In 1917-18 the exports of the "Pastoral Zone" were:

In 1919 it was estimated that $20,000,000 were invested in stock-raising and pastures. Since that time there has been a great increase and it is safe to estimate that now the sum is nearer $30,000,000.

Topographically Venezuela may be divided into three regions:

1. The mountain area of the north and northwest.

2. The Orinoco Basin, with its spacious "llanos" (plains).

3. The Guiana Highlands.

It is the second region, called "The Pastoral Zone," in which we are most interested. The other two concern us only in two respects: as a source of water supply, and as a hindrance to easy transportation.

"The Pastoral Zone" covers 300,000 square kilometers (187,500 square miles), and extends from East to West, from Barrancas, on the vertex of the Orinoco delta, to the plains of Sarare on the Colombian frontier; and from South to North from the Vichada River to the mountains of El Pao in the State of Carabobo. It includes the states of Portuguesa, Zamora, Cojedes, Apure, GuÁrico, AnzoÁtequi, Monagoas, BolÍvar and part of the other neighboring states.

This entire region is most admirably suited for the raising of cattle. All year round there is an abundance of green grass and the cattle do not need much care. Here exists one of the finest natural pastures of the world, capable of supporting, with the use of modern methods, 50,000,000 head of cattle, twenty-five times the number now existing.

There are two seasons—wet and dry. During the rainy season, from June to October, the cattle feed in the highlands and mesas, which are not subject to inundation. From January to May, the dry season, they feed in the lowlands, which always retain a natural dampness and abundance of grass.

The climate of this zone is slightly warmer than that of the plains of Texas, and the dampness of the lowlands results in a much greater growth of vegetation suitable for cattle.

Throughout this region are scattered the cattle farms of the country, in most of which the primitive methods of cattle raising are still followed. The "llaneros," as the inhabitants of the plains are called, have not yet commenced to utilize the modern methods for breeding or raising cattle. The cattle run almost wild and considerable loss results from the lack of proper care. The milk is obtained almost entirely by the calf, and thus another great source of income is lost. This accounts for the importation of $400,000 worth of butter annually.

Each year the cattle over three years old are separated from the herd and slaughtered, although the slaughter of cows is prohibited, and General GÓmez has absolute control over the slaughter of beef for home consumption. Then, until the next year, the cattle are again allowed to run wild and at will.

The reason for this apparent carelessness is the regrettable lack of sufficient labor to care for the herds. This is also the main reason for loss by disease and drought.

The Orinoco River, 1500 miles long, and 1900 miles long if measured by its Guaviare branch, lies entirely within Venezuela, and drains this great cattle section. It has 436 tributaries, and plays an important part in the transportation of cattle. Here lies the remedy for drought. No steps have yet been taken for the proper storage of water for emergency use; with the installation of water storing facilities the drought loss may be practically eliminated. The screw-worm of the kind existing on our Texas ranches is here in evidence and loss undoubtedly results from this source.

Malarial fever at times works havoc in various sections of the "llanos." Though it may be said that the effects of this disease are greatly exaggerated it is true that the disregard of the laws of hygiene is responsible for the wide prevalence of this disease. It is the supine ignorance of a portion of the half-savage people who inhabit the plains, which allows the disease to gain dangerous headway. These people live and eat in primitive fashion, drinking muddy water, eating badly cooked roots and beef, without salt, sleeping in the open nearly naked, and consuming at every opportunity huge quantities of coffee and spiritous liquors (aguardiente), thus becoming predisposed to end as victims of the dread disease. With the adoption of sanitary methods to combat the fever, it may be wiped out upon the plains, as is now happening in some of the better ranches where the workmen observe the elementary laws of hygiene.

Considering Venezuela's natural advantages and the handsome profits even now realized under the loose methods of breeding followed, it is certain that Venezuela is destined to be primarily a cattle country. "If, notwithstanding the unprogressive methods followed in the breeding of cattle, and despite the lack of care on the part of the 'llanero' in the selection of good males, resulting in a large percentage of weak calves, which, on reaching puberty, give little milk and little beef, it still appears that breeding is the most profitable industry in the country, it can well be imagined how the profits will increase when the Venezuelan breeder puts into full operation the modern improved methods for breeding, such as the selection and crossing of good breeds, the introduction of modern methods of sanitation, and the selection and improvement of the pastures for fattening and the production of milk." (Director of Experimental Station of Agriculture, Dr. MartÍnez Mendoza).

Until very recently, a decided lack of adequate transportation facilities prevented the development of the industry. Death of stock and loss of healthy condition when transported by the shaky mountain railways decreased the profits of the cattle raisers. Lately, 1,800 miles of motor roads were built under the direction of General GÓmez, which afford an outlet for the products of the "llanos." Their construction means the unification of the country and its development. Probably no one factor has been of such prime importance to the nation as this great engineering feat.

Still, it must be acknowledged that these roads are not sufficient and that there is still a lack of transportation facilities. The one saving factor in the situation is the Orinoco and its branches.

In the past very little attention has been given to the systematic crossing of breeds. Of late, several prominent cattle raisers, aided by General GÓmez, have begun scientifically to better the breeds of animals by the importation of fine foreign stock. Thus, the Zebu cattle has been in the country for some time. This type excels the native cattle in weight, but is very fierce and wild.

The milk cows are now being selected with great care and good results are being obtained from crossing them with native stock. Dutch, English, Swiss, German and American cows are kept in several up-to-date establishments, where the raisers are beginning to overcome the difficulties of acclimatizing the foreign breeds, and a high average in the production of milk is resulting.

At "La Rinconada," an establishment very near Caracas, the pure breed "Holstein Friesian" is found and the specimens are sold to cattle-men of the interior, showing a commendable tendency on their part to improve their stock. I have visited this establishment and may say that great diligence is exercised in the care of these cattle.

Although the principal income from cattle accrues, of course, from the slaughter of beef and sale of hides, there is another great source of income,—the production of "cincho," cheese, for home consumption. Cattle on the hoof now command a price of Bs.25 ($5.00) per "arroba" (25 pounds); the price of cheese is Bs.600 ($125.00) per 100 kilos. Because of the recent advances in the prices of cattle and cheese, the industry has obtained a new impetus as is evinced by the huge investment of foreign capital (mainly English) during recent years.

The Venezuelan government is doing its best to encourage foreign capital to invest in the industry. To stimulate production breeding animals, barbed wire, pumps and well-boring machinery may be imported at a very low rate of duty.

Immigration is being encouraged by the payment of transportation, passport, and incidental expenses, and by grants of land. In spite of this, immigration however is very small, being offset by emigration, and the high death rate that results from unsanitary conditions keeps the population figures of the country practically stationary.

There are laws in operation fixing the price and amount of land to be bought by any one person. One may buy 6,000 acres of first-class grazing land and 10,250 acres of second-class grazing land at very low prices. He must improve the land and have at least ten persons on every 250 acres, in the case of land grants, though I have been unable to ascertain whether this also applies to bought land.

To buy land one first applies, in writing, to the governor of the state in which the land is situated. If no objection is found to the sale, a land commission surveys, classifies, and values the land. The application then goes to the Minister of Fomento, who, if he approves it, issues a deed, upon payment of purchase price in bonds of National International Consolidated Debt, or the equivalent at the current rates. The deed must then be properly recorded.

The government is encouraging the industry by the imposition of very high protective duties. An example may be found in the boot and shoe industry which is protected by a tariff, based in 1918 upon gross weight and, including surtaxes, amounting to $274.10 per 100 pounds.

