BOLIVIAN NATIONAL POLICY

Panama Canal as Outlet for Mid-continent Country—Railways for Internal Development—Intercontinental Backbone—Proposed Network of Lines—Use Made of Brazilian Indemnity—Chilean Construction from Arica—Human Material for National Development—Census of 1900—Aymará Race—Wise Governmental Handling of Indian Problems—Immigration Measures—Climatic Variations—Political Stability—General Pando’s Labors—Status of Foreigners—Revenues and Trade—Commercial Significance of Treaty with Chile—Gold Legislation—A Canal View.

MID-CONTINENT country though she is, Bolivia realizes the value to her of the Panama Canal. For a great many years the larger part of her exports must be ores and metals. The mineral regions lie chiefly on the Pacific side of the Royal or Oriental Andes. A portion of the output in the southern district may find its way profitably down through Argentina, but the overwhelming bulk of the mineral products will have the shortest transit, and therefore the cheapest outlet by the West Coast, through Antofagasta, Arica, and Mollendo, all within the waterway radius. This also will be the route for the machinery and the merchandise imported.

The future of Bolivia is so intensely an industrial one, that the public men who came into power when General Pando became President keenly appreciated that they must secure the means of internal development. This could be fostered only by building railways. In relation to the general subject of rail communication and transportation the Bolivian plans fit intimately with the Intercontinental or Pan-American railroad idea. To have a complete national system of railways it is essential that there shall be a through trunk line from Lake Titicaca to Argentina, though the branches toward the Pacific themselves partake of the nature of main lines. In the political aspect the motive is to secure such domestic progress as in time will enable Bolivia to obtain a seaport of her own. Yet a patriotic policy of forethought for all contingencies forbids her to be dependent entirely on the Pacific outlet. Out of this feeling grew not only the determination to complete the connection with the Argentine system, but also the purpose of combining railroad and water transportation, so that the great river basins of the northeastern region shall have through communication with the capital and with the interior of the country, and afford an Atlantic outlet by means of Villa Bella and the Amazon River.

In this manner Bolivia helps to maintain her independence and to free herself from too heavily leaning on her Pacific coast neighbors. Nevertheless, geography decrees that her earlier stages of development for a quarter of a century, perhaps for half a century, shall be to obtain the fullest advantage of the extension of the Panama Canal zone along the West Coast.

The political, geographical, and economic conditions which, in the view of President Montes and the progressive public men of Bolivia, are necessary for the development of the nation, involve the construction of railway lines somewhat as follows:

This scheme is very general, yet it has a solid basis. When visiting Bolivia in the Autumn of 1903 on an official mission, the plans were explained to me, and the prospective events on which were founded the expectations of realizing them. Concurring circumstances followed swiftly. At the beginning of 1905 Bolivia was in the possession of cash capital of $10,000,000,—the indemnity received from Brazil for the Acre rubber territory; Chile, for patent reasons of national policy, by a treaty agreement had obligated herself to construct the line from Arica to La Paz, and also to advance funds to Bolivia, as a guaranty for further railway building; the Peruvian Corporation, to insure its share of future traffic to the Pacific, was engaging in various projects, and minor enterprises were advancing under the encouragement given by the government.

A rough calculation of the cost of railway building was $20,000 per mile in the central plateau, $24,000 in the valleys, and $32,000 in the mountain regions. The latter estimate was too low, but taking the topography of the country in its entirety and making a general engineering reconnaissance of the proposed routes with a maximum grade of 3 per cent, it may be assumed that the 700 miles of railway which are reasonably sure to be constructed can be built for an average cost of $35,000 per mile, or $25,000,000. Half that amount of capital might be said to be in the control of the Bolivian government at the beginning of 1906. The ultimate extension projected in order to league all the parts of the country together is about 1,700 miles, but that is a matter of many years.

