When I engaged the history of Venezuela seriously for the first time in 1964, the first books I bought for my library were the three volumes of José Gil Fortoul’s Historia constitucional de Venezuela (4^th ed., 3 vols., Caracas: Ministerio de Educación, 1953-54). During the next thirty-five years, the works of many other Venezuelan scholars have passed across my desk, a significant number authored by the distinguished members of this Academia Nacional de la Historia, drawing me deeper into a life-long involvement with the history of this country. As often happens with a powerful first impression, the calm orderly voice of José Gil Fortoul remained audible in my imagination, whatever the historical issue or intellectual controversy. As a consequence, when you honored me with the invitation to speak to you under the auspices of the José Gil Fortoul lecture, my grateful acceptance came without hesitation.

I stand before you, not with the expectation of adding much to your store of historiographical knowledge but rather with the obligation to render my respect and profound gratitude, in the name of José Gil Fortoul, to this corporation and its members and staff, whose unceasing support for the history and historians of Venezuela has no limit. The generous spirit of the Academia towards my own, often poorly informed, search for an understanding of this country’s past, has never ceased to amaze me; a spirit reflected I might add throughout Venezuela’s historical community. It is, then, an honor to bear witness before you for the permanent debt I owe Venezuela, Venezuelans, and especially Venezuelan historians for sharing their intellectual work and their love for their country.

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Each of us lives in a world of our own construction, built out of the materials provided by our families, language, culture, education, and experience and limited by the context of our time and place. We share many elements of our worlds with our friends, colleagues, generation, and community, and our view of this world coincides only in part with the views that others elsewhere hold. I, for example, who have lived and studied the history of Venezuela, share much of my understanding with that of my Venezuelan friends and colleagues, but we do not see the world in exactly the same way.

When we historians attempt to explain why people and their societies behave as they do, we use many strategies to compensate for our inability to revisit the past or replicate its events. Unlike our scientific colleagues, we cannot create a controlled laboratory to test historical theories of human behavior. The materials available to us are complex and incomplete and admit many different interpretations. We can rarely isolate one event, holding other events constant to analyze historical behavior.

These limitations explain why the historian pursues a methodologically sound art rather than a rigorous science. Our reconstructions of past events serve less to provide a scientifically precise description of things as they were and more to deliver a perspective on who we are today and who we might become tomorrow. Our choice of the questions to ask and the way we ask them determine the focus of the answers we get. Most historians choose to ask questions of the past whose answers they expect will help their contemporaries better manage the challenges of today.

To take but one personal example, consider the issue of slavery in the Americas. Although many Latin American scholars have engaged questions of the slave trade, the operation of the slave system, and the processes of manumission and abolition, a remarkable series of contributions to the historiography on Latin American slavery and race relations comes from the intense focus of United States scholars on these themes. Historians, economists, anthropologists; specialists in both US and Latin American history along with experts on European history; all engaged the question of slavery in the Americas.

Is this because Latin American slavery represents the fundamental social, political, and economic institution of the Spanish and Portuguese colonial empires and the nineteenth century republics? Not exactly. The US scholarly community’s intellectual preoccupation with slavery rested on the hope that the Latin American experience, properly understood, could clarify a United States economic, social, and political dilemma. The United States has not reconciled its historical experience as a slave society with its traumatic national crisis of the American Civil War or with a Reconstruction era that left the nation with a continuing and still incomplete struggle to construct a racially neutral society. Unable to fully understand its place in world history within the context of its own experience with the slave system, US historians turned to Latin American for insight and perspective. The flowering of this scholarship, moreover, coincided with the revival of racial discrimination as a major social, political, economic, and moral determinant of the US national self-image during the late 1950s, and especially the 1960s and 1970s, a process that continues today. (1)

This need to refract current national challenges through the crystalline structure of the Latin American experience demonstrates the power of historical imagination to construct reference points for understanding the present and measuring the significance of future opportunities. We do not, of course repeat our histories, but we do learn from our experience, and the accumulation of historical analysis provides the vicarious experience that leads to wisdom. 

A similar issue appears today for Latin America where political, economic, and social challenges engage us in the phenomenon called globalization. For Spanish Americans, this represents not a new issue but the reformulation of an old one. Since the discovery and conquest of America in the late 15^th and early 16^th centuries, what we now call Spanish America has been an essential if subordinated participant in all the large-scale multi-national or trans-national economic structures of European commerce and trade. Spain in America succeeded by virtue of a complex Atlantic system built on behalf of the economic and political interests of the Spanish crown. Political independence, as well the subsequent readjustments of the independent Spanish American republics during the nineteenth century, came from the reorganization of that Atlantic commerce. The story of the century of transition from 1750 to 1850 charts the reconfiguration of Spanish American participation in this Atlantic economy, first within the context of the Spanish empire and then from the base of autonomous independent republics. A subsequent readjustment came with the emergence of the multinational or transnational industrial-commercial enterprises after the Second World War. Today’s version of this process, globalization, produces a world economy that challenges Spanish Americans and many others to find an economically acceptable and culturally identifiable place within this expanding economic and commercial space.

