Into the Red?

Venezuela is the only country in the Western Hemisphere that owes no man anything--it has neither external nor internal debt. Since the death of its bloody, carnal 27-year Dictator Juan Vicente Gomez five years ago, it has also been fortunate in its leader. Like little Guatemala's Jorge Ubico tall, scholarly President Eleazar Lopez Contreras has given the nation a decent, liberal, reformist Government. His term ends next April. Constitutionally, he cannot succeed himself. His people find it hard to imagine that he would attempt to do so by any other means. Fortnight ago elections in 13 of the 20 States gave a great victory to the Bloque Bolivariano coalition which favors the Lopez Contreras policies, led most of Venezuela to hope that the era of political liberalism would continue indefinitely. Venezuelans do not elect their President directly, but vote for municipal councilmen & State legislators who elect Lower & Upper Houses, who in turn elect the President.

But if Venezuela's political future seemed bright, the dark state of the world shadowed the nation's remarkable financial status. The basis of its prosperity has been the fact that since oil began to gush there in 1912 it has become the world's third greatest producer (No. 1 the U. S., No. 2 Russia). Other potentially big resources, such as gold, diamonds, iron have never had much attention. Venezuela pays for its imports mostly with oil royalties, import duties, wages, taxes. Before World War II, about 60% of its oil went to Europe. But today Venezuela sees its oil production slumped 25%, with a resultant drastic shortage of foreign exchange.

Last week in Caracas official Venezuela considered what to do. Some Venezuelans favored expropriating the oil wells. To forestall this, the oil companies (chiefly Standard of New Jersey and Royal Dutch Shell) were arranging to throw more business Venezuela's way. Venezuela also might join other South American countries that have asked the U. S. Export-Import Bank for credits. The nation was learning the precariousness of a one-product economy.

The Government was resigning itself to going into the red.

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