Of late, more and more impetus has been given to the establishment of canning, tanning and meat packing plants. Yet, there is only one packing house in the country. The "Venezuelan Meat and Products Co., Ltd.," an English company, with a plant at Puerto Cabello, has practically a monopoly of the exportation of frozen and chilled meats and of "tasajo" (jerked beef). The capacity is 300 head of cattle per day and the chief market is Europe. The same company has invested large sums in choice cattle lands near the site of the factory, and since its infancy has shown a consistent tendency to steady expansion.

There are two sizable tanneries at Maracaibo which supply the local demand for coarse leather. Uppers for shoes and finer grades are imported from the United States. Other smaller tanneries are located at Caracas, Valencia and La Guaira.

At Barrancas is located a salt-meat plant which is expected shortly to handle 25,000 head of cattle per year in the production of gelatine, meat extracts, fertilizer and salt meats. The very high price of salt in Venezuela is a severe drawback to the salt-meat industry.

RÍo Chico is a manufacturing town, making soap and candles and passing the hides to La Guaira for tanning and export.

The Dairy and Canning plant at Maracay is entitled to special mention. It owes its success to the support given by General GÓmez, its largest stockholder. It is ideally located, being surrounded by some of the most modern cattle ranches of the country, and has the advantages of nearby and easily accessible markets. The company also owns its own cows, and hogs which are supported by the waste and refuse of the factory.

The building is a specially constructed one, fitted out with a refrigerating plant and modern machinery of American and German make. Even the cans used are made within this building. Two kinds of butter are made here, one with salt and the other without salt. This is the best butter made in the country. Canned sterilized milk and cream are also produced, as is also a high grade of cheese. The capacity is 400 pounds of butter and 100 pounds of cheese per day.

Immediately upon entrance to this factory, one is impressed by the extreme cleanliness and efficiency existing and by the up-to-date methods used.

Finally, we may consider the advisability of investing capital in the cattle industry in Venezuela, as there is no question that real opportunity for profit exists here.

Venezuela is superior to Argentina, the other great cattle country of South America, in every respect except one, that of the amount of pasture land. This handicap, however, is not very important considering that Venezuela is not producing to capacity by 96 per cent and that it will be a very long time before it becomes necessary to look for means of extending the present feeding grounds. When that time comes, alfalfa may be planted on the mesas and highlands not bearing a natural growth of grass. It has been demonstrated that both alfalfa and elephant grass will grow in almost all sections of Venezuela.

Venezuela is a week nearer to Europe than Argentina. The vast importance of this fact is self-evident, for it means that Venezuela will always be called upon up to the limit of her production.

Land is cheap. A square league of meadow land may be had for $80.00. The best pasture land in a good location may be bought for $800.00 per square league. Land is abundant too, and but a small percentage is now in use.

Guanta is a port of the Carribean, in the State of BermÚdez, 12 miles east of Barcelona, with railroad connections. It has a protected harbor, with an easy and safe entrance 1998 feet wide, secure anchorage for large vessels, and a good wharf. Behind Guanto lies fine cattle land, a significant fact when it is recalled how very important is the shipment of live cattle.

Here would be an ideal spot for an American packing house, and the country behind would seem well adapted for the investment of capital in cattle-raising.

The regions just below Ciudad BolÍvar would also be a good location for an American enterprise. Stock may be very cheaply bought and brought down the Apure and Orinoco rivers to the plain below the city, where they could be fattened and slaughtered. There is easy access to the Carribean and Atlantic, to Trinidad and other markets.

On the other hand, we may say that the future of the cattle industry depends primarily upon the political situation of the country. It is this factor which has retarded the industry in the past and which is now responsible for the hesitancy on the part of foreign capital. The profit to be derived from any industry here depends upon a firm, stable government. Under such a government the profits to be derived from cattle will be immense. If political wars again break out, however, heavy losses are almost inevitable.

The present administration has done more for the development of the country than any previous government and its attitude towards foreign capital is favorable. It has, furthermore, been firm and stable.

Still, beneath it all, one detects signs of a strange unrest. The observant traveler hears murmurings every day. There is no denying the fact that the present government is a military one. Yet, I believe that the intelligent and influential class of the nation realize the good it has done and feel that the country must never return to the old conditions of ceaseless revolution. I am of the opinion that Venezuela has fairly embarked upon a program of development and prosperity.

Another factor to be seriously considered is the aforementioned shortage of labor. Yet, in spite of this, labor is very cheap. The government has a favorable attitude toward grants for colonization purposes, and in this lies a golden opportunity for a resourceful man with capital to bring his own laborers here and realize great profits in the venture.

If, upon more detailed examination of the conditions than I have been able to institute during my limited stay, it is still the desire of Americans to invest here, such action must be taken soon. The unprecedented success of the packing plant at Puerto Cabello has encouraged other Britons to invest. The company itself is acquiring the best lands about the site of the plant and interested investors are buying the desirable land in other sections. The American who intends to invest should do so immediately or he will find that the choice cattle lands and the best locations for packing houses will be in the hands of the English. Prompt action is imperative.

Willard C. Frazee.

Before discussing the minerals of Venezuela we shall touch briefly on some of the predominant features of the topographical formation of the country, without, however, entering on a detailed description of the geologic aspects of the rocks and soil. The location of minerals is directly connected with geologic formations, and the findings of geologists should be consulted before we can take up the more intimate study of mineral ores for commercial and industrial purposes.

It has been stated that one of the most ancient land surfaces in the world is the Guayana Highlands, and from observation made on this point they may be said to offer many striking analogies to the western highlands of Scotland, which furnish such frequent opportunities for exalted poetical allusion in the writings of Robert Burns. The great, elevated platform, from which rises the peaks and mountain chains of Guayana appears everywhere to be composed of rock which during the process of integration and disintegration has preserved traces of a primitive land of long ages ago when living organisms, if there were any, had not reached such a stage in their development as to leave relics in the deposits of the time. The mountains are thought to be composed of similar rocks, gneisses, hornblendes, schists, and granite, all containing evidence of great antiquity in point of geologic time. This Guayana complex, as it is called, has been considered by geologists as more or less equivalent in age to the Lewisian gneiss of Scotland and therefore one of the oldest members of the Archaean system.

While in all probability northern Venezuela has no rocks quite as ancient as those of Guayana, the geological history of this part of the country has been much more eventful and the number of earthquakes suggest that even now the form of the earth's crust in this region is undergoing comparatively violent changes. As is commonly the case, to find the oldest rocks one must search the hills. The masses of gneiss, silvery mica, schist, marble, etc., which form the highest part of much of the mountain region, were first studied by Mr. G. P. Wall in the Caribbean Hills in 1860 and named by him the Caribbean Series. The silvery mica flakes of this region are sometimes mistaken for the precious metal and many valueless specimens have been offered for sale as silver to credulous fortune hunters.

The mineral wealth of Venezuela although not as extensively developed as conditions would seem to invite, is without doubt of very great extent, especially in the states of BolÍvar and Yuruari. The principal mineral resources consist of gold, silver, copper, iron, zinc, lead, quicksilver, asphalt, petroleum, coal, sulphur and precious stones. There exists hardly any known mineral product that is not found in some part of the vast territory of Venezuela.

GOLD

The yellow lure that drew the early European venturers to the West is still one of the principal sources of wealth in Venezuela. Since the Conquest gold has always been one of the chief attractions offered by Venezuela to prospectors and capitalists. In 1904 Venezuela occupied fifth place in the production of gold in the American Republics and it is acknowledged that the evidence obtained in the various expeditions in search of this precious metal indicates that gold exists in greater quantities than statistics tend to show. The greatest output is in the region of Yuruari, which includes "El Callao." Lack of experience and carelessness of management on the part of early companies have led to the shutting down of mine after mine when once the accessible ore of the vein was exhausted, or lost by faulting. Among the earlier mines, the Callao was perhaps the most famous, though at all times the mining industry in this region has been hampered by the cost and difficulty of transportation, a drawback only to be removed through the construction by the government either of macadamized roads or railroads, at the outset preferably the former. There are rich veins in all the mountainous lands between the Yaracuy River and the cities of San Felipe, Nirgua, and Barcelona. Near CarÚpano large mines are being exploited by New York capitalists, who have been able to extract seven ounces per ton out of the ore mined; besides these there are also mines in the vicinity which contain rich deposits of silver, copper and lead.

