BRAZILIAN MANUFACTURES
There is much controversy in Brazil on the subject of national manufactures. I have heard extremists declare roundly that Brazil ought not to manufacture anything at all, because each mill-hand is one more person taken away from the fields to which all Brazilian attention should be given.
“Brazil is an agricultural country,” a cotton planter said to the writer. “She cannot legitimately compete with the manufactured products of great industrial countries because the price of living is too high here. To obtain large revenues from the import taxes which are the Federal Government’s source of support we have heavy duties against large classes of goods entering the country; the barrier has been so high that it has been worth while for factories to be started here, sometimes making things from material produced in the country, which is not bad policy when we have enough labour, but often making goods every separate item of which is imported, an absurdity.”
He went on to say that there is a considerable manufacture of matches in Brazil, but that the igniting chemicals, the little sticks, and the boxes were all imported; nothing was done but the mere putting together. “It is only remunerative because the tax on imported matches is so high, and in many districts owing to want of communication the match factory has a monopoly of local trade—a purely artificial condition.” This fazendeiro was equally opposed to the silk and velvet factories of Petropolis, declaring that “every item, raw silk, colours, machinery, even the skilled weavers, are imported” and that until Brazil produces national silk—a beginning has been made—she should not have silk factories.
Coffee-loading equipment at the port of Santos, State of São Paulo.
Sugar lands In Pernambuco.
This view was that of the agriculturist who sees a menace to labour supplies in the growing manufactures of Brazil: I give it for what it is worth, as an interesting view point with force in some of the argument. But there are industries in Brazil which the agriculturist will admit to be legitimate in themselves and helpful to himself in that they tend to raise prices for his raw products. Of this class the most shining example is the list of cotton mills. They are already so active that the national supply of raw cotton is not sufficient for their needs, demand being so acute in 1919 that the price in Brazil rose to forty cents a pound. The output is sold in Brazil, supplying over eighty per cent of the fabrics used, with a surplus for export since 1918.
It is not generally recognized to what extent Brazilian manufactures have developed. The great industrial region is Rio de Janeiro. Her industrial advance has been made possible in this direction, as in agriculture, by the influx of sturdy Italians, Portuguese and Spanish workers.
At the same time the manufacturing section is not confined to S. Paulo; it is notably active in Minas and Rio, especially where electric power derived from waterfalls is employed, and in Bahia and Pernambuco where tobacco and sugar create legitimate home industries, and where there is a sufficiency of native and negro labour, the latter an inheritance from slavery days.
The total value of the products of Brazilian factories is about 2,000,000 contos of reis, equal at twelve pence exchange to £100,000,000 or in U. S. currency, $500,000,000 mais ou menos. This is a larger sum than the value of Brazil’s exported agricultural and forestal products, which was about 1,811,000 contos in 1919, and 1,464,000 contos in 1920.
This calculation, however, is not quite fair because it does not take into consideration the agricultural produce consumed in the country; there are no figures available on this subject.
In a review of commerce published in May, 1916, the Jornal do Commercio said that out of the ninety-four classes of Brazilian manufacture, eighty were free from internal taxes (the “imposto do consumo”) while fourteen were subject to tax, as well as to foreign competition.
It was demonstrated that in these fourteen classes Brazilian manufactures fell below fifty per cent of the total consumption in only one instance, that of pharmaceutical specialties. The most important items are these, in round numbers:
| Brazilian-made | Imported | ||
|---|---|---|---|
| Woven fabrics (chiefly cotton, but some silk and wool) | 450,000 contos | 47,300 contos | 82 |
| Beverages (mineral waters, beer, wine, spirits) | 101,300 contos | 47,640 contos | 68 |
| Footwear (leather shoes and boots, and alpagartas) | 150,225 contos | 2,425 contos | 97 |
| Prepared tobacco, cigarettes and cigars | 39,000 contos | 1,565 contos | 96 |
| Hats | 29,000 contos | 3,800 contos | 86 |
| Matches | 18,000 contos | 4 contos | 99.9 |
| Conserves | 13,300 contos | 9,800 contos | 58 |
| Pharmaceutical specialties | 11,700 contos | 15,780 contos | 43 |
In 1921 the number of home-made goods paying imposts rose to 21, and the value to well over one million contos, and includes, besides those detailed above, vinegar, walking sticks, salt, candles, perfumeries (of which Brazil makes sixty per cent of the consumption) and playing-cards.
Among the large class of manufactures free from internal taxes are the important items of cotton thread, jute products (rope, cord and coffee bags) the products of ironworks, potteries, furniture factories; goldsmiths and jewel-workers, soap makers, paper and paper-bag factories, biscuit and bottle, shirt, mirror, trunk, ink, pipe, pin, and window-glass makers; but all of these pay a contribution to their State or municipality or both, appearing in revenue lists under “Industrias e Profissões.”
In the city of São Paulo this tax upon industries and professions, the latter list embracing bankers, lawyers, barbers, shoe-shiners, hotel-keepers, doctors, newspaper sellers and so on with true democratic impartiality, brings in over forty per cent of the municipal income; it is now worth some three thousand five hundred contos a year, or let us say nine hundred thousand dollars, the cotton factories paying the biggest item, twelve thousand dollars, while shoe factories, jute mills, potteries, jewellers, furniture makers and metal works each pay about eight thousand dollars.
It is plain that manufacturers do not have things all their own way in Brazil, and must be prepared for fairly heavy taxes, but one does not hear the same complaints about petty taxation for every trifle as in the Argentine; on the other hand, the mill owner has not to face cut-throat competition as in older manufacturing countries, is able to get an excellent price for his products, is able to buy land at inexpensive rates and to obtain comparatively cheap labour. As soon as a district becomes thickly sown with factory chimneys prices of land and labour automatically rise, of course; this natural law has operated already in the now densely populated and built over suburbs of São Paulo, Braz and Moóca, and is, under one’s eyes, transforming the windy upland flats of Ypiranga. A year or two ago much of this area was red clay swamp, with a cottage here and there and a few Italian market gardens producing vegetables for the city dwellers, and land could have been bought for ten milreis an acre or less; today it is worth from two hundred to five hundred milreis; the wet lands have been filled in, an enormous undertaking, rows of workmen’s houses extend for miles to the crest of the hill where the Monument stands commemorating the Grito da Independencia, and from its summit one has a view that is mottled with factory smoke and punctuated with tall chimneys. To see this and to watch the crowds of pretty chattering Italian girls pouring out of Braz and Moóca factories at noon or evening is to obtain a revelation of the newer South America. It is no longer a land of sugar and brazil-wood only and although the agriculturist may shake his head over the lack of hands on the farm, manufacture in Brazil is a live, energetic phase of her modern development. São Paulo City was employing, by the end of 1921, over twenty-five thousand horsepower of electrical energy in her factories.
The fabric-weaving factories in all Brazil, including cloths of cotton, jute, linen, silk and wool, were 303 in number in 1914, employing 75,000 workpeople and capital totalling over 368,000 contos of reis; in 1920 they had increased to 328 including 242 cotton mills which alone employed 109,000 hands. The premier producer of cotton cloth in 1920, in values, was Rio de Janeiro (Federal District) with an output worth 102,000 contos; next came S. Paulo State, 92,000 contos; then Minas Geraes, 91,000; Rio de Janeiro State, 46,000; Bahia, 32,000; Pernambuco, 21,000; Alagôas, 16,000; Sergipe, 12,000; Maranhão, 11,000; Rio Grande do Sul, 9,000; Ceará, 3,000; and Piauhy, Rio Grande do Norte, Paraná, Parahyba and Espirito Santo, about 1,200 contos each. The States absent from cloth manufacturing returns are the great forestal territories of the extreme north, and those of the vast interior uplands, where conditions are not greatly changed from the time prior to the Portuguese discovery so far as development is concerned.
In numbers of mills São Paulo again comes first with seventy-eight mills making cloths: fifty-five of these weave cotton alone, leaving a higher proportion of fabrics made from other materials than in sister States; generally speaking cotton cloths occupy the greatest share of capital and labour, as for example in Minas, where sixty fabricas de tecidos operate, and out of the total value of the production, 23,500 contos, cotton accounts for over 22,600 contos. With a larger number of cotton-cloth mills at work than S. Paulo, but with production worth not much more than one-fourth, it is clear that factories are very much smaller in the interior State; nevertheless, she is able to pride herself upon a thriving industry, occupying nearly nine thousand people, twenty-five thousand contos of capital, and using ten thousand tons of raw cotton. In common with the other weaver States of the Brazilian Union, Minas ships her cloths to less industrially developed regions: in this connection some light is shed upon the ramifications of finance cum industry by the President of the Sociedade Mineira da Agricultura (Minas Society of Agriculture), Dr. Daniel de Carvalho, in an address at the Cotton Conference held in Rio in June, 1916. Stating that the Minas export of cotton cloth (to other States) was nearly 28,000,000 metres in 1915, he showed that, at an average price of four hundred reis (eight cents) a metre, the total value was more than eleven thousand contos: but in the official statistics the value of exported cotton cloth appeared as only 3,893 contos. “This anomaly is an example of the regimen of fiction in which we live, from the taxation point of view. The Minas legislator votes for high and sometimes excessive taxes,—and the Government in a fatherly manner corrects the excess in calculations of ad valorem percentages, accepting a benign interpretation of merchandise values. Instead of products appearing with exaggerated values we find on the contrary that most estimates are well below the real amount, as in the case of manganese....” The cure for this deliberate lessening of values, which certainly does Brazil poor service, would be, said Dr. Carvalho, an all-round diminution of tribute, together with a rigorous application of the law.
In the Federal District the number of weaving mills is thirty-five, several clustering in the mountain valleys of Petropolis and deriving power from waterfalls; the State of Rio has twenty-seven; Santo Catharina, fifteen; Bahia and Maranhão have thirteen each; Rio Grande do Sul, twelve; Ceará and Alagôas, ten each; Pernambuco, nine; Paraná and Sergipe, eight each; Espirito Santo, three; Rio Grande do Norte, Piauhy and Parahyba, one each.
The largest employer of labour in weaving mills is S. Paulo, with (1920) over thirty thousand hands; the next is the Federal District with about twelve thousand; third comes Minas with over eight thousand. São Paulo is also the greatest consumer of raw cotton, using thirteen thousand tons; the Federal District uses eleven thousand tons and the State of Rio nearly six thousand tons, Minas using, as we saw above, about five thousand.
