AS in the case of Tacna-Arica, the intrinsic value of the area in dispute between Bolivia and Paraguay is not commensurate with the persistence of the controversy or the bitterness of feeling which it has engendered on both sides.

The Chaco Boreal, or that part of the Gran Chaco involved in the quarrel, is still a little-known wilderness, with serious defects as a field for either agriculture or stock raising. Its surface is a vast plain, with a slope to the east so imperceptible that one of the most serious obstacles to its development is the lack of natural drainage. This condition is aggravated by an impermeable sub-soil, which, combined with the circumstance of heavy seasonal rains, turns much of the country into a morass for a considerable period each year. The few sluggish streams have not sufficient fall to carry off the water which spreads a continuous sheet over wide areas of the country. At this season, though the pasturage is luxuriant the herds of stock often are unable to find a place to lie down on the immersed savannahs, and for the human inhabitants the season is particularly trying. On the other hand, during the dry months the grazing lands may not afford sufficient feeding for the herds, unless they are distributed over a wider range than is necessary during the wet season, when the tall grasses rise well above the layer of surface water. Moreover, during the dry season there may be an actual dearth of good drinking water; not only is water scarce then, but much of it is salty or brackish. The outstanding feature of the Chaco landscape is the large extent of open grass country. The continuity of these prairie lands is broken at frequent intervals by islands of heavy tropical jungle or clumps of palm trees. The Chaco forest contains a number of useful hardwoods, including the red quebracho, lapacho and lignum vitae.

A number of Indian tribes of a very low cultural state roam the Chaco within fairly well-defined areas. While hostile on principle to the encroachments of the whites, they are not numerous enough to be seriously considered in the military calculations of the rival countries. However, they have interfered with the individual colonization of the interior. Occasionally some of them come out to barter at the trading posts along the Paraguay and a few are employed at taking out quebracho logs, but as a rule their only concern is to avoid the whites and their works as far as possible.

The principal industries of the Chaco are cattle raising and the production of quebracho extract for tanning purposes. The breeding of cattle in the region is of comparatively recent development. It was given a considerable impetus by the demand for low grade beef for canning during the last years of the World War, a demand which continued for a few years after 1918. Three meat canning plants were established on the left bank of the Paraguay River during that period. For a while they afforded an excellent market for the cattle of the Chaco, but when the European market for canned beef declined two of the plants were dismantled. Since then the only real outlets for Chaco steers have been the one remaining plant at San Antonio, which later turned to producing chilled beef, and the old saladeros, which produce jerked beef. In spite of a few efforts to breed up the herds, most of the Chaco stock is still unacceptable to the frigorificos of Buenos Aires.

The quebracho-extract industry is dependent on the supply of the hardwood tree of that name, and as the reserves of the tree are exhausted in any particular district the manufacturing plant has to be shut down or dismantled

and set up in another virgin zone. Private railway lines have been built back some distance into the interior from each of the plants in order to keep them supplied with logs for grinding, and numerous cart roads have been opened as feeders to these railways. Of the quebracho companies, the International Products Company, with a plant at Puerto Pinasco, and which also operates the packing house at San Antonio, is American; the majority of the capital in the others is Argentine.

Little attempt has been made to develop general agriculture in the Chaco Boreal, or to produce any particular crop, as is done in the Argentine Chaco, where a large area is planted to cotton. The agricultural settlement at Villa Hayes, a short distance above Asuncion, is no exception, since this locality is in reality a bit of eastern Paraguay that was isolated by a change in the course of the river. The colonizing project of an Oklahoma American in the lands to the north of Puerto Pacheco failed in 1920, when he ran afoul of the boundary dispute, which is particularly acute in that border district. The more recent concession granted by Bolivia to Colonel Murray, also of Oklahoma, for a colonizing enterprise on the Pilcomayo has encountered the difficulties inherent in all such schemes for making tropical pioneers of American farmers. However, the less exigent members of the large Mennonite colony in the region back of Puerto Casado appear to have fair prospects of success, after having overcome serious initial difficulties. These colonists, most of whom are of German speech, though they migrated to the Chaco from western Canada, are devoting their energies to stock raising and general farming. It is to be observed that such economic development as has taken place in the Chaco has been largely due to foreigners. Neither Bolivian nor Paraguayan capital or hands have played any appreciable part in the efforts that have been made to utilize the resources of the region disputed by both of them.

