun.

The main question, and the one most debated in literature dealing with the war, has always been the question of guilt and blame. In general, all of the blame has been put on Daniel Salamanca. This feeling is perhaps most adequately summed up by Herbert Klein, who states that Salamanca “deliberately led the Bolivian nation to war” believing “that all his personal glory and promise of future greatness could at last find unfettered expression”77. Two main theories exist as to why Salamanca would have deliberately led the ‘nation’ to war: first, there is the ever-popular Guerra del Petróleo theory, which states that the entire war was nothing more than the result of competition between the Royal Dutch Shell and the Standard Oil Company of New Jersey, both fighting for suspected oil-reserves beneath the sands of the Chaco78. The simple fact that no such oil-deposits exist, seems not to take away from the theory’s popularity.

The second most important theory is that presented by Herbert Klein in his Parties and Political Change in Bolivia 1880-1952, concluding that going to war represented the only way for Salamanca to save face and retain his “personal glory”. It states that the country was deliberately led to war, simply to redeem Salamanca’s personal dignity. Both theories, however, seem to oversimplify matters. Truly Salamanca’s retaliatory actions were the immediate cause of the war, but they in turn were the result of the unreliability of the armed forces to carry out his orders. It was the military that occupied Laguna Chuquisaca, and the EMG that subsequently failed to carry out orders to evacuate it. It was public clamour, combined with political pressure, that forced Salamanca to take action and it had been the army that had assured the President that Bolivian armed forces were superior to the Paraguayans; they only retracted this, after it was too late79. Even though under tremendous popular pressure to act, the President decided on action that he had hoped could still public blood-thirst while at the same time guarding against going too far, in an effort to avoid war. Even his opponents within the EMG, who were against this particular action precisely because it would provoke war, allow him this much credit80.

75 Valencia, Historia política, 1720. 76 Valencia, Historia política, 1723. 77 Klein, Parties, 152. 78 “Ambos paises deseaban el dominio del Chaco en cuanto este extenso territorio se suponía obsesivamente relleno en el subsuelo con el petróleo u oro negro.” Valencia, historia política, 1718. 79 See page 34n. 80 Klein, Parties, 152. Above all this, even for all his warlike talk during Siles’ presidency, one of the first things Salamanca tried to accomplish when he became President, was to arrange a lasting Peace-

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It seems most likely, therefore, that under these conditions of social upheaval and political pressure, there really was no other course of action that could be taken. Salamanca took his chance to go the middle way, to take action but not declare war. The fact that this action did lead to war, in reality means that war was, at this stage, unavoidable.

agreement with Paraguay, that was unfortunately torpedoed by Saavedra, Montes and finally rejected by Congress: Foianini, Misión Cumplida, 55.

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The Chaco War Even though Salamanca had hoped to avoid war, he was well aware of the fact that his orders might well result in it, as becomes clear from the orders of general mobilisation and the state of siege1. He had already himself drawn attention to the fact that the event of war would spell disaster for the country, both financially and in terms of human life. The EMG had made it abundantly clear that, in contrast to what they had always claimed, winning such a war would be an almost impossible task. In reality, the war would have an even more devastating effect, especially on the political system, which would perish as a direct result of the war and its mismanagement. Knowing full well what dangers lay ahead, Salamanca obviously saw that he had very little choice and in August of 1932 led the country to war. Many would die as a result of his decision, the country’s finances would be ruined and the traditional alliances on which was built the entire political system would be torn apart. Salamanca’s name would in future be tied to the country’s most shameful defeat, he himself vilified and reviled for generations to come.

The Conduct of War Given the absolute ascendancy of the Paraguayans in the Chaco, the battle for el Boquerón was a foregone conclusion. The 6000 Paraguayan troops quickly succeeded in encircling the fort and cutting it off completely from the outside world. After the fort was cut of from its supply lines, the Paraguayans started continuous heavy bombardments on the fort and it was only a matter of time before hunger and bloodshed wiped out moral; on September 29th the 466 Bolivian troops at el Boquerón surrendered, only to become the first prisoners of war2. The news of the loss of el Boquerón and a sizeable part of the Bolivian armed forces in the Chaco, produced a shock-wave throughout the country, as the initial nationalist fervour made way for the harsh reality of war. Within few days all the forts taken by Bolivia were firmly back in the hands of the Paraguayans, and they were now looking toward the rest of the Chaco, having experienced first-hand how little resistance they were to expect. Being completely undermanned and under-equipped, the Bolivians were unable to stop the rapidly growing Paraguayan advance and position after position fell. Within a matter of two weeks, fortines Ramírez, Lara, Yujra and Castillo fell to the Paraguayans, while the remaining Bolivian troops retreated to fortín Arce3. As the Bolivians continued to lose ground, public moral fell tremendously and demonstrations were now held against Salamanca and the EMG, who were both held responsible for the series of defeats and the loss of national honour. Demonstrators and congressmen now called for the return of General Hans Kundt, hoping that somehow he might be able to turn the tide. Neither the EMG nor the President really wanted Kundt’s return4. A clear schism was developing between the EMG and Salamanca, who took popular clamour against the EMG as an opportunity to remove those within the EMG that failed to support him and his actions. More and more, Salamanca began to take his official title as Captain-General of the armed forces quite literally, sending direct orders to commanders in the field, some times

1 Although it is likely that this state of siege was at least partly intended merely to do away with leftist and union leaders and that the threat of war provided a good excuse for this. 2 Valencia, Historia política, 1722. Numbers taken from Julio C. Saracho Calderón, Una ráfaga en la historia de la guerra del Chaco, 50. 3 Valencia, Historia política, 1723. 4 The General was, after all, exiled after Siles’ failed prorogue attempt; he was the immediate political rival of Salamanca and the members of the EMG who had replaced Siles’ supporters.

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conflicting with those from the EMG. This was perceived as a true annoyance by the members of the EMG, who felt that the President placed too little trust in their capabilities and loyalty5. On the political front, there was trouble also, as Salamanca had used his the pretext of war to exclude all his opponents from the cabinet and government altogether. This of course led to increasing hostility from the traditional parties to Salamanca. Then, on the 21st of October, fortín Arce finally fell to the Paraguayans, and with this Bolivian resistance to the Paraguayans had finally been destroyed. This defeat signalled the end of all confidence in the EMG, and Salamanca had no choice but to call upon Hans Kundt to return and take over military operations, under tremendous political and popular pressure. Salamanca now had to hand over control over the military to his former enemy. The already ageing, but immensely popular, General returned to Bolivia on December 9th 19326. Kundt immediately set to work on what he was best at: organisation. He was able to concentrate Bolivia’s remaining forces, adding to them significant numbers of draftees and organising Bolivia’s second army by January 1933. The forces were re-equipped, given some rest and some heavy work was done rebuilding the soldiers’ morale. But although Kundt admittedly was brilliant at organisation, he was unfamiliar with the Chaco terrain and had had his own experience only during WW I and stuck to the tactics learnt in that experience. He therefore devised a new strategy, based on a single goal: the conquest of Paraguayan fortress Nanawá, an excellently supplied and defended position, that was home to the Paraguayan 5th division7. The Bolivians were able, with their new-found strength, to re-conquer fortines Alihuatá and Platanillos and then, from January to July, came the continued attack on Nanawá8. The Bolivians were, during these months, constantly near the fortified position of Nanawá, and a few times Kundt sent his men in vain to try and conquer the position that was held by some 10.000 Paraguayan troops; the result was a massacre. Two major frontal assaults, the first on January 20th and the second on July 4th 1933, were carried out. Over 4000 soldiers died in the two fruitless attacks9, which succeeded only in fully discrediting the ageing General in the eyes of the public, while he had already lost the support of the EMG through constant arguing over his outdated methods and senseless tactics. Even his one-time associate Dávid Toro was removed from the EMG, for openly and publicly criticising Kundt10. Yet Kundt still boasted more confidence from the people than the Bolivian officers’ corps itself11. Between the Nanawá disaster of July 4th and September, fighting was minimal as both the Paraguayans and the Bolivians regained their strength. This created a little time for Salamanca to deal with problems at the home front, where popular discontent over the economic crisis and the seemingly unending series of defeats at the hands of the Paraguayans, was growing to an all time high. Salamanca spare time nor effort to obliterate any workers’ resistance, outlawing all unions and syndicates and sending many of their leaders to the front, a fate shared by their political allies in the leftist parties. Meanwhile, the traditional parties were growing more frustrated by Salamanca’s refusal to allow any members of the Liberal, Nationalist and Socialist Republican Parties to enter the cabinet. By now, as the war was

5 Klein, Parties, 173. 6 Valencia, Historia política, 1723. Again, the European Allies protested vehemently against this move. Also, the Germans present in other Latin American countries, especially in Paraguay, officially asked the German government to intervene and impede Kundt’s return to Bolivia, as this move was interpreted by many as direct German support of the Bolivian war-effort, not withstanding the fact that Kundt’s presence in the Bolivian EMG was on a strictly personal title and not as an official representative of the German government. Rinke, “General Kundt”, 635. 7 Valencia, Historia política, 1724 and Klein, Parties, 178. 8 Saracho, Una ráfaga, 79. 9 Saracho, Una ráfaga, 79-80, Valencia, Historia política, 1724 and Klein, Parties, 178. 10 Klein, Parties, 178. 11 Klein, Parties, 180.

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dragging on and Bolivia suffered defeat after defeat, the same men who stood hollering for war just one and a half years earlier, viciously attacked Salamanca for going to war, and not settling the conflict through diplomatic means12. At last, the Liberal Party and the PRS, sworn enemies just a year before, found common grounds in their resistance against the Genuinos and signed a mutual pact. Both parties agreed to abstain from the Congressional Elections of May 1933, meaning that the Genuinos won the elections by a landslide13. The continued attacks, not only on his policies, but also on his person, exacerbated Salamanca, to the point where he closed down the oppositions’ newspapers and threatened to exile their leaders, most especially PRS leader Saavedra14. In September the war started moving again, as Paraguayan General José Félix Estigarribia launched his “Guaraní” offensive, immediately drawing the Presidents’ attention away from his political worries, as first the fortín Alihuatá was re-conquered by the Paraguayans and they again started moving deeper and deeper into uncontested Bolivian territory. One bitter defeat was suffered after another, while Kundt proved unable to remedy the disastrous situation, until, by December 12th, under heavy pressure from the military, decided he would support Kundt no more and called him back to La Paz, whence he returned to Germany15. He was immediately replaced as chief of the EMG by General Enrique Peñaranda16: it was, however, Colonel Dávid Toro who in reality dominated the EMG17. Peñaranda and Salamanca were successful in arranging a short armistice thereafter, which both the Bolivians and the Paraguayans used to re-organise their troops. Peñaranda set at work constructing the Third Army, made up out of 7000 soldiers left in the field as a sorry remainder of Kundt’s Second Army of 77.000 men18. The armistice was of short duration, and the Paraguayans resumed their initiative in January 1934. The Third Army was not yet ready, and so the Paraguayans were able to continue their drive forwards with only minimal resistance19. In truth, both the members of the EMG and the President were glad to see Kundt go, though not precisely for the same reasons. Not only had he been responsible for the greatest massacres ever suffered by the Bolivian military, and was he deemed a dreadfully ineffective tactician, but also this gave Salamanca the opportunity to once again meddle with military affairs directly, and he immediately sought to take upon him the role of Captain-General of the armed forces. Once again he gave direct orders in attempts to personally lead the country to victory, as he accused the members of the EMG of being ineffective and incompetent. The same arguing and bickering that had seriously hampered military operations before December 1932, now re-emerged and the relationship between the EMG and the President deteriorated as quickly as the situation in the Chaco itself. As a result of this and Salamanca’s political inflexibility he became more and more isolated: annoyed by the constant attacks from the PRS, he exiled Bautista Saavedra, while at the same time fighting with Peñaranda and Toro over military leadership. 12 Klein, Parties, 179. 13 AME, vol. 5, f. 3, May 11 1933. Only some 20 percent of registered voters voted in these elections, according to the French envoy Arthur Guy, as a result of the Liberal-Republican abstention. 14 Klein, Parties, 180. 15 Valencia, Historia política, 1724. After which he returned to Germany to become part of Hitler’s masterplan. Rinke, “General Kundt”, 629-636. 16 Who had only been promoted to the rank of General two weeks before, as a reward for his heroic actions; Peñaranda had been able to escape one of Estigarribia’s famous encircling movements, and escape unharmed with 2500 men. 17 Klein, Parties, 180. 18 Of these, 32.000 ill and wounded were evacuated, 10.000 taken prisoner, 6000 deserted or missing in action, 8000 left in rearguard services and 14.000 killed: almost three fourths of the total number of Bolivian casualties in the entire war. Valencia, Historia política, 1724. 19 Klein, Parties, 181.

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The constant bickering led to great unease within the military, not in the least with the military cadets of the Colegio Militar in La Paz, who, as an act of support for the EMG, revolted against the government on April 6th 1934, demanding the resignation of Salamanca20. Order was restored only with great difficulty, but in the end the cadets went back to the barracks. Nonetheless, Salamanca insisted in counter-ordering the EMG, changing its composition at will, and with increasing frequency, thus removing even the faintest consistency in the war-effort. But for all the tension and internal problems, Peñaranda did prove able to construct the long awaited Third Army by the end of April, consisting of some 55.000 men21. The EMG, that had criticised Kundt so much for his WW I tactics of massive assaults, indeed proved wiser with this new found strength, and used the forces to set up an adequate line of defence. The Paraguayan advance was finally halted in May, with the battle of Cañada Strongest, which took place at the end of the month, and in which the Bolivian army scored its first big victory since the beginning of the war, capturing some 1400 Paraguayan soldiers in the process22. After this ‘great victory’23, all remained quiet on the Western front, as the Paraguayans were unable to break through the strong line of defence that had at last been set up. From June until August, Estigarribia’s troops searched in vain for a weak spot, and a virtual stalemate developed. In August, Colonel Toro suggested to the President that he quickly seek a diplomatic solution, now that the Paraguayans seemed unable to advance further24. The President was tempted by this suggestion, as it finally offered a way out of the war, before further humiliation occurred. At the same time, he suffered great troubles with the opposition and the military as a result of his constant intervention in military tactics. The tension between the President and the military had become such, that a plot for military insurrection could only at the last minute be idled on August 21st, by the arrest of 20 officers. Faced with such opposition from within the military, it was announced that in future any ‘subversive movement’ would be considered high treason and thus punishable by death25. To the shock and horror of the entire nation, even before the President could act on the suggestion to come to a peace-agreement, Estigarribia finally succeeded in breaking through the Bolivian defences on August 27th, only days after the intended insurrection. The Paraguayan breakthrough meant that now the departments of Tarija and Chuquisaca were invaded, and that the Paraguayans had access to Bolivian oil-resources26. With these oil-fields in plain sight, the Paraguayan forces made an undisguised attempt to occupy several of them and started their drive directly towards the Villa Montes heartland at the hart of the region in which the wells lay27. The Villa Montes region itself was defended by a large fortress, just outside the city of Villa Montes, appropriately named Villa Montes. Between it and the rapidly advancing Paraguayans, only lay the fortress of El Carmen, which was taken by the Paraguayans, after heavy battle on November 15th28. The fall of El Carmen was yet another major blow to the Bolivian defences, leaving the oil-fields guarded only by fortín Villa Montes, and the conditions surrounding the disaster infuriated President Salamanca to the point where he 20 AME, vol. 5, f. 10, April 8 1934. 21 Klein, Parties, 182. 22 Valencia, Parties, 1725. 23 Commemorated by numerous streets, allies, statues and monuments throughout Bolivia. 24 Klein, Parties, 182. 25 AME, vol. 5, f. 20, August 23 1934. 26 Located in Tarija and exploited under concession by the Standard Oil Company of Bolivia: it is highly likely that it was this invasion and the subsequent occupation, though not lasting, of several important oil-fields that lay at the basis of the Guerra del Petróleo theory. 27 Valencia, Historia política, 1727. 28 During which 4000 Bolivians were taken prisoner and 2500 died, while the officers in charge of the divisions in the Chaco were out celebrating Peñaranda’s birthday in the safety of Samayhuaté; Valencia, Historia política, 1727.

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decided to fire the entire EMG and replace its members by his personal following. The members of the EMG were likewise fed up with the President, for all his constant intervening and attacks on the High Command, and the military’s leading men met up in Villa Montes to decide which steps to take; at the same time Salamanca was travelling to Villa Montes to personally fire the EMG. The military decided to come to a veritable show-down and rebel, under the suspected instigation of Dávid Toro, who had after all for years been the Presidents political enemy29. The military rebelled, for the first time since 1883 without co-operation or consent from other political parties, and exclusively on their own account. The drama took place on November 27th, as Salamanca met with Peñaranda in Villa Montes. Peñaranda informed the President that the army had rebelled against him and that all officers loyal to him had also been taken into custody. Furthermore, so he was informed, he himself was taken into custody until such a time as he was prepared to relinquish the presidency. In order to back his demands, Peñaranda had ordered that around 400 troops surround and guard the house in which the President resided at the time30. Also present were Dávid Toro and a young officer by the name of Germán Busch, who was very rapidly climbing the military ladder and had obtained the rank of Major in December 193331. The young Major, who was still only 30 years old, was one of few full-fledged heroes in the war, as well as a notably effective military man, and held the respect and admiration of many young soldiers, over who he held considerable influence. Likewise, Peñaranda and Toro started depending quite heavily on this man, without whose support the military coup might not have been possible32. Salamanca had no choice but to renounce his presidency, and quickly an agreement was reached with the Liberals that vice-President Tejada Sorzano take over Presidential responsibilities. Overall, the move was hailed with approval throughout the nation and by the entire opposition. Tejada Sorzano quickly forged a new cabinet, including ministers from all traditional Parties, while giving in to military demands that he refrain from interventions in military policies33. The new government accepted as its most pressing task to resume peace talks with Paraguay, under the auspices of the League of Nations, which had become the main mediator in the conflict in previous years. In January, Bolivia fully accepted peace terms proposed by the League of Nations, only to find that Paraguay rejected the same terms34. On the front, a stalemate was now emerging. As the Bolivians had been driven back, and the front had moved from the Central Chaco to the Andean foothills, the same conditions that had so hampered military operations for the Bolivians at the start of the war, now started affecting the Paraguayans. So far from their own supply lines, it were now the Paraguayans that waited endlessly for food, ammunition and medical supplies to traverse the Chaco-terrain, while the Bolivians now had immediate access to all of these, as Villa Montes itself was at the end of a railroad that had been constructed in 1929 for the benefit of the oil-industry35. Also, unlike the Paraguayan soldiers, the Bolivians were now in territory familiar to them, the Andean foothills. Throughout February and March heavy battles raged in the vicinity of Villa

29 See page 26. 30 Foianini, Misión Cumplida, 94-95. 31 AMR, volume F.A. 1 5 Ejercito Nacional, folio without number, number 4471, 13 July 1936. 32 AMR, volume F.A. 1 5 Ejercito Nacional, folio without number, number 4471, 13 July 1936 and Foianini, Mision Cumplida, 95. Busch is often quoted stating his regret for supporting this undertaking, which he supposedly regarded as very dishounorable. 33 Klein, Parties, 184. The speedy and suspiciously smooth transition indicates to me that some sort of agreement must have been made with leaders of the political opposition, prior to the events at Villa Montes. This can, however, merely be speculated at, as no thorough investigation has ever been undertaken. 34 Klein, Parties, 185. 35 Valencia, Historia política, 1726.

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Montes, but the Paraguayans proved unable to occupy the position itself, although capturing several oil-fields in the process of losing. Then in April a Bolivian counter-offensive, under the command of Major Busch. Busch proved able to drive the Paraguayans back considerably, re-capturing all oil-fields and in fact driving the Paraguayans out of Tarija and Chuquisaca altogether by May 1935, for which he was rewarded by a promotion to the rank of Lieutenant-Colonel36. The Paraguayans, who had grown unaccustomed to defeat, now recognised that they would not be able to advance further. Also, Paraguay itself was near bankruptcy as a result of the war, and after the heavy losses of May 1935 found itself prepared to sign an armistice-protocol with Bolivia in order to end the hostilities. Under heavy pressure from the League of Nations and especially Argentina, a peace-conference had been set up in Buenos Aires in March, and it was here that, after much deliberation negotiations and re-negotiations, the protocol was drawn up and signed on June 9th. The armistice went into effect on June 14th 1935, and at 12:00h that day the guns became silent after three years of war37.

Table 2. Cost of the Chaco War in Human Lives38 Source: Julio C. Saracho Calderón, Una ráfaga de la Guerra del Chaco, 296.

Bolivia Paraguay Fatalities 20.321 30.100 Ill and Wounded 24.538 35.040 Taken Prisoner 21.626 4.060 Missing in Action 7.141 Repatriated from Captivity 17.365 3.982 Escaped from Captivity 2.000 Died in Captivity 1.85139

The cost of war had been tremendous. In three years, Bolivia had lost roughly 100.000 square kilometres of land, almost lost its oil-fields and many lives as well [see table 2]. The war also saw the destruction of the military-civilian alliance, as constant bickering and arguing overshadowed the relationship between government and military leaders, and the drifting apart of industrial interests and government, as the war was financed to a very high degree by the mining-sector alone. Above all, the war fostered leftist radicalism and the formation of new leftist power-structures, united in the face of Salamanca’s repression. All things considered, the war was to have a lasting effect on the constitution of Bolivian society as a whole, as the country and its institutions were forced to cope with altering relations and yet another signal military defeat to add to its already impressive résumé. As to why Bolivia once again lost a war, many reasons spring to mind. The most important factor, without a doubt, is the utter lack of preparation, as the war started somewhat precipitately. Only 1500 soldiers had been present in the region as the war started, and as mentioned supply lines were inadequate and ineffective: the Chaco knows some torrential rains, which on occasion rendered all roads impassable. In effect, of all those who died, more died from illness, starvation and thirst, than at the hands of the enemy: high ranking killers include Malaria, Dysentery, Typhoid, Thirst, Hunger, shortage of vitamins and a general lack of

36 AMR, volume F.A. 1 5 Ejercito Nacional, folio without number, number 4471, 13 July 1936 and Klein, Parties, 186. 37 Valencia, Historia política, 1733. 38 The table does not include known deserters who crossed over to Paraguay or Argentina. These numbers are hard to calculate, but at least 10.000 men are known to have deserted to Argentina and some 500 to Paraguay: Saracho, Una ráfaga, 296 and Klein, Parties, 196. 39 According to the Bolivian foreign office, some 4500 Bolivian POW’s had died in the Paraguayan concentration camps, while some 5000 had escaped them: AMR, Alem 1 R 14 Legación boliviana en Alemania, folio 105, no number, 19 May 1936.

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hygiene40. As if such conditions were not bad enough already for morale, the overall attitude taken by officers towards ordinary soldiers was crude, to say the least: while officers organised orgies, and somehow managed always to escape conviction for cowardice and bad behaviour, it was not uncommon that ordinary soldiers be shot even for relatively minor offences41. It is not hard to imagine how such conditions, combined with a string of defeats and numerous deaths in senseless assaults on impregnable Paraguayan positions, led to massive desertion: exact numbers are difficult to calculate, but it is known that some 10.000 soldiers sought refuge in Argentina before the war was over42. The complete lack of morale, resulting from the described conditions, can not but have affected the war effort in adverse ways also. But above all this stands out the utter stupidity of the military men who were allowed to guide the military from humiliation to humiliation, General Kundt without a doubt being the most effective butcher on the Bolivian side of the conflict. This war was lost from the moment it started, due to a lack of military strength in the area, but nevertheless the losses suffered can not be explained through this alone; the war was transformed from mere loss to national tragedy only through the incompetence and internal divisions of the men that led it.

The War and National Economy The Chaco War was a costly undertaking, not only in terms of human life, but also financially. When the war broke out, the country’s financial situation was so desperate that Salamanca had announced a moratorium on external debt service in 193243: obviously, under these conditions, no country was prepared to extend further loans to Bolivia, and thus the entire war effort must be financed internally. Of course, the financial situation of government was already heavily shaken by the crisis and subsequent depression, and the war meant not only further cutbacks on expenses other than defence, but also that alternative ways had to be found in order to finance the war44.

Figure 3 :G overnm ent E xpend itures on D efense as a Percentage o f T o ta l Expend itures

Source : Carm enza G a llo , T axes and S ta te P ow er , tab les V I-1 and V I-2.