When the 128 miles of the Pan-American system between Viacha and Oruro are completed, there will remain only 125 miles from Uyuni to Tupiza, and then the through links will exist from Lake Titicaca to Buenos Ayres, for the Argentine government will have completed the prolongation of its line to Tupiza, the section within Bolivian territory, 55 miles in length, being constructed and operated under a special treaty. Three-fourths of the traffic of the Southern Railway from Puno to Mollendo is furnished by Bolivia, and it is important for the Peruvian Corporation, which operates that railroad, to make sure that its Bolivian freight shall not be diverted. The traffic by way of Lake Titicaca and Mollendo is about 25,000 tons annually.

The network of railways in project includes the section between Uyuni and Tupiza, and the line from Uyuni or Sevaruyo to Potosi, and from Oruro to Cochabamba. The commerce of Cochabamba is considerable, yet the most pressing national need is to furnish the Potosi mines with transportation facilities. After the convention with Chile for the construction of the line from Arica to La Paz the American engineers who were making the reconnaissance indicated a preference for the routes from Oruro to Potosi and from Potosi to Tupiza as the complement of that system.[16]

How soon the territory of the Yungas, that is, the head-waters of the Beni, will be opened up may be a matter of conjecture; but the very great advantage resulting to the Bolivian government from having this rich tropical territory developed, which among other things would help to provide the capital with fuel, insures the building of a railway of some kind. The success attending the electric road from the Heights of La Paz down into the city may afford some test of the feasibility of using the waters of the Inquisivi River as the means of traction to Puerto Pando, for the water-power of this stream is almost unlimited. Once the head-waters of the Beni are reached, the way will be open for navigation to the confluence at Villa Bella of the Mamoré and the Madre de Dios, which later reach the Amazon. When the Brazilian government carries out the long-postponed plan of building a railway around the Madeira Falls, Bolivia’s course to the Atlantic will be shortened.

This Amazon outlet is likely to become practicable long before the route by way of the Paraguay and the Plate is opened.

The Antofagasta and Oruro railway, with its 2½ feet gauge for the whole 575 miles, has been a very profitable enterprise, and indicates the prospective profit of other railways. The government guaranteed 6 per cent annually on the cost of the Bolivian section, that cost not to exceed £750,000, but it never has been called on to meet the guaranty, the net earnings being sufficient to pay all fixed charges and handsome dividends. The railway between Viacha and Oruro, when built, will be of the 1 metre gauge (3 feet, 3⅜ inches) which is the gauge of the line between La Paz and Viacha. Ultimately the Oruro and Antofagasta line is bound to be widened in conformity with it.

There may be halts in the policy of the Bolivian government. Changes may occur. Unexpected obstacles may postpone the fruition of all these national hopes. Yet during the period when the Panama Canal is building between $35,000,000 and $40,000,000 is likely to be employed in railroad construction, and this will mean collateral expenditures in other directions. It may be guessed that $50,000,000 will be spent in internal development during the next twenty or twenty-five years. That would not seem much in the United States, but in a country such as Bolivia it is an enormous sum.

What is the human material for this development, the mineral and other physical resources being understood? Taking the Acre region from it, and averaging the territory which will be given Bolivia in the settlement of the boundary disputes with Peru and Paraguay, the country may be said to have an area of 400,000 square miles. A reasonably trustworthy census was taken in September, 1900, and this placed the total number of inhabitants at 1,816,000. Of these the classification was made:

The remainder was composed of negroes and blended nationalities.

The relative number of inhabitants in the different political divisions of the country was:

A curious circumstance is the even ratio of the sexes. Of the 1,633,610 enumerated population, the males were 819,247 and the females 814,363. The Indian woman fills so important a function in the industrial economy of the country that her numerical standing is of consequence.

This census of 1900 showed that the foreigners domiciled in Bolivia were few. The total was 7,400, and it was made chiefly of Argentinos, Peruvians, and Chileans. The Europeans—Italians, Spanish, Germans, French, Austrians, and English—numbered 1,500. Substantially it might be said the Republic up to the present is without a foreign population large enough to influence its national character and development. The native inhabitants are the economic element of growth.

