How rents on concessions developed in Venezuela

The introduction and first chapter of El petroleo en el pensamiento economico venezolano by Asdrubal Baptista and Bernard Mommer (Ediciones IESA 1997) give a good historical background to how oil rents began in Venezuela.  In the 1930s, there were two very different economies developing in the country: one linked to the traditional agricultural activities of the region and the other was found in the foreign dominated petroleum industry.  The question that the State needed to address was how to handle the oil concessions.

Europe's social revolution was defined by the historical pressure to reduce or eliminate the profits landowners received from their monopoly on land ownership and it's development.
 However, mine production had a different trajectory than that of land because workers on the land weren't considered to have much to do with the natural resources found within it.  As a result, most of the mines in Europe, with the exception of in the UK, were declared property of the state.  As such, the state became an obstacle for privcate energies that wanted to develop the mines and the state also had free access to the capital produced from the mines.  In the Spanish tradition, Venezuelan mines had been property of the state since colonial times and concessions were given freely with no rent on the land, following the French example.  When the importance of the role of oil in World War I was understood, international oil companies began to jockey for concessions and a consciousness of the importance of nationalistic rents began to grow in Venezuela.

There were two examples of rents that were typically collected for oil production at the time 1) taxes and 2) fees for the right to exploitation of the concession.  The latter was not collected in Venezuela prior to WWI, though it was used in the U.S.  In 1920 the Minister of Development (Ministro de Fomento), Gumersindo Torres, proposed that rent apart from taxes be collected for the use of the land.  His argument was that Venezuela was not advanced enough to produce its oil directly or indirectly because the work was too technical as well as capital intensive.  Rents were the only possibility that the government had at that time profit from the national resources.  The only question was who should benefit from those rents: the state or the landowners?

Torres believed that the landowners should benefit from the oil rents while the president of the Bank of Venezuela, Vincente Lecuna, felt that the profits would be more productively used for modernization in the hands of the State.  When the rents were established Torres had his way initially and the landowners received the profits, but over time Lecuna's strategy won out and in the 1940s the benefit passed to the hands of the state.  It is worth further investigation to see if this revenue was used as Lecuma wished, to be distributed fairly and productively with the result of modernizing the country.