REGIONAL CLEAVAGES AND POLITICAL PARTICIPATION IN BRAZIL

 CHAPTER 5
ECONOMIC IMPULSE AND PATRIMONIAL POLITICS


1. Economic development in the "new" countries

The process of political change described in the preceding chapters had, in its background, the new relationships between the country and an expanding world market. One of the most important aspects of the relationship between the marginal new countries and the central old ones was the pattern of asymmetry, economic dependency and political interference which came with it.

Less obvious, but certainly as important, was how this kind of external dependency was reflected in the country's internal structure and political process. Since there are varying degrees of freedom and alternate possibilities of behavior in even the tightest bonds of dependency, it is necessary to know which alternatives are open in a given situation, and the reasons why a given alternative was adopted instead of another. To take this perspective does not mean, of course, that the relevance and explanatory power of the political and economic variables related to external dependency will be neglected; it simply means that the analysis will be made from the standpoint of the dependent unit, taking the external system as given, and recovering, as it were, the relative internal autonomy and possibilities of choice. This chapter is intended as a step in this direction. It is concerned with changes in the "new countries," given the context of an expanded international market, and considers some alternative ways in which these countries may relate to it.

The main economic activity in late eighteenth century Brazil was gold mining. But its decline was very abrupt, going from an annual average of 14,600 kg. in the 1741-1760 period to an average of only 1,760 kg. from 1811 to 1820. The Napoleonic wars and the beginning of free trade with Britain brought a brief prosperity to the sugar and cotton agriculture, but after 1812-1815, prices declined, and "the Brazilian political independence occurs at a moment of full world economic recession and of recession in the Brazilian economy."(1) At the same time, however, coffee was emerging as the leading product in the country, a situation which would prevail from then on, as the table below shows.

TABLE 12
BRAZILIAN EXPORTS UP TO 1931
Year Value in 1,000 Value in in 1950 % of coffee over total exports % of second ranking product
1821 4.30 9.40 16.30 25.30 (sugar)
1829 2.10 4.60 20.50 37.20
1830 3.30 7.30 19.80 36.70
1840-41 5.30 10.40 42.70 28.50
1850-51 8.10 21.50 48.10 23.30
1860-61 13.20 25.00 64.70  
1870-71 15.40 34.00 50.30  
1872-73 22.30 45.00 37.60 14.70
1880-81 21.20 51.00 54.60  
1890 26.30 75.00 50.30  
1900 33.10 90.00 67.70  
1910 63.00 160.00 42.30 39.10 (rubber)
1920 82.30 67.50 49.10 6.00 (sugar)
1929 94.80 156.00 71.00  
1930 65.70 130.00 62.60  
1931 49.50 122.00 68.90  
Source: IBGE, Anuário Estatístico 1940 and 1966. APEC, Estudos, A Economia Brasileira e Suas Perspectivas, 4 volumes. Oliver Onody, A Inflação Brasileira 1820-1958 Rio 1960), for the conversion index to 1950 pounds.

From the 1860's to the first World War, the volume of Brazilian exports increased about six fold, due mainly to the expansion of the coffee industry, which had become, since the second half of the nineteenth century, responsible for 40 to 80 percent of the country's exports.

This economic boom was certainly not an isolated phenomenon, since it occurred alongside a rapid expansion of the international market. In the well known "First Wiksel Lecture" of April, 1959, Ragnar Nurkse presented some estimates on the expansion of international trade in the nineteenth century as compared with the contemporary period, dealing specifically with the pattern of "growth through trade." From 1850 to 1880, world trade increased) according to his estimates, by 270 percent; from 1880 to 1913 it increased 170 percent; and the increase for the 1928-58 period was just 57 percent. "The focal center of economic expansion," says Nurkse, "was initially Great Britain, whose population, despite heavy migration, trebled in the 19th century while her national income appears to have increased about ten-fold and the volume of her imports more than twenty fold."(2) The countries which benefited more directly from this expansion were those in the "regions of recent settlement," namely Canada, Argentina, Uruguay, South Africa, Australia, New Zealand and, of course, the United States. According to Nurkse the share of the "new countries (Canada, Argentina, South Africa, Australia, New Zealand) in Britain's imports rose from 8 percent in 1857-59 to 18 percent in the 1911-13 period. The share of British investments, which went to these areas grew from 10 percent in 1870 to 45 percent in 1913.