At the end of 1915 when, in spite of great demands upon the national mills consequent upon checked importations of cotton cloth several had to reduce their staff on account of shortage of raw cotton, the Centro Industrial addressed a letter to the President of the Republic in which the plight of the manufacturers was displayed. A cotton famine in the North had reduced the national supply, and raised the price beyond precedent, while importations are always minute in Brazil owing to the heavy duty of about six cents per pound against it. The signatories of the letter explain that the cotton cloth industry never calls for less than forty-five thousand tons[[15]] of raw cotton produced on national soil, and that this amount was made up in 1913 into cloth worth over 162,000 contos; that, with the exception of aniline dyes, which cost about 2,000 contos a year, no other prime material enters into the Brazilian cotton Industry.
“The time is long past when cotton yarns were imported on a great scale for weaving. Now, our numerous factories have created in their vast and modern mills a perfect industrial cycle from spinning to printing,” so that the present import of yarns is worth only 1,800 contos, and the value of cotton cloths brought from abroad less than 17,000 contos (1914 figures).
At the same time Brazil’s export of raw cotton from the Northern States of fine long staple, usually practically all sent to England, diminished until returns for 1915 show only 5,223 tons against over 37,000 tons in 1913 and 30,000 in 1914, but this restriction did not make up the shortage following the drought. The Centro Industrial asked for a governmental enquiry into cotton conditions; in the middle of 1916 the Conference was held in Rio, samples of cotton, etc., displayed, and, after a collection of facts by a questionnaire sent to all weaving mills, expositions of the highest interest were made by officials of the government, technical experts, and cotton growers. Reference is made to this valuable conference under “Cotton,” but the manufacturing notes of these pages may include the name of Miguel Calmon, Chemical Director of the Companhia Industrial do Brasil, popularly known as the “Bangú” factory, who gave an address on the use of native vegetable dyes; optimistic as regards tints drawn from Brazilian forests, Senhor Calmon spoke with appreciation of the “urucú,” a dye producing hues ranging from yellow to deep red, as well as many other better known colouring matters. There is already a very busy dye factory in Minas, the Fabrica de Tinta Machado, using native vegetable bases, and much is expected in S. Paulo from dyes made by the use of “Inglotina,” obtained from mangrove leaves: a factory has recently been established at Cubatão.
It was at the same conference that Dr. Costa Pinto gave details of the threads spun in Brazil; counting in English measurement, Brazilian mills spin from No. 2 to No. 100 thread. From No. 30 upward a long staple cotton is needed, and only a small proportion of native-grown fibres are suitable, although there is plenty of short fibre for the coarser weaves.
Brazilian manufacturing already depends considerably upon the water power accessible, especially in São Paulo, Rio de Janeiro, and Minas. There is enough hydraulic force available in Brazil to turn the wheels of the world but the majority of these wonderful cascades are scarcely known by name, and many were not charted in the interior of Matto Grosso and Amazonas until the work of the Rondon Commission opened great tracts of those unknown lands. It is not possible here to do more than mention one or two of the most important falls. The Maribondo, in the Triangulo Mineiro, has an estimated force of six hundred thousand horse power; Urubupunga, on the Paraná river, has some 450,000 horse power; Iguassú has 14,000,000, four times as much as Niagara; and the force of the Sete Quedas, or Guayra Falls, on the Paraná near the Paraguay boundary, is calculated at 80,000,000 horse power. The Light and Power companies of Rio, São Paulo, Campinas, Petropolis, and other cities obtain their force from falls, hundreds of little townships in the central interior sparkle with electric lights, run factories and public utilities as a result of a nearby source of water power.
Allusion has before been made to the variety of Brazilian soils and climates which result in her possession of several important and utterly diverse industries; the list is so long that many interesting embryo industries, or others of local or internal importance only, can only claim space for passing mention. Among these is the wine-making industry of the far south, where European colonists cultivate grapes and have created quite a notable business in the production of fairly light red wines. These are shipped to many other parts of the country, are sold inexpensively in Rio and other cities, and while they lack the mellow tone of imported wines, they are sound, good, and popular.
Salt extraction in Rio Grande do Norte is another busy industry, and here is the chief source of Brazil’s native salt; it is exported from the ports of Macáu and Mossoró. Also in the north are the famous lace-makers, whose yards of fine rendas, made on a pillow with scores of bobbins, would not disgrace Malta; the big, thickly woven white hammocks of Ceará are justly prized all over Brazil, and both lace and hammocks should form the base of an export business. In Maranhão, where the babassú palm grows luxuriantly, a local industry extracts the fine oil from the kernel hidden in a stony shell, and experimental exports have occurred during the past year; the babassú is but one of the valuable nuts of the Brazilian north. One, the “Brazil nut”[[16]] of commerce, has of course been exported from the Amazon for nearly a century, and is a considerable revenue yielder to Pará and Amazonas states, but the sapucaia, of the same family but larger and sweeter, is rarer, less known, and fetches much higher prices in sophisticated world markets.
In Parahyba State there is at least one considerable coconut oil extracting factory, on a sandy spit south of Parahyba city; several thousand people are said to be employed in this industry and the product is shipped as far south as Rio: in spite of the immense quantity of coconuts on the littoral of the northern promontory there is no copra or fibre industry yet established, apparently because the native consumption of the nut leaves little surplus for the one, and interest is lacking in the other.
CHAPTER VI
FINANCE
Brazilian Currency
In common with other young countries whose gold reserves are insufficient to back the paper currency used to carry on the ordinary business of life within her borders, Brazil has been and still is faced with difficulties in regard to exchange, i. e., the gold value of her paper and its relation to the face value of that paper. Exchange in Brazil is the measure of the paper milreis (one thousand reis) with English money: this standard is the official one as a result of the preponderance of English finance.
The par value of the Brazilian milreis is twenty-seven pence (fifty-four cents), but at the end of 1916 it was worth 12 pence, rose to 18 in early 1920, and later sank below 8 pence. In 1889 the milreis was actually above par by a fraction of a penny, but later on great fluctuations took place, almost invariably as the result of the issue of large quantities of paper money, which, unbacked by gold, are regarded as of diminishing value in comparison with the gold-backed currency of other countries.
The present rate of exchange, which is a recovery from the first panicky drop of paper here, as in many other parts of the world on the outbreak of the European War, is below a rate which the efforts of Brazilian financial men succeeded in preserving for eight years by the establishment of the Caixa de Conversão; continuance of exchange at a lowered level is probably partly the result of the issue of extensive amounts of inconvertible paper into circulation for budgetary purposes since the middle of 1914, and partly on account of the heavy demand for bills of exchange on London, which began to have their effect from the time of the Balkan trouble of 1913. The drop would without doubt have been much sharper were it not for three causes of strength: the first is the unprecedentedly large trade balance in favour of Brazil in 1915, amounting to nearly £28,000,000 ($140,000,000); the second is the Funding Loan which the Federal Government succeeded in making with its European creditors in the latter part of 1914 and which prevented the outflow of other large sums in gold; and, third, the strong gold reserves of the Caixa de Conversão. It is true that these reserves have been drawn upon until they now stand at less than one-fifth of their level at the beginning of 1913, but without that stream of gold and its strengthening effect on circulation it is reasonable to suppose that exchange would have suffered to a greater extent.
The Caixa de Conversão, which I will henceforth call the Conversion Office, is Brazil’s concrete effort to fix a rate of exchange; it was excellent in conception and performed its function admirably until unforeseen world conditions overpowered its operation. After the establishment of a Republic in Brazil large issues of paper were for the first time put into circulation, with the accompaniment of successive falls in exchange; the proclamation of the overthrow of the Empire found Brazil with not more than 199,000 contos in paper, but eight years later the amount had risen to nearly 790,000 and Brazil was obliged to suspend interest on her debt to Europe. A Funding Loan of ten million pounds sterling was arranged with Rothschild’s, which had the effect of checking the fall in the value of the milreis, then (1897–98) down to eight pence or nine pence, and even touching the threatening level of six pence; the arrangement included destruction of the debased paper in considerable quantities, and as this work was accomplished exchange steadily rose until in another ten years’ time, 1908, outstanding inconvertible paper amounted to less than 650,000 contos, and the value of the milreis was sixteen pence. But by this time the Conversion Office was in operation, thanks largely to the efforts of President Affonso Penna; this office in 1906 began receiving deposits of gold and issuing against them convertible paper bills having the fixed exchange value of fifteen pence; these bills always equalling the amount of gold in the Conversion Office had the value of actual gold; they differ in appearance from the ordinary paper currency, and as they always command a five per cent premium there was created a tendency to hoard them—a tendency which cannot occur in the case of the bills of the similar Conversion Office of Argentina, which exactly resemble the ordinary bank bills.
By the end of 1909 the unbacked, inconvertible paper currency of Brazil was about 628,000 contos, while the convertible bills of the Conversion Office amounted to over 225,000 contos, with an equivalent amount of gold on deposit there; in 1910 it was found possible to raise the official value of the milreis to the point that the money market indicated, sixteen pence, and at this rate of exchange all the paper in the country stood until the outbreak of the European War. At the same time that the exchange rate was officially raised a rule was put into operation by which all foreign coins were received by the Conversion Office at rates based on their mint value, excepting English sterling which was still accepted at its exchange value.
It is likely that had neither the Balkan nor the great European wars happened Brazil might have been able to raise again the official value of the milreis farther towards par; at the end of 1912 and beginning of 1913 the gold-backed paper amounted to over 406,000 contos of reis, and the unbacked was only 607,000 contos. In spite of the accumulation of heavy debts Brazil was in such a flourishing condition that she was able to show convertible currency amounting to two-thirds of the value of the inconvertible, as against one-sixth in 1907–8. Today, with eighty per cent of the gold of the early 1914 highwater mark gone from the Caixa, the convertible currency is but one-tenth of the inconvertible, a matter for regret, but things are undoubtedly in a much better condition than had the Conversion Office not existed. Suspension of conversion was ordered when deposits were reduced to £5,005,000.
Since the middle of 1914 the Brazilian Government has been obliged to issue nearly 400,000 contos of new inconvertible paper; it has not actually added more than about 100,000 contos to the total paper currency, since at the same time a shrinkage in the convertible element has been proceeding. An emergency issue of 250,000 contos was made in the autumn of 1914 and another 150,000 was authorized in August, 1915. During the same period of stress the internal floating debt was added to by the issue of Treasury Bills to the nominal value of about 250,000 contos: a curious and instructive situation arose from the employment of these special Bills.