0

10

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30

40

50

60

70

80

90

1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939

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40 Saracho, Una ráfaga, 510. 41 Klein, Parties, 197. 42 Klein, Parties, 196. 43 Which would have accounted for some 47 percent of the national budget of 1934: Gallo, Taxes, 134. 44 Gallo, Taxes, 112.

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Such alternatives were found in two ways: first by extending the taxing-apparatus and secondly through attracting large loans. As foreign loans were out of question, only two possible sources remained: the Central Bank, that had been set up under Siles’ Presidency, and the Tin Industry, which still had the largest financial resources and income. Together the three great Tin Companies lent the government a total of some £1,700,000 in order to finance the war45. These loans were not fully voluntary, and it was often practice for the government merely to decree that a certain company would loan a certain amount to the government46. This practice of forced loans was made possible, among other things, by the fact that during these same years of war, the government was responsible for the distribution of tin-quotas among the companies and therefore held considerable leverage47. But, unfortunately, the loans in question were not enough to cover for expenses, and so the government also had to consider increasing taxes. Of course, the rather poor condition of national economy in the early nineteen-thirties made it nearly impossible to do just that with most of Bolivian industry, and therefore this burden also was put largely on the tin companies. Agriculture escaped such extra taxation mainly because the landowners had far greater electoral influence, and because there was already a shortage of foodstuffs, and increasing food prices would be a sure way to rouse public anger48.

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New taxes had to be introduced, and existing taxes were raised. The most important of the new taxes, was in theory not a tax at all. In order to combat the state’s lack of foreign exchange, that resulted from heavily reduced imports and the depression in tin-prices — both the direct results of the world-wide depression —, Siles and later the Military Junta introduced a system whereby the tin industry was obliged by law to sell part of its foreign exchange to the state’s Central Bank, at a price below market levels49. Even though Salamanca, as a senator, had

45 Gallo, Taxes, 111. 46 Gallo, Taxes, 110. 47 It is interesting how the companies were often at odds, trying to convince government to extend a large quota to one company and to extend smaller quotas to the others. Competition was high, as were the stakes during these times of extreme hardship. Given such circumstances the companies had very little choice but to give in to demands without ado, for fear of being punished with a small quota. AMR, Min 1 110 Hacienda, folio not numbered, number 4448/721, 8 June 1938. 48 Gallo, Taxes, 105. 49 Gallo, Taxes, 112.

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resisted the move, he himself raised the rate from 10 percent, the rate introduced by Siles, to 65 percent by 1933 and to 100 percent by 193450. The system had initially been intended to combat urgent fiscal troubles, but as the war drastically increased demands for fiscal revenues, it was converted into a lasting system of indirect taxation.

The government, under Salamanca, started fixing the exchange rates of Bolivian currency after the British government abandoned the gold standard. Now that government, through the Central Bank, also controlled a very large proportion of foreign currency, it actually fixed two separate exchange rates: one for military expenses and primary goods — such as foodstuffs &c. — and one for all other imports and exports, including tin. In 1934, the rates were 20 Bs to a pound and 80 Bs to a pound, respectively51. And so, the system that had been introduced merely to supply the state with much needed foreign exchange, was transformed in a means of extracting vast amounts of money from exports, and therefore automatically from the tin industry. The state’s dependence upon the mining industry grew dramatically during the early nineteen-thirties [See figure 4]. Throughout the war, the new taxes and industrial loans were the main source of income for the state’s fiscal needs. It is not surprising that the industry was not at all happy with this new situation, in which it by itself became more and more a milking-cow. The generally good relations between industry and state, that had been so important since the beginning of the century, and was one of the main pillars upon which the entire political system was built, rapidly became clouded. The industry itself was already badly hurt by the fallen tin prices, and suffering great problems as a result, and now government was taking almost all of profits away from them in the form of imposed exchange rates and high taxes. I have already noted that, in comparison with other tin-exporting countries, Bolivia was already in a disadvantageous position to begin with, and now was added to this the incredibly high taxes52. With almost 100 percent of profits drained away, and through the exchange-rate system set up by Siles and extended by Salamanca, they were left with enormous quantities of Bolivian currency for which they had no use, as local expenses were otherwise low53. On other fronts as well, the tin industry had good reason to be unhappy with government, as its needs were less and less met. When the depression set in, around 1930, the mine owners were somewhat fearful of the workers’ reaction to massive dismissals; also they suggested ways, in which the effects of depression on the industry as a whole might be softened. From 1930 to 1933 the government remained quite willing to meet industrial demands, but when the war started in 1933 the situation changed drastically: through the draft, the industry in fact had considerable problems attracting enough labourers. Also, the government was no longer able to use military force to suppress uprisings and keep the order in the mining regions, as these forces were obviously needed elsewhere. Given these circumstances, it was no longer easy to dismiss the workers’ demands54. The mining sector was also hit in other ways than taxes upon tin-exports. When the gold-standard was abandoned by the British government, the government immediately stopped

50 With exception only for the amounts needed by the companies to pay dividends and other costs that had to be met with foreign currencies. Klein, Parties, 149. 51 Gallo, Taxes, 114. The importance of this income should not be underestimated. Although I do not dispose of figures for the 1933-1935 period, the income from exchange rate-differences accounted for 31 percent of the national budget in 1938 [AMR, Min 1 110 Hacienda, folio not numbered, number 572/9, 20 January 1938] 40 percent of the national budget in 1939 [AMR, Min 1 110 Hacienda, folio not numbered, number 9168/143, 5 December 1938]. These figures represent what the government expected to bring in. 52 In comparison: in 1940 the tin industry paid £114 per ton in taxes, while other countries such as Malaya paid around £15 in export duties. Charles Geddes, Patiño the Tin King, 181. 53 Gallo, Taxes, 115. 54 Gallo, Taxes, 47.

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direct exports of gold, as a means of controlling the ensuing financial chaos55. It was soon realised, as the states financial needs increased, that this too provided a way in which to extract more money from the mining sector. It was established by law, on August 21st 1933, that all gold should be sold directly to the Central Bank, this too at prices below market levels. The prices were fixed very irregularly by the government, more or less in concordance with needs at the time56. So, in reality, the industry was forced to pay up by every means possible. These changes in the relationship between the state and the mines had some very serious repercussions. In contrast with the period between 1900 and 1930, the state no longer was able, or willing, to accede to the demands of the mining sector. At the same time, the state extracted ever growing amounts of money from that same sector, and became even more heavily dependant, certainly far more than before the war, upon taxation of the mining industry. In effect, the mines paid more money for less services57. The interests of the state were no longer compatible with those of the mining sector, and although the state disposed of enough means to keep the sector in check, and could no longer count on its support. An important part of the state’s power-basis now fell away, and in the end this would lead to a growing dependence on other sectors of society: the labour movement and the political left58. Another direct result of the war was Bolivia’s huge debt, as war had brought with it tremendous costs: by 1939 the small country had amassed some 3.473.000.000 Bs of debt59: over ten times the projected budget for that same year. At the same time as government was exerting more pressure on the export-sector, the war had a marked effect on the way in which the great capitalist institutions were regarded generally. As the Paraguayan forces advanced rapidly in the direction of the Bolivian oil-fields in 1935, the idea came to life that the entire war had in fact been started by the two great oil companies of the world: Royal Dutch Shell and the Standard Oil Company of New Jersey. The attitude taken by Standard Oil during the conflict added enormously to the animosity against the company: it had refused to aid the war-effort by refining gasoline for aviation, and during 1934 and 1935 rumours started spreading that the company had illegally shipped oil to Argentina, whence it was reportedly sold to Paraguay60. The rapid growth of the political left, and the accusations against Standard Oil, put the large corporations, especially Standard Oil, in an increasingly difficult position. Not only were they leaned upon by government, but also the call for nationalisation grew enormously. Even though only Standard Oil stood directly accused of causing the war and impeding the war-effort, the case of Standard Oil was taken as an example of the evils of capitalism and foreign (-based) companies in general. The entire export-sector was under great pressure from both traditional government and newly risen leftist groups, and found itself in almost complete political and social isolation by 1935.

The Changing Face of Politics: 1932-1935 When war became seemingly inevitable in August 1932, mass demonstrations were held in the streets of La Paz in support of the government. Many political parties and party-leaders on both

55 Klein, Parties, 149. 56 In 1933 (August to December), 85.255g of gold were sold to the central bank ,totalling 293.127 Bs, in 1934 this was 229.968g to 860.649 Bs and in 1935, 485.393g to 6.338.246 Bs. After 1935, the amounts of gold remained steady at between 350.000 and 400.000g per year. AMR, Min 1 110 Hacienda, folio not numbered, 8572, 15 November 1938. 57 Gallo, Taxes, 118. 58 Gallo, Taxes, 116. 59 Around £250.000.000. 60 Klein, Parties, 153.

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sides of the political spectrum immediately cried for war at the offences against Bolivian sovereignty in Laguna Chuquisaca, and in fact it might be said that it was precisely this sort of popular and political pressure, that eventually played a leading role in the advent of war. The news of Bolivian progress in the Chaco, and the fulfilment of Salamanca’s promise to “stand firm” was widely hailed, and Salamanca could, at least temporarily, count on the support of most political parties61. This support, however, soon waned as the war started going sour, and Salamanca reverted back to the authoritarian style of government that had caused so much trouble with his Liberal coalition partners only a few months earlier62. Almost immediately after the start of the war, the Republicans and the Liberals started calling for a cabinet of national unity, meaning that all — traditional — parties should join, considering the gravity of the country’s predicament. Salamanca refused, and he in fact did quite the opposite: once again he rearranged his cabinet, and among other things re-instated the hated Demetrio Canelas as minister of finance63. Salamanca’s moves were received by the Liberals as direct provocation, and in response they withdrew from the government and cancelled the coalition, at their party assembly on August 27th. Saavedra’s Republican Party also started attacking the government, calling for a cabinet of national unity, and pressuring Salamanca to take even stronger measures in the Chaco than he had already taken64. Now that the Liberals had abandoned the coalition, Salamanca’s government was left without a congressional majority, and this resulted in serious conflict between Congress and the government. Throughout the rest of 1932, Congress continued attacking Salamanca and the cabinets he put together, and continuously demanded that Salamanca organise a cabinet including members of all traditional parties: but the more they pushed, the more Salamanca refused to give in to such demands. Disagreement soon became so great, that Congress actively started obstructing the President, for example by refusing to vote for a continuation of the state of siege65. Salamanca responded in kind to these attacks, and to the generally hostile attitude of Congress. Even though fully unconstitutional, he decreed that the state of siege would continue, and made use of it to gaol or exile his most fervent critics. Demands, decrees and laws passed by Congress were ignored by the President, and soon accusations were made that the country was being turned into a dictatorship. Salamanca, however, having found all the justification he needed in the current state of national urgency, continued to reign in his old authoritarian manner, waving away most criticism and punishing all too great opposition with forced exile or gaol-sentences. By the time the military finally did away with him, there was still no sign that he had had any intention of letting up, or easing tension between the traditional parties by giving in to their multiple demands of participation, or stepping down: throughout 1933 and 1934, it had been mostly the Republican Socialist Party that had insisted on his resignation, either because of his political attitude, or because of his alleged “weakness” in the Chaco War66. The events at Villa Montes, and most especially the swiftness and smoothness of the transition to Tejada Sorzano, can not but imply that perhaps the coup was planned by both the military — who themselves were in serious conflict with the President — and the civilian leaders of the traditional parties, out of sheer frustration and anger with the President67.

61 Klein, Parties, 154, 169. 62 See page 29. 63 Cf. footnote 40. 64 Klein, Parties, 149. 65 Klein, Parties, 171. 66 Right until the end, the PRS called for a more aggressive approach, and even at the Conference of Buenos Aires would not hear of peace. Klein, Parties, 186. 67 Cf. footnote 33. As stated earlier, no direct proof of this exists, but still, one can not help but wonder.

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But not only traditional politics were becoming more complex. The depression had already badly shaken the Bolivian people, most of all the urban work-force, but when a totally disastrous war was added, political agitation and radicalism grew very quickly. Salamanca, who recognised the growing leftist movements as a serious threat to the existing order, came down hard on all leftist movements, parties, unions and syndicates; he had already set the tone in April 1931 with the heavy clamp-down on strikes and unions. Now, with the country at war, Salamanca disposed of an excellent excuse to continue his repressive tactics to silence leftist leaders68. The state of siege that continued unabated throughout the war also gave Salamanca the means to easily control these ‘communist agitators’. Many were gaoled or expelled, and many wound up in neighbouring countries such as Argentina and Peru, where they continued their subversive practices, organising small parties, or even comités de desertores69. This led to the formation of a number of small political parties in exile70. The exiled political leaders did remain in contact, and in December 1934 organised a congress in the Argentine city of Córdoba. The congress had been organised with the specific aim of joining forces, in order to create a more lasting revolutionary party, and resulted in the formation of the Partido Obrero Revolucionario (POR). The POR was, at first, no more than a conglomerate of radicals and revolutionaries, but in the end would grow out to be one of Bolivia’s most influential political parties71.

At home, Salamanca’s efforts to suppress unions and syndicates was markedly successful, his policy culminating in the law of non-recognition of unions and syndicates, which was decreed in November 1933. From that time onwards, all of the FOT’s and FOL’s and other labour-organisations were officially illegal and pushed underground, thereby stopping the overt organisation of such entities72. As a result of Salamanca’s position towards the left, such parties and organisations were effectively banned, but not destroyed altogether. In the underground, socialist and nationalist ideologies were very much alive, and given the circumstances of war and depression, they were also highly contagious and rapidly attracted many workers and young intellectuals. The severe repression, however, made it hard, if not impossible, to get organised in a structured and effective fashion. A new trend for the decade was becoming more visible by the day, as socialist rhetoric was becoming bon ton, and the existing political structure pejoratively referred to as lo tradicional73, indicating that it had lost the support, or even acceptance, of the people. Under-the-surface political developments were not limited to the cities on the Altiplano, and one major source of discontent was on — or near — the Chaco front. Amongst soldiers, morale was visibly and understandably shaken, as they witnessed not only the continuous conflicts between their superiors and civil government, but also suffered the effects most immediately. Food was always short, as was drinking-water and disease was rampant throughout the badly organised military forts and camps. No-one was in as good a position to witness the failure of traditional government, as were these soldiers, whose lives were lost because of bad management and bad political decisions, and it is hardly surprising when we find that many of the veterans returning home had some outspoken ideas about the traditional system of government: needless to say that they were not pleased74.

68 Klein, Parties, 177-180. 69 Klein, Parties, 191. These committees were aimed at trying to persuade Bolivian soldiers to desert. 70 Such as the Izquierda Boliviana in Argentina and the Exiliados in Peru: Klein, Parties, 195. 71 Klein, Parties, 196-197. 72 Klein, Parties, 177. 73 Lora, Movimiento obrero, 13. 74 Klein, Parties, 202.

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Another important source for the development of political thought and theory, were the POW-camps in Paraguay, where almost 20.000 Bolivian soldiers resided for a long time. These men had the time and ample reason to reflect on the causes of the war, and the causes of defeat, and many came to the conclusion that blame lay with the traditional system of government. The system had failed them miserably, but even more important to many, it had failed the nation and led it to disaster. In these camps, new political organisations — and none of them in support of the existing political structure — were founded, the most influential among them being RADEPA: Razón de Patria75.

RADEPA was founded in the Paraguayan internment camp of Cambio Grande in May 1934, and included some lower and high-ranking officers of the Bolivian military. RADEPA was created as a secret military loge76, with a number of direct aims: the first was the reorganisation of the Bolivian Armed Forces. The shortcomings had been made overly clear, especially to those interned in the Paraguayan camps, and these officers agreed that the entire institution need be reorganised, re-trained and professionalised. The second goal was to stop the “Political anarchy”, that lay at the basis of Bolivia’s predicament77, with one major rule that all members would swear to obey: never to actively take political power78.

The importance of such loges of military officials is clear: even though an organisation such as RADEPA stated that it wished not to participate directly in government79, the primary goals stated by this and other organisations are quite definitely of a political nature and with direct political consequences. The rapid growth of these institutions demonstrates that after the Chaco, these young military men were no longer content to leave politics to politicians, and that the idea that the military have a role to fulfil in politics also was now accepted by many influential military men. The growth of these military loges signalled the return of the military to politics. On the whole, the entire Bolivian society was badly shaken by the depression and the war. The humiliating defeat at the hands of Paraguay, which was supposed to be poorer than Bolivia, and whose military forces were previously regarded as generally inferior, made many people think about the causes of the war, and of Bolivian defeat: most came to the same conclusion, namely that the political system was defective. Apart from the military loges formed in the Paraguayan prison-camps80, most of this new political current, which was anti-traditional and generally leftist in rhetoric, still needed time to be organised into effective structures81. But in contrast to the pre-war years, they could now count on many, many more

75 The most informative work on RADEPA, which has played a very important role in Bolivian politics since the war, is: RADEPA, sombras y refulgencias del pasado, by Elias Belmonte Pabón. The work is auto-biographical of nature, and was written in 1994 by one of RADEPAS founding members — at that time 89 years of age. 76 Its existence only uncovered in 1946, after the death of President Gualberto Villarroel: Belmonte, Sombras, 29. 77 “No más anarquía política en nuestra patria. No más golpes de estado. No más inestabilidad física de los gobiernos nacionales. Pero sí el beneficio de su continuidad, del orden, del progreso, del potenciamiento del Estado y la conquista del bienestar y felicidad de todos sus habitantes. Este era el objetivo prioritario que RADEPA … debía servir y que justificaría su secreta existencia.”. Belmonte, Sombras, 40. 78 According to Belmonte, a number of officers that wished to join, were refused, precisely for their political ambitions, including Germán Busch and Dávid Toro. Belmonte, Sombras, 45-47. 79 A claim that was already untrue by 1938, when Elias Belmonte himself became a minister of Busch’ government. The same Belmonte stands accused of having participated in the Nazi-Putsch of 1933, which was allegedly organised in the Bolivian embassy in Berlin. At the time of the Putsch, Belmonte was active as military attaché in Berlin: Belmonte, Sombras, 7, 46 and AME, vol. 20, folio 119, 26 July 1938. 80 RADEPA certainly not being the only one, even though the most important. 81 Apart from the leftist ideologies, Fascism was also gaining ground and attracting followers rapidly: hardly surprising given the success of Hitler’s Third Reich and Mussolini’s Corporate Italy. The success

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sympathisers, for even apart from radicals, and discontented military officers, the war and the failure to counter the effects of depression had accomplished one important thing: no longer did the urban masses hold even the slightest confidence in the political structures of the day. Without the acceptance of the urban workers, the days of lo tradicional were numbered82.

Angry Young Men As we have seen, the Liberal political structure had been based on three great pillars: first, the economic support of the export-sector, in a mutually beneficial exchange of favours. Secondly, the continuance of the system depended on the willingness of the military to enforce political decisions, and its willingness also to recognise the primacy of civilian politics. Finally, an exclusive system such as this could only survive as long as it had the acceptance83 of the urban population, that is to such a point where massive discontent did not result in organised opposition to the system. All of these necessary requirements were now undergoing rapid change, at least partly due to the war and the depression, but mostly due to the government’s inability to cope with either. Almost the complete load of financial pressures resulting from the war had been placed on the shoulders of an already troubled export-sector, and the mutual understanding between these two had been irreparably damaged. Although the extra fiscal pressures had been intended as temporary, altering social circumstances would make that in effect, this new, rather one-sided, relationship would prove to be lasting and that the post-war governments and the export-sector would remain in constant opposition, until the nationalisation of the tin-mining industry in 195284.

The military had also undergone drastic changes: the old, traditionally minded military top had failed miserably, resulting in great national humiliation, and had thus rendered itself obsolete. By the end of the war, the EMG consisted to a large degree of very young men, and at the head of the EMG was a 31 year old Lieutenant-Colonel by the name of Germán Busch85. Due to the conflict between the EMG and Salamanca, this new military had lost its confidence in the traditional ways: they were Angry Young Men, no longer content to leave politics in the incapable hands of traditional politicians. The rapid growth of military loges, with a decidedly political content, is testimony to the fact that from the ruins of war had marched forth a new, politically-minded military86.

On the popular front, the changes were too great to be overseen. Unemployment, repression, drastic wage-cuts and military defeat had had their effect, and the direct post-war period gave people time to reflect on what had gone so terribly wrong: some-one must be to blame for all this. In effect, traditional politics proved to be partly their own undoing, as the constant condemnation of Salamanca and the Genuinos by their peers, thereby diverting blame from the military87, left very little alternatives but to lay blame with politics. Slowly but surely,

of these new political currents, either in the form of the USSR or Nazi-Germany, must have been regarded as exemplary by many. 82 Klein, Parties, 203. On acceptance, trust and power, some excellent sociological studies have appeared throughout the years. Shmuel Eisenstadts studies, Power trust and meaning and the political systems of empires give some insight into the functioning of state and government, and the basis of power-structure and their survival (Or lack of it). 83 But certainly not necessarily the approval: see Shmuel Eisenstadt, Power, Trust and Meaning. 84 Gallo, Taxes, 117-118. 85 AMR, volume F.A. 1 5 Ejercito Nacional, folio without number, number 4471, 13 July 1936. 86 Belmonte, Sombras, 40-45. 87 Who had most definitely played their part in the disastrous war-effort. When examining where the war went wrong, we must conclude that the larger part of the defeat lay with the military’s incapability.

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the urban middle classes started turning away from traditional politics and searched for alternatives, as the realisation spread that the entire political system was defective and to blame for the country’s predicament. More and more, the realisation got hold that the old order was obsolete, and unjust: it was, however, not immediately clear with what it should be replaced. This new popular mood was, for now, not very well defined and best characterised by a general longing for “social justice”, a somewhat abstract notion that implied changing social and economic conditions, but defying rigid definition88. The only truly pronounced condition of “social justice” was that the traditional system must go.

All of these sectors of society were now in utter disarray, as they had to learn to cope with changed circumstances. It was clear to most, with the exception only of the Liberals and Genuinos, that things could not and would not go back to the way they were: the traditional system had been rendered unacceptable to all but those that most directly represented it, and even they realised that change was afoot and were uncertain how to react. But the fact that ‘change’ had become the rallying cry, does not mean that the word was well-defined or that people knew how things should change. It would be a while until the new mood found expression in political programmes and manifestos, or until traditional parties, new parties, unions, syndicates and the military were able to redefine their function in society so that a new order might emerge: one that would bring “social justice”.

Even though Salamanca’s heavy repression had succeeded in obliterating the organised labour-structures, the movement as a whole had not been destroyed, but merely been pushed underground. True, it needed time to re-organise and recover from its wounds, but proved remarkably fast in doing just that. Under the guidance of labour-leader Waldo Álvarez, the old Sindicato Gráfico was re-erected, as well as most of the FOT’s and FOL’s of Oruro, La Paz and other industrial centres89. With a good memory of how the movement had been brought to its knees by Salamanca, it emerged with a new vitality and conviction, determined not to make the same mistakes: this time around, the importance of co-operation and unification were well recognised, and immediately the unions and syndicates set to work to establish communication and work towards a united front, based on their many common grounds90. The result was the Confederación Sindical de Trabajadores de Bolivia (CTSB), which had been erected before the war, but was reborn form its own ashes with a vengeance in May 193591. The CTSB, however, remained a rather clumsy attempt at reorganisation, the separate FOT’s, FOL’s and other unions and syndicates still operating largely on their own: but now willing to actively support one another in the face of oppression.

Another great difference with the pre-war years was that now, recognising the growing power of the labour-movement, many of the political organisations — including the PRS — actively supported the unions in their demands for wage-increases and labour-legislation92. The relationship between labour movement and politics became ever more important and eventually replaced the interdependency between industry and politics. Now that the export-sector and international industries had become tainted, both through allegations of obstructing the war and an overall tendency to reject such capitalist institutions on the grounds of political theory, and the tin-industry itself had understandably become less sympathetic to government, smart politicians started siding more with the workers, and less with the industries, thereby further undermining the earlier relationship between state and industry. As a result, the urban work force slowly started taking on the role of political power-basis for new governments, which finally produced a growing coalition between labour and government.

88 Lora, Movimiento obrero, 13. 89 Klein, Parties, 225. 90 Lora, Movimiento obrero, 9. 91 Lora, Movimiento obrero, 10. 92 Klein, Parties, 226.

