The Republican Party and the Great Depression
The advent of the Republican Party did not at first indicate any profound change in Bolivian politics. Fernando Díez de Medina, a Bolivian writer, commented on the change: "Twenty years of privilege for one group ends, and ten years of privilege for another begins." The 1920s, however, was also a period of political change. New parties emerged as the Republican Party split into several factions. One major opposing branch was led by Bautista Saavedra Mallea, who had the support of the urban middle class, and the other was led by the more conservative Daniel Salamanca Urey (1931-34). A number of minor political parties influenced by socialist or Marxist thought also emerged.
During Republican rule, the Bolivian economy underwent a profound change. Tin prices started to decline in the 1920s. After peaking in 1929, tin production declined dramatically as the Great Depression nearly destroyed the international tin market. This decline was also caused by the decrease in the tin content of ore and the end of new investment in the mines in Bolivia. As economic growth slowed, Republican presidents relied on foreign loans. Saavedra (1920-25) and Hernando Siles Reyes (1926-30) borrowed heavily in the United States to finance major development projects, despite opposition by Bolivian nationalists to the favorable terms for the lender. The so-called Nicolaus loan aroused national indignation because it gave the United States control over Bolivia's tax collections in return for a private banking loan of US$33 million.
During the 1920s, Bolivia faced growing social turmoil. Labor unrest, such as the miners' strike in Uncia in 1923, was brutally suppressed. But the unrest reached new heights of violence after the drastic reduction of the work force during the Great Depression. Indian peasants continued to rebel in the countryside, although they had been disarmed and their leaders had been executed after participating in the overthrow of the Conservative Party in 1899. Now, for the first time, the Indians found support for their cause among the elite. Gustavo Navarro, who took the name Tristan Marof, was Bolivia's most important Indianist. He saw in the Inca past the first successful socialism and the model to solve rural problems. As Indian uprisings continued during Liberal rule, Siles Reyes promised to improve their situation and organized the National Crusade in Favor of Indians.
The social legislation of the Republican governments was weak, however, because neither Saavedra nor Siles Reyes wanted to challenge the rosca. Siles Reyes's four years of inconsistent rule and unfulfilled promises of radical changes frustrated workers and students. In 1930 he was overthrown when he tried to bypass the constitutional provision forbidding reelection by resigning in order to run again. A military junta ruled until March 1931, when Salamanca (1931-34) was elected as a coalition candidate.
Although he was an esteemed economist before taking office, Salamanca was unable to suppress social unrest and to solve the severe economic problems caused by the Great Depression. Criticism of his administration mounted in all sectors of Bolivian society. Initially reluctant to enter into an armed conflict with Paraguay, he nevertheless led Bolivia into war, a move supported by the military and traditional groups.
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