FOREIGN TRADE OF VENEZUELA AND AMERICAN GOODS IN VENEZUELA
Part I
Foreign Trade of Venezuela
Where there is population, industry and resources, there will be international trade. Venezuela is lacking in population and her industries are scarcely in the first stages of development, but she possesses natural resources which command a world market. The three essentials of commerce are: (a) transportation, (b) freedom of labor and exchange, (c) security; and at the root of all trade must be moral integrity.[21]
[21] Ency. Brit., "Commerce."
Until the beginning of the present administration, Venezuelan commerce has been fitful and unsatisfactory. Under the Gómez régime, however, the country has taken great strides forward, especially in internal development and in the establishment of a national credit of which it is justly proud. As a result, her foreign commerce, except for a slight falling off at the beginning of the war period and a rather sharp decline in 1918, has shown a steady growth.
Transportation gives commodities and persons "place utility" and until the establishment, recently, of a splendid system of motor roads, as yet but little used, Venezuela has been lacking in this respect. Natural resources, in the absence of local manufacturers, become worthless without means of transportation to the coast for export. In 1908 there existed but thirteen railroads in Venezuela with a total mileage of 540 kilometers[22] connecting a few of the richest and most accessible regions with the coast, and the year 1920 finds no increase either in number of roads, or in total mileage. Fertile inland regions are still without outlet for their products and vast mineral wealth and forest resources lie untouched, awaiting transport facilities.
[22] Central Executive Council, International High Commission, "Venezuelan Financial and Economic Conditions," and Ency. Brit., "Venezuela."
The Venezuelan coast line extends for 1876 miles and possesses in all 32 ports of various sizes, more than sufficient to handle the potential commerce of the country. The amount of commerce passing through these ports, though steadily mounting, has in no one instance approached the limit. These ports have developed in spite of onerous tariff regulations and other handicaps, because the demand for the riches possessed by the Republic in the shape of natural resources is too insistent to be checked by natural or artificial barriers.
The principal industries are agricultural and pastoral, the most important agricultural products being coffee, cacao, sugar, tobacco, corn and beans.[23] Manufactures are few in number and those existent for the most part flourish mainly by the help of severe tariff discriminations. These manufactures include the following lines: beer, hats, candles, ice, chocolates, matches, cigarettes, boots and shoes, cotton goods, drugs and medicines.
[23] International High Commission, "Zones of Venezuela."
There are several electric plants in Venezuela and a few factories for the manufacture of agricultural implements. On the whole, however, Venezuelan manufacturing is still in its infancy and the country must depend on importation for nearly all her manufactured wares; this flow of importation is conditioned by the nature of the population whose purchasing power, except for the gentry of Caracas and a few of the more advanced cities, is limited, in great part, to the barest necessities of life.
On the whole, the World War had a beneficial effect on Venezuela's foreign commerce. At the outbreak of the war, Europe withdrew her shipping and Venezuela's foreign commerce was hard hit. The year 1914 witnessed a sharp decline, but gradually in the ensuing years the figures mounted until in 1917 they were nearing the pre-war totals, only to fall off sharply in 1918. Advanced statistics for 1919, with no return from the Aduana of Maracaibo, indicate a phenomenal increase both in imports and exports for 1919 over the previous year. The value of Venezuela's total foreign commerce by years, in millions of bolivares, follows:[24]
| 1913 | Bs. 246 |
| 1914 | 184 |
| 1915 | 191 |
| 1916 | 228 |
| 1917 | 239 |
| 1918 | 179 |
| 1919 | 315 |
[24] "Alta comisión internacional," Sección Venezolana, Caracas, 1919; "Memoria de Hacienda," 1919.
In 1917 the imports into Venezuela from the United States amounted to 70% of her total imports. For the same year, Great Britain's share of import trade was 16% and all others 14%. The same for 1918 follow:[25]
| United States | 60% |
| Great Britain | 30% |
| Others | 10% |
[25] Bureau of Foreign and Domestic Commerce, "Venezuela."
In 1917 the exports from Venezuela were apportioned as follows:
| United States | 55% |
| Great Britain | 11% |
| Others | 34% |
The same for 1918 follow:
| United States | 45% |
| Great Britain | 17% |
| Others | 38% |
Incoming shipments by parcel post for 1917 amounted to Bs. 3,837,916 ($740,719.00), the principal articles coming by this method being drugs, medicines, jewelry, watches, hats, cotton goods, silks and rubber manufactured goods.
