1940: Venezuela

Local elections in the autumn in thirteen of Venezuela's twenty states have been interpreted as strong endorsement of the program President Lopez Contreras, including his policy of close cooperation with the United States. Interest in these elections centers in the fact that the President is indirectly elected by Congress, in joint session, which, in turn, is chosen by the state legislatures and municipal councils. These last are elected by the public at large. La Crítica, which often reflects the official viewpoint, asserts that the President will not run for office again nor try to prolong his constitutional term when it expires in April 1941.

The withdrawal of Venezuela from the League of Nations became effective July 18, this country being the ninth Latin American nation to quit the League. A social insurance act was passed by Congress in July, based entirely upon the recommendations made by an International Labour Office technical mission in 1938.

Declining exports of petroleum, which accounts for 90 per cent of total export values, and the unsatisfactory coffee situation, are largely responsible for the exchange stringency, which led to an intensified foreign exchange control in October. Over one-half of Venezuela's coffee in 1939 was exported to Germany. It is hoped that the substantial United States import quota (420,000 bags annually as compared with 220,804 bags in 1939-40) (See EL SALVADOR) and the decision of Imperial Oil of Canada (a subsidiary of Standard Oil of New Jersey) to divert about one-half of its purchases of 40,000 barrels daily from the United States to Venezuela will offset the loss of European markets and improve the value of the bolívar, which in the second half of 1940 has been subject to considerable pressure. The new Banco Central, authorized in September 1939, has sole power to issue currency and to control the exchange value of the bolívar. It has just succeeded in securing a private loan from the National City Bank of New York, the proceeds of which will be used to finance the purchase of essential imports from the United States and to liquidate commercial arrears.

Petroleum has shown a sharp decline in production in 1940, both the Royal Dutch-Shell and the Standard Oil groups having decided to reduce output as a result of the war in Europe. The output in 1939 reached a record figure, however, totalling 207,055,000 barrels. The Venezuelan export balance is misleading, since the value of oil shipments is only partly retained by the Republic. Out of total budgetary revenues of 335,000,000 bolivars in 1939, over 110,000,000 however, was derived from petroleum taxes. Receipts and expenditures in the budget for 1939-40 are calculated to balance at 361,325,000 bolivars, which is about 20,000,000 greater than the actual receipts during 1938-39.