The value, in average years, of Venezuelan gold production since 1896 has been:

COPPER

Copper ores are fairly common in the northern cordilleras, and likewise in the mines of Aroa in Yaracuy, 112 kilometers from Puerto Cabello. Here the pyrite veins occur in the Capache Limestone not far from the point where it has been crossed by a mass of granite. Copper ores are believed to exist in many other places in the mountains of Venezuela, especially in the mines of Seborneo and Bailadores. A rich deposit has recently been opened up near Pao in the northern part of the state of Cojedes. But the development of metals has been so retarded during the past year, that the South American Copper Syndicate Ltd., one of the principal concerns, has practically suspended operations and very little production has been realized since March, 1919. The normal output could not be maintained after the termination of the European war, which accounts for the disproportion observable between the years 1918-1919 in the production of gold and copper. In 1919, 653,456.77 grams of gold were mined as against 712,007.08 in 1918. In 1919, 2,090,290 kilograms of copper were produced as against 29,708,195 kilograms in 1918.

IRON

Many signs of hematite and magnetic iron occur in the coast of the Cordilleras in the mountains above Cora, Barinas, Barcelona, CumanÁ and in many spots in the mountains of Parima; the most valuable ore is found near the river Imataca, a tributary of the lower Orinoco, eighty-six kilometers from the mouth. At one point the iron is only 487 meters from the river. There are inexhaustible deposits of magnetic mineral which give 80% pure metal, easily accessible and presenting little if any difficulty in transportation. The veins are said to be numerous and extensive. In 1901 seven hundred tons were shipped to Baltimore where the ore was examined and described as magnetic with 60-70% of iron content. The main deposit is known as Imatoca, but there are several other well known deposits in close proximity such as El Salvador, Nicaragua, La Magdalena, El Encantado, Costa Rica and Yucatan.

Every natural advantage is afforded in the working and developing of iron ore deposits in Venezuela. In a metallic mine, value depends more upon its fertility and less upon its situation.

It is otherwise with coal. The value of a coal mine to a proprietor frequently depends as much upon its situation as upon its fertility; hence we may deduce the conclusion that the iron mines of Venezuela being both fertile and commercially well situated, should have a compelling interest for foreign capital, especially American capital, in its search for profitable fields of investment.

COAL

In many parts of the Caribbean Hills, the Segovia Highlands, the Andes as well as Maracaibo and the Coco Lowlands, deposits of coal exist, but have only been worked in a perfunctory manner in scattered regions. The coal mines west of Maracaibo have produced the best specimens, and seams of a similar nature have been opened near Coco by shallow workings. The most extensive coal mines are those of Naricual some fifteen miles east of Barcelona, where the partially explored area has revealed some hundred deposits of coal of regular formations measuring from 10 centimeters to 2 meters in thickness.

Coal, however, is not one of the great revenue paying staples, due to the fact that the mines are located in a country thinly inhabited, and without good roads or facilities for transportation by water.

SALT

Salt is perhaps the most profitable mineral for the government, due to the fact that it is a government monopoly. The State allows only certain specified companies to mine or otherwise obtain this staple. One of the richest deposits is the salina of Aroga, discovered by Nino in 1499. An extensive surface of pure sodium chloride is found here, which yields large annual incomes to the government. Salt is found in almost all regions of Venezuela as follows:

The states of TÁchira, Trujillo and MÉrida use great quantities of yellow salt, white salt only being consumed in the regions near the salinas of Zulia. From 1874 to 1904 this commodity yielded $2,753,761.44 in revenue to the government.

In 1918 the extent of the mining industry was so broad that a special directory service was suggested by the Minister of Fomento, separate from the present Union of Mines, Government Lands, Industry and Commerce. Mining concessions in 1917 included 9 in iron, 14 in gold, 1 in copper and iron, 8 in copper and 1 in mica. In 1918, 9 were granted in gold, and 5 in iron. The production totalled:

The general mining output of Venezuela in 1918 exhibited the following characteristics:

James J. O'Neil.

[The writer of this report is much indebted to Mr. W. T. S. Doyle, a graduate of Georgetown University, now manager of the Caribbean Petroleum Company in Venezuela.]

The purpose of this report is to present a complete, yet concise, discussion of the petroleum and asphalt situation in Venezuela. The first part is devoted to petroleum and the second part to asphalt.

SeÑor N. Veloz Goiticoa, a prominent Venezuelan, says, "There is scarcely a mining product known that can not be found in some part of the vast expanse of Venezuela." This statement, intended to apply to all minerals, is particularly true of petroleum and asphalt in respect of which the great area of Venezuela has as yet hardly been scratched.

PETROLEUM

Some of the natives of Venezuela knew of the properties of petroleum as far back as 1856, and used the oil in lamps. Deposits were later discovered in the interior of the country, particularly near the banks of the Venezuelan lake of Maracaibo. In the year 1883 the Government granted the first concession to a local organization, called the "Compania Petroleo del TÁchira," which installed a hand-drilled well in the state of TÁchira; this plant is in operation at the present day, although old-fashioned methods are being used to obtain the oil from the ground, consequently the production is negligible. Immediately after this discovery several concessions were granted to various interests, but they lapsed because no work was started on them. No further interest was shown in petroleum until 1893, when a general mining law was enacted which included provisions for petroleum and asphalt. This law was in force until 1904 when a new code was enacted, containing special legislation relating to petroleum and asphalt. The main provisions were that claims could no longer be taken up by denouncement proceedings[16] but only under a special contract entered into with the Federal Executive, the President.

In 1905, during Castro's administration, the mining law of 1904 was remodeled. The act was very short,—containing not more than 13 articles,—but it placed in the hands of the Executive a great deal of power that he had heretofore not possessed.

All dealings regarding concessions were to be negotiated directly with him. In the year 1906, pursuant to authority delegated to the Federal Executive, an Executive decree was formulated which provided for the whole procedure under which concessions were to be granted. Under this, important initial steps were taken and many concessions granted. Four of these concessions are in force to-day; namely:

1. The ColÓn District (ColÓn Development Co., Ltd.)

2. The Maracaibo and BolÍvar District (Venezuelan Oil Concessions, Ltd.)

3. Buchivacoa District (British Controlled Oilfields, Ltd.)

4. Silva and Zamora District (North Venezuelan Petroleum Co., Ltd.)

Under the new code of 1909-1910, several new contracts were made. A roving concession was granted to John Allen Tregelles, an Englishman, to explore the whole northern part of Venezuela. He located and started to drill a well near CumanÁ, but without result. The rest of his concession lapsed, after a period of two years, through non-performance. The next important concession under the code of 1909-1910 was granted to the BermÚdez Company which obtained a small area, not covered by the Tregelles concession; their efforts were rewarded with more success. The Pauji Company, a local organization, also obtained a concession for a small area, but their efforts met with but small success.

On the second of January, 1912, the Caribbean Petroleum Company started the first solid work in the exploitation of the petroleum fields. They obtained permission to explore over 1,000 different sections and was the first company to achieve substantial success. Drilling was begun in 1914, and three wells in Mene Grande, state of Zulia, and one in Perija turned out to be successful. In the same year the "Venezuelan Oil Concessions, Ltd.," a British corporation, drilled a successful well near Cabimas, and the "ColÓn Development Company," also a British concern, struck oil near the RÍo de Oro.

