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Communists. Newspapers carried a new threat next morning: The mutineer sailors were really planning with the assistance of Communists on shore to set up a Chilean Soviet. For the first time in a Latin-American revolution, Communism was a real problem. The idea was disproved later in the week, but there was enough truth in the story to cause grave concern. Because of poverty, there is a sizeable body of Communists in Chile. Breadlines stretch through all the big cities. The country has had to default on its foreign debt. Of Chile's 4,000,000 inhabitants, over 100,000 are unemployed. Copper and nitrates are the country's two biggest industries; both are largely owned by U. S. capital, both are seriously depressed. In an effort to revive the Guggenheim-controlled nitrate industry, a great holding company known as the Compania Salitre de Chile ("Cosach") was formed to fight German synthetic nitrates by modernizing, mechanizing the Chilean nitrate fields (TIME, July 28, 1930). It was a successful move from the stockholders' point of view, but the new machinery has put thousands of Chileans out of work. Such people are ripe fodder for Communism. As soon as the Communist scare started the streets of Santiago and Valparaiso were filled with clattering Carabineros riding their horses over the sidewalks, poking their long lances into doorways and alleys. In the foreign residential section of Los Leones, U. S., German, British and French residents formed a Home Guard, elected their own officers, marched up & down the streets armed with shotguns.
Talcahuano, There was bitter fighting at Talcahuano. Naval mutineers held not only the ships in the harbor but the coast defense forts ashore. Three' loyal regiments stormed the fort and finally captured it, but not before nearly a hundred men had been killed. Trying to help their comrades on the shore, rebels on the modern destroyer Almirante Riveras swung her close to the shore batteries under a white flag. Suddenly she dropped her flag and opened fire. Bombing planes took off. Shore batteries and the Almirante Riveros exchanged shot for shot. The Almirante Riveras was beaten out to take shelter behind Quinquina Island and surrender. In three hours Talcahuano was in Federal hands. Despite official denials, Santiago gossips insisted last week that every fifth man in the rebel garrison was taken out and shot.
Coquimbo. Eleven ships under the Almirante Latorre were waiting off Coquimbo for the rebels' last stand. Their leader, Electrician Rogelio Reyes, seemed to have lost his head completely. Knowing that a squadron of some 40 planes, including at least a dozen Dornier-Wahl and Junkers bombers, were preparing to sink the fleet, the rebels steamed out to sea under cover of fog. Then, realizing that they had no food for an extended cruise, no place to go, steamed back again.