Within each of these reconfigurations of the world economy, including the many variations along way, each generation in the Americas sought the right model, the right intellectual context, to inform and support their effort to increase opportunities and minimize risks. If the issues of economic policy and practice dominated the conversation about the place of Spanish America within these global structures, many observers also worried about the tendency of global economic forces to blur if not erase the distinctions of place, nationality, language, and culture that identify each nation’s unique characteristics.

Although we often think of the global competition for economic advantage as involving the competitive economic policies of countries and the actions of nationals within those countries, the high mobility of capital, commerce, and production, and the transnational interests and behaviors of individuals, families, and firms, make the Atlantic or global system itself an actor in this competition. The game has two sets of rules that govern the opportunities and risks. The first set consists of local rules within each national jurisdiction. These rules constrain or protect the economic opportunities of individuals and firms operating within a nation’s jurisdiction. The second set of rules governs the flow of capital, talent, trade, and production from one nation to another in search of ever-higher returns on investment. This second set of rules is often less formal and codified; nonetheless, it creates the primary determinants of the global economy within which the national economies live.

The critical characteristic of this second set of global rules is that it reflects the most competitive, the most successful, and the most advantageous practices drawn from all the participating local economies. As various countries create new or enhanced comparative advantages, the innovations rapidly become the defining characteristics of the global market. If precious metals and controlled, bureaucratically managed imperial economies provide economic prosperity, all nations organize to compete within a context defined by this comparative advantage. When innovations in trade and commerce, in agriculture and land holding, and in patterns of manufacturing shift, creating a new set of comparative advantages, these became the criteria for all national economies competing in the Atlantic or global economy.

Nations try to manage the consequences of such changes. Depending on how close their own national economic situation is to an emerging set of Atlantic rules and changed balance of competitive advantage, nations use all the tools at their disposal to either accelerate or delay the impact of the internal transformations required for success in the international competition. War, investment, taxation, economic development, treaties, immigration, land reform, social policy, political revolution, legal and commercial reform, the list is endless and the combinations vary depending on the opportunities and resources available within each national economic environment.

In an ideal world, nations could readjust rapidly to changes in the competitive environment to maximize their ability to capture the most advantage possible from the new global rules. Real nations cannot respond in such theoretically optimal fashion. In the early stages of a change, nations may not recognize the nature of the new rules. Internal interests may resist a change that, while optimal for the nation at large, is certain to harm some traditional and politically powerful subgroup. The geography and material resources of the nation may not provide a strong base for the new competition. The national bureaucratic and institutional infrastructure, adequate to participate in the previous competition, may not have the skill or knowledge to manage change or support the new comparative advantages. Finally, the national economy may not have sufficient economic surplus to pay the costs of change without disrupting internal political and social equilibriums.

As is true in all historical processes, sequence matters. The nations that adapt first to any new Atlantic or global rules have an advantage, and those that come later must invest more to catch up. Nations whose internal economy most closely matches the new comparative advantage of the Atlantic system adapt more quickly at less cost than those whose national economies operate at a much greater distance from the new standard. The early adopters have a double advantage: They receive the benefit of being first and they adapt at a lower cost because they have less to change. (2)

Few historical periods illustrate these patterns more clearly than Spanish America’s century of transition, 1750-1850. Although we can learn much by looking at this century from an Atlantic, European, or Spanish perspective, it is the Spanish American adjustments to this shift in the Atlantic system that primarily interests us, and within that perspective, we have a particular interest in the history of Venezuela.

Between 1750 and 1850, Spanish America engaged with increasing intensity in a critical conversation with an expanding Atlantic economy. What once in previous centuries had been a reasonably orderly and coherent Spanish economic system driven by rule and regulation as well as by the forces of competition and commerce became part of an increasingly competitive, free-trade oriented market economy driven by the expanding commercial and production or industrial activities of its major Atlantic participants. Spanish Americans struggled to find their place in this emerging world system, first as integral parts of the adjustments to the Spanish imperial trading system of the Bourbon reformers in the 18^th century. This adjustment continued through the more socially and economically expensive transformations of the independence process and the subsequent reconfiguration of Spanish America into politically autonomous republican entities.

When historians first looked at these changes in Spanish America, they saw a nation building exercise and understood the changes as part of a larger worldwide process of national self-invention and self-determination. Historians within and without Spanish America looked at the movements beginning in 1808 and continuing through the 1820s in most parts of the original Spanish empire as watershed events dividing a unified Spanish imperial past from a multi-nation republican future. Even within this perspective, however, most historians recognized the tension between the new national republicanism and the continuing elements of Spanish colonial society and economy. Indeed, a popular theme of historical explanation turned on the issue of "continuity and change."

