This book details which Germans pushed for overseas expansion, how they tried to implement their ambitions, and why they ultimately failed.
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Germany's Vision of Empire in Venezuela, 1871-1914
By Holger H. Herwig
PRINCETON UNIVERSITY PRESSCopyright © 1986 Princeton University Press
All rights reserved.
FROM COFFEE TO RAILROADS: GERMAN MERCHANTS AND INVESTMENTS
Germany's economic relations with Venezuela basically can be divided into a pre-industrial and an industrial period. Indeed, it would be more accurate before the 1880s to speak of Hamburg's trade with "Little Venice" in terms of coffee, cacao, tobacco, and cotton imports; according to one estimate, Hanseatic merchants in 1845 accounted for sixty-seven of the ninety-eight German firms engaged in commerce in South America. Exports of iron wares, machine tools, chemicals, and weapons take on meaningful proportions only well after German unification in 1871. Thus it is to the early Hanseatic coffee trader that one must look in order to garner some understanding of what a later generation would celebrate as the Deutschtum overseas. To be sure, there had been a brief period in the sixteenth century when the brothers Bartholomäus and Anton Welser of Augsburg had tried to attract colonists to and establish trade with Coro and its hinterland under a charter granted by Emperor Charles V. Yet, despite highly advantageous terms — tax exemption for all settlers, relaxation of the Spanish twenty-percent tax on mining precious metals, and a net return of five percent on all incomes — the venture had not succeeded within two decades. Thereafter, individual enterprising Hansa merchants plied the South American trade either through Cadiz or through Amsterdam in the Spanish Netherlands. And while some Hamburg skippers as early as 1801 had sailed directly to La Guayra and Puerto Cabello, the number of such passages never exceeded ten per annum by the 1820s.
Caracas cotton reached Hamburg markets in the 1780s, but the greatest single boon to Hamburg-Venezuela trade was to be coffee. Wilhelm Sievers, who travelled extensively in Venezuela around 1900, claims that the bean was first brought to the West Indies from Africa and Arabia in 1717, and that it was taken to Venezuela perhaps as early as 1730 and certainly by 1740. Coffee plantations flourished in the state of Táchira and around Caracas by the mid-1780s, expanding thereafter into the Aragua valleys near La Victoria and to Trujillo. The first regular exports of coffee to Hamburg were noted between 1786 and 1790. By the mid-1830s, Hanseatic merchants sent mainly coffee, cacao, tobacco, and cotton home in the value of about 1.3 million Mark, while exporting to Venezuela mostly linens, iron wares, glass, brandy, butter, and beer estimated at about 500,000 Mark.
Unfortunately, this trade was severely crippled when Britain, France, the Netherlands, and the United States concluded favorable trade agreements with Venezuela by the mid-1830s. In fact, traders whose countries had not concluded formal treaties with Caracas were forced to pay special surcharges of as much as fifty percent upon all imports. In addition, they had to ship their goods in bottoms belonging to those nations which had established formal trade agreements — at an additional charge of two to three percent. In the process, their own shipping lines suffered accordingly. Unsurprisingly, Hamburg rushed to conclude a trade treaty with Venezuela in May 1837, and commerce quickly blossomed to around 5 million Mark per year, or an increase of 130 percent over the earlier period. The nature of the trade also changed: Venezuela now sent mainly cacao, coffee, dividivi, and cow hides to Hamburg in return for machine-made textiles and silk products as well as cement, drugs, and steel. It is estimated that about a dozen German firms dominated the Hamburg trade at La Guayra and Puerto Cabello.
The issue of a formal trade treaty continued to trouble German-Venezuelan relations. Prussia and the German Customs Union (Zollverein) had concluded trade accords with Argentina (1857), Paraguay (1859), Chile (1862), and Peru (1863), but a formal agreement with Venezuela drafted in April 1858 was never ratified by either side. Nor was a similar pact negotiated between Hamburg and Caracas in March 1860 formally adopted, mainly because Venezuela insisted upon a clause stating that in case of damages arising from domestic unrest — as had been the case in 1847 — foreign merchants were to submit their claims only to Venezuelan courts under local law. The newly formed German Empire in 1871 likewise refused to ratify a trade accord with Venezuela; the two countries in 1883 agreed only to honor each other's patent rights. In the following years, Berlin concluded formal trade pacts with Brazil and Mexico (1882), the Dominican Republic (1885), Ecuador, Guatemala, Honduras, and Paraguay (1887), El Salvador (1888), and Uruguay (1892). Chancellor Leo von Caprivi in 1891 stated that these trade pacts had been negotiated "mainly as a counterweight to American aspirations" in South America. But a trade treaty with Colombia in July 1892, especially, wherein Berlin agreed that Bogotá could not be held accountable for damages arising from domestic violence, was firmly rejected by the leading 200 firms in Hamburg, which argued that it would only "encourage" South American states to "seize German property with impunity." The issue of state liability for revolutionary violence, of course, would bring irritation and confusion right down to the international blockade of Venezuela in 1902-1903, with the result that Berlin did not pen a formal trade treaty with Caracas until the summer of 1909.
