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Good Neighborliness of Bosses Pays

U.S. Ambassador to Bolivia Cooperates to Continue Labor Peonage in Mines

(February 1945)

From Labor Action, Vol. 7 No. 7, 15 February 1943, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

In the January 4 Labor Action we reported the revolt of 60,000 tin miners who had gone on strike to obtain the enactment of a labor code which would grant them the elementary right of collective bargaining, establish minimum wage rates and guarantee regular payment of wages, The Bolivian government answered with a declaration of martial law and accused the miners of participating in a pro-Nazi plot to overthrow the regime. To date seventeen workers have been killed by soldiers, scores of others have been wounded, and the leaders of the strike are in jail. The strike has been broken.

But the story does not end here.

“Hemispheric Unity”

This one event richly illustrates what the Good Neighbor policy is. The prattle about “hemispheric unity” boils down to the solidarity of the financial interests of the United States and the Bolivian mine owners and other capitalists of Latin America. This solidarity is cemented by the State Department through its ambassadors.

Soon after the strike began, Ernesto Galarza of the Labor Division of the Pan American Union, wrote a letter to Under Secretary Welles of the State Department, protesting the activities of U.S. Ambassador Boal, who had intervened to prevent the passage of the labor code.

Both Secretary Hull and Welles have issued denials of such intervention, and Hull even stated that Ambassador Boal was instructed to avoid making any statements which could be construed as an attempt to influence Bolivian legislation, but merely to inquire of the Bolivian President how the passage of the labor code and the raising of wages would affect the cost of strategic materials, namely, tin, which the United States buys in huge quantities.

It has now been made known that the U.S. Ambassador held a long conversation with the Bolivian President in which he tried to induce him to veto the labor code should it be passed by Congress. The President of Bolivia, however, pointed out that such a veto would lead to strikes and protests and that it wasn’t a good idea. He said that the code was provisional and could be suspended in any given instance. Ambassador Boal was not satisfied and asked that the President make some of the provisions of the code effective by decree, but here the President said that labor would not be satisfied since presidential decrees do not have much status in Bolivia and could easily be disregarded by the mine owners.

Boal’s Suggestion

At this point Boal made another suggestion. There is a provision in the contracts made by the Board of Economic Warfare (the agency which buys much of the vital war materials needed by the United States) which calls for better wages and better working conditions. The contracts provide that the BEW pay all or half of the added labor costs. Boal proposed that the purposes of the Bolivian labor code, be achieved through the labor clauses in the BEW contracts.

While labor would be temporarily satisfied, the advantage would really fall to the mine owners, who were opposed to the labor code, not so much because of its immediate effect of raising wages (since their profits were guaranteed by United States contracts), but were thinking ahead to after the war, when it might be very difficult for them to reduce wages again. By applying the Boal formula the problem of wages after the war would be solved.

Boal cabled Washington that the mine operators would have to ask for increased prices from Metals Reserve (an RFC subsidiary) if the labor code were enacted. The truth of the matter is that Metals Reserve had already given the Bolivian mine owners an increase in price and it was on the basis of this increase that the Bolivian Confederation of Labor had asked for increases in wages.

Among other things which Boal cited in his telegram were the inconvenience collective bargaining would impose upon the mine owners, and the fact that the regular payment of wages would increase bookkeeping costs! Better that a man should starve than hire a bookkeeper! Boal explained that he also objected to regular payment of wages because it would induce the miners to quit their jobs. “They are now paid tardily deliberately in order to maintain them on the job and to give them a stake in their next month’s pay.”

Peonage has been the method by which the mine operators have been securing sufficient workers to run their mines. At fiesta time, when many of the Indians get drunk, advantage is taken of them to sign them up for work in the mines. By withholding wages, the miners are constantly in credit to the company and kept on the job. This condition is attested to by Boal himself.

The Facts – and Mr. Hull

The State Department has denied that Boal was instructed to intervene in the labor legislation of Bolivia. The telegram, sent to him by Secretary Hull, however, reads:

It is, however, considered desirable that you discreetly express to the (Bolivian) President or other appropriate authorities your government’s hope and confidence that no steps will be taken which might result in the creation of situations which would inhibit the full performance of contracts made in good faith by both parties. You may refer to the fact that agencies of this government have entered into important contracts for the purchase of various strategic materials, particularly tin, tungsten, antimony and rubber. It is, of course, patent that the uninterrupted flow of these items is essential to the optimum prosecution of the war. It is consequently hoped that no action will be taken which might jeopardize hemispheric security. Discreet reference can be made to Resolution IV of the Rio meeting on the production of strategic materials.”

Resolution IV recommended that the countries of the hemisphere “eliminate or minimize administrative formalities and regulations and restrictions which impede the production and free flow of basic and strategic materials.”

As a result of his revelation of these facts, Ernesto Galarza has had to resign his post with the Pan American Union. This too is an instrument through which the United States controls the Latin American countries. The Labor Division of this organization was ostensibly created to protect the economic interests of labor of the western hemisphere and to act as an international link between the working classes of all these countries.

As it turns out, the Pan American Union finds that it cannot intervene in any disputes as described above. Should one of its officials speak but in the interests of labor, then he has to leave his post. According to the director of the Pan American Union, Leo S. Rowe: “it is obvious that any questions relating to the conduct of the American Ambassador involve only the State Department. Bolivian labor problems are a matter for the Bolivian government. If the Pan American Union went into such matters, it could not last long.”

Exactly so! The Pan American Union was not created for that purpose!

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