831.6363/61

The Minister in Venezuela ( McGoodwin ) to the Secretary of State

No. 2372

Sir: I have the honor to report that assurances have been given me by General Juan Vicente Gómez that the Petroleum Law approved June 26, 1920,5 copy and translation of which were transmitted with the Legation’s No. 2,176 of October 10, 1920,6 will be changed to suit the requirements of the petroleum development companies during the present session of Congress. I made a reference, Paragraph “a” of Section IV, in my Despatch No. 2,346 of May 9, 1921, (General Conditions No. 39),6 to the interest manifested in this subject by representatives of American companies, three of whom had instructions from their companies to remain here and watch developments and to render this Legation any assistance in the nature of informal representations to the Minister of Fomento (Development), the Counselor of the Ministry of Fomento, the Provisional President and other officials of the Government. At my suggestion several meetings were held by, the attorneys for and representatives of all of the American companies that own properties in Venezuela, all American citizens, as early as February last. In March they were joined in these sessions by representatives of other American companies which desired to acquire properties for exploitation and the inefficiencies and inconvenient features of the law were discussed thoroughly.

In view of the fact that most of these companies acquired properties under the last prior law, that of June 25, 1918, which granted more privileges and in many respects was more desirable to lease holders and as their holdings are sufficiently extensive to keep them employed constantly in developing such properties within the time limit prescribed by the law of 1918, there seemed to be a likelihood that all or some of them might not be disposed to seek changes in the subsequent law. This would have left to prospective investors the burden of pointing out to this Government the needed changes and representatives of course have had little if any acquaintance with the authorities.

But I am glad to be able to report that all of the representatives of American corporations, acting upon instructions from their home offices, have joined in the effort to secure modifications in the law of June 26, 1920. Each of them submitted to the others memoranda in [Page 939] which they set forth their respective ideas as to the changes which should be made in order to facilitate the industry, invariably with, due regard to the interests of the Government of Venezuela. These statements, all of which I have examined carefully, are predicated upon the proposition that the American companies are in partnership with this Government for the development of the petroleum territory.

After having familiarized myself with the recommendations embodied in these memoranda, I accepted an invitation from General Gómez to visit San Juan de los Morros, where I remained six days, during which I discussed with him the necessary changes. He gave me assurances that informal representations by his brother, the Governor of the Federal District, would be made to the Chairmen of the Committees in the Senate and the Chamber of Deputies, to both of which had been referred a few days previously a bill which provided for only three slight modifications.

I went with General Gómez to his home in Maracay and on the day after my return to Caracas, May 25, two additional bills were introduced in the Chamber. The Chairman of the Senate Committee called at the Legation on May 26 and informed me that the two Committees had decided to draft, jointly, a bill which he said “would include various other reforms,” and on the afternoon of the same day Doctor Márquez Bustillos, the Provisional President, told me that “a new bill would be presented to the Congress which would meet the features of the present law, which all of us have found to be so objectionable.”

. . . . . . . . . . . . . .

I have [etc.]

Preston McGoodwin
  1. A law of mines was approved June 26, 1920; the petroleum law was approved June 30, 1920. Both laws were printed in Department of the Interior Bulletin No. 206, Washington, Government Printing Office, 1921.
  2. Not printed.
  3. Not printed.