"Last October's work stoppage was the major obstacle put in our country's path to prevent the workers from consolidating and advancing. Its immediate effect was a loss of more than $200 million"
SALVADOR ALLENDE, Third Presidential Message to Parliament, May 21,1973

On August 15, 1971, the Santiago daily La Nacion carried an interview with a laborer employed in the textile factory Yarur S.A. (the heart of the Yarur group oligopoly, which included the Credit and Investment Bank [Banco Crédito e Inversiones], chemical, textile, an food industries, distribution and financial companies; Chase Manhattan Bank held a substantial portion of Yarur stock). The factory had been requisitioned by the government for the Area of Social Property. Fulfilling the "annual goal" for the Area meant expropriation of copper, iron, and saltpeter companies, private banks, and textile an cement factories, in addition to some distribution companies. The controller general of the Republic, under pressure from the Yarur group and Chase Manhattan Bank, had declared the expropriation "illegal."

The Yarur S.A. laborer had this to say: "We don't care whether the requisition is legal or not. We will not give the factory back. Neither the controller nor the Supreme Court can make us. We workers know what we are doing, and we refuse to continue being exploited. What the courts say is one thing, and what we are going to do, quite another. ... The Unidad Popular government has given us the opportunity of making decisions in our factory. Our aim is to keep moving forward, even if we have to bypass the law."

As a frame of reference, the report noted that in 1969, the workers took over 118 farms; in 1970, the last year of Frei's administration, the figure climbed to 365; but now, in the first eight months of 1971 the farmers had taken over 990 farms -four takeovers a day!

The same thing was happening in industry. In 1969 there had been 23 workers' takeovers; in 1970, 133; and in the first eight months of 1971, the takeovers had extended to 531 businesses-an average of ore than two a day.

For Orlando Saenz and his colleagues, this report indicated that "social chaos could not be avoided" by attempting to influence Allende's economic and social policies. Saenz said, "Our interests are threatened, and we are the heart of the national economy, which means that the interests of Chile are in danger."

The situation was very disturbing for the select group of industrial, commercial, and financial oligopolists. (These people totaled no more than 1,000 and owned more than 60 percent of the national productive apparatus.) Under the influence of certain generals, they had agreed to "sacrifice" some of their economic power to "save the system." But events during the first eleven months of Allende's government showed that while the President was trying to fulfill the agreement he had made in October 1970 to maintain limits to his program of change, the people's organizations were transgressing those limits (for one thing, they didn't know about Allende's compromise) and were pressing for the completion of the entire program, which was the "expropriation of the economic power of North American imperialism and the national oligopolies."

To set this antigovernment offensive into motion, Saenz and his economic advisers were able to rely on an economic fact that gave them tremendous maneuverability. The Unidad Popular government had been able to reduce inflation (from 1970's 32.5 percent to 1971's 20.1 percent) thanks to its "economic reactivation" policy, which consisted of price controls, mobilization of the entire national productive apparatus to full capacity, raising low wages and salaries to levels higher than the inflation index, and keeping high wages at levels equal to the inflation index. However, this economic reactivation contained one serious danger, owing to Chile's oligopolistic, dependent economy. Once it reached the limits of expansion, if a parallel accrual of large capital did not take place, a shortage of products (created by excess demand) and a resulting rise in black market prices could return control of wages and salaries to the oligarchy, in whose hands it had traditionally been.

At the same time, the price freeze, being based on the costs of the large oligopolistic manufacturers whose production was much larger, also left them a "reasonable profit margin," though it affected severely the small and medium-sized businesses, whose unit costs were much higher owing to smaller production.

The only way out of this economic deadlock, from the Unidad Popular's point of view, was to set up a strong Area of Social Property by transferring private oligopolies to the state, thereby changing the entire system's productive structure (thus avoiding a shortage) and setting prices at the level of the production costs in small and medium-sized businesses. The "surplus" profit received by the oligopolies, which would no longer be in private hands, could be then plowed back into the economy in the form of capital growth and social services, improving the conditions of the lowest strata in the population.

The Society for Industrial Development team now initiated various plans to destroy the Allende government's popular platform.

Point One: Use any means to prevent the formation of an Area of Social Property larger than the limit, keeping it innocuous as a force in the national economy. Eduardo Frei was recruited to arrange for the presentation to Parliament of a constitutional amendment ensuring this "legal freeze" (the parties influenced by the oligarchy and the American multinationals controlled the majority vote). The job was assigned to a Christian Democratic Senator, Juan Hamilton, and his colleague Renan Fuentealba.

Point Two: Attract the support of the medium-sized and small businessmen (104,000 retailers, 34,000 industrialists, and 150,000 families in agriculture), with such slogans as "better prices for your products," assurances against "expropriations" (something none of these people had to fear), and "commercialization" without state control. All this would doubly benefit the private oligopolies.