The whites are of Spanish origin. The cholos are more Indian than Spanish, but they have shown considerable capacity for civilization and progress. The Indians are very largely the Aymará race. Possibly one-fourth may be of Quichua stock, but certainly not more. Included in this aboriginal people are a large number of unclassified Indian tribes, and some of these, particularly the savages, have no affiliation with Aymarás or Quichuas. The number of savages is placed at 91,000, though that is hardly more than an estimate. They are found in the river regions of the East and Northeast. The Quichuas are in the South along the Argentine border, and in the North along Lake Titicaca. The great central belt is Aymará, and the mixed blood there is Aymará and Spanish, somewhat more virile than the Spanish Quichuas.

The Aymarás, though conquered by Spain and recognizing that they were vanquished, have resisted absolutely the imposition of more than the thin layer of Caucasian civilization upon them. They are said to have aspirations for independence, but the uprisings which have taken place never have been general and usually have been due to local causes. Their most marked characteristic is the tenacity with which they have held to their language. It would seem absurd to say that a majority of the inhabitants of La Paz do not understand Spanish, because their intercourse with the Spanish-speaking classes must be assumed to give them some knowledge of that language, yet some experiences of my own showed that it was useless to depend upon Spanish. In the interior there are a few persons among the Indians who understand the language of the government, but the mass of them resolutely refuse to know it. The wife of a mining engineer, whose camp was only a few miles away from La Paz, told me her experience with the household servants. She had had to acquire enough of the Aymará tongue to give the ordinary household orders, and her children had picked up more, so that they got along very well. But no persuasion had been sufficient to secure the consent of the Aymarás to learn a little Spanish. In other mining camps there was the same difficulty. The miners always master a few phrases of Aymará and get along in that manner.

It is not unusual to hear reports of uprisings, or attempted uprisings, by the Indians. I witnessed one of these occurrences at Guaqui, on Lake Titicaca. The Indians were said to be coming down a thousand strong. But when the local authorities exerted themselves, and made a show of a few extra soldiers, what had been a noisy, drunken demonstration quieted quickly. However, there are instances in which the Indians give trouble, but in most cases the disturbances are purely local. The testimony is that the Indian population is to be feared only during periods of political tumult, when the government is divided into factions, or when one leader is fighting against another leader, and the bonds of authority are loosened. Then there is danger. The Indians make a pretence of joining one faction or the other, but it is only with the purpose of freeing themselves from restraint.

Considering that the European race is relatively so small a part of the population, the Bolivian government has handled the Indian problem very well,—much better than it has been handled in the United States. Without question, the army, which is an army of conscription, has been of great benefit, not only in the military control of the natives, but in the training it gives the Indians and the cholos. Military service is compulsory, but it is evaded by many of the Aymarás, and discriminating state policy does not seek to enforce it too rigidly.

In spite of the commonplace and stereotyped talk about the worthlessness of the aborigines and their laziness, all my observations led me to believe that the Bolivian Indians are an appreciable element in the economy of the State, and are capable of assisting the national development. In the puna, or mountain regions, where most of them are found, Nature has not been so prodigal that they can live without work. They do labor in the mines, in tilling the fields, in tending their flocks, and as freighters. Their endurance is remarkable.

But this native population is not enough for the development of the mines which may be expected during the next ten or twenty years. A mining population will have to be brought from other lands, and if not from neighboring countries, then from Europe, possibly Galicia, in Spain, and the northern districts of Italy. The white race endures the cold, and works in the rarefied air of the mines, 12,000 to 15,000 feet above sea-level, without serious impairment of its vital powers. I noted this from individual experiences and from what mining superintendents told me.