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Like the labour movement, the leftist political organisations also needed to restructure themselves, for much the same reasons as organised labour: power lies in numbers, and the increasing awareness that many small political fractions are ineffective in bringing about change made that here too, a growing effort existed to bring the country’s left together in a united body. Throughout the country, discontent showed itself through the erection of numerous ephemeral political organisations, literally hundreds of them appearing all-over93. Before the war, many such small groupings had also existed, but the growing popular discontent made that many middle-class citizens, looking for a political alternative to the traditional system, now also joined such discussion-groups and ephemeral parties and these new members of the left brought with them moderation: most of these were looking for a more equitable and socially-minded state, but not necessarily a Soviet republic or anything as radical. So, as the left grew rapidly in the post-war period, it also changed its tone to a more moderate form of leftist agitation. Certainly, some of the hard-line organisations continued to exist, but over the years after the war, they found themselves marginalised precisely because of their radical stance, while the more moderate organisations successfully attracted large followings and found themselves obtaining a growing political significance94. The waiting now, was for a political organisation that could effectually fill in the gap between the traditional parties and the radicals.

Saavedra’s PRS was the first party to try and tap in to these enormous human resources of discontented Bolivians. Its first overture was the changing of the name into PRS, claiming to adhere to some of the socialist ideology that was so rapidly becoming bon ton. The party caught on quickly, and adopted diverse elements of socialist and pacifist phraseology, in an almost 180 degree turn from its previous stance: the most warlike of all traditional parties had been the same PRS that now claimed always to have opposed war95. Now, the party came with a programme of ‘revolutionary’ reforms, claiming that it alone had both the experience and willingness needed to introduce “social justice”, while at the same time avoiding the evils of atheist communism. But, for all the change in rhetoric, the programme itself proposed little more than moderate labour-legislation, in effect leaving all existing structures, politically, socially and economically, unscathed. The new and improved PRS was, in fact, a radish: red on the outside, white on the inside, and this fact did not go unnoticed, as these attempts to attract the dissident middle-classes really met with only very limited success96. Eventually, the fact that the PRS turned away from those that shared most of its ideals and vision — the other traditional parties — only weakened the traditional system it was trying to maintain through its thin veil of Socialism.

In the end, it was the Nationalist Party, or what remained of it, that accomplished what neither the old radical parties nor the traditional ones were able to. The Nationalist Party, through its relatively innovative stand, had before and during the war attracted a number of moderately leftist intellectuals and students, who hoped the system might be reformed from within. The tremendous crisis that was wrought by the war, made that this slightly leftist wing lost its faith in reform from within, and decided that change could come only through parties outside the existing structure. At the party convention of October 1st 1935, the leader of this group of young men, José Tamayo, called upon the members to leave the convention, and set up a new, truly socialist-minded party: the room was left almost completely empty, and the remainder of the Nationalist Party decided to dissolve it97.

The former Nationalists then set up the Célula Socialista Revolucionaria (CSR), which in reality was not as revolutionary as the title might suggest, but still quite a bit more innovative

93 Klein, Parties, 204, 211-212 and Lora, Movimiento obrero, 38. 94 Klein, Parties, 213. 95 Klein, Parties, 204. 96 Lora, Movimiento obrero, 36. 97 Lora, Movimiento obrero, 24-26.

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than the Nationalist Party had ever been98. The new party was headed by Enrique Baldivieso, Felipe Tovar and José Tamayo, who had some great advantages over the old-style radical leftist leaders: a great deal of political experience, a willingness to compromise, but above all else, they were quite moderate in their plans. These things would prove instrumental to the development of the post-war leftist movement, as they, just like the other leftist leaders, recognised the need to band together, but added to this the ability to attract many of the middle-class discontented and thereby gain an important power-basis. The CSR succeeded in a very short time to make contact with many of the smaller groupings that flourished throughout the country, and in just under a month this resulted in the creation of the Partido Socialista Boliviano (PSB), consisting of the grupos Andes and Bolivia, the Acción Socialista Beta Gamma and the CSR. The next month, the PSB joined into yet another coalition, out of which emerged the Confederación Socialista Boliviana (CSB); the CSB functioned as an umbrella for many of these smaller, still more-or-less independent organisations, but soon it was agreed upon that it should have one single political outlet: the Partido Socialista (PS), which emerged in spring of 193699.

Of course, the rather moderate programme of reforms put forward by the PS could not appeal to many of the more radical socialists and communists, and in the face of the large and potent PS, these too were finally able to overcome their differences and join together in a single umbrella, still partly hanging on to their separate identities. These, dissident members of the groups joined in the CSB and other radicals organised themselves in the Bloque Socialista de Izquierda (BSI), also by the beginning of 1936100. In a way though, the formation of the BSI was also in part thanks to the CSB, as it was the fear of being marginalised and not profit from the growing ranks of the discontented, that made it possible for these radicals to look for common grounds on which to build their political outlet.

So, within a year the political landscape had gone through some dramatic changes, as for the first time, the left was able to form truly great blocks of power, and offer effective opposition to the traditional system of politics. Unlike Salamanca, Tejada Sorzano was very fearful of this new opposition and did not dare crush their demonstrations, nor the strikes organised by the regenerated labour movement: as a result, the country was plagued by frequent strikes and demonstrations, which could paralyse the country for days, while the President could do nothing but wait for them to subside101. The last of the important pressure groups was the Legión de Ex-Combatientes (LEC).

The LEC was not a political group at all, but would prove to be of great political importance. By July of 1935, the de-mobilisation got underway and some 100.000 veterans returned home. By September, many of these had already started organising veterans’ groups locally, and very quickly these local movements banded together in the LEC, which was officially erected on September 13th 1935. It was intended, primarily, to vindicate veterans’ rights and press for disability, widows’ and orphans’ pensions, and to better the living conditions among the veterans altogether102. Given the enormous following the LEC almost immediately boasted, the organisation almost instantly represented a force to be reckoned with, and obtained the immediate support of the government. Given this important source for potential support, it is not surprising that many political parties would ask for its support and try to draw the LEC into national politics: since the LEC was intended as a mutual and a-political organisation, all these attempts would fail. But even though the LEC would indeed

98 Lora, Movimiento obrero, 27. 99 Klein, Parties, 217. 100 Valencia, Historia política, 1810. 101 Klein, Parties, 225. 102 Klein, Parties, 208-209.

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stay out of the politics, its support could prove instrumental as a power-basis for other, truly political entities103.

It All Falls Down It was under these conditions of political fermentation, that the government led by Tejada Sorzano had to operate: not an easy task. The new Liberal government increasingly felt the political, social, economic and military pressures and would eventually collapse under the sheer weight. The most pressing of problems, immediately after the cease-fire agreement, was the question of how to solve the political impasse that resulted from the military coup d’état: Tejada Sorzano had accepted to take over Presidential duties at the behest of the military, who had ousted Salamanca. His term would end shortly, though, and the question was who would take over afterwards. Presidential elections had been held in November 1934, but due to the abstention of the Liberals and the Socialist Republicans, the Genuinos had won, and therefore, the next constitutional President would have to be Franz Tamayo104. Since Salamanca had himself been ousted by the military, these election results had suddenly become obsolete, and rendered fully unacceptable to all parties concerned, except the badly discredited Genuinos themselves105. Another solution had to be found. The problem was temporarily solved as the military and the traditional parties agreed that it would be best that Tejada Sorzano’s term be extended until August 1935, so that there would be time to solve the matter in a orderly fashion and also to provide Tejada Sorzano with the time to negotiate further with Paraguay106. In these first months of 1935, most of the Presidents’ time was spent trying to come to an armistice-agreement with Paraguay, a goal finally reached on June 14th. By this time, the end of the Presidential prorogue was nearing already, and the trouble started all over again. The political bickering between the traditional parties now started anew, as all disagreed completely on the matter of presidential succession: the Liberals wanted to see Tejada Sorzano’s rule extended further, the Genuinos wanted the 1934 elections respected — they were quite constitutional, after all — and the PRS and Nationalists called for new elections to solve the problem. Then in July, matters were complicated severely when the military showed its new, politically-minded, colours and officially asked the President to stay on after August, in order to finalise negotiations with Paraguay and reach a peace-treaty107. The traditional parties, who had not yet grasped the new role the military was taking on, reacted in shock at the military request and their meddling. Only the Liberals did not mind this request at all, and during July threatened the other parties with direct military intervention, were Congress to disallow further Presidential prorogue. Under such pressure, the parties gave in and Tejada Sorzano’s term was extended further, until August 1936. The PRS and

103 Klein, Parties, 217. 104 With Rafael Ugarte, Salamanca’s brother-in-law, as vice-President. Only 17.354 votes were cast in these elections, because of the abstentions and the fact that so many voters had been drafted: AME, vol. 5, folio 22, 16 November 1934. 105 Unacceptable to the military, who had had bad experiences with Genuinos, unacceptable to the other traditional parties, who now blamed the Genuinos for the country’s predicament and unacceptable to the population as a whole, as it too blamed much of the misery on Salamanca and his party. 106 Klein, Parties, 199. It is quite interesting to note that the military played a great role in this prorogue, indicating that it indeed had become far more involved with politics than in the pre-war years: this time, the military asked for the prorogue first, and the parties agreed later. The political involvement of the military before 1932 had always followed the opposite pattern, whereby the military could be asked by civilians to intervene on their behalf. 107 Klein, Parties, 276.

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Nationalist Party were appeased with the promise of elections, to be held for both Congress108 and the Presidency, in October 1935. Although the most immediate problem of presidential succession had now, temporarily, been resolved, other issues started surfacing rapidly, making government increasingly difficult. The new political organisations, as well as labour unions, were moving beyond their embryonic stages quite fast, and started exerting their own political pressures. By October, election month, the CSB was beginning to form and threatened the government with total political anarchy if the elections were not postponed, so that the CSB and its PS might prepare and participate. Fearful of the visibly discontented masses of voters and labourers, Tejada Sorzano acceded to these demands, and the elections were re-scheduled for May 1936. Until that time, the traditional parties, save the Nationalists who had just been discontinued, would try and re-gain their following, in a bitter attempt to cling on to power. The PRS had already shown it saw the growing power of the left, and tried tapping into this new spring of youth, with moderate success. The Genuinos had been so badly damaged, that they disappeared into the margins of politics, not actually dead, but hardly very lively. The Liberals faced similar problems, though not as bad as the Genuinos, and tried very hard to rid themselves of the already very negative adjective “traditional”, in an attempt to present itself as lively and innovative109. Unfortunately for the Liberals, the party was indeed perceived as the embodiment of “traditionalism”, and quite unable to shake this image. Now that the PRS was engaging in overtures towards the new left, especially the CSB, the Liberals became increasingly isolated on the political front, as the very marked shift in popular morality and political conviction was taking shape. For all their good intentions, the Liberals remained true to their most essential ideology, which had overnight become both tainted and outmoded. Adding to the Liberal misfortune, the popular and political tension as a result of the rapid political fermentation had already got to such a point where it would no longer prove productive to suppress the opposition, as would have been the standard modus operandi in the years before the war. The situation for the Liberals was fast on its way of becoming hopeless, as it was clear that they had no hope whatsoever of winning open elections, could not possibly rig elections without evoking major popular protest and perhaps revolution and the military stated its unwillingness to come to the aid of a single political party110. The party’s plight was not at all helped by Tejada Sorzano’s economic measures, as the President returned to some of the Liberal ideological strongholds concerning economic policy, and dropped the double exchange rates and reverted to inflationary tactics in order to counter the financial crisis111. As a direct result of these measures, the cost of living tripled within a year, average inflation going up from 16.6 percent between 1932 and 1935 to 50.7 percent between 1936 and 1939112. This situation, combined with the fact that the war had cost so many lives that there was actually a shortage of skilled labour (Both in the mines and in the urban industries), added considerable momentum to

108 Which was still dominated by Genuinos. 109 “No party can reasonably attribute to itself the privilege of the truth and pretend to condemn the other group by marking them with the seal of traditionalists”: Liberal Party leader Tomás Manuel Elío in a newspaper interview in El Diario, February 16th 1936: Klein, Parties, 220. 110 Klein, Parties, 220-221. 111 At around the same time, in a vain attempt to draw more voters and rouse public sympathy, the government announced that an official public inquiry would be held into the wheeling and dealing of the Standard Oil Company of Bolivia, which had become the main focus of attacks on international capitalism: all of the self-respecting political groupings called for the nationalisation of this company, accused of aiding the Paraguayan war-effort against Bolivia. 112 Klein, Parties, 223.

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the re-organising labour movement113, which in turn led to an increase in strikes and workers’ demands of wage-increases. Despair among the ranks of the Liberals reached such a point that the party entered into talks with the traditional parties, hoping to solve their predicament through a cabinet of national unity, even offering to simply divide Congress equally among the PRS, the PS and the Liberals, each thus obtaining 30 seats. Eventually, the Liberal Party asked the military to intervene and force a cabinet of national unity, holding power itself until agreement among the traditional parties could be reached. All of this manoeuvring, however, proved futile, as neither the PRS, the PS or the military would hear of such proposals. Then, around April of 1936, rumours started spreading that the PS and the PRS had agreed on a pact to obtain power, while at the same time rumours spread that the PRS-PS combination was also in talks with the EMG, allegedly in an attempt to break the political impasse and force a new, progressive government to replace the Liberals114. In a reaction to these rumours, the Liberal Party announced that, in protest, they would abstain from the elections; at the same time, while the May elections were nearing, neither the PRS nor the PS had pushed their Presidential candidates forward, leaving the elections without nominees — the Genuinos had already promised to back the Liberals, fully aware that they themselves stood no chance whatsoever: their help however, was a very mixed blessing. The complete standstill of politics continued until May 6th, when another complication made matters untenable: the FOT of La Paz had, just days before, presented a petition to government, demanding, among other things, a 100 percent wage-increase. The petition was accepted, but Tejada Sorzano was long in reacting to it, while the BSI, the PS and the PRS all supported the FOT in its demands115. Then, on May 6th, the Sindicato Gráfico, a member of the FOT, decided it would wait no further and announced that it would go on strike until the newspapers and publishers gave in to the demanded wage-increase. Having learnt from their previous mistakes, the other unions and syndicates immediately joined the strike, which had suddenly become the largest the country had ever witnessed. For fear of violence, Tejada Sorzano ordered the National Police to stay indoors, and let the strikers roam free: for days, the streets of La Paz were patrolled by workers. The strike lasted for several days, while government proved unable to control matters any longer: the government had completely collapsed in the face of political and social opposition, and the situation became such that the military, in coalition with the PRS and the PS, decided to act. On May 17th, the military, under the command of Germán Busch, grabbed power from Tejada Sorzano116. In truth, this development had been predicted for months, and was generally accepted as inevitable, given the political and social situation at the time. The traditional system had lost its credibility, and also its ability to suppress the opposition and was no longer deemed acceptable. The left was still in its initial phase of organisation, something that is attested to by the fact that many of these new parties, such as the BSI and the PS, would not last for many years, and develop into newer and ever-stronger parties, and was therefore not in any condition to actively challenge the government or take it over by itself. The same more or less goes for the unions and syndicates, which even though now co-operating, were still far from united. Really, the most common of grounds among all of these, save the Liberals and the Genuinos,

113 Klein, Parties, 224. 114 Klein, Parties, 222. 115 Undoubtedly trying to show their goodwill and hoping for the workers’ support in return. 116 Klein, Parties, 227. IN fact, on May 16th President Tejada Sorzano, in utter despair over the continuing strike and his powerlessness to control it, formally asked the military to intervene and crush the strike: indeed the army did intervene, but not exactly as Tejada Sorzano had hoped: on the orders of Lieutenant Colonel Busch, two officers went to Tejada Sorzano’s residence only to place him under arrest and ask that he sign his resignation: Ferrán Gallego, Los orígenes del reformismo militar en América Latina, 89.

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was that the existing government was failing, outdated, outmoded and should go. Given the state of the opposition, there was no single credible unit, with sufficient popular acceptance, moral standing or sheer might to replace the Liberals. None, other than the military, as people were remarkably quick to forget its role in the Chaco war and put the blame on civilian politics alone. As for the civilian politicians involved in the coup — the second within two years —, they seemed quite certain that this was another coup like those before: at their behest, and with only temporary interim military involvement. Quite to the contrary of what Baldivieso and Saavedra believed, the military were there to stay, as new politics still needed much time to develop into a viable alternative, and be able to provide order and stability without the use of military force. Also, Saavedra’s hope that he might preserve the political system to which he belonged, would prove false: he himself, in May of 1936, had helped to ‘put it to sleep’. He, and all those like him, the representatives of an old, repressive and exclusive order, had had their time and would now be replaced by an entirely new generation, consisting of highly idealistic angry young men, who did not yet know where they would go from here, as their calls for “social justice” had not even had time to be elaborated into any concrete plan.

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The Establishment of Military Socialism As the military, in alliance with the PRS and the PS, took power on May 17th, the first order of business was to solve the strike which had been the context in which the revolution took place1. Immediately, the demanded wage-increase was granted, not only to stop the strike, but also to make clear the socialist content of the revolution2. With this, the strike subsided, and normality returned to the streets of La Paz: or did it?

Busch’ Interim Government When Saavedra entered into talks with the EMG, together with the PS, his goal had been clear: to obtain power for the PRS3. To do this with the help of the military was not a new idea, and had in fact been somewhere near standard practice since the establishment of the Liberal system in 1883. Certainly, Saavedra understood that the popular current of thought had changed, and he had adapted his rhetoric to fit this new mood, but he apparently had failed to grasp the fact that the military too had changed considerably in their ambitions and he was in for a nasty surprise, as the military failed to meet entirely with their end of the deal: the number of military officers in the newly established provisional Junta Mixta de Gobierno4 was greater than agreed upon5. Worse still, unlike the agreement, Germán Busch indicated that he wished to stay on as head of the EMG, rather than take upon him the responsibility of the Presidency6: Busch would stay on as President ad interim only until Colonel Dávid Toro’s return from the Chaco, where he was on military business at that time. Saavedra had wanted Busch to stay on as President, as he thought that the young man would be much easier to handle than the overtly politically-minded and astute Toro7. Adding insult to injury, the last act performed by Germán Busch as President before Toro returned to take over from him, was to decree that the censor, at the time regulated by the ministries of War, Foreign Affairs and Internal Affairs, be controlled by the EMG and not the civil authorities, thereby assuring that he himself could regulate censorship8. Unlike the PRS, the leaders of the PS understood that the army would, and must, play an important role in the revolutionary government: given the circumstances, no merely civil government could possibly survive for very long without depending heavily on the military. Further still, PS leader Baldivieso knew and respected both Toro and Busch, and was very well

1 Since the same strike also affected and thus silenced the country’s newspapers, the only source of information available to us of this short period is the Anuario Administrativo of 1936, which contains all decrees and laws passed in that year. 2 Anuario Administrativo (AA) 1936, 697: 17 May 1936 and AME, vol. 5, f. 95, 26 May 1936. The decree was signed by Germán Busch, interim President, and also by Víctor Paz Estenssoro, the man who would lead the country through the 1952 National Revolution. 3 And the Presidency for himself, after the Junta Mixta had served its purpose and the presidency would be handed to civilians. It is for this reason that Saavedra himself was never a part of the Junta itself and had his interest looked after by his second in command Gosálvez. Gallego, Reformismo, 102. 4 Indicating that both civilians and military men took part in the Junta. 5 Four in stead of two: Gallego, Reformismo, 94. 6 Actually, the pact between the PRS-PS coalition and the military had initially included the stipulation that Bautista Saavedra himself attain the Presidency. Lora, Movimiento obrero, 40. 7 Gallego, Reformismo, 95. Saavedra’s resistance to Toro is understandable, seen as how Toro had been Saavedra’s political enemy during Siles’ regime. To further complicate matters, the PRS had attacked Toro publicly during the months before the May revolution, accusing him of being an ineffective soldiers harbouring far too many, and far too dangerous political ambitions. 8 AA 1936, 700, 20 May 1936.

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aware of their political stance towards innovation and social change, and saw that they would both make good allies in trying to bring about a more equitable and fair Bolivia9. The main question as to why the PS went into a coalition with the PRS, is rather difficult to answer10: in all probability the answer would be that this party not only had most experience, but also that the presence of a member of the traditional block might make the revolution more acceptable to the sectors of society that were not waiting for a social revolution: the export-sector, for example, the international community or the more conservative members of the military. Another interesting matter is the relationship between Toro and Busch, which has been described by those who knew them, as a difficult one at best11. It must be understood that Busch, head of the EMG and regular war-hero, was a very important factor in the military as a whole: he was very popular, and also had the full support of the LEC, with which he was to have a very good relationship in the years to come12. He was also very young, and aware of the fact that he knew very little of politics, having devoted all of his short life to the military and serving much of his time in the far-away Chaco region, and felt that he would best serve his country as head of the EMG. Toro was quite the opposite: most of his contributions to the war-effort had resulted in bloodshed, and he proved to be an inefficient military man. He did, however, possess great social skills and was a highly educated man, able to surround himself with a loyal following of high-ranking officers such as Generals Peñaranda and Quintanilla — both outranking him, but who would take orders from Toro anyway. Their relationship therefore was one of mutual dependency: without Busch’ support, Toro’s government could not possibly survive, as he himself was quite unpopular with the citizenry. Likewise, Busch did not have anything near the political insight, experience or even ambitions that Toro had, and he deemed himself unprepared and unable to run a government. In the end, therefore, he decided to leave politics to Toro, remaining head of the EMG himself: in this way, Busch still had much influence and could steer matters somewhat, while still leaving most of the political game to the much more sophisticated and astute Toro13. Eventually, this decision would make matters quite complicated: Toro had to deal with Busch looking over his shoulders for a little over a year, while Busch was inevitably drawn into the political game as the military became more and more the focus of the government, and this growing involvement in politics which he had previously tried to avoid, would end with his death in 1939. Having made his decision to return to strictly military duties, it was announced that Toro would become President of the mixed Junta, while announcing at the same time that Busch would stay on as head of the EMG and fully supported the new government, thereby assuring that the new government headed by the unpopular Toro would at least have a chance. Also, the presence of the PRS reassured that traditional parties and conservative elements in society could rest assured that no radical changes were about to occur, while the participation of the PS guaranteed the support of the largest leftist grouping, the CSB. In this manner, the new government was assured of enough of a popular basis to be able to maintain stability. The big question now was: what did the new self-proclaimed ‘revolutionary’ government propose to do? For Busch had made only the necessary comments to the effect that order would be

9 Gallego, Reformismo, 97. 10 The PRS-PS alliance was signed on February 4th 1936. Lora, Movimiento obrero, 40. 11 Foianini, Misión Cumplida, 116-119 and Belmonte, Sombras, 85-92. Díaz Machicao, on the other hand, states that Toro and Busch became friends during the Chaco War, and that it was conflict over the precise nature of “Military Socialism” that eventually soured their otherwise good relationship: Díaz, Toro …, 22 - 58. 12 Foianini, Misión Cumplida, 258. 13 Gallego, Reformismo, 96-98. Toro’s exact stance on politics is still the subject of much speculation, certainly in the light of his one-time alliance with Hans Kundt, under Siles’ government. Kundt is well known for his National-Socialist tendencies and had in fact been directly tied to the failed Nazi-Putsch of 1923. Rinke, “General Kundt”, 621.

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restored, but had neglected to mention what was to happen next14. Not surprisingly, as it would turn out that the PS, the PRS and the military all had quite different ideas of just how ‘revolutionary’ the new government was to be.

The Concept of “State -” or “Military Socialism” Toro arrived from the Chaco on May 20th of 1936, on which day Busch handed power over to him. Of course, given Busch’ initial silence, the first task at hand was to explain the reasons for the coup, and the plans the Junta had. As he accepted this ominous task from Busch, he stated that:

“The coup was laboriously planned, with the undivided consent of the military, whose ideology is in accordance with the new ideology of the country.” He added that the intentions of the Junta were to “implant State Socialism with the aid of the leftist parties”15.

The political programme of the revolution was pronounced just few days after, on May 25th 16. The main points of the programme formed a peculiar mix of political ideologies, which would be hard to term either Liberal, Socialist, Communist or Fascist and in reality contained many items taken from all of the above. The most important of the 52 separate points were these: • The final solution of the Chaco conflict, aimed at restoring normalised relations with

Paraguay and reaching a peace-agreement. • Extending civil rights to women in general, and ‘political rights’ [Meaning the right to vote]

only to women with a university degree, a professional title or an office that guarantees their economic independence17.

• Obligatory syndication, to the extent that this would be obligatory for all those who wished to exercise their civil rights.