Point Four: Turn private investment and speculative capital toward the black market (in 1972-1973 more than $100 million was put into this by the oligopolists) in order to unleash runaway inflation, resulting in economic chaos and government loss of popular support.

Point Five: Set up an intensive propaganda campaign to prove that the breakdown of the economy was caused by "the failure of Socialism," hiding the central factors of shortage of investment capital, government agencies' inability to plan, and lack of control of the apparatus of the bourgeois state itself to resolve the crisis "in favor of the groups with the least resources" instead of "favoring the Chilean and foreign private oligopolies."

Point Six: In a period of six to eight months (beginning in October 1971), effect the deterioration of mass support for the government, and then demand a plebiscite. Allende would, of course, lose; he would then either step down or yield to the economic requests of the Society for Industrial Development, the National Agriculture Society, and the National Confederation of Production and Commerce.

To help implement those six points, they could rely on the intact economic and political power of the oligarchy (less than one-fourth of their businesses had passed into the hands of the state, and for these they had been paid); on a majority in the Parliament; on complete influence over the Judiciary and the controller general of the Republic; on newspapers that accounted for more than 80 percent of the country's daily circulation; on radio stations that reached more than 50 percent of the country's listeners; and last, they could rely on the most important thing: the armed forces' "neutrality."

Nevertheless, the "reformist" generals insisted that an "error of judgment" existed in their agreement with the Society for Industrial Development. In their estimation the time had not yet come to "get nervous"; Allende's ability to "calm the workers and make them see reason" was not yet exhausted.

The National party leaders, headed by Onofre Jarpa, and Senators Pedro Ibanez and Francisco Bulnes, as well as Deputies Patricio Phillips and Fernando Maturana; the Frei faction of the Christian Democratic leadership, chiefly the former defense minister, Juan de Dios Carmona, Senators Juan Hamilton and Patriclo Aylwin, and Yarur group employee Felipe Amundtegui Stewart were commissioned by the Society for Industrial Development, the National Agriculture Society, and the National Confederation of Production and Commerce to set the propaganda campaign in motion.

On October 1, 1971, the Society for Industrial Development opened fire by distributing a "balance sheet" on the Unidad Popular's record: the government's prestige had been adversely affected and its political judgment called into question; important industrial groups were being harassed and their rights abrogated; public opinion was disconcerted and confused; and, worst of all, none of the desired objectives had been achieved.

THE EMPTY POTS

The preliminary statistics of November 1971 showed that consumption of poultry, pork, sugar, and potatoes had increased by 16, 18, 37, and 55 percent respectively. On the other hand, the productive apparatus had reached its limit. A market shortage of those products was affecting large numbers of office workers, medium-sized and small businessmen, and their families who were not eligible for the direct supply line through unions and union federations.

On November 4, celebrating his first year of government, President Allende spoke to a capacity audience of 80,000 in the National Stadium. He did not omit mention of the shortages: "There has been a temporary shortage of some products, owing to the increased buying power of the masses, owing to the tendency of certain sectors to buy more than they need. If they need three or five kilos of meat, and they find some, they buy ten or twelve kilos and store it in their freezers. There is psychological pressure for people to buy more than they need. We also ought to point out that there is speculation going on in several districts. . . . In the case of meat, for example, at the beginning of this administration more than 200,000 head of cattle left Chile" (shipped out by latifundistas to provoke economic chaos on a large scale).

The "psychological pressure" was coming from the mass media owned by the private oligopolies and their political parties. They had inaugurated a daily news campaign designed to create a buyers' panic in the population.

In the same speech, Allende tried to calm hundreds of thousands of farmers, laborers, and office workers who were helplessly watching the private oligopolies continue to run the economy, creating a black market and cornering large hoards of staple products. The workers themselves had finally resorted to taking over businesses caught stockpiling and demanding their expropriation. They also occupied the estates of latifundistas used as training camps for fascist groups with military advisers from Navy Infantry, the Air Force, and the Army's Paratrooper and Special Forces Schools. Allende termed these "indiscriminate takeovers" and labeled them "leftist extremism." He said:

"This is why we will not accept this pressure. We have said this with the honesty of revolutionaries. We are against all indiscriminate takeovers of rural properties, as these create anarchy in our production capacity and will end in setting one peasant against another, or all peasants against small farmers. . . We are against the takeover of living quarters, which hurts the workers who saved their money to buy them. We are against workers' takeovers of small and medium-sized factories. Expropriation and the requisitioning of businesses must follow a government plan and not the anarchy of the willful impulse of a few."

Those on the side of the imperialists and oligopolists, however, were very well organized indeed.

These were the well-dressed, attractive, refined women whom one had always seen at theater and movie galas, or in elegant restaurants, neatly wiping their lips on napkins before sipping vintage wine. That day, raging in the streets, they were screaming obscenities against Allende, such as "Allende maricon, ya no sirves ni para el colchon" (Allende you faggot, you're not even good in bed anymore). I saw several attack boys who shouted "Viva Allende," striking them with pots and ladles. In one case, two women trapped a boy of about fifteen, held him down on the ground, ripped his pants at the waist, and began to strike at his genitals, while another was screaming, "Castrate the sonofabitch!" and trying to pull the boy's genitals out of his pants. Only the arrival of a military police patrol saved the boy.

