The Chaco War (1932-1935) was fought between Bolivia and Paraguay over control of the arid Chaco Boreal region of South America. Though the region was sparsely populated, control of the Paraguay River running through it would have given one of the two landlocked countries access to the Atlantic Ocean. This was especially important to Bolivia, which had lost its Pacific Ocean coast to Chile in the disastrous War of the Pacific (1883). Furthermore, the discovery of oil in the Andean foothills sparked speculation that the Chaco itself would be a rich source of petroleum. In international arbitration, Bolivia argued that the region had been part of the original Spanish province to which Bolivia was heir. Meanwhile, Paraguay had begun to cultivate the region, making it the world's largest producer of mate, while the small indigenous population of Guarani Indians was related to that country's own Guarani population. Finally, Paraguay had also lost almost half of its territory to Brazil, Uruguay, and Argentina in the War of the Triple Alliance and was not prepared to see what it perceived as its last chance for a viable economy fall victim to Bolivia.
Border skirmishes throughout the late 1920s culminated in an all-out war in 1932, when the Bolivian army, following the orders of the President Daniel Salamanca, attacked a Paraguayan garrison at Vanguardia.
The war was a disaster for both sides. Bolivia's European elite forcibly enlisted the large indigenous population into the army, though they felt little connection to the nation-state. While Paraguay was able to foment nationalist fervor among its predominantly mixed population, its soldiers were ill-prepared for the dearth of water or the harsh conditions of terrain and climate they encountered. In fact, of the war's 100,000 casualties, more died from diseases such as malaria and other infections than from the actual fighting. At the same time, the war brought both countries to the brink of economic disaster. In addition, On November 27, 1934, Bolivian generals frustrated by the progress of the war seized President Salamanca while he was visiting their headquarters in Villamontes and replaced him with the vice president, Josť Luis Tejada Sorzano.
By the time a ceasefire was negotiated in 1935, Paraguay had seized control over most of the region. This was recognized in a 1938 truce, signed in Argentina, by which Paraguay was awarded three-quarters of the Chaco Boreal. Some years later it was found that there were no oil resources in the Chaco proper.
Many middle-class Bolivians were humiliated by Bolivia's quick military defeat during the Chaco War, which led to a mass-movement away from the traditional order known as the "Generacion del Chaco", which was epitomized by the MNR-led Revolution of 1952.