Subsequent research on this era looked more closely at the continuing elements of a changing structure that bridged the political transformations of independence, including such topics as:

A subtext of this larger inquiry addresses the definition of national identity in Spanish America throughout the century of transition. The quest for identity recognized that the Spanish heritage no longer served the purpose of nationality and the need for locally maximizing strategies for competition in the Atlantic economy called for new national myths. To many outside observers, the remarkable similarities of language and culture, and the profound impact of three to four centuries of Spanish imperial rule, overwhelmed the distinctions emphasized by Spanish America’s multiple national discourses. This perhaps reflected the myopia of outsiders for whom important distinctions disappear into the unfamiliar background of another culture. (3)

For Spanish Americans, the years leading up to the Independence moment and those that followed the invention of national entities reflected a constant operational adjustment of the original Spanish colonial system accompanied by a conversation about the ideal structure for engaging the evolving Atlantic economy. In the restructuring efforts of the Spanish empire during the Bourbon reforms, throughout the independence conflict, and in the national debates of the post-independence generations, Spanish Americans reconfigured the theoretical policy base and the operational arrangements for their involvement in the Atlantic world.

This conversation engaged Spanish America at many levels. Landowners, clergy, workers, peasants, slaves, cowboys, small businesspeople, and merchants all had interests that required attention. The Spanish imperial system had contained the multiple and often conflicting interests of these and other groups within a bureaucratically managed and legally defined economic and social structure, but the Bourbon reforms opened up many previously settled controversies for review. Monopoly companies such as the Compañía Guipuzcoana or Caracas Company established new relationships that connect on one side producers, laborers, merchants, shippers, and internal political authorities to the Atlantic commercial world on the other side. New political agents, principally the intendents but also including the greatly increased military personnel in forts and standing armies, challenged the authority of traditional bureaucrats and local elites by creating overlapping jurisdictions, reducing opportunities for local control, and introducing new venues for conflict resolution. New territorial jurisdictions such as the Viceroyalties of the Rio de la Plata and New Granada or the Audiencia and Captaincy-General of Venezuela created opportunities for local advantage and self-definition at the same time they rearranged patterns of bureaucratic, political, and economic authority and responsibility.

These changes created both opportunities and conflicts within the Spanish imperial structure. Although the reforms improved the control and operation of the Spanish system, they created a wide range of conflicts based on new opportunities and lost privileges. If the Bourbon reforms improved tax collection and enhanced the effectiveness of trade with Atlantic markets, they also created a demand for more trade and recognition of other, non-Spanish opportunities available through the Atlantic system. The 18^th century Spanish reforms may have improved economic performance for the larger Spanish system, but the local citizens in America often found their opportunities restricted. Many members of the local communities resisted the reforms and improvements of the Bourbon era, often because Spain centralized control by reducing local influence on political decisions (through a policy of appointing Spaniards to local positions) or because Spain reduced economic opportunity by increasing taxes and reducing contraband. As is always the case with changes in the distribution of power and authority, opportunities for one group mean a loss for another. (4)

The articulation of an American perspective on the Spanish empire during the late colonial period continued a long American tradition. From the very beginning, the first conquerors insisted on their local rights and privileges and challenged every real or perceived threat to their control of and profit from the people and resources of the Americas. Indeed, much of their remarkable allegiance to Spain came from recognition of the imperial system’s effectiveness in enabling local ambition and guaranteeing the permanence of its success. Fundamental differences between local interests and the administrative and economic needs of the larger Spanish empire began in the sixteenth century with the distribution of encomiendas and continued throughout the centuries of Spanish rule.

The many scholars who have articulated the nature of these conflicts and their changing character over time provide a context for seeing this conversation as part of Spain’s remarkable success in implanting an effective extractive economic engine in Spanish America. Over the course of the colonial period, local American interests argued with Spanish imperial bureaucrats over the margin of benefit from this system that could stay in America. This permanent controversy served as a device to guide the development of Spanish policy in such a way that the insatiable appetite of the crown for American resources would not destroy America’s ability to prosper on Spain’s behalf.

This difference in perspective on the distribution of the gains from the Spanish imperial extractive machine, as well as other disputes over the scope and activities permitted in America, does not represent an attack on the structure of the system, but rather an argument about the details of its implementation. By virtue of the effectiveness of contained and controlled competition, Spain succeeded in creating, adjusting, and sustaining its extractive machine for over three centuries until the machine passed to local ownership at independence.

