Negocios y politica en tiempos de Guzman Blanco (review)

Originally published in 1991, this second edition boasts a new index, an updated bibliography, and some minor textual clarifications. (The edition unfortunately is flawed by mismatched citation and footnote numbers between pages 178 and 240.) González Deluca argues that Venezuela's president Antonio Guzmán Blanco (1870-88) understood that he could enrich himself and promote national economic development at the same time. Demonstrably, he and his cronies achieved more success in the first goal than in the second. A few individuals became wealthy, but the nation experienced economic stagnation and accumulated a crippling national debt. Investment in minerals and river transport provided more opportunity for personal graft and arguably harmed the national economy less than investment in railroads did. Caracas offered a 7 percent guaranteed return on capital invested in the railroad companies in order to attract foreign investment. Most Venezuelan rail lines failed to achieve such a return once they were in operation, so the nation increasingly fell into debt to the companies, contributing to the national crises of the 1890s. The author blames neither Guzmán nor foreign investors for Venezuela's failure to derive more benefit from its first stage of modernization. She concludes that in spite of the red ink in the nation's accounts, Venezuela received an indirect blessing from the new technology, labor systems, and heightened activity that came from the investments.

González Deluca explores the tantalizing question of why the railroads benefited Venezuela's economy so little. She rejects the charge that the investments themselves were inefficient, irrational, improvised, or poorly planned, and she compares them favorably with some other Latin American railroads. One of the few profitable lines, the Caracas-La Guaira railroad, made its money by importing items from the coast to Caracas. When bumper local crops flooded the city, or when a brewery opened in Caracas in 1891, imports dropped and the railroad's accounts suffered. In spite of the deficits, González Deluca argues that the accounts of the Caracas-La Guaira railroad resembled those of Brazil's São Paulo-Santos line. British investors, however, had more confidence in Brazil and valued those shares more highly. The author has consulted voluminous archival sources, principally in England and in the Fundación Boulton in Caracas, valuable both for the records of the Boulton commercial house and for the Archivo Guzmán Blanco. The Boulton commercial house worked closely with Guzmán both in his personal and national business activities, and the archive is invaluable for late-nineteenth-century economic history.

The author provides a clear and compelling account of business and politics in Guzmán's Venezuela, but she leaves us with a conundrum. If Guzmán Blanco could serve the national interest and his own at the same time, if the modernizing investments were reasonably efficient, and if the returns on investments in Venezuela were comparable to those in other countries, then why was the nation's economic situation so much more dire than that of Argentina or Brazil by 1900? Was it because the Venezuelan lines depended on imports, while those in the Southern Cone earned returns on exports? Was the personal enrichment of Guzmán and his allies more of a brake on development than the author suggests? Did the foreign investors exact guarantees that were too stringent for the nation to meet? The author does not explore these issues in depth—although, in fairness, she did not set out to provide a comparative economic history of nineteenth-century Latin America. This is a book that asks big questions, but also inspires many others. It is a valuable addition to the literature on Latin America's economic history.