Although like Bolivia an inland country, Paraguay is much less preoccupied by the problem of outlets to the sea. While her communications with the Atlantic, both by rail and river, are across Argentine territory, Paraguayan policy has shown little concern at this limitation on her economic independence. The only alternative to the present situation would be to construct a railway across Brazil, but when they reach the survey stage the various projects for such a line have died of a mysterious inanition. Not only does Argentina wish to continue her influence over Paraguay, thus depriving that country of using Brazil as a counterpoise, but she would also appear reluctant to have Bolivia admitted to free navigation on the great fluvial system that radiates north from the River Plate. As an Argentine diplomat once remarked to me, "We do not want another flag on the Paraguay River."

Viewed objectively, Paraguay's most urgent problems are rather of an internal than an international character. Her outstanding need is for an increase in the production of exportable products, and, as corollaries to this, the construction of roads and the attraction of immigrants to her highly fertile lands. In view of this, her present extreme policy in the Chaco represents a diversion of national attention and energies from more fruitful channels of endeavor.

Bolivia's present situation, internally and internationally, is for the moment a difficult one. The new government which overthrew the Montes régime in 1920 has not established itself firmly enough in power to be able to give its uninterrupted attention to administrative and international problems. It has had to contend with an over-assertive military class and with risings of the aboriginal population, such as occurred in the Sucre district in 1927 and this year in the vicinity of Garcimendoza. The nation is economically uneasy because of its overdependence on the world price of tin. In spite of the excellent work of the Kemmerer Commission, the government is preoccupied with the problem of raising sufficient revenue to pay its ordinary running expenses, and to meet the heavy service on the foreign debt. Moreover, the outstanding question of Bolivian foreign policy -- the finding of outlets to the sea -- appears further than ever from a satisfactory solution. For one thing, the recent rapprochement between Chile and Peru seems to have postponed indefinitely the realization of her hopes for a corridor to the Pacific; the Tacna-Arica problem has been settled without regard to Bolivia's insistent claims, which were largely based on expediency and natural equity. As a result she has been left in a singularly isolated position among South American powers. The only state which borders on all three of the so-called A-B-C nations, she has no special affinity with any one of them and is playing virtually a lone hand in international politics.

For the time Bolivia's attention is being increasingly directed eastward. The expensive railway project to link Cochabamba and the rail system of the plateau with the plains of Santa Cruz is representative of this new orientation of national policy. A regular aeroplane service already operates between the two cities. In the far northeast her borders are fixed and a through connection from La Paz to the Atlantic by way of the Amazon is too impracticable for serious consideration. To the south there is a through railway service into Buenos Aires, but the potential benefits of this connection are greater for Argentina than for Bolivia. The particular ambition of Bolivia in the east is to gain direct access to navigable water on the Paraguay River, and so to secure a less trammeled outlet to the River Plate and the Atlantic. Of her present outlets to the Paraguay the Lagoon of Gaiba lies too far to the north; and Puerto Suarez, at the terminus of the long trail from Santa Cruz, is situated on the shallow Lagoon of Cáceres, opposite the city of Corumbá. The limestone shelf of Corumbá, which would have afforded her an ideal river port, went to Brazil in the shiftings of frontiers in the last century. Thus landlocked to the north, Bolivia has pushed her historic claims to the Chaco, only to have her designs frustrated by the counter claims of Paraguay and still more effectually checked by Paraguay's priority of possession of most of the coveted region. Puerto Pacheco (or Bahia Negra), the one remaining and now most logical outlet for Bolivia, was seized by Paraguayan forces in 1888 and now constitutes the key position in Paraguay's military plans on the upper river.

Meanwhile the extension of the quebracho industry northward from the Argentine and the expansion of the cattle raising business from the eastern side of the main river called attention to the intrinsic resources of the Chaco wilderness, hitherto neglected by both claimants. This development has coincided with Bolivia's renewed interest in her vast eastern territories that center on Santa Cruz de la Sierra. The life of the Santa Cruz country might gravitate towards the Argentine if a long projected railway were actually built north from Salta to tap the undeveloped riches of the Bolivian plains. A long road already connects Santa Cruz with the Argentine railhead at Embarcacion. On the other hand, if the Brazilian scheme for a line west from the terminus of the Northwestern Railway into Santa Cruz were to be realized, the Bolivian "Oriente" would face eastward toward Sao Paulo. Confronted with the possible alternative of a reorientation of the Santa Cruz country, that might throw it into the economic and political sphere of attraction of the aggressive Argentine, or of the Brazilian colossus, Bolivia determined to push her claims for an all-national outlet to the internationalized Paraguay River. Meantime she decided to link up Santa Cruz with the plateau, cost what it might.