The discourse of Spanish Americans about their economic circumstances and the political and social structures that sustained them focused primarily on issues of technical adjustments until the circumstances of the early nineteenth century created an opportunity to take the conversation much farther by using a politically independent national model derived from existing Atlantic economic and political examples. Before independence, the argument about managing the extractive machine took place within the context of a long and complex Spanish imperial bureaucratic tradition; after independence, it attempted to adapt modern international economic and political theory to local circumstances and generate rapid economic change. (5)

Spanish America’s uncertain success in constructing and delivering an effective bureaucratic managerial tradition to replace the Spanish imperial version indicated among other things a mismatch between the logic of Atlantic economic and political policies and the needs of the Spanish colonial extractive machine; the machine that produced the elite’s wealth and sustained its power. A more or less free, open, and entrepreneurial economy, as implied in the aggressive commercial and industrial ideology of early to mid-nineteenth century capitalism, seriously threatened the economic, political, and social base of many members of local Spanish American elites.

Moreover, the larger structure of the world economy gave Spanish Americans few opportunities to consider a major overhaul of the Spanish imperial extractive machine even had they been so inclined. This machine, weakened in many parts of the Americas throughout the last years of Spanish rule and significantly damaged in many regions by the extended war and social disorder of the independence decades, had little capacity to sustain major restructuring. Indeed, its weakness denied Spanish Americans the resources required to replace it with a more competitive economic engine. In searching for the quickest and highest, return possible from the existing stock of natural and human resources, Spanish Americans continued to operate, maintain, and modify that colonial machine for the extraction and export of commodities into the world market. In some parts of the Americas, a shift in world demand created opportunities for substantial local prosperity from this method, particularly of course in Cuba with sugar, an event that delayed the independence and the abolition of slavery in that region for about two generations. In countries such as Venezuela, the rise of coffee along with the maintenance of the traditional cacao export production changed some of the regional focus of economic prosperity and prompted the rise of new elite groups. However, it changed almost nothing about the extractive, commodity export structure of the economy.

In the debates of the immediate post independence period through the 1850s, we see these issues played out as various elite factions sought to control the operation and management of the extractive machine for the benefit of their group. (6)

As in so many other Spanish American historical topics, Venezuela’s history offers a remarkably useful example. In the conversation about the transition from Spanish imperial economic outpost to Atlantic market participant, Venezuela’s experience is a particularly instructive example of the range of responses available during this critical period. Venezuela participates in the fullest sense in the readjustment process, from the transformations of the Bourbon reforms through the creation of an independent constitutional republic linked to an Atlantic trading and production network. Yet, its economic structure and the relative clarity of its historical trajectory make its history more transparent than equivalent stories based in the much more complex and layered societies of, for example, New Spain or Peru.

Venezuela, as we now know it, is itself a product of the new global trade and production system that emerged among the Atlantic nations in the second half of the eighteenth century. Spain’s many responses to these changes included the consolidation of jurisdictions and functions around the administrative nucleus of the central city of Caracas symbolized by the creation of the Captaincy-General, Audiencia, and Bishopric of Caracas in the last quarter of the century. The directed, bureaucratic nature of Spanish imperial response to economic change appears clearly in the formation of Venezuela whose central city of Caracas exists in charmed but improbable geographic space behind the mountain barrier of the central costal range. Accessible neither through its own port nor through navigable rivers, Caracas nonetheless emerges at the center of Venezuelan history as an artifact constructed to serve the operation of the Spanish colonial extractive machine. Caracas, not Coro, not Maracaibo, not Cumaná, became the center of Venezuela with the bureaucratic and regulatory infrastructure of a central city because its location reduced the problems of control and management of this extractive economy and made the region with a long Caribbean and Atlantic coastline easier to defend. (7)

The history of Venezuela in the century of transition illustrated quite clearly the multiple efforts of Spanish policy to enhance and adjust the operation of the Spanish extractive machine to respond to the threats posed by the new Atlantic economic system emerging rapidly in this period. Reoriented in its economy and political-bureaucratic structure away from the New Granada center in Bogotá, Caracas and its Venezuela shifted its primary orientation and linkage to the world economy away from a geographically distant Spanish colonial center in Bogotá towards a more direct linkage carried out locally through the Caracas-La Guaira-Caribbean route.

Venezuela demonstrated a classic example of the directed and managed Spanish Bourbon economic policy through the work of the monopolistic Caracas Company, an effective if not universally admired enterprise. The Basque monopoly transformed the cacao business and enhanced the region’s dependence on the bureaucratically managed extractive export commodity. The ‘grandes cacaos’ of caraqueño lore earn their name from the cacao export base of the local elite and the growing dependence of that elite’s prosperity on the operation of an Atlantic trading community it did not influence.

