[1][2] Having secured the resignation of President David Toro on 13 July 1937, Germán Busch entered the Palacio Quemado and established his first cabinet.

The government was a mixture of leftist military officers and members of the United Socialist Party (PSU) which had collaborated with the Toro regime.

However, at the same time, he appointed such figures as the right-wing Federico Gutiérrez Granier in the crucial office of Minister of Finance, a position the Liberal politician would use to undo many of the consumer goods subsidies of the Toro regime.

Ten days later on 22 August, a dedicated Ministry of Health and Hygiene would be established with Alfredo Mollinedo appointed to head the position.

General Carlos Quintanilla would take hold of the presidency in the interim period and the majority of the Busch cabinet, save for Alfredo Mollinedo, Bernardo Navjas Trigo, Vicente Leyton, and Felipe Manuel Rivera, would be dismissed.