831.6363/25
The Minister in Venezuela (McGoodwin) to the Secretary of State
[Received April 29.]
Sir: I have the honor to report that I returned today from Maracay, where I went primarily for the purpose of pointing out to General Gómez1 the injustice of a plan which is being fostered by Doctor Román Cárdenas, Minister of Finance, to greatly restrict the size of areas granted by the Government of Venezuela for exploring and exploiting petroleum. This plan was submitted to Doctor Cárdenas, by Doctor Vicente Lecuna, … Doctor Lecuna is the President of the Banco de Venezuela, the Government spokesman and leader in the National Senate and was Chairman of the Venezuelan Delegation to the recent Second Pan American Financial Conference in Washington, as he was also of the Pan American Scientific Congress in Washington four years ago. He wrote to General Gómez from New York last January, urging an amendment to the Petroleum Law to curtail development areas from 15,000 hectares to 400 hectares. Soon after his return late in February he convinced Doctor Cárdenas that inasmuch as such areas are small in the United States, they should be greatly reduced here and the latter at once took up the matter with General Gómez.
… I dwelt upon the fact that it was exceedingly unfair if not ridiculous to compare the thickly populated oil districts in the United States, where there are numerous pipe lines and railroads, with the wilderness in Western Venezuela where American and English capital are attempting to accomplish development work in the face of adverse health and labor conditions and with no means of transportation or communication. It was pointed out that inexperienced persons, however pure their motives, probably have no comprehension of the enormous cost involved in exploring virgin territory, in transporting ponderous machinery over swamp lands and of the almost endless construction work required. Finally I [Page 933] represented that the existing provisions of Venezuelan law, requiring the concessionaire to leave equal, alternate areas of the property he has explored to the Government, certainly supply sufficient safeguards. This fifty per cent, together with the ten per cent gross production tax, affords the Government fully sixty per cent of the entire value.
Of equally as much importance is a proposal of Doctor Cárdenas, of which Doctor Lecuna is also believed to be the author, to prohibit foreign interests from participating actively in the exploitation of petroleum concessions. I also discussed this proposal, reminding him that Venezuela is susceptible of great development and possesses vast material resources but has not yet had time to accumulate the reserves of the capital necessary for this realization; therefore that he is not only pursuing a necessary but an eminently wise policy not only in permitting but even in inviting the cooperation of foreign capital and that at the outbreak of the European war statistics showed that several billions of dollars of foreign capital were invested in the mines, railways and industries of the United States.
At our second conference General Gómez did not bring up this subject and when I asked him if he had formulated an opinion he promised that he would give me a definite response within two days. Yesterday afternoon he told me that insofar as concerns foreign capital in Venezuela he greatly desires the introduction of American capital and shall do all that he can consistently to encourage it and “to facilitate all enterprises in which it may become concerned.” He added that he “would not countenance any additional changes in the Petroleum Law” and expressed almost violent opposition to the plan to restrict areas for petroleum and other minerals.
I have [etc.]
- Gen. Juan Vicente Gómez, Constitutional President of Venezuela.↩