Even more significant, the Caracas Company and the multiple changes in bureaucratic rules and structures, limited the ability of Venezuelan-based producers to compete directly in and respond quickly to the constantly changing opportunities of the Atlantic market. Contraband trade, one of the key mechanisms of direct local Atlantic trade declined under the surveillance of the Caracas Company and the newly invigorated Spanish government agencies. These changes fixed every more firmly on the economic operation of Venezuela the understanding that the primary economic rules of prosperity came not directly from the international competition by producers in their markets but rather from Spanish bureaucratic regulations. These rules reflected not only the realities of the market but also the imperial and dynastic interests of the Spanish monarch. In addition, by their very organization, the economic bureaucracies that regulated Venezuelan commerce, trade, and production proved rigid, slow to change, and essentially unresponsive to the challenges of the Atlantic system. Indeed, nothing so clearly illustrates this system than the history of the Caracas Company, an organization so unresponsive to local interests that it took the rebellion of Juan Francisco de León in 1749 to induce it to change its operations to help Venezuelan producers compete in Atlantic markets. (8)

In understanding the relative disadvantage of Spanish America in the new Atlantic economy, it helps to imagine the Spanish empire as a large, multi-product global firm. Vertically integrated, tightly controlled, and centrally managed, this firm dominated its economic space and controlled a wide geographic domain. Over time, however, the effectiveness and responsiveness of its systems declined, in part because its success created an enterprise much larger than its technology could manage centrally.

Spain and its local managers in America knew what they needed to do, as the constant requests for information (hacienda accounts, visitas, residencias, relaciones geográficas, censuses, and special surveys) and the continuing efforts at reorganization indicate. Spain failed, however, to transform its centralized economic-bureaucratic model (a model that sought to control all aspects of the enterprise) into a decentralized enterprise capable of responding to the more fluid and volatile Atlantic system.

The Bourbon Reforms, then, represent a dual and contradictory approach to economic change in the 18^th century. On one side, they created new jurisdictions or branch offices of the larger Spanish firm with enhanced local authority and greater access to the world markets. On the other side, they increased the central direction and control over the economic enterprise. This internal contradiction combined with managerial and information infrastructures incapable of centrally operating such a complex enterprise on such a large scale, produced constant conflict between local and imperial interests. The system resolved these so slowly and inadequately, that the international dislocation of 1808 relatively quickly broke the chain of authority that held the Spanish imperial firm within a single managerial organization.

Although independence freed Venezuela from the central direction of Spain, it did not solve the region’s economic problem. We can imagine the independence, using for a while longer the business analogy, as a messy and expensive corporate breakup. Perhaps akin to the dissolution of American Telephone and Telegraph in 1984, and the creation of a series of Baby Bells or regional operating companies. In Spanish America, the breakup of the transnational corporation we call the Spanish empire produced a series of regional economic corporations, each possessing at the moment of corporate dissolution, a set of local assets, managers, and managerial infrastructure.

To be sure, the corporate breakup of an enterprise like ATT lacked the drama and the violent destructiveness of the Spanish American wars for independence, a process that took place within the contemporary context using the tools available. Absent a rule of law or an institutional infrastructure higher in authority than the parties in conflict during independence, violence became the ultimate human arbiter. The local Venezuelan version of this larger conflict eventually settled two significant questions. It released Venezuela from the corporate management of the Spanish transnational firm. It also established at almost the same time, the local limits of the Venezuelan corporation, in relationship to the other regional entities left by the dissolution of the Spanish imperial firm.

The principle followed everywhere in Spanish America established that the limits of the separate corporate entities created out of the Spanish transnational would be determined by a combination of two forces: First, the bureaucratic organization of the Spanish corporation as of about 1808-1810; and second, the capacity of the local organization to manage the claimed enterprise across the boundaries of geography. Following these principles, Venezuela participated in the common effort to dissolve the Spanish enterprise and then succeeded in defining itself separately from Colombia but maintaining corporate control over its own peripheries to the East and West with some boundary lines vague and unresolved to this day.

The approach to understanding Spanish American independence that sees the process as a corporate dissolution of a transnational firm minimizes a number of significant issues in the effort to understand the fundamental structure of the century of transition in Spanish America. Where in all this, we may ask, are the heroics of the independence wars, the dramatic contests that carry the names of extraordinary people and events? Where is the recognition of the price paid in lives and treasure? Where are the ideas, the constitutions? Where in this bloodless mechanistic account are the struggles of slaves and pardos, llaneros and peones to forge for themselves a better future?

As is always the case during any economic transformation, opportunities appear, barriers to advancement fall, the controls that define elite and non-elite weaken and some disappear. The participants who engage these changes take great risks with the assets they have, assets that include their lives, treasure, and families. Participants know that the old paradigm no longer serves; they know that better explanations for the progress of human events exist; and they seek the knowledge that puts the changes about them into a coherent intellectual framework that can guide successful action.

