The Ambassador in Venezuela (Corrigan) to the Secretary of State

No. 3898

Sir: Since my return I have had a number of informal conversations concerning the oil business with regard to the development of the present negotiations. Among the people with whom I have conversed are President Medina and Mr. Curtice, his technical consultant, with regard to the Governmental point of view, Mr. Proudfit, successor of Henry Linam as head of the Standard Oil Company of New Jersey, and Waldo Emerson Sheldon, local head of the Socony Company. In brief, the development seemed to be about as follows:

The basic proposal which was set forth in the letter that Mr. Thornburg wrote to Gustavo Manrique54 found general acceptance. These more or less basic principles having been decided upon and the decks [Page 810] being thus cleared for action, representatives of the Government and the oil industry sat down to write a basic petroleum law. It appeared as though this law would be written speedily and accepted without delay, but there came a certain public clamor against railroading the law, along with some attacks on Gustavo Manrique, citing his record as a former attorney for the oil companies during the time of Gómez, which caused the President to adopt new tactics. He announced his determination to allow all interests to have a hearing and called in people representing all sectors of public opinion including ministers of former administrations who might now be considered of the opposition. He evidently wished to fortify his position to be able to say that his policy of revision of relations between the nation and the oil companies (now publicized as the política revisionista) had had a thorough hearing and that all elements had been able to voice their opinion and give their counsel. He finally named a council of about 18 lawyers and experts headed by Minister of Fomento Eugenio Mendoza to examine the law paragraph by paragraph. Mr. Curtice, the Venezuelan Government’s expert informed me that the Commission had about reached Article 35, that there are some eighty odd articles in the law and that some of the most controversial ones have not yet been considered. This of course has slowed things down and at the present rate of progress it seems that it will be at least another month before the work of this Commission will be completed and the law be ready for presentation to Congress.

The President told me that he had been sitting with this Commission as much as two hours a day during the past week, and while it interfered greatly with his many other duties he felt that it was of sufficient importance to make it worth his while to devote to it his personal attention. The exact make-up of the Commission that is now examining the law has never been made public. Even Mr. Curtice, the Government-retained expert, said that he did not know just who constituted the membership. The President told me that there were at least two former Ministers of Fomento, and it is more or less public knowledge that Dr. Egaña, Minister of Fomento under López Contreras, is taking an active part in the conferences. The result of all this seems to be that the originator of the plan, Attorney General Gustavo Manrique Pacanins, seems to have been relegated more or less to the background. …

Mr. Proudfit of the Standard Oil Company was very much concerned about a development stemming out of the speech made by the President at Zulia in which he more or less committed himself to the bringing back of the refining operations now located in Aruba and Curasao to Venezuela as part of its national industrial development. The injecting of this controversial issue into the negotiations has [Page 811] naturally caused a great concern in oil circles because of the tremendous investments and possible loss that would be entailed by such a transfer.

In my conversation with the President this subject cropped up and he expressed himself in no uncertain terms as to the ultimate intentions of the Venezuelan Government in this regard. I gathered that he intends to insist upon some commitment from the companies that all further extensions of refining operations shall be built on Venezuelan soil. I tried to convince him of the wisdom of keeping this controversial question out of the basic discussions now going on, but not, I felt, with entire success. I feel that there is a more serious side to it than just the interest in development of Venezuela’s national industrialization. There is a deep-rooted and bitter feeling of resentment against the Dutch in Curaçao and of course the idea that these islands rightfully belong to Venezuela has strong support, but even aside from this claim there exists a real enmity against the Dutch, a feeling that they are unfriendly and inimical to Venezuelan interests. Should this basic feeling get out of hand and become a political issue it might loom up as a serious obstacle to the smooth working out of the new petroleum law which is in reality a basic treaty between the Government and the oil industry governing the future conduct of the operations in this area.

I have recently discussed the present status of this matter with the British Minister, Mr. Donald St. Clair Gainer, and while retaining his optimism about the prospects for the enactment of a law along the lines now contemplated, he feels that delay in this matter is likely to lead to the injection of political factors which might be able to present considerable opposition to the program adopted by the Government under the guidance of General Medina, However, since Mr. Hoover, the senior negotiator for the Venezuelan Government who is assisting in the drafting of the new law returned to Caracas yesterday from the United States where he has been since December 23 for purposes of consultation with the interested American companies, it is hoped that consideration of the remaining half of the draft of the law will proceed with considerably more despatch.

To complete this picture there is enclosed herewith55 a translation of the full text of President Medina’s address made at a public meeting in Caracas on Sunday, January 17, 1943, an excerpt from which was furnished in translation in my telegram No. 82 of January eighteenth.56 A single copy of the Spanish text of President Medina’s remarks is also enclosed.

It is worthy of note that President Medina, while mentioning the [Page 812] overflowing enthusiasm which prevailed at the meeting, stated that his responsibility required that he ponder over matters and study them thoroughly adding that if he permitted himself to be carried away by the enthusiasm of the moment, he would not be worthy of the confidence of his listeners. Fifty thousand persons are stated to have been present at the demonstration, which while enthusiastic was very orderly.

Although President Medina did not detail the other problems “in need of investigation by the Government” it is generally understood that he here had reference to fiscal matters arising from reduced Government income arising from economic factors such as reduced production of petroleum, reduced imports from the United States and the effect on internal economy and employment of these results of the war.

The public meeting at which the President spoke after 20 other orators had delivered addresses was held under the auspices of the “Comité Directivo de la Concentración de Respaldo a la Política Petrolera” (Directive Committee of the Concentration of Support of the Petroleum Policy). This Committee was composed of the following:

  • Dr. Manuel R. Egaña
  • Dr. Enrique Tejera
  • Dr. Mario Briceño Iragorry
  • Dr. Leopoldo Manrique Terrero
  • Sr. Manuel B. Pocaterra
  • Dr. José Antonio Marturet
  • Dr. Carlos Irazabal
  • Dr. Andrés Eloy Blanco
  • Sr. Alejandro García Maldonado
  • Sr. Pascual Venegas Filardo
  • Sr. Calixto Noda
  • Sr. Nerio Valarino
  • Srta. Luz Casado Lezama
  • Sr. Pedro Vallenilla Echeverría
  • Sr. Raimundo Aristiguieta

The impetus for the formation of this committee emanated from the Association of Venezuelan Writers (Asociación de Escritores Venezolanos) apparently on the suggestion of high officials of the Government with the view of holding a kind of public forum on the petroleum question and giving to the public at large a feeling of responsibility in the decisions to be made and thus anticipate some of the discussions of the proposed new petroleum law which would inevitably take place in the Venezuelan Congress when it is called upon to deal with this matter, and thus shorten eventual discussion in that body.

Respectfully yours,

Frank P. Corrigan
  1. Not found in Department files.
  2. Enclosures not printed.
  3. Not printed.