The law of 1915 showed that the government was exhibiting a tendency to exert a controlling influence, much more than before, over the various oil fields. It was found no longer possible to obtain the enormous concessions that had heretofore been granted.

In 1918 still another new law was enacted. Just about this time greater interest was being displayed in Venezuelan petroleum, a condition brought about through the operation of the economic law of supply and demand. The European War, and the failure of some of the most important Mexican fields had a great deal to do with the shortage. The world naturally looked for new petroleum fields, and Venezuela seemed to be among the most promising prospects. Pursuant to the 1918 law, an Executive Decree was formulated on October 9, 1918, establishing the conditions required to explore and exploit petroleum, granting to prospectors all the necessary facilities, and, in a word, securing for Venezuela the efficient and profitable exploitation of her valuable deposits. In pursuance to said decree, the Fomento Department having passed several resolutions, opened for bids the zones which were free in the states of Zulia, TÁchira, Trujillo, MÉrida, FalcÓn, and Sucre.

In the spring of 1919 sixty-four contracts were made with the government by various interests, as follows:

1. West India Oil Company (Branch of Standard Oil Company.)

2. The Sun Oil Company, with subsidiaries as follows:

• a. Venezuela Oil Fields, Lt'd.
• b. Venezuelan Sun, Lt'd.
• c. Sucre Oil Fields, Lt'd.
• d. Trujillo Oil Fields, Lt'd.
• e. Merida Oil Fields, Lt'd.

3. Maracaibo Oil Exploitation Company with subsidiaries as follows:

• a. Mara Exploitation Company.
• b. Miranda Exploitation Company.
• c. Perija Exploitation Company.
• d. Paez Exploitation Company.

It will be noted that under both the Sun Oil Company and the Maracaibo Oil Exploitation Company there are various subsidiaries. The reason for these combinations are, that under the law of 1918, no one company or individual may control more than 80,000 hectares of land for exploration or more than 40,000 for exploitation (1 hectare = 2.471 acres).

In the spring of the year 1920 about 140 concessions were granted under the law of 1918, and the prospective fields were greatly extended. Whereas in 1918 they were restricted to the western part of Venezuela, by 1920 they had been extended to several sections of eastern Venezuela. In the western part of the country, at the present time, the whole Maracaibo Basin is covered with concessions, and most of these are being exploited by American capital.

At the present day there are five companies of importance operating in Venezuela. The Caribbean Petroleum company, a subsidiary of the General Asphalt Company, has completed eight wells, all of them producing, the combined capacity of which is about 6,000 barrels per day, and the average depth of the wells 1,200 feet. All these wells are located in Mene Grande, in the state of Zulia, east of the lake of Maracaibo. This company is now drilling two wells, also in the State of Zulia; they have already drilled nine dry holes in the State of Zulia, west of Lake Maracaibo. The Caribbean Petroleum possesses the only refinery in Venezuela, located at San Lorenzo, on Lake Maracaibo, with a capacity of about 1,200 barrels per day, intended for local consumption in Venezuela. A pipe line 10 miles long connects the wells at Mene Grande with the refinery at San Lorenzo. The large refinery at CuraÇao, D. W. I., completed two years ago, is also refining for the Caribbean Petroleum Company, the crude oil being transported up Lake Maracaibo, and through the port of Maracaibo, in barges.

The ColÓn Development Company, a British Corporation, has completed four wells, two of 900 feet, one of 1,200 feet, and one of 1,600 feet and is now drilling a fifth well, all in the District of ColÓn, state of Zulia, south and southwest of Lake Maracaibo. Their four wells are believed to have a capacity of from 400 to 500 barrels a day. The British Controlled Oil Fields, Ltd., a British Corporation, is drilling a well in the State of FalcÓn, 30 miles east of the city of Maracaibo, and about 10 miles from the Caribbean seacoast. The Maracaibo Oil Company, an American corporation, organized in the autumn of 1919, has made four locations, all in the State of Zulia, with the principal locations in the Parija district. Camps have been established, and drilling material is arriving at the port of Maracaibo. The BermÚdez Company, a subsidiary of the General Asphalt Company, has been drilling for petroleum near Guanoco, for the past 23 months. It is understood that after drilling 3,600 feet, three-fourths of which was in black shale, the work was abandoned.

The petroleum now being produced in Venezuela is of an inferior quality. The wells at Mene Grande, controlled by the Caribbean Petroleum Company, produce petroleum which has a specific gravity of 960, with a heavy asphalt base, and contains about 15% light material, and 85% fuel.

The geographical situation of Venezuela makes particularly interesting the various petroleum enterprises which should contribute considerably to the economic development and prosperity of the country. Furthermore, the Panama Canal is not far distant, and vessels that cross through it,—and they are daily increasing in number,—will be able to utilize easily the petroleum of the country.

As other industries have suffered, so has the petroleum industry been seriously handicapped in Venezuela by the lack of adequate transportation facilities. There are undoubtedly many rich fields of petroleum in the interior of the country, but it is clear that they are worthless without adequate means of transporting the product to the seaports or centers of consumption. The Caribbean Petroleum Company has had considerable difficulty in transporting its product to CuraÇao from San Lorenzo, a difficulty due to the fact that at the narrow neck of Lake Maracaibo, there is a bar with only 12 feet of water above it. It is obviously impossible for ships of any great size to come over the bar and into the lake. All the petroleum that is shipped from the Maracaibo district at the present time is handled by shallow-draft barges, but with sufficient capital, and some good engineering, this difficulty could undoubtedly be overcome, and it would then be possible for tank steamers to come into the lake and receive cargoes of crude petroleum from the various producing points. The principal port in this section is Maracaibo, in the state of Zulia, and all petroleum for export is handled through it.

There are numerous opportunities offered for foreign capital in Venezuela in the exploitation of petroleum. As noted before, the surface has as yet only been scratched, and indications to-day point out that there are many possibilities as yet untouched.[17] Geologists say that there are signs on all sides of the existence of petroleum, but just where the big producing fields of the future will be located is difficult to ascertain at the present time.

On the 26th of June, 1920, a new law pertaining to petroleum and asphalt was enacted. A full copy of the act, in Spanish, is presented with this report. (On file in School of Foreign Service.)

The following table gives the names of the principal petroleum and asphalt companies operating in Venezuela, with capital invested:

There are in addition several small local companies operating in Venezuela; these together with the above companies represent probably a total investment of Bs.50,000,000 ($10,000,000) in petroleum and asphalt.

It will be interesting to note at this point that during the year 1919 over Bs.2,000,000 were paid to the Venezuelan Government by North American corporations for the right to exploit concessions.

The following table shows amounts (in metric tons) of petroleum exploited and exported during the last three years:

It will be noted that production and exportation greatly increased in 1918 over 1917. In 1919, production was decreased and exportation greatly decreased in proportion to exportation of 1918. In 1918, almost half of the production was exported while in 1919 the amount exported was about one-twenty-second part of the amount produced. This was due to the fact that a greater amount was being consumed locally in Venezuela.