Brazil also belonged, even if as a minor partner, to this club of "new" countries which received the impact of British economic expansion. Brazil had to pay England dearly for the international recognition of its independence and, with the economic treaty which Britain imposed upon Brazil in 1827, "the transfer of the special privileges which England had enjoyed for centuries in Portuguese commerce was completed, and the continuation of Great Britain's pre-eminence in the economic life of its old European ally was assured in Portuguese America, despite the severance of the colony from the mother country. The thread of continuity is remarkably clear, running back through the transition years of 1810-1827 to the Anglo-Portuguese relations of the seventeenth and eighteenth centuries."(3)

Britain was not to remain the main market for Brazilian agricultural products in the late nineteenth century, but she was certainly the main supplier of loans and capital investments. As Manchester puts it, "Great Britain . . . has never made a question of maintaining its early supremacy in the field of Brazilian exportations; it is primarily interested in Brazil as a market for English goods, not as a supplier of raw materials for home consumption."(4) The United States became the main market for Brazilian products after the Civil War and, during the first World War, it supplanted Great Britain as the principal supplier of capital investments in the country.

The development of the "new" countries obeyed what economic historians have called the "staple theory," according to which the economy grows on the basis of a leading export product, which benefits from international comparative advantages due to the abundance of land and immigrant labor.(5) Open spaces for the production of new products absorbed by an expanding international market, availability of foreign capital to finance the transportation and commercial infra-structure for the new products, and the immigration of European manpower, all led to an economic impulse which should have been enough to create, in the long run, a self sustained and differentiated economy. What has been difficult to explain is why the staple theory worked so well for some countries and did not work for others; why some of the "new" countries of the late nineteenth century's expansion of international trade are now in the club of high development, while others lagged behind.

There is a wealth of information and discussions on this problem, and it would be out of place to introduce this material here. What is important in this context is to see how this difficulty in turning the economic impulse of the staple product into self sustained and diversified economic growth was linked to the types of institutional and regional differentiation and cleavages we have been pointing out. We will begin with a close and well analyzed international comparison, between Argentina and Australia, and then see how this applies to the Brazilian case.(6)

2. External impulse and internal differentiation: Argentina and Australia.

Regardless of minor differences in statistical estimates, it is fairly clear that the rates of development in Argentina and Australia have been quite similar since the beginning of this century. According to Hector Dieguez, per capita income in Argentina rose 99 percent from 1904 to 1960-63, while income in Australia increased by 113 percent in the same period. What makes most of the difference, of course, is the starting point. It is estimated that the per capita income of Australia was already, at the beginning of the century, 1.75 times that of Argentina.

What concerns Dieguez are less the historical reasons for this difference than the reasons why the process of industrialization in the twentieth century did not reduce this difference; in other words, how did Australia keep and actually increase its relative advantage through time.

Since the overall relative performance of the Australian economy was not significantly better than the Argentine, it can be assumed that both countries behaved at a "reasonable" level of economic rationality, Australia's only advantage being the higher starting point. Under closer examination, however, it becomes clear that Australia had a well established and purposeful policy of defense and stimulation of its industrial structure, which Argentina lacked. It is as if the relative advantage in the international market belonged to Argentina, and not to Australia; as if Australia needed to work harder to keep the same levels of economic achievement which Argentina had with a policy of economic laissez-faire. It also means, of course, that Argentina could probably have caught up with Australia in absolute terms if she had had a similar policy of industrialization.

The reasons for the differences are thus not economic, but essentially sociological and political, as Hector Dieguez is well aware:
A mi juicio la solidez político-social alcanzada por Australia en las primeras dos décadas de este siglo, el debilitamiento del poder terrateniente, la acción política organizada del movimiento sindical, y la presencia del Partido Laborista, fueron elementos importantes para lograr tempranas políticas de altos salarios y leyes sociales, y lo que debe destacarse particularmente, para desplazar la actitud terrateniente reemplazándola por una diferente actitud general hacia el crecimiento industrial, circunstancia que se consolida en la década de los veinte. Durante esta década no se advierte en Argentina una equivalente actitud hacia el desenvolvimiento industrial.(7)
The historical account presented by Dieguez shows a well- formulated and purposeful policy of industrialization in Australia, which Argentina certainly lacked. Less convincing, however, are the links between these policies and the strength of the trade unions and the Labor Party, which the quotation above implies.