The lack of a formal Handelsvertrag notwithstanding, German-Venezuelan trade grew rapidly, increasing fully 143 percent in the first five years of the 1890s. Indeed, if we look at the longer range from 1837 until 1890, Hamburg's imports from Venezuela increased 1,100 percent, and its exports 1,500 percent. And in the final five years before the Great War, the Reich's trade with Venezuela stood at 26 million Mark, placing it on the same level as that with Colombia, Peru, Cuba, and several of the smaller Central American states.
In order to handle this increasing volume, German merchant lines began to offer direct sailings between Hamburg and Venezuela, thus bypassing the customary stops at Southampton and Liverpool en route. As early as 1855, packets sailed directly to La Guayra and Puerto Cabello; non-stop sailings to Maracaibo began in 1860. The greatest impetus to trade with Venezuela came after 1871, when both the Hamburg-America Line and the North German Lloyd inaugurated regular service with Venezuela via the West Indies. And while this direct connection proved highly irregular owing to Venezuela's repeated domestic troubles and the notoriously volatile nature of the coffee market — where fluctuations of nearly 300 percent (from 85 to 30 Bolívars per quintal) in a short span were not at all uncommon — the Hamburg-America Line profited from the trade with the West Indies and Venezuela. By the turn of the century, it not only carried fully one-half of Venezuela's coffee exports, but purchased two shipping lines, de Freitas and Kosmos, for that trade. Moreover, South American shipping was conducted without the benefit of state subsidies.
Before additional statistics are presented concerning either the value or the volume of German-Venezuelan trade, a word of caution is in order. Statistics are notoriously inaccurate and can at best be taken as relative indicators of overall trade. In the first place, German commerce figures as late as 1888 contain only the activities of states associated with the Zollverein, to which the vital Hanseatic cities did not belong. Hamburg was listed as a "foreign country," and hence no records were kept of the final destination of goods passing through its duty-free port either overseas or to Europe. And when the "free-port" regions were incorporated into the German Empire in 1906, Hamburg was again conspicuous by its absence. Finally, a host of other technicalities combined to render trade statistics suspect: volumes rather than values were usually listed; goods were classified according to tariff rates rather than to actual description; no records were kept either as to place of production or final destination; goods crossing more than one border, including Hamburg's duty-free port, were excluded from all tabulations; and the very area of the Zollverein was not static but rather in flux.
By the turn of the century, most observers in Venezuela agreed that the German merchant colony was dominant, controlling nearly one-third of all commerce and two-thirds of the trade in manufactured goods. It therefore becomes necessary to take a closer look at this group. There were thirty-eight German houses operating in Venezuela by the end of the nineteenth century. Of these, eight had established bases at Caracas, six each at Maracaibo and Valencia, five each at Puerto Cabello and Ciudad Bolívar, four at La Guayra, three at Barcelona, two at La Victoria, and one at Carupano. From Caracas, they had cast a web over much of the land, monopolizing the import and export trade, mortgaging harvests, and lending money at twenty-percent interest rates. Their estimated real property holdings of 20 million Mark were mainly in coffee plantations, with F. H. Ruete of Hamburg leading the list with seven coffee haciendas under cultivation. By far the largest house was that of H. G. & L. F. Blohm of Hamburg, with branches located at Caracas, Ciudad Bolívar, Barquisimeto, La Guayra, Puerto Cabello, Valencia, and Maracaibo. Breuer, Möller & Co. as well as Van Dissel, Rhode & Co. came next, with trade centered on Maracaibo and San Cristóbal. Unfortunately, very little is known of the Blohms' commercial empire; they left neither diaries nor letters and no family archive has survived. By and large, the family network operated in great secrecy and apparently concluded many of their transactions by word of mouth or handshake.
A glance at the German merchant colony at Maracaibo will provide some insight into the activities of the Hanseatic traders. Maracaibo's foreign trade was largely in the hands of five major German houses: Blohm, Breuer, Van Dissel, H. Bornhorst, and Schon-Willson; lesser Hansa firms included Beckmann & Co., E. Herrnbrück, Christern & Co., and Ad. Kehrkahn. Their direct holdings — not counting business credits — were estimated at 12 to 15 million Mark. The Germans dominated the local club de commercio, maintained a "German Rowing Club," organized a chapter of the German Navy League, and alleviated the torrid climate through the 300,000-bottle annual production of the Cervecería de Maracaibo, built with German machinery and run by a German brewmaster. And while opinions as to the quality of the Maracaibo Pilsner differed greatly, the merchants nevertheless agreed that it had been a boon to German industry as all hops, malt, bottles, boilers, instruments, ice plant, and the like had come from Hamburg. Consul Eduard von Jess of the casa Breuer, Moller & Co. merely lamented that the searches for artesian wells had only brought in unwanted "petroleum springs."
