By the 1950s, social and political stability in
Paraguay had been severely eroded due to more than two decades of crises, including the
Second Paraguayan Civil War, the
Chaco War, and the pro-
Nazi Party sympathies of former president
 President Federico Chávez, who had declared a
state of siege and initiated a crackdown against his political opponents shortly after taking office, faced an uncertain economic situation in Paraguay and turned to Central Bank president Epifanio Méndez Fleitas to spearhead a national economic recovery.
 Méndez' attempts to convince Chávez to seek support from the Argentine government of
Juan Perón proved unpopular with conservative elements of the Colorado Party and Méndez was pressured to resign in January 1954.
 Despite his departure, Méndez continued to enjoy support from some factions of the party, as well as Army Major Virgilio Candia, a deputy to cavalry commander Colonel Néstor Ferreira. Ferreira was, himself, a strong supporter of President Chávez.
 Beyond this rivalry between supporters of Chávez and the supporters of Méndez, the so-called epifanistas, a secondary rivalry had begun to develop between the government and the Army due to the decision of Chávez to outfit the National Police with heavy weaponry, which was met with the chagrin of the Army's commanding general Alfredo Stroessner.