The Bolivian government has a very liberal policy with respect to immigration and the public lands. Hopes are entertained that a scheme of European colonization on an extensive scale will be inaugurated within a few years. This must come with the development of the chaco, or tropical prairie and forest region, which extends from the eastern slopes of the Royal Andes to the Paraguay River. Some of the chaco is swamp desert, and some is baked soil, covered with thorny scrub; but much of it is fertile, and the climatic conditions are not unfavorable. Several years ago the government granted a railway concession, known as L’Africaine, to the French Bank of Brussels, with the special purpose of securing the peopling of this region. The railway enterprise has not advanced rapidly. In time it may be carried forward and bring the chaco district into railway communication, not only with Santa Cruz, which is the tropical capital, but also with Sucre and the whole network of railways. Santa Cruz has encouraging possibilities for the European immigrant.

The agricultural region in the Southeast, of which Tarija is the capital, is now partly settled, but there is room for a much larger number of tropical farmers in that locality. In proportion as the mining population grows, colonization may be encouraged, because there will be the inducement to the agricultural production which supplying the mining camps will demand. There also will be an overflow into farming and pastoral industries.

The climate of Bolivia is so modified by the configuration of the country that more than a general statement is not possible. Lying within the torrid zone, the altitudes are to be taken into consideration as modifying influences. Fully 80 per cent of the population lives at altitudes above 10,000 feet, and not less than 60 per cent may be said to exist above 12,000 feet. That is the height above sea-level of La Paz, which is the largest city, and of the central plateau. The mean temperature between 12,000 and 13,000 feet varies in different years from 57° Fahrenheit to 59°. Above 15,000 feet it is 43°. The seasons, wet and dry, are of more consequence than the temperature. The central plain, the regions of the Cordilleras, and the chaco, are all in their climatic character hospitable to natives of the temperate zone.

There are three distinct climatic belts or zones in the Bolivian territory, according to the altitude of the respective regions. These are called yungas, or hot valleys; valles, or valleys; and punas, or cold lands. Cabecera de valle, or head of valley, is a subdivision of the main valley division. The puna brava is also a subdivision of the puna. The mean temperature and the production of the several zones are as follows:[17]

The average annual rainfall is shown in the following table:

Bolivia has only had one revolution in a quarter of a century, that is, since the Constitution of 1880 was adopted. The revolution took place in 1898, when General José M. Pando, the head of the army, superseded President Alonso. It was not a very serious affair, and the tranquillity of the country was not long disturbed. The foreign interests favored the change, for the one issue was whether the populous and progressive Department of La Paz should be held back by the unprogressive sections of the country. Since then the Pando policy has prevailed, and has been continued by President Ismael Montes, who was elected as the candidate of the Liberal party with many evidences of popular approval, and was inaugurated in August, 1904. Previous to that time he had been Secretary of War in Pando’s cabinet. He has made the policy of railway and industrial development the principal programme of his administration. Señor Villazon, the Vice-President, was formerly Minister of Foreign Relations, and his election was very satisfactory to the foreign interests. Señor Fernando Guachalla, former minister to Washington and one of the leaders of the Liberal party, is looked upon as a prospective president. He has had wide experience in European diplomacy and in conducting negotiations with neighboring South American Republics, and enjoys an international reputation. His success at some future election would be very satisfactory to the foreign interests.

The president is elected by popular suffrage, or, in case there is no election by the voters, by the Congress. His term is for four years. A body of 35,000 electors substantially constitutes the political power of Bolivia. The vote for president in the last three or four elections has varied little from these figures. The Congress is composed of 16 senators and 72 deputies.

The country is divided into eight political divisions, called departments. These are La Paz, Oruro, Beni, Santa Cruz, Potosi, Chuquisaca, Tarija, and Cochabamba. There is also the national territory of Colonias, which is of lessened importance since the Acre district that was part of it has been yielded to Brazil. The departments are subdivided into provinces, and these in turn into cantons or counties. The administration is highly centralized. Each department is governed by a prefect, the provinces by sub-prefects, and the cantons by officials known as corregidores, or magistrates. There are also alcaldes in the municipal divisions known as the vice-cantons. Municipal councils are elective, but the administrative officials are named by the higher authorities.