The Government, called upon for currency by national banks which were embarrassed by lack of paper owing to the financial crise, lent them sums from the emergency issue, charging two and a half per cent interest. Next, pressed for payment by creditors many of whom were merchants supplying the various governmental departments, and the emergency issue being insufficient for the purpose in all cases, recourse was had to Treasury bills; as these are not legal tender the merchants were not altogether pleased, and in some cases refused to accept the bills and had to wait longer.
The creditor who did accept them found himself with paper in his possession which could not be passed over the counter or paid into a checking account at his bank, and his only recourse was to sell the bills for what they would fetch, bearing the loss between their face value and market price. Although the bills bear interest at five and six per cent, almost the only buyers were the banks which had borrowed money of the Emergency issue, for in the meantime the Government agreed to accept the Bills as repayment of these sums, in a “curso libre,” or (limited) legal tender.[[17]] The price of the Treasury bills was always below par, and the writer saw them quoted in Brazilian newspapers as low as seventy-six. Buying at this or higher prices the bankers were able to present them to the Government at their face value in payment for currency advances, and were thus in the fortunate position of making profits on borrowed money. Promptly labelled “sabinas” in this country where everything has a nickname, the Treasury Bills roused a storm of discussion in the press. Totals of bonds (apolicies) and paper money issued from August 1915 to October 1916 amounted to nearly 550,000 contos.
In late 1916, the total currency of the Republic stood as regards paper money at 1,551,122:650$500, over a million contos being inconvertible. It may be useful here to explain the manner in which Brazilian money is counted. It is, like the Spanish from which most American systems are derived, very simple, based as it is on the decimal plan. The theoretical single rei or real does not exist, the smallest coin now consisting of the nickel one hundred reis.[[18]]
There is also a coin of two hundred reis, which pays a car fare or buys the Jornal do Commercio, and 400 reis, and a silver 500 reis. The silver milreis is what it says it is, one thousand reis, and any sum reckoned in milreis and below a thousand of them is written with the figures first, followed by the “dollar” sign; thus four hundred milreis is written 400$000.
One thousand milreis (a million reis) is a conto, the colon sign being written immediately after it. Six contos is written 6:000$000. The present exchange value of the conto is a little over fifty pounds sterling.
The following figures, extracted from reckonings made by the Brazilian Review, show some of the variations in paper currency:
| December, | 1889 | 195.485:538$ |
| „ | 1894 | 367.358:625$ |
| „ | 1899 | 733.727:153$ |
| „ | 1904 | 673.739:908$ |
After the establishment of the Conversion Office a new element, convertible paper, was added:
| Inconvertible | Convertible | Total | |
| 1907 | 643.531:727$ | 100.032:700$ | 743.564:427$ |
| 1912 | 607.025:525$ | 406.035:800$ | 1.013.061:325$ |
| 1914 | 822.496:018$ | 157.786:930$ | 980.282:948$ |
| 1916 | 1.060.562:720$ | 94.559:930$ | 1.155.122:650$ |
Issues of paper money during war years greatly increased this currency, but against it the Government held, in 1921, nearly 63 million contos of gold, in the Treasury and Conversion Office. Besides this amount of paper there is the coin circulation of nickel, and of silver in half-milreis, milreis, and multiples.
It is an excellent coinage, of good design, well made and convenient, that minted since the Republic bearing republican devices, the date of inauguration of the new administrative plan, etc. But now and again a handful of change contains a coin bearing the bearded head of Dom Pedro II, for it is but twenty-seven years since the Empire was ended. A curious superstition exists among some Brazilians with regard to these coins; received, they are never passed on, but carefully put away in some drawer: “it is not good to spend the Emperor,” they will tell you, handling his image with kindliness.
The six million pounds sterling below which the gold reserves of the Conversion Office have not been allowed to sink, and to which it has been possible to add little, back the large amounts of convertible paper, and, although a greatly shrunken sum, it has its effect in steadying exchange: another factor in preventing farther breaks, in spite of the seventy per cent increase in inconvertible paper, is the earnestness with which the Federal Government and the people of Brazil are insisting upon a vigorous solution of the problem of the foreign debt. Individuals in Brazil show themselves no less interested than officials: letters bearing upon the situation are constantly printed in the public press, many personal sacrifices have been made of percentages of salaries by legislators, officials and civil servants, and it is clear that the ablest heads in Brazil are trying to find a way in which Brazil can meet her obligations. This sincerity of purpose may not create gold, but it does strengthen public credit and helps in a more or less direct manner in restoring confidence which is certainly not without its effect upon exchange.
More than once a fall of exchange in Brazil has, by an anomaly, actually saved industries from something near bankruptcy. This is readily understood when it is realized that exporters of such products as rubber and coffee, cacao and hides, selling in the markets of London, Paris, Hamburg or New York, are paid in gold, while they pay their day labourers in paper. To the Brazilian interior it is of little interest that the bankers of Rio say that it takes another milreis paper to purchase a gold pound sterling; the country markets do not reflect such nuances, unless, indeed, a fall should be heavy and continued in which case it must in course of time react upon the whole country. But a temporary depression does not affect the amount of black beans or mandioca that can be bought with a milreis, and neither the rubber collector of the Upper Amazon or the more sophisticated worker upon a fazenda of coffee or cattle will demand a rise in wages because exchange goes down for a time. To the exporter the fraction of a milreis makes all the difference between prosperity and ruin, and both rubber and coffee have benefited thus by temporary low rates of exchange; the present crisis has certainly been smoothed to the agriculturist, the producer and exporter, of Brazil, by the fall in exchange since the middle of 1914, the paper receipts of the country showing marked inflation due to the larger number of milreis bought by the foreign gold paid for these products. Low prices received abroad for coffee and rubber are thus compensated, and when, as has happened since the war began, prices have been better than had been predicted. It is not to be wondered at that there is a feeling of prosperity in Brazil and that money is abundant among certain classes in spite of administrative difficulties.
The people who really suffer from fallen exchange are, besides the governments owing sums abroad which must be paid in gold, the importing houses which have bought in gold and must sell in depreciated paper, and which cannot always adjust paper prices to fit the monetary market; the transportation companies, too, whose rates are fixed now find themselves with paper in hand of a lowered value abroad; it is true that their obligations to employees are paid in paper, but since most carrying companies are owned or leased in Europe, and dividends must be paid in gold, earnings are very much reduced when large quantities of additional paper are needed to buy bills on London. Every railway, port company, street-car line and lighting and power company which derives its capital from outside Brazil has seen its dividends cut down during the last two years even if earnings have been larger and expenses reduced.
Ministry of War, Rio de Janeiro
Avenida Nazareth Belem (Pará)
Large foreign debts have of course a depressing effect upon exchange in the long run, but at the time when the loans have been made there has almost always been a rise corresponding to the influx of gold; this effect was a marked cause of wild ups and downs of exchange in the palmiest days of the present century. I have frequently asked bankers in Brazil if they would like to see an absolutely stable rate of exchange: more than once the answer has been Yes, and the examples of the stabilized countries of the world quoted as showing that real financial strength can only be obtained with a firmly gold-backed currency. But even the most conservative banker will admit that variations in exchange have been the cause of large earnings on the part of financial houses in Brazil, and it is certain that fluctuation is not only the source of many fortunes, but that it materially lends itself to the promotion of the gambling spirit that helps both to make and to undo a young country; it is a spirit prevalent in many parts of Latin America and perhaps particularly in Brazil where such spectacular turns of Fortune’s wheel have been seen from time to time in different parts of the country.
Investment in Brazil
Investment in Brazil from other countries has been of three chief kinds: blood, brains, and money. The investment in blood came during the sixteenth, seventeenth and eighteenth centuries almost exclusively from Portugal—with a forcibly introduced negro element from Africa at the same time—while during the nineteenth century colonies were introduced of a remarkably wide variety of peoples; the investment in brains came so far as technical skill is concerned almost directly as a result of the great investment of the third element, money, which began soon after the erection of the monarchy in Brazil in 1808, flowed steadily for eighty years, and increased to a golden torrent after the establishment of the republic in 1889.
Nearly the whole of the investment of manhood, skill, and gold came from Europe. Brazil’s debt to other parts of the world is small. The African slave contributed more towards the opening-up of Brazil than any other race, and it is almost impossible to conceive of a flourishing Brazil without him during at least the first three centuries after Portuguese possession; the Asiatic only came here in noticeable numbers since the beginning of the present century, and the Oriental is not a strong element. North America has done remarkably little for Brazil. With the exception of a few technically skilled individuals, and the ill-fated little colonies which sought a home here after the Civil War in the United States there has been practically no investment in personality until within the last few years, when branches of American businesses have sent resident employees to Brazil: investment in money is still in its infancy so far as Government or State loans[[19]] are concerned, development work in railways, docks, harbours, or city improvements, and it is only within the last few years that North American money has made timid entry into Brazil for the establishment of industries. The opening of branches of North American financial establishments in Brazil dates only from 1915, and the capital so far employed is insignificant in comparison with that of the powerful European banks, established in South America for a couple of generations.
No Brazilian securities were, up to the end of 1916, listed upon the New York Stock Exchange, for the simple reason that there were practically no North American investments in South American securities; but since the war, changes in the world’s finance have induced a lively interest.
The British investment in Brazilian securities, apart from many enterprises and businesses of a private nature, were reckoned at the commencement of 1916 at £226,719,052, or the equivalent of about $1,133,595,000. The French investment is estimated at Fr. 1,500,000,000 or some $300,000,000, and that of Belgium, with considerable railway interests, at about half this sum; Germany and Portugal also hold a certain quantity of Brazilian securities.