Venezuelans do not seek independence and the dissolution of the Spanish empire for its own sake but rather for the material benefits the dissolution can bring. Liberty, republican government, constitutions, international treaties, and new economic regulations—these things the próceres seek because they believe their lives and opportunities will improve as a result. No one voluntarily participates in an expensive and risky revolutionary process without recognizing an advantage. Slaves join Boves’ armies with the hope of freedom just as they join Bolívar with the same goal. The patriots produce constitutions whose goal is the invention of a rule of law that, in replacing the Spanish version, eliminates obstacles to economic prosperity. They hope they do this without increasing their personal risk (and often they are wrong about that).

Because Venezuelans have many often-competing interests, the correct course of action is never universally recognized and throughout the last years of this transitional century, Venezuelans carry on an often contentious and not always peaceful conversation about the definitive form the newly independent Venezuelan corporation should take. However, in this creative effort, Venezuelans as is the case with their Spanish American counterparts in other regions, found it difficult to identify the model best adapted to their history and to the continually evolving Atlantic economy. (9)

Throughout the years 1830-1850 that conclude the century of transition, Venezuela found its opportunities and its options limited. While in theory Venezuela could imagine expanding its economy and diversifying its products to compete in the Atlantic markets, in fact this scenario did not represent a reasonable alternative. Venezuela’s comparative advantage, as a result of its history, lay in export driven agriculture.

The litany of challenges faced by the new Venezuelan firm in its competition with other producers selling in the Atlantic market appears again and again in the remarkably perceptive and clearheaded analyses published in contemporary newspapers, government documents, special studies, and reports by visitors. Too small a population, too thin an agricultural base, too underdeveloped a public infrastructure, too weak financial institutions, too ineffective a government bureaucracy, and too expensive a political process all made the list. The Venezuelan firm’s directors, the country’s political elite, proposed many solutions for these problems. Immigration and labor laws; publications and discussions of crop improvement techniques and advanced technology for enhancing agricultural productivity; endless reports and projects for roads and bridges; credit and banking laws and institutions and a long discussion about religious censos; compensation for manumitted and eventually freed slaves along with the distribution of public lands; and a constant attention to revising laws and institutions to improve the operation of the government’s bureaucracy testify to the concerns and creativity of Venezuela’s first generation of leaders.

Throughout all of this however, Venezuelans found it impossible to change the basic model for their country’s economy and government, however much they understood the need. Although they could change the formal organizational structure from imperial branch office to independent competitive firm, the basic Spanish operational model remained intact throughout the century of transition. In this model, the country is a firm directed by the government and managed by a national bureaucracy. The bureaucracy serves to run the firm at the direction of the government, and when the firm fails to perform, the shareholders change the government and expect the bureaucracy to perform better under new direction. This model rests on the belief that the government and bureaucracy constitute the firm rather than the expectation that the government and bureaucracy will create rules that support the development of independent firms within the nation’s territory. This is a critical distinction, for it is an essential characteristic of the Spanish model that the government becomes responsible for the economic success of the country and directs the activities that will lead to that success. Individuals and firms may benefit, create enterprises, and seek opportunities, but they do so as part of the national firm not as independent risk takers. In the Spanish model inherited by Venezuela, failure of the system represented a government failure, not a failure of individuals and their enterprises. As a result, Venezuelan proposed solutions focused on government initiative more than on enabling individuals and their firms to compete in the world market.

Unfortunately as the century of transition concluded it became increasingly clear that the Venezuelan firm lacked the size and market power to significantly influence the Atlantic trading community and lacked the economic prosperity and surplus wealth to pay the costs of a fundamental change in its internal economy. Consequently, Venezuelans settled on an optimal course given their resources. They worked hard to adapt the country’s colonial export machine to the requirements of the world market and organize its government and institutions to support the necessary interactions with that market.

Few controversies illustrate this process better than the battle over the famous 10 de Abril de 1834 law. This piece of legislation passed in 1834 when Venezuela’s economy experienced a period of prosperity and promise bolstered by the stabilization of government, relative peace, and the high price for coffee. Designed to solve Venezuela’s lack of investment capital and encourage an inflow of foreign funds, it guaranteed lenders virtually complete control over the terms of loans and over the process of resolving a default. Most loans came in support of expanded coffee cultivation and benefited the agricultural elite. The loan funds came mostly from foreign commercial houses trading in coffee on the world market and had the support of the Venezuelan elite affiliated with this trade.