The looseness of colonial cartography and the delay of the young republics in defining their national territory have provided material for a boundary controversy that is virtually irreconcilable from a purely legal standpoint. Each side adduces old maps and decrees in support of its claims to the entirety of the Chaco, and a voluminous literature of partisan evidence has been produced by the publicists of both nations. Bolivia stands firmly on the Utipossidetis of 1810, which would have confined Paraguay to the eastern side of the river. Several formal conferences and more informal parleys have been held by diplomatic representatives of both countries in an effort to settle the dispute. However, the inflamed state of national sentiment or political considerations at home have prevented the consummation of a reasonable compromise, whereby each party to the controversy would receive that part of the Chaco which is most vital to its material rather than its sentimental interests.

Both nations have continued to strengthen their military position in the disputed region. This process has taken place on two different fronts -- one in the zone of the lower Pilcomayo and the other in that of the upper Paraguay. For years the Bolivians have been gradually pushing their line of fortines, or outposts, farther down the Pilcomayo towards the Esteros de Patiño, where the marshes effectually block their advance down the river valley. To prevent them from advancing inland in this region and reaching the settled belt along the main river, the Paraguayans have established a chain of small detachments in a general north and south direction. On the northern Paraguay the Paraguayans, using Puerto Pacheco as a base, established the advanced post of "Fort Galpón" opposite the Bolivian outpost at "Fort Vanguardia."

It was in this region that the inevitable clash between the military forces of the two countries occurred last December 6, when a detachment of Paraguayan troops surprised and captured the small Bolivian garrison of "Fort Vanguardia," and carried back the survivors as prisoners to "Fort Galpón." A few days later Bolivian troops retaliated by the capture of the Paraguayan post of "Fort Boquerón" in the southern part of the Chaco. For a time the nations were on the brink of open war, while offers of arbitration poured in from many sources. Bolivia showed much forbearance in the crisis, though her ultimate decision not to have recourse to arms was probably dictated in part by a realization of the difficulty of her military situation. To reach the scene of action on the upper Paraguay requires an arduous march of over 800 miles from the railhead at Cochabamba and to reach the zone of the lower Pilcomayo from Sucre a march of about the same length. On the other hand, the moving of troops and supplies to either zone of the Chaco would present no serious difficulty to the Paraguayan War Office. While I watched a demonstration of the populace of La Paz during the critical days of last December a Bolivian remarked to me, as he shook his head: "We are three months from the battlefield and the Paraguayans are right on the ground." It was after the first war fever had subsided that both sides agreed to submit the immediate problems arising from the incidents of last December to a conference of their representatives to be held in Washington, under the auspices of the Pan American Conference on Conciliation and Arbitration.

The main issue in the boundary dispute remains to be settled. And until the limits of each country are defined once and for all there can be no firm peace between them. Sooner or later the military element would again take the matter into its hands and an unimaginably fatuous war would be the result. Neither country needs the whole Chaco at all. Neither has a clear title to all of it. Yet international equity demands that Bolivia have a direct outlet to the Paraguay River at some point accessible to the steamers which ply between the River Plate and Corumbá. Though the present backward state of her eastern territory does not make such a commercial outlet an imperative need at the moment, the inevitable development of that fertile region requires the assurance of this provision for the accommodation of its eventual trade. Puerto Pacheco is the logical location for the river port of the Santa Cruz country and its re-cession to Bolivia is the crux of a just settlement to the problem. Equity demands as surely the recognition of Paraguay's claims to the zone along the right bank of the main river to within a short distance below Puerto Pacheco; and also of Bolivia's claims to the immediate valley of the Pilcomayo to the vicinity of the northern edge of the Esteros de Patiño. As the frontier between the two countries a diagonal line would be drawn across the Chaco between the two points. By the very nature of their economy and geography no appreciable commercial interchange is possible between the two nations. However, if this acrimonious and long standing boundary dispute is definitively settled along reasonable lines, instead of in accordance with the sentimental aspirations of one or the other of the contestants, they can at least follow in the future a passive policy of live and let live towards each other.

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  • WILLIAM L. SCHURZ, formerly American Commercial Attaché at Rio de Janeiro and other posts in Latin America
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