The school system I thought, from observations in different places, a creditable one. The country has 700 schools, with more than a thousand teachers and with between 35,000 and 36,000 pupils. It has 15 institutions called colleges, the pupils of which number 2,200. There is also the national university. President Montes hopes to have an American school established as one of the measures of his administration, and has been assured by Washington officials of the coöperation of educators in the United States.

Bolivia now observes only one national holiday. This is the 6th of August, the anniversary of independence from Spain. The Church takes many days for its celebrations, and General Pando, when he was President, thinking that they formed sufficient rest and recreation for the population, abrogated various occasions which were celebrated as national holidays.

The Bolivian legislation with regard to foreigners is satisfactory. They enjoy all the civil rights of natives, and are not subject to military service. They may acquire political privileges and be naturalized after a year’s residence in the country. The recognition of the rights of non-citizens with reference to mining claims is quite specific in the revised mining code. Foreigners get along very well in Bolivia, even in the remote localities, when they choose to adapt themselves to their surroundings.

There is no prejudice against North Americans, who, in fact, are preferred to Europeans. For a while Englishmen were not welcome,—it was after one of the dictator presidents had set the English minister on a donkey, with his back to the animal’s ears, and sent him out of the country. Great Britain did not feel that she could afford to land forces and cross the Andes in order to secure reparation for the insult, but for many years thereafter she refrained from sending a minister. Diplomatic relations, however, never were suspended, because the interests of British citizens were looked after by the ministers of the United States. In 1903 Great Britain accredited Mr. Beauclerc, her minister to Ecuador and Peru, to Bolivia also. He presented his credentials and was warmly received. The aggregate of English investments in Bolivian mines is large. In 1905 Germany accredited a minister to Bolivia.

The national revenues are derived from internal taxes and from both export and import duties. The chief source of internal revenue is alcohol, which is farmed out to a private company as in Peru. Under this arrangement the government does much better than when it itself undertook to collect the alcohol duties. As the export taxes were on the minerals and on rubber, the low state to which they fell during the world-wide depression of silver and copper is not difficult to understand. The controversy with Brazil cut off almost completely the returns from the rubber district. Now that source of revenue is gone for good, yet there is enough rubber territory left for Bolivia to expect a fair return from the domestic impost and the export tax. With the revival of the mining industry, the country may expect that the financial condition will improve, because a small export tax on the various minerals will bring in a good revenue. The weakness of the Bolivian fiscal resources, however, comes from the nation’s isolated position without a seaport. Under its treaties with Peru and Chile, their products, both natural and manufactured, were admitted free of duty, but in 1905 Bolivia gave notice of her intention to terminate the commercial arrangement with Peru, this being a result of the convention with Chile for railroad construction.

The international commercial movement shows a balance of trade in favor of Bolivia. For a ten-year period, ending in 1905, the total foreign commerce ranged from 34,000,000 to 54,000,000 bolivianos annually. In a recent year the value of the exports was 25,170,000 bolivianos, and of the imports 16,253,000 bolivianos, or, on the computation of 1 boliviano as equal to 42.6 cents, $10,571,000 and $6,826,000, respectively. Germany and Great Britain have even shares in the foreign commerce, but Germany’s advantage is in the merchandise she exports to Bolivia. Sometimes the United States does not appear in statistical abstracts as an exporter, but this is because consular invoices are made out for the Peruvian and Chilean ports through which the merchandise is entered. According to the Bolivian figures, goods to the amount of $400,000 to $500,000 are imported annually from the United States, but it is doubtful if this is anything like the full sum. Railway enterprises carried on by American capitalists would mean largely increased importations of equipment, mining machinery, and merchandise.