When the price of coffee fell in the late 1830s and early 1840s, many elite agriculturalists found themselves in serious financial difficulties. Having taken short-term commercial loans at very high interest rates to expand their coffee plantations, the falling export price left them unable to pay interest or principal on these annual or semi annual loans. Merchants could roll over and continue or call the loans every six months or at most a year. This short cycle exposed the agriculturalists to serious cash shortages as export prices fell before the volume from new plantings could generate sufficient funds to pay the debts. A default exposed the planters to the full effects of the 10 de Abril law and their lenders could and did put the defaulted properties up for auction to the highest bidder, producing distress sales at low prices. This situation divided the Venezuelan political elite between planter and merchant interests and provoked a fascinating blizzard of commentary and useful analysis.

This controversy and the subsequent political readjustments saw a transition of government control from one elite group known as the Conservative Oligarchy to another elite group known as the Liberal Oligarchy. For our purposes, it clarifies the operation of the Venezuelan system at the end of the century of transition and displays an operating paradigm that would prevail well into the 20^th century at least. (10)

The adaptation of Venezuela’s management during the second part of this century of transition took two concurrent but different forms. On one side, Venezuela’s elite presented a modernizing face to the rapidly expanding, industrializing market economies of the North Atlantic that represented the only source of capital and price-competitive consumer goods and the only market for Venezuela’s agricultural export crops. From this perspective, Venezuela functioned as close to the standards of the North Atlantic’s dominant economies as possible. Representatives of Venezuela spoke French, or German, or English, they drew up contracts and treaties, and they presented sober governmental reports on their fiscal affairs. They operated customs systems that met the minimum standards of this external world. The task of adapting to these standards in the 1830s and 1840s proved somewhat easier than in subsequent years as the distance between the dominant Atlantic economies of England, France, Germany, and increasingly the United States and the Venezuelan reality grew wider over time. An indicator of this distance could well be seen in the relative size of the major cities of the US compared to their Venezuelan equivalent in Caracas. In 1810, New York had a population of about 120,000 and Manhattan alone stood at 96,000, already at least twice as large as the most generous estimate for Caracas of 40,000. By 1850, New York’s Manhattan had reached a population of over 500,000 while Caracas remained about 50,000 and failed to exceed 100,000 by the last census of the nineteenth century in 1873.

On the other side, Venezuela’s elite managed an internal agricultural production system inherited in all its major characteristics from the clearly no longer competitive Spanish imperial enterprise. This productive system, an extractive machine designed to take value out of Venezuela, rested on a complex set of relationships between land, labor, and society built up through custom and law over the previous centuries. Independence may have changed many of the surface features of the Spanish firm in America, but except for the effects of property destruction and significant labor unrest, most of the apparatus for managing the extractive machine remained in place. Indeed, a large portion of the work of Venezuela’s independent elite, especially after 1830, addressed the repair of those elements of the local extractive economic engine damaged by independence.

With the elimination of the caste system and its complex set of relationships between elite and non-elite, and with the wartime disruption of local micro economies of plantation and farm, labor proved a major concern. To replace the lost Spanish coercive mechanism, Venezuela passed multiple laws, rules, and regulations to restore order, regularity, and control to the rural workforce. A significant part of the discussions dealt with the issue of replacing the labor lost through war, manumission and anticipated abolition, with better labor control and more laborers through immigration.

The lengthy debate over credit and lending represented an effort to find a replacement for the long-term, land based credit previously provided by the Church through censos and other ecclesiastical loans and sought to restore the legal protections provided landowners and other possibly improvident borrowers contained in Spanish law. Each revolt or uprising that threatened the peace brought a renewal of a discussion about the "social question," a coded reference to the problem of finding a replacement for the Spanish caste system that served to control and manage the aspirations of pardos and free blacks in the Venezuelan context.

The new republican elite after independence refined this Janus mask strategy for inserting their local enterprise called Venezuela into the world market. One face to the outside world, modern and sophisticated; the other face to the inside world, traditional and colonial. Depending on the external demand for Venezuela’s export products, one or the other face might predominate. In good times, the modernizing face smiled inward as well as outward, investing in roads, schools, and other public works. In bad times, the traditional face predominated, driving that colonial export machine hard to produce sufficient returns in the world market to support a minimum acceptable elite lifestyle.

The central city of Caracas served a special function in this process, for Caracas held the bureaucratic infrastructure connecting the traditional internal world to the modern Atlantic markets. The elites divided into factions and fought over who would control that bureaucracy and manage the connection, for the details of the connection determined which element of the elite would prosper most, or in hard times, not prosper at all. Weak institutional structures for resolving disputes and reconciling conflicting interests combined with a cyclical and often-marginal economy encouraged occasional semi-organized violence as one of the principal mechanisms for substantial management change. The caudillo, so popular a figure for many observers, simply filled a vacuum of authority, creating the illusion of legitimacy by the authority of arms and the force of will.