ASPHALT

The age of asphalt is at hand. This important mineral already has many applications in our lives, and with a greater knowledge of its possibilities, its utility will be largely extended. Asphalt is very old. It was the material that welded together the stones of the Tower of Babel; it was found on the shores of the Red Sea, and the Egyptians used it in the preservation of their dead. The etymology of the word asphalt ("a" privitive and sfa???, to slip) indicates its cementatory properties, and the actual ingredients of the substance are common scientific knowledge. Asphalt, asphaltum, bitumen, maltha or mineral pitchmene,—different names for the same substance,—is an amorphous, pitch-like material, black or brownish in color, and lustrous, being composed of various hydrocarbons, whose proportions vary widely according to the locality from which the material is obtained. It is a product of the decay of vegetable matter, and commonly,—perhaps always,—occurs in connection with rocks containing bituminous matter. It melts at a heat of from 195 degrees to 212 degrees Fahrenheit, and burns with a bright, smoky flame. While the pitch-lake of Trinidad, a surface a mile and a half across of pure asphaltum, is perhaps the most remarkable occurrence of this mineral in nature, still the lake of BermÚdez, which covers 1,000 acres in the state of Sucre, Venezuela, is fast equaling the former in commercial importance. Asphalt is also found in the Pedernales district, in the state of Monagas, as well as on the shores of Lake Maracaibo. As an indication of the value of Venezuelan bitumen, we may cite the fact that this special variety is used to protect the tunnels of the New York subway from moisture.

The fact that Venezuela has sent 43,000 tons of asphalt to the United States in one year, is an indication of the future wealth to be derived from the systematic exploitation of asphaltum there.

At the present writing there is but one company producing asphalt,—The New York and BermÚdez Company, a subsidiary of the General Asphalt Trust. This company is working a pitch lake at a point near Guanoco, in the state of Sucre, adjacent to the Gulf of Paria, in the extreme northeastern part of Venezuela. The concession held by this company is known as the Hamilton Concession,—obtained in 1886 for a duration of 99 years, and including about 960 hectares. The grade of asphalt is excellent, and in many respects better than the Trinidad variety, as it tests at a grade of 98% asphalt and 2% water and waste. The pitch lake is only 7 miles from the Rio San Juan and the company is particularly fortunate because the deep water in the river permits ocean steamers to come alongside the company's docks. A railroad, controlled by the New York and BermÚdez Company, is in operation between the lake and the docks, and over this all asphalt produced in this region is transported. The transportation situation here may be contrasted with that in the Maracaibo district in western Venezuela, where transportation conditions are none too good.

The South American Asphalt company of Philadelphia has obtained an asphalt concession in the vicinity of Mene Grande, near the eastern shore of Lake Maracaibo, but as yet no results have been obtained.

The following table shows the capital of the New York and BermÚdez Company, and the amount of asphalt exploited and exported for the last three years:

Official Trade Statistics of Finance Department for 1918-1919 show that during budget year, Venezuela exported more than Bs.1,000,000 ($200,000 American gold) worth of asphalt.

The law of June 26, 1920, referred to in the last part of section one of this report, applies likewise to asphalt. The photographs attached show several phases of the petroleum industry in Venezuela and the accompanying map shows in a general way the petroleum and asphalt concessions and the areas of production.

William H. Johnson.

"In the primitive ages of commerce, article was exchanged for article without the use of money or credit. This was simple barter. As civilization progressed, a symbol of property—a common measure of value—was introduced to facilitate the exchange of property. This might be iron or any other article fixed by law or by consent, but it has generally been gold or silver. This certainly is a great advance beyond simple barter, but no greater than has been gained in modern times by proceeding from the use of money to the use of credit.

"Commercial credit is a creation of modern times and belongs in its highest perfection only to the most enlightened and best governed nations.

"Credit is the vital air of the system of modern commerce. It has done more—a thousand times more—to enrich nations than all the mines in the world. It has excited labor, stimulated manufacturers, pushed commerce over every sea, and brought every nation, every kingdom and every small tribe among the races of men to be known to all the rest.

"All bills of exchange, all notes running upon time as well as the paper circulation of the banks, belong to the system of commercial credit. They are parts of the one great whole. We should protect this system with increasing watchfulness, taking care, on the one hand, to give it full and fair play and, on the other, to guard it against dangerous excesses."

(Speech of Daniel Webster in U. S. Senate, March 18, 1834.)

These weighty words uttered by the great Webster, more than four-score years ago, indicate the importance of the functions of commercial credit, the red blood which flows through the veins of commerce. It is of vital importance, therefore, when studying the commerce and conditions of a country to consider, as we are about to do, the credit system.

CHECKS

The system used in Venezuela is the same universal check system common to the United States and European countries. Money is deposited in the usual manner on a checking account, in return for which bank credit is received, and the depositor thereafter has the right to direct the bank to pay to the order of a specified person any part of the capital therein deposited.

In regard to the period of time during which this method of payment has been employed in Venezuela it is difficult to secure definite information, although local bankers say that its history is very short. The period of real use is not longer than the last decade.

Considering the proportion of checks devoted to financing commerce, it is necessary to divide the latter into two main parts. First: commerce with the interior of the country, in the life of which checks are practically unknown, all payments being made in gold or silver. Second: transactions of the wholesale merchants and the larger retail dealers of important cities, who make ready use of this efficient and easy method of payment.

Although no statistics have ever been collected showing the amount of checks used in Venezuela, the following reliable data was obtained:

An estimate was made in 1920 by the National City Bank of New York City, sucursal of Caracas, showing that about 75 per cent of the business handled by them was done through the medium of checks. It may be well to note at this point that this bank handles the business of American firms in that city together with other foreign companies who have dealings with the United States. Another estimate made by the Bank of Venezuela, taking the month of January, 1920 as an average, showed that about 50 per cent of the business transactions passing through their hands for that month was similarly completed. It may be observed that this bank is the largest and best recognized national bank in Venezuela.

From these two estimates we may draw the conclusion that the foreign branch banks handle more checks than the old established native banks of the country, due to the fact that foreign firms in Venezuela use a greater amount of checks than the native dealers. But since business with the interior of the country comprises about one-half the commerce of Venezuela, we should divide our estimates and conclude that between 25% and 37%, (31% mean average) is the proportion of checks used in the commerce of Venezuela.

The system of clearing these checks is the same as was formerly the custom of the United States, before the days of the clearing house. The banks of the interior are all branches of the four main banks of Venezuela. They handle very few checks but when occasion arises send them to the main offices for final settlement. Each day the banks gather their checks together and send them by messenger to the respective institutions on which they are drawn. In this manner the clearing takes place, currency being exchanged to settle balances. The size of the country and the proportion of checks used does not necessitate a clearing house.

LAWS REGARDING COMMERCIAL PAPER

Article No. 2 of the National Stamp Tax Law, drawn up by the Congress of the United States of Venezuela in conference assembled in the year 1915 decrees:

"Will be subject to a national tax of stamps, all documents or writings which relate to things, services, laws or legal proceedings, whose value is estimated or determined, that circulate within the interior of the Republic, or that are expedited for foreign use."

"This tax will be collected with the following tariff:

DRAFTS AND BILLS OF EXCHANGE

Drafts and Bills of Exchange used in Venezuela may be classified and considered with reference to the following headings: International Trade and Domestic Trade.

We shall first consider the drafts used in foreign exchange. In most countries they may be classified as "clean bills" of exchange, and "documentary bills," i.e. those accompanied by bills of lading (full sets), invoice copy and insurance certificates. But this is not so in Venezuela, as according to the Banking Law of 1919 all drafts on Venezuela, in order to be collectible must have documentary evidence attached. At the termination of the late war many anxious dealers in North America shipped goods to Venezuelan firms, as a rule forwarding a draft to a local consul or bank for collection, only to find that it was useless without documents attached. Hence, if the merchant to whom the goods were sent chose to be dishonest, he might obtain the goods from the docks and sell them, and not be held responsible by law. Although this has very seldom occurred, it is always a wise measure for the drawer of a draft on Venezuela to acquaint himself with the banking laws of that country.

