The Bolivian Crisis: The World-System Teeters; The Revolution Triumphs
Excerpts from House of Commons Exchange
HOUSE OF COMMONS
Bolivia (Shipping Insurance and Neutral Trade)
Debate on an Opposition Motion for Papers; January 1933
Mr. SPEAKER: Order! The House will now proceed to the following Motion: “That there be laid before this House the communications, understandings, and directions—formal or informal—issued by His Majesty’s Government to insurance underwriters, shipping combines, and commercial boards with respect to trade destined for Bolivia.” First, those who will speak in the defense:
Mr. ARTHUR GREENWOOD (Lab):
The Government has not come to the House for authority. It has not sought our consent. It has not even troubled itself with the dignity of a clear statement. Instead, it has done what modern administrations do when they wish to act without scrutiny: it has governed through circulars, whispers, and pressure upon interests whose names never appear upon a public list.
We are told, Sir, that there is no blockade, only “commercial prudence”; that there is no coercion, only “insurance adjustment”, that there is no war—only “quarantine.” Yet the consequence is the same predictable consequence that follows any blockade: the tightening of a people’s throat until obedience is won with hunger. One need not fire a cannon at La Paz in order to starve La Paz. One need only make bread and medicine uninsurable; one need only threaten the neutral carrier; one need only turn paperwork into a weapon.
The Government speaks as though it were a neutral spectator, reluctantly enforcing nothing more than decent order. But the truth is simpler. If a policy is designed so that flour does not arrive, fuel does not arrive, bandages do not arrive—then the policy is not administrative; it is moral. And this government does not possess the right to pretend innocence because the instrument is a ledger rather than a gun.
Several HON. MEMBERS of the Labour Party, some dissident Liberals: Hear, hear!
Mr. ANEURIN BEVAN (Lab):
The Right Honourable Gentleman opposite asks us to be calm. Calm! When men are being taught, by deliberate design, the political lesson of the empty bowl? When “commercial prudence” is used to do what the honourable word “war” would at least compel a nation to admit?
Let us not be mealy-mouthed about what is happening. A people in Bolivia has risen—miners, peasants, soldiers; the very classes from whom all wealth is squeezed and to whom all suffering is sent back in payment. Whatever one thinks of their doctrine, they have done the one thing the comfortable always denounce as impossible: they have seized the levers of their own life. And for that, the United States has resolved to make an example of them.
The Government speaks as if it were merely protecting British ships. But British ships are not being protected! They are being conscripted into another nation’s policy without parliamentary sanction, while the City is being used as a second Cabinet, anonymous and unaccountable.
And I say this to the House: if we permit this method to stand, if we permit “quarantine” to become a respectable synonym for strangulation, then we have invented a new imperialism, more cowardly than the old because it kills without admitting that it kills.
HON. MEMBERS, of the left-wing of the Labour Party: Hear, hear!
A MEMBER: Revolution by wireless!
Mr. BEVAN: Better that than starvation by circular.
Sir OSWALD MOSLEY (Lab):
If the House permits me, I should like to speak not only in the language of moral condemnation—though I share it—but in the language the Government claims to understand: power.
The Government is behaving as though Britain’s interests are identical with Washington’s interests, as though the Atlantic were a family estate jointly administered. It is not. The United States is not a dutiful ally content with our guidance! It is a vast industrial state with a growing fleet and a doctrine of hemispheric primacy that tolerates partners only so long as they are useful.
What are we doing—practically? We are lending, through our insurers, our merchant marine, our commercial boards, and the prestige of our financial machinery, assistance to a policy that is not merely anti-Bolivian. It is the rehearsal of an American maritime policing regime. Today it is “Bolivian traffic.” Tomorrow it is any traffic that displeases Washington. Today it is a “special risk notice.” Tomorrow it is the normalisation of searches, seizures, and blacklists in the name of “order.”
The Government pretends it is moderating American excess. In truth it is enabling American capacity. It is helping to build habits, of interdiction, of pressure upon neutrals, of conflating trade with loyalty. Those habits will not remain politely confined to a Bolivian dossier. Once created, they become the operating system of the state.