• Obligatory labour for all able-bodied men in the country. To those that did not have employment, the state would supply it, or in the event in which no job could be found, the state would supply a pension for personal sustenance18.

• The re-organisation of the police-force. • To organise investigations into the private fortunes of those that had held public offices, in

an attempt to counter corruption19. 14 And of course created the circumstances in which the strike at hand could be resolved without resorting to violence: without a doubt, resorting to violence would have caused major bloodshed at this point and might very well have destroyed the government even before it had been inaugurated. So even though many authors suggest that this move was a gesture of friendship or sympathy, it would be hard to see how Busch could have done otherwise. 15 “El golpe de estado tuvo una gestación laboriosa con el consenso unánime del ejército, cuya ideología es concordante con la nueva ideología del país … [our intention is to] implantar el Socialismo de Estado con el concurso de los partidos de izquierda”, Porfirio Díaz Machicao, Toro - Busch - Quintanilla, 24. According to Dávid Toro, there was nothing planned about it, and he states in his book: Mi actuación en la campaña del Chaco, that he was only informed of the coup on May 17th. 16 Elaborating the statements made by Enrique Baldivieso on May 23rd, roughly outlining the intentions of the mixed Junta. Gallego, Reformismo, 98. 17 This same stipulation held true for men also: the right to vote was limited to those men that had sufficient income (Settled at 200 Bs annually). AME, vol. 5, f. 3, 11 May 1933. 18 “Un salario vital”, Lora, Movimiento obrero, 42. 19 Which was wide-spread: as the Minister for Foreign Affairs put it, the source of many of the problems the country was facing lay in “la creencia, demasiado difundida desgraciadamente, de que los Ministerios y demás oficinas dependientes del gobierno sólo sirven para que los empleados ganen sueldos, por labores que no ejecutan”. AMR, Min 2 388 Departamento de Propaganda (Del ministerio de Relaciones Exteriores y Culto), folio not numbered, number 8399, 21 October 1937. Other than this, much mention is

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• An investigation into the military, political and diplomatic responsibilities of the Chaco War, aimed at bringing those guilty of causing and losing the war to trial.

• The revision of the contract with the Standard Oil Co., and finalising of the law-suit in which the state and the company were involved at the time.

• Revision of taxes on mining, aimed at increasing the stake of the state in the profits made in this sector.

• The introduction of a Value Added Tax. • The creation of a national Patronate to study all matters pertaining to the “Indian Classes”,

especially their incorporation into civilised society and the distribution of land. • Nationalisation of public transportation and communications, as well as the expansion and

improvement of the communications-network, including new roads and railroads, aimed at improving infrastructure to neighbouring countries for commercial purposes, but above all in an attempt to increase governmental control over national territory.

• Economic diversification aimed at reducing the country’s dependence upon a single product. • The reform of existing and development of new social legislation, aimed in particular at the

formulation of a Labour Code.20 Toro made it clear that the Junta, that was to introduce all these changes ‘in so far as possible’21, would stay on for no more than a year, after which period a new civilian government would take over the reigns. Elections were to be held three months before the end of this period, for the Presidency, Congress and also to convoke a new constituent assembly: the assembly was to write a new constitution, more in accordance with the new ideologies that had replaced age-old Liberal ideals. In order that these changes be introduced, Toro also announced the creation of four new ministries: those of Labour and Social Affairs, Mines and Petroleum, Industry and Commerce, and Agriculture. Also, a new department of Indian Affairs was added to the ministry of education22. Especially the items regarding labour-issues attracted attention and would eventually lead to heavy debates within the Junta, and even internationally. The most immediate of these, as the mandatory syndication was as yet far off, was the creation of the Ministry of Labour and Social Affairs. In a very successful attempt to gain the allegiance of the Labour movement, Toro invited the independent labour movement to appoint the first minister of Labour and Social Affairs from its own ranks, and Waldo Álvarez, leader of the Sindicato Gráfico, was pushed forward and accepted23. This caused quite a stir, and certainly was the most controversial act so-far, as Álvarez had been a ‘mere’ working man all his life, had had no political experience whatsoever, nor did he enjoy any sort of higher education24, and apparently not all the partners in the new revolutionary government were as thrilled as the labour movement: many of the traditional parties, including the PRS saw Álvarez as a dangerous communist agitator and would start an entire campaign to rid the government of this ‘evil’. The Ministry of Labour and Social Affairs was created on June 2nd 1936, when its job-description was established by decree: thence on, this ministry would be responsible for the creation of adequate labour legislation, the organisation and syndication of labour, decreasing unemployment and so forth. Also, concerning social affairs, it would oversee the introduction

made, by all the Ministries and their respective departments, of corruption and ineffectiveness of their officials. 20 Díaz, Toro …, 24. 21 Lora, Movimiento obrero, 42. 22 AME, vol. 5, f. 97, 25 May 1936. 23 Gallego, Reformismo, 97. 24 A fact that becomes painfully clear when one studies papers and letters written by him, in which the letter “V” hardly ever appears (Thus Bolivia becomes “Bolibia”) and the letters Z, C and R are often replaced by the letter “S”.

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of mandatory insurance, covering health, accidents, pension-plans and so on25. Finally, this ministry also was to have a department of Indian Affairs, concerned with rural labour26. Álvarez was given more or less a free hand in these matters, as long as he stuck to the goals set by the revolution, including mandatory syndication and forced labour, which the ministry would also oversee. Álvarez himself had some misgivings about the idea of mandatory syndication, fearing that the project would hand the state too much control over the syndicates and possibly undermine their effectiveness. In the end, however, he came to the conclusion that the plan would at least be helpful in organising labour, and probably do more good than harm and decided to support the project: one of the main items in the Junta’s proposals that were protested against by the traditional parties and the capitalist sectors of society, for reasons obvious to the eye27. The proposed forced labour for all able-bodied residents was received quite well, in all sectors of society: to the labour movement and the leftist parties, it represented action against unemployment, and for the mining sector, which had been having great difficulties attracting enough labour, it meant that it would finally dispose of the labourers it so badly needed. Right around this time, the international tin-market was recovering from its crisis very rapidly, mainly due to the increasing tension in Europe, causing France, Great-Britain, the United States and Germany to start re-arming themselves and therefore the need for tin grew rapidly28, and the mines were unable to attract sufficient workers29, as many former miners were still held in Paraguayan POW-encampments, and the de-mobilisation had not been completed. The fact that such forced labour in the mines was in conflict with international agreements30, did not eventually stop the forced labour-decree, which was ratified on July 6th31. The arrangement was such that every employer must provide his employees with a certificate, testifying to the fact that the person in question had work: all those that did not have such a certificate, must identify themselves with the Ministry of Labour, which would either find work, or provide a basic pension for personal sustenance. The business and industrial communities could make their needs known to the ministry, so that it could in turn supply labour to them32. Closely related to the idea of forced labour, was the obligatory syndication proposed by the Junta, and which had been a part, specifically, of the PS’ programme: the idea was part of a whole set of plans to rearrange the political and social structure of the nation, in that the syndicates should eventually play an active role in the political process, and that the right to vote should be limited to those who were ‘productive’ members of the community, united in the national syndicates. The corporatist implications were obvious, and this particular idea met with quite some resistance: the traditional parties were against it, because it threatened the very nature of the system that they had built, and the left was generally preoccupied with the fact that the whole idea had more to do with fascism than with socialism33, while the labour movement feared that it might undermine its ability to exert pressure, since according to the proposal, all syndicates would be under strict government control. Álvarez was asked to give 25 AA 1936, 829-830, 2 June 1936. 26 AMR, Min 1 102 Trabajo y Previsión Social, folio 1, number, 3781, 16 June 1936. 27 Gallego, Reformismo, 116. 28 Tin being one of the ‘strategic minerals’ (In a military sense), together with manganese, antimony and tungsten. 29 AMR, Min 1 102 Trabajo y Previsión Social, folio 14, number 4332, 6 July 1936. 30 AMR, Min 1 102 Trabajo y Previsión Social, folio 14, number 4332, 6 July 1936. 31 AA 1936, 1226-1228, 6 July 1936. 32 Gallego, Reformismo, 113. Unfortunately, no data exist on the effectiveness of the scheme: there are no statistical data as to the number of people who were put to work in this manner, nor is it known how many escaped the system that resulted from the July decree. According to Klein, the decree was aimed at forcing the returning Indian masses (From the front) back to the country-side, and preventing them from attempting to escape the “feudal caste-system”: Klein, Parties, 241. 33 Gallego, Reformismo, 115.

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further explanation to the FOT and other members of the labour movement, and explained how he too had his misgivings, but that the project did not endanger the existence of the concurrent unions and syndicates, even though it admittedly would bring them within the scope of governmental control. On the other hand, he added, there was still no national labour organisation, something that all agreed upon was necessary to their common goals, and forced syndication, implemented and supervised by the Labour Ministry, would provide at least that, thereby accomplishing something that the various independent organisations had thitherto been unable to34. It might not be exactly how they wanted it, but certainly represented a step in the right direction, and the labour movement accepted Álvarez’ explanation and assured him of their continuing support and confidence. The battle over mandatory syndication was, nevertheless, not over yet. Though the creation of the Ministry of Labour and Social Affairs was the item that drew most attention at the time, it was certainly not the only issue addressed by the May revolution. One of the other major points was also the sum of proposals dealing with the “Indian Problem”, as it had been phrased for over half a century35. According to some writers, including for example Augusto Céspedes, Herbert Klein, Porfirio Díaz Machicao, Alipio Valencia Vega, Guillermo Lora and others, the “Indian Problem” was largely ignored in the proposals of the Junta. However, two ministries were given departments of Indian Affairs, while Toro stated that he realised that the matter was so serious that there should eventually be a separate ministry, but for now the problem should first be studied properly and the financial state was such that there simply was no money for such an undertaking36. The first goal of the two independent departments — the first with the ministry of Education and Indian Affairs and the second with the ministry of Labour and Social Affairs — was to establish how the situation was, exactly, and how it could possibly be changed: the definition of the “Indian Problem”, as it were. In order to do this, the Ministry of Education and Indian Affairs would have to set up schools in rural areas, on the haciendas as well as in the comunidades, as it was deemed that the first order of business was to educate the Indian masses37. The Labour Ministry’s task in this matter was to investigate the working conditions of the Indian masses, so as to be able to incorporate them into the nations economic life: after all, the Indians were not ‘productive’ members of society and contributed too little38. For the first time in the history of the country, true attention was given to the Indian question: debate over how to deal with the “Indian problem” had existed for many years, especially the Liberal Party calling for a system of education in rural areas39, but nothing had ever been undertaken. The new and self-proclaimed ‘socialist’ state could not, however, remain passive in this area, as its socialist rhetoric was totally incompatible with the very idea of leaving some 60 percent of the population in the bitterest of circumstances: the idea of “Social Justice” must apply to them too. Moreover, it was also feared that if the Indian masses were left 34 Gallego, Reformismo, 116. 35 The term “Problema indígena”, and other terminology to the same effect, occur very frequently in the documents of this government: the conception of the Indian masses as “a problem” was born in the second half of the nineteenth-century, as Liberal and Positivist ideals starting getting hold in the country: see Florencia E. Mallon, “Indian Communities, Political Cultures and the State in Latin America, 1780-1990”, and Irurozqui Victoriano, Marta, “¿Qué hacer con el indio? Un análisis de las obras de Franz Tamayo y Alcides Arguedas”, in Revista de Indias, vol. LII, 1992. 36 AMR, Min 1 102 Trabajo y Previsión Social, folio 7, number 3781, 16 June 1936. 37 AMR, Min 1 101 Educación y Asuntos Indigenales, folio 143, number 5246/51, 21 July 1937. “la creación intensiva de escuelas para los nativos, que es una de las primordiales aspiraciones del supremo gobierno de la nación”. 38 “a convertir las densas masas indígenas en elementos útiles a la economía del estado”, AMR, Min 1 101 Educación y Asuntos Indigenales, folio 61, number 273/4/37, 13 January 1937. 39 For a discussion of this debate in Bolivia, see Irurozqui Victoriano, Marta, “¿Qué hacer con el indio? Un análisis de las obras de Franz Tamayo y Alcides Arguedas”, in Revista de Indias, vol. LII, 1992.

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out of the revolutionary process, they might violently claim their right as Indian rebellion was a well known phenomenon and had been for centuries40. It is especially interesting to see that, even though authors such as Klein and Céspedes claim that no reference was made to agrarian reform, one of the tasks of the Indian Affairs department of the Labour Ministry was to investigate exactly that: the distribution of land, and to research a new law governing the ownership of it, aimed at a more equitable distribution of the land in the framework of “Social Justice”, as well as in the hope of increasing production and eliminating food-shortages41. So granted that little was immediately changed in the relationship with the Indians, the will was there and important steps were taken, of which the effects would be felt in the years to come, as the educational system progressed and the syndication of the Indian masses — also included in the specification of duties of the Labour Ministry42 — took hold and was instrumental in the growing importance of the Indian masses as a political factor in the nineteen-forties and ‘fifties. Some of the other proposals were clearly intended as little more than propaganda, such as for example the continuing law suit, filed by Tejada Sorzano’s government, against the Standard Oil Co. The generally hostile attitude against the company put government under tremendous pressure to act, as had already been proven by Tejada Sorzano’s initial steps in filing and investigation and a law-suit; the most important factor in this being that many had come to believe that the company had been directly involved in the advent of war, and in its disastrous results. However, neither Toro, nor Busch, who for obvious reasons had good knowledge of how the war had come about, nor foreign representatives put any faith in this “Guerra del Petróleo”-theory, as becomes clear from their memoranda to the Ministry of Foreign Affairs. The continued action against the company can therefore be seen, in part at least, as a populist measure, aimed at amassing support. The same might very easily be said about the idea of investigating the causes of the Chaco War and bringing the culprits to trial: not surprisingly, this was never carried out, and the very mention of the plan can not but be seen as ‘hot air’: any such investigation would have incriminated many of those that were now running the revolutionary government and would certainly have irreparably damaged the reputation of the military and rendered its current position untenable43. Much of the rest of the revolutionary programme involved reforms within the state-apparatus itself, such as a reform of the diplomatic service and the police force. Both suggestions had already been part of the Nationalist Party’s programme in the late nineteen-twenties, and were viewed as necessary modernisations: the national police force received very little training and was seen as ineffective, leaving it necessary for the military to intervene when the police were unable to. As for the diplomatic service, little good could be said about it: there were only very few professional diplomats, and the service was used frequently as a form of voluntary exile for opposition-leaders — within the traditional block — or as a reward for

40 “es de mayor interés para el estado socialista que desea regular la economía sobre una base de justicia, eliminando toda explotación, atender de modo señalado e inmediato el problema campesino con mayor razón si su descuido podría ocasionar el levantamiento indígena, con el mas perfecto derecho”, AMR, Min 1 102 Trabajo y Previsión Social, folio 7, number 3781, 16 June 1936. 41 AMR, Min 1 102 Trabajo y Previsión Social, folio 7, number 3781, 16 June 1936. Also, Sección de Prensa Palacio de Gobierno, Bajo el régimen militar socialista: ¿Hay Labor gubernativa?, 44. 42 AMR, Min 1 102 Trabajo y Previsión Social, folio 7, number 3781, 16 June 1936. 43 Klein, Parties, 236.

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services rendered. The service itself was corrupt44 and highly ineffective, and badly needed reform45. The last of the proposals, and certainly the way in which they were phrased and executed, are perhaps the most significant, as they represented a dramatic turn in the structuring of the state, and directly affected its allegiance to different sectors of society: the system of taxation was to be altered, in such a manner that more money could be extracted from the mining-sector. The very creation of the Ministry of Mines and Petroleum was aimed at this, and the inevitable ‘nationalisation’ of the Standard Oil Company46. Of course, the financial state of affairs was such that the state could use increased income, and almost immediately Toro re-imposed the fixed and separate exchange-rates, which in fact reached their record-highs during the years of “Military Socialism”47. In addition, the other taxes on mining were also extended and raised, so that around 50% of all government revenues came directly from tin-mining alone [See figure 4]. This produced a continuous antagonism between the state and the industry, meaning that the new regime must obtain its support from other sectors of society. How to view these plans and proposals, in the light of what it was supposed to be replacing? The programme adopted by the new regime made some things very clear from the beginning: first of all, they indicate a recognition of the “Social Injustice” that was prevalent in this country, and had been kept in place by the Liberal System for more than half a century. One of its main goals was certainly to improve living and working conditions of the urban masses, as well as the rural masses, at the direct expense of the upper echelons of society: this is what was so vaguely termed “Social Justice”, the idea that wealth should more equally be distributed. The May revolution represented the awareness that the Liberal political system was dysfunctional and excluded too great a portion of society from progress, education, political participation and from the means to gain a decent living. Perhaps, apart from all the plans and ideas pronounced by the Junta, the most striking and significant feature is the simple fact that in its rhetoric and in its objectives, there is a shift in the basis of power itself: the new government leaned very heavily on popular sectors of society, and did so willingly and purposefully, now quite overtly less sympathetic to the pleas of the industrial sectors, and much more sympathetic to the labour movement, the ex-combatants, the Indian masses and the younger generation of military officers.

44 A number a minor and major scandals emerged from this corrupt system, and as WW II neared increasingly to do with Jewish immigration: a major ring of corrupt Bolivian officials selling permits and visa to Jewish refugees (at between US $100-US $ 500) was uncovered in March 1939, as well a several independent smaller cases of similar corrupt activities between 1936 and 1940: AME, vol. 5, folio 137, 20 March 1939, AMR, Min 1 121 Ministerio de Relaciones Exteriores (RREE) Informes 1939, Reservado (no number, folio not numbered), 12 April 1939 and elsewhere. 45 Sección de Prensa Palacio de Gobierno, Bajo el régimen militar socialista: ¿Hay labor gubernativa?, 31. 46 The term ‘Nationalisation’ is perhaps out of place, as in fact all that was eventually done was to declare the contract by which the company obtained the right to exploit concessions granted by the state, null and void as a result of a breach of contract and fraud by the company. The company itself admitted to having exported oil, without permission and without paying taxes, in 1926 and 1927, and was therefore in breach of contract: the term employed by the Bolivian government in this matter is therefore not ‘nationalisation’ but ‘eviction’. See: YPFB, Bolivia y the Standard Oil Company; Anonymous, “Defraudación”, in Revista Bolivia, vol. VII, number 6, September - October 1939; Departamento Nacional de Propaganda Socialista, Cuartillas Informativas, no. 5, 23 March 1937; AMR, VRE 2 349 Desahucio de The Standard Oil Company of Bolivia 1935-1938 and AA 1937, 519-521, 13 March 1937 [The decree by which the company was ‘evicted’]. 47 Gallo, Taxes, 113-114: during these years, government revenue derived from the exchange-rate mechanism represented some 30 to 40% of total government income. Toro in fact made the system far more complex, establishing a total of 13 different exchange rates, for different types of in- and exports, for students abroad &c.

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But still, for all of its socialist rhetoric, and in spite of the fact that the government now called itself “Socialist”, there is also the element of governmental control. Unlike previous regimes, the new government would allow and approve of syndication: as long as it was under strict government control. Also, the government promised to oversee the improvement of social and economic conditions, but at the same time warned of the dangers of leftist extremism and stressed heavily the need to go about this in an orderly manner, again maintaining strict control48. Not for nothing, the regime typified its politics as “State Socialism”49, as opposed to merely Socialism. At the same time, the social elements of the programme were quite moderate, not directly doing much to improve living conditions and standards, but vowing to study the different problems. Enrique Baldivieso himself stated that the country was not ready for the advent of “integral socialism”, and the country needed first to rid itself of its “semi-colonial” features in order to prepare the country and its citizens for such drastic changes50. However, the corporatist tendencies within the new government can not be overlooked, as one of the main features of the programme lay in the re-structuring of the political system, through the introduction of mandatory syndication. It would soon become clear just how important this part of the programme was, and to which coalition-partners.

The Birth of “Military Socialism” Dávid Toro’s ineffectiveness in the Chaco War, his allegiance with Kundt and his involvement with Siles’ prorogue attempt, that was the direct cause for the revolution of 1930, had made that his reputation outside the military was a point of worry for the government that installed itself on May 20th 1936. It was well realised that the Socialist State, as it was hailed, would stand a chance only if its President could muster popular support, and do so quickly. Toro proved remarkably successful in easing worries and quickly gathering the military, the labour movement and the ex-combatants behind him: military support was secured through Busch’ strong presence behind the scenes, and the labour movement was quite pleased with Toro’s ratification of the wage-increase granted in his name by Busch just days earlier and became thrilled when Álvarez was made head of the Labour Ministry, which by itself was seen as a significant victory51. When to this was added the end of the state of siege, amnesty for all political exiles and prisoners and the end of censorship, Toro had succeeded in swaying public opinion his way in just under a day: during the first days of the regime, there had been anti-Toro demonstrations in the streets of La Paz, also to do with the fact that the precise nature of the revolution was as yet unknown, and people feared that military intervention might be directed towards the maintenance of the traditional system. As Toro announced the new regime

48 In August of 1936, the government issued a 98 page long booklet, informing the public of its intentions for each of the governments ministries. In it, one will find an exposition of the ideas behind the plans, and the concrete measures taken by the government, including warnings against the dangers of the Traditional block — now termed La Reacción — and of the extreme left: Sección Prensa Palacio de Gobierno, Bajo el régimen militar socialista: ¿Hay labor gubernativa?. 49 Socialismo de Estado. One can not help but wonder whether the word “Socialism” is used in a truly Socialist meaning, or whether perhaps it is related to the other types of “Socialism” that were concurrent with it, such as National Socialism. It is striking that many officials apparently struggled with the same problem, as different ones put the “Socialism of State” or “Military Socialism” in the context of both kinds of “Socialism”: some very clearly refer to National Socialism, while others clearly interpret the word in a more Marxist fashion. Apparently, it meant different things to different people in the same government. 50 Gallego, Reformismo, 98. 51 Gallego, Reformismo, 97.

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under his guidance to be Socialist and made public the intentions of the Junta, demonstrations in support of his government were held, on May 21st, one day after his arrival from the Chaco52. Having been able to obtain popular support for the movement, all problems were not yet solved. Short from experiencing the difficulties in accomplishing its even relatively moderate program, and finding out that the harsh reality of government is a far cry from the idealistic purposes set in the last days of May, there were other factors as well that would make the Socialist road a difficult one to wander. The most pressing of these was the composition of the revolutionary coalition, as the three partners were soon at odds over the programme itself, and the way in which it should — or should not — be executed. At the basis of the first problems within the coalition, lay the PRS, which really was the odd one out: not only did Baldivieso and Montenegro come under attack from the ranks of the PS for having concluded a pact with the devil53 — as the PRS was justly considered a member still of the traditional block —, but also did the PRS itself become increasingly unhappy with the way things were going in the first weeks of the revolution. Saavedra had entered into the current pact, considering that in doing so it would dramatically increase its power: he had expected Busch to become President, thinking him to be malleable to his purposes. Also, the advent of a revolutionary movement in which the PRS played a significant role, would lead to support for the PRS from the other members of the traditional block, including the industrial sector, since only the PRS would be in a position to impede all too drastic reforms. Furthermore, its presence in the new ‘Socialist’ government would attract popular support, thereby increasing its ranks further and accomplishing what it had been unable to do until now. Finally, in its position of power, it could prevent the more radical, anti-traditional forces from implementing too much of their ideas and plans54. It was understood that in order to accomplish this, it needed the help of the military, in an experience much like that of 1930, and it was also understood that the army had better relations with the PS, and this is why they went into coalition with Baldivieso cum suis. They soon found out that things had changed considerably since 1930, not least of all the military. One of the major topics of discussion was the Labour Ministry headed by Álvarez, who had gone about his duty in a very speedy manner, and had distributed important posts within the ministry among his political friends and allies, thereby turning the ministry into an island of leftist activities, far more radical than the rest of government. Not only did the PRS miss out on obtaining this important portfolio — that would provide the popular support needed —, but now it had been taken by someone openly hostile to the entire traditional block, including the PRS, and all it stood for. There was a noticeable and growing unease about what was taking place in this ministry, and the PRS proved quite unable to do anything about it, save warn of the dangers of “creeping radicalism”55. Of course, this particular ministry was not the only source of Republican discontent or worry, as Saavedra soon found out that the military had no intention of ceding the presidency over to him any time soon, and that their political intentions were quite real. By June, the PRS had finally grasped what the PS had known all along: the military were there to stay, and they were nothing like the military that took power in 1930 without its own political agenda. The PS was willing and able to allow the military to take on a decisively political role, but the PRS was not. Confrontation became inevitable, as the PRS found out that it had no hold over the military, and would be unable to achieve any of the goals they had set when entering the tripartite coalition. The feeling, however, was mutual and Saavedra very quickly became nothing more than a nuisance to the new regime. In order to rectify the problem, Saavedra started attacking the leftist elements in the coalition, especially in the Labour Ministry, 52 Klein, Parties, 232. 53 Klein, Parties, 237. 54 Gallego, reformismo, 100-101. 55 Klein, Parties, 237.

