PRESENT FOREIGN INVESTMENTS IN VENEZUELA
In a report on foreign investments in Venezuela, the public debt, at
least the external foreign debt, ought not, perhaps, be included as an
investment. For two reasons, however, it deserves consideration, first,
because of the sum involved and the manner in which the government
meets this obligation; and secondly, as a barometer of other nationals'
interests in Venezuela.
PUBLIC DEBT
The public debt of Venezuela is a topic important enough in itself
to warrant consideration in a special report, hence we shall concern
ourselves here solely with the _external_ foreign debt. Its history
is interesting but long and involved and since our interest as far as
this report is concerned is not in the debt itself but in the debt as
a factor in influencing investments in Venezuela, we shall confine
ourselves solely to a statement of the following statistics from the
Report of the Minister of Finance:[20]
_June 30, 1919_ _December 31, 1919_
1. Deuda Nacional del 3% annual
por Convenios Diplomatics Bs. 9,208,291.61 Bs. 9,088,291.61
2. Certificados Provisionales
(Españoles) 1,600.00 1,600.00
3. Deuda Diplomatics del 3%
annual de Venezuela,
Emisión de 1905 84,511,755.00 80,295,615.00
4. Deuda Diplomatica sin interes 23,769.12
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Total Bs. 93,745,415.73 Bs. 89,385,506.61
[20] Cuenta de Gastos del Departmento de Hacienda, July 1, 1919, and
January 1, 1920.
The national debt of 3% is divided between France, Spain and Holland in
approximately the following proportions: France, 86%, Holland, 11% and
Spain, 3%.
The second item of 1,600 bolivares is held in the Venezuelan Treasury
pending a settlement as to whom the debt should be paid.
The 3% diplomatic debt is held by English and Germans, while the
diplomatic debt without interest due to France was entirely paid at the
expiration of December, 1919.
The obvious conclusion to be drawn directly from the above statistics
is that Venezuelan public finance is in good hands and that the
country is in a flourishing condition as witnesses a payment of nearly
$1,000,000 on the foreign debt in six months. Under such conditions,
foreign investors may feel reasonably sure that capital may be invested
here both securely and profitably.
FOREIGN BANKS
Closely allied to the above topic is the subject of foreign banks.
When foreign capital first finds its way into a new country it is
inevitably followed by a branch of some large home bank, a fact as true
in Venezuela as elsewhere. In Caracas we find The National City Bank of
New York, the pioneer American bank in foreign fields, serving not only
American firms but many Venezuelans in their business dealings with
the United States. The National City Bank made its initial bow to the
city of Caracas in 1917. American interests are further represented in
Caracas by a branch of the Mercantile Bank of the Americas which has a
subscribed and paid up capital of Bs. 2,600,000.
Canadian interests are represented in Venezuela by the Royal Bank of
Canada with a paid-up capital of Bs. 88,400,000 and a reserve amounting
to a like sum. English interests are served, to a great extent, by The
Commercial Bank of Spanish America, Ltd., which is affiliated with
the Anglo-South American Bank, Ltd., and has a capital and reserve
amounting to Bs. 200,000,000. This is the most recent foreign banking
institution to appear.
The Dutch have here a branch bank of the Hollandsche Bank Voor
West-Indie, which has a subscribed and paid-up capital amounting to Bs.
2,000,000, and lastly we have the Deschanel International Corporation
de Venezuela of French origin which has a capital and reserve of Bs.
1,260,000. Besides doing a banking business, this corporation is itself
interested in the importing and exporting business. From the above
facts we may see that the investor will not lack any of the banking
facilities so essential in a foreign field.
PUBLIC UTILITIES
Under the caption of "Public Utilities" may be considered street
railways, telephones, telegraph, gas and electric light and power
companies. The English seem to have a monopoly on most of the public
utilities in Venezuela, but whether or not this is an advantage
either for the English or Venezuelans is matter for speculation. One
of the leading American governmental officials in Venezuela on being
interviewed by the writer said: "Nearly all the public utilities are
in the hands of the English and I am glad they are being operated by
English and not American companies, for the service is poor and the
people are discontented." From the writer's observation, this is indeed
true in the city of Caracas, for the street railway company (English)
uses very ancient cars, each capable of holding only twenty-four
people, and there are turn-outs about every two hundred yards which
give the passengers opportunity to reflect on the service while waiting
for the other car to come along. Data as to the investment and earnings
are lacking but as a general conclusion it may be stated that there is
much room for improvement in all these fields. For example, the only
cable in Venezuela is in the hands of a French company and in order to
send a message to the United States it is necessary first to relay it
to Haiti and thence to the United States which occasions unnecessary
delay and considerable expense in commercial transactions. (See special
report on _Radio Communication_.)
OTHER INVESTMENTS
In Venezuela it is the ordinary thing to find American goods on sale
in most of the stores and agents for different classes of American
goods throughout the country. These agencies are mainly in the hands of
established Venezuelan firms but in Caracas there are fewer Americans
acting as agents for many of the best known American products. Here
too is the Caribbean Petroleum Company with important oil and asphalt
concessions along the shores of Lake Maracaibo. For the year 1919 the
output of the company was 45,913,840 metric tons of oil on which the
government receives a tax of two bolivares a ton. English capital has
of late been used increasingly in buying land in the interior "llanos,"
for the development of the cattle industry. At the present writing
American capital is being diverted to the same purpose, as, with the
development of transportation facilities, live stock promises to be
of utmost importance because of an increasing world population and a
greater demand for food.