Complex sentence: The leaders of the revolution (Franco was not commander-in-chief yet), instead of declaring the coup a failure, initiated a slow and determined war of attrition against the Republican government in Madrid.
Split into simpler sentences: The leaders of the revolution (Franco was not commander-in-chief yet) did not lose heart with the stalemate and apparent failure of the coup. Instead, they initiated a slow and determined war of attrition against the Republican government in Madrid.