the destruction of the ITC to be only the first step in dismantling trade restrictions on the tin industry imposed by the tin-producing states. The ITC was far from alone in imposing such restrictions. Through export duties on Malayan tin in 1903 and 1924, the British government had derailed U.S. plans to establish smelters before World War II. Even so, in the opinion of U.S. experts, Bolivia’s restrictions were the most onerous in the world. Because only an “infinitesimal number” of Bolivians paid any tax at all on real estate or income, the national government was funded almost entirely by a Byzantine system of taxes on the production and sale of tin. Through literally hundreds of national export taxes, local taxes, indirect excise taxes, income taxes, mining transfer taxes, dividend taxes, and a burdensome foreign exchange surrender scheme to finance imports, the Bolivian government extracted, by U.S. estimates, 15¢ of tax revenue from each pound of tin. Moreover, this list did not include regularly decreed (“often retroactive”) wage increases or other social benefits for workers or new taxes like one commemorating the four hundredth anniversary of the founding of Potosí. The obvious next step for the United States as it entered the postwar period was the elimination of this maddeningly unpredictable taxation scheme, in which La Paz alone had 468 different taxes and the national government another 366 taxes and duties.69
Ironically, the U.S. drive for “free markets” through the ITO could well have worked to the advantage of the Bolivians, at least for a few years, had these been regulated equitably. Although Bolivian tin was ordinarily unable to compete with alluvial tin from the East Indies and Malaya, the war and the Japanese occupation had crippled tin production in both these regions. Restoration of normal production in the Malay Straits was at least years away, and the soaring demand for tin created by postwar reconstruction gave rise to a tin shortage that augured well for the tin barons and any Bolivian government that subsisted off them. The U.S. decision to maintain smelting operations at Texas City, which the RFC considered the “most effective means of securing for the United States its share of limited world production,” should have guaranteed competition that would benefit Bolivian producers.70
Instead, as tin became, under the RFC regime, “the most controlled of all commodities” in the world, Bolivian diplomats entered annual negotiations with the ruthless technocrats of the RFC having little or no leverage. The Reconstruction Finance Corporation, the British Ministry of Supply, and private Dutch smelters all benefited from Combined Tin Committee collusion that forced Malayans, Bolivians, Nigerians, and Indonesians to sell their primary exports to a sole bidder. Although the RFC justified its monopoly by asserting that the world’s three largest producers were chronically unstable and that a crisis in any one would “mean a serious world shortage,” it clearly worked to U.S. advantage.71
For the Bolivians, the primary diplomatic task of the postwar period was to somehow circumvent this cunning system calculated to bring the combined might of the great industrial powers “almost exclusively against the tin industry of Bolivia.” Failure, they correctly predicted, would inexorably lead to the “decline and ruin” of the private tin industry in Bolivia, if not the political order it undergirded.72 Bolivia found itself at a critical juncture. The old political and economic order was deteriorating rapidly, and the next several years would either see collapse, a smooth transformation of the nation into a somewhat more modernized, more egalitarian society, or revolution. Patiño and the tin barons had welcomed and encouraged the U.S. intrusion into the tin markets, but these masters of manipulation soon found their would-be saviors to be as self-interested as they themselves were.
What emerges from this complex interplay of powerful forces is the realization that U.S. diplomacy was unable to coherently address the coming of the National Revolution, contributed to the demise of three successive governments that it sought to bolster, and inadvertently provided assistance to a movement it considered, at various points, to be “Nazi,” “Peronist,” and “Communist.” The needs of the national security apparatus, embodied in the Reconstruction Finance Corporation and the creation of the tin stockpile, completely overrode U.S. diplomatic priorities and, through a convoluted process, actually hastened an anticapitalist revolution that threatened to destabilize a major supplier of the U.S. defense industries, if not the entire Andean Cordillera.
The chapters that follow examine the Truman administration’s dealings with six distinct and quite different governments of Bolivia in some detail (see table 1). Chapter 1 focuses on the supposedly “fascist” regime of Gualberto Villarroel and his MNR allies, whose first effort at societal reform ended in the lynching of the president. Chapter 2 details attempts by the junta of Tomás Monje and the Bolivian elites to regain control of the nation and to rebuild liberal constitutional oligarchy at the beginning of the sexenio. Chapter 3 deals with the presidency of Enrique Hertzog and his failed diplomatic initiatives in Buenos Aires and Washington; chapters 4 and 5, with Mamerto Urriolagoitia’s efforts to suppress the MNR, rein in the tin barons, and secure a tin contract that might stave off the coming revolution. Chapter 6 tells of General Hugo Ballivián’s desperate attempts to reach agreement with the RFC. Chapter 7 begins with the National Revolution of 1952 and the regime of Víctor Paz Estenssoro and ends with Truman’s departure from the presidency in 1953. The conclusion briefly discusses the early days of the Eisenhower administration, when a more sophisticated, if not effective, U.S. approach to Bolivia finally emerged.
We have, of course, certain practices of party discipline and order, but the difference between them and the goosestep is as great as from La Paz to New Orleans. This is a government of essentially nationalist tendencies—let us say clearly, an eminently democratic government.
—Víctor Paz Estenssoro, 24 December 1943
One is led to suspect that though the MNR may have absorbed Fascist argot and Fascist ideology during its formative years, faced with the actual task of governing it will not be prepared to apply Fascist methods as thoroughly as they have been applied in Europe, if for no other reason than that the social climate of Bolivia and that continent are so different that first, the MNR could not effectively absorb European Fascism and second, Fascism as known in Europe is not fully applicable to Bolivian society, especially not at the present stage of its economic development.
—Walter Thurston, 13 February 1945
When Harry S. Truman assumed the presidency at the close of World War II, the final defeat of the Axis in Europe and Asia obviously preoccupied every branch of the U.S. government. For the heirs of Franklin Roosevelt’s Good Neighbor policy, however, that valiant struggle extended deep into the heart of South America as well. Since 20 December 1943, when Major Gualberto Villarroel López had risen from the barracks to seize control of Bolivia, U.S. policy makers had viewed issues on the Altiplano almost entirely through the prism of the war against Hitler’s Germany. That fateful perspective paved the way for seven years of misconception, misunderstanding, and deeply flawed policy making because it impeded U.S. efforts to formulate an effective response or even to fully understand events in the region. Nonetheless, by the end of the war, the State Department had discovered a far more realistic rationale for its opposition to both the Villarroel government and its MNR backers.
Simply put, Villarroel’s government was the harbinger and Paz Estenssoro’s Movimiento Nacionalista Revolucionario (MNR) the driving force behind an urgently needed populist transformation of Bolivia that postwar Washington could not endorse. U.S. statesmen spent much of their time attempting to discern obscure links between the Bolivian regime and Juan Perón’s Argentina, not just because both shared some imagined link with now-defunct Nazism, but also because the nationalistic underpinnings of both Peronism and the MNR threatened U.S. conceptions of liberal capitalism in South America. Villarroel and Paz Estenssoro were working assiduously, if somewhat haphazardly, to break the back of “the old and
