BOLIVIAN HISTORY FROM 1930 TO 1939: THE CRISIS AND THE RISE OF MILITARY SOCIALISM

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
Rijksuniversiteit Leiden
Faculteit der Letteren
Vakgroep Talen en Culturen van Latijns Amerika
P RE F ACE
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.
i
T AB L E OF C ONT E NT S
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
ii
I NT RODUCT ION
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).
1
I NT RODUCT ION
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.
2
B OL I V IAN S OCI E T Y
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.
3
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.
4
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
5
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 Percentage of GNP
active population in 195021 in 1950
Agriculture (Including rural 72.1 32.8
artisans)
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.
6
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
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.
7
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: 1900-1930

Source: Carmenza Gallo, Taxes and State Power , 33.
40000 80
35000 70
30000 60
Percentage of Total Exports

Exports in Metric Tons
25000 50
Average Metric Tons per
Year
20000 40 Percentage of Total Exports
15000 30
10000 20
5000 10
0 0
1900 1901 - '05 1906 - '10 1911 - '15 1916 - '20 1921 - '25 1926 - '30
Year
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.
8
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
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
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
9
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
49
Ibidem, 329.
10
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.
11
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.
12
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
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.
13
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.
14
“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.
15
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),
16
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.
17
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
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
101
Rinke, “General Kundt”, 621.
18
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.
19
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.
20
T HE C RI S IS
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].
21
T HE C RI S IS
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; 1929-1935

Sources: Carmenza Gallo, Taxes and State Power, 33
Luis Penaloza Cordero, Nueva historia economica de Bolivia, 201, 266
60000 300
50000 250
Tin Prices in Pounds Sterling

