Instituting the Coalition Government
When Lleras Camargo took office in August 1958, he faced not only the problems of rivalry between Liberals and Conservatives but also factional controversies within the two parties. He succeeded, however, in demonstrating that the National Front program could point the way to a restoration of constitutional government. His administration adopted vigorous measures to reduce banditry and rural violence.
Lleras Camargo introduced an austerity program to improve economic conditions, with the result that in 1958 Colombia recorded its most favorable balance of trade in twenty years. The government cut imports, stabilized the peso, and established the National Planning Department. It handled labor troubles with firmness. The Lleras Camargo government also instituted a series of programs to improve the living conditions of the masses, including expansion of the water supply, sewers, housing, and education. An agrarian reform law passed in 1961 provided for a new agency, the Colombian Institute of Agrarian Reform (Instituto Colombiano de Reforma Agraria--Incora). Lleras Camargo's government made only limited progress in land reform, however, in the face of opposition from Liberals, who denounced the plan as inadequate, and from Conservatives, who called it communistic and revolutionary. Nevertheless, at the end of his term in 1962, despite a difficult political situation, Lleras Camargo had done much to stabilize the economy, stimulate increased output of industrial and agricultural products, and bring the people a renewed confidence in the future.
Although he was strongly opposed by Gómez and his supporters among the reactionary Conservatives, Valencia became the next official Conservative candidate of the National Front and was elected for the 1962-66 presidential term. Only half the eligible citizens voted, but Valencia received more than 62 percent of the votes, which perhaps confirmed the voters' belief in the principle of alternating the presidency between the two leading parties. Valencia took only modest steps to continue the programs initiated by his predecessor. He ignored, for example, the National Planning Department and failed to fill vacancies as they occurred. Incora's land reform program also ran into opposition from large landholders. In addition, Valencia's finance minister, Carlos Sanz, devalued the peso and proposed new taxes, thereby arousing the hostility of Congress.
Declining economic conditions contributed to growing social unrest. Increasing prices, the printing of growing quantities of paper money, and a drop in the price of coffee affected the economy adversely and contributed to increased inflation. Drains on the economy were generated by contraband trade with neighboring countries. The equivalent of some US$64 million in foreign loans promised in 1964 had been withheld, and the government was faced with a serious deficit. Rumors of plots against the government circulated, students protesting high prices rioted in Bogotá, and kidnappings occurred frequently. Valencia declared a state of siege in May 1965 and, having lost additional congressional support, was forced to rule by decree. The war minister, General Alberto Ruiz Novoa, succeeded in reducing civil disorders; Ruiz was dismissed in January 1965, however, after he openly criticized the president and made it known that he considered himself a leader who might bring order out of the confusion that plagued the nation.
In mid-1965 the state of siege enabled Valencia and his new finance minister, Joaquín Vallejo, to enact reforms by decree. They raised taxes, collected delinquent taxes, limited imports, and applied other austerity measures. The United States and international lending agencies then agreed to make loans to Colombia with the understanding that the government would take vigorous action to improve its financial situation. Inflation leveled off, and rumors of plots to remove the president died down.
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