The Chargé in Bolivia (Muccio) to the Secretary of State

No. 534

Sir: I have the honor to transmit a newsclipping from El Diario of March 3, 1936, and translation3 reporting the result of the President’s weekly reception of local journalists and foreign correspondents held on March 2, 1936. Of particular interest is the [Page 223] President’s statement that the state of siege cannot be lifted since, “We are in possession of concrete data by which is known that preparations are being made in Bolivia to overthrow public order.” He adds, however, that “the elections will be held in an atmosphere of complete liberty and that the state of siege will be suspended during the time they are being held.”

There is no question but that the Bolivian political situation is confused, uncertain and most delicate. The President’s inference ascribing the unrest entirely to the activities of communists and extreme “leftists”, however, is not correct. The activities of the communists is a factor but unquestionably one of the least important causes of the present turmoil.

The main cause of the present confused situation is the weakness and vacillation of the present administration in facing the Herculean post war problems and its failure to solve any of them. The administration’s inability to curb the constantly increasing cost of living has brought numerous protests from the workers and lower classes. With a view to checking the rising costs the administration has endeavored since October 1, 1935, to peg the Boliviano at 40 to the pound sterling. The opposition of the mining industry to this rate of exchange and to being saddled with what it considers unjust and confiscatory exactions has resulted in the miners’ refusal to ship minerals, principally tin, thereby depriving the Government of its principal source of income which is the percentage of drafts that exporters of minerals have to turn over to the Government at 20 Bolivianos to the pound, the so-called “official” rate. The continued uncertainty as to the Government’s final action concerning the rate of exchange has resulted in a drastic suspension of importation causing heavy losses to merchants. The administration is therefore unpopular with the workers, the all important mining industry, and with the merchants and its unpopularity is increased by the continuance of the onerous state of siege.

Respectfully yours,

John J. Muccio
  1. Not printed.