The following are the most important securities represented by the British investment in Brazil; the list shows that it was this money, more than any other element, which contributed to the opening-up of Brazil in the nineteenth century, giving her railways, public utilities, and helping to operate a number of industries. There was no philanthropy about this stream of bright pounds sterling. South American investments were expected to return a better rate of interest than did similar securities in Great Britain, and frequently results justified the hope. The average return on British investments in South America, which altogether total about £1,050,000,000 (say $5,250,000,000) in 1913 was four and seven-tenths per cent; this average dropped to three and one-half in the first year of the European War, a showing which very many profit-earning corporations in other regions of the world would have been glad to equal in that critical time.
| BRITISH INVESTMENTS IN BRAZIL | |
|---|---|
| Railways | |
| Amount invested, 1916 | Name |
| £605,569 | Brazil Great Southern |
| £341,000 | Brazil North Eastern |
| $57,835,200 | Brazil Railways, 5 classes[[20]] |
| £4,187,650 | Great Western of Brazil, 4 classes |
| £15,893,429 | Leopoldina, 6 classes |
| £2,600,000 | Madeira-Mamoré |
| £4,000,000 | Mogyana Sul-Mineira |
| £100,000 | Quarahim International Bridge |
| £6,000,000 | São Paulo (to Santos) |
| £3,175,000 | Sorocabana |
| £900,000 | Southern São Paulo |
| Public Utilities | |
| £1,154,700 | Port of Pará |
| £115,800 | Cantareira Water Co. (S. Paulo) |
| £1,321,900 | City of Santos Improvements, 4 classes |
| £2,003,000 | City of S. Paulo Improvements |
| £1,200,000 | Manáos Harbour and Manáos Improvements |
| £349,000 | Pará Improvements |
| £1,761,875 | Rio de Janeiro City Improvements, 4 classes |
| £1,423,400 | Central Bahia Railway Trust, A and B |
| £275,000 | S. Paulo Gas, 2 classes |
| £2,571,871 | Rio Claro Ry. and Investment, 2 classes |
| £527,800 | Amazon Telegraph, 2 classes |
| £91,000 | Pernambuco Waterworks, 2 classes |
| £596,000 | Manáos Tramways |
| £1,384,449 | Pará Electric, 4 classes |
| $110,361,400 | Brazilian Traction, Light and Power, 2 classes |
| $1,400,000 | Jardim Botanico Tramways |
| $28,013,500 | Rio de Janeiro Tramways, Light and Power, 2 classes |
| $6,821,917 | S. Paulo Tramways, Light and Power, 2 classes |
| $2,000,000 | S. Paulo Electric |
| (The five last mentioned companies are registered in Canada, and the securities are thus issued in dollars, although the stock was largely held in Great Britain and Canada, prior to the European War.) | |
| Industrial Companies | |
| £1,182,400 | Dumont Coffee Estates, 3 classes |
| £120,000 | S. Paulo Coffee Estates |
| £150,000 | Agua Santa Coffee Co. |
| £646,265 | S. Juan del Rey Mining |
| £643,601 | Rio de Janeiro Flour Mills |
| £100,154 | North Brazilian Sugar |
| £100,000 | Mappin and Webb (Rio and S. Paulo) |
| £850,000 | Brazilian Warrant Co. |
At the same time the British share in the total foreign debts of the Federal, State and Municipal governments are estimated at about £150,000,000 out of aggregate obligations of some £180,000,000. These debts are treated in more detail on another page.
There are very many enterprises carried on with British capital which do not figure upon the Stock Exchange, or are branches of businesses which do not differentiate the capital employed in Brazil. Included in one or other of these classes are the shoe factories belonging to Clarke (Glasgow) in São Paulo; the cotton-spinning mills of Coats, also heir of Scotch skill; several cotton cloth mills, as the Carioca in Rio, and others in Petropolis and Campos; sugar factories in Pernambuco, etc. Included also in money investments should be counted the eight and a half million pounds of paid-up capital of the three British banks, the British Bank of South America, the London and Brazilian and the London and River Plate, which total with their branches to twenty-four establishments. It is impossible to say what part of the huge shipping investment serving Brazil should be included, but it is a highly important element and quite the greatest developing factor in Brazilian commerce; the Royal Mail is the great popular passenger and freight line, while Lamport & Holt, Booth, Harrison, the Prince, Johnson, and other smaller lines do a big Brazilian business.
Among firms doing energetic work and with large capital invested are the two great coal firms, Wilson’s and Cory’s, with their depots for Welsh coal, their fleets of lighters, repair equipment, salvage departments and stevedoring; old-established commercial firms such as Stevenson’s and Duder’s in Bahia, chiefly occupied with cacao export—the latter in addition to other activities maintains a fleet of modern whaling boats, and a factory for refining whale-oil; there are the “dry goods” stores of Sloper’s series; the new house of Mappin; the Brack firm in Pernambuco; all these and a score of other classes are not only commercial developers but in a greater or smaller degree employers of Brazilian labour. There are British cattle breeders, sugar and cotton growers, owners of coffee and cacao estates, operators of ironworks, foundries, schools, bookshops, oil-depots, and many other enterprises. The total British investment of money in Brazil cannot be under £300,000,000.
The external debts of the Brazilian States and Municipalities have varied very little since 1913–14. Loans became difficult to obtain from the beginning of Balkan troubles, while since the outbreak of the great European War there have been no additions to cash advances and in only a few cases has there been substantial reduction of debts. On the contrary, most debtor States and cities found it necessary to make funding arrangements by which specie payments were suspended for a number of years—measures which gave temporary relief, but seriously increase the amount of money to be paid annually when the funding period comes to an end.
Certain states, as São Paulo, Rio de Janeiro, Paraná (paid up until the autumn of 1917), Espirito Santo, and the Federal District, have made gallant efforts to avoid piling up debt in this way, and by severe economy have continued to pay interest on their foreign obligations. The sacrifice has not been small, for with depressed exchange it has taken an unusually large number of paper milreis to buy sterling, and at a time when it has not been easy to collect even paper revenues. The effort is all the more creditable.
With the worst part of the 1921 crisis past, state finances have been materially eased by calls for Brazilian products at enhanced prices, and there is a perceptible restoration of confidence, at the end of 1922. In some districts the post-war boom proved an undisguised blessing, bringing profits that could not have been looked for under normal conditions: coffee, hides, rubber, cacao, frozen meat, sugar and manganese, have all brought stimulated prices, and many home industries, such as coal mining and cotton spinning and weaving, have been greatly encouraged.
In round numbers the external debts of the separate states of the Brazilian Union appear to amount to about forty-seven million pounds, with the municipalities adding another twelve or thirteen million pounds.
The British interest in these loans is largely dominant, but important sums of French money have also been invested. Brazil’s direct debt to France includes £10,400,000 for three loans with which the Bahia, Goyaz, and Corumbá railways were constructed; there are also state debts, that of the State of Pará being held by Meyer Frères of Paris, while the Société Marseillaise holds the bonds of the big Amazonas debt. Part of São Paulo’s debt is owed to the Société Générale, and the State of Espirito Santo owes nearly two million pounds to the Banque Française et Italienne, as well as large sums about which a dispute rages, advanced by the French Hypothecary Bank established at the port of Victoria.
There is a good deal of French money sunk in the Madeira-Mamoré railway, one of the Farquhar undertakings which cost the equivalent of more than six million pounds sterling, fifteen hundred livres, is said to need much reconstruction already (opened to traffic in 1912), and does no more than pay its way. French bondholders also hold part of Minas Geraes debt, and of that of Rio de Janeiro. French engineers, operating with French money, built several of the existing railways, notably the Auxiliaire de Chemins de Fer au Brésil with 1,400 miles of track; it was a French firm, the Compagnie Française de Rio Grande do Sul, formed in Paris in 1906, which put one hundred and fifty million francs into the port works of that southerly city, opened to shipping in November, 1916. French companies also began the port works of Pernambuco, checked by money paralysis after 1914, and constructed the new harbour facilities of Bahia.
When the much-discussed “Missão Baudin” came to Brazil in 1915, it was with the object of investigating the condition of the properties in which French money was concerned, and the chief member of the party was also credited with an effort to induce the Brazilian Government to guarantee the rather clouded State obligations to French bondholders.
German investment in Brazil is, as regards money, not of great importance; it is largely confined to the loans made by the Dresdner Bank, and to capital expenditures in the southern states, including the construction there of a couple of small railways. There has, however, been great investment of blood and energy, there are many strong German commercial houses and retail stores in all districts, and to Germany was due the first granting of long and easy credit facilities to Brazil. Germans have been largely interested in the coffee and rubber businesses. The Brasilianische Bank für Deutschland operates with a capital of fifteen million marks, and the Banco Alemão Transatlantico is another strong German financial house.
This summing up of European investment in Brazil, incomplete as it is, serves to demonstrate the extent to which Brazil has been opened up by Europeans. The European has asked for Brazilian raw products, brought ships to carry them, built ports for the ships to lie in and railroads to freight the products to the ports; has sold manufactured goods and lent Brazil the money with which to pay for them, and established banks for financial operations connected with the business created. Millions of hardy and industrious people have gone to live in Brazil and to bring the land into cultivation, to educate their children as Brazilians and help in the mental progress of the country.
When, therefore, some of the less thoughtful journals of the United States turned their eyes towards South America at the outbreak of the European War and protested loudly that this country was not getting her “share” of commerce, it was rather as if the cuckoo complained that she was not getting her share of the robin’s nest. To accuse Europe of monopolizing Brazilian trade is like accusing water of monopolizing the river. Brazil, in fact, like the whole of the Americas, had no trade until Europe created it by calls for natural products, supply of transportation means, and loans of money for development work.
Today the situation is changed. It was inevitably changing as North America herself became during the last fifty years herself a caller for raw products, and began to take great quantities of Brazilian coffee and rubber, drugs and hides. Her sales to Brazil, despite the drawback of the shipping triangle, have been increasing for some time along certain highly specialized lines, but sales and purchases are not sufficient to create a permanent link between countries, especially when conducted through the medium of a third person as freighter and banker. The European War brought about as no other awakening process perhaps could have done, a realization of the new duty of the United States to South America: it is part of her inheritance from Europe. It is the work that lies to her hand: if she will do it, there is no one better fitted at the present time; if she will not she loses an extraordinary chance for both service—and profit.
She must not think only of buying and selling, and when she is occupied with this trading she must remember that to her as to South America, sales of North American goods are less important than purchases of South American raw materials. It would not matter very much to the United States if she did not sell anything to Brazil: the probability is that more money has been spent on making sales, so far, than the profits amount to. What does matter is that North American manufacturers should continue to be supplied in vast and increasing quantities with South American hides for the use of leather manufactories; with ivory nuts for the button industry; with the coffee that cannot be grown in northern climes; with rubber and fibres and tannin materials; and with the minerals that exist in the sands and rocks of South America in unexampled variety and which can be there produced at half the cost that North America is forced to pay for labour.
Apart from trading there is a great need for more investment in Brazil, for more opening of great spaces, planting of fields, lumbering, road-building, mining, cattle-raising. There is space for twenty million people in the cool temperate zones alone, excluding tropical areas. Is the United States ready to take up the task which Brazil cannot perform alone, however seriously she attacks her problems? Is she prepared to devote to this work blood, brains and money?