The Empty Pots March forced Allende to declare the city of Santiago an emergency zone, and it remained under martial law for several days. This demonstration concluded the first phase of the campaign to overthrow Allende using "legal means."

This event, which occurred almost simultaneously with Fidel Castro's visit to Chile, prompted the Cuban leader to assert that the March of the Empty Pots signaled the beginning of the confrontation between the mass of the Chilean people and the oligarchy and imperialism. His words, not taken very seriously at the time even by leftist politicians, were to prove grimly prophetic as the months went by.

THE AREA OF SOCIAL PROPERTY

On February 9, 1972, the Christian Democratic and National party majority in Parliament carried out the orders given by the Society for Industrial Development a little over four months earlier: they approved a constitutional amendment to "fix norms for the Area of Social Property." The amendment's authors had been Senators Juan Hamilton and Renan Fuentealba. (Juan Hamilton was a lawyer for the construction industry magnates Soza Cousino and the Klein iron oligopolists, who, although they were Chilean, kept all their capital in Switzerland and Canada. The Kleins were highly favored by the Frei regime. They financed a chain of luxury hotels on the Spanish Costa Brava in order to help the economic endeavors of the Christian Democrats.)

Hamilton and Fuentealba's "constitutional amendment" was a veritable time bomb: President Allende was obliged to promulgate it, since not to do so would break the letter of the Constitution politic, something his opponents were hoping would happen so they could dismiss him from office. On the other hand, Allende could hardly promulgate it, because it made a mockery of the Area of Social Property, vitiating it as an implement for activating and controlling the national productive apparatus. A summary of this constitutional amendment is contained in these points:

1. "For the purposes of administration" and for "technical reasons," it permitted restoring the nationalized copper companies to Anaconda or Kennecott. That is, it permitted reversing nationalization.

2. It left as "conclusively an area of private property" such enormous oligopolies as Paper and Box Manufacturers, the main business of the Matte-Alessandri group. (In Chile, there were eleven oligarchic clans who owned the largest and best part of the national economy, in close association with American principals.) 1

4. It outlawed all transfers of private oligopolies to the state property prior to October 20, 1971. This left the Area of Social Property reduced to practically zero, pending parliamentary approval of those transfers, in "case by case" discussions.

5. It obligated the government to submit for Parliament's approval every new case of a business to be expropriated. Since reactionary elements controlled the majority vote in Parliament, it was easy to predict that the Area of Social Property would never grow, unless the government won a majority in Parliament in the March 1973 congressional elections, when half the Senate seats and all the Deputies' seats would be open.

This impudent defense of North American and Chilean monopolistic interests was the Parliament majority's way of backing Allende's government into a corner: if he approved the amendment's promulgation, he took the bottom out of his economic scheme; if he refused to, he was going outside the Constitution. This was phase 2 in the campaign initiated by the Society for Industrial Development.

                                                   A MINISTER GENERAL

During all of February, March, and the first week in April, the campaign unleashed by the Christian Democrats and the National party "to defend consumers against shortages and price hikes, the black market, and Unidad Popular sectarianism" reached fever pitch. It had taken effect in many sectors, and in elections for new leaders in employee unions, Unidad Popular candidates had been defeated by Christian Democrats and even National party candidates. Senator Luis Bossay Leiva, founder of the Radical Left party, abandoned the government coalition and took his party over to the opposition, stating that "we cannot act as accomplices to a process that has to go outside the bounds of the Constitution and will not solve the problems of the masses." Luis Bossay Leiva and other leading members of the Radical Left party had received support from the oligarchy to "form their party," a splinter of the Radical party. Their activities and their connections with the oligarchy were denounced in the Chilean daily, Ultima Hora.

When Allende first broached to General Carlos Prats Gonzalez the idea of the need for a military man in his new Cabinet, Prats said he would take it up with his corps of generals. The "reformists" were agreed with the "constitutionalists" that it was a good idea to accept this offer for a short time, so that "one of us can get some on-the-job training." General Palacios was appointed to Mines, exactly the area that most interested the "reformist" generals. They wanted to learn all about the organization, administration, and performance of the nationalized copper industry.

However, the generals' discussion of whether to accept this offer was not as simple and unproblematic as it seems in the telling. Less than thirty days earlier, two of the "hard-liners" had committed the blunder of attempting a coup without informing the General Staff. The Unidad Popular's intelligence services in the civilian police had found out about it, and the high command, headed by Prats, had no choice except to take disciplinary action against the conspirators.

The civilian police denounced these activities to President Allende. Allende denounced them to Prats. The generals decided to defuse Canessa by transferring him to the Junior Officers' School in Santiago.