Let the House consider the geometry. A power that commands the sea commands the terms upon which others eat, buy, sell, and build. If Britain participates in teaching America that this is acceptable, and Britain helps construct the machinery and moral alibi of that doctrine, then Britain is not securing peace. Britain is signing away the last residue of independent policy and calling it “co-operation.”
We are told: better America than the revolutionary states of Europe. But a Britain that allows itself to become the silent clerk of American coercion will find, in time, that it has enabled not a friend but a master.
HON. MEMBERS: Oh!
Sir O. MOSLEY: You may dislike the word, but you will live with its consequence.
Mr. STAFFORD CRIPPS (Lab):
The Government has attempted to make a constitutional question disappear by conducting policy through the shadow of “private” commercial decision. That method ought to alarm every Member who values parliamentary government, regardless of their view of Bolivia.
If His Majesty’s Government believes that trade with Bolivia must be restricted, let it come to the House and say so. Let it propose an Order. Let it state the grounds. Let it accept debate, amendment, and vote. But that is precisely what it has not done. It has proceeded by “understandings” with insurers; by “consultations” with shipping combines; by lists that circulate without signature and without appeal; by pressures that are never recorded but are perfectly understood.
In other words: the Government has fused the coercive power of the state with the deniable power of private finance, and it asks Parliament to treat this as though it were merely the market behaving prudently.
It is a dangerous invention. It permits the executive to make foreign policy without accountability and to punish foreign peoples without the discipline of public justification. It converts the City into a covert arm of state power while preserving the City’s favourite immunity: that it is “only business.”
Whatever view one takes of the regime in La Paz, it is intolerable that British subjects should be made instruments of an undeclared blockade by means that evade the authority of this House. The Motion before us asks for papers. The Government will resist because the papers, if they exist at all, will reveal a policy conducted precisely so that there would be no paper trail.
HON. MEMBERS, Labour and dissident Liberals: Hear, hear!
Mr. AUSTEN CHAMBERLAIN (Government):
The Honourable Members have delivered speeches of great colour. They have also delivered, I regret to say, a great many assumptions.
First: there is no British blockade. His Majesty’s Government has declared no such thing, authorised no such thing, and intends no such thing. What has occurred—and what the House may understand without melodrama—is a recognition by commercial institutions that a region in turmoil presents extraordinary risks to ships, cargoes, and crews.
Secondly: the House is invited to believe that Britain is acting as a puppet of the United States. That is absurd. We are co-operating, as we have often co-operated, with friendly powers in the maintenance of international order. The alternative urged by the Honourable Gentlemen opposite is to do nothing while clandestine shipments of arms, equipment, and “volunteers” flow into a region already inflamed, thus multiplying bloodshed rather than relieving it.
Thirdly: the Honourable and Learned Member speaks of constitutional impropriety. The Government does not dictate to underwriters. Nor does it require parliamentary sanction every time a firm declines a policy it judges dangerous. We do not nationalise the City in order to satisfy the rhetorical needs of the Opposition.
As for humanitarian concern, which I do not question in its sincerity, I must remind the House that humanitarian relief is not made more humane when it is coupled to the transport of rifles and grenades, nor when it is organised by international bodies that proclaim, openly, their intention to export political systems by material intervention.
The Government’s position is plain. We shall not be drawn into adventures. But we shall also not permit the sabotage of international order under the banner of “self-determination.”
HON. MEMBERS, Conservative and some Liberal: Hear, hear!
Mr. BEVAN:
The Right Honourable Gentleman says there is no blockade - only a convenient pattern of refusals, delays, blacklists, and risks that happen, by coincidence, to produce a blockade. He says there is no policy - only “prudence” that somehow aligns, perfectly, with the needs of Washington. He says Parliament need not be consulted because the state is not acting - only the City is acting, with the Government’s wink.
That is the argument of a government that has discovered it can govern without saying so.
If the Government believes it is right to starve a revolution into collapse, it should say it. If it believes it is right to help America rehearse a new regime of maritime policing, it should defend it. If it believes it is right to conduct foreign policy by deniable coercion, it should have the courage to put it on the record.
Until then, it does not ask for our cooperation but our complicity.
Extract: “The Shopkeepers’ Cordon” — Editorial in Die Rote Welt (Berlin)
(Published December 1932; widely reprinted; later cited in parliamentary debates as evidence of “incendiary rhetoric”)
They call it “inspection.” They call it “prudence.” They call it “order.”
