End of the Liberal Era

The coup that ended the Liberal Era brought Isidro Ayora to office. Ayora attempted a series of economic reforms and created institutions, like the Central Bank, to control the national economy. Ayora's restructured fiscal and monetary institutions and policies brought a revenue windfall to the government during the next half-decade. The increased revenue was used to establish several social agencies and to initiate a number of progressive social programs intended to protect the working class from unscrupulous employers. However, despite Ayora's progressive social stance and apparent dedication to reform, the onset of the worldwide economic depression in 1929 prevented the success of his programs and ultimately led to his downfall and yet another period of severe political inconstancy.

Political Chaos

Social inequality has always plagued Ecuador, during times of depression it is even more apparent.

Fueled by the Great Depression, political instability continued through the 1930's. Numerous populist politicians came and went and none enjoyed much success. In fact, Ayora was just the first of fourteen chief executives during the 1930s.

In August 1932, after Ayora was ousted and after Congress blocked Neptalí Bonifaz Ascázubi's assumption of the presidency, the Consolidation of National Workers that brought Bonifaz to power clashed with paramilitary forces assembled by opponents of the president-elect. Bonifaz's opponents were victorious.

The Liberal candidate Juan de Dios Martínez Mera succeeded the defunct Bonifaz but lasted only a little longer. José María Velasco Ibarra, the charismatic president of the Chamber of Deputies, led a campaign against Martinez that alleged fraud in the election that brought Martinez to power. Martínez was forced to resign and Velasco assumed the presidency. Though Velasco lasted only eleven months, he would serve four more presidential terms over the course of his political career. In addition to Velasco, several other presidents served incomplete terms in the 1940s. Not until after World War II would Ecuador achieve any sort of political stability.

War With Peru

In July of 1941, a territorial dispute dating back to colonial times between Ecuador and Peru turned violent again when Peruvian troops invaded parts of Ecuador. On January 29, 1942, while Peruvian forces occupied areas of Ecuador, the two countries signed the Protocol of Rio to end the brief war. The Rio Protocol accomplished little besides putting an end to the immediate hostilities. Because World War II had engulfed Europe and Asia, and the United States and the America's were intent on presenting a united front to the Axis and Japanese aggressors, the peace agreed to in the Rio Protocol was dictated more by the outcome of the war than by the peace negotiations. As a result of the hasty peace accord, Peru and Ecuador clashed several more times before they signed the Brazil Act on October 26, 1998.