The generals were aware that Canessa was part of a much larger team formed by Brigadier General Hernan Hiriart, chief of the Cavalry Division in Valdivia, and Brigadier General Alfredo Canales Marquez, of the generals corps in the Santiago garrison. All of them were "hard-liners" who wanted a coup "here and now," followed by a military junta of government for six months and a turnover to a "new President chosen in democratic elections." Of course none of this was communicated to Allende.

In early April, when the question of including a military man in Allende's government came up, the "hard-liners" were against it because "it would mean that we are supporting a Marxist." Prats and the "reformists" managed to convince them that the Allende government was not strictly Marxist, and that the armed forces were still in a position to withdraw their minister whenever it suited them, to show "public and outspoken repudiation" of Allende's policies.

In his annual speech to the workers on May 1, 1972, President Allende warned the people that a struggle was going on behind the scenes. Referring to the Hamilton-Fuentealba constitutional amendment, he defined it as an attempt "to annul the victories achieved in the Social Area in the economy" and that "behind that attitude lurks the threat of dismissing. . . the President of the Republic. This does not disturb me personally. It concerns me because it is my obligation to defend the Constitution."

He added: "What makes me uneasy is that the bases of the Chilean Constitution are being undermined. They want to change the game; they want to plunge this country into a very difficult and intense struggle." He continued by defining his "obligations" as President, the order of which perturbed his listeners: "It is my obligation-and I intend to fulfill it-to defend the precepts of the Constitution. "It is my obligation to avoid confrontation. "It is my obligation to reject all physical, economic, and social violence. "It is my obligation to prevent a bloodbath in Chile. "It is my obligation to defend the victories of the workers and the Chilean revolution."

For the workers listening to Allende, his vow to defend the Constitution hampered them daily in their efforts to expand their growing organization and to stop sabotage, black-market speculation, and the daily abuses that the oligopolists carried out through their fascist bands trained by armed forces personnel against the entire country's economic apparatus. And the judges, the military police, the Parliament, the letter of the law, and "constitutional precepts" all served to protect the saboteurs and obstruct the task of guarding and increasing the workers' productivity.

TO ADVANCE OR NOT TO ADVANCE

While on the one hand Allende was urging the workers to organize into supply and price juntas, peasants communal councils, production committees, committees to oversee production, and so on, to "defend the revolution," on the other hand the workers could see only too clearly how, through control of their organizations via the political leadership of the Unidad Popular, these organizations were being forced to paralyze the masses' mobilization. The workers were being prevented from preparing for the real confrontation that they could see coming: the people against the armed forces of the bourgeoisie and the imperialists.

At the heart of the government, an intense discussion was going on about this. The Minister of Economics, Pedro Vuskovic (an independent leftist, and a member of the Socialist party as of 1973) stated, as he would later write in a document published by Revista de la Universidad Tecnica del Estado (State Technical University Review) that the essence of the difficulties lay in everything meant by the class character of the bourgeois state, into whose still-prevailing boundaries the new achievements have been channeled. Its whole structure, including the judicial framework and even the administrative apparatus, has been shaped to attend to the interests of capitalism and dependency, to preserve the oligopolies' control, to exclude any means of access or worker participation. New demands conflict with this, and a large part of the workers' efforts falls on barren ground, sharpening a contradiction that will be resolved only when this bourgeois state has been replaced by a state with a different character, a people's state. Manifestations in that direction can be seen in the participation of workers in the management of industries in the Social Area, in their decisive presence on the administrative councils and other mechanisms; in the recently initiated forms of extending this presence to different levels of administrative decisions; in the still-embryonic forms of their control over the private area; in the organization of the workers and the people into supply and price juntas, to exert greater control over the process of distribution; in the communal organizations, the "industrial cordons," and many other initiatives, some of them expanded by the workers in their response to October's reactionary offensive. All of these constitute other such manifestations in that direction, which it is essential to deepen and broaden immediately both to confirm the character of the revolutionary process and to solve our immediate problems [italics added].

Vuskovic stated (and only a minority of the leaders of the Socialist party and the MAPU agreed with him) that the only way to prevent collapse when the bourgeoisie and the imperialists resorted to "their strategic reserve for control" (the armed forces and the military police) was to "initiate a huge mobilization of the masses with concrete objectives to control the production apparatus and to prepare themselves for a military confrontation between the classes."

In this period, the advances toward achieving the Program have been large enough to motivate the most irate reaction from the imperialists and the bourgeoisie, but are as yet insufficient to forestall the national bourgeoisie's possibly using the economic power they still retain for all sorts of economic obstruction and sabotage. That is, the economy is not being directed with enough political control to ensure concentration on constructive tasks. On the contrary, it is the battlefield of an unresolved political struggle that is converting economic activity into an instrument of the same struggle. It goes without saying that in every economic problem today it is not difficult to discern deliberate action on the part of the imperialists and the bourgeoisie.