Entry of North American interests into Brazil has been steadily increasing for the last ten years, and was hastened after the outbreak of the European War; there has been noticeable since then much more energy on the part of individuals and small firms. Before 1914 the bulk of United States work done in Brazil was part of the international campaign of such big firms as Standard Oil or the Singer Sewing Machine Company. Oil has its rivals in other companies, also with depots on the coast, but the Singer machine has almost a South American monopoly; locomotives, cars, elevators, most of the typewriters, electrical equipment, and quantities of agricultural machinery, are sold by American houses with branches in Brazil. Agricultural, printing and shoe machinery of United States origin also seems to make good sales.
In 1915 the National City Bank of New York opened branches in Santos, Rio and S. Paulo; the United States Steel Corporation started a line of freight steamers, and was followed by a number of new lines.
The two great Light and Power companies of Rio and S. Paulo are Canadian, but some of the capital, equipment and personnel are from the U. S.; one of the two existing packing-houses is Chicagoan in capital, equipment and personnel. Several of the allied enterprises of the Brazil Railways Company are American managed and equipped, as the lumber mills at Tres Barras and the cattle company, as well as part of the transportation lines. The Brazil Railways is the largest American-registered company in Brazil, but is rather an example of how not to do things in South America, for although a few interests, as those cited above, are doing well, the company as a whole is in the hands of a receiver. The time is probably past when money could be obtained in Europe by persons registering a company in a second country to spend it in a third, and what is most needed now is continued and genuine development work actually financed from North America.
Most of the United States firms with agencies in Brazil are sellers, but among the purchasers are several coffee-importing houses and, with the eclipse of German traders, the greatest rubber dealers, while the past year has seen American agents coming to Brazil to increase takings of manganese, precious stones and hides.
The State Debts
The figures given below are in round numbers only, and are without the additions which the Funding loans entail; all sums are in pounds sterling:
| State | External Debt |
|---|---|
| Alagôas | £ 500,000 |
| Amazonas | 3,000,000 |
| Bahia | 3,875,000 |
| Ceará | 600,000 |
| Espirito Santo | 1,160,000 |
| Maranhão | 720,000 |
| Minas Geraes | 6,800,000 |
| Pará | 2,040,000 |
| Paraná | 2,200,000 |
| Pernambuco | 2,370,000 |
| Rio de Janeiro | 3,000,000 |
| Rio Grande do Norte | 350,000 |
| Santa Catharina | 220,000 |
| São Paulo | 20,350,000 |
The States of Goyaz, Matto Grosso, Parahyba, Piauhy, Rio Grande do Sul and Sergipe have no external debts.
The Funding Loan arranged by the State of Pará adds another £1,070,000 to her debt; the Funding Loan of Minas Geraes adds £600,000 and that of Amazonas, £850,000.
The external debts of Brazilian municipalities, also borrowers from Europe, are about as follows, round numbers again being used:
| Federal District of Rio de Janeiro | £4,395,000 |
| Manáos (Amazonas) | 214,000 |
| Belem do Pará | 750,000 |
| plus Funding Loan | 88,500 |
| Recife (Pernambuco) | 400,000 |
| Bahia | 2,000,000 |
| São Paulo | 750,000 |
| Santos | 1,000,000 |
| plus Funding Loan | 118,000 |
| Other municipalities in S. Paulo State | 685,000 |
| Porto Alegre (Rio Grande do Sul) | 600,000 |
| Pelotas (Rio Grande do Sul) | 600,000 |
| Bello Horizonte | 216,000 |
Federal Debts
On the outbreak of war in Europe in August, 1914, the foreign debts of the Federal Government of the United States of Brazil amounted to something over £102,000,000. President Wencesláo Braz inherited obligations which had been enhanced by about £30,000,000 during the previous four-year régime of Marechal Hermes da Fonseca. Brazil’s reputation as a good world customer had long permitted her to borrow freely, often paying old debts or interest with new loans, and piling up deficits as the most facile solution of economic complications.
The world shock of 1914 brought exchange down with a run, and, although it recovered from the first fall, it was soon evident that Brazilian credit could not bring it back to its old level, and that the financial burden of the country, its obligation to pay foreign debts, would be rendered still more onerous by this depression; it would take just so many more milreis, with Federal receipts perilously lessened by the stoppage of imports, to buy pounds sterling, than in normal times.
Brazil asked her foreign creditors for relief, obtained a Funding Loan by which payments on interest and amortization were suspended until October, 1917. As the specie payments called for by the foreign debt would have needed about £5,200,000 in both 1915 and 1916, a burden was lightened, for the time, which the increased balances of trade during the intervening period have also helped to lift. But between 1914 and 1918 the Foreign Debt was increased by nearly £12,000,000 of accumulated interest, and the sums required for annual service were more difficult to find after the depreciation of the milreis in 1920. In 1920 the total nominal Foreign Debt was £120,400,000, plus 325,000,000 francs. Later, Brazil borrowed a few millions from the United States, and in early 1922 again borrowed successfully in London. The internal debt, at the beginning of 1921, amounted to over one million contos. It will be seen from the following list that while nearly £12,000,000 came from France yet the great bulk of the borrowed sums came from England originally: a considerable proportion of the original sums—apparently about forty per cent—were destined to the construction or acquisition of railways and port works in the Republic.
| BRAZIL’S EXTERNAL STERLING DEBT, DECEMBER 31st, 1920 | |||
|---|---|---|---|
| Sterling | |||
| Loan— | £ | s. | d. |
| 1883 | 4,599,600 | 0 | 0 |
| 1888 | 6,297,300 | 0 | 0 |
| 1889 | 19,837,000 | 0 | 0 |
| 1895 | 7,442,000 | 0 | 0 |
| 1898 (Funding) | 8,613,717 | ||
| 1901 (Recision) | 16,619,320 | 0 | 0 |
| 1903 (Port Works, Rio de Janeiro) | 8,500,000 | 0 | 0 |
| 1908 | 4,000,000 | 0 | 0 |
| 1910 | 10,000,000 | 0 | 0 |
| 1911 (Port Works, Rio de Janeiro) | 4,500,000 | 0 | 0 |
| Ceará Railways, 1911 | 2,400,000 | 0 | 0 |
| Lloyd Braziliero, 1906–1911 | 2,100,000 | 0 | 0 |
| Loan— | |||
| 1913 | 11,000,000 | 0 | 0 |
| 1914 (Funding) | 14,502,396 | ||
| Total nominal | 120,411,334 | 0 | 0 |
| Franc Debt | |
|---|---|
| 1908–1909—Loan for the construction of the Itapura to Corumbá Railway | 100,000,000 |
| 1909—Loan for the Port Works at Pernambuco | 40,000,000 |
| 1910—Loan for the construction of the Goyaz Railway | 100,000,000 |
| 1911—Loan for the construction of the Viação Bahiana network of railways | 60,000,000 |
| 1916—Goyaz Railway loan, responsibility for which was assumed by the Government by Decree No. 12,183 of August 30th, 1916 | 25,000,0000 |
| Total nominal | Fr 325,000,000 |
This would be an exceedingly heavy debt if Brazil were an old, exploited, filled up country with no spare lands and her natural resources tapped; Brazil’s reason for hopefulness lies in her youth, the vast undeveloped land and mineral resources of her patrimony, her good credit among the nations, and the sincerity with which her statesmen are attacking the task of resuming interest payments.
Brazil has a big income, but it needs to be increased before she can pay her debts without a strain; the President has repeatedly declared his firm intention to sustain payments at whatever sacrifice, and has recently called the States into conference with a view to devising new methods of raising revenue. In the Budget estimates of the Federal Government for 1921 revenue was reckoned at 102,000 contos gold (milreis = twenty-seven pence) and 624,761 contos paper (probably a fraction over twelve pence); expenditure at the same time was calculated at 75,680 gold and 711,640 paper contos, including in the gold payments the service of the foreign debt.
The Federal Government’s chief revenues are derived from import taxes, impartially placed upon entries into all the States; income of the States is mainly derived from export dues, while municipalities get revenues from imposts upon professions and industries, and manage sometimes to get a share in export dues. The Acre Territory, purchased by the Brazilian Government from Bolivia in 1903, is the only part of Brazil paying export as well as import dues to the Federal authorities, this contribution coming from rubber.
To help raise new revenues, impostos do consumo (excise) have been increased on articles consumed in the country, the addition to the burden of the retailer and the consumer himself raising some outcry, as has also the suggestion to put on railway freight imposts. The States, exporting larger quantities of goods than normally, are not so badly placed as the Federal Government, but that they look upon the matter of raising income from produce exported with different eyes in different parts of the republic is shown by a look at some of the export tax figures for 1922; these figures are not constant, as the pauta is frequently changed by the officials of exporting points in response to conditions in international markets:
Coffee, the premier export of Brazil, pays to S. Paulo an export tax of 9 per cent, plus five francs a bag for Valorization service; in Minas it pays 8½, plus five francs a bag, used for administrative purposes; Bahia coffee pays 10 per cent of its value, Pernambuco 4.8, Paraná 30 per cent, Santa Catharina 8, Espirito Santo 12½.
Cacao pays in Bahia 14 per cent of its value; in Amazonas 5 per cent; in Pará 5 per cent; in Maranhão 4 per cent.
Fishing Boats of North Brazil.
Rocks at Guarujá, near Santos.
Bertioga, the Old Entrance to Santos.
Cantareira Water Supply, São Paulo.
Sugar pays in Pernambuco, the principal producing state, 8 per cent, with additional charges bringing this to nearly 10 per cent for interstate, and 12 per cent for foreign, exports; in Bahia, 4 per cent; Alagôas, 7.8; Paraná, 4.4; Rio sugar pays 2½ to the State and 2 per cent to the municipality of Campos.
Rubber pays 15 per cent of its value in Amazonas, or half of the amount paid in the palmy days of the industry; Pará charges 18 per cent; the Acre, 6 per cent; Matto Grosso, 10 per cent.
Cotton pays 11 per cent in Pernambuco, nearly 12 in Alagôas, 8 per cent in Bahia.
Hides pay 20 per cent in Amazonas; Maranhão, two cents a kilo; Pernambuco, 18 per cent; Alagôas, 13 per cent; Bahia, 15 per cent; Paraná, and Santa Catharina, 10 per cent; Rio Grande do Sul, 10.5; Matto Grosso, 6 per cent.
Tobacco pays a variety of dues, ranging from 12 per cent in Bahia, the chief exporting point, to 4 per cent in Pernambuco and the southern States.