Production in Metric Tons
40000 200
Average yearly production in

30000 150 metric tons
Price per Metric Ton, in
pounds
20000 100
10000 50
0 0
1900
1901-1905
1906-1910
1911-1915
1916-1920
1921-1925
1926-1930
1929
1930
1931
1932
1933
1934
1935
1936
—————
Year
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.
22
T HE C RI S IS
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
9
Gallo, Taxes, 110. In 1931, the foreign debt of 137.700.000 equalled US$60.300.000.
10
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.
23
T HE C RI S IS
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
17
18
24
T HE C RI S IS
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.
25
T HE C RI S IS
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
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.
26
T HE C RI S IS
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
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
27
T HE C RI S IS
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
33
34
35
36
37
The Federación Nacional Postal Telegráfica y Radiotelegráfica. Valencia, Historia política, 1703.
38
28
T HE C RI S IS
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
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
29
T HE C RI S IS
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
45
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.
30
T HE C RI S IS
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
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
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.
31
T HE C RI S IS
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
57
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
32
T HE C RI S IS
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 C
B anzer, Misión C
B anzer, Misión C
B anzer, Misión C
B anzer, Misión C
B anzer, Misión C
B anzer, Misión C
B anzer, Misió
33
T HE C RI S IS
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
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
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
34
T HE C RI S IS
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
76
77
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-
35
T HE C RI S IS
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.
36
T HE C HACO W AR
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
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.
37
T HE C HACO W AR
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
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
11
38
T HE C HACO W AR
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
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
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
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
39
T HE C HACO W AR
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
22
Valencia, Parties, 1725.
23
Commemorated by numerous streets, allies, statues and monuments throughout Bolivia.
24
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
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.
40
T HE C HACO W AR
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
35
41
T HE C HACO W AR
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.
38
Table 2. Cost of the Chaco War in Human Lives
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
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.
42
T HE C HACO W AR
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.
F ig u re 3 :
G o v e rn m e n t E x p e n d itu re s o n D e fe n s e a s a P e rc e n ta g e o f T o ta l E x p e n d itu re s
S o urce : C arm enz a G a llo , T axes a nd S ta te P ow e r , tab les V I-1 and V I-2.
90
80
Percentage of Government Expenditures on Defense
70
60
50
40
30
20
10
0
192 6 1 927 19 28 1929 19 30 193 1 1 932 193 3 1934 1 935 193 6 1 937 19 38 1939
Y ear
40
Saracho, Una ráfaga, 510.
41
42
43
Which would have accounted for some 47 percent of the national budget of 1934: Gallo, Taxes, 134.
44
Gallo, Taxes, 112.
43
T HE C HACO W AR
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.
F ig u re 4 : E x p o rt s a n d T a x e s 1 9 2 2 -1 9 4 0
S o u r c e : C a rm e n z a G a llo , T a x e s a n d S ta te P o w e r , 1 0 8 .
60
50
P e r c e n ta g e o f
G ov e rnm en t
40 R ev enu es from
M in in g
Percentage
30
Tax es as a
20 P e r c e n ta g e o f
E x p o r ts
10
0
1922 1924 1926 1928 1930 1932 1934 1936 1938 1940
Y ear
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.
44
T HE C HACO W AR
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.
45
T HE C HACO W AR
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
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
46
T HE C HACO W AR
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
65
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.
47
T HE C HACO W AR
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
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
72
73
Lora, Movimiento obrero, 13.
74
48
T HE C HACO W AR
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
49
T HE C HACO W AR
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
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.
50
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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
89
90
91
92
51
T HE C HACO W AR
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
95
96
97
Lora, Movimiento obrero, 24-26.
52
T HE C HACO W AR
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
99
100
101
102
53
T HE C HACO W AR
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
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
54
T HE C HACO W AR
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
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
55
T HE C HACO W AR
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
114
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.
56
T HE C HACO W AR
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.
57
T HE E S T AB L IS HM E N T OF M I L I T ARY S OCIAL IS M
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.
58
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.
59
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
60
• 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
22
AME, vol. 5, f. 97, 25 May 1936.
23
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”.
61
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
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
62
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
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.
63
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”,
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
43
64
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.
65
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
51
66
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
53
54
Gallego, reformismo, 100-101.
55
67
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
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
68
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
64
65
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.
69
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
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
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
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
70
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
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.
71
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
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
72
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
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
73
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
96
Working, besides the efforts to organise labour, on a Labour Code.
97
98
99
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.
74
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
75
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.
76
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
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
77
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
122
123
See page 72.
124
125
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.
78
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.
79
B US CH ’ M I L I T ARY S OCIAL IS M
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
3
4
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.
80
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
9
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
13
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
81
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
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
20
Céspedes, El dictador, 174.
82
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
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.
83
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
32
See Klein, Parties, 276-283, Céspedes, El dictador, 178-183.
84
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
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.
85
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
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.
86
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
87
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
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
88
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
58
Díaz, Toro …, 93-94.
89
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
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.
90
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
69
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.
91
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).
92
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
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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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Bibliography
Primary sources
Arze Quiroga, Eduardo, Documentos para una historia de la guerra del Chaco, seleccionados
del Archivo de Daniel Salamanca, 3 Volumes, La Paz, Editorial Don Bosco, 1960.
Bolivia, República de, Anuario Administrativo de 1936, 2 Vols., La Paz, 1937.
Departamento de Propaganda Socialista, Cuartillas Informativas, no. 5, La Paz, 1937.
Intendencia General de Guerra, Bajo el régimen Militar Socialista: ¿Hay labor gubernativa?,
La Paz, 1936.
Ministerio de Relaciones Exteriores y Culto, Tratados y convenciones vigentes, 1940.
Primera Convención Nacional de Estudiantes Bolivianos, Programa de principios, estatuto
orgánico y reglamento de debates de la Federación Universitaria Boliviana,
Cochabamba, Publicaciones de la Federación de Estudiantes de Cochabamba, 1928.
Yacimientos Petrolíferos Fiscales Bolivianos, Bolivia y The Standard Oil Company, Sucre,
1938.
ARCHIVES DU MINISTÈRE DES AFFAIRES ÉTRANGÈRES DE LA REPUBLIQUE FRANÇAISE

Série Amérique 1918-1940, Sous-Série Bolivie;
volumes: 5, 7, 19, 20, 39.
ARCHIVO DEL MINISTERIO DE RELACIONES EXTERIORES Y CULTO DE LA REPÚBLICA DE BOLIVIA