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apparently hoping that the military would eventually side with him and expel these ‘communists’ that were threatening the existing order and structures. He was, however, painfully mistaken and it was he that would be shovelled out56. The conflict within the PS, as a result of the pact with the PRS, grew rapidly, and seriously threatened Baldivieso’s position within the party: on June 2nd, at the PS party convention, the pact was annulled and Baldivieso had no choice but to accept this decision. At the same time, Saavedra’s attacks on the leftist members of government had grown all out of proportion, and the situation became untenable57. As a last resort, Toro tried to send Saavedra into voluntary exile, offering him the highly sensitive post of chief-negotiator at the Conference of Buenos Aires, but Saavedra refused the position, on the grounds that he felt the offer was insincere58. Now that this attempt had failed, the situation became such that the tripartite coalition was decaying rapidly and the political situation had become such that the revolution and all of its intentions became endangered by the split. The impasse was broken by Busch, who oversaw the political game from a neat distance, in the offices of the EMG. The re-emerging political bickering, which might seriously endanger the army’s design, made it necessary to act, and on June 21st 1936 Busch acted: the second coup d’état within 35 days was carried out, eliminating civilian presence in the Junta. In his address to the nation, Busch stated that: “the parties to the left, united through political pacts, did not hesitate to break these pacts, offering us the display of their completely opposite political appetites. … The Saavedrista Party is entirely to blame for our current predicament”59. Immediately after the fact, Saavedra was expelled from the country and power handed over to a Junta consisting of military men and three civilians, these however à titre personnel, and not as part of any political organisation60. Thus, even though the PS was exonerated, and all blame put on the PRS, all organised civilian political involvement had been eliminated: June 21st 1936 marks the birth of true “Military Socialism”. This Military Socialism was the first exclusively military rule since 1883. Why was it the EMG that finally broke through the political crisis that resulted from the split within the tripartite coalition? It has been suggested that Toro had not known of Busch’ impending ‘rectification’61, but this seems rather far-fetched: Toro’s influence within the military establishment is well-known and has been described in detail, and it seems unlikely that such a detail as a coup d’état would have escaped his attention, given his connections within the military and within the EMG. Rather, it seems likely that Toro knew full-well what was to happen, and that the coup was undertaken after having reached agreement with Busch in the matter: not only did Toro have excellent connections within the EMG, but also the fact that the EMG, and not Toro, undertook this action was meant as a sign that it was an effort supported by the entire military establishment, united in its intent to ‘implant state socialism’. In this manner, Toro’s political problems could be solved, while at the same time demonstrating the army’s support of his policies62. 56 Klein, Parties, 237-238 and Gallego, Reformismo, 103-105. 57 He in fact had started organising demonstrations against the “communist” elements in government, and called for the expulsion of these individuals: Díaz, Toro …, 26. 58 Which of course it was: the French envoy, Arthur Guy, wrote that “La proposition … lui [Saavedra] donne … la pénible impression de n’avoir d’autre but de l’éloigner du pays”. AME, vol. 5, folio 109, 18 June 1936. 59 “Los partidos de la izquierda, unidos por pactos al parecer sólidamente definidos, no tardaron en romperlos, dándonos el espectáculo de sus apetitos totalmente contrapuestos … Ha correspondido al Partido Saavedrista la responsabilidad máxima de lo que ahora acontece.”: Díaz, Toro …, 27. 60 Klein, Parties, 238. 61 For example by Herbert Klein [Klein, Parties, 238-239] and Díaz Machicao [Díaz, Toro …, 26-27]. They suggest that the coup of June 21st should be viewed as further proof of discord between Toro and Busch. 62 Gallego, Reformismo, 106.

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Military Socialism Advances With the removal of the PRS from the Junta, transforming it from a Junta Mixta into a Junta Militar, one of Toro’s major problems had been solved. In his address the next day, he announced that the revolutionary process would continue, but now without the assistance of the political parties, which had proven unable to set aside their differences for the good of the nation. The PRS was understandably upset, but in contrast, the PS accepted the change as necessary in light of the developments before June 21st, and continued their support for the Military Socialist government, which they believed would uphold the standards set in May. The labour movement also continued its support, as Waldo Álvarez was allowed to continue as minister of Labour and Social Affairs: after all, he did not represent a political party, but the labour movement as a non-political whole63. Most importantly, Toro remained President, and the elimination of political parties from the Junta would provide the opportunity to indicate what the military political agenda consisted of. The removal of political parties from government did not, however, make the political situation any easier. The ousting of the PRS contributed to the fact that thereafter the traditional parties found themselves able to co-operate and find their common grounds, in resisting the efforts of Military Socialism to alter ‘their’ political system. The demise of both the Nationalist and Genuine Republican Parties had created enough space for a new political grouping, which emerged during Tejada Sorzano’s rule: the Partido Centralista, lead by tin-baron Víctor Aramayo, which during 1936 proved able to absorb a number of dissident Liberals and Socialist Republicans as well as Genuinos and traditionally minded ex-Nationalists64. The military intervention of June made unmistakably clear that the intentions of the military had changed, since 1930, and that the Junta had not been placed there merely to hand over power to traditional parties after restoring law and order. Busch’ movement had made unequivocally and painfully clear that the military was no longer content to subjugate itself to the traditional block. The main question now was whether its programme matched the May revolutionary programme. Toro’s new government gave the traditional Parties much to worry about, as Álvarez fast continued his work of syndication, which was to be one of the predominant political issues of the year. By July 4th, the Asamblea Nacional Permanente de Organizaciones Sindicales (ANPOS) first saw the light, thus having been created the first National Organisation of Syndicates. The ANPOS was the first umbrella for all — legal — unions and syndicates, and all recognised labour organisations were invited to delegate representatives, as it would be the prime instrument for overseeing the proposed forced syndication that was to follow in August65. Quite clearly the major issue of the time was the idea of forced syndication, introduced by ex-Nationalists, but most notably by the younger officers’ generation that looked upon Mussolini’s Corporate Paradise and Nazi-Germany66. The idea was much debated within the cabinet, as the civilian members, including Álvarez, were far less enthusiastic about the whole

63 Gallego, Reformismo, 109. 64 Klein, Parties, 222. 65 Gallego, Reformismo, 116. 66 It is not difficult to see whence the military’s admiration for Germany came, as the whole institution was shaped by German training missions, and the EMG had been headed for years by a genuine German general, whose political ideals would now be deemed rather tasteless (See Rinke, “General Kundt”). Many Bolivian officers were also sent to Germany to be trained and educated, so a strong set of ties between Germany and the Bolivian military existed. That many of these were also drawn to National Socialism is unmistakable: many military men actually sent their children to join the Hitler-Jugend: AMR, Alem 1 R 15, folio 26, number 29, 27 April 1938, an activity funded by the German government.

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idea than the military members. Discussion did not remain limited to cabinet, though, as the traditional parties were dead set against the idea, writing in their newspapers that the military was trying to destroy the political party system and replace it with a Corporatist system67. Without a doubt, this was exactly what many of them had in mind, as becomes clear from the writings of some of the more militant fascists in the Bolivian civil service68, who were quick to point out to the German government that Bolivia too was installing a National-Socialist system69. As discussion of the syndication idea grew more wide-spread, it became time for the military to explain what it was they wanted to do, and what role the Syndication would play in the ‘rejuvenated’ state they wanted to set up: the coup and subsequent discussion had resulted in a general feeling of unease, as no-one was sure what the military in fact proposed. Through speeches, propaganda — organised in the Departamento Nacionalsocialista de Propaganda 70— the military let the cat out of the bag: what they proposed was to introduce a “New Bolivia”71, and the forced syndication would be instrumental in bringing this about: The “New Bolivia” was to be a corporatist state, in which the political system would be transformed into a “functional democracy”72, which basically meant that the system of representation would be based upon the syndicates73: thus, every ‘productive’ member of society was to have a dual vote, one individually and one as a member of a syndicate74. As far as political organisations were concerned, the military made their stance very clear when they declared the traditional parties to be “non-existent” for as far as government was concerned75 and added that the leftist parties could continue to count on political guarantees, as long as they did not become too radical. The idea behind this was that the masses were not ready to take responsibilities themselves, and should be guided through the process by a strong state, which

67 Klein, Parties, 243. 68 One excellent example is that of the Bolivian delegations to Germany and Italy, where not only the Bolivian officials were quite explicit about their sympathy for National Socialist and Fascist ideologies: see for example AMR, Sta S 1 R 11 Legación ante la Santa Sede, folio 5, number 2950, 19 March 1938 [And most of the rest of the volume], or AMR, Alem 1 R 14 Legación en Alemania, where one will find statements such to this effect: “... me permito ratificar mi profesión de fe política nacionalista-socialista. Soy adherente de la causa que surgió en Bolivia al retirarse el presidente Tejada Sorzano en mayo de 1936 y comparto del convencimiento que esa orientación es la única apropiada para estructurarse un estado fuerte que garantice el provenir de nuestra nacionalidad.”, AMR, Alem 1 R 14 Legación en Alemania, page 156, number 5411, 19 July 37. In fairness, however, it must be added that the same General Julio Sanjinés, Bolivian representative to Berlin, adds that although he greatly admires national-socialism, he is faced with a serious moral dilemma where anti-semitism is concerned. 69 AMR, Alem 1 R 14, folio 127, no number, 12 November 1936. 70 Díaz, Toro …, 37. 71 Which, through a weird twist of fate, also happens to be the phrase with which the MNR regime of the last few years has tried to impose its economic reforms, which have sparked major protests to the extent that a state of siege was declared for a good part of 1995; many hundreds of adds and posters, throughout the country, have proclaimed “Bolivia la nueva” throughout 1995 and 1996. 72 Gallego, Reformismo, 118. 73 Díaz quotes Toro as stating: “El ambiente se caracteriza por la ausencia de grandes agrupaciones políticas sanas, por la inercia de las masas, por el predominio de los intereses creados y por la existencia de pequeñas agrupaciones egoístas que pretenden dominar al Estado … Es necesario buscar la manera de reorganizar el estado sobre nuevas bases … Creo que los sindicatos funcionales bien organizados y controlados, bajo la tuición del estado, pueden constituir un factor de ayuda a la reorganización de nuestro sistema político social.”, Díaz, Toro …, 34. 74 Sección de Prensa Palacio de Gobierno, Bajo el régimen …, 64-65. 75 Klein, Parties, 259.

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would provide education and instil social responsibilities as well as political awareness in the popular masses, until they were ready to govern themselves76. The forced syndication was finally decreed on August 19th 193677, although the functioning and make-up of the syndicates to be erected was regulated by the Estatuto Sindical, worked out by the Labour Ministry78, which divided the syndicates into two types: the Sindicatos Patronales and the Sindicatos de los Trabajadores. From the date of its promulgation, all workers and employers were officially obliged to join such a syndicate and given the ideas behind it, this was certainly the greatest step undertaken so far in the ‘rejuvenation’ of the country and the bringing about of the Corporatist state. Unfortunately for those that had worked so hard on the proposal, nothing ever came of it, and the decree, nor the statutes, were ever taken from the Anuario and turned into reality. The only thing accomplished through the decree was the complete alienation of the conservative sectors of society, the middle classes and the labour movement; by the capitalists, the decree was seen as a direct assault on their activities, giving the workers far too much power; the labour movement received the decree as an attempt to limit its power and the middle classes feared that unionisation of the working classes would increase class-struggles and therefore endanger their position79. All these sectors were equally distraught over the fascist implications of the new regime. Why the Military Socialists were unable to implement their proposals, and quite unsuccessful in enforcing the syndication decree, is hard to say exactly. The most obvious factor would lie in the fact that not a single sector of society, with the exception of the PS — which was itself very rapidly losing support and more or less quietly dissolving, primarily due to its support of the Military Socialists’ attempt to install an overtly fascist system80 —, was prepared to lend it its co-operation: the labour movement quickly retreated, the industry was already at odds with the military socialists over economic issues, the middle-class was untrusting of their intentions, the left were feeling uneasy about the ‘Socialist’ content of “Military Socialism” and the Ex-Combatants were again growing unhappy with Toro: there was now no popular basis left, nor any of the pre-war state-industrial alliances. Also, one can not help but wonder to what extent the bureaucracy — which after all had been trained by and for the Liberal system — helped impede any of the Military Socialist efforts81. Within three months of the revolution, the government had been able to do little more but lose all of its initial supporters: where the military had been the only viable source of power in May, now it had become as volatile as any other possible combination, leaving the direct future very insecure. The growing opposition to the Toro administration did not, however, just come from the traditional block or the industry: during the winter of 193682, another pressure group appeared that seemed specifically designed to make Toro’s task more difficult: the Asociación de Ex-Prisoneros (AEP), which had been erected from among the ranks of returning POW’s, 76 “Es indudable que desde el punto de vista político y social, la nueva estructura elevará a las clases trabajadoras del antiguo nivel de esclavitud a un nivel de reposición de derechos económicos y de dignidad en el seno de la colectividad, sustituyendo en el campo político al ciudadano — ente abstracto de la Democracia —, con el hombre concreto, obrero, empleado, terrateniente o capitalista que concurre en tal calidad a la expresión vital de las sociedades”: Sección de Prensa Palacio de Gobierno, Bajo el régimen …, 93. 77 AA 1936, 1641, 19 August 1936. 78 Min 1 102 Trabajo y Previsión Social, folio 43-49, no number, 27 August 1936. 79 Gallego, Reformismo, 122. 80 Despite careful wording to the effect that the Bolivian “Socialism of State”, as the system continued to be termed, was unlike ‘alien ideologies’ — “de tipo absolutamente propio” — and should not be compared to foreign systems, i.e. Italian Fascism or German National Socialism; Sección de Prensa Palacio de Gobierno, Bajo el régimen …, 93. 81 No specific research has been done to investigate its role, composition or possible obstruction. 82 Which is during the months of June, July and August, on the Southern hemisphere.

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that as a result of the negotiations of the Conference of Buenos Aires were starting to make their way home, despite continuing Paraguayan attempts to keep the prisoners in Paraguay, where they served as cheap manual labour for the construction of public works83. The ex-POW’s were understandably unhappy with the High Command, save recognised and decorated war-hero Busch, which they held responsible for their ill-fate and the AEP started calling upon the government to make true on its promises to organise a tribunal and order investigations into the conduct of the High Command and the traditional parties during the war. Trying to muster as much support as they could, the traditional parties (Especially the PRS, the Partido Centralista and the Liberals) joined in with the AEP, as well as many of the other ex-combatants’ organisations such as LEC, the Asociación de excombatientes Nacionalsocialistas and the Asociación Nacional de excombatientes Socialistas. Given Toro, Peñaranda and Quintanilla’s dubious roles in the Chaco War, the military establishment in power would not survive any such tribunal, and had to do whatever it could to prevent it. Not only did the AEP — though not exclusively the AEP — call for this tribunal, but also it was very clear in its hostility to Toro and Peñaranda whom it held personally responsible in part for the Chaco Defeat: in its manifestos, the AEP quite clearly referred to these two men as culprits and primary responsible for the misery the prisoners and other soldiers had been made victim to84. Obviously, the problem of the ex-POW’s must be dealt with while at the same time avoiding the erection of any sort of tribunal: Toro decided to go on the offensive, and threatened the AEP with his own tribunal, which was to judge the conduct of the POW’s and the circumstances in which they fell captive; the terminology employed by Toro was painfully harsh, as he nearly condemned all the ex-POW’s of sabotage, desertion and cowardice85, any one of which (If ever proven before a military tribunal) was punishable by death. Toro’s particularly vindictive attacks on the ex-POW’s did not go down very well with the veterans’ organisations, but certainly proved successful in quieting the AEP’s demands for military tribunals, and the whole affair was manoeuvred into the background86. It had, however, irreparably damaged Toro’s reputation with the veterans’ movement, thereby losing the last bit of popular support he had, and now the Junta remained in place only with the support of the rest of the military establishment, still firmly controlled by the ever-popular Busch; there were however enough indications that Toro’s influence in the military was waning, due to the seeming incapability of the Junta to impose changes and due to Toro’s stance towards the veterans’ movement87. Throughout most of the rest of Toro’s administration, the embattled President kept himself occupied trying to regain some of the support he had succeeded in losing so quickly, while at the same time forced to manoeuvre in such ways so as to keep the support of the EMG, without which his rule would undoubtedly end. The Palacio Quemado88 saw feverish activity, as one edict followed the other, in an increasingly desperate attempt to demonstrate the revolutionary Junta’s efforts to change the Bolivian social realities: among others, the decree granting civil rights to women was promulgated, as well as decrees concerning the restructuring of municipal organisation, especially the establishment of salaried mayors (alcaldes)89.

83 AME, vol. 19, folio 17, 4 September 1935 (French Envoy H.F. Dussol). 84 Díaz, Toro …, 33. These manifestos display an enormous ingenuity and literary aptitude on the part of their authors, as they brilliantly reduce Toro and Peñaranda from semi-heroes to traitors and cowards through the scathing and damning attacks. 85 Klein, Parties, 248-251. 86 The Traditional Parties’ call for such a tribunal was quickly silenced by General Peñaranda, who pointed out to the parties that they themselves would not survive the effects of any such an undertaking. 87 Belmonte, Sombras, 157. According to Belmonte, the fall of Toro’s good reputation within the armed forces was also due to his ‘Bohemian lifestyle’ and drinking habits. 88 The Presidential palace on Plaza Murillo in La Paz. 89 Klein, Parties, 250.

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The people, however, were largely unimpressed with these rather vain and ineffective efforts, which seemed not to actually change anything much. Rather, they remained worried above all by the economic conditions the country was experiencing, which were not very good: inflation was on the rise and had been since the end of the war. The inflation itself was to do largely with the enormous expenses the country was facing, what with all the extra social legislation and expensive education projects the government was undertaking, and aside from these, the growing national debt90. The inflation the country as going through presented a real problem, as the price of living index in the year of 1936 alone, rose by almost 100 percent91. All that Toro could do, were he to avoid major popular discontent, was to set up almacenes fiscales, state-subsidised stores, where the public could buy the primary necessities of life at reduced prices. Also, on some occasions, but especially when pressure was great, wage-increases were decreed92. Such measures succeeded in subsiding the most urgent pressures, but overall too little concrete was visibly taking place for any sector of society to back the Military Socialist regime.

Toro Stumbles and Falls By the beginning of 1937, things were not going well at all for the Military Socialist regime, that had seemed so promising just half a year earlier. The Corporatist experiment had failed in an almost embarrassing manner, and most of the other attainments of Military Socialism had met with equally disappointing results: the Military Socialist decrees, which hurried out of the Palacio Quemado in a constant flow of revolutionary zeal, were to a large extent merely ignored. The state, in reality, had no hold over the countryside, and thereby all decrees concerned with the rural population were disregarded. Much of the same holds true for the ‘reforms’ concerned with Labour, such as the Syndication decree. In truth, the only successes booked were in the field of mining and the taxation of it: it is fascinating to see how the only sector that did in fact obey the state’s orders, was the same sector that has historically been accused of running the government during the Liberal Era93. It was this sector, the mining sector, together with the traditional parties, that did feel the effects of Military Socialism: the traditional parties were officially considered ‘non-existent’, while the mining sector was subject to ever increasing taxation, as the government was looking for ways in which to finance its reforms and the overwhelming national debt. Also, the two were united in their resistance against the ‘communist elements’ within the Toro administration, referring to Waldo Álvarez, who was still continuing his work for the Labour Ministry94. The relationship with mining and the traditional block had been soured almost 90 The education-issue itself was regarded as ‘dangerous’ by the traditional sectors; one important move, had it been enforced, was the decree of August 19th, stating that all hacendados and mine-owners were obliged by law to establish schools, at their own expense, in the areas they controlled where children lived. The decree was, however, largely ignored. On the other hand, the state was successful in erecting its own schools in some areas of the countryside, mainly around Cochabamba. Min 1 101 Educación y Asuntos Indigenales, folio 68, no number, no date (1937). Min 1 107 Educación y asuntos Indigenales, folio not numbered, number 6867/268, 17 September 1938 and elsewhere: in fact, there is considerable attention for the way in which the “Indian Problem” — where related to the foundation of rural schools — is approached and solved in México, and many Bolivian officials visit México, hoping to learn something: f/e: Min 1 107 Educación y Asuntos Indigenales, folio not numbered, number 9767/97, 10 December 1938. 91 Gallego, Reformismo, 145. 92 Gallego, reformismo, 137-158. It seems likely that these measures were indeed, as Gallego suggests, intended only to woo the urban masses, when discontent was at its peak. 93 See the chapter on “The Mines and the State” on page 11. 94 Klein, Parties, 254.

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completely, and Toro found himself, and a large part of his cabinet, under continuing attack from these conservative sectors of society, not only for his economic policies, and harbouring dangerous communists, but also for example for not organising the constituent assembly and the elections that had been promised95. At the same time, the relationship with the labour movement, which had already been difficult in the months after June 1936, was equally becoming heavily clouded, as Álvarez felt that the rest of the cabinet was hostile to him and his efforts: he continued to do his work96, but announced that he would resign his post as soon as the labour movement had appointed his successor97. Before he left, however, he managed to organise a national congress of the labour movement through ANPOS — which had also been set up under his wing — by the end of 1936, during which was debated the re-erection of the all-but-dead CSTB. In this light, the congress was a complete success, as at the end of it, a renewed and rejuvenated CSTB was borne to the light. On the other hand, the congress was unable to agree upon a successor for Álvarez, meaning that Toro himself picked the next minister for Labour: he chose Javier Paz Campero, who had thitherto worked as a lawyer for Hochschild. Obviously, the labour movement was upset; just as obviously, the traditional block rejoiced. How then to interpret this ‘shift to the right’98 as Klein has called it? According to Klein and others, the appointment of Campero to this sensitive post should be seen as a shift to the right, in order to placate the conservative sectors of society. The reason Toro gave us for the move was that Álvarez had used the office for his own purposes, adding to the discord between capitalist and labouring sectors of society99, while the whole idea of the ministry had been to build bridges between these equally important sectors of society100. If we take the man seriously in his wording, however, there seems not to be any reason not to believe the reasons stated: to a large degree, the Military Socialist experiment had been aimed at installing a Corporatist system in Bolivia: Álvarez had indeed been busy mostly with advancing his own causes, above all the re-construction of the independent labour movement101, and according to his own statements really did not co-operate much with the rest of the cabinet. So when Toro replaced Álvarez, he was removing a member of cabinet, who was confessedly not in agreement with the corporate ideal cherished by the other members, and who was in fact through his machinations obstructing that very principle.

During the rest of the years of Military Socialism, we shall see an entire string of removals, appointments &c. that have been labelled either as ‘shifts to the right’ or ‘shifts to the left’. It is my opinion that this cabinet-reshuffling should not be seen as concessions either to the left or the right, but as removals of those elements that were not co-operating in the realisation of the Military Socialist objectives: really the opposite of conceding to pressure from any sector of society, since removal in this light would signify that a certain member is becoming too difficult to handle, merely because of his own actions and/or opinions. In reality, during this era, the contradictions between the conservative sectors of society and the Military Socialist state were so great, that it would be difficult to imagine the conservatives really having much leverage at all: they had been ousted by the military, declared non-existent, would not participate in the constituent assembly, and the mining sector was unrelentingly the primary

95 Klein, Parties, 259. 96 Working, besides the efforts to organise labour, on a Labour Code. 97 Klein, Parties, 256. 98 Klein, Parties, 257. 99 Klein, Parties, 257n. 100 The whole discourse by Toro in fact strokes perfectly with the other Corporatist minded experiments thus far. 101 As Álvarez took no action whatsoever to actually make something of the obligatory syndication decree. He did co-operate in writing the decree and promising supervision, but as we have already seen the decree was never enforced: nor was it ever supervised by the labour ministry.