Vuskovic was saying that the bourgeoisie had set itself the goal of making the government's economic policy fail, to remove popular support from it first and afterward to overthrow it. And "in spite of the number of businesses incorporated into the Social Area, the nationalization of the banks, and the expansion of agrarian reform, the bourgeoisie continues unlawfully to retain enough economic power to be able to attempt this task with some possibility of success."

He went on:

They have this power, in the first place, because the Area of Social Property has not yet been completed in terms of the goals foreseen [that is, instead of expropriating 266 oligopolistic businesses, a compromise goal of 90 had been established]. Important oligopolies or strategic activities remain in the hands of their capitalist proprietors, constituting a large source of income and an instrument of domination over other businesses.

In the second place, the Social Area has not been able to make itself strongly enough felt in the presently dominant sector, which can impose working terms and according to their decisions generally control the conduct of businesses which, according to the Program, are and will continue to be part of the private area of the economy. Also there are not yet, in the private area, effective means of worker control. . .

In the third place, a real redistribution of income and the process of accumulation of capital in the workers' favor has not yet been achieved in any definitive way. 2

However, the thinking of the Communist party went against Vuskovic. Orlando Millas and Luis Corvalan were adamant: "We cannot do that. Our task right now is to prevent our enemies from being provoked," they added. Along with Allende, they believed that it was a good idea to "take into consideration the Santiago generals' arguments, since they've let us know [in May 1972] that they are very worried about the huge rise in inflation, the disorder in which some workers in the city and country have taken over businesses, and the drop in production in the private area."

On June 17, Allende changed his Cabinet. The two most prominent departures were Brigadier General Pedro Palacios Cameron from Mines and Pedro Vuskovic from Economy

General Palacios Cameron was withdrawn from the Cabinet after the generals of the Santiago garrison were forced by the "hard-liners" and the "reformists" to agree that "we cannot allow a member of the armed forces in the Ministry when we know that the new Cabinet will be dominated by the Communists. It gives a bad image to our armed institutions, which are basically and philosophically anti-Marxist."

Pedro Vuskovic left because the Communist party demanded complete control of the economic part of the new Cabinet, to put into practice their policy of "national coexistence." Through Orlando Millas, who would become Treasury Minister and, later, Minister of the Economy, the banner of Salvador Allende's new "political sleight of hand" would be stated in these words: "To move toward socialism, and later to build socialism, what must come first is the development of production in all areas of the national economy. Without this, there is nothing."

The leadership of the Chilean Communist party and Salvador Allende had unveiled the idea of freezing the process under the motto: "Consolidate what we have, first, to advance later." But "what we have" was unfortunately exactly what Vuskovic had described: substantial economic power in the bourgeoisie, a Social Area powerless to prevent the sabotage of production, armed forces constantly preparing for a "final taking of power," and a working class whose revolutionary momentum was being reined in and dissipated. These factors combined to make the workers the prey of a daily propaganda campaign in the mass media, owned by the oligarchy and imperialists. The newspapers and radio-television stations were succeeding in accomplishing the purpose of isolating the workers from their natural allies, the peasants and the lower middle class.

 A NEW MILITARY PLOT

The political, legislative, judicial, and trade guild forces set loose to overthrow Salvador Allende legally began very early on to receive the support of organizations run by the CIA in Chile. Money was available not merely from the "slush fund" and "publicity and advertising" items in the Chilean oligopolies' budgets but also from multinational companies like ITT (which was reprimanded in May 1972 by the Chilean government for tax fraud and for having openly taken part in the conspiracy of September-October 1970) and from Anaconda and Kennecott, who had declared all-out war on Allende's government, including an "embargo" on shipments of Chilean copper to foreign ports, which took effect in Europe on September 30.

The scheme consisted of bringing about the breakdown of the economic system, conducting psychological warfare via the mass media, penetrating the armed forces, and preparing paramilitary "terrorist" groups to abet the deterioration of the economy.

Fatherland and Liberty was charged by the Chilean government with industrial sabotage and terrorism. Its CIA contact was Keith W. Wheelock, then secretary of the U.S Embassy in Chile, named on page 540 of Who's Who in the C.I.A. (a 1972 publication of the Democratic Republic of Germany) as the author of' a series of activities designed to overthrow certain governments.

However, Fatherland and Liberty's connections with the Chilean high command were none too good, particularly after Rodriguez Grez served as defense attorney for ex-General Roberto Viaux Marambio when he was tried for the October 1970 "betrayal" assassination of General Rene Schneider Chereau. At this time Grez had a notorious falling out with the Army high command. Only the Navy Infantry lent wholehearted support by providing training and large-caliber arms to the organization. Ultima Hora and El Rebelde reported that in the Army, Fatherland and Liberty was able to secure a foothold in Atacama Province through the commanding officer, Lieutenant Colonel Oscar Haag Blaschke, who allowed them to smuggle in arms from Argentina and Bolivia. In Santiago, they managed to recruit Colonel Roberto Souper Onfray (commander of the 2nd Armored Regiment until June 29, 1973) to their cause; Onfray confessed his association with Fatherland and Liberty after the failure of the coup.

