Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume V

824.00/1395: Telegram

The Ambassador in Bolwia (Boal) to the Secretary of State

La Paz, December 29, 1943—10 p.m.
[Received December 30—11:08 a.m.]

2094. For Assistant Secretary of State Berle. The following is a summary of the revolutionary situation as it appears today based on details which have already been communicated or are under study: The revolutionary Junta is for the moment firmly entrenched through the support of the army and to a much lesser degree of the traffic police and to probably a moderate degree of civilian support to the extent of which as yet undefined the venality of the old regime which had grown torpid in power and thus allowed itself to be surprised contributes to its unpopularity with the younger army officers and the small lower middle class of civilians in the cities. President Peñaranda’s prestige has of course suffered, particularly in the cities, but he is generally chaotic [sic] to have been imposed upon by his Ministers and having apprised [sic] still considerable liking for him as a person.

The upper middle class a large portion of which has speculative tendencies in business is either hostile or disposed to dicker with that Junta and to continue their opportunities for making money. All mining interests are alarmed but inclined to compromise to protect their holdings from drastic action and gradually attempt to reestablish their influence through financial or other assistance to individuals. They realize that the Junta is going to need money and are mostly preoccupied over increased taxation if such is deemed probable soon.

The revolution appears to have little or no incidence on the agricultural areas of the country which contain the great underprivileged majority of the population, inarticulate, illiterate and apathetic. However, the Junta is believed to have considerable support, largely through conditional and hesitant PIE adherence in the mining areas. For some time before the revolution word seems to have been spread about among the Indians and Cholos that the Government had “sold out Bolivia’s metals, rubber and quinine to the United States for nothing”. This I learned from Indian and Cholo sources.

. . . . . . . . . . . . . .

It is considered probable although not yet probable [provable?] that the MNR received funds from persons such as Bernardo and Augusto Eisner, Rudolfo Borgzvte, Ernst Schilling, C. F. Gundlach, the firm of Zeller Moser, and possibly from Japanese. Carlos Hertzog, manager for Gundlach and brother of the former Minister of Labor who was not arrested, is a fervent MNK member and it is reported he may have collected funds from enemy interests.

It is not believed that such contributions were large—that the cost of the revolution probably did not exceed $50,000 and that most of the funds were used to provide some form of reward to soldiers and a citizen police.

It is generally believed that some form of support was received from Argentina presumably in the form of assurances of backing to Paz Estenssoro when he was in Buenos Aires and some small shipments of arms to the MNR, for civilian use. None of this is provable, merely seems to be the consensus of opinion, from La Paz Junta circles which are of course emphatic in their negation. There is some indication of recent entries of some arms into Bolivia of which the Department has been informed. In connection with Argentine influence you will recall my confidential letter to you of November 6, 1943.¹⁸

The question may arise why Axis firms would invest even on a small scale in a revolution against a Government which had left them relatively unmolested. The answer to this may be that: First, the general tendency of such firms to invest with both sides in order to protect themselves against action from either; second, their observation of a disposition on the part of our Government to use leverage of the tin contract to obtain more satisfactory action by the Bolivian Government and their belief that such action was imminent particularly on expropriation.

Any move that would delay the issue and enable them to fish in troubled waters may have seemed timely. Previous friendship with MNR leaders and La Oalle may be a factor.

The Argentine motive, it is believed in addition to making a beginning of forming a bloc of friendly nations, may have been to head off the quinine agreement and create a disturbance in which they could operate. Obviously, whatever undertakings or decrees the Junta or an unconstitutional successor thereof might make prior to or subsequent to recognition would have to be ratified by action of a Congress and President whose election is necessary to return Bolivia to a constitutional basis. The influence of Axis and Argentine elements has always seemed more effective in the Congress than elsewhere within the Government, and Congress might take such action with regard contracts and decrees of the old Government as to reopen all of them for renegotiation, thus providing an opportunity for larger quotas to Argentina, higher prices and less materials to the United States.

A return to a status considered constitutional in Bolivia prior to elections, might be achieved if the Junta could arrange for the return of Peñaranda or Carrasco¹⁹ or more likely to have Baldivieso,²⁰ who is in La Paz, assume his constitutional position as Acting President in the absence of the other two from the country. Such a solution is probably barred at the moment by the personal ambitions of Paz Estenssoro and Taborga.

A prolonged period of nonrecognition may drive them to seek arrangements with Baldivieso. Recognition by Argentina alone, or by Argentina and Paraguay, for instance, is not thought to solve their problem as in an unrecognized status, they would fear the possible economic disorganization of blocking funds, including proceeds from tin purchases, or outright stoppage of tin purchases. The moral effect of nonrecognition of the great majority of the American nations would also be very strong. In the event the military reaches the conclusion that the civilians are not successful in handling the recognition problem, the military element might decide to oust the civilians. Civilians and Taborga are obviously concerned about this and will take precautions against surprise. If ousted, and they were able to do so, they might make some effort to create public disturbances possibly including violence against diplomatic missions, to discredit the military. They might also seek to bring forth a general, such as Rodríguez, to try to split the army influence at such a time. (See also my 2069, December 28, 6 p.m. on Rodríguez.)²¹ Prolonged nonrecognition is apt to cause considerable bitterness unless modus vivendi is established for current operations pending finding some means of returning to a constitutional status and, or, recognition.