Matte pays 3.6 in Rio Grande, 46 reis a kilo in Paraná and 20 reis a kilo in Santa Catharina.
Frozen meat, a new industry, escaped taxation until September, 1916, when Rio put on a tax of about one-hundredth of an American cent per pound, a delicately weighted burden, which a vigorous industry can stand perfectly well if it is not multiplied too much.
Principal Banks in Brazil
Certain strong banks, as the three of British origin (London and Brazilian, London and River Plate, and the British Bank of South America), have branches or agencies at several places, the two first possessing establishments in every important town; the National City Bank of New York has three Brazilian branches (Santos, Rio and S. Paulo); the French-Italian Banque Française et Italienne and the (French) Crédit Foncier have several branches besides the establishments in Rio and S. Paulo, as also have the (German) Banco Alemão Transatlantico, Brasilienische Bank für Deutschland, and the Sudamericanische, the (Spanish) Banco Español del Rio de la Plata, and the (Portuguese) Banco Nacional Ultramarino, and the (Italian-Belgian) Italo-Belge.
The Banco do Brasil is the strongest Brazilian bank, with headquarters in Rio and many branches. In addition to the houses spreading all over Brazil each State has its own banking firms established in the capital. In banking power the Federal Capital, Rio de Janeiro stands first, with a capital of nearly 46,000 contos of reis; S. Paulo is next, with banking capital of over 13,000 contos; Rio Grande do Sul comes third, with over 11,000 contos, Minas Geraes following, succeeded by Bahia and Pernambuco, Pará and Amazonas.
The chief banks of Rio, in addition to the three British, one American, and other foreign banks above mentioned, as well as the Banco do Brazil, are the Banco Commercial do Rio de Janeiro; the Banco do Commercio; Banco do Estado do Rio de Janeiro; Mercantil do Rio de Janeiro; and the Lavoura e Commercio do Brasil. São Paulo, besides the foreign establishments, has the Commercial do Estado de S. Paulo; Banco do Commercio e Industria de S. Paulo; Banco de S. Paulo; Banco de Credito Hypothecario e Agricola do Estado de S. Paulo; the Banco de Construcções e Reservas, and the União de S. Paulo.
Among the local banks doing excellent service are the Hypothecario e Agricola do Estado de Minas Geraes (headquarters in Bello Horizonte); the Provincia do Rio Grande do Sul; Banco do Porto Alegre; the Banco do Recife (Pernambuco); the Commercial do Pará; Credito Hypothecario e Agricola do Estado da Bahia; Banco do Ceará; Banco do Maranhão; but many other places also have comparatively small banks, and in addition there are many private “Casas bancarias”—financial houses—strongly entrenched, doing sound and useful work.
CHAPTER VII
THE WORLD’S HORTICULTURAL AND MEDICINAL DEBT TO BRAZIL
Loudon, the English horticultural authority, says in his Encyclopædia of Gardening (1835) that “some of the finest flowers of British gardens are natives of South America, especially annuals.” He mentions the dahlia—by the obsolete name of Georgina; the Marvel of Peru (Mirabilia) the Calceolaria and the Schizanthus, adding that “beautiful shrubs are not less numerous, but they are generally inmates of greenhouses.”
Since Loudon wrote Brazil, as other parts of South and Central America, has been the happy hunting ground of plant explorers, and the gardens of Europe and North America have been beautified to an extent of which that devoted horticulturist never dreamed. The tale of the indebtedness of the gardens of less fortunate climes to South America in general and Brazil in particular for plants and shrubs, both ornamental and of economic value, would occupy a large volume; the extent of the debt is no less great than general ignorance of it. Practically nothing is known of early attempts to introduce Brazilian plants, for they were failures, and failures they remained for two and a half centuries after South America was discovered. The science of botany and art of gardening were alike in primitive stages until the latter part of the eighteenth century, and, whilst South American plants were known by their local names, means for their successful transportation had not been found; nor, in the rare cases of their surviving long journeys by sailing boat, was successful cultivation of these exotics known. If, as is possible, there are yet in herbariums in Portugal any plants which the early colonists sent home, no printed record of them seems to exist.
It was not until the second decade of the nineteenth century that any serious attempts were made to reveal to the world the richness of Brazilian flora, and only within recent years that anything like a comprehensive account of it has been published: as far back as 1648 Willem Piso and Georg Marcgrav published in Amsterdam a large folio volume containing spirited woodcuts carefully coloured by hand of Brazilian flowers, shrubs, fishes, birds, reptiles, etc., but this was a natural history rather than a botanical book. Both these pioneers are commemorated in Pisonia and Marcgravia, species of which are still in cultivation.
In 1820 three scientific works dealing with Brazilian flora appeared. Mikan’s Delectus floræ ... brasiliensis was issued in Vienna: Raddi’s Di alcune specie nuove del Brasile and his Quarante piante nuove de Brasile, were issued in quarto volumes in Modena. Four years later St. Hilaire published in Paris his Histoire des Plantes of Brazil and Paraguay; between 1827 and 1831 J. E. Pohl’s Plantarum Brasilæ icones appeared in two folio volumes in Vienna. Other floras of Brazil, notably that of Martius, 1837–40, came out at intervals, and by the end of the century the plant life of Brazil was well covered by scientific publications.
So far as Great Britain is concerned, and it may be taken as a criterion of Europe generally, the most comprehensive record of sources and dates of the introduction of South American plants is Loudon’s Hortus Britannicus, first published in 1830. It enumerates something like thirty thousand species, exotic and otherwise. As the importation of South American plants was only in its infancy at that time many hundreds of flowers, now familiar in gardens and hothouses, are not recorded, but the book is reasonably complete up to the time of publication. Most of the more important introduced aliens, before and after the date of Loudon’s great work, may be found described and illustrated in the Botanical Magazine of London (issued monthly from 1787 to the present time), while others are dealt with in Loddiges’ Botanical Cabinet, 1818–24, and in many other of the quantity of horticultural publications appearing in Europe during the first half of the nineteenth century—notably in Nicholson’s Dictionary of Gardening and in the revised edition of Johnson’s Gardener’s Dictionary, bringing the record to the end of the nineteenth century.
Whilst many European botanists, such as Langsdorff, Burchell, Lhotsky and others had, during the earlier decades of the nineteenth century, explored certain parts of Brazil, nothing was of more importance to general knowledge of the plant-treasures of the country than the work accomplished by a Scotch botanist, Dr. George Gardner, afterwards Superintendent of the Botanical Gardens of Ceylon. His Travels in the Interior of Brazil during 1836–41 is a record of high merit, not only on account of its contribution to Brazilian botany and natural history, but because it is a faithful and genial picture of life and conditions in the interior of Brazil three-quarters of a century ago. The amazing richness and beauty of Brazilian flora had never before been revealed to Europeans as through Gardner’s book and his collections of thousands of specimens; it is extraordinary that these fascinating Travels should have remained out of print.
Of all the groups of plants introduced to the rest of the world from the southerly countries of the New World, orchids easily rank first, as the most precious, the most varied and beautiful, and the most costly: the first brought to England came from the East and West Indies. Epidendrum cochleatum found its way from Jamaica to England and was flowered for the first time in 1787; another species of the same lovely family, Epidendrum fragrans, came also from Jamaica in 1778 but was not flowered until 1788. In 1794 fifteen species of epiphytal orchids were at Kew, chiefly brought from the West Indies by Admiral Bligh, and for many years these islands, and India, were the main sources of orchid importation. But in 1793 a species of Oncidium was introduced to England from Panama: in 1811 another came from Montevideo, and by 1818 Brazil had begun to contribute species of the same genus. In 1825 Loddiges of Hackney, London, had in cultivation some eighty-four species of orchids from South America and the East, and by 1830 the Royal Horticultural Society of London had collectors in various parts of Brazil, hunting for rare plants.
Many beautiful orchids were sent home by business men residing in South America; for instance, William Cattley of Barnet, who died in 1832, and whose name is commemorated by the noble Cattleya, established an extensive correspondence with business men living abroad for the purposes of obtaining new and rare orchids, and through his efforts came many fine specimens, chiefly from Brazil. The earliest Brazilian Cattleya to reach Europe was C. Loddigesii, 1815, but the most famous and most protean species of all C. Cabiata, reached Europe in 1818, and others of the same genus came in rapid succession from Brazil, Colombia, Mexico, Costa Rica, Guatemala and the Argentine. Many beautiful Brazilian orchids were sent by William Harrison, a merchant living in Rio de Janeiro during the thirties and forties of last century, to his brother Richard in Liverpool, whose residence at Aigburth was in those days a Mecca to which orchid lovers paid annual pilgrimages.
To introduce these plants was one thing; to cultivate them successfully was quite another. Hooker once declared that for more than half a century England was “the grave of tropical orchids” and that those surviving did so in spite of, rather than on account of, the treatment they received. Each grower had his special system, mostly wrong: it was not until after repeated and costly failures that orchid importing and growing became a success, and that success only became general about 1850.
The debt of other countries to Brazil and indeed all tropical America for ferns and cacti is also great. The Canna and its ally Marcanta may be traced in England as far back as 1730; the Begonias and the Gesnera date from 1816–18, whilst the favourite Abutilon, introduced in 1837, is today hardy in many parts of Europe. The Gloxinia, arriving from South America a century earlier, has developed possibilities undreamt-of by earlier horticulturists, and the same may be said of the Fuchsia, brought from Mexico and Chile, 1823–25. The most popular South American shrub is the Escallonia macrantha, introduced from the island of Chiloe (Alexander Selkirk’s retreat) in 1848; it has for many years been a favourite hedge plant in the county of Cornwall, where it thrives in pink profusion.
On the Madeira River, Amazonas; rapids at Tres Irmãos.
Victoria Regia lilies near Manáos.
The Calceolaria is another early nineteenth century alien from South America; so too is the Dahlia: sixty years ago whole nurseries were given over to the culture and hybridization of this flower, and an entire literature appeared on the subject. Its popularity has somewhat waned, but on the other hand the most gorgeous of greenhouse climbers, Bignonia, was never more treasured than it is today. Brazil, and other adjacent countries, has given us also many species of such genera as Achimenes, Alstromeria, Anthurium, Aristolochia, Caladium, Calathea, Hibiscus, Iponoea (the Evening Primrose), and hundreds of other beautiful plants.