It is difficult to evaluate how much Australia was ahead of Argentina in terms of political organization and participation in the first two decades of this century. What is well-known, nevertheless, is that, in 1912, universal enfranchisement was established in Argentina by the Sanz Pena Law, leading to high levels of political participation and the organization of radical and socialist political parties. Ezequiel Gallo offers evidence which shows that the radical and socialist groups were fighting, as in Australia, for higher standards of living, but against tariffs and other protectionist measure which could help the industrial development of the country. Higher tariffs meant higher prices in the short run, and the notion that the interests of the working and middle classes are fostered when the income of the industrialist is improved was certainly alien to the popular ideologies of the time. As Gallo puts it,
The Socialist party (in Argentina) resolutely opposed two kinds of measures: legislation tending towards a devaluation of the Argentinian peso and any attempt to raise the tariff barriers. Both measures would have had an adverse effect on the standard of living of the workers (in the case of the tariffs, it must be remembered that despite import substitution, a significant proportion of the consumer goods purchased by the workers was still imported)(8)
Which means that the little industrial development Argentina had was not due to the political strength of these "modern" social sectors, but was achieved almost in spite of them.

3. A model of change

The model implicit in Gallo's discussion can be expressed in the graph below:

The formulation of the explanatory model for Brazil is usually attributed to Celso Furtado, and the criticism to which it has been subject follows a pattern similar to the debate on Argentine development, described above.(9)

First, regarding the negative link between industry and agriculture, there is a widespread notion that a natural hostility exists between these two sectors, which is not supported empirically. The theory works in terms of comparative costs, according to which it would be cheaper and more convenient to import manufactured products than to produce them at home, when foreign currency is available and industrial tradition is lacking. The development of a national industry would require tariff barriers, tolerance for higher costs and low quality, and other protective measures which the agriculturists would not be interested in supporting. Besides, the establishment of protective tariffs always brings the risk of reciprocity, and the closing of the foreign market to export products.

Although correct in its more general terms, this theory does not cover all the facts. An active export economy does not exclude, as it did not in São Paulo, a series of related and unrelated industrial and urban activities. Directly related to it are items of transport, processing and commercial organization. The money economy, which was stimulated by wages paid by the coffee plantations, created a demand for products which could not easily be imported from abroad:
Along with bricks, almost every kind of construction material was domestically produced by 1920: tiles, cement, nails, ceramic pipes, lumber, arid even plate glass and plumbing fixtures. Other obvious examples are beer and soft drinks (and bottles to put them in), shoes, boilers, coarse textiles, furniture, stonework, flour, pots and pans, and hats(10)
A third source of manufacturing development was the decision of the merchants and importers to finance the national production or finishing of goods, rather than bring them in from abroad. This combination of export, import and manufacturing interests is quite far from the image of an urban, entrepreneur capitalism struggling against traditional agricultural sectors. The fact is that an active and dynamic export agriculture can hardly be considered "traditional" on closer examination, as we shall see further on. The positive correlation between an export economy and industrialization is explicitly stated by Ezequiel Gallo:
The strategic variable in the process of industrialization undergone by these regions has been the steady expansion of demand, which in turn resulted from the increase in incomes generated by the successful performance of the export sector.(11)
High tariffs and external crises are usually seen together as factors which give strength to the development of national manufacture. The two World Wars and the 1929 world crisis are seen as circumstances which impaired the flow of international trade, reduced the availability of foreign currency and foreign products, and freed the national industry from foreign competition. The fact, however, seems to have been that world crises had a depressing effect on the economy as a whole, including the industrial sector.(12) It is true that, during the Second World War, Brazil had a limited participation in the western war effort, and this led, for instance, to the creation of the first steel plant in the country, Volta Redonda, the first motor engine plant, the Fábrica Nacional de Motores, etc. In his comparison between Argentina and Australia) Hector Dieguez notices that Australia had to produce supplies for the troops engaged in the First World War; moreover, it was the main Allied base in the Pacific after 1942, having to make a war effort similar to Great Britain's.(13) What these examples show is not that the wars had a positive effect on the process of industrialization, but that they could lead to political and psychological situations in which a conscious and purposeful effort of economic organization and production could be made possible. In other words, the market mechanisms created by external crises tend to be mostly negative, but the political and psychological effects can have the opposite result.