Another noticeable matter of considerable importance is the difference between the drafts drawn on Venezuelan merchants by American houses and those drawn by European houses. It is a commonly understood and most regrettable fact that the time on drafts from the United States do not exceed ninety days, while those from European countries, especially England, will bear six months' time. This fact was brought to the attention of the writer by the Chamber of Commerce and by every representative of banks, both American and Venezuelan, with whom he consulted. The Republic has expressed its desire to maintain and increase the present trade with North America but it demands the same credit from Americans as is granted by European merchants. To-day we live in an age of credit, and Venezuela must have that credit in order to develop her commerce.

From the law quoted herein it will be seen that all drafts on Venezuela are subject to a graduated stamp tax ranging from .05 bolivares for drafts valued at 25 to 50 bolivares up to one bolivar for drafts valued at from 500 to 1,000 bolivares.

Foreign drafts in Venezuela are always drawn in duplicate (first of exchange and second of exchange), each being forwarded by different steamers to insure safety, one becoming void when the other has been paid. Drafts may be drawn to the order of a specific payee, usually the collecting bank, or they may be drawn to the order of the drawers or shippers.

The discounting of drafts and other bills of exchange has developed greatly within the last two years. Commercial liquidation has been made possible by the buying and selling of drafts in all parts of the country at the same price. Funds have been transmitted by telegraph to places where the sending of specie would be extremely costly. Commissions range from ¼% of 1% to 1.

Recently there has been established by private enterprise that type of bills of exchange bearing 8% annual interest, or one per cent less than the current interest, at which wholesale dealers discount the invoices of their sales in the interior. This important branch of banking has been in operation for about two years and it has been noticed that the system, in spite of the short time in existence, has gained firm foothold and been generally adopted. The operations which have been carried on by the Bank of Venezuela in this branch show the following results:[19]

As may be seen from these figures the results have been satisfactory, and the system has also produced still greater results in the development of the commerce of the Republic.

As is natural, the foreign banks recently founded, have also discounted these acceptances of commerce and it is hoped that with their great influence and the cooperation of the banks of Venezuela, this method will continue to grow in use.

The handling of drafts is at the present day perhaps the most important dealing in commercial paper observable in the banks of the country.

TRADE ACCEPTANCES

As expressed in the circular of Feb. 8, 1915, it is the opinion of the Federal Reserve Board that: "the acceptance is still in its infancy in the field of American banking. How rapid its development will be can not be foretold but the development itself is certain."

The Federal Reserve Board in its circular of July 15, 1915, defines the term "trade acceptance": "A bill of exchange—drawn to order, having a definite maturity and payable in dollars in the United States, the obligation to pay which has been accepted by an acknowledgment, written or stamped, and signed, across the face of the instrument, by the company or firm, corporation or person upon whom it is drawn; such agreement to be to the effect that the acceptor will pay at maturity, according to its tenor, such draft or bill without qualifying conditions." An acceptance, therefore, may rightly be called a time bill of exchange which passes from hand to hand like money.

This acceptance differs from what is commonly termed such in Venezuela and also from drafts. The commercial document with bill of lading attached commonly called an acceptance in that country, may be drawn at sight, or may be made payable at a certain time after sight. This enables the title of the goods covered by the bill of lading to remain vested in the seller, the drawer of the draft, or the person to whom the bill of lading may be endorsed, until the draft is paid. Another form not in common use in Venezuela is the sight draft for collection, which is drawn on buyers previously sold on open account. It is generally used as a means of collection when ordinary means have failed to produce payment. The "trade acceptance," on the other hand, is an acknowledgment of obligation and a promise to pay it on a certain date.

Some objection has been made to trade acceptances in this country on the ground that the bidding of the banks in the market of discount, would deprive commercial houses of selling their own single-name paper. It has been proved, however, that the sale of the aforesaid paper has in no way been disturbed by the introduction of acceptances. All banks worthy of consideration have as a rule surplus capital to invest and this is usually attracted by the commercial paper of responsible houses.

The use of trade acceptances, therefore, not only does not impede but tends to increase the banking facilities of merchants.

This most important of all commercial papers has yet to be adopted in Venezuela. The first acceptances cashed in that country were handled by the local branch of the National City Bank of New York. These acceptances—twenty in number—were cashed during the last week of July, 1920. The foundation has thus been laid and it is expected that their use will grow in such numbers that they will eventually surpass all other instruments of commercial credit employed in the country.

The present need of the Venezuelan public, of the bankers and of the nation as a whole is the development of the great natural resources of the land. This, obviously, is an enormous undertaking and requires from all the nations with whom Venezuela has business dealings, especially from the United States, credit. And by what means can that credit be more satisfactorily granted than in that form wherein each party reaps a real benefit, by the instrument known as "trade acceptance"?

Nelson Hopkins.

The importance of commercial travelers not only as representatives of business concerns, but also as types of a given nationality, has at last been realized and they are being treated as important factors not to be overlooked by corporations or the nation in the formulation of trade policies. They are the spokesmen of their countries and from their lips and by their actions a nation is sometimes judged not only from a business but also from a political standpoint.

The importance of this factor was realized but by few nations before the war, and the nations fortunate enough to appreciate their importance readily provided means for improving their service. The United States of Venezuela and the United States of America were among the nations which had been slow to realize the benefits that could be reaped from commercial travelers for their respective countries. However, once they had realized the necessity, Venezuela and the United States signed a treaty, effective July 3, 1920, which greatly benefited the travelers of all countries and also testified to the influence of their service.

The convention also impressed upon the business houses in both countries, and demonstrated the fact, that commercial travelers are the criterion by which concerns and countries are judged in foreign countries. Representation in overseas commerce requires men of skill and character and without these two qualities no traveler can ever succeed.

Venezuela is one of the best fields in South America for commercial travelers, as the nation is very rich and has a high standing in the financial world. The natural resources are innumerable and rich, as can be readily realized from the number of countries competing for investments and monopolies at the present time. The large amount of money in circulation and the importance of Venezuelan markets in the export trade has encouraged export houses throughout the world to send representatives to study conditions and eventually place their products in that market.

In order for commercial travelers to rightfully represent their principals they must be fully acquainted with climatic, political and legal conditions in Venezuela. The legal requirements for commercial travelers are few and by far less stringent than the laws of other Latin-American countries. Commercial travelers coming to Venezuela are not required by law to present any document other than their passports. No power of attorney is necessary, but it is advisable to have it in case it should be required in business transactions. A letter from the home office of the traveler or from some well established exporting or importing house is not necessary but advisable as a medium of introduction to the prospective buyers.

The recent convention signed between the United States of Venezuela and the United States of America has slightly changed previous customs. The object of the convention was that both countries might encourage commercial relations and increase business by facilitating the activities of commercial travelers. The convention provided for a license in both countries but as yet that provision of the convention has not been complied with and the prospects are that the old custom requiring no licenses will remain in effect.

There are no baggage restrictions, but, as the means of travel are limited in some parts of the country, it is advisable that the traveler confine his baggage to as small a trunk as possible.

In customs treatment of samples it is necessary to follow the provisions of the recent convention:

Means have been provided at all principal ports in Venezuela for the immediate clearance of samples so as not to delay the commercial travelers. Samples usually receive consideration immediately after personal baggage and in some cases they are first.

In connection with advertising matter it is interesting to note that catalogues are admitted free; but the term is strictly construed. Pamphlets and advertising matter in general, including calendars, are dutiable at $1.37 per hundred pounds gross weight. Advertising matter with lithographed or printed designs not bearing the name and legend of the advertiser is dutiable at $17.13 per hundred pounds gross weight.

Practically all exporting countries are transacting business with Venezuela at the present time. America ranks first with Spain and England second and third respectively. Competition is keen, due to the fluctuation of the foreign exchange and the manufacture of goods. The American commercial travelers are excellent salesmen and thoroughly understand their products. The appearances, personalities and ways of the Americans are very popular in Venezuela, but the English and German travelers are very efficient and have considerable influence.

