"Progressive Socialism"

"Within one month-it can safely be predicted-there will be no unemployment in Chile!"

Such was the biggest, best & boldest promise made last week by small, dapper Don Carlos Guillermo Davila whose recent coup d'etat set up Chile's new Government (TIME, June 13).

"This is what we will do!" continued Don Carlos with that sparkling vivacity which made socialite Washington flock to his parties when he was Chilean Ambassador. "We will create three State companies. One for agriculture, one industrial and one mining! Each of these companies will employ the unemployed. We will have a job for every man now out of work!"

To back this airy promise with something solid for jobless men to chew on, Don Carlos ordered a half-million free meals served daily by the Government to Chile's unemployed. State pawnshops obeyed an order to return gratis sewing machines and all tools pawned by the "certified unemployed." Joyous crowds soon flocked around every pawnshop, roared "Viva Davila!"

In words partly borrowed from Abraham Lincoln, Chile's new President declared: "We have the absolute, full cooperation of the great mass of the people who want to see in this country a Government of the people, for the people and by the people!"

After only a few days in office the Davila Government began to run short of funds, ordered carabineers to raid all the jewelry shops in Santiago, a work they performed with a will. Lest this seizing of valuables from helpless jewelers be called "confiscation" the carabineers gave each jeweler "compensation" in the form of a receipt which he could cash in paper pesos. Thus swank Weil's received a bit of paper on which a carabineer had scribbled "350,000 pesos." Marching bands of well-fed unemployed hailed "The First Socialist Government of Chile!" Plaintively Don Victor Navarrete, Minister of Public Works, complained, "The Government offices seem to be full of merely curious visitors," shooed out as many as possible.

Socialist Finance. To organize Don Carlos' promised Three Companies and put all Chile's unemployed to work will certainly take time. But a few hours sufficed the Davila Government to take over the Banco Central, organized as the sole Chilean bank of issue after Princeton Professor Edwin Walter Kemmerer, famed "Currency Doctor" was called to Santiago. Last week the Banco Central was rechristened Banco del Estado and Finance Minister Don Alfredo La Garrigue spoke of inflating the Chilean currency by 200,000,000 pesos "which would be gradually withdrawn." Next he got down to the serious business of drafting a decree covering deposits of foreign money in Chile. ''The problem requires," he observed darkly, "much study."

Culbertson & National City. Rumors of the Government's intentions broke out like a rash. Diplomats representing all the Great Powers called to protest a decree not yet issued. In the thick of the fog labored large, astute, easy-mannered U. S. Ambassador William Smith Culbertson. After having had to deal with Rumanians as U. S. Minister at Bucharest, Mr. Culbertson rather likes Chileans. His protests last week were firm, not angry. He had done his best when the Davila Government finally handed him their decree, reading significantly in part:

"Article 1. Credits and deposits in foreign currency which the public may have in the national and foreign banks are declared the property of the State.

"Article 2. The commercial, national and foreign banks shall transfer to the order of the State the deposits in foreign currencies which they have for account of the public and shall credit the latter with the sums equivalent to them at the exchange rate of June 3 [day before the Revolution]."

Only U. S. bank in Santiago is the National City. Its officials quietly refused, according to despatches, to turn over any deposits to the State. Mildly Finance Minister La Garrigue said that "conducive measures" would be applied "if necessary," but he did not seem to think them necessary last week. Carabineers, instead of surrounding National City, surrounded Santiago's Stock Exchange and methodically confiscated firearms found on the persons of traders.

Socialist Program. Throughout the week Don Carlos Davila talked of "progressive Socialism," admitted the backwardness of Chilean workers, observed brightly: "However, the Army and Navy are Socialistic." Spokesman for the Army & Navy in the new Cabinet is Irish-blooded Defense Minister Col. Marmaduke Grove (pronounced gro-vay).

"We will use a hand of steel in putting down Communist actions designed to create a substitute for . . . the present Government," declared Col. Grove. "We wish to state as our final word that nothing will be allowed to stand in the way of the program that we have outlined."

What this program was no one really knew except Don Carlos Davila who was suspected of making it up as he went along, feeling his way, testing the Great Powers which have a billion dollars invested in Chile to see what they would let him get away with, testing the Chilean populace to see what they would demand. Finally, however, Don Carlos handed to United Press this definite statement of his aims:

The government of Chile has two immediate objects:

1) An increase in production until we have a surplus for exportation which has previously been lost because of the copper and nitrate crisis.

2) The socialization of all economic processes.

To this end we shall work by organizing all production through cooperation instead of competition. Profits from economic processes will go in small part to individuals, but mostly to the State. We hope to create a collective economy system which will progress paralled with individual enterprise which has dominated until the present. . . .

Personal interests would logically prefer to maintain the former situation under which the capitalistic minority reaped the greatest profits from economic activities and the masses got crumbs hardly sufficient to feed themselves and continue to work.

It will be necessary to proceed with "a benevolent dictatorship," breaking up the private interests to realize the plan I have outlined.

Building Socialism. As they read this program, socialites who used to clink cocktail and champagne glasses with Ambassador Davila in Washington recalled the eagerness with which he read, studied and talked about Soviet Russia--a hobby considered at the time mere well-bred eccentricity.