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target of the Military Socialists’ economic reforms. These do not seem to be conditions in which one would easily and willingly yield to the demands of a completely discredited, internally divided and very manageable right-wing opposition one has just personally ousted, and which lacks any popular backing. But even though one does not have to look upon the appointment of Campero as a shift to the right — but as an expression of the Military Socialist ideology —, it did further alienate the labour movement from the Military Socialist experiment.

But even though we might not consider that the conservative sectors had much leverage, the state did need to depend on some sort of power-basis. The popular sector, suffering from the effects of inflation and not seeing the changes promised in May, was largely apathetic to government, and never constituted a major power-basis since May and June of 1936. Likewise, the labour movement had also lost much of its enthusiasm, as the Military Socialist idea was not quite shared by it, and the flow of decrees had done little to improve working conditions or equitable remuneration. The leftist parties, still divided in a number of smaller parties, of which the POR was ascending now that the PS was quietly performing its vanishing act102, were also not impressed: furthermore, they objected to the fascist tendencies within the Military Socialist government. Internationally, the French, Americans and English were also showing growing concern about the direction in which Military Socialism was taking the country103, and Toro had to issue, time and time again, statements to the press to the effect that the concept of Bolivian or Military Socialism was unlike any foreign ideology, since no foreign ideology was applicable to Bolivian realities104. After Toro’s collision with the AEP, he had lost the Ex-Combatants’ support, too. With no civilian sector truly backing him, Toro had only the military to lean on.

Given this state of affairs, the political trouble emanating from the fact that Toro had still not set a date for the elections for the constituent assembly, put Toro in an awkward position. Without a doubt, the project had initially been intended in order to introduce a new corporatist constitution, reflecting the changes Toro had hoped to be able to introduce before its convocation. As the reforms failed so miserably, Toro postponed the elections time after time, to the growing annoyance of all political factions and really put him between a rock and a hard place: convoking the assembly in the near future, while the corporatist constitution was still being studied and researched by the government105, and without the active support for its corporatist ideals of any viable political institution, would probably be the end of the whole corporatist undertaking.

Toro’s predicament was very badly worsened by Germán Busch, who had apparently become exacerbated by Toro’s inability to effect any change and must have taken note of Toro’s increasing unpopularity: in March of 1937, Busch handed in his official resignation106. The drama of this act should not be missed, for even though the rest of the military were able to persuade Busch to stay on, the move propelled Busch’ impatience with Toro into publicity with a vengeance. Through this act of the young, visibly impatient Busch, Toro was publicly humiliated as it was made known that he had now lost the undivided support of the military as well: perhaps without realising what he had done, Busch had struck the final blow to the Toro regime107.

102 Since mid-1936, its ranks were rapidly decreasing. It is difficult to express why, but certainly its support for the corporatist ideal was a part of it, as was the growing internal strife over the precise political direction the party should follow. Gallego, Reformismo, 206-207. 103 As becomes clear from messages from the Bolivian legations to Great-Britain, the United States and France. 104 See Sección de Prensa Palacio de Gobierno, Bajo el régimen …, 93, and elsewhere. 105 Klein, Parties, 259 and Gallego, Reformismo, 208-210. 106 Somewhat vaguely stating that he wished to dedicate himself to other activities. Díaz, Toro …, 44. 107 The exact circumstances surrounding Busch’ resignation are unclear. No more can really be said than that their relationship had become very difficult, in part because of Toro’s alleged misconduct: according

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Toro knew that he had to act quickly, were he to regain support for his regime. The only way in which to do this was to ‘make a stand’, and he knew very well what he had to do: he decided to drastically speed up the investigation into the affairs of the Standard Oil Company of Bolivia, an investigation that had been undertaken initially by Tejada Sorzano and was finally now coming to an end; it would be the first ‘nationalisation’ undertaken in Bolivia and occurred just a year before the expropriation of foreign-owned oil companies in Mexico108.

The Standard Oil Company had been accused, most significantly, of causing the war, and subsequently obstructing the war effort, by most of the leftist parties that sprang up during and after the war. Also, the anti-Standard emotions had been very strong within the military establishment, and among the veterans’ who likewise accused the company of their predicament: precisely how the idea had become so widespread is difficult to tell, but the fact of the matter is that it had; not only the POR and other left-wing militant splinters called for its expropriation, but also RADEPA, which had become highly influential within the military, and veterans’ unions called for the same109. The basic problem, because of which the company could not be tried for its alleged involvement in the war, was that there was no evidence whatsoever to support the “guerra del petróleo” theory; most significantly, Busch and Toro themselves did not adhere to it110.

Still, the popular clamour, and political pressure exerted to take action against the company had become so great by 1935, that Tejada Sorzano started an investigation: knowing full-well that any investigation into the company’s involvement in the war would prove to be utterly fruitless, and therefore solve nothing, he decided to take action on something that could possibly be proven: fraud. The company had claimed, during Siles’ rule, that there had been no oil-production in the Bolivian fields in 1927 and 1928, thereby escaping taxation of revenues from such production. It was discovered however, that a minute quantity of oil had111, in fact, been produced and exported across the border, where it was used to start production in oil-fields on Argentine soil: article 18 of the contract with the Bolivian state, that had originally been signed by the Richmond Levering Co. but continued by the Standard Oil Co., stated that in the event of fraud committed by the company, its contract would be discontinued and all assets within the territory of the republic would fall to the state112.

The company had denied, on several occasions, that any production had taken place between 1925 and 1928, but in 1935 one of the company’s lawyers, a Mr W.B.Blocker, issued a memorandum to the effect that it had produced and exported the said 704.316 kg to Argentina, without prior consent of the Bolivian government, and without paying taxes113. Of course, the

to Belmonte, Toro drank heavily and did not take his job seriously enough, thus infuriating Busch. Belmonte, Sombras, 153-158. 108 See: Josephus Daniels, “The Mexican Reaction to the Oil Expropriation” in W. Dirk Raat and William H. Beezley (eds.), Twentieth Century Mexico, 185-194. In fact, Mexican representatives had started a fervent correspondence with the Bolivian Ministry of Foreign affairs in 1935 over the ongoing oil-dispute, and it seems likely that the Bolivian success might have had some influence in the approach taken by the Mexican government. AMR, Min 2 388 Departamento de Propaganda, folio not numbered, number 1464 G2/5482/21, 8 August 1938; also, many references to this communication is made in the volumes containing correspondence with the United States and in the volumes dealing directly with the ‘eviction’/‘nationalisation’/‘Expropriation’ process. 109 Belmonte, Sombras, 85-97, Valencia, Historia política, 1761, Lora, Movimiento obrero, 70-75 and elsewhere. 110 Even though, for reasons of popular support, they did proclaim to. Cf. page 64. 111 A total of 704.316 kilograms, AMR, VRE 2 350 Desahucio de la Standard Oil Company of Bolivia, folio not numbered, circular reservada 9/ page 2, 20 March 1937. 112 AMR, VRE 2 350 Desahucio de la Standard Oil Company of Bolivia, folio not numbered, circular reservada 9/ page 3, 20 March 1937. 113 AMR, VRE 2 350 Desahucio de la Standard Oil Company of Bolivia, folio not numbered, circular reservada 9/ page 2, 20 March 1937.

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company vehemently protested these accusations, but proved unable to do anything about it, as its own files indicated that there had been, however minute, production in the Bolivian oil-fields during the years indicated. Given these findings, Toro declared the contract null and void on March 13th, in the now famous decree, and thereby committed the one great act that generations to come would remember Military Socialism for114.

The effect was immediate: suddenly, when the decree was announced, public opinion swayed in Toro’s favour115. Obviously, the company tried whatever it could in order to reverse the decision, including offering the Bolivian state bribes, or new arrangements or really whatever the government wanted in order to have the decree undone, but all of its efforts proved vain116, even though it flooded the Bolivian government with memoranda and letters, offering new deals and warning that it would go to any lengths to have its property restored to it117. of course, the powerful company turned immediately towards the US government for support, and indeed the US did try and get involved in the matter, but it met with just as much success as the company itself118.

The correspondence between the State Department and the Bolivian ministry of Foreign Affairs makes it very clear why such efforts to undo the decree failed: most importantly, this is to do with two separate matters: first of all, the popular clamour that had been responsible for Tejada Sorzano and Toro’s actions against the company had not subsided, and would turn into anti-government rage if the decree was ever overturned. Quite frankly, the danger from within Bolivian society, were the decree to be overturned, was much more direct than any threat from the United States’ government could ever be, and giving in to external pressure at this point would certainly have signified the end for Toro. Secondly, and this perhaps explains to a degree why the United States’ government, even though it did not stay out of the matter entirely, really put so little pressure on the Bolivian government, there was the matter of tin: tin, which had been declared a ‘strategic mineral’ by the US government, but which it lacked itself. Only Nigeria, Indonesia and Malaya were possible alternatives, but the United states felt far more secure procuring the needed tin — and some other minerals — closer to home, and therefore from Bolivia. The country was not about to drive the Bolivians into a German sphere of influence over the oil-affair119. Bolivia was, as it were, saved by the bell120. 114 Even though the move occurred quite suddenly and unexpectedly, it had in effect been inevitable and been predicted for several months: the first direct step was the creation of the Ministry of Mines and Petroleum in May 1936. But when this ministry created the Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) laced on the Argentine example of YPFA, in late 1936, there could have been only one single goal, which was to take over from Standard Oil. 115 Klein, Parties, 263. 116 A number of such proposals can be found in AMR, Min 2 389 Cuestión Petróleo, folio not numbered, number 3/1367/228, 11 January 1938. 117 A number of such memoranda may be found in AMR, Min 2 389 Cuestión Petróleo, also AMR, VRE 2 350 Desahucio de la Standard Oil Co. and VRE 2 349 Desahucio de la Standard Oil Co. 118 The entire communication with the State Department was, for the benefit of the diverse ministries involved in the matter, summarised in two memoranda: AMR, VRE 2 349 Desahucio de la Standard Oil Co. : La caducidad de las concesiones de la Standard Oil Company y las gestiones del gobierno americano (an 85 page memorandum, containing the exchanges between the State Department and the Bolivian legation in Washington between 1937 and 1942, dated 9 November 1942) and same volume: Oficio Reservado al señor general Enrique Peñaranda, jefe de ejercito en campaña (A 108 page memorandum containing all exchanges between the company and the state between 1925 and 1935, dated 26 August 1935). Of course, all this correspondence can also be found in the original volumes, but these two memoranda are no more than a compilation of the same, and most useful. 119 AMR, VRE 2 349 Desahucio de la Standard Oil Co., folio not numbered, nota confidencial, 25 February 1938. 120 Negotiations with the United States over tin had already started long before the decree of March 13th. The first problem taken on by the US and Bolivia was that of Bolivian dependence from England, where the foundries lay that were adapted to Bolivian mineral: in early 1937 a project had come underway in

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As stated, the decree met with a considerable amount of euphoria, and promptly the government found itself popular as it had never been before. Toro immediately seized upon his chance to turn this victory into a permanent basis of power, and quickly set to work organising his own, state-sponsored political party: the Partido Socialista de Estado121 (PSE). He had hoped that this would be the solution to his problems, as before he organised a constituent assembly, he would need a corporatist-minded political power with some influence to take part, if he were still to fulfil the goal of the Corporate State that had been central to the proposed reforms. So fast did things go, that the national committee of the PSE had already been established by mid-May, while Minister of Government, Lieutenant-Colonel Viera, stated publicly that the PSE could not only count on the active support of the government, but that the state would not shun to use undemocratic means in order to have it elected122.

The PSE rapidly absorbed the political fragments that shared much of the Military Socialist ideology, and suddenly found itself backed by the National Socialist veterans’ association that had been so firmly opposed to Toro just months earlier123. The main body, however, consisted of the remainders of the PS, which had now all but officially died. By June 21st, the organising committee had been able to draw up a programme, with which it could enter into the elections (Which still had not been scheduled): it contained much the same programme as that edited during the May revolution124. Obviously, the military socialist aspirations had not changed much, even after a year of failure.

The action against Standard Oil, even though it did rouse wide-spread recognition for Toro, did not eventually save Toro from his impending downfall. Now that he had finally gained the support of popular sectors of society, the military themselves were growing restless, and still there was no sign of elections. It was clearly perceived by the military that the PSE was meant to be a power-basis so that Toro no longer would have to depend exclusively on the military, as Busch’ resignation in March had made it apparent that he no longer enjoyed the full and undivided support therein. Busch realised what was happening, as the PSE started gaining momentum quite rapidly, and decided to act: when he was appointed chief of the LEC on July 10th, he addressed himself to the public stating that the armed forces too were growing weary and that it was time for the military to return to the barracks, as had been promised in May 1936. Already, Toro had extended his presidency, breaking the promises made during the revolution, and still there was no sign of elections125. The army was growing weary: more than a year had passed, and save for the expropriation of Standard Oil, virtually nothing off paper had been accomplished by Toro, who himself stood accused of being disinterested and more interested in drink126.

What it was that had caused the rupture between Toro and Busch is not entirely clear: that such a rupture had occurred was very, very clear: Busch decided to act and took power himself on July 13th 1937. Toro was informed, in a meeting with the members of the EMG, that he no longer had the support of the military, and that he must resign his Presidency127. Busch then proceeded to offer the presidency to General Peñaranda, who refused it: after this order to alleviate the problem, by building new foundries in the US itself, as it was realised that shipments from Great-Britain might come under attack in the event of war: AMR, Min 1 96 Hacienda, folio 150, number 168/1061, 6 February 1937. 121 Klein, Parties, 263. 122 Gallego, Reformismo, 209. 123 See page 72. 124 Gallego, Reformismo, 211. 125 Gallego, Reformismo, 215. 126 Belmonte, Sombras, 156. 127 Belmonte is the only author to give us an entirely different picture of the events of that fateful day: according to him, as he was himself present in the meeting, the meeting was held in Toro’s absence, as Toro had been away for more than two weeks: “trasladándose, para divertirse con sus amigos y amigas, a los baños de Urmiri”. Belmonte, Sombras, 158.

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somewhat theatrical gesture, Busch announced that he himself would take upon him the Presidential responsibilities. Dávid Toro, who was very unhappy with this decision, went into voluntary exile: a few times he attempted to invade the country with a small force of loyal soldiers (Quite ironically from the Paraguayan Chaco), at which times he met with so little success, not even able to comfortably pass the first border-posts, that the attempts can be labelled as little more than pathetic: after 15 months of rule, and after the first Bolivian nationalisation, he still was unable to rouse more than complete apathy in the Bolivian people, who neither rose up against him, nor aided him in his attempts to rule and later ‘conquer’ the country128.

128 AMR, Min 1 9 Presidencia de la República, folio not numbered, number 2211, 30 March 1938. For information on another attempt, crossing the Argentine border into Picuiba, see: Augusto Céspedes, El dictador suicida, 156-157 and AMR, 1 9 Presidencia de la República, no folio, number 2211, 30 March 1938. Also, Toro apparently made (illegal) use of diplomatic passports he still kept: AMR, Min 1 9 Presidencia de la República, folio without number, number B1003/3298, 5 May 1938.

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Busch’ Military Socialism During the entirety of Toro’s reign, Busch had sat on the next-best throne behind him, as head of the EMG. Very rarely did he come out to appear publicly or did he make statements concerning the policies of Toro, and really we know very little of his role as ruler behind the throne. That his influence had been felt, and had been important is mere fact: Busch’ presence in the EMG was the only thing keeping Toro in power, and when he willed it, Toro must leave. Busch’ continuing silence, which he kept up right until the last months of the Toro administration, also meant that no-one really knew of what political mind Busch was. It would seem likely that Busch must have shared some, even many, of Toro’s sympathies or else he would not have handed him the Presidency in May 1936 nor supported him up until March 1937. Somewhere between May 1936 and March 1937, however, Toro had lost Busch’ support, a fact that became embarrassingly clear when Busch menacingly waved his resignation in Toro’s face1. A fact that became overly obvious when Busch himself ousted Toro on July 13th 1937. Now, it would finally become clear how Busch viewed matters, politically and socially, and all the country waited in expectation of what was to come next.

Busch too is a Military Socialist Busch had never been a public figure, even though he indubitably was one of the country’s most popular men, and therefore no-one knew exactly what to expect of him. In fact, even though in his first address to the nation on July 13th he stated that his goal was to fulfil promises made in the May revolution2, there was a persistent rumour to the effect that Busch had been bribed by the Standard Oil Company to oust Toro and give it back its — former — belongings3. The rumour was so persistent, that Busch had to publicly announce that he had no intention whatsoever of returning anything to the company4. Meanwhile, the traditional parties hailed the coup as a sign that the army would no longer put up with Toro’s ‘socialist’ experiment, applauding Busch as they announced that the old days would soon be back5. That in stating these things they completely ignored all Busch statements to the contrary seemed not to harm their optimism. Busch himself had actually stated that he wished to return to the principles of the May revolution, from which, he stated, Toro had strayed: these principles included the harmonisation of Capital and Labour, in an obvious reference to Toro’s Corporatist goal6. However, many of Busch’ actions in the first weeks of the regime seemed to be reaffirming the belief that he was a champion of the traditional system and that his task was merely to prepare for the return to the Status Quo Ante; Busch immediately removed the cabinet-members that had worked with Toro on his many projects, including his minister of government Viera, who had been instrumental in the creation of the PSE, and replaced them with a number of individuals with strong ties to the traditional block. He also installed 1 A pity we do not know what caused the rupture, nor how it evolved; that Toro supposedly had quite some influence within the military suggests that he must have known of Busch’ dissension before March 1937. 2 Díaz, Toro …, 63. 3 Klein, Parties, 267. 4 Díaz, Toro …, 65. 5 Foreign envoys, however, disagreed and saw in Busch the continuance of Military Socialism: the French envoy Mr Goubin, wrote to his minister that the new government consisted of “Les mêmes hommes” bent on carrying out “Exactément le même programme”: AME, vol. 5, folio 134, 20 July 1937. 6 Díaz, Toro …, 63-64.

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Baldivieso as minister of Foreign Affairs7, indicating to some degree that Military Socialism was not over yet, as Baldivieso had remained Toro’s staunchest supporter right until the end. His appointment of Federico Gutiérrez Granier, President of the Miners Association and heavily tied to mining interests, to the post of Finance was taken as the best sign that the country would return to pre-war normalcy8: Granier immediately cancelled the almacenes fiscales, and starting working to end the system of separate exchange-rates introduced, that were so costly to the mining companies9. Finally, the long awaited constituent assembly was also announced, and aspirant voters would be able to register to vote on August 27th. There were signs, however, that the traditional block were being somewhat short-sighted in their assumptions, as all was not exactly as it appeared. For instance, the decree installing Busch new cabinet made no mention of the word ‘provisory’ when mentioning the new Junta10. Also, the removal of corporatist minded men such as Viera, can also be considered a removal of Toro’s loyal followers: had not Viera been responsible to a great degree for the PSE, which was supposed to make the Junta less dependent upon Busch? Moreover, the introduction of men, sympathetic to the mining corporations’ plea, fits perfectly the idea of ‘harmonising labour and capital’, certainly when these men sat besides Baldivieso and his companions in the same cabinet. With regard to the constituent assembly, Busch decided that the LEC itself, even though not a political organisation, might join in as if it were and become a part of the process of re-writing the constitution: also in par with the corporatist notions present in Toro’s administrations. Finally, Busch decreed that all political exiles could return to the country, and this included not only Bautista Saavedra, but also men like the legendary Tristán Marof11. The traditional parties ignored all signs that things might not just be as they hoped. At first it seemed as though the parties had learned from their experiences with Toro, who bluntly refused even to recognise them, and started negotiating a pact between the four parties, and they were able to come to an official truce by July 27th12. Saavedra, who only returned by October, spoiled the celebrations, as he made it understood that he was not pleased with this pact: he still recognised that the future lay with the younger, idealistic generations and went back to what he had done before, namely to woo the leftist parties into allying themselves with the PRS. With his manoeuvring, the antagonism between the traditional parties returned as they each made their separate ways, preparing for the constituent assembly’s elections13. This is hardly surprising, as Saavedra still held his presidential ambitions, and the assembly would elect the new constitutional President and vice-President14. Discord again broke out, and

7 A post that Klein calls ‘harmless’, but was at the time occupied with serious matters such as attracting foreign loans, which seen as how Bolivia was still defaulting on its foreign debt were hard to obtain, and was still in litigation with the United States’ government over the issue of Standard Oil. All in all, even though Bolivia was relatively immune to external pressures, the term ‘harmless’ seems inappropriate. With regard to these foreign loans, it seems worthwhile to note that only the German Reich was prepared to extend such loans, in return for oil, tin and other ‘strategic’ minerals: AMR, Min 1 119 Minas y Petróleos , folio not numbered, number 2498, 16 March 1939, EEUU 1 R 42 Legación de Bolivia en Washington, folio 174, number 5129/83, 22 May 1939 and elsewhere. 8 Klein, Parties, 268. 9 Klein, Parties, 270. 10 AA 1937, 14 March 1937. 11 A pseudonym for Augusto Navarro, one of the country’s most influential leftist thinkers and writers, heavily involved in the creation of several leftist political parties, including the POR, and one of few influential men calling for a total agrarian reform: AMR, Min 1 9 Presidencia de la República, folio not numbered, number B184/950, dated January 1938. 12 Klein, Parties, 269. 13 Klein, Parties, 272. 14 Otherwise always done through direct presidential elections: this stipulation too, bears signs of the corporatist tendencies present, as it had been Toro’s government that had suggested that the President (As

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Saavedra directed many attacks to Busch’ government, together with the leftist parties, especially against Granier and his economic programme15. The PSE had by this time completely died out, following in the footsteps of the PS and so many political parties erected during and after the war, and this left the moderate reform-minded individuals without any viable moderately leftist platform but the PRS: the other leftist organisations being far more radical. Thus, the PRS was quite successful in amassing support for Saavedra, who was getting high hopes of attaining the Presidency at the constituent assembly. But it was, at the same time, becoming increasingly clear that Busch now wanted to remain as President himself: he was backed primarily by the LEC, of which he still was the President. In late October, the LEC officially announced Busch’ candidature for the Presidency, and so, now there were two serious contestants: Busch and Saavedra16. Naturally, neither liked the other, as it had been Busch that had destroyed Saavedra’s hopes for the Presidency in May 1936, and little later had expelled him from the country altogether. At the same time, there was trouble in the cabinet itself, as it became increasingly obvious that Busch’ intentions were not to restore the traditional parties to power. As a result of pressure from the leftist parties and claiming that a ‘leftist tendency’ was growing within the cabinet, Granier resigned his post in November17. Thus was revealed to the political parties and the public, that Busch was not at all what he had seemed in early July, and immediately the political scene became more complex, as simultaneously with this ‘shift to the left’ came the growing concern that Busch’ intention with the constituent assembly was not so much to elect a new constitutional President, but to elect him the new constitutional President and thereby provide him with the legality and opportunity to continue the work started by Toro. All of a sudden, the a-political Busch, so used to remaining in the background, was unmistakably making his way to the Presidency, and wanted some air of legality added to it. Naturally, this situation and the attitude taken by Busch, led to severe conflict with Saavedra, who also had his hopes set on the Presidency. The conflict reached in late November. On the 22nd, it was decreed that the elections for the assembly were to take place in March 1938: the assembly, called the convención nacional, would proceed to elect the President and vice-President, after which it was to write a new constitution. After having completed this historic task, of replacing the 1880 Liberal constitution for the first time, the body would be split into two chambers and act as a regular two-house Congress, at that time having restored the country completely to political normality, with functional18 congress and constitutional president19. Just five days later, on November 27th, Busch had Saavedra arrested on charges of disturbing public order, and had the old caudillo político jailed and thence exiled, thus solving the problem of the presidential candidacies and assuring his own victory beyond a shadow of a doubt20. In order to back Busch, the LEC, the CSTB and some political splinters combined to form the Frente Única Socialista (FUS), of which Busch was now the official candidate, while Baldivieso was suggested as vice-President. Since it had become clear that Busch would

well as the mayors) be elected indirectly through congress. Congress, however, was not in session and had not been since the May revolution. 15 Díaz, Toro …, 66. 16 Augusto Céspedes, El dictador suicida, 176. 17 Stating that “tengo actualmente la convicción de que se viene acentuando dentro de la composición de la Junta de Gobierno una tendencia de izquierda con la que personalmente no comparto”: Díaz, Toro …, 66. 18 The word functional always coinciding with corporatist ideals. On Corporatism, see: Philippe Schmitter, “Still the century of Corporatism?”, Review of Politics, 36 (1974), 93. 19 Klein, Parties, 274. 20 Céspedes, El dictador, 174.