Fatherland and Liberty maintained close relations with the southern latifundistas; eventually they were given control of the National Agriculture Society radio station in Santiago. In addition, that oligopoly's president, Benjamin Matte, was one of Fatherland and Liberty's leading members. The industrialists, for their part, contributed the good offices of the Society for Industrial Development's president, Orlando Saenz. In a letter from Grez to Orlando Saenz published in Ultima Hora in August of 1973, Grez thanked Saenz for "the services lent earlier by you to our cause."

The second group, the ex-Cadet Commandos, was formed after the director of the Bernardo O'Higgins Military School, Colonel Eduardo Labbe', refused to render military honors to Fidel Castro on his December 1971 visit to Chile.

Labbe' was a "hard-liner," closely associated with Generals Alfredo Canales Marquez and Hernan Hiriart. When these officers' plot was discovered in March 1972, Labbe' was sent into retirement.

The ex-Cadet Commandos' main contact with the U.S. Embassy was the Chilean journalist Federico Willoughby MacDonald. He had been for years the chief of publications for Ford Motor Company in Chile. Willoughby MacDonald was intimately related to the CIA team in the U.S. Embassy (made up of Joseph F. Manus, Daniel Arzac, Dean Hinton, Frederick Lastrash, Keith Wheelock, Arnold Isaacs, Donald H. Winters, Raymond A. Warren, James Anderson, and John B. Tripton). He made contact with senior officers in the three branches of the armed forces. This job, whose original purpose was only to get support for the ex-Cadet Commandos, led to his being appointed press secretary to the fascist junta on September 11, 1973.

Willoughby's fluent English was a great asset in the generals' eyes, though not nearly so important as his useful connections in the U.S. Embassy.

In September 1972 the two fascist groups began to play their roles in the Society for Industrial Development's plan by undertaking to sabotage railroads, bridges, roads, and high-voltage towers, as well as by assaulting union and political leaders of middle and low rank. At that point, the economic situation was rapidly deteriorating, owing to the government's inability to control the private sector's moves to bring about a general destabilization by lowering production, halting investment, increasing speculation, and partially paralyzing the productive apparatus. By that time, the Society for Industrial Development had already given the word to its agents in the Christian Democrats, the National party, the Judiciary, the controller's office, and the various trade and professional associations directly controlled by the oligarchy, saying that "we must go on to the last phase." The last phase was total production stoppage. One evening at a party in Vina del Mar, some officers were talking together, among them Brigadier General Alfredo Canales Marquez and Rear Admiral Horacio Justiniano. As was later reported in the Santiago daily papers, General Canales, who was drunk, confided to Justiniano: "We have the sonofabitch in the frying pan." The "sonofabitch" was the President of the Republic. He added: "This month we are going to unload the shit." Rear Admiral Justiniano was very upset because he was not in on the coup. When he returned to Santiago, he asked General Prats what it was all about. Prats conferred with his colleagues in the Santiago garrison, and they reached the conclusion that Canales was "a threat to the security of the armed forces" if he talked like that when drunk. The corps of generals was agreed that they could not make an "adequate plan to defeat the enemy [Allende's government] by attacking at an appropriate time and taking advantage of their weaknesses, if our own people are going to give it away."4

This fabricated "plot" was what Salvador Allende publicly de-nounced on September 14, 1972, as "the September plan to oust me." What he did not know was that there was still a plan, but it was the "October Plan."

                                                          OCTOBER 1972

The "October Plan," put together by the Society for Industrial Development and feverishly supported by the CIA, did not include the armed forces. It was a civilian conspiracy to bring the country to a standstill, to the brink of total collapse, and thus oblige the people to throw Allende out in a plebiscite that he would have to call as the only means of curing the country's paralysis. It had been decided that October would be a good time because popular support for the government was very feeble, thanks to the price hikes, the food lines, the shortage of all goods, and the government's inability to do anything about the situation.

President Allende ordered Brigadier General Herman Brady Roche, director of the Academy of War, to "intervene" with the Santiago transportation guild. General Brady, who was a "reformist," did everything possible to make sure that, contrary to Allende's request, the transportation guild's microbuses and taxi-buses would not go back to work. He maintained that there were 3,500 vehicles of that type in Santiago, that the Santiago garrison had less than 7,000 men, and that because he would have to put one soldier in each microbus and taxi-bus to protect the drivers from fascist commando sabotage, it would leave the city without a military garrison. The "reformist" generals had given Brady instructions; "Let Allende hang himself. Do not give him any assistance, but don't let it show."

The government had decreed emergency zones (under martial law) in the twenty-five provinces of Chile, but not one soldier was seen breaking into a boss's house to force him to go back to work. At the same time, thousands of laborers were working-but only part-time, because they had to form shock brigades to repel the fascists' harassment and sabotage.