We have learned, after a decade of their euphemisms, to translate.
When a navy halts neutral ships on the open sea, when insurers are instructed to treat bread as contraband, when a people is made to count its flour as though it were ammunition—this is not commerce but coercion.
There is a particular odor to this method: not the frank sweat of battle, but the cold smell of contracts and counting-houses—an Anglo-American fraternity of respectability that discovers, again and again, that it can do with premiums what it once did with cannon. England and America have learned the genius of cowardice: to kill not with men but with arithmetic. A cordon drawn by merchants is still a cordon. A siege conducted by bankers is still a siege.
Bolivia has become the test because it is simple: either hunger is a legitimate tool of policy, or it is a crime. If they win by starvation once, they will use the method again—against the next revolution, and then against any government that grows disobedient.
The cordon is drawn. Let it be answered by our organized refusal.
—The Editors
Confidential Memorandum — Latin American & Maritime Exposure
Graham, Pierce & Co., Investment Banking Division (New York)
(Circulated internally to partners; March 1, 1932 — “Not for public distribution”)
Recent volatility associated with the Bolivian situation is no longer “local” in character. It is now expressing through three channels of systemic concern:
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Maritime & Insurance Risk. War-risk premiums and denials of coverage on routes touching Chilean/Argentine ports are producing delays, spoilage, and disputed claims. Several counterparties have begun inserting broad force-majeure language into contracts. This is tightening trade finance and increasing the probability of cascading defaults in shipping-related paper.
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Commodity Dislocation. Tin pricing has become erratic, with spreads widening beyond ordinary speculative fluctuation. Secondary effects are visible in freight, fuel, and machinery supply contracts. If the “maritime inspection regime” expands further, expect sudden illiquidity events in commodity-linked securities and margin stress among firms with leveraged positions.
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Sovereign & Political Risk. The extension of measures to Chile and Argentina introduces uncertainty regarding customs receipts, remittance capacity, and the reliability of existing credit arrangements. Any incident involving seizure, injury to crew, or retaliation against American assets may produce a sharp repricing across Latin American bonds and related industrial holdings.
Recommendation: reduce concentrated exposure to shipping finance and commodity-linked credits vulnerable to interdiction risk; increase liquidity reserves; avoid new underwriting in sectors dependent on southern-cone transit until policy clarity improves. Note: the principal hazard is not Bolivia alone, but escalation dynamics that may force measures to become sweeping and difficult to reverse without reputational cost. Markets can tolerate risk, but not unknown rules.
—Prepared by: L.A. Desk / Maritime Risk Committee
—Approved for internal circulation by: Managing Partner
The Bolivian Revolution: An International Proletarian History: Chapter 5 (1978)
The final phase of the Bolivian crisis echoed the closing years of the First Revolutionary Era. The world-system’s fragile diplomatic and economic equilibrium—kept together by fatigue, credit, and the habit of restraint—began to groan under the weight of mounting militarization. Ship seizures multiplied and insurance “war-risk” clauses quietly spread from a Bolivian exception into a general language of Atlantic commerce; the same cargo that moved as routine in 1929 now elicited rumor and hazard. Markets twitched, then lurched: tin and freight rates whiplashed, shipping paper tightened, and even the lords of American finance found themselves torn between the desire to see hemispheric dominance confirmed and the need for the very predictability that makes markets possible.
In September, the question on the table was whether America could arrest a pope. By now, the frame of legality had been almost completely displaced by the calculation of interest. Of course they could arrest a pope, and some contemplated doing so. A few reactionary Catholics even encouraged a naval intercession against the globe-trotting antichrist. But Hoover was not a fool, and he knew enough about religious martyrs to avoid making one. A letter sent from the Fatima Pope, urging him to give safe passage to his counterpart, confirmed his decision.
And so on September 12th, the Pope arrived in Santiago, the luxury ocean liner accompanied by a watchful entourage of American destroyers, meant not to do harm to the high-profile traveler but to ensure that no harm came to him. Hoover, after having heard the rantings of one too many reactionary zealots, feared both a false-flag incident on the sea and the potential of an assassination on the Roman Pontiff. Either would have been a diplomatic disaster and international embarrassment. An automobile awaited Francis in the city, along with an unexpectedly large crowd; his schedule did not permit him lengthy remarks, but he met with Catholics, smiled, and left it to “their own conscience” to determine whether he was a mere pretender or the supreme Pontiff.