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tolerate no real opposition, the traditional parties withdrew from the elections in protest21. In order that the elections would not be as embarrassing as earlier elections in which the number of voters had been so limited, Busch announced that voting was mandatory, and abstention would result in a 500 Bs fine: as a result of this threat, thousands upon thousands of ‘none of the above’ would be counted22. Under these conditions, it comes hardly as a surprise that the FUS won a landslide victory. The newly elected members would convene in May 193823. By this time, Busch had already shown that he was as much of a Military Socialist as Toro had been, trying to wander the middle road between leftist extremism and the traditional way of life: his solution, just as Toro’s had been, was the corporate ideal: even though allied to a great extent to many of the leftist parties, Busch never hid his abhorrence of Communism and other leftist radical theory. His dislike of such extremes was made known through the March 1938 decree, banning all communist and anarchist propaganda and activities, either written, verbal or graphical24, as undermining the state. Still, he continued to enjoy the backing of a large portion of the labour movement and the leftist political parties. The traditional sector of society, including the mining corporations, was steadily growing more weary of Busch as well, especially after their not-so-good experiences with Toro earlier. Initially, Busch’ economic policies, guided by Granier, had been favourable to the industry, establishing a single exchange rate beneficial to the tin corporations. Great financial pressures ensuing this made that on March 7th, he revised his policies and reverted to ordering the companies to hand in 45% of their foreign currencies to the central bank at the fixed exchange rate, which was more and more diverging from the black-market rates25. Even though his policies were relatively moderate, certainly compared to Toro’s administration, there was an increasing tendency to rely more heavily, yet again, on the mining sector. Also, in his public addresses, he spoke increasingly of the need for economic changes, and finding ways in which to equally redistribute the nations’ wealth: he was quite clear in stating that the nations’ wealth should benefit all inhabitants, and not just a small minority. It was especially such language that began to disquiet the industry, as they were no longer so sure about Busch’ reliability in these matters26. For as far as the traditional political parties were concerned, Busch’ stance was now known to be not entirely propitious to them: Busch had just destroyed the last traditional resistance to his presidency. He had successfully disproven the high hopes they had held in early July 1937, and they now knew they would have to work together more in order to be able to recover some of the strength and vigour they had lost after the Chaco War. It was at last realised though, that things would never go back to the way they had been; the constituent assembly was to be the ultimate proof of this, in rewriting the 1880 charter and thus destroying the very foundation upon which the Liberal system had been built27.

21 Díaz, Toro …, 73. Although they did not withdraw completely, as the Liberal party did, in fact, nominate a candidate for the vice-presidency. 22 AME, vol. 5, folio 156, 17 March 1938. 23 Klein, Parties, 280. 24 AA 1938, 27 March 1938. 25 AA 1938, 7 March 1938 and AMR, Min 1 101 Hacienda, folio 24, number 1738, 8 March 1938. 26 Céspedes, El dictador, 177. 27 Also, and much to the regret of the traditional parties, Busch had ordered an investigation into the private wealth of politicians of the war-years, Díaz, Toro …, 74.

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The National Convention The National Convention of 1938 truly was a revolutionary affair. Through the abstention of a large part of the traditional parties, they were heavily under-represented in the convention28; the large majority of delegates was made up of Ex-Combatants, Socialists, Communists, Anarchists and members of the labour movement (As the CSTB had also been granted the right to participate in the elections and had subsequently allied itself to the FUS). Also present were members of the Partido Orientalista, a regionalist party from the departments of Santa Cruz and Beni: regionalist tendencies in the Llanos and selvas had been sparked and financed by Paraguay, and had resulted in a regionalist movement, striving for autonomy29. The first sessions of the convention already set the tone for any further proceedings, as all members must be sworn in. Even the opening ceremonies sparked heated debates, as there was immediate dissension over the formula by which delegates should be sworn in. The traditionalists of course, as well as other members of the faith, demanded that customary procedures be respected, such as kissing the crucifix. The more radical delegates refused to do anything of the sort, and found themselves inventing quite fantastic formulas, with outstanding originality: thus there were members that swore by “liberty of thought”, “social revolution”, “the socialist doctrine” or anything but Christ, with the one notable exception of the delegate that swore by “Christ, the greatest socialist of all”30. These first discussions were but a small sample of what was to come, and surely are an indication of the revolutionary and reformist zeal that so many of the delegates shared. Given the make-up of the convention, it is not hard to imagine the reaction of the traditional press: almost immediately, heavy attacks were made on the convention and its delegates, who were accused of being unwashed, illiterate, without distinction and many other things, none of them very pleasant or appreciative31. No political convention, institution or organisation in Bolivia had ever seen such diversity of political notions, and it took the traditional parties very little time to conclude that this convention would eventually write a constitution quite different from its Liberal predecessor. But even granted that the delegates were, in majority, of a different political mind than the traditional parties, its fear of a totally revolutionary charter, turning the very basis of Bolivian society up-side down would prove not to be entirely founded. For all of its radical members, not the entire convention was made up of such radical thinkers as Waldo Álvarez, Walter Guevara Arze, Ricardo Anaya and some of the other radical leftist thinkers. All in all, this sector izquierda — as it came to be called — found itself balanced by a large grouping of moderate reformist delegates, who indeed wished to introduce change, but certainly nothing as drastic as the sector izquierda. Among these more moderate members we find men such as Víctor Paz Estenssoro, Augusto Guzmán and Augusto Céspedes, who were all to become highly influential political minds in the years to come, as members of the Movimiento Nacionalista Revolucionaria, which was to bring the National Revolution in 1952. All these men were having their first important political experience in this convention, only adding further to its historic significance32. After the troublesome opening ceremonies, the first task at hand was to elect the new constitutional president and vice-president, for a period of four years: almost without dissent, Busch and Baldivieso were thus elected on May 27th 1938. For the first time since the May revolution, Bolivia once again had a constitutional head of state, and the period was to last until 28 Only two liberals and a small — but unspecified — number of Socialist Republicans: Céspedes, El dictador, 177. 29 Céspedes, El dictador, 177-178 and AMR, F.A. 1 5 Ejercito Nacional, folio without number, number 5335, 25 August 1936. 30 Céspedes, El dictador, 178-180 and Klein, Parties, 279-283. 31 Klein, Parties, 281n. 32 See Klein, Parties, 276-283, Céspedes, El dictador, 178-183.

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August 6th 194233. After this, the convention could set to work writing constitutional history. So, from the last days of May onwards, heavy battle broke out over the design and aim of the new Bolivian charter. Almost every aspect of society was considered and studied carefully, and in almost all of these cases, some middle-road was found eventually between the radical wing of delegates, and the traditional block. Thus, as Klein puts it, the new Bolivian charter of 1938 became a ‘catalogue of human rights and social responsibilities’, containing articles to do with almost every aspect of life in Bolivia: it granted the state the right to intervene in economic matters, stipulating that it might seize any property if the good of the nation required it; pongueaje was formally abolished, and the comunidad recognised as a legal entity and body corporate; it established that education was the primary responsibility of the state34; it established free association of professional and syndical nature and the legality of strike as a means of exerting pressure; it called upon the state to develop obligatory security for accidents, sickness, unemployment &c.; finally, it formally protected private property only under the condition that such property be productive and serve the common good35. Of course, the proceedings came under continuing attack from the conservative sectors of society, in particular the traditional parties and Roman Catholic Institutions36, who saw their world changed much more drastically than they would have liked to see. The attacks became so unrelenting, accusing the convention of being communist-inspired, that Busch himself started feeling pressured by it, and his patience slowly but surely came to an end. Finally, it was the machinations of the Partido Orientalista, that was looking for autonomy for the Eastern part of the nation that enraged the President; it called upon him personally, as a camba — a derogatory term for inhabitants of the Eastern lowlands —, to support their move towards autonomy. He angrily wrote to the delegates that he would not tolerate any such attacks on national unity and that he saw the very existence of such a party as an insult to his patriotism, and finally asked that they abandon the whole effort, which under tremendous pressure and under threat of being found guilty of treason (Capital offence) they did37. After five months of debates, Busch decided that it was time the delegates finally finished the new Charter and told the convention they had better do so quickly, as he would otherwise adjourn the convention personally; at the end of October, the document was finally completed and the convention dissolved, leaving Bolivia with a new constitution, one that was decidedly different from its predecessors. Some important progress had been made in these five months: the new charter was completed, but perhaps more importantly, the leftist parties, hitherto still plagued by fragmentation and unable to co-operate successfully, had learned how to work together in the face of staunch opposition. The fermentation witnessed during the national convention of 1938 was instrumental in bringing these forces of innovation together, and it was here that so many of the leftist individuals found each-other and had the opportunity to exchange opinions and ideas, and learned the art of compromise, something they had not mastered until then. It is not for nothing, that political development took a flight directly after the convention was dissolved, and the leftist parties found themselves, all of a sudden, able to unite in lasting coalitions, that

33 The official term starting August 6th 1938. 34 Something already effected by the Military Socialists: after Military expenses and debt-payments, education received the largest share of the budget, almost as big as the rest of the ministries put together: AMR, Min 1 110 Hacienda, no folio number, number 572/9, 20 January 1938. 35 Klein, Parties, 284-290. 36 This charter was seen as a particularly nasty attack on the Church, and throughout the country church officials called upon the faithful to reject this work of the devil and return to old-time morality: AMR, Leg 1 471 Legislativo, folio 105, no number, 28 June 1938, same volume folio 106, no number, 28 June 1938 and elsewhere. 37 Díaz, Toro …, 88-89.

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would shortly result in the creation of some of the century’s most influential political forces: for example the Partido de la Izquierda Revolucionaria, and the Movimiento Nacionalista Revolucionario. Toro’s old dream of installing a corporate state, based on a corporatist constitution, had unfortunately died during the convention, as it turned out that the truly leftist ideals were far more wide-spread than the Corporatist ideal the Military Socialists adhered to. In fact, the LEC and other Military Socialist minded institutions found themselves occupied mostly with moderating the extreme left’s proposals, calling for all-out nationalisation of the mining industry, complete agrarian reform and so forth, rather than coming out with their own proposals for the reconstruction of the Bolivian state. The growing realisation that the very core of the Military Socialist venture had been destroyed, and had vanished without a trace in the process, must have added to Busch’ growing exacerbation with the convention, an unhappiness so profound that he broke his promise that the convention be turned into a two-house chamber after completing its constituent function, and so, the country was again left without a representative organ38.

Come Together Busch never understood much of the political games being held at the convention, or in effect outside of the convention, and as a result he kept himself occupied mostly with other matters while the convention progressed, and mostly kept away from interfering an any way in the complex political chemistry taking place in the convention. Watching from a distance, all he could do was watch with amazement as the delegates bickered and argued and seemingly could not agree on anything, and as time went by, more than anything else he grew exasperated at the whole process, until he himself put an end to it in October 1938. From all his speeches and public addresses, it becomes clear that Busch was not made for politics, and this became unmistakable as he followed, with growing bewilderment, the political process at work, as delegates argued on philosophical bases, took their ideas from so many different political theories, and just never agreed. To him, it was incomprehensible; how could so many smart men, all claiming to want what’s best for the country, disagree so completely? Busch himself had a rather clearer vision on politics: anything should be done to further the causes of the collective good, and how could any citizen or patriot not make whatever sacrifices necessary? His naiveté39 also made him very susceptible to the ideas of the me that surrounded him, as the best way to get something done, was to convince the young President — only 32 years of age — that it would be good for the country. This concept of his patriotic duty, to further the causes of the fatherland, was basically at the heart of his decision-making process, and this tendency to view things either as beneficial to the collective good, or bad can be found in almost all of his activities as President: in the European conflict, now at the brink of war, Busch promised neutrality, as Bolivia had enough trouble of its own and siding with any one of the battling parties would eliminate beneficial ties with the other40. Busch had taken more or less the same attitude in the final settlement of the Chaco War, as he proved prepared to accept almost anything from the Paraguayans in order to finalise the agreement, so that relations could normalise and the continuously high defence-budget

38 Klein, Parties, 292. 39 Commented on by all authors that knew him personally. 40 AMR, EEUU 1 R 40, folio 268, number 3031/121, 23 April 1937. And AMR, EEUU 1 R 42, folio 174, number 5129/83, 22 May 1939.

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might be lowered41. The Paraguayans were not making it any easier however, and they took a very warlike stance during the direct aftermath of war. The Paraguayan attitude can be explained through the fact that Paraguay was experiencing the same sort of political turmoil as Bolivia, and throughout 1936 and 1937, there was intense fear of a coup in Asunción42. To keep at least part of the population behind the sitting government, the Chaco conflict was used as a decoy, and the Paraguayan government took a very warlike tone throughout these years, virtually making any serious negotiating impossible, as its demands became ever more ridiculous, Paraguay actually demanding the oil-fields after all, as a condition to be met before it would sign any agreement43. The situation had become such, that a number of border incidents occurred, in which some Bolivian soldiers lost their lives at the hands of the Paraguayans, and for a while during 1937 and the beginning of 1938, it looked as if war was about to erupt all over again44, thereby keeping the Bolivians obliged also to keep their forces at strength, and thus precipitating high military expenses. The turn-around came around mid 1938, when Paraguay suddenly accepted official binding arbitration by Chile, Brazil, Uruguay and Argentina: what had happened? Two main reasons exist for the Paraguayan change of mind. First of all, the feared coup had taken place, and a new government had been installed. Secondly, the neighbouring countries, as well as the United States, had apparently become fed up with the difficult Paraguayan attitude, and had threatened that in the event of another war, provoked by the Paraguayan attitude, the small country would receive no aid and might well risk its existence as an independent country45. As a result of the pressure, the arbitration was accepted, and a pace-agreement reached on July 21st 1938, which was subsequently ratified by the national convention. With this obstacle out of the way, Busch again started occupying himself more with national politics, and it is around this time that his stance towards the convention started to become less favourable. With the convention out of the way, the road was again clear for him to dedicate his time to the furthering of his patriotic causes, and he used the opportunity to again reshuffle his cabinet, and even the EMG, of which General Carlos Quintanilla was made head, in replacement of Peñaranda. Unfortunately, Quintanilla had a mind of his own, which was geared towards the traditional block and had been since before the war, Quintanilla being one of few high-ranking officials of the older generation to survive the war unscathed, either physically or with regard to his social standing and position within the military46. Quintanilla made his stance known, when he started purging the military of the young politically minded officers on which Military Socialism had been built in the first place, thus paving the way for the destruction of this system a few months later47. As time progressed, however, Busch’ bewilderment at politics and politicians became ever more obvious, as he again reshuffled his cabinet, within the month, and replaced the present traditionalists with staunch leftists, including close friends of communist leader Tristán Marof. 41 As it continued to suck up some one third of the national budget: AMR, Min 1 110 Hacienda, no folio, number 9168/143, 5 December 1938. 42 AMR, F.A. 1 5 Ejercito Nacional, no folio, number Reservado 5123, 21 July 1936. 43 These fields lying way beyond the military control exercised in the Chaco by Paraguayan forces: AME, vol. 20, folio 25, 14 April 1938. 44 AMR, VRE 2 350 Desahucio …, folio 80, reservado, 5 May 1937 and AMR, Min 1 8 Presidencia de la República, no folio, number 8680, 21 November 1938. 45 French envoy Pierrotet noted that the new government had been warned that “s’il s’obstinait à rendre impossible la solution du conflit, il serait l’objet d’hostilité de toute l’Amérique et risquerait peut-être même son existence indépendente au cas d’une nouvelle guerre, au cours de laquelle toute aide serait refusée”: AME, vol. 20, folio 119, 26 July 1938. 46 This reshuffle was again seen as a ‘shift to the right’, but might as well be seen as a sign that the other members of cabinet had become too independent to Busch’ taste, and more occupied with their own agendas than with Busch’ Military Socialist agenda. 47 Klein, Parties, 293.

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The ever-increasing pace of cabinet reshuffles had some major effects, certainly when combined with the comparatively radical convention of 1938. Both convinced the traditional parties that they had better come to terms with each-other, if they were to come back into power. The only obstacle to this development was Saavedra, who still thought that the only way to retain power and keep his Presidential aspirations alive was to ally with the moderate left. The problem was solved on March 1st, when news of Saavedra’s death in exile reached the country48. The news coincided with the news that new congressional elections were to be held in May 1939, and these things combined made that the traditional parties were able to finally come to terms and agree on a true and lasting pact. On March 21st, the new traditional party, consisting of the PRS, the Genuinos and the Liberals, called the concordancia issued its manifesto, outlining its long held beliefs of Liberal doctrine49.

Similar attempts to come to a true understanding between the radical leftist parties continued to fail, but talks had started to unite the moderates in a new party, resulting in the creation of the Partido Socialista Independiente (PSI) in late 1938, with such notable members as Paz Estenssoro, Céspedes and Guevara Arze; the name clearly indicating, however, that this was nothing like the PSE. The PSI, in preparation for the coming elections, went into talks with the LEC and various other political organisations50, and resulted in the Unión Democrática Socialista (UDS), which was created quite specifically to support Busch in his reformist efforts.

These efforts, however, had come to a virtual standstill: after the convention shattered all hopes and dreams of an equitable corporate state, the Military Socialists were hard-pressed to figure out what to do next. The wish to introduce “Social Justice” was still there, but a new formula had to be found. This too, can help explain Busch’ many cabinet reshuffles between 1938 and 1939, as none of the combinations seemed to hand him the ideas he was apparently waiting for. Obviously, such shuffling resulted in very unstable government, unable to produce any sort of coherent design, and reformist policy stood at a virtual stand-still in the last months of 1938 and in early 1939. Somehow, Busch failed also to support the UDS efforts’ at organising, and in fact showed it open hostility, for reasons which are not exactly clear51 and thereby depriving himself of a potentially very useful political power-basis.

In doing this, Busch succeeded only in completely alienating the political sector that had stood by the Military Socialists right from the start, and did so just before the elections. Busch then went on to try and erect a new version of the Partido Socialista de Estado, but failed quite miserably, as his attitude towards those that had always been his political friends had made that almost none of them, including his key minister of government, Gosálvez, wished to join such a party. The idea died when still in its embryonic state, and so the elections were fast approaching, but without any viable party to back Busch’ government. It was, however, external influences that would lead Busch to his next military coup: it was the growing European conflict that finally put Busch in a very awkward position.

In order to back up its claims in the Chaco before the Buenos Aires Peace Conference, Paraguay had invited, in a smart move to gain international approval, some 15.000 Austrian Jews to settle the remote Chaco region under arbitration. Bolivia protested this move, on the grounds that the land was not Paraguayan to give away, and thus sparked a wave of protest from the international community, condemning the Bolivian government of Pro-German

48 Montes had died in 1933, Escalier in 1934 and Salamanca in 1935: thus, all the traditional parties were now deprived of their caudillos: no replacements existed for these near-legendary figures, and so with Saavedra gone as well, the entire personalist aspect of the traditional parties had ceased to exist, paving the way for further co-operation, culminating in the concordancia. Klein, Parties, 304n. 49 Klein, Parties, 305. 50 The LEC having made its transition from strictly a-political to truly politicised during the 1938 national convention, in which it was a prime mover. Also, the fact that Busch depended very heavily on its support as his main popular basis of power, drew the LEC further into the political game. 51 Klein, Parties, 303.

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sympathies52 and anti-Semitism, as it would not allow the Austrian Jews to find a safe-haven in the useless Chaco region53. Already, Bolivia did not have a very good reputation in this area, as one of the first acts of the Military Socialists in June 1936 had been to ban all Jewish immigration54. The United States’ government intervened on the Jews’ behalf, and asked that Bolivia show consideration for the plight of the European Jews, and it was decided, in order to counter the wave of negative publicity that had followed Bolivian protests to the Paraguayan initiative, that Bolivia too would allow Jewish refugees to emigrate to Bolivia55. The move did wonders for Bolivian international esteem, but then, in March of 1939, disaster struck:

The ‘affaire de inmigración’ hit the newspapers in March of 1939: it had come out that a ‘veritable syndicate’ of Bolivian visa-dealers had sprung up in Europe, amassing fortunes, selling the required visas to aspiring Jewish immigrants. The Bolivian consuls in Berlin, Paris and Marseilles had banded together and arranged that all visas must be cleared through the Parisian consulate, and Jewish arrivals in Bolivia had reported to the authorities that they had had to pay up to 500 dollars American in order to obtain a visa — some 100 times the official fare. A full-scale investigation was launched, and the syndicate uncovered: it was reported to have amassed some 12.000.000 Bs from the dealings. The worst part of it was that apparently the minister of foreign affairs had known all along, and turned a blind eye in exchange for a share of the profits56. A major scandal erupted and exploded in Busch’ face, as key members of his cabinet were implicated in the matter. Of course, these members, as well as the Bolivian consuls, were fired, but the damage had already been done, and the government was now tainted and branded ‘corrupt’, thereby losing the last of its already scarce support57.

Now, Busch was facing the elections without any political backing whatsoever, and it was obvious that his opposition would win the Congressional elections, thus filling the Congress with members who might not be as sympathetic to Busch’ design as he had hoped. His own cabinet discredited by a major scandal of international proportions, and with no chance of gaining the backing of the Congress yet to be elected, Busch opted for yet another coup d’état, hoping that through this he might be able to finally complete his project of ‘national rejuvenation’, ‘patriotic resurgence’ and ‘social justice’. Apparently, he was not about to let the ideals of the May revolution just go under in the continuing political flux the country was experiencing, and on April 24th 1939 declared the formal establishment of a dictatorial regime under his leadership, abandoning the constitutional government that had only just been set up58. His dictatorship was to be the last and very desperate attempt at carrying through the ideals of Military Socialism.

Hero turns Dictator turns Martyr In his speech explaining the drastic turn of events, Busch explained how he failed to understand what had gone wrong: he had done his duty, forming only cabinets of national unity and never letting one extremist faction gain the upper hand, but always remaining on the middle road towards ‘national rejuvenation’. The result had been anarchy, as all the different factions could think only of their own good, setting aside completely the common goals and patriotism of the Military Socialist efforts at instilling ‘Social Justice’. Immorality prospered, as the people seemed unable to return to their patriotic and moral values. The only thing left, he stated, was 52 Which most certainly existed. 53 AMR, EEUU 1 R 41, folio 3, number 3666/140, 10 May 1938. 54 AMR, F.A. 1 5 Ejercito Nacional, folio without number, number 4471, 13 July 1936. 55 AMR, EEUU 1 R 41, folio 21, number 4221/128, 14 May 1938. 56 AME, vol. 5, folio 137, 20 March 1939. 57 Klein, Parties, 308. 58 Díaz, Toro …, 93-94.

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to cure the evils with drastic means, and this he proposed to do through his movement. His minister of government agreed and stated that this was not just another totalitarian reactionary dictatorship, but:

“Now were are dealing with a dictatorship that has but one goal: to prepare the country for the advent of true Democracy, as, at this point in time, the country is unprepared to walk that road59”.

The programme of reforms announced, being education the primary goal of the dictatorial regime, was nothing more than a mere repetition of the aims stated during the May revolution. After almost three years, Busch concluded, nothing had been reached, no real progress made and the political scene remained as muttered and cluttered as before. To him, it all seemed so clear, and from his emotional, rather desperate pleas to the nation, to please help in the creation of a new Bolivia, it appears that he just could not understand why others did not see it all as clearly. As time progressed, the sheer desperation, mixed only with frustration, in his pleas really became the central message in them. He was fighting a losing battle, he knew it, but he just did not understand why. Apparently, the political forces were working against progress: the traditional block worried about its own influence, and the labour movement doing much the same. Busch would make them see eye to eye, for the good of the nation. The political parties, he decided, only stood in the way of progress, and therefore he alone would rule and by executive decree60. In accordance with his wish to rejuvenate and reform the nation, he started to work personally at reforming it. Immediately after the April movement, as it came to be called, an unprecedented flood of executive decrees poured forth from the presidential palace, as Busch reformed institution after institution, by decree. Almost all of them were completely ignored and left a lasting impression only in the Anuarios in which the decrees were published61, save two decrees that captured the imagination of the public and caused considerable commotion: The first of the legendary decrees of Busch’ dictatorship was the promulgation of the Código del Trabajo, the labour-code, which was promulgated on May 24th 1939 and was soon popularly known as the Código Busch62. The 122 articles long code had been worked out mostly under the auspices of Waldo Álvarez, during the Toro administration and was a jewel in its kind, providing the most extensive and socially minded labour code the country had ever seen, far outstripping anything initially envisioned by Toro and his aides. It provided for apprenticeships, separation wages, pension provisions, full legal protection for labour contracts, collective contract binding, annual paid vacations, a 48 hour work-week, minimum wages, uniform salaries for Bolivian nationals and foreigners, regardless of sex, work-place safety regulations and factory medical facilities, the legal right to strike, child labour prohibition and mandatory justification in case of firings63. All in all a very modern document, and the one accomplishment of the Busch’ regime that lasted throughout the century64. The next great decree that shook the nation, was the infamous decree of June 7th, stating that thence on, the great tin-companies were obliged to sell 100% of their foreign currencies to 59 “Ahora se trata de una dictadura que no tiene otro fin que el de preparar al país para que llegue a ejercitar la verdadera Democracia, ya que en este instante él no está maduro para caminar por esa senda”, Díaz, Toro …, 95. 60 Klein, Parties, 309-311. 61 To a large degree due to their impracticability, such as the Decreto Supremo dealing with housing, also promulgated May 24th 1939: its stipulations are purely impossible, as it states for example that all houses must be equipped with electricity, running water, water-closets, and must have adequate ventilation, be built at 100 cm above ground-level (In case of flooding) and so on. Such housing would have meant that almost no-one in Bolivia might have afforded to live in a house. AA 1939, 24 May 1939. 62 Lora, Movimiento obrero, 82-83. 63 AMR, Min 1 120 Trabajo y Previsión Social, no number, no number, 24 May 1939. This list of stipulations is, of course, not exhaustive. 64 It is still valid, though in a modified version.

