The British believed that the revolution was a “good thing for Bolivia and the United Nations,” brought about by “left-center” nationalists disgusted by the “corruption and inefficiency of the previous government.” The chief of the U.S. Military Mission in La Paz considered the revolutionaries “sincere patriots, to the point of idealism,” and many in the State Department were reluctant to label them “totalitarian” or “pro-Nazi.” As Philip Bonsal tried to explain to Secretary of State Cordell Hull, the “unfriendly” statements and acts by MNR members or military officers detailed in his memorandum were “only a very small proportion” of their activities and were more or less an “automatic” response to anything Peñaranda did. The MNR and RADEPA, Bonsal said, actually represented the “legitimate and respectable, if perhaps unattainable, aspirations of certain sectors of the Bolivian people.” Laurence Duggan went further, comparing the MNR to Louisiana populist Huey Long. He argued that the MNR was genuine in its call for the uplift of the masses and indeed might lead Bolivia to “evolve peacefully and gradually from semi-feudalism to something approaching twentieth century civilization.”45
For President Roosevelt, however, this was no time to be “wishy-washy.” And Secretary Hull, though no great supporter of Peñaranda, was outraged by the emergence of a cabinet featuring five majors, Paz Estenssoro, and two other supposedly pro-Nazi MNR members. Convinced that the MNR and the military were “connected with Nazi groups in Germany and Argentina” and “received financial support from pro-Nazi sources,” Hull inaugurated a policy of nonrecognition against Villarroel’s government in the hopes of provoking a counterrevolution or at least the removal of the MNR. The United States was joined by the other nations of the hemisphere (except Argentina), but Hull refused to tell Villarroel what he had to do to secure U.S. recognition. Through veiled hints and suggestive conversations, it eventually became clear that Hull sought the expulsion of German and Japanese nationals from Bolivia and the elimination of the MNR from the cabinet.46
In April, Villarroel removed the MNR ministers from his cabinet and replaced MNR prefects with nonpartisan army officers. In May, he complied with a U.S. demand to turn over eighty-one German and Japanese nationals. Although U.S. diplomats were barraged with “for-God’s-sake-don’t-recognize” pleas from Aramayo and other oligarchs, by June, every other nation in the hemisphere except Uruguay supported recognition of the regime. With congressional elections pending, the U.S. recognized Villarroel in the hope that this would strengthen his hand against the MNR and encourage other parties to join the government. Within months, however, Villarroel formalized his alliance with the MNR by appointing Paz Estenssoro to the post of finance minister and other party members to other cabinet posts. The MNR had won a share of power but had also earned the enmity of the rosca, the PIR, and the United States.47
Villarroel is best seen as a harbinger of the National Revolution of 1952. When Harry S. Truman became president in April 1945, Villarroel had been entrenched in the Palacio Quemado for more than a year and a half. The tentative steps Villarroel had undertaken toward changing the status quo were a clear warning to the rosca and the political classes. Patiño, Aramayo, Hochschild, and the hacendados may have been content to preside over the hopelessly warped economy of Bolivia, but more astute observers understood that, without reform, revolution was inevitable. For the next seven years, Villarroel and his more traditional successors sought to achieve national development without dismantling the centuries-old foundation of the Bolivian political economy. They faced the almost impossible task of finding a middle road between Paz Estenssoro’s promised National Revolution and the intransigent stonewalling of the rosca.
World War II Tin Diplomacy
Although Washington’s drive for a global capitalist order and Bolivia’s struggle for national development were obviously critical elements in the diplomacy of the sexenio, perhaps the most decisive aspect was the postwar destruction of the international tin cartel and the establishment of an Anglo-American tin purchasing monopoly. If the governments of the sexenio hoped to bankroll modest reforms with tin export revenue, they required high tin prices to, if nothing else, prevent a disastrous economic downturn. Because World War II had left Bolivia as the sole major producer of tin concentrates for the Allies and the State Department did indeed fully support efforts to block the MNR, there was cause for optimism. However, developments in the international tin trade quickly overshadowed all other aspects of the U.S.-Bolivian relationship.
Before the war, Bolivia produced roughly one-sixth of the world’s tin concentrates. Two-thirds came from the Malay Straits, especially the Dutch East Indies and Malaya, and one-ninth from Nigeria, the Belgian Congo, Siam, and China. The United States, which had only produced two thousand tons of tin in the previous sixty years, consumed more than 40 percent of the world’s total, and European nations, led by Great Britain, another 45. In 1927, Patiño’s Consolidated Tin Smelters and John Howeson’s London Tin Corporation formed a producers’ cartel, the International Tin Committee (ITC), to stabilize the world tin market, protect themselves from the devastating fluctuations that periodically wracked the industry, and guarantee their profits. By 1931, they were joined by representatives from all the major tin producers—Bolivia, Nigeria, Malaya, and the Dutch East Indies.48 Government officials and private tin producers united to set quotas, restrict output, and at one point even launch a two-month “tin holiday” by suspending all shipments to raise prices. Consuming nations were eventually given access to the proceedings but, much to the consternation of Washington, were denied any vote.49
For Bolivian miners, this “prescient cartelisation,” to use Dunkerley’s phrase, had been nothing short of a godsend. Alluvial tin concentrates from the Malay Straits, far purer than Bolivian ones, were dredged from easily accessible rivers by cheap labor and would have otherwise doomed Bolivian producers. Simply put, the Bolivians could not compete. Their tin, generally of low quality, had to be extracted from the dizzying heights of the Andes hundreds of miles from the nearest port. Moreover, Bolivian workers, though poorly paid, were still better compensated than their Far Eastern counterparts. Finally, the tin barons bore the bulk of the nation’s tax burden. In all, U.S. experts estimated that that the cost of production in Bolivia was almost double that of Malay Straits producers. The cartel remained the only means by which Bolivian tin could remain competitive with English and Dutch producers in the Far East.50
In June 1940, U.S. planners, weary of the decades they had spent at the mercy of the ITC, set in motion a series of events that culminated in the United States seizing control of the international tin trade in the postwar period and placing Bolivia at Washington’s mercy. The U.S. military consumed massive quantities of tin, primarily for canned food and solder. Anticipating war and economic dislocations, Undersecretary of State Sumner Welles proposed creation of a fifty-thousand-ton tin stockpile and construction of a U.S. tin smelter designed to accommodate low-grade Bolivian tin concentrates. A smelter and stockpile, in conjunction with a massive recycling campaign, would insulate U.S. industry from the conflicts in Europe and East Asia and possibly shatter the ITC once and for all. Roosevelt agreed and authorized the Reconstruction Finance Corporation’s Metals Reserve Company to construct a U.S. tin smelter.51
Ostensibly in response to the German seizure of the Dutch Arnhem smelter and to fears that the Luftwaffe might at some point put British smelters out of commission, the Longhorn Tin Smelter was built in Texas City, near the port of Galveston. It cost the U.S. government $8 million but more than paid for itself during the war. It was the potentially the world’s largest and most versatile smelter, capable of processing any type of tin concentrate from any part of the world. The RFC contracted with the Dutch smelting giant Billiton Mastschappij, known for its experience with both Bolivian hard-rock and Far Eastern alluvial concentrates, to construct and operate the Longhorn smelter. Because the urgency of