Among plants introduced and cultivated abroad for other reasons than their loveliness are the pineapple (Anana sativa) which reached Europe as early as 1690; coconuts were carried from Brazil a century ago; and the Brazil nut (Bertholletia excelsa), which was probably first taken to Portugal by very early navigators, finds its first mention in England in the 1830 edition of Lindley’s Natural System of Botany; he speaks of the “Souari ... or Brazil nuts of the shop, the kernel of which is one of the most delicious fruits of the nut kind.”
Brazil’s gifts to the pharmacopeias of the world have also been very valuable. Discovery, or rather publication in Europe of the medicinal properties of many Brazilian plants is due to Piso, author with Marcgrav (“een geboren Duitscher”) of the work De Medicina Brasiliensi, etc., of 1648, already mentioned. This monumental publication was undertaken under the patronage of Count John Maurice of Nassau, Governor of North Brazil during the period of Dutch occupation, a far-seeing man whose portraits are to be seen in the public galleries of Amsterdam and Brussels. Nearly all the Brazilian plants with notable medicinal properties are fully described and illustrated in this book: among them, and perhaps the best known, is Ipecacuanha, obtained from the root of Cephalis ipecacuanha, native to the damp shady forests of Brazil. This drug was first mentioned in an account of Brazil given by a Portuguese friar in Purchas’s Pilgrimes, 1625, where it is called Ipecaya, so that it is clear that Piso, although the first to bring the drug to the notice of European medical men, was not the discoverer of its qualities. In England the famous physician John Pechey was the first savant to bring ipecacuanha to general notice in his Observations made upon the Brasilian root called Ipepocoanha, issued in 1682; a few years later it was firmly established in European medicine. In 1686, says A. C. Wootton (Chronicles of Pharmacy, 1910) Louis XIV bought from Jean Adrien Helvetius the secret of a medicine with which a number of remarkable cures had been performed; Helvetius, whose patronymic was Schweitzer, was the son of a Dutch quack, and he not only made his own fortune out of ipecacuanha (the royal gift alone was a thousand louis d’or) but got the appointment of Inspector General of the hospitals of Flanders and court physician to the Duke of Orleans.
Another famous drug from Brazil is the Balsam of Capevi (or Copaiba—Copaiva), the sap of Copaifera officinalis, a genus of the leguminous order of plants; it was described by Piso; is mentioned in Edward Cooke’s Voyage to the South Sea and round the World, published in 1712, and first made its appearance in English gardens in 1774, having previously figured in Jacquin’s Stirpium Americanarum Historia, 1763.
Jaborandi, obtained from the dried leaflets of Pilocarpus pennatifolius, was described by Piso and Marcgrav: like the two mentioned above, this drug was well known to the native tribes of Brazil and employed by the pagés or medicine men; it received its first serious notice in recent times in the Diccionario de Medicina published by Dr. T. J. H. Langgard in Rio de Janeiro in 1865. The plant reached English gardens three years later, but its properties do not seem to have been recognized in Europe until 1874, when a Brazilian scientist, Dr. Coutinho, sent some leaves to M. Rabutau, the eminent pharmacist of Paris, who tested it and declared it to be as valuable as quinine as a febrifuge and sudorific.
Guaraná (Paullinia sorbilis, Mart.) is a tonic widely used in Brazil and Peru, which has recently been making its way into favour in Europe, France taking the drug readily. It is obtained from seeds, and a paste made which hardens into such a consistency that it can only be powdered by a grater; this powder is dissolved in cold water and taken as a tonic and digestive. One of Brazil’s bottled mineral waters is also made with Guaraná added, and the pink-tinted, rather acrid drink is quite agreeable.
The Brazilian interior, and particularly Amazonas, is so rich in medicinal herbs, seeds and roots, that it would take pages to give their names, and as they are not popularly known, the reader would not be greatly enlightened, but the Quassia (Quassia amara, Linn.) has international fame; Jalap (Piptostegia Pisonis) is an old acquaintance. Many drugs have local names as the Lagryma da Nossa Senhora (Tear of Our Lady), a diuretic; the Melão de São Caetano (S. Caetano’s Melon), whose little fruit of the cucumber class is a medicine, whose stalks furnish a fine fibre, and whose leaves contain potash. There is at least one remarkable astringent, the Cipó Caboclo (Davallia rugosa); Cambará is a much-used base for pectoral syrups; the Batata de Purga and the Purga do Pastor are used all over Brazil; many of the Rubiaceae are used as febrifuges; there are numbers of tonics, as the Laranjeira do Matto (Forest Orange) and the Páo Parahyba and Páo Pereira. Andiroba oil is used to make a skin soap, and also to light the family lamp in northerly states; the Sapucainha (Carpotroche brasiliensis) tree yields a nut containing fifty per cent of oil used locally for rheumatism in Minas, Rio and Espirito Santo; and the Pinhão de Purga’s seeds furnish an oil said to be convertible into gas.
Besides the well-known Vanilla, there is known one fine flavouring and scenting plant, the Páo precioso, one of the Lauraceae; its bark and seeds are sweetly perfumed and it is much used by local chemists.
Brazil could if necessary ship excellent mineral waters abroad. There is an import of bottled waters into Brazil, but they have rivals in the national waters, chiefly found in Minas Geraes and there bottled by Brazilian companies. Perhaps the most popular are Caxambú and Salutaris, but there are others. The chief points of origin are at Aguas Virtuosas, Caxambú, Lambary, Cambuquira, São Lourenço, and the recently opened wells at Araxá.
Altogether the natural gifts of Brazil in minerals and plants are such that not only does she supply the basis for many home-made remedies but also ships drugs abroad; were her resources better investigated and quantities developed she could greatly increase her position as a supplier of medicines to international markets.
CHAPTER VIII
BRAZIL’S EXTERIOR COMMERCE
Studying the commerce of Brazil with the rest of the world, following the remarkable variations in amount of export of certain articles, and the no less remarkable fluctuation in price of others, one comes at last to the conclusion that Brazilian trade has never had a normal year. Almost every twelve months has seen changes taking place which are not the result, in most cases, of the growth, to be expected, along definite lines; influences unforeseen have more than once knocked the bottom out of certain prosperous businesses, production has been affected by remote causes, or stimulated by others as little to be normally reckoned upon. The history of Brazilian exterior commerce, which is largely the history of her exports since purchases depend upon income, shows some of the most sensational transferences of prosperity from one region and industry to another, oddest appearances and disappearances of industries, falls and rises of prices, in commercial records.
To realize something of this it is only necessary to think of the dominance of the northern promontory, in colonial days, when sugar was the great Brazilian staple together with dyewood, and of the total disappearance of the latter—until the last year—from consideration; of the once-feverish gold industry, which shipped over a thousand tons of the refined metal in its hey-day, employing an army of people, and which has now vanished, with the exception of the operations of two British-owned companies; of the obliteration of Brazil’s fame as a diamond producer after the discovery of the blue-clay deposits of Kimberley; of the rise of the once-neglected and uncolonized south to the position of “leader” section of the country with its enormous coffee production, built up during the last forty years; of the phenomena of the rubber export of the extreme north, as well as the new developments in Brazilian business appearing on the horizon, great in potentiality, during the war period, and which may bring Brazil into the front rank of countries exporting chilled beef and producing manganese ore. Few countries on the active list have seen such revolutions in industry; they have been largely due to the variety of Brazilian regions, and they will in all probability be repeated while Brazil opens her great expanses of virgin prairies, forests, and mineral-saturated hills.
The following figures show that between 1915 and 1920, Brazil’s exterior commerce was nearly equal in value to that of the previous ten years:
| Ten-year Period | Total Importation Values | Total Exportation Values | Relation of Imports to Exports | Average Value of Milreis in Pence | |||
|---|---|---|---|---|---|---|---|
| 1846–1855 | 737,720 | contos | 691,740 | contos | 106.6% | 27 | ¹⁄₁₆ |
| 1856–1865 | 1,228,171 | „ | 1,225,563 | „ | 100.2% | 26 | ⁹⁄₃₂ |
| 1866–1875 | 1,551,630 | „ | 1,902,331 | „ | 81.5% | 21 | ⁹⁄₁₆ |
| 1876–1885 | 1,768,564 | „ | 1,969,515 | „ | 89.8% | 19 | ³¹⁄₃₂ |
| 1886–1895 | 3,267,650 | „ | 4,073,764 | „ | 80.2% | 18 | ³⁄₁₆ |
| 1896–1905 | 4,856,634 | „ | 7,324,009 | „ | 66.3% | 11 | ³⁵⁄₆₄ |
| 1906–1915 | 6,331,487 | „ | 8,115,492 | „ | 78 % | 14 | ³⁹⁄₆₄ |
| 1916–1920[[21]] | 6,063,000 | „ | 7,397,300 | „ | 81.5% | 13 | ¹¹⁄₂₅ |
These figures show one or two points clearly—first, the vitality of Brazil, for as one industry has waned another has waxed, exportation values steadily showing increases in spite of the caprices of fortune; it is also plain that for the last fifty years Brazil has exported more than she has imported. In war years, this excess of exports was very much more accentuated, but, although this balance is useful in helping to steady exchange, to pay debts abroad, and to put money into shippers’ and producers’ pockets, it has the effect, when imports are greatly curtailed, of starving the Federal Government, whose revenues are mainly dependent upon import taxes.