In Santiago's industrial districts, the so-called industrial cordons, first formed in June to fight fascist sabotage, began to take on a character of their own. In addition to guarding places of work against sabotage, they fought against the black market, speculation, and the scarcity of industrial raw materials. They had been conceived as "organizations for work, commerce, labor planning, and for defense against class enemies," in the Los Cerrillos industrial district south of Santiago. They had been reviled by some politicians in the Unidad Popular itself, who described them as "extremist counterrevolutionary organizations," manipulated by the "lunatic fringe."

The workers were really showing their strength in October. They kept industry on the move, they were taking over factories, and without owners, technicians, or managers, they were making them function. They held meetings to discuss this: "How long are we going to give the momios [reactionaries] to come back to work?" And this:

"We should organize in armed people's brigades to overthrow our enemies permanently. . . . The military are helping the bosses by not acting . . we have to solve the problem ourselves." Army, Navy, and Air Force intelligence received daily reports on the "people's mobilization." They also received reports from inside "the institutions." Watching the spectacle of the country functioning without owners and managers, Some senior officers expressed their admiration: "The rabble can do it." In other words: "The Allende government deserves respect-it's pulled off quite a stunt."

The "reformist," "hard-line," and "constitutionalist" generals met to "plan a strategy for the difficult moment." They reached an agreement to "support Allende as a political out." Why? Because that solution allowed them "to restrain the people's anger in the nick of time" The armed forces could not smash them without starting a long and expensive civil war. The military apparatus, even if it were to win, would be left half-destroyed, defenseless against its external enemies and vulnerable to its internal enemies. Their thought was that the economy was in such a bad shape that if they added civil war to the effects of the present strike, "our country would fall to pieces." They also decided to support Allende because the civilian politicians had shown themselves incapable of forcing him to resign.

At the same time, the oligarchs of the Society for Industrial Development, the National Agriculture Society, and the National Confederation of Production and Commerce were viewing the same landscape of popular mobilization and the armed forces' inaction. They instructed their politicians to "make a deal," giving up their goal of ousting Allende for the time being.

Some Socialist party leaders suggested to Allende that he appoint a Cabinet in which the Army commander in chief, Division General Carlos Prats Gonzalez, would serve as Minister of the Interior (a job with the rank of Vice-President), to give the government an image of strength and make it look as if it had the armed forces' support.

Such arguments were not communicated to the accomplices in the October Plan, Eduardo Frei and Onofre Jarpa. These politicians were informed that the armed forces were not yet ready to take over the country, and therefore had not been able to do anything about the work stoppage.

On November 2, Allende announced changes in his Cabinet: Minister of the Interior, the commander in chief of the Army, General Carlos Prats Gonzalez; Minister of Public Works, Rear Admiral Ismael Huerta; Minister of Mines, Air Force General Claudio Sepulveda.

On November 5, Allende left the country for two weeks, on a trip to the U.N., Algeria, the Soviet Union, Morocco, and Cuba, with short stops in Caracas and Lima.

General Prats acted as Chief of State. When Allende returned, Prats dutifully returned the constitutional reins to Allende. It seemed to be Allende's securest moment.

NOTES

1. When Allende became President, Chile was for the most part a developing capitalist country, but dependent on U.S. transnational capital. To get an idea of the nature of Chilean society at that time, let's look at some statistics taken from "National Accounts of Chile 1967-68" (Cuentas Nacionales), ODEPLAN, Santiago, 1970:

Distribution of expenditures in the national economu: agriculture, forestry, and fishing, 10.5 percent; mines, 9.7 percent; manufacturing, 25.7 percent; construction, 4.5 percent; electricity, gas, and water, 1.7 percent; transportation, warehousing, and communications, 4.4 percent; wholesale and retail commerce, 21.6 percent; other services, 21.9 percent.

Percentage distribution of the work force: agriculture, forestry, and fishing, 25.6 percent; mining, 3 percent; manufacturing, 21.6 percent; construction, 6.2 percent; electricity, gas, and water, .8 percent; transportation, warehousing, and communications, 6.3 percent; commerce and services, 36.5 percent.

The same accounts showed that 50 percent of the work force was laborers and 1.4 percent employers. This gives an idea of why combative strength of the workers in Chile was so great and was to push such movements as the Unidad Popular forward. Its fighting capacity was tragically set in motion in 1907 when the saltpeter works went on strike, to be suppressed by the government through the Army's slaughter of 3,000 workers in the Santa Maria de Iquique schoolhouse.

The 1.4 percent of the work force comprising the employers and bondholders was organized into guilds in the Sociedad de Fomento Fabril, the Sociedad Nacional de Agricultura, and the Confederacion de la Produccion y el Comercio, through which they had always controlled the Chilean government. The degree of concentration of economic power in this 1.4 percent is revealed by the following facts, from same source: 17 percent of the stock companies possessed 78 percent of the total assets of the stock companies. In those dominant companies the ten biggest shareholders owned more than 90 percent of the stocks in almost 60 percent of those companies. It was there that the eleven oligarchic clans mentioned were concentrated, consisting of no more than 1,000 adults, for whom 1,500,000 laborers worked.