On the 15th, he arrived in La Paz, now thronged by the masses, his wiry frame, ceremonial vestments, and wry gentleness offering a counterpart to the city’s revolutionary passion. At the cathedral, he delivered remarks which he knew would be transmitted around the world. Hunger was condemned as a policy instrument, the new government was begged not to commit the same mistakes as its opponents, and the dignity of labour upheld as inviolable Catholic teaching. To the surprise of many, he took the opportunity to formally apologize for the church’s role in the colonization of the Americas, pledging to make up for this “black spot” on its history.
Francis did not speak the Marxist language of class emancipation, but instead spoke one of land, dignity, and protection of the weak. None could agree whether this was an identical, adjacent, or opposed conceptual vocabulary. Inside America, the speech elicited fury. The papal visit was a humiliation: the government had purposely refused to interdict him, puncturing the totalizing claims of the blockade. He had not only traveled with de facto American warrant, but snubbed America after doing so. Once again, the temperature was raised.
Francis’ visit did not loosen the cordon, but it did underline that the contest of manifests and insurance was also a question of prestige, credibility, and resolve. For Washington, there was only one way to answer this humiliating moral spectacle: more ships, more inspections, and a larger wager on the sea. In October, after weeks of negotiations with the Japanese, the Ozaki government agreed to wind down its naval presence in the east for the duration of the crisis. In exchange, Japan would receive extensive trade concessions. Ozaki’s diplomacy once again paid off as Japanese goods entered the American market at greater rates than ever before. Sizable contingents from the American Pacific Fleet steamed toward Chilean ports. With more than half the American Navy involved, exclusion zones were expanded and stop-and-search orders were expanded to all flagged traffic, bringing the “maritime inspection regime” into a de facto total blockade. The costs to the United States - military, diplomatic, and especially economic - were thereby raised. But neither Congress nor the President wished to admit that they were approaching something like a state of war.
Over the next month and a half, the blockade strangled the three South American nations but did not shatter their resistance. In Bolivia, a discourse of shared suffering helped mend the wounds from harsh rationing decisions. The indigenous Ayllu congresses, having won freedom from the old landowning class, would not give it up so easily. Hoover sensed that the battle was perhaps unwinnable, but now viewed as a lame duck, he found his own room for independent maneuver hemmed in. The Republicans had nominated a hardliner, Arthur Vandenberg, at their convention, who promised to bring the Bolivia crisis to a close. In the media, this was framed as a repudiation of Hoover’s more moderate, cautious brand of politics, and many in his own party also saw it as such. Vandenberg went on to handily win the presidential election in November, and Hoover, looking both for political capital and a means to ensure his successor had some awareness of the situation he was about to be thrown into, made the highly unusual move of nominating him as the head of a “temporary advisory commission” on Bolivia.
The psychic and material investments of the major powers continued to make it difficult to back down until the brink was reached, and steady escalation exposed fissures in both coalitions. Britain’s cooperation was thrown into question when labour, the dormant giant of Britain’s society, stirred. Stoppages and dock actions broke out at first over increased hours tied to blockade-related work, but the more political language of anti-imperialism soon crept in, alarming British elites. The shadowy, underhanded manner by which the British government had assisted the Americans throughout the crisis awakened a whole set of anxieties which were not simply socialist in character: liberals worried about the growth of “informal cabinet power”, nationalists mooted concerns over “selling out to the Americans”, and humanitarians treated the whole matter as a stain on Britain’s reputation. The cabinet was forced to descend to parliament, and polls showed Labour’s popularity surging. British diplomats privately told their American counterparts that they were unsure whether logistical support could be continued indefinitely.
In socialist societies, anti-war memoranda started circulating alongside, and sometimes in answer to, anti-colonial agitation. Even as anti-colonial rhetoric grew ever more fervent and denunciatory in tone, activists were forced to concede that they hardly wished for a resumption of more open conflict, whether it be war or quasi-war. In Washington, meanwhile, disquieting reports filtered in of market volatility; a number of high-profile Republican donors demanded to know why the blockade had not succeeded, and pointed out that it was starting to strain the country’s finances and magnify instability. The system was discovering that emergency measures frequently create enemies faster than solutions.