The famous “nine principal articles” of Brazilian export were coffee, cotton, sugar, rubber, cacao, hides (of cattle), skins (of goats and sheep), tobacco, and matte (“Paraguay tea”) up to 1916. Other items which displayed marked rises up to 1918 were lard, rice, Brazil nuts, carnauba wax, manganese ore, precious and semi-precious stones, and chilled or frozen beef. Prosperity over all Brazil depends much more upon volume and variety of goods exported than upon prices, for while soaring values put large profits into the hands of the few, great volumes of products mean employment for the field labourer or collector, for transportation companies, and a host of intermediaries. In addition to increased prices, the actual volume of Brazilian exports was larger in the five years 1916–1920, rising from seven million tons in 1911–1915 to nearly ten million tons. This prosperity was due to war calls, several new items appearing on the 1916–20 lists on page [319].
| 1915 | 1914 | 1913 | 1912 | 1911 | ||
|---|---|---|---|---|---|---|
| Coffee | 17,061,000 | 11,270,000 | 13,267,000 | 12,080,000 | 11,258,000 | bags |
| Matte | 75,885 | 59,354 | 65,415 | 62,880 | 61,834 | tons |
| Rubber | 35,165 | 33,531 | 36,232 | 42,286 | 36,547 | „ |
| Sugar | 59,074 | 31,860 | 5,367 | 4,772 | 36,208 | „ |
| Cacao | 44,980 | 40,767 | 29,759 | 30,492 | 34,994 | „ |
| Hides | 38,324 | 31,442 | 35,075 | 36,255 | 31,832 | „ |
| Tobacco | 27,096 | 26,980 | 29,388 | 24,706 | 18,489 | „ |
| Cotton | 5,228 | 30,434 | 37,424 | 16,774 | 14,650 | „ |
| Skins | 4,578 | 2,487 | 3,232 | 3,189 | 2,798 | „ |
| 1920 | 1919 | 1918 | 1917 | 1916 | ||
| Coffee | 11,525,000 | 12,963,000 | 7,433,000 | 10,606,000 | 13,039,000 | bags |
| Matte | 90,686 | 90,200 | 72,781 | 65,431 | 76,777 | metric tons |
| Rubber | 22,876 | 32,213 | 22,211 | 31,590 | 28,865 | „ |
| Sugar | 109,141 | 69,429 | 115,634 | 138,159 | 54,438 | „ |
| Cacao | 54,419 | 62,584 | 41,865 | 55,622 | 43,720 | „ |
| Tobacco (leaf) | 30,562 | 42,575 | 29,011 | 25,282 | 21,021 | „ |
| Cotton (raw) | 24,696 | 12,153 | 2,594 | 5,941 | 1,071 | „ |
| Cotton seed | 23,564 | 22,649 | 42 | 22,882 | 11,762 | „ |
| Rice | 134,554 | 28,423 | 27,916 | 44,639 | 1,315 | „ |
| Mandioca Flour | 8,660 | 21,834 | 65,322 | 18,745 | 5,370 | „ |
| Beans | 23,000 | 58,607 | 70,914 | 93,536 | 45,817 | „ |
| Brazil Nuts | 9,279 | 24,998 | 6,750 | 16,057 | 9,882 | „ |
| Hard Woods | 125,394 | 103,824 | 179,799 | 64,264 | 82,816 | „ |
| Manganese | 453,737 | 205,725 | 393,388 | 532,855 | 503,130 | „ |
| Meat | 63,600 | 54,094 | 60,509 | 66,452 | 33,661 | „ |
| Lard | 11,166 | 20,028 | 13,270 | 10,235 | 3 | „ |
| Hides | 37,265 | 56,788 | 45,584 | 39,912 | 53,511 | „ |
| Tinned Meat | 1,649 | 25,398 | 17,223 | 6,552 | 856 | „ |
| Skins | 3,966 | 5,166 | 2,215 | 3,046 | 3,840 | „ |
The preponderance today of São Paulo as a producer state is shown by her shipment values—465,212 contos out of the total exports, or about forty-six per cent of Brazilian sales. Next in values come the sales of Minas Geraes, worth 221,000 contos, and Rio de Janeiro state, with about 176,000 contos; Bahia is fourth, with exports worth over 102,000 contos; Pará and Amazonas follow with about 70,000 and 64,000 contos respectively; Paraná, 33,565 contos; Espirito Santo, nearly 30,000; and Pernambuco, with 22,600 contos, are next, followed by Ceará, shipping nearly 19,000 contos’ worth of goods, to Rio Grande do Sul, with sales worth almost 16,000 contos; the only other state shipping over 10,000 contos’ worth of goods is Maranhão.
The United States has been for many years the greatest single purchaser of Brazilian materials, generally taking rather more than one-third of all exports, Europe taking nearly all the rest, with South America also buying an appreciable share, amounting to about five per cent of the total. The coffee trade is that in which the United States is most largely concerned: for the last six years Brazilian exports of coffee have averaged over fourteen million bags, and of this the United States has been taking about one-third, Germany, Austria and the Netherlands accounting for another third, France taking from one to two million bags, and the rest of Europe absorbing the remainder. The United States, purchaser of a billion dollars of tropical and sub-tropical products in 1915–16, is an eager taker of Brazilian hides and skins, an export markedly stimulated since the European War began, important shipments coming from Rio Grande do Sul among other cattle states; she has, during the last two years, apparently been able to receive larger quantities of all Brazilian products, and perhaps the most salutary trend, for both the United States and Brazil, has been in the great quantities of raw materials taken by the northern country. These materials are the breath of life to the manufactures, and nothing is better for Brazil than increased volumes of such exports.
During 1915 the United States bought, reckoning in dollars, nearly $107,000,000 of Brazil’s total exports of over $255,000,000, while Great Britain took $31,000,000, France $29,000,000, Sweden $23,000,000 (chiefly coffee, and, in view of the disappearance of direct sales to Germany, in all probability transferred to the Central Powers), and the Netherlands $16,000,000; sales to the Argentine were nearly $13,000,000, while Uruguay took about four and a half million dollars’ worth of goods. Apparently, trading between Brazil and her South American neighbours on the same side of the Andes has been greatly increased during 1916, Argentina buying unprecedented amounts of sugar, as well as maintaining her imports of matte. During 1915, the total sales of Argentina to Brazil were worth over 89,000 contos, or something like $22,000,000, of which nearly $20,000,000 were accounted for by wheat and wheat flour. At the same time Brazil sold to the Argentine 42,226 contos’ worth (say $10,560,000) of goods, of which nearly 70 per cent was accounted for by matte sales, with 15 per cent of tobacco.
Brazilian imports show important changes in places of origin since the European War; formerly Great Britain was by far the greatest seller to this country, supplying nearly a third of the total goods purchased. In 1911 the order in importance of countries selling to Brazil were Great Britain, Germany, the United States, France, Argentina, Portugal, Belgium; in 1912 and 1913 the same order was maintained, but with Germany increasing her sales at a greater rate than Great Britain, while the United States also showed gains.
In 1914, with the outbreak of war, England still retained her top place, but with reduced values, while the United States drew second, Germany third and the Argentine fourth. In 1915, the United States sold more goods than any other country, and Great Britain came second, maintaining her command of the market in cotton piece goods in a remarkable manner, and holding over half of the coal sales in the latter item until 1916, when United States’ sales replaced the Welsh coal, whose export was then prohibited. Development of South Brazilian coal fields also helped to supply the home market to an increasing degree. During 1921–2 Britain recaptured much of her coal sales, and the share of the United States fell almost to pre-war conditions, from top place (81%) in 1920.
In U. S. currency, Brazil imported nearly $146,000,000 worth of goods in 1915, the United States selling about $47,000,000, England nearly $32,000,000 worth, while Germany’s former average of fifty-two millions was reduced to two. Many of these changes were due to the abnormal war situation, and while it could not be expected that the United States would retain an advantage due to the elimination of competitors, she was still the greatest supplier of goods in 1920, selling over twice as much as her nearest rival, Britain, or goods worth $52,000,000, in comparison with Britain’s $25,000,000. The European countries organized for overseas trading are making strenuous and determined efforts to regain the commerce built up by the transportation lines and development work financed from Europe; although they awaited the end of the war to renew these efforts. Probably the best recommendation of the United States to a large share in Brazilian imports lies not in commissions and reunions, but in her extensive purchases of Brazilian raw material.
Broadly speaking, nearly sixty per cent of Brazilian imports are manufactured goods. Large quantities of machinery, steel rails, locomotives, etc., are usually imported every year for the construction work needed in a vast and young country. Over twenty-four per cent of the total purchases are of foodstuffs with wheat and wheat-flour largely preponderant: last year one-fifth of the total imports of Brazil were credited to these two items. About ten per cent of Brazilian purchase money is paid for coal. Financial stringency due to abnormal conditions has cut down Brazilian imports in a salutary manner—and fortunately for Brazilian merchants and retailers, stores were at the outbreak of hostilities largely overstocked by the unprecedentedly large purchases of 1913, when $326,000,000 was paid for imports.
As a result of big sales and reduced buying, Brazil in 1915 had a trade balance in her favour of about 440,000 contos of reis (exports 1,022,634 contos and imports 582,996 contos) the equivalent of nearly $140,000,000 in United States currency. This balance appears to have largely remained abroad to help meet Brazilian indebtedness, and helped to steady exchange. This surplus of export values dropped well below 400,000 contos in 1916 and 1917, and to 148,000 in 1918, but rose to the unprecedented height of 845,000 in 1919, when the milreis soared to the rather inconvenient exchange value of 18 pence. The years 1920 and 1921 witnessed adverse balances of trade, with the milreis fallen below 8 pence, 1922 showing trade recoveries practically to pre-war values. Brazil has weathered many a storm commercially and industrially because the world needs her raw material; she has every reason for confidence in the future.
| State | Capital | Area Sq. Kilometers | Population |
|---|---|---|---|
| Alagôas | Maceió | 58,500 | 785,000 |
| Amazonas | Manáos | 1,895,000 | 390,000 |
| Bahia | São Salvador | 427,000 | 2,500,000 |
| Ceará | Fortaleza | 104,250 | 1,000,000 |
| Federal District | Rio de Janeiro (São Sebastião) | 1,116 | 1,200,000 |
| Espirito Santo | Victoria | 45,000 | 400,000 |
| Goyaz | Goyaz | 747,000 | 300,000 |
| Maranhão | São Luiz | 460,000 | 500,000 |
| Matto Grosso | Cuyabá | 1,379,000 | 245,000 |
| Minas Geraes | Bello Horizonte | 575,000 | 4,500,000 |
| Pará | Belem | 1,150,000 | 660,000 |
| Parahyba | Parahyba | 75,000 | 600,000 |
| Paraná | Curityba | 250,000 | 500,000 |
| Pernambuco | Recife | 128,400 | 2,100,000 |
| Piauhy | Therezina | 301,800 | 425,000 |
| Rio de Janeiro | Nictheroy | 69,000 | 1,300,000 |
| Rio Grande do Norte | Natal | 57,500 | 410,000 |
| Rio Grande do Sul | Porto Alegre | 236,500 | 1,500,000 |
| Santa Catharina | Florianopolis | 43,535 | 450,000 |
| São Paulo | São Paulo | 290,876 | 3,000,000 |
| Sergipe | Aracajú | 39,090 | 450,000 |
| Acre Territory | 191,000 | 100,000 | |
The Territory of Acre was legally acquired from Bolivia by the Government of Brazil in 1903 but had been populated and the rubber reserves worked by Brazilian seringueiros for at least ten years previously. Their entry into Bolivian lands was the cause of much friction until the final settlement by the payment by Brazil of £2,000,000 for this rich area.