The United States Consul at Maracaibo, Eugene H. Plumacher, left a detailed description of the business activities of the Maracaibo Germans. He noted that they "practically monopolized" the coffee trade not only at Maracaibo, but also of the entire Táchira region at San Cristóbal, Tovar, Mérida, and Valera as well as San José de Cúcuta in Santander, Colombia (despite a special twenty-percent tax on all coffee brought out from Colombia through Maracaibo). "They are thoroughly acquainted with all the wants of the people in the interior, and are in fact personally known to most of the leading men." Above all, the Germans "know what the market needs and supply it. ... These Germans not only speak Spanish fluently, but also speak French and English." Rating the German business system "far superior to all others," Plumacher detailed that effectiveness:
Some of these firms had a dozen or more young Germans in their service engaged for a term of years, who rise from position to position until they become partners, and finally Chiefs, the Seniors retiring as rich men and fixing their residence chiefly at Hamburg where they attend to the export of merchandise for the Maracaibo houses and receive and dispose of the produce shipped from here.
The Chiefs housed and fed their staffs, clothed them and provided medical care, while maintaining "strict control and discipline." Even a rigid dress code furthered the appearance of the Germans in the eyes of the natives: dinner was taken only in black tie. The "recruits" from Hamburg were often a sorry lot "with their heavy, clumsy boots, ill fitting German clothes, and coarse linen, and with a general air of rusticity." In short order, however, they were observed on the streets of Maracaibo "in white duck costumes of elegant cut and fit, fine straw hats, neat polished boots and with shirts and collars of the latest mode." Above all, they impressed the Venezuelans with their social cohesiveness. "They had their club, their glee club, their boat club with all the members elegantly dressed." Moreover, the German merchants had pooled their financial resources in order to purchase and operate a small fleet of ships that dominated the traffic not only on Lake Maracaibo, but also on the vital Zulia-Catatumbo River system that brought Colombian coffee to Maracaibo. Finally, the American consul observed much the same pattern of German trade practices at San Cristóbal, where four German houses dominated with 12 million Mark capital, and at La Guayra and Puerto Cabello, where the Germans worked with capital of 10 to 12 million Mark and property holdings of about 1 million Mark in each.
This German business system reached into the interior of the land, where it recruited the most energetic young Venezuelans to act either as intermediaries or as direct buyers. Especially from Maracaibo, the Germans expanded their businesses into Venezuela's Andean states and into northeastern Colombia, sending apprentice clerks to these regions to learn the language and local trade practices; Cipriano Castro was but one such journeyman recruited by Breuer, Möller & Co. in Táchira State. And the system proved highly effective. Consul Plumacher in 1893 noted that the "Hamburg market has gobbled up" all the Maracaibo coffee trade. "In all the other ports it is the same." The following year, he again lamented that "All our business is in the hands of the Germans," advising Washington "simply [to] recall our consuls." And, while the pessimism of these reports may have been exaggerated, Plumacher, as a native of Stein am Rhein in Switzerland, was nevertheless in a position to learn intimately the workings of the Hamburg merchants at Maracaibo.
Indeed, the British at about the same time discovered the validity of Plumacher's observations. Both the government and the Board of Trade joined in the so-called "Made in Germany" alarm in 1896, and began to gather information from around the world regarding the efficacy of the German business system. From consuls in Venezuela came the news that the Germans had attained their dominant position there "by steady perseverance." Above all, the Hamburg merchants "assimilate themselves to the natives of their adopted home, acquire the language quickly and thoroughly, and in that way gain the sympathies of the people with whom they have intercourse." The final report on the "Made in Germany" alarm gave further evidence of the German manner of using local weights, measures, and currency; publishing their trade catalogs in Spanish and Portuguese; paying great attention to the needs of local markets; taking care over even small orders and packaging and invoicing; being willing to work for smaller profits; and using commercial travellers schooled in the language and customs of the country they worked. Not specifically stated was the fact that German home industry also used "dumping" tactics and set lower prices for overseas in order to capture foreign markets from established American, British, Dutch, French, and Italian entrepreneurs.
Excerpted from Germany's Vision of Empire in Venezuela, 1871-1914 by Holger H. Herwig. Copyright © 1986 Princeton University Press. Excerpted by permission of PRINCETON UNIVERSITY PRESS.
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Table of Contents
- FrontMatter, pg. i
- Contents, pg. vii
- Tables, pg. ix
- Acknowledgments, pg. xi
- Introduction, pg. 3
- Chapter I. From Coffee to Railroads: German Merchants and Investments, pg. 17
- Chapter II. The German Community: Deutschtum as a Trojan Horse?, pg. 47
- Chapter III. The Blockade 1902-1903: Motivation and Hesitation, pg. 80
- Chapter IV. The Military Advisors' Game, pg. 110
- Chapter V. Germany, Venezuela, and the Panama Canal: The Elusive Quest for Agerman Naval Base in South America, pg. 141
- Chapter VI. Venezuela and President James Monroe's "Insolent Dogma", pg. 175
- Chapter VII. Parting of the Ways: Germany, Great Britain, And Venezuela Around 1900, pg. 209
- Conclusion: What Price Imperialism?, pg. 236
- Bibliography, pg. 247
- Index, pg. 273