Volumes: Subject and Period:
Alem 1 R 14 Legación en Alemania 1936-1937
Alem 1 R 15 Legación en Alemania 1938
Alem 1 R 16 Legación en Alemania 1939
Cons 2 E 405 Consulado en Londres 1937
Cons 2 E 384 Consulado general en Gran Bretaña 1936
Cons 2 E 387 Consulado en Liverpool 1936
Cons 2 E 449 Consulado en Londres 1939
DR 1 13 Decretos y resoluciones
ED 1 1 Bancos y ferrocarriles 1938
ED 1 2 Bancos y ferrocarriles 1939
EEUU 1 R 39 Legación en Estados Unidos 1936
EEUU 1 R 41 Legación en Estados Unidos 1938 January-April
EEUU 1 R 41 Legación en Estados Unidos 1938 May-December
EEUU 1 R 42 Legación en Estados Unidos 1939
F.A. 1 5 Ejercito nacional
GBRT 1 R 37 Legación en Gran Bretaña 1939
LE 3 R 154 Legaciones extranjeras en Bolivia 1936
Leg 1 471 Legislativo 1938-1939
Min 1 94 Ministerio de guerra 1935-June 1936
Min 1 96 Ministerio de hacienda 1937
Min 1 98 Ministerio de industria y comercio 1937
Min 1 101 Ministerio de educación y asuntos indigenales 1937
100
B I B L I OGRAPHY
Min 1 102 Ministerio del trabajo y previsión social 1936-1938

Min 1 103 Ministerio de minas y petróleo 1936-1937
Min 1 107 Ministerio de educación y asuntos indigenales 1938
Min 1 108 Ministerio de obras publicas 1937-1938
Min 1 110 Ministerio de hacienda 1938
Min 1 118 Ministerio de comercio 1939
Min 1 119 Ministerio de minas y petróleo 1939
Min 1 120 Ministerio del trabajo y previsión social 1939
Min 1 121 Ministerio de relaciones exteriores: informes 1939
Min 2 171 Ministerio de hacienda 1937-1938
Pres 2 1 Presidencia de la República 1938-1941
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103

BOLIVIAN HISTORY FROM 1930 TO 1939: THE CRISIS AND THE RISE OF MILITARY SOCIALISM

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BOLIVIAN HISTORY FROM 1930 TO 1939

Eindscriptie Cultuurkunde van Spaans Amerika

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

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

The Land and the People

Table 1. Percentage employment of economically active population, by sector (1950)

Of Silver and Tin: mining from 1860 to 1900

Figure 1: Tin Exports: 1900-1930

Percentage of Total Exports

The Tin Industry: mining from 1900 to 1930

The Mines and the State

The Political System until 1926

Economic Collapse: 1926-1932

Figure 2 : Tin Production and Prices 1900-1930; 1929-1935

Tin Prices in Pounds Sterling

Average yearly production in

Political Developments: Siles

Political Developments: Salamanca

The Political Left: 1928-1932

organisations and it could therefore perform as a constant in deliberation and negotiation

The Advent of War

The Chaco War

The Conduct of War

The War and National Economy

The Changing Face of Politics: 1932-1935

Angry Young Men

It All Falls Down

The Establishment of Military Socialism

Busch’ Interim Government

The Concept of “State -” or “Military Socialism”

The Birth of “Military Socialism”

Military Socialism Advances

Toro Stumbles and Falls

Busch’ Military Socialism

Busch too is a Military Socialist

The National Convention

Hero turns Dictator turns Martyr

The Traditional System and its Failure

ARCHIVES DU MINISTÈRE DES AFFAIRES ÉTRANGÈRES DE LA REPUBLIQUE FRANÇAISE

ARCHIVO DEL MINISTERIO DE RELACIONES EXTERIORES Y CULTO DE LA REPÚBLICA DE BOLIVIA

Min 1 102 Ministerio del trabajo y previsión social 1936-1938

Rinke, Stefan, “Der letzte freie Kontinent”: Deutsche Lateinamerikapolitik im Zeichen

Marten Brienen, Leiden, Monday 26 August 1996

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