This question of market vs. political mechanisms is very important when it comes to the issue of protective tariffs. The idea of complementary interests between the export and manufacturing sectors is based on a similarity of interests and activities, which occur on a day-to-day basis. In other words, the final outcome is an aggregate of a large number of individual decisions. The idea of a conflict of interests, however, would probably need a change from the economic to the political level: that is, a clear and conscious political effort would be necessary to keep the government from raising the tariffs. In this scenario, the agriculturists would organize themselves as a lobby in the fight for low tariffs, while the industrialists would be organized and lobbying for them.

As it happened, this scenario did not exist. When tariffs were established, the objective was not to protect industry, but to bring in resources for the government. Dean is very clear on this:
The central government of the Republic spent more money than had the Empire; the tariff continued to be, however, the only significant source of revenue that the planters would grant. The available alternatives would obviously be more painful to them: a tax on land or a tax on incomes or profit. Therefore, the federal government, whose expenses had grown from 434,000 contos ($87,000,000) to 1,227,000 contos ($257,000,000) between 1900 and 1920, relied on customs duties to provide about 70 percent of its income. Though such a tariff would necessarily be protective in effect, its intent was merely fiscal.(14)
The political significance of this statement is very high. Tariffs were accepted by the agriculturists, as Dean puts it, faute de mieux; and they were not meant to protect the industry. What they were meant for, of course, was to finance an ever-growing governmental bureaucracy, which increased three-fold in the period of maximum political decentralization of the country's history. The expanding export economy supported the State and, at the same time, accepted tariff protection for an industry which she did not particularly mean to support. The tariff system in Brazil from 1900 to 1934 was casuistic, and specific tariff protections could be obtained through particularistic means and private lobbying. Hence, Dean concludes that "the particularism of the industrialists' claims to government favors led to a dependence upon the existing political structure.(15) In short, if we consider the weight of the three sectors - the central government, the agriculturists, and the industrialists - it becomes clear that the first certainly had the political control of the situation; the industrialists were the weakest group. The agriculturists had some power to decide where the government could draw their resources, but they were unable to curtail the continuous growth of the patrimonialist governmental bureaucracy.

Which brings us to another element of the model, the "modern" (socialist, middle class, trade union) sectors. Sociological common sense tends to link these modern, "leftist" social groups to the progressive social sector, the industrialists, and infer an opposition of interests between these modern and progressive sectors, on the one hand, and the agricultural sectors, on the other. It is curious how the classic opposition and hatred between workers and bourgeois seems to disappear in the context of underdevelopment, under the aegis of common progressivism and modern outlook.

Empirical evidence, however, does not support what ideologies of development would expect. Brazilian industrialists, according to Dean, did not develop a well formulated policy of industrial development, and were not in the least concerned with national progress as such. They depended on particularist favors from the government; they had to give continuous demonstrations of loyalty and support, and "in effect they had aligned themselves not with the reformist middle class but with the landowners, and invariably they provided unquestioning political support. Industrialism, with its potential for social transformation, was thwarted in effect by a regressive and opportunist alliance with the class least likely to favor that transformation."(16)

If the industrialists did not like the "progressive" groups, the reciprocal was certainly true. Early industrialism in Brazil was similar in its ruthlessness and exploitation of labor to its British counterpart in the preceding century, and strikes and other forms of class conflicts in Brazil occurred with intensity in the first decades of the century. The country's middle class, very often dependent on the governmental bureaucracy or on the merchant groups, had a clear preference for foreign products, and joined other social sectors in the secular complaint on the "artificiality" of the national industry.

The conflict of interests between industrialists and importers, which is to be expected when the national industry starts to claim protection against foreign products, is thus enlarged with an alliance between importers and consumers from the "middle" and low sectors. Here, again, the analysis of Brazil coincides with what Gallo finds in Argentina. He shows that, in spite of an objective interest of the export groups in low tariffs, a relative stabilization of tariff levels in Argentina occurred only during the 1913-25 period, which coincides with the arrival of the Radical Party to the government:
It is important to realize that from 1916 until 1930, political power passed to the party generally identified with the "rising middle classes." The "growing rigidity" of the tariff policy thus coincided with the time when political power was slipping out of the hands of the traditional ruling classes. And what is more, it was precisely the representatives in Congress of the new popular parties, radicals arid socialists, who opposed most actively any attempt to raise tariff barriers.(17)
If we look back at the reasons offered by Hector Dieguez for the relative backwardness of Argentina as compared to Australia, it is possible to see that we have