| Source | Year 1917 | Year 1918 | 1919 |
|---|---|---|---|
| U. S. | $350,339 | $292,423 | (not available) |
| France | 228,559 | 56,648 | |
| Italy | 76,127 | 59,923 | |
| United Kingdom | 61,626 | 94,258 | |
| Spain | 19,570 | 3,595 | |
| Others | 4,498 | 20,100 | |
| Total 1917 | $740,719 | $524,947 | |
| Total 1918 | 524,947 | ||
| Decrease | $215,772 |
Although the foreign trade of Venezuela actually decreased during the war, the country was indirectly benefited by the turning of the energy of the nation to the development of natural resources, which, in turn, must mean in due course an increased surplus of production for export. Furthermore, the shortage of shipping during the war necessitated the use of existing bottoms to the fullest extent with a consequent effort towards the improvement of terminal facilities and an increase in the speed of loading and unloading cargo carriers. As a result of this feverish war activity, a number of Venezuelan ports now possess modern equipment for speedy handling of cargo and with the products of the country moving seawards in increasing quantities, Venezuela's harbors should be attractive ports of call for tramp steamers and conducive to the establishment of other routes of liner traffic.
The principal articles imported into Venezuela are cotton, textiles, wheat flour, machinery, agricultural implements, kerosene, drugs and medicines. The principal exports are coffee, cacao, balatá, hides and skins, rubber, gold, copper, sugar, asphalt, heron plumes and cattle.
Estimating the bolivar at .193 cents gold, the accompanying figures show the extent, in United States currency, of Venezuela's foreign trade:
| 1917— | Imports | $22,188,223.08 | ||
| Exports | 23,164,701.60 | |||
| Total | $45,352,924.68 | |||
| 1918— | Imports | $14,908,275.39 | ||
| Exports | 19,813,216.67 | |||
| Total | $34,721,492.07 | |||
| A decrease in imports for 1918 over 1917 of | $7,279,947.69 | |||
| A decrease in exports for 1918 over 1917 of | 3,351,484.93 | |||
| A total decrease in foreign trade for 1918 over 1917 of | $10,631,432.62 | |||
| 1919— | Imports | $27,020,000.00 | ||
| Exports | 33,196,000.00 | |||
| Total | $60,216,000.00 | |||
| An increase in imports for 1919 over 1918 of | $12,111,724.61 | |||
| An increase in exports for 1919 over 1918 of | 13,382,783.33 | |||
| A total increase in foreign trade for 1919 over 1918 of | $25,494,507.94 | |||
(Above figures were compiled from official sources; advance estimates for 1919 from "Memoria de Hacienda, Ano civil de 1919.")
Part II
American Goods in Venezuela
American goods have always been welcome in Venezuela, even when Americans were personae non gratae in the country. The greatest obstacle in the way of increased sales of American goods in Venezuela is American selling methods.
In selling the Venezuelan market, German and British merchants have always evidenced a readiness to adapt their goods to meet the requirements of Venezuelans, while it has been the policy of Americans in general, to attempt to force their customers to alter their requirements to fit American goods. The World War, by shutting off Europe from South America, helped certain American dealers to force on Venezuela goods which the merchants of that country did not want. A homely example of American "strong arm" selling methods occurred during the war in the matter of an order for a quantity of stickers, or labels, to be pasted on small packages. The Venezuelan house ordered the labels without the usual gummed back, as the climate of the country propagates myriads of mucilage-hungry insects and was clearly not favorable to the usual form of gummed-back stickers. Therefore, the order was given for a certain number of printed labels with plain backs, the intention being to apply mucilage to the labels as needed. The American exporter, however, promptly sent the usual gummed-back labels with the intimation that he was selling labels with gummed-backs and not labels with another kind of back and that he did not think it advisable to change his wares in order to fill a small order. The Venezuelan house needed the labels and as Europe was isolated, it was forced to accept, under protest, an article which was clearly doomed to prove unsatisfactory. This is but one example of what I have been told is one of the greatest defects in American selling policy. Now that the war is over and Europe is hastening to pick up the slack ends of her world trade, America is liable to lose a large part of her war-won trade if she does not immediately alter her previous attitude. "With the exception of flour, lard, lumber, cement, certain lines of dry goods, typewriters, cash registers, sewing machines and a few other articles in which Europe does not compete, the main current of importation into Venezuela has been from European countries, which have for many years made a careful study of the merchandise and packing requirements of the Republic. Backed by ample banking facilities, European firms have given liberal and long credits to facilitate the sale of their products."[26]
[26] "Market for Construction Materials in Venezuela," Bureau of Foreign and Domestic Commerce.
The necessity of careful packing has been systematically dinned into the ears of American exporters and as consistently ignored. As import duties into Venezuela are in many cases charged on commodity and container alike and as the chief means of transportation in the interior is by burros, over mountain trails, the packing should be as light and at the same time as durable as possible. In this connection, there is a story current in Caracas with reference to a shipment of small balloons for testing purposes, which may or may not be true, but which vividly illustrates the point. The American house, upon receiving an order for a number of balloons to be delivered to Venezuela, is charged with having inflated each and every balloon, enclosed each balloon in a separate case and shipped the entire order in this form!