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the Central Bank. It further stated that no foreign exchange could be exported, save 5 percent of earnings, in order to pay dividends. It also stipulated that the Bolivian exchange gathered in this way should, at least in part, be used to establish a smelting industry within Bolivia. Finally, the decree stated that any resistance, either active or passive, to the decree would result in the death penalty and subsequent confiscation of all holdings of the deceased, as it would be considered high-treason65. The decree, stated Busch as he proudly announced the measures to the public66, was to finally grant Bolivia its economic independence, as it effectively nationalised all of Bolivia’s exports67. As a result of the momentous decree, enormous crowds gathered in front of the Presidential Palace in the days after the announcement, cheering Busch, the great national hero. The miners were not so happy, as they stated that the decree would be the ruin of the entire industry: they were multinational corporations and what were they to do with massive amounts of inconvertible Bolivian pesos? Hochschild soon made it known that he had no intent of following the decree, and when Busch heard of his promises to evade the decree, he exploded in a fit of fury: he had Hochschild and several other industrialists arrested and then taken to his personal offices. There, they were awaited by the full cabinet, which was in the presence of the industrialists persuaded to sign death warrants for them all, not withstanding the fact that the decree itself had not yet been enacted68. The members of cabinet soon repented their hasty decision and pleaded with Busch to let the men go free; after much deliberation, and not entirely willing, he gave in to the peer-pressure and ordered that Hochschild and the others be released69. The decree, however, was never made effective and it too disappeared in the Anuario, which had by this time become a virtual encyclopaedia of legislative mythology. In the few months following these incidents, Busch retreated to his Presidential quarters, whence continued to flow a constant stream of edicts, almost none of them ever acted upon, as Busch himself rapidly lost the support of the armed forces, now controlled by Quintanilla, who had sided with the miners over the exports-issue. Ever more isolated, Busch entered into a deep depression, annoyed by his own inability to effect the changes he had thought so necessary. His personal behaviour reflected his emotional downswing, as he started stating frequently how he felt that no-one understood him, and he became estranged from his friends and his own wife70. Suffering from bouts of depression, he at times announced that the best thing to do would be to take his own life. He did, on August 23rd 1939, with his own Colt revolver, at 33 years of age71. With him, died the experience of Military Socialism.

65 AME, vol. 39, folio 201, 10 July 1939. 66 He stated that “Nadie puede sentirse herido por el nuevo rumbo que toma la economía nacional. Se dirá que mi gobierno es revolucionario; sí, ciudadanos, aspiro a una revolución cuyos resultados sean éstos: que Bolivia aproveche sus propias riquezas”, Díaz, Toro …, 102. 67 Gallo, Taxes, 113. 68 AME, vol. 39, folio 201, 10 July 1939. 69 AME, vol. 39, folio 202, 10 July 1939. 70 Klein, Parties, 320n and Foianini, Misión Cumplida, 256. 71 It has been suggested, for example by Guillermo Lora, that the tin-miners had Busch assassinated. No proof whatsoever of this exists, and his colleagues certainly did not believe anything of the sort: AMR, Min 1 10 Presidencia de la República, no folio, number 9353/1, 1 September 1939.

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Epilogue Busch’ dramatic deed quickly turned him into a true martyr of the revolution. Years later, during and after the National Revolution, historians and politicians72 pointed towards the Era of Military Socialism, and most specifically to Busch, as the time when it all began: Busch was said to be the great precursor of the revolutionaries of the 1950ies. The mystery surrounding his death, as evil tongues claimed he had been murdered by the Rosca, helped him attain the status of Bolivia’s most popular hero, and nowadays there is hardly a city of village that does not have some street, plaza, boulevard, statue or memorial dedicated to his memory. There is an air of mystique around the young dictator that no other Bolivian head of state has, and a number of books have appeared describing Busch’ magnanimity and good deeds, as well as his good character and undying love for the fatherland73. Over the years, he became the symbol of resistance against the all-powerful Rosca and of reformism. There is only one other person in Bolivian history that has the same kind of mystique, and who like Busch only became popular and widely acclaimed after his passing: Ernesto Che Guevara, who was killed in the Bolivian jungle after a particularly unsuccessful attempt at exporting the revolution. While Che was hardly very popular at the time he was in Bolivia, nowadays great murals of him are scattered throughout the country, and every self-respecting kiosk and book-stand sells his Bolivian diary. It is interesting how these two people, who accomplished virtually nothing for Bolivia when they were still alive, have become so widely acclaimed in death. Much unlike Busch, the other great Military Socialist — Dávid Toro — is not anywhere near as popular as Busch. Rather, he is generally seen as a traitor to the cause, even though he was somewhat more successful in accomplishing results; however limited. I find it hard to explain exactly why this is, but perhaps it is due for the most part to the lack of romanticism in his government: Busch’ story is almost a classic Greek tragedy, while Toro was a much more effective and therefore unromantic politician. One can not help but wonder if he would have been more popular also, had he killed himself in a senseless, but dramatic gesture of despair, rather than taking up arms in order to try and regain his lost power.

But even though both Busch and Toro largely failed at their attempts of reforming the country and its institutions, the years of Military Socialism were of tantamount importance to the further political development in the country. For even though their stance towards the extreme left was less than favourable, they did allow and foster moderate reform-minded movements. Also, they did invest heavily in education — the third largest post, after debt-services and defence — and managed to make a start at erecting schools in the countryside: these would be of singular importance, as they were able to draw many of the Indians into national life. In a way, therefore, the experience of Military Socialism was the first important step towards nation-building after the establishment of the traditional Liberal system in the late nineteen-hundreds.

For all their resistance to leftist extremism, the years of Military Socialism did allow for the development and consolidation of the leftist and moderate reformist movement: during the years between 1936 and 1939, the first important steps were taken in the formation of political alliances that would within few years lead to the development of the Partido de la Izquierda Revolucionaria (PIR) and the Movimiento Nacionalista Revolucionario (MNR), both of which would come to dominate to a great extent the political scenery of the 1940ies, while the latter would grow out to be the most important party in the National Revolution of 1952-1964. In fact, even today the Bolivian president is a Movimientista. The same is equally true of the labour-movement, which was actively supported during military socialist years. This

72 In Bolivia not unlikely to be the same. 73 One especially nice hagiography is Luís Antezana Ergueta, Germán Busch: vanguardia del destino nacional, (La Paz, Editorial Juventud, 1990).

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allowed the time for further development, and the labour movement that emerged after 1939, was a strong and increasingly influential factor in Bolivian politics.

Perhaps the most important contribution to these parties and the labour movement made by the Military Socialists, was to allow the leaders of both to participate in the political process, as administrators of various state-organs, ministers of cabinet or delegates to the national convention: this gave them the experience they needed in affairs of state, and a better view of the possibilities of state and government than they had had before. Especially the national convention had given these young radicals and moderates the opportunity to interact and learn to understand one-another better: important men of later years had their first experiences in this way: for example Víctor Paz Estenssoro and Augusto Céspedes.

Likewise, Military Socialism gave the traditional parties time and opportunity to regroup and reaffirm their coalition with the mining-interests, which had become damaged during the war. The concordancia was able to regain power for a number of years, after Busch’ death: something that would have been impossible had the traditional parties not united in the face of growing opposition. Their strength and credibility had, however, been reduced and their years in power would not last. The 1940ies were above all a time of great instability and political fermentation, in which neither the left, the moderates or the right seemed able to hang on to power for very long. Eventually, the battle was decided in favour of the moderate MNR, who emerged as the key-political organisation in 1952, and guided the country through one of the largest revolutionary processes in the history of the continent.

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Conclusion In most of the current bibliography, the main question concerning the era of “Military Socialism” has been how to typify the Military Socialist movement in political terms. A grand debate exists, in which different authors conclude that the Military Socialists are either fascist, socialist, nationalist or what have you. Even though this question is clearly worth looking into, one might wonder whether it is really the most relevant topic or whether the significance of the Military Socialist regimes lies exclusively in their political inclinations. Likewise, how could one hope to answer the question of Military Socialist politics without having a firm grasp of where its origins lie. In the end, I would have to conclude that the mere fact that a seemingly stable political system, that lasted for over half a century without major upsets, completely collapsed only to be replaced by a military regime is in itself quite interesting. Why did this system quite suddenly, and very quickly, collapse?

The Traditional System and its Failure When the Liberal system was set up, in 1883, its control was limited, to all intents and purposes, to the urban centres and the mines. The system itself was run, to a great extent, by urban professionals such as lawyers and journalists, and by the silver-magnates, some of whom became constitutional Presidents themselves. The function of this Liberal state was fairly straight-forward: it was supposed to keep law and order, and take measures necessary to promote progress. Progress, in the economic sense, meaning that infrastructure should be built to further the mining-industry, such as railroads, urban schooling and the like. The ultimate purpose of this Liberal state was to safe-guard private property and eventually to build the Liberal Heilstaat, the nation-state, in which all inhabitants should be citizens. This project of nation-building, however, would prove to be quite difficult and attempts to construe this nation-state all failed. It took little to see why this failed: all Liberal politicians recognised that Bolivian society was nothing like the Western-European societies, or even like the United States — which to some too served as an example of progress. Its difference lay in the racial and social make-up of the country, as the larger part of Bolivians were rural Indians, many of whom spoke an entirely different language and whose cultural identity was radically different from urban Bolivians. For a long time, the comunidades libres were seen as the greatest obstacle to progress and nation-building, as the comunidades were constructed on a collective basis, while Liberal theory prescribed private-property as the singular basis of progress. Throughout the late eighteen-hundreds and early nineteen-hundreds, attempts were made to ban the comunidades from Bolivian society: though not wholly successful, there was a marked decrease in their number. Still, the institution itself survived even the most radical attempts to root out this remnant. At the same time, the economic importance of the rural communities remained very limited, and fear of Indian uprisings such as those experienced in 1899 made that such attempts remained limited in number and limited in scope. As the number of comunidades decreased, however, the large-holdings or haciendas grew, both in number and in size, so that by the turn of the century, most of the rural population had been reduced to colonos, forced to work the land of others and subject to the almost complete control of the hacendados, who were able to control almost every aspect of colono life, including his marriage, his religion and his movements. Even though the urban intellectuals did not all approve of the hacienda structure, it was seen as far more civilised and above all productive, that any of the traditional comunidades. Perhaps the most important

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element in this acceptance of the hacienda system was the fact that the hacendados were able to effectively control the large Indian population and keep them, as it were, in their place. This, combined with the fact that the attempts to subdue the comunidades had hitherto failed in achieving their goal, made that the state really left the rural areas alone, occasionally sending in troops to suppress Indian revolts. The result of this situation was that the country was effectively split in two, if not more, parts that enjoyed a tremendous degree of autonomy. The state, run by and run for the silver-magnates, controlled the mines, the cities and the infrastructure (Including imports and exports, of which it depended for revenues). The countryside consisted of comunidades libres, minifundia and latifundia, all of which were constantly embroiled in bitter dispute and attempts to expand at the expense of the others, but largely segregated from each-other and from the urban centres (with which the haciendas had most dealings, being the suppliers of foodstuffs). A completely fragmented society, of which the constituent parts largely lived their own lives, and kept to themselves if possible. In theory, the Liberal government, so tightly nit with mining interests, would have to try and integrate these separate parts, but in practice little came of this. Despite much discussion, rural centres remained without educational or other facilities, and the Indian community was never up-graded to form part of civil society. The most important thing to these governments was to keep the urban economy going, and seen as how the countryside contributed so very little, it was to a degree left alone. The Liberal political system had been built on this society, and its functioning depended on several factors: first of all, it needed a power-basis within the cities, as its control on the country-side was almost non-existent and left to the local notables and hacendados. This power-basis was found in the relatively small number of urban professionals, including lawyers and teachers and so forth. It also needed income, which was derived from the mining-industry and other import- and export-duties. Seen as how the mines and urban industries were also needy of certain things, which the state could provide in return (Law, order, infrastructure, suppression of strikes and relative economic stability), the relationship between urban industry and commerce on the one hand, and the state on the other, can be seen as mutually beneficial. The last of the requirements to be met, is the system’s ability to provide the things demanded by urban sectors, such as stability and order, and for this it in turn depended on three things: First, it depended on the acceptance of the urban population of its moral validity: law and order must be kept throughout the cities, while at the same time the living standards of the urban populace should be acceptable. In short, the need was not so much for the active support of the urban populace, as for its failure to actually actively oppose the system in any effective manner. Secondly, it depended on the continuance of the mutually beneficial relationship with the economically important urban sectors, i.e. the mining-corporations, banking and commerce: it could not ask for too much, and should keep its end of the deal, providing economic and social stability, suppressing strikes and providing infrastructure. Finally, the success of the state depended also on the hacendados’ ability to keep the order in rural areas: occasionally suppressing uprisings, it was content to leave the countryside to its own devices, so long as this did not threaten stability. So here too, we might state that the main thing was not support, but rather the lack of real opposition to its urban rule. In sort, the survival of the Liberal system depended on the lack of effective opposition from popular sectors, whether rural or urban, and the ability to extract revenue from imports and exports without upsetting the relationship with the industrial and commercial sectors, while at the same time the military served as its main source of power: a military that on the whole abstained from politics and recognised the primacy of civilian government. Throughout the final decades of the nineteenth century, this system survived without major problems: the Federal War of 1898-1899, even though it wreaked a certain amount of havoc, did not truly endanger or even upset the composition of the structures themselves, nor

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threaten its continuance. Rather, it represents the struggle between different political factions, tied with different economic interests, but all within the framework of the same system, of which the validity and functioning were not even questioned. The first decades of the nineteenth century however, saw some marked changes, that would eventually destroy the Liberal system. One of the major changes, that would reshape Bolivian society, and thus have its effects on the political system, lay in the very process of modernisation. As infrastructure was improved, and the Bolivian economy grew quite rapidly in the first two decades, mainly due to the enormous growth of tin-exports, the urban centres of the Altiplano attracted more people and grew considerably. The railroads, for example, became very important to the national economy, as did other supporting industries. The urban population grew: as more people inhabited the cities, the urban middle classes grew, as did the work-force; eventually these people would become central to Bolivian politics. Of course, these lower and middle-classes were themselves excluded from the political system, for example by disallowing them the right to participate in the political process. Unable to obtain their right through politics, from which they were excluded, the working classes increasingly recognised the need to organise themselves into effective pressure-groups, so as to be able to exert pressure on the employers to meet with certain basic demands. So, increasingly during the nineteen-tens and nineteen-twenties, this movement gained momentum, while the political system fought them and their demands, both of which were considered to be threatening the ordering of society and its stability. Not even an effort to appease was made, and generally these working class demands were met only with violence and repression. As stability declined, as a result of the growing pressure from below, the political system was also weakening from the inside. The very personalist nature of the political system, whereby political parties were usually centred around a caudillo político, also turned out to cause problems: the all-powerful Liberal Party, which was without serious competition during the first fifteen years of the century, was dominated by one such strongman, leaving little room for other promising and ambitious politicians to develop and manoeuvre. As these men were seriously limited in their possibilities for growth, they decided to step out, and form their own political parties, in which they themselves became dominant to the extent of excluding others from developing their political careers. So, in turn these parties also split up, and the entire political system became more fragmented itself: more political parties appeared, split up again and fell apart, leaving the political scenery somewhat unstable. But even though these different parties, led by their respective caudillos políticos were embroiled in a constant struggle for power, at the basis of their disagreement lay little more than personal differences. In strictly political terms, they agreed on all but minor issues, and all believed in the fundamental validity and purpose of the system itself, including its wholly exclusive nature. We might say that the segmentation of these political parties therefore would not have been a problem, had not society around changed so much. As the influence of working class alliances and middle class organisation grew, but these continued to be excluded from political participation, the Liberal system came under much external pressure, and its basic functionality came under threat, as it became harder to fulfil the needs of industry and commerce in the face of workers’ organisation. It was eventually the Chaco War that destroyed the traditional system, as it broke up the alliance with industry and commerce, and bankrupted its validity in the eyes of the urban population: on the countryside too, there was discontent, but never to the extent of formal organisation and resistance to the system — things that would come about in the following decade. Salamanca’s stance towards the military also made things more difficult, as the military were less willing to co-operate with the traditional parties as a result. Also, the basic acceptance of urban sectors did not survive the war, and the entire system was left without support from

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any major sector in society: the last vestiges were urban professionals, such as lawyers etcetera, being only a small percentage of the urban population.

As became very clear during Tejada Sorzano’s presidency, the system had been rendered obsolete by 1935. The government, during this interim, was no longer able to control the urban masses, or suppress workers’ co-ordinated action, as the military refused to clear the streets of protesters. Protesters that included the urban work-force, but also the middle classes, who were to become a major political force as well. The complete collapse of the system became imminent and inevitable, but no viable civilian alternative existed: even though the workers’ organisations had grown in strength, they were too fragmented themselves to form a viable alternative, while the middle classes had only just begun organising and were in no position at all to take over governmental responsibilities.

The only viable source of power that remained, after the Chaco War, was the military itself. Even though it had shown no interest in partaking of political power before 1933, the War had reshaped it too: as the older officers’ generation failed miserably in achieving results, it had been replaced by a younger, very politically minded generation, that did in fact have political ambitions. Also, given the extremely difficult circumstances of Bolivian politics after the Chaco War, it saw that it was the only institution left, that was in a position to prevent the complete discomposition of Bolivian politics and society in the face of political strife, social unrest and economic adversity. Even if the military had not had political ambitions as such, its involvement in politics had become unavoidable, since its task-description under the 1880 constitution included stipulations to the effect that its responsibilities included national security and social stability. The lack of civilian options, as much as new political ambitions on the part of the younger officers’ generation, had propelled the military to the forefront of Bolivian politics.

Military Socialism A new politically minded military had come forth from the Chaco War, and it, as much as most popular sectors of society, felt a decided need for changes in the social fabric of Bolivian society. As it would turn out, however, the political vision of the young officers propelled into office by the coup d’état of 1936 did not stroke entirely with that of the popular sectors, where socialism and communism had become the most widely adhered to political ideologies. As the Military Socialist government was built on the ruins of the Liberal system that preceded it, a whole new set of popular, industrial and social alliances also had to be construed, upon which to eventually build a new power-basis. This task would prove to be very difficult, not in the least because all parties involved eventually came to realise that the Military Socialist ideology was not as socialist as its name would imply. The first Military Socialist government led by Colonel Dávid Toro quite soon made it clear that its goal was to build a corporatist structure, which would hopefully provide the state with enough power to control society, while at the same time educating the people and introducing some modest social legislation, mostly to do with labour legislation. The heavy dependence on mining for government revenues inherited from the War-years, combined with the popular aversion to capitalist industries that also emerged from the Chaco War, made that the industrial sector could not serve as a part of this power-basis, and throughout the era of Military Socialism we find that the state and industrial interests, most especially the mining interests, do not stroke at all, and in fact we could say that the two were constantly at odds: during Busch’ dictatorship, this became evident when the mining sector refused to increase exports, as the profits made were too low. Increasingly, keeping production artificially low became the favourite means of exerting pressure on the state, as this in the end

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formed a way of obstructing the state’s aims, through a virtual boycott, whereby the state was deprived of revenues1. Obviously, the traditional block could not possibly serve as an alternative to industry for the construction of a power-basis, as it had been totally discredited. Also, the traditional parties remained in opposition to each-other, at least until it became unmistakable that this opposition was threatening their very existence: at first, it seemed to them, the military was as before paving the way for a return to the traditional system, but as they came to understand that this was not the case, they were eventually able to put aside their differences and co-operate in the concordancia, that was born in 1939. This left only the popular sector as a possible power-basis, meaning that the government would have to concede favours to this sector, in order to retain its support: this, and the Military Socialist efforts at reorganising the state and introducing education, for example in the countryside, cost money, and that in turn worsened the relationship with the industrial sectors that would have to cough up to cover state expenses. Military Socialism, however, was unable to attract sufficient popular support, mostly because of its political ideology, which was corporatist in nature: as the WW II neared, this ideology became more and more tainted, and less acceptable to either Bolivian popular sectors, the traditional block or the major trading partners (The United Kingdom and the United States). The result was that the Military in power formed little more than a very volatile government, with quite little effective control over society, as industrial sectors and the traditional block opposed it, and popular sectors neither really opposed it nor supported it actively, taking a rather non-committal stance. Still, this volatile government constituted the only viable one at the time. The failure to amass sufficient backing, cost Toro his presidency, as it meant that he was unable to achieve results quickly. In the end, even the military itself withdrew support of his government and staged a coup against him, replacing him with the very popular Busch. But the circumstances had not altered considerably, and so Busch faced many of the same problems as Toro: with little to show for two years of Military Socialism, Busch managed also to lose much of his popular support, and found his intentions to continue where Toro had left off obstructed also, and he too eventually proved unable to introduce the Military Socialists ideals: the central theme of Military Socialism, the corporate state, was torpedoed as the military were unable to organise an effective influential party to participate in the national convention, and as a result the entire corporatist project remained absent from the new constitution. Meanwhile, Busch had named Quintanilla as head of the EMG, thereby allowing a traditionally minded officer of the older generation to replace the younger officers in important posts with the traditionally minded older ones: Busch was now rapidly losing control over the military too, and this made his own position nearly untenable. Without effective control over the military, and without effective control over society, feeling the unrelenting pressure from the popular sectors to improve social conditions but unable to effect this, Busch tried to do it all himself, as the first military dictator in Bolivia in the twentieth century: to little avail, as opposition from many quarters of society, and virtually no support from any made it impossible to do what he had hoped and promised. Heavily frustrated Busch took his own life, rather than continue to rule in this fruitless manner, or admit to limitations. With Busch, the whole idea of military socialism came to an end: what had it accomplished? Military Socialism had been intended to introduce social justice, through he restructuring of society on a corporatist model: it would educate the people, until they were able to govern themselves without carrying with the dangerous and destructive socialist or communist ideals. Military Socialism was certainly intended to stop radicalism, which was seen

1 Gallo, Taxes, 111-114.

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by the military as a destructive force, as can be seen by the fact that Toro tried and failed and Busch succeeded in suppressing communist and anarchist agitation. It all failed, as the military were unable to muster enough support: without this support it could not introduce the changes it had wanted to, and because of this lack of results the support it did have withered away; a downward spiral. There was at the time no popular basis for this corporatist ideal, but Military Socialism continued as long as it did for three main reasons: first, it was the only viable option, and this was recognised by most political organisations. Secondly, like the traditional system before it, it could continue as long as opposition to it remained scattered, unorganised and ineffective: once the traditional block reorganised, and re-established its ties within the military (Through such men as Quintanilla), it could actively oppose government, with the aid of the mining industry, which boycotted the regime through its refusal to increase production and thereby deprived it of the financial means it needed to function properly. Finally, the military socialists had promised to reform a badly outdated system, and did in fact try to do just that: the mere fact that they wanted to do away with the old order, was enough of a reason to support it in the beginning. It was only after it proved unable to effect change, and it became clear that the changes it proposed were of a corporatist nature, that initial support for the military was withdrawn.

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