The treaty between Bolivia and Chile which was ratified in 1905 and put into effect, has a highly important commercial and industrial significance. By its terms Bolivia formally yielded all claim to the littoral, or coast strip of territory, which was taken from her by Chile as a war indemnity in 1881. The principal feature of the treaty is the agreement of Chile to construct at her own cost a railway from the port of Arica to La Paz, the Bolivian section to be transferred to Bolivia at the expiration of fifteen years from the date of completion, Chile also giving Bolivia, in perpetuity, free transit through Chile and the towns on the Pacific. Bolivia is authorized to constitute customs agencies in the ports which may be designated for her commerce. Under this treaty Chile further agreed to pay to Bolivia a cash consideration of £300,000, and to discharge various liabilities recognized by Bolivia for certain claims both Chilean and American.

Another provision of the treaty is that Chile will pay the interest, not exceeding 5 per cent, which Bolivia may guarantee on the capital invested in the construction of railways from Uyuni to Potosi, Oruro to La Paz, and via Cochabamba to Santa Cruz, La Paz to the region of the Beni and Potosi via Sucre, and Lagunillas to Santa Cruz. It is stipulated, however, that Chile shall not be required to disburse more than £100,000 a year, that the aggregate disbursements shall not exceed £1,600,000, and that the undertaking shall be void at the end of thirty years. The terms of this guaranty are somewhat indefinite, and their vagueness may give rise to controversy in the future. The present, immediate, and prospective value of this treaty to Bolivia is in securing a railway outlet from the interior to the Pacific at Arica, and thus being assured of a commercial artery which is bound to become a great highway of commerce. Its relation to the Panama Canal through the port of Arica I have explained in previous chapters.

In order that the country’s fiscal growth may keep pace with its industrial and political development, the government has sought to insure financial stability by recognizing the gold standard, somewhat after the manner of Peru. An important step in this direction was taken when, notwithstanding the silver production and the coinage of the white metal by the national mint, a monetary commission was created. This body matured a plan for the adoption of the gold standard. The report was accepted and recommended by the government to Congress at the Autumn session in 1904, and was enacted into law.

The financial system of Bolivia, as fixed by this legislation, may be said to be an approach to the gold standard. The basis of the currency is the silver boliviano of 25 grammes, 900 fine, and supposed to equal 100 centavos, or cents. In United States terms the boliviano is equal to 42.6 cents. In a recent year 19,187,610 kilograms of silver were coined into 866,592 bolivianos. The law of November, 1904, fixed the value of Bolivian silver currency in terms of the English pound sterling. It declared that the pound sterling, or English sovereign, should thenceforth have a cancelling value of 12 bolivianos, 58 centimes; also that from January 1, 1905, 50 per cent of the customs duties should be paid in gold coin at this rate, or, if a whole or part should be paid in silver, this quota should be subject to a surcharge of 5 per cent. Amounts less than one pound sterling may be paid in silver without being subject to the surcharge. By this law the Executive was empowered to suspend, should it become necessary, the mintage of silver coin; the exportation of silver coin was declared free, and its importation into the Republic was prohibited under the penalty of confiscation.

This gold approach law apparently caused no inconvenience to domestic trade, while it was a great help to Bolivia’s international commerce and to her credit abroad.

In 1905 the outstanding issues of the four banks which had the authority to emit notes was 9,144,000 bolivianos. The paid-up capital of these banks was 7,350,000 bolivianos. German and Chilean banks established branches in Bolivia in 1905. By a law passed in November, 1904, an issue of bonds was made to the amount of 2,000,000 bolivianos, to cover government obligations to the banks. They bear 10 per cent interest, and the amortization, or refunding, is to be at the rate of 6 per cent each year, 320,000 bolivianos being included in the national budget for interest and amortization.

The chapter is becoming long. The conclusion shall be short. The treatment of the topics has been paragraphic. If it were not so, further chapters would be necessary for the exposition of the guiding motives of the Bolivian national policy. Much of it is as yet only national aspiration. But the basis is industrial and, therefore, sound. Bolivia shares with her West Coast neighbors the stimulating influence of the Panama Canal. Its economic effect is her industrial and commercial opportunity.