The construction of the two-sided Janus face for Venezuela required an intellectual and ideological base to explain, rationalize, and frequently cover the archaic but inescapable internal reality of the Spanish colonial extractive machine that sustained the country’s economic and social structure. Constitutions and laws and the other formal elements of the liberal democratic republic provided one element of this base. Like other parts of the Venezuelan reality, this exercise too had its characteristic duality. Many of the leaders of Venezuela’s highly competent and world-class intellectual elite genuinely sought the appropriate model that could change Venezuela’s economy and reconcile the country’s two faces. Whatever the intentions, sincerity, or cynicism of the many contributors to the construction of Venezuela’s national identity, the result served in practice to sustain the two Venezuelas.

National economic systems generally require a national identify to provide intellectual, historical and cultural context. Venezuela’s organic national identity is Hispanic, derived from the conquest, colonization, and administration of America. However, the rhetorical structure and political project of independence demanded the rejection of this Hispanic identity. After independence, Venezuelans had the formidable task of inventing a national identity without using its Hispanic past. In the world of nations where Venezuela operated as a presumed independent republic, the ownership of a national identity, like the existence of a constitution and the formal rule of law, appeared a required element for the external face of Venezuelan nationality.

In addition to the external audience that looked for touchstones of national uniqueness, the elite also needed an authentic national myth to help define the context of their internal control of this region called Venezuela. Each elite group that reached power in Venezuela naturally saw itself as the culmination of the historical process of nation building and sought to connect itself to the country’s traditions at the same time it established what its members expected to be a long and prosperous reign. The Hispanic roots of Venezuelan history could not provide the material of the internal version of the national myth. To fill this cultural void, Venezuelans turned to the invention of Bolivar as the mythological creator of Venezuelan national identity. In our current enthusiasm for the Liberator, many of our contemporaries, although no one in this room, forget that Venezuela emerged as a nation by rejecting and proscribing its most famous son. Venezuela’s founders wanted no part of the living Bolívar. Not until a decade after his death did his countrymen decide to resurrect their hero for another purpose. In many ways, the invention of the Bolívar creation myth ranks as one of the most inspired ideological constructs of our time. Coming as it did at precisely the moment Venezuela also invented its dual model of operations (internal and external), the myth served exceptional well in supporting both side of this duality.

This choice to embody national identity appears in retrospect as nothing less than perfect. Bolivar served both the needs of the external accommodation to the Atlantic world economy and the internal accommodation of managing the local production of export commodities.

From the outside, viewed by the community of nations, Bolivar’s extraordinary achievements accredited him as a worthy international hero. Better than Washington, more heroic that Napoleon, authentically Venezuelan, Bolivar’s dramatic life-and-times, even without hagiographic exaggeration, gave Venezuela a world-class creation myth. At once, it gained a distinction few other Spanish American nations could claim. Venezuela had a first order, internationally validated, and universally admired national hero and symbol.

From the inside, Bolivar’s authenticity as a native caraqueño accredited him as an appropriate symbol representing the power and glory that should be Venezuela’s, a legitimizing token for the regime in power. By embracing and further glorifying this authentic Venezuelan hero, each successive regime employed the cleansing properties of the Bolivarian legacy to distance itself from the often irregular methods used to acquire power. In Venezuela, the right to glorify Bolivar became synonymous with the right to govern the country. (11)

Venezuela struggled to define its national perspective and create an autonomous and unique historical trajectory during the century of transition against the dissolving power of the global economy. Since at least the 1750s, when Venezuela began to emerge as an economically and politically integrated element within the Spanish colonial system, its economic and social opportunities responded primarily to the needs of the global economy rather to a locally autonomous historical tradition. The Bolívar myth gave Venezuela a means to legitimize the continued operation of the colonial extractive economy and avoid confronting the stark contrast with the rapidly advancing industrial world. In the struggle to maintain an internationally competitive elite lifestyle and generate some measure of economic progress for the rest of the country, Venezuela recognized its only comparative advantage lay in sustaining an export driven commodity economy. Ever since, its history has turned on the construction of successive accommodations that permit the maximum return to the country from extracting and exporting commodities. Ideology, politics, and social change move in rhythms determined by the flow of that global economy, and Venezuela’s major social and political changes follow the opportunities and disadvantages of its relationship to that economy.

The miracle of this experience, of course, is that Venezuelans made so much out of these circumstances. Although it is fashionable to complain that the fragmented parts of the Spanish empire failed to reach world standards of development and prosperity, the surprise is how well Venezuela did given its comparative disadvantages in the world economic order visible since well before independence. Measured by almost any scale, the historical record of intellectual, economic, political, and social accomplishment of Venezuelans throughout the century of transition is remarkable. Will the Venezuela of the petroleum era produce a first world economy? That is a story for the future, but the experience of the past gives us a much better insight into the dynamics of world trade and production within which Venezuela has made and will make its future.

Notes