In the near future, Germany will again be a dangerous competitor in Venezuela. At the present time there is a German trade commission touring the country and plans are also in process of formation for German immigration on a huge scale. Though the present government of Venezuela is more than well disposed towards the United States, it is clearly evident that the mass of Venezuelans while not hostile, are rather more suspicious than friendly, while the feeling of sympathy for Germany is and always has been manifestly very strong. There is strong German propaganda now at work in Venezuela for the future sale of German goods. The idea is deeply set in the Venezuelan mind, as deeply rooted as his feeling of distrust of the "Norte Americano," that what is made in Germany is the best. There have even been instances where American goods have been sold as "Made in Germany," because of this skillful insinuation of the superiority of German goods. For a long time "Reuter's soap," manufactured by a New York concern, sold widely in the Republic, and every Venezuelan merchant would have sworn that the Reuter Company was a German concern, in spite of the fact that "Reuter Company—New York," was plainly marked on every package. The United States should institute a counter trade-propaganda in favor of goods "Made in America," if she would retain and increase the volume of her trade with Venezuela.
Experience has shown that the best means of furthering the sale of American goods is through the establishment of agencies in the principal cities of the country. Formerly much good American energy was wasted through the practice of sending out commercial travellers who toured the country without first studying the field and reporting regularly to the head office in the States. A resident American agent, with several assistants to alternate on selling trips into the interior, forms friendships, observes, and establishes liaison with the government, which is of prime importance in commercial dealings with certain Latin-American republics. Especially in meeting the peculiar customs regulations by which so many incoming shipments are questioned, held up, fined or confiscated, is the resident foreigner more apt to secure expeditious treatment while the native handling an agency would be without the recourse always at hand for the American representative.
A serious obstacle to Venezuela's trade and to the future extension of the sale of American goods in the Republic is the complicated system of customs collection. The complaints heard are those of friends anxious to facilitate trade and eliminate sources of friction. "There are nine classes in the customs tariff, ranging from 0.05 Bs. per kilo gross for the first class to Bs. 20 per kilo gross for the ninth class. In addition to the regular schedule, some articles are subject to specific or ad valorem surtaxes, two surtaxes of 12½% each, the National Tax and the Territorial Tax were authorized in April, 1901, and a 30% duty established by a decree of February, 1903, for the purpose of paying off the foreign indebtedness and continued by decree of June, 1912, to be used for internal improvements. There is also the sanitary tax of 1% and a surtax of 30% on imports from the West Indies (since June, 1881) designed to promote the establishment of wholesale houses and warehouses."[27]
[27] Compilations from "Ley de Aduanas," and "Ley de arancel de Derechos de importacion de 16 de junio de 1915."
"American exporters have been discouraged by the intricate system of fines and penalties imposed by the customs regulations for slight errors in invoices."[28] The customs collectors and officials receive meager salaries, but the discoverer of an error in an invoice, or other violation of customs regulations, receives one half of the resultant fine. Consequently, there is a natural zeal in discovering errors, frequently resulting in fines for the omission of commas, faulty use of semi-colons and for abbreviating. "As compared with other South American countries, Venezuela is placed at a distinct disadvantage and many American merchants have refused to continue doing business in the Republic."[29]
[28] Bureau of Foreign and Domestic Commerce, "Venezuela."
[29] Bureau of Foreign and Domestic Commerce, "Venezuela."
Other obstacles to the furtherance of the sale of American goods in Venezuela are poor steamship connections with the States and the resultant slowness of mails and the unwillingness of the larger American export houses to ship small trial orders which the merchants in Venezuela frequently insist upon.
In closing, the writer may use the privilege of a patriotic American to say a word concerning the impressions he received as to the character and ability of the salesmen of American goods encountered in Venezuela. While there are many young men in the field who are models of strong character and efficiency (for the most part Porto Ricans), it must be confessed that the larger cities and the capital, Caracas, are not over-supplied with energetic young American salesmen of steady habits able to command the respect of the Venezuelan buyers.[30]
George A. Townsend.
[30] Together with this report the writer has submitted detailed statistics containing the following information; the tables are on file in the School of Foreign Service:
- —Ten year table of foreign trade of Venezuela.
- —Value of imports by ports in bolivares.
- —Principal articles of export for the years 1917 and 1918 valued in bolivares.
- —Exports by ports, 1917 and 1918 (bolivares).
- —Destination of exports, 1918 (bolivares).
- —Entrance of ships by ports—1918.
- —Entrance of ships by flags—1918.
- —Sailings by ports—1918.
- —Sailings by flags—1918.
- —Imports for the six years 1913 to 1918 (in bolivares).
- —Exports in the six years 1913 to 1918—bolivares.