VENEZUELAN POLITICS AND ECONOMY 269
cooperation of foreign capital, but other countries
were reluctant to invest in a country whose recent
history had been marked by recurrent episodes of
civil war. In 1879 he secured his fi rst foreign con-
tract, with a group of British investors for the con-
struction of a railroad connecting Caracas with its
major port, La Guaira. By the time he left offi ce,
Venezuela had eleven railroad lines completed or
under construction, all designed to serve the export-
import trade by connecting Caracas and the major
agricultural and mining areas with the ports. Given
Venezuela’s unfavorable terms of trade—the long-
term tendency for the prices of its exports to decline
and those of its manufactured imports to rise—the
net result was to reinforce Venezuela’s economic
dependency, promote decapitalization, and leave
the country a legacy of large unpaid foreign debt
that in time posed a threat of foreign intervention
and loss of sovereignty.
Guzmán Blanco’s anticlerical policies led to a
further weakening of the church. Tithing had al-
ready been abolished as “an excessive tax burden”
on the citizenry. Under Guzmán Blanco, the priestly
fuero was ended, civil marriage and civil registra-
tion of births and deaths established, and convents
and seminaries closed. The church was also forbid-
den to inherit real estate, and many church estates
were seized by the government. Guzmán Blanco
also tried to prohibit black and Asian immigration,
even as he enticed Europeans with generous subsi-
dies. Ultimately this failed, and Venezuela remained
a society in which a small, self-proclaimed “white”
wealthy minority ruled a “black” majority.
For the rest, Guzmán Blanco’s development
programs caused little change in the country’s eco-
nomic and social structures. In 1894 the pop ulation,
numbering some 2,500,000, was over whelmingly
rural; only three cities had a population of more
than 10,000. Most of the working population was
employed in agriculture; what little modern in-
dustry existed was limited to light industry such
as food processing and textiles. Artisan shops, em-
ploying some 50,000 workers, were economically
much more important.
After a chaotic decade following the demise
of Guzmán Blanco, Cipriano Castro, an energetic
young caudillo from the Andean state of Táchira,
seized power with his compadre (buddy) Juan Vi-
cente Gómez, a prosperous cattle raiser and coffee
grower. Castro’s rise refl ected the growing eco-
nomic importance of the Andean coffee-growing
region. Although he tried to continue Guzmán
Blanco’s policy of centralization by establishing a
strong national army to replace the old-time per-
sonal and state militias, his program of military
reform was handicapped by declining coffee prices
that reduced state revenues. This led to a series of
caudillo revolts repressed at heavy cost and a ma-
jor confl ict with foreign powers whose blockade of
Venezuelan ports deprived the government of a vi-
tal source of income: custom duties.
Castro presided over a country in ruin due to
devastating civil wars and a prolonged depression.
The German and British governments demanded
immediate settlement of their nationals’ claims for
unpaid debts and damages suffered in civil wars,
but the government could not pay. In December
1902, despite Castro’s offer to negotiate, the two
powers sent an Anglo-German squadron of twelve
warships into Venezuelan waters with orders to
seize or destroy Venezuela’s tiny fl eet and blockade
its ports. The powerful guns of the Anglo-German
squadron soon silenced the answering fi re of Ven-
ezuelan coastal batteries, and the aggressors occu-
pied several Venezuelan ports. The unequal nature
of the struggle, the catastrophic economic impact
of the Anglo-German blockade, and the continu-
ing internal revolts in some areas of the country
made a settlement necessary. Accordingly, Castro
asked the U.S. ambassador to serve as mediator in
negotiating a settlement. The terms required Ven-
ezuela to allocate 30 percent of its customs duties
to the payment of claims, provided for an end to the
blockade, and reestablished diplomatic relations
between the parties, but the settlement denied
Venezuela compensation for its losses.
Castro’s last years in power were troubled by
new clashes with foreign states—France, Holland,
the United States—usually caused by his insistence
that foreign nationals were subject to Venezuelan
courts and laws. As Castro’s health declined, Juan
Vicente Gómez, with support of foreign powers,
notably the United States, ended the Castro regime
and launched a new liberal dictatorship.