PART I

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 ------------------ ------------------ 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.