1938: Venezuela

Rapid progress in the development of the Venezuelan oil fields, resulting in a new peak of production of 187,000,000 barrels in 1937, with exports valued at approximately $224,000,000, is due, in part, to unsettled conditions in the Mexican petroleum industry. As a result Venezuela has recently replaced Soviet Russia as second oil-producing country in the world. Since oil is the principal source of national revenue, the López administration is able to keep the budget balanced — the 1937-38 budget estimated revenues and expenditures at 254,632,000 bolivares — and at the same time finance an increased social program. In his presidential message President López Contreras announced a three-year public works program, to be realized out of Venezuelan resources, without appealing for foreign loans. He has extended the educational system and the public health services.

The oil and mining industries are almost entirely in the hands of foreign interests — Standard Oil of New Jersey, Gulf Oil Corporation and Royal Dutch-Shell — which means that the tremendously large export balance represents an export of profits and is a fictitious advantage to Venezuela. The actual returns to Venezuelan interests come from the sales of agricultural commodities abroad, chiefly coffee and cacao, which explains the government's promotion of domestic agriculture and industry. Steps taken to develop a national element in the country's economy include an export bounty system, the creation of a Banco Industrial to make loans to small domestic mining and manufacturing enterprises at low interest rates, and the increase of capital and of powers of the Agricultural and Cattle Bank.

In July the United States State Department called hearings on a proposal to negotiate a reciprocal trade agreement with Venezuela. Early in the year barter contracts were reported negotiated with Italy to exchange cruisers for crude oil.

Venezuela withdrew from the League of Nations on July 12, making the ninth Latin-American state to take this step.