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LA PAZ, Bolivia--President German Busch today abolished constitutional guarantees, dissolved the Congress and set up a totalitarian dictatorship in a drastic move to cope with internal economic and political conditions that threatened Bolivia with bankruptcy and revolution.

Busch, who became Provisional President in July 1937 after the overthrow of Col. David Toro and was elected constitutional head of the country last May, said his dictatorship was neither extreme leftist nor rightist, but "entirely Bolivian" in character.

He explained that his action, which was supported by the nation's armed forces, was necessary to save the country from a "formidable economic crisin" and a "fratricidal struggle" being plotted by political parties in their "morbid desire" to seize power.

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