Over the next few months, several international incidents drove home the escalating danger of the new dynamic. A Chilean naval artilleryman with jittery nerves fired on an American destroyer; fortunately enough, none were killed, but the ship was damaged and limped to a Peruvian port for repairs. A wave of Italian volunteers en route to Buenos Aires was seized in the South Atlantic and carried into American custody, where they were interned as enemy combatants. And in Britain, German agents were discovered in Liverpool, accused of fomenting labour unrest. Calumnies were hurled, accusations issued, and dark voices mused about a new descent into barbarism less than a decade after the previous one.
In the first week of February, Hoover received two disquieting documents. The first came from Prime Minister Austen Chamberlain, explaining that the Government in Britain was under tremendous parliamentary pressure and could likely sustain its assistance for only another two months. The second was a confidential naval intelligence report indicating that there was no sign any of the three South American states would near internal collapse in the next few months. Consulting with Vandenberg, Hoover agreed to announce publicly his intention to begin negotiations, thereby sparing his successor the indignity of being seen to capitulate to the socialists at the beginning of his term. Vandenberg was to be inaugurated on March 4th.
The Beijing Conference
On February 12th, under instruction from President Herbert Hoover, the Secretary of State sent a confidential message to La Paz expressing a desire for bilateral negotiations. The invitation carried a ploy: Washington hoped to parley directly with Bolivia, bypassing its socialist and South American patrons and extracting better terms from a small state facing an immense one. In La Paz, this proposal split opinion. Some feared that inviting allies into the talks would turn Bolivia into a mere token passed between blocs; others feared the alternative more—entering a room alone with the United States and calling it sovereignty. They chose the lesser danger. By March 1st, telegraph traffic was already moving through the established channels: from the IntRevMar South American Council in Buenos Aires to the Council of Revolutionary States’ Riga offices, which—though never intended as permanent—still served as the emergency clearinghouse for the Bolivian question.
All sides professed a desire to talk “as soon as possible,” but it proved unexpectedly onerous to find a venue that did not itself become a battleground. As a point of honor, the Americans rejected Chilean and Argentine offers to host in Santiago or Buenos Aires. The Bolivians, for their part, refused to negotiate on the soil of other South American governments—dismissed in La Paz as comprador states. Stockholm was briefly mooted by force of habit: it was the site of the famous 1924 talks, and its conference rooms still carried the aura of managed peace. Yet for the Caudillo delegations the problem was not comfort but optics. They did not want the crisis pulled back into a familiar Atlantic–European corridor where the socialist powers would enjoy home advantage and where American naval reach could lurk, unspoken, behind every procedural question. The Americans, too, balked at traveling into the Scandinavian Sozialstaaten, whose public sympathies had shifted further toward the socialists during the blockade years.
It was in that vacuum that an unlikely and distant candidate emerged: Beijing. The Chinese government, eager to advertise its neutrality and to play host to great powers without being drafted into their quarrel, offered security, protocol, and a stage large enough to satisfy every delegation’s pride. The Southern Cone regimes warmed to the proposal first; they preferred a third space that was neither European nor Atlantic. Washington hesitated—then recognized the advantage: Beijing was far from the moral theater of European capitals and far from the South American ports whose very names had become propaganda. For want of any better option, the delegations assembled in Beijing on March 14th to seek a formula for defusing the latest rupture in the international system.
The socialist delegations arrived in a triumphal mood. They did not need to speak openly of the Monroe Doctrine being punctured for this to be communicated in gesture and tone. In 1924, socialist envoys to Stockholm had been buoyed by the thought that they had achieved equality with the capitalist states; at Beijing, some treated American diplomats as relics of a decaying world, destined for oblivion. Already bruised by the impending “loss” of Bolivia, the condescension deepened the psychological wound.