It is realized in many quarters that the issue is far broader than the matter of securing strategic materials from Bolivia. Apprehensions of neighboring countries with regard to establishment of a precedent are believed to exist. It is also realized that the Peñaranda government with all its faults was, nevertheless, one of the few elected governments (however relative that term may be) of Bolivia and for that matter of South America, and that any encouragement of abandonment of democratic procedures of obtaining office is a matter to be weighed seriously.

Assurances of cooperation by the Junta should be viewed in the light of previous records of its members which are not remarkable for any consistency in support of either the United Nations or the United States. It is generally believed that the Junta or a successor thereof or a Congress elected under its auspices may change its international attitude just as rapidly in the future as in the past if not held by some firm factor. The pivotal factor seems to be the Government revenue derived from sales of minerals which amount to from 54% to 60% of the Government’s income. It is also generally believed that the United States would find it much more difficult to cease purchases, block funds or take other similarly drastic measures after recognition than before. It is also believed here that the United States will not act alone in this matter and therefore the opinions of the other South American nations excluding Argentina will be very material in connection with recognition (reference circular of December 28 [30], 8 p.m.²²) [The present Government?] if recognized and established in power may at least until elections be considerably less venal than the old Government but there is no assurance that this would last and it is generally believed that with regard to some of its members and adherents it would not. A number of prominent adherents to the Junta such as Armando Arce, Cespedes²³ and Jorge Lavadenz,²⁴ can hardly be expected suddenly to reform. Mr. Pacheco²⁵ is very friendly with the Junta group and his son and brother are members of it.

Another unsuccessful effort was made last night by the Junta to arrange for a contact with me. I gather that while the MNR and the Army both have suspicions of the PIR they will come to an arrangement with the PIR in the belief that it may have more influence in the United States than they have to give evidence of broader popular support of the Junta. Presumably this would cause some changes in the composition of the Junta.

It is not anticipated that a counter-revolution by the old Government can be successful at present. However, if prices go on rising and economic benefits are not rapidly visible to the populations in the cities, at the mines and possibly in the rubber areas, it is to be expected that a counter-movement by whoever starts it first might succeed. Pinto²⁶ is evidently prepared to shift into such a movement at the proper time but if Peñaranda generals were leading it Taborga would probably be a centre of resistance, fearing retribution for his outright and notorious betrayal of the President’s personal confidence and because he is generally disliked. His nickname is “Little Hitler”. At the moment, Taborga is openly anti-MNR and pro-army, evidently considered army may soon force out MNR.

Conditions throughout the country appear to be fairly normal but there is great anxiety and pessimism in business circles. While such anxiety may be justified from the point of view traditional to business in Bolivia, it is obvious that much more fair and progressive measures in administration could be carried out in Bolivia without their meriting the term “radical”.

According to the New York Herald Tribune correspondent who has just talked with him Paz Estenssoro describes himself as an “unorthodox Marxist”; that he emphatically denied a sort of communism “of the Stalinist variety” and believes in eventual nationalization of the public utilities and mines but admits technical personnel for such a program is not now available.

The matter of recognition is generally considered of paramount importance at the moment for the reasons given.

I have just received word from our Embassy at Buenos Aires that Argentina will probably recognize tomorrow. Tamayo told reporter recently that he expected “several recognitions this week including Argentina and perhaps Peru and Chile”. General feeling here is that having Argentina recognize first may embarrass the Junta by strengthening assumption of Argentine inspiration and that if other American Nations generally withhold they will in the last analysis be in a better position to secure their requisites from the Junta or a successor than Argentina. Of course, the Junta will welcome recognition from any country now in their present rather panicky state of mind on the subject.²⁷

Boal

18. Not found in Department files.
19. Manuel Carrasco, President of the Bolivian Senate.
20. Enrique Baldivieso, President of the Bolivian Chamber of Deputies prior to the emergence of the Junta.
21. Not printed; this telegram referred to General Bilbao Rioja rather than to Genera] Rodríguez (824.00/1377).
22. Not printed.
23. Augusto Cespedes, Secretary of the Junta.
24. The Junta’s representative in Santa Cruz.
25. Presumably Abel Pacheco whose brother, Major Alfredo Pacheco, was chief of the Air Force under the Junta.
26. Maj. José Celestino Pinto, Minister of Defense in the Junta.
27. The Department continued to withhold recognition, and in a circular message to a number of its European Missions dated January 22, 1944, indicated that the Bolivian Government had been overthrown by force and treachery under circumstances that appeared to link the action with subversive groups based in Argentina (824.00/1722a).