CARACAS, Wednesday April 01, 2009 | Update
The final organization of the Central Bank of Venezuela (BCV) in the last quarter of 1940 was a big step for the domestic economy. Despite the resistance of some conservative sectors that were afraid of the potential government power over the national banking, the BCV helped normalize Venezuela's financial situation. Thus, for instance, the issuance of banknotes, at the discretion of every private bank, was channeled
Façade of the second head offices of the Central Bank, at Urdaneta Avenue, downtown Caracas File Photo: Andrés Mata Foundation
The world was in turmoil. It was the beginning of World War
II, a six-year conflict that claimed 60 million casualties.
World news focused on the advance of German troops and retaliation of those attacked. A headline in El Universal read: "The German attack on England is huge."
There was widespread concern. Venezuela was not free from the confrontation that effectively started in 1940. The outbreak of the war lessened the country's trade, following a restriction of the maritime transit. There was shortage and exports were reduced. The country, with only four years free from dictatorship, had a feeble economy. However, it was beginning to capitalize on oil revenues.
In this context, President Eleazar López Contreras enacted on September 8th, 1939, a law to organize the Central Bank of Venezuela (BCV), just one week after the outbreak of the war.
As the first BCV President Jesús Herrera Mendoza said, "The idea of creating a central bank had been felt for some years, but discussions began after Juan Vicente Gómez's death, in 1935," Ipostel quoted in 1990.
In this regard, historian Manuel Caballero told in 2007 a peculiar story. The opposition leader at that time, Rómulo Betancourt advocated the creation of a central bank, like President López Contreras. Betancourt had gone underground and anonymously wrote for Crítica journal. In this way, both of them joined efforts to "face" the opposition of some sectors, including the private banking, and furthered the BCV development. There were multiple objections to the organization of the bank, to such an extent that complaints were filed against the constitutional nature of the September's law. All of the complaints were dismissed.
The beginning of the 1940's marked the BCV development and organization, finally implemented on October 15th. Previously, on August 14th, its stockholders held the organizational meeting.
Under the Law of 1939, the BCV was born as a corporation with an initial capital stock of USD 4,666 and a joint shareholding (50 percent for the state and 50 for private stockholders). It had initially 10,818 stockholders.
El Universal reported in 1940 that the BCV functions included regulation of the local currency; centralization of the issuance of banknotes and monetary reserves, and regulation of the gold trade.
On October 15th, the BCV started operations in a building located between the corners of Veroes and Jesuítas, downtown Caracas. On January 1st, 1941, it was formally opened by President López Contreras.
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