Before a commercial traveler can successfully sell goods in Venezuela he must understand Spanish. It is necessary to know not only the words but also the construction of the language. Many commercial travelers have failed in their attempts to sell goods due to the fact that they possessed only slight knowledge of the language, which is not alone a fault of the travelers but also of the houses they represent. The German nation was the first to realize that the knowledge of Spanish was indispensable to commercial travelers; knowing that this essential was the basis of business success in South America, the various German concerns prior to the war established schools where they instructed their agents in the language and customs of the countries to which they were to be sent. Offices were opened in the principal cities of various countries and agents sent to them where they remained for fully a year learning the business customs and language, and after mastering both they were given positions as commercial travelers. Consequently the Germans successfully entrenched themselves in numerous countries and were enabled to compete with every advantage in export trade. But many American travelers have neglected to learn Spanish, preferring to talk their own language whenever possible.

The national customs of Venezuela are naturally different from those of the United States and other countries. Business customs, too, are different and so are the customs of the home. It is easy to become used to them and one must know them in order to transact business. In some parts of the country business would seem to be a secondary consideration, social life ranking first, which of course is contrary to the habits of thought in the United States and many European countries.

It is advisable, too, that we consider the variations in climatic conditions in Venezuela and the effect of such conditions on the demand for goods in general. In order intelligently to understand the situation it will be necessary to know the climatic features of each important city.

Caracas, the capital of Venezuela, has a splendid climate, invigorating and refreshing, somewhat similar to that of Los Angeles, California. The days are rather cool with the exception of mid-day which, of course, is very warm. Light-weight clothing is worn during the day while at night medium-weight clothing is preferable. As Caracas is the capital, there is a steady demand there for fashionable clothing. Aside from clothing, many other products are in demand such as drygoods, machinery of all descriptions, autos, hardware, etc. The same products are generally needed in all other cities. The intensity of the heat in Valencia, Maracaibo, Maracay and Ciudad BolÍvar allows only light-weight clothing to be worn.

Commercial travelers should acquaint themselves with conditions in all cities and must carefully study the demands for their products. The market for machinery is greater in Caracas than any other city in Venezuela. The demand for farming implements is greater in Valencia than elsewhere. Mining machinery is needed in Maracaibo and surrounding cities where the various mines are located. Dry goods are in demand throughout the country districts. Regardless of the size of the city one can find American goods everywhere. The quality of the goods outranks that of other countries and, moreover, there is a strong feeling of friendship on the part of the Venezuelans in favor of America and American goods.

One of the frequent complaints uttered to American commercial travelers is directed against American methods of packing goods for shipment. During the last two years the majority of American exporting houses sending goods to South America have neglected proper packing with the result that the goods are often received in woefully poor condition. Although a small item, it is of prime importance from the standpoint of the importer and a hindrance to the success of commercial travelers.

We have enumerated the legal requirements and personal duties of commercial travelers and have also mentioned the market. It will be helpful to point out the means of transportation and communication in Venezuela. Companies that have never sent commercial travelers to Venezuela have a wrong impression as to the means of communication and transportation. The roads are excellent and in some cases surpass those in the United States and other countries. The railroads, although not as modern as the roads in the United States or Europe, are well capable of carrying passengers and freight up and down the high mountains. In some cases in Venezuela, a train will ascend from sea level to an altitude of 12,000 feet. There is herewith submitted a complete list of the railroads, showing destinations and number of stations. There is also attached a complete list of the roads showing distances between principal cities en route, the outline further showing the altitude of each city.

[Railroad facilities may be found enumerated on pp. 69-70.]

The following list of the roads and highways in Venezuela show the distances between cities and the altitudes of the respective highways:

The charge for freight on the railroads is rather high, $.58 per hundred pounds, and the passenger rate averages 10c. per mile. Hotel accommodations are not scarce nor are they excessive in prices. Statistics show that European commercial travelers can live on $3.50 to $4.00 per day while it costs the average American $7.00 per day. The hotels are not as modern as in the States but are very clean and suitable. The food is exceptionally good and wholesome.

The means of transportation by automobiles are as modern as those of some of the largest cities of the world. The majority of the cars are high priced and high powered as they are designed to climb to high altitudes in the surrounding mountains.

It may be stated that the financial condition of Venezuela is superior to that of any other country in Latin-America with the exception of Argentina. Her public debt has been decreased and her financial standing, although established comparatively few years ago, is very high.

Germany, France and England prior to the war practically had a monopoly on the Venezuelan trade, due largely to the long credits offered by them to the Venezuelan merchants. Before the war the above mentioned countries extended credit from four to nine months. The policy has changed now and the merchants are satisfied with from three to four months' credit. The reduction of the long term credit is also due to improved banking methods, and it is expected that trade will soon reflect the change when conditions are settled.

At the present time many of the exporting houses in the United States are dealing on either a 90 day sight draft or a 120 day draft dated New York. This system has been approved by the Credit Association of America.

Since practically every exporting or importing country is represented in Venezuela at the present time by bank affiliation, the average commercial traveler encounters very little difficulty in having his drafts or letters of credit honored. The difference in rate of exchange is an important item and should be carefully considered by all commercial travelers upon arriving in Venezuela. The exchange fluctuates slightly, the rate now being $5.35. The standard of value is the bolivar, valued at $.193, American gold.

One of the most exasperating difficulties confronting all commercial travelers is their ignorance of the metric system. The system has always been in effect here and must be learned in order to transact business.

The customs duties of Venezuela are very high, more so than in many other Latin-American countries. The high protective tariff has been a means of increasing the revenue of the country but on the other hand it has made it practically impossible for the poorer classes of Venezuela to purchase foreign made goods. Another purpose of the high protective tariff is to protect home industries but the fact remains that the manufacturers in Venezuela can not supply the demand. In many cases the tariff is so high that it is inadvisable for outside merchants to attempt to do business there. For example, it would be very poor business judgment for a shoe salesman to attempt to sell shoes in Venezuela as that industry is well protected by the tariff. The same applies to many other industries. Appeals have been made to the Venezuelan government to lower the tariff but as yet it has not complied with the request. Tobacco is another protected industry. American cigarettes in Venezuela retail for as much as three times the price in the States. The reduction of the tariff will open a greater field for all commercial travelers and will mean an increased foreign trade for Venezuela.

Before concluding this report it may be useful to say a word regarding the present opportunities for commercial travelers in Venezuela and the attitude of merchants in that country as to American travelers. The writer has visited Maracay, Caracas, Valencia and La Victoria, and after talking with business men reached the conclusion that American commercial travelers are considered among the best and are most welcome. The only complaints heard were that American concerns would not allow more than a three months' credit and that the packing of goods for shipment has been deplorable. The Englishman with his great variety of goods such as woolens, cottons, crockery and with facilities for long credit has gained the confidence of the merchants and has built up considerable trade throughout the country. Germany prior to the war also had considerable trade with Venezuela due to their banking facilities and diversity of products. Before the war, for example, Germany had a monopoly on the dye industry and the toy industry and was thus able to establish herself successfully in Venezuela. American business houses prior to the war had not realized the importance of Venezuelan trade until the establishment of the International High Commission, an organization which has brought South America and North America into closer contact and thus assured friendly relations.

The old proverb has it that "Commercial travelers are here to-day and away to-morrow." As the proverb is undoubtedly true, the only way to leave a favorable impression with all is to smile, be courteous, considerate and clean, not only in business transactions but in morals as well. The possession and exercising of these social qualities will be of inestimable advantage not only to commercial travelers but to the good name of the United States.