On its face the Chilean Program is a much diluted form of Communism, similar to that professed today by Josef Stalin who has stated officially that Russia is now only "building Socialism." Out of Davila's sentences leap such typical Stalin catchwords as "socialization of all economic processes," "production through cooperation instead of competition," "profits will go in small part to individuals but mostly to the State."

These phrases describe the actual situation in Russia, not in Chile. In Chile, a land as long and slim as a string bean, the resources do not exist to defy World Capitalism. No battle fleet could seriously menace the Union of Socialist Soviet Republics which sprawls over one-sixth of the earth, but a second-rate navy prowling up & down the Chilean coast could pulverize every city, town and hamlet.

Observers waited to see whether any other South American land would follow Chile's Socialist lead, revolutions being notably contagious. While Great Britain waited, her House of Commons cheered a Foreign Office statement reminding Chile who rules the waves: "His Majesty's Government takes the most serious view of the Chilean Government's confiscatory measures and . . . will strongly support a demand for full compensation to British interests affected."

"I Have Resigned." Meanwhile Chilean newspapers began complaining bitterly that Don Carlos Davila had taken no step against "Cosach," the $375,000,000 Chilean nitrate monopoly created by Manhattan's Guggenheims. Because Don Carlos when Ambassador had assisted in the negotiations creating "Cosach" and had pooh-poohed Chilean fears of "Yankee Imperialism," his lack of ruthlessness toward "Cosach" began to seem suspicious to some Chileans. Was the Stalinism of Don Carlos genuine, they wondered, or was he dragging a Red herring through the streets of Santiago, prating of "progressive Socialism" in order to head off a real Socialist revolt?

Behind locked doors an angry scene took place. When the doors opened at last out strolled Don Carlos wearing a poker-face smile. To flabbergasted correspondents he announced: "I have re-signed." He refused to make any explanation, as did other members of the Government. He called his limousine, drove home.

Military members of the regime were soon blamed for forcing Don Carlos out. These included General Arturo Puga, president of the Junta which was formed at the same time as the new Cabinet, and Defense Minister Colonel Marmaduke Grove. The sudden "illness" of General Puga was invoked as an excuse for not announcing Don Carlos' resignation. Taking the standoffish attitude of a soldier who thinks civil matters should be left to civilians, Col. Marmaduke Grove said: "I declare emphatically the firm determination of the Army & Navy not to mix in politics but to continue fulfillment of their duty in protecting the Socialist Republic." General Puga, mum as an owl, retired to bed.

In Santiago, bewildered by these developments, three schools of rumor held sway: 1) that former Dictator Carlos Ibanez, still supposed to be exiled in Argentina last week, might be expected back in Santiago at any time to resume his interrupted Presidency (TIME, Aug. 3); 2) that anti-foreign sentiment would flame up and sweep to power Senator Manuel Hidalgo. Communist, who ran in Chile's last presidential election on a platform of confiscating "Cosach," splitting up Chile's vast landed estates among the peasants and repudiating the national debt; 3) that the Army & Navy strongmen would postpone the selection of a civilian leader and might even be persuaded to let Don Carlos Davila withdraw his resignation.

Any or all of these things might happen, but meanwhile the Junta appointed a successor to Don Carlos: Minister of the Interior Rolando Merino. General Puga arose from his sick bed. Senor Davila's mild methods of socialization, it was said, were the cause of his fall, but the Junta announced its regime would receive his support. Only new indication of policy was that the Government would delay converting the Banco Central into a State institution. It was reported that Aurelio Munez Morgado, strongly antagonistic to "Co-sach," would supervise Chile's nitrate industry. But Chile's Government late last week was still nebulous. Only undisputed leader was Colonel Marmaduke Grove.

Grove & Davila. Jaunty and glib, Colonel Marmaduke Grove has figured in several Chilean revolutions, attempted one in 1930, using for purposes of getting into Chile from Argentina the airplane Friendship in which Passenger Amelia Earhart first crossed the Atlantic. Captured by troops loyal to Dictator Ibanez, the Colonel was exiled to Easter Island. There he pumped the Chilean Governor of this colony so full of revolutionary ideas that Governor & Colonel set out in a small boat to Tahiti, later made their way to France. In July 1931, after Dictator Ibanez was ousted, Colonel Grove returned to Chile, has been intriguing ever since.

Don Carlos Guillermo Davila, born of poor parents 47 years ago, worked his way through law school, nearly starved trying to practice law, entered journalism. Playing the Press and politics for all they were worth, he built up a fortune in little over a decade, boomed General Ibanez for the Presidency (Dictatorship) and took as his well-earned reward the Chilean Embassy at Washington.

Mercurial in temperament, Don Carlos changes his mind as often as women are supposed to do, switches his programs to suit the times. Thus in 1929 when Columbia University made him a Doctor of Laws (Honoris Causa) he was shouting for more and bigger loans to Chile, which many Chileans feared as "giving a foothold to imperialism." No sooner did times turn really bad than he popped up at Santiago as a bantam Stalin. A man with a host of friends, a good fellow, spender, gourmet, racy raconteur, Don Carlos was not down last week merely because he seemed out.

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