Negotiations proceeded in predictable phases. The IntRevMar delegation opened with a maximal demand: complete, public, and unilateral recognition of Bolivia. For the Americans—especially for Vandenberg—this was politically noxious and diplomatically humiliating; for the Bolivians, it was framed as national survival. Days of quarrelsome debate followed. It was then that the Argentine and Chilean delegations intervened, dismissing the recognition demand as symbolic theater and proposing a substitute: an American pledge of non-interference, time-limited but public, which could be taken as a victory in La Paz without forcing Washington to pronounce the forbidden word. The socialist powers accepted grudgingly. In return, the Bolivians pledged not to export armed agitation into neighboring states; at socialist insistence, they retained the right to host foreign detachments for relief and defense so long as these were placed under formal Bolivian authority—another small buttress to sovereignty and small indignity for the Americans.
The position of the two caudillo states presented its own set of difficulties. They had grown closer to the socialists over the course of the blockade, and the Americans feared the emergence of a permanent IntRevMar-aligned bloc in South America. In return for winding down the cordon, Washington secured a promise from both governments that, for the next decade, they would not grant leases of naval or air stations to extra-continental powers. More ambitious efforts to draw them back into the American fold—through new trade and investment guarantees—were quietly but firmly rebuffed. The cordon might be loosened, but the habits and circuits built under pressure would not be undone by a single signature.
The most explosive confrontation between the proletarian nationalism of the Bolivians and American notions of legality and property came over a proposed “claims commission”. The Americans wanted the Bolivians, at the very least symbolically, to promise compensation for nationalized property. For the Bolivians—particularly Tristan Marof—it would have been a manifest injustice, and an absurdity, to promise restitution to a nation whose policy had been to starve them. The European socialists stood firmly behind Bolivia: there was to be no “compensation,” not even in principle, for property said to belong to the Bolivian people. The Americans, having already relaxed the blockade and facing eroding allied support, had little additional leverage to apply. In another humiliation, they were forced to accept the permanence of the nationalizations even as they refused to recognize their legitimacy.
In Bolivia itself, the immediate aftermath was felt first not in communiqués but in bread. The loosening of the cordon brought flour and fuel in quantities large enough to end emergency improvisation as a mode of rule. The government in La Paz moved to regularize rationing, reopen disrupted transport circuits, and - under pressure from both miners’ councils and ayllu congresses - set a date for a national congress to convert revolutionary authority into a constitutional order. The victory was neither clean nor painless, but it was a victory.
Later accounts treated Beijing as a “managed draw,” but its asymmetry was evident in what the Protocol conspicuously lacked. Washington obtained narrow strategic assurances—no extra-continental basing in the Southern Cone and a formal Bolivian pledge against exporting armed agitation—yet failed to secure any supranational claims machinery, oversight commission, or permanent verification regime that might have translated coercion into lasting legal authority. Socialist representatives and Bolivian delegates resisted such instruments precisely because they resembled, in softer form, the tutelage the blockade had tried to impose. The United States accepted a thinner settlement because the alternative was a widening quasi-war it could not sustain without rupturing markets and allies alike: Britain’s wavering cooperation made delay more costly than concession.
Beijing reopened the trade routes and lowered the temperature, but in Washington it did something far more corrosive: it made the Monroe Doctrine sound like an idle phrase which could be recited dutifully and then ignored. Vandenberg tepidly defended the Protocol with the language of prudence and cost. Outside, it was read differently: Editorial pages spoke of a cordon turned into an embarrassing spectacle, of American destroyers reduced to escorts for a pontiff who crossed the quarantine to scold the Republic on enemy soil. In clubs and committee rooms the story hardened into a single, poisonous sentence: we drew a line and watched the world step over it. The anger was not only at Bolivia, or even at the socialists, but at the sickening discovery that American maritime power had been successfully defied.
The deeper humiliation did not arrive in a headline, but after, in the quiet, measurable ways that power bleeds. The Southern Cone did not snap back into the old habits of dependence when the cordon loosened. Contracts continued to clear through unfamiliar channels; credits were rolled over elsewhere; insurance and freight followed the paths that had proven reliable under siege. Each small administrative fact could be explained away, and yet taken together they formed a single nightmare: it was not merely Bolivia that had survived, but a method—corridors, papers, committees, “volunteers,” and sermons—that could reorganize the hemisphere without firing a shot. “Beijing” became, in the American elite’s imagination, less a settlement than a warning: that America could be ignored and that the world would adjust. From that realization a new demand rose, first in editorials, then in hearings, then in appropriations, until it took the shape of an answer made of steel: if the ocean would not obey American doctrine by right, it would obey it by force.
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