1942: Venezuela

The first attack of the war on the soil of the Western Hemisphere occurred on Feb. 16, 1942, when German submarines broke through the outer screen of United States and Allied bases guarding the Panama Canal and shelled the Dutch island of Aruba, just fifteen miles off the coast of Venezuela. Aruba is the site of the world's largest oil refinery, where crude oil from Venezuela is ferried over to be refined in the Standard Oil Company of New Jersey's plant. In April Curaçao, another of the Dutch West Indies, where the second largest oil refinery is located, was shelled. Both Aruba and Curaçao are big production centers for high octane aviation gasoline and are so important in supplying the United Nations, especially Great Britain, which gets 70 per cent of the petroleum used by the Empire's armed forces from this source, that they have been placed under the command of a United States admiral. Venezuela has a right to participate with the United States in their protection, and will collaborate with United States and Netherlands forces in defending them.

Venezuelan petroleum production reached its highest peak in 1941, exceeding 33,000,000 metric tons, which put Venezuela second among the world's oil-producing nations. The Standard Oil Companies of New Jersey and New York accounted for 64 per cent of the total increase in production, the Royal Dutch Shell group for 18.5 per cent. Income through taxation of oil properties and production increased from 84,357,306 bolívares in 1940 to 134,332,382 in 1941, with very satisfactory results to the nation's finances.

Although attempts have been made to keep 1942 production up to the 1941 level, the sinking of oil tankers in coastal waters and inadequate shipping have made it necessary to curtail production. Unemployment, as well as loss of government revenue, has followed. Moreover, the shipping shortage has had a serious effect on the food supply since, owing to the nation's unbalanced economy, Venezuela must import most of its rice, potatoes and milk products.

Agricultural Activities.

This situation has brought sharply to the fore the need of making the nation more nearly self-supporting agriculturally. Several plans have been advanced to this end. A pact signed by the Government and the three largest oil companies, in July, calls for the establishment of three agricultural colonies on which unskilled employes discharged because of drastically curtailed production would be settled. The Government will donate the land (25 to 37 acres per man); the companies agree to keep discharged workers who stay on the farms in funds for a thirty-week period. Another proposal, the so-called Ron Plan, submitted by the Director of the Banco Central, provides for the formation of large mechanized farms operated with modern production methods, for which the Government is asked to supply two-thirds of the capital at low interest rates, part in reclaimed public lands.

Venezuelan agriculture up to the present has been largely concerned with commercial crops, such as cacao, coffee and cattle products. Emphasis must now necessarily shift to producing food for domestic consumption. A United States technical commission, headed by U. S. Department of Agriculture experts, in September made an exhaustive study of the cattle regions in the interior to investigate means of increasing meat and dairy herds. The four-year public works program, to be in part financed from an Export-Import Bank loan of $20,000,000 announced in June, emphasizes development of the hinterland and the improvement of communications as a step towards the revival of agriculture and cattle-raising. This loan is in addition to a credit of $6,000,000 assigned in January to the Government-owned Workers Bank for a low-cost housing project in Caracas, the first venture of its type in South America to be aided by the Export-Import Bank. Other steps in the direction of diversifying Venezuela's economic activities and of meeting the war shipping shortage are the establishment of a meat packing and canning plant, a rubber factory, a cotton gin, and a cement plant.

The financial statement reported to Congress by President Isaías Medina Angarita at the time of his annual message in April, indicated a balanced budget, in spite of his administration's ambitious public works program, extension of education and encouragement of new industries and agriculture. Venezuela has no foreign or domestic debt.