The high protective tariffs of the Latin American countries at the same time tend to raise enormously the price of imported articles and to foster the industries of the countries themselves. In Brazil the national manufacturing industries have grown very considerable under this system of economic fostering. None is more striking than the cotton-weaving industry, and we are already in sight of the time when the country will cease to import English or other foreign cotton goods, except perhaps certain special kinds. This, of course, is sound economics (however unpleasing it may be for British manufacturers). Brewing and soap-making are other industries that have similarly prospered in the Republic. But, so far, factories are few, comparatively, though there is some useful decentralization of manufacture. One finds tiny factories in small struggling villages where their presence might have been unsuspected, industries brought about by the immensity of distance, the high cost of carriage, which soon exceeds the value of the finished product, and thus Nature has here provided a sort of natural protective zone; factories being established where customers exist, and for the purpose of serving them, rather than for the object of sale beyond their borders. Each small factory has its own circle of customers, under these circumstances, and can rely upon its market close at hand. It enjoys a monopoly of its peculiar region.
Apart from any defects to which such a system may give rise, this may be regarded as a valuable condition, and, if preserved, may avoid in Brazil the serious evils which in some European countries, such as England, over-centralization of manufacture has given rise—a philosophy to which, however, English people have not yet awakened.
Similar conditions exist as regards agriculture: the dispersal or decentralization of industry is necessarily accompanied by the dispersal or decentralization of agriculture. Food products are grown where they are to be consumed. Each hamlet, and indeed each family, has its own fields of maize, manioc and often sugar-cane. The village is enabled not only to provide itself with employment and with manufactured articles, but with foodstuffs, and, in the future, this circumstance might give rise to an intensive general settlement and contentment.
For trading conditions it may have its adverse side. But the question is how far trading should be encouraged as against economic settlement.
"As a result of the difficulty of communications, and also, perhaps, of the defective organization of trade, Brazil is far from forming a national market. Her territory may be decomposed into a host of little isolated markets, each independent of the other, each sufficing to itself. If the prices vary, neither rise nor fall affects the outer world. In Rio I find the sugar-planters in a state of joyful excitement: in a few months the price of sugar has risen by 100 per cent. Two days later I land in Paraná; there, in the narrow tropical belt of seaboard, are a few sugar-plantations, whose crop is sold on the plateau; not in the shape of sugar, but as 'brandy,' aguardiente, or, strictly speaking, rum. The local crop of cane is abundant, the owners of the sugar-mills at the foot of the serra are grumbling at having to sell their spirit at far below its usual price.[27] Similarly the price of coffee will fall in San Paolo and in Santos, until the Paulist coffee industry appears in actual danger, and the State undertakes the perilous business of running up the prices to save the planters. Yet in Ceará there are only a few growers, who can barely supply the consumers of the State, who are selling an inferior coffee at double the usual prices, and know no other anxiety than the fear that the drought may threaten their crops. Such contrasts are frequent. If such is the case with luxuries like sugar and coffee, what of the heavier products, whose transport is still more costly?
"The limitation of the markets renders the economic life of the country unequal and ill-adjusted. It exposes it to continual partial crises which naturally check its development. When production exceeds consumption the local market cannot unload itself upon the neighbouring markets, in which the producers would perhaps receive better prices, since these, on account of the cost of transport, are shut off, as it were, by water-tight compartments. Prices accordingly fall, without any possible remedy; immediately production is limited and becomes insufficient; then prices rise, and there is no importations from without to limit their rise. Reawakened by better prices, production is once more stimulated; and its very improvement provokes a new crisis. I found the settlers of Paraná accustomed and even resigned to the sudden leaps of the market, which they had come to regard as a normal and inevitable state of affairs. They live, therefore, always in a state of uncertainty, never able to foresee what will be their resources for the coming year. The spirit of saving has decayed among them. In the same way wholesale trade used to suffer formerly from the extravagant variations of exchange. The Brazilians have at last come to understand the dangers of such conditions. There is only one remedy: to improve the means of communication. The great question of Brazil is above all a question of roads."[28]
In Brazil the question of means of transport is a serious one. The magnificent network of railways (largely built by British capital) serves only the more settled part of the country.
The great export trade of Brazil, with its staple products, furnishes a stream of gold, which, more or less, becomes dispersed throughout the country, and creates strong ties of union between the various States, which otherwise might not exist in unison.
As to sugar, however, Brazil is in large degree its own customer. The great export is coffee, as it was once sugar, and in part rubber. Meat also finds its principal market at home. Brazil will soon supply its own wants in flour, which now comes in part from Argentina.