This oligarchy was closely related to major American capital. The facts show this: machinery and equipment, 50 percent American control; iron, steel, and metal products, 60 percent; rubber products, 45 percent; automotive assembly, 100 percent; radio and television, nearly 100 percent; office equipment, nearly 100 percent; copper fabricating, 100 percent; tobacco, 100 percent; advertising, 90 percent. To this should be added the power of Anaconda, Kennecott, and ITT, in copper and telephones (Dale Johnson, ed., The Chilean Rood to Socialism, New York, Doubleday Anchor, 1973, p.13).

Combining this situation with the state's foreign debt and private Chilean companies having North American organization, the outlay for  technology, and the dependency of the country's armed forces on the U.S. Army should give an idea of what is meant by calling Chile "a capitalistic country dependent on imperialism. "

After 1907, the organization of workers and peasants began to obtain legal recognition, which was achieved only in 1953, when the Central Unica de Trabajadores was formed. In 1972 the Central Unica had a million members, that is, 33 percent of the work force. The agricultural workers' unions began to gather strength after the 1967 peasant unionizing law, forming various "confederations" which by 1972 represented more than 100,000 agricultural workers.

Such political parties as the Communists and Socialists depended on the strength of the urban and rural workers' organizations to be able to participate in the country's political life, finally obtaining the presidency in 1970. It was against this rapidly rising force that the Chilean generals mobilized their troops on September 11, 1973.

The Chilean unions, in addition to serving the workers as a weapon to obtain wage increases, better working conditions, and fringe benefits, traditionally took an active part in politics, being the vanguard in the struggle against the domination of the American multinationals and paralyzing the country whenever political crises threatened to bring in fascism and its derivatives. The owners' guilds (for example, the Sociedad de Fomento Fabril) traditionally took the opposite position.

Lying somewhere between these adversaries were some 1,400,000 employees and self-employed workers, whose inconsistent political position tended to oppose that of the workers. These formed the midle stratum in the city and country, and traditionally they served as a kind of buffer zone to the 1.4 percent of employers and bondholders. Some 400,000 of these people were government employees during the Allende administration. It was this middle stratum that the fascist military movement depended on for the success of the September 11 coup.

2. Pedro Vuscovic's words are taken from his article "Dos anos de Politica Economica del Gobierno Popular," Revista de la Universidad Tecnica del Estado, special issues 11-12, 1972-1973, Santiago,  pp. 53-67.

3. In the first week of July 1973, National party Deputy Domingo Godoy Matte (of the extreme right wing), gesticulating menacingly with his right hand toward the seats of the leftist Deputies, cried out: "The Marxists had better not be so happy! Djakarta is coming!" From the first days of 1973, the words "Djakarta is coming!" scrawled in black paint had been appearing all over the walls of Santiago. Shortly afterward, leftist politicians and progressive journalists began to receive anonymous letters that said simply: "Mr. So-and-so: Djakarte is coming: Number X."  For example, José Gómez López, director of Puro Chile (presently a prisoner of the military, since his arrest on September 15, 1975), received anonymous letter number 31; Puro Chile's assistant director, Eugenio Lira Massi (in exile in France, when he died in June 1975), number 28; I received number 37. In August 1973 the scenario of Plan Djakarta began to be revealed when attacks commenced against the homes of these people. The selective terrorizing of leaders and journalists of the left was carried out by groups of ex-Cadets and Rolando Matus Commandos, advised by two Americans. The investigation of Plan Djakata was halted by the September 11 coup. The selection of the name Djakarta for the plan of killing was obvious: it referred to the September 1965 coup in Indonesia, in which approximately 300,000 Indonesian leftists were massacred by the Army, overthrowing President Sukarno. A leading member of Plan Djakarta was Brigadier General Hernan Hiriart Laval (sent into retirement in early 1973 for conspiring with the latifundistas and giving orders to kill two peasants in Valdivia Province). Hiriart is currently ambassador of the military junta in Peking. (Reports on Plan Djakarta appeared in Puro Chile and Ultima Hora during July and August 1973.)

4. This case is a typical one that demonstrates the contradictions, deceits, and stratagems in the inner circle of the high command. Justiniano denounced Canales because he jeopardized any serious plan for a coup with his frivolity. Prats had to accept his generals' opinion to maintain the precarious cohesion of the Army, in the hopes of proceeding with his thesis of forming an armed forces-Allende government to save the critical situation and avoid a military coup commanded by the "hard-liners." After September 11, 1973, General Canales was appointed ambassador to Lebanon.

5. From Punto FinaL No.190, Aug.14, 1973, p.7.

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