Carroll Quigley - Tragedy and Hope - A History of the World in Our Time

The poor Bolivian performance in the Chaco War with Paraguay in 1932-1935 gave rise to national feeling even among the Indians, and inspired a group of academic intellectuals, led by Victor Paz Estenssoro, to found a new political party, the National Revolutionary Movement (MNR). Many of the younger officers and the Indian enlisted men sympathized with the movement, and it won the largest vote of any party (45 percent) in the election of 1951. The older officers prevented the MNR from participating in the new government, but their junta split and was overthrown by an uprising in April 1952. Paz Estenssoro returned from exile to become president, with Juan Lechin, leader of the revolutionary tin miners’ union, as his chief aid.

Within a year, pressure from the tin miners and from the peasants ( campesinos ) forced the new regime to nationalize the mines and to break up many of the large estates into small peasant holdings. Production of metals and of food both collapsed, the miners demanding more pay and shorter hours for less and less work, driving Bolivian costs of production above the world market price for tin, thus wiping out a major part of the country’s foreign-exchange earnings. These fell from $150,770,000 (96 percent from metals) in 1951 to $63,240,000 (86 percent from metals) in 1958. To make matters worse, as Bolivian costs of tin rose, the world price of tin collapsed in 1957 when the Soviet Union, for the first time, came into the world markets with low-priced tin. In these same years, Bolivia’s production of food for the market, which had never been sufficient, was reduced by the transformation of large estates producing for market into small farms producing for subsistence. The nationalization of the railways used to export Bolivia’s metals proved as disastrous as the nationalization of the mines, and by 1961 only eighteen of sixty main-line locomotives were still functioning. As might be expected under such a regime, price inflation drove the value of Bolivia’s monetary unit down from an official rate of 190 to the dollar in 1954 to an open market rate of 12,000 to the dollar in 1958.

These problems could hardly be handled, even by a government that knew better, because of the popular pressures in a democratic country to live beyond the country’s income. Fortunately, the final collapse did not occur, despite continued troubles from Juan Lechin’s miners, because of the courageous efforts of Hernán Siles (President in 1956-1960, but unable to succeed himself constitutionally) and assistance from the United States (this increased from $4,853,000 in 1953 to $32,120,000 in 1958). Siles sought to encourage both workers and peasants to seek production increases as a preliminary to increased consumption, a monetary stabilization plan, freezing of wages even while prices were still rising, encouragement of peasants to join in larger groupings with increased emphasis on production for market rather than for subsistence, efforts to bring some of the fertile eastern lowlands into agricultural production, and largely unsuccessful efforts to stop the drastic fall in industrial productivity in order to obtain some goods that could be offered to the peasants in return for their increased production of food. To reduce political pressures from the miners, 10,000 of their total working force of 36,000 were relocated in a new sugar industry in Santa Cruz. But the problem remained critical. Manufactured goods fell from $55.7 million in 1955 to about $40 million in value in 1962, while agricultural goods for sale fell from $132.6 million to $118.7 million in 1959-1961.

The struggle still goes on, showing, if any proof were needed, that radical reforms for sharing the wealth of the few among the many poor is not an easy, or feasible, method for settling Latin America’s material problems. However, one asset from this Bolivian experiment does not appear in the statistics or on the balance sheets. Bolivia’s intelligent and hard-working Indians, once hopelessly dull, morose, and sullen, are now bright, hopeful, and self-reliant. Even their clothing is gradually shifting from the older funereal black to brighter colors and variety.

Few contrasts could be more dramatic than that between the Bolivian revolutionary government (in which a moderate regime was pushed toward radicalism by popular pressures, and survived, year after year, with American assistance) and the Guatemala revolution where a Communist-inspired regime tried to lead a rather inert population in the direction of increasing radicalism but was overthrown by direct American action within three years (1951-1954).

Guatemala is one of the “banana republics.” This perishable fruit, with a world production of 26 billion pounds a year, forms 40 percent of the world’s trade in fresh fruit, with almost 70 percent of the world’s total produced in Latin America and almost 57 percent of all the world’s banana exports going to North America. The retail value of Latin America’s part of the world’s trade in bananas is several billion dollars a year, but Latin America gets less than 7 percent of that value. One reason for this is the existence of the United Fruit Company, which owns two million acres of plantations in six Latin American countries, with 1,500 miles of railroad, 60 ships, seaports, and communications networks. This corporation handles about a third of the world’s banana sales and about two-thirds of the American sales. It controls 60 percent of the banana exports of the six banana republics (Guatemala, Honduras, Costa Rica, Ecuador, Colombia, Panama) and accounts for over 40 percent of the foreign-exchange earnings in three of the six countries. It pays about $145 million a year into the six countries, and claims to earn about $26 million profits on its $159 million investment each year, but this profit figure of about 16.6 percent a year is undoubtedly far below the true figure. A United States suit against United Fruit in 1954-1958 claimed that the latter controlled 85 percent of the land suitable for banana cultivation in five countries, and ordered it to get rid of most of its subsidiary transportation, distribution, and land operations by 1970. At the time, about 95 percent of the land held by United Fruit was uncultivated. The antitrust consent decree, even if carried out, will not materially reduce United Fruit influence in Central America, since its relations with its subsidiaries can merely be shifted from ownership to contractual arrangements.

Guatemala, like Bolivia, has a population that consists largely of impoverished Indians and mixed bloods (mestizos). From 1931 to 1944 these were ruled by the dictator Jorge Ubico, the last of a long line of corrupt and ruthless tyrants. When he retired to die in New Orleans in 1944, free elections chose Juan Jose Arevalo (1945-1950) and Jacobo Arbenz Guzmám (1950-1954) as presidents. Reform was long overdue, and these two administrations tried to provide it, becoming increasingly anti-American and pro-Communist over their nine-year rule. When they began, civil or political rights were almost totally unknown, and 142 persons (including corporations) owned 98 percent of the arable land. Free speech and press, legalized unions, and free elections preceded the work of reform, but opposition from the United States began as soon as it became clear that the Land Reform Act of June 1952 would be applied to the United Fruit Company. This act called for redistribution of uncultivated holdings above a fixed acreage or lands of absentee owners, with compensation from twenty-year, 3 percent bonds, equal to the declared tax value of the lands. About 400,000 acres of United Fruit lands fell under this law and were distributed by the Arbenz Guzmám government to 180,000 peasants. This and other evidence was declared to be Communist penetration of the Americas, and John Foster Dulles, in a brief visit to the OAS meeting at Caracas in 1954, forced through a declaration condemning Guatemala. The Secretary of State left the execution of this condemnation to his brother, Allen Dulles, Director of the Central Intelligence Agency, which soon found an American-trained and American-financed Guatemalan Colonel, Carlos Castillo Armas, who was prepared to lead a revolt against Arbenz. With American money and equipment, and even some American “volunteers” to fly “surplus” American planes, Armas mounted an attack of Guatemalan exiles from bases in two adjacent dictatorships, Honduras and Nicaragua. Both these countries are horrible examples of everything a Latin American government should not be, corrupt, tyrannical, cruel, and reactionary, but they won the favor of the United States Department of State by echoing American foreign policy at every turn. Nicaragua, often a target of American intervention in the past, was decayed, dirty, and diseased under the twenty-year tyranny of Anastasio Somoza (1936-1956). His assassination in 1956 handed the country over to be looted by his two sons, one of whom became President while the other served as Commander of the oversized National Guard. In 1963 the presidency was transferred to a Somoza stooge, René Schick.