W. J. Donnelly.

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]

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.

Part II
Investment Opportunities in Venezuela

Before entering upon a discussion of the future opportunities for investment in Venezuela, two outstanding features need to be emphasized as factors influencing the investing of money in Venezuela. They are: 1st, A realization of the fact that Venezuela needs immigration and needs it badly to develop her rich natural resources, as her population has been almost at a standstill for the last ten years. The other crying need is foreign, not native, capital.

Venezuela, a country larger than Germany, at present maintains a population estimated at 2,800,000. The greater proportion of the population is found in six or eight large cities in the north. Around the Orinoco and south of it lie thousands of acres of rich virgin soil and, strange to say, mines of coal, iron, copper, and gold which are not worked due to lack of transportation facilities.

Here, then, lies the prime investment of the country, a proper system of railroads to make these rich natural resources available. These projects have already been discussed widely, and Doctor Vicente Lecuna, President of the Bank of Venezuela, considered the most prominent man in the country, named railroads as the greatest need of the country and the best investment for foreign capital.

Here we may be permitted to digress for a moment to point out an unique advantage which Venezuela holds in regard to commerce with the United States. Due to the opening of the Panama Canal, Venezuela can ship as easily and quickly to the western part of the United States as to the eastern and thus effect a considerable saving on trans-shipment of goods by rail across the United States. Further, the proposal holds much favor here to-day for the introduction of a steamship line to Saint Louis which would be quicker and cheaper than the present line to New York. Thus we see that three direct lines might be maintained from the States to Venezuela, one from some western port via the Canal, a second from Saint Louis which would transport the goods to the Middle West; and, lastly, an expansion of the present service from New York.

Here too a word would not be amiss relative to the present service from New York. The Red D Line maintains a fleet of four passenger ships, the largest being of three thousand tons and the time consumed from New York to La Guaira usually nine days. The need for more and better ships is obvious. With improved service, there is no reason why Americans in search of a cool spot to visit in the summer time should not come to Caracas situated, as it is, three thousand feet above sea level in a mountainous country and with a wealth of that beautiful scenery found only in the tropics.

PROPOSED RAILROADS

1. San Felipe to Puerto Cabello.

The first line to be considered would run from San Felipe to Puerto Cabello. Puerto Cabello already occupies a prominent place in the economic life of Venezuela, being one of the principal ports and a port of call for all American and European steamers. The proposed railroad would be approximately eighty kilometers in length and would pass through one of the best cacao regions of Venezuela. This section is especially favored due to the trade winds which blow across it, giving this locality a special aptitude for the raising of a superior brand of cacao; it is from this section along the coast that the best cacao in the world comes. At present, due to the lack of transportation facilities, it is useless to develop the region, for the product can not find its way to market. A railroad here would serve to make available a huge, rich territory for cacao which could then find its way into the markets of the world.

2. San Cristobal to Valencia.

The second proposed railroad is one from San Cristobal to Valencia passing by way of Barinas. Considerable construction work would be necessary as this line would be about 615 kilometers in length, through rich, fertile lands which at present lie untouched due to lack of communications with the outside world. The railroad would lie over flat level land except for a stretch of approximately fifty kilometers over the mountains.

All along the southeast of this road lies fertile table land suitable for the raising of cattle. In fact, the llanos extend all along the route while to the north stretches the coffee producing section of Venezuela. Near Barinas there are large cacao and tobacco plantations but they are not developed to any appreciable degree nor to their real capacity, due to the lack of proper forwarding agencies. Furthermore, the opening up of this region by railroad would give great impetus to further settlement and investment in the interior, for it is an observed fact that after the railroad come cities and civilization. The situation is similar to that existing in our own history when, simultaneously with the building of the trans-continental railroads, caravans pushed their way westward and have left as their heritage the great cities of the West. This lesson from our own history should not go unnoticed, for the same opportunity exists in Venezuela and to the pioneers will come rewards similar to those reaped by our own dauntless settlers.

Even now before the building of this railway, English companies have acquired large concessions of territory near the proposed line. This is only a start and soon they will be extending their concessions and if Americans do not act before it is too late they will find the choicest land already taken. Most of the English concessions lie in the Apure district, the best cattle land in Venezuela, whose only disadvantage lies in the fact that the land is frequently inundated by the overflowing of the waters of the Apure River. The value of the land, of course, depends on its fertility and the availability of water, but it may be stated that a square league, that is, twenty-five square kilometers (9 square miles), varies in price from two thousand to five thousand bolivars, or from $400.00 to $1000.00. And this for land in the best cattle section of Venezuela! Among other sections of the country well suited for cattle raising are the llanos of Marturin, extremely fertile lands, swept by the trade winds. As they are situated in the northwestern part, shipment could be made through the port of Guanta which, it is predicted, will be the future main port of Venezuela. In this same vicinity lie the llanos of Barcelona, even closer to the port high tablelands, but somewhat dryer than the llanos of Maturin. To develop this land, a railroad from Ciudad BolÍvar, a port used now on the Orinoco and Barcelona, is necessary. This would connect with the present line from Barcelona to Guanta, thus connecting two important ports and serving a rich cattle section, necessitating the building of only three hundred kilometers of road.

Further west, running parallel to the last mentioned line, lies a region between San Fernando and Cagua, and as Cagua is already on a railroad line, shipments can be made either to Puerto Cabello or La Guaira. The llanos of GuÁrico which lie in this region are high table lands but with numerous oases which provide sufficient water for the cattle. At times, parts of this region are subjected to inundation which makes the land very rich and fertile. This is another section merely waiting the day when capital will develop railroads. It may not be amiss to remind American investors that the English have already secured three large concessions along this route.

Another important consideration deserving of mention is that along this route lie coal mines which have not been developed due to lack of transportation facilities. These mines would serve as an easy means of procuring fuel for the road.

3. Limon-Castilletas.

Another railroad projected is that from Limon to Castilletas. About Limon are rich oil fields now being developed but which are handicapped by the fact that Maracaibo, the present shipping port for oil, lies inside the Gulf of Maracaibo and only small ships can enter due to deposits which are continually filling up the strait. Maracaibo is not always available for small ships and a line from Limon to Castilletas, which is a port lying outside the bar and on the shores of the Gulf of Venezuela, would solve the present difficulty and, besides, effect a saving of over two hundred kilometers in sailing distance.

4. Yuruari-Orinoco.

The last important railroad which the country needs is one from the Yuruari River to the Orinoco. About the region of Yuruari are rich gold mines which are only worked to a small extent and in a very primitive way due to the impossibility of bringing the necessary machinery to the mines. Not only would a line connecting the two rivers do this but it would also pass through rich grazing lands. Then, too, only a short distance to the east are the iron mines of Imataca, still unworked due to the lack of transportation facilities.

Railroads are, then, the key to a double prosperity—prosperity for the foreign investor and an opportunity for Venezuela to take her proper place in the markets of the world. It seems inconceivable that here, close at hand, potential factors of great wealth are lying dormant awaiting the magic touch which in this case must come from the railroad, the forerunner of civilization. Dipping further into the future, we can see other results which would quickly follow the opening up of this great country,—an increase in immigration, consequently a larger market in which to buy and sell. And whom should it benefit more, the United State close at hand, or Europe a week further away! Time alone will decide, but this point can bear emphasis again and again that now is the propitious hour when, due to the recent war, American goods are being sought for in increasing volume by Venezuela. But England is already in the field and Germany is striving hard to regain her lost place in the sun. It behooves all of us, therefore, to strive with might and main to consolidate the position in world commerce which was thrust upon us and there lies no better path to that end in South America than along iron rails constructed by American capital in the sister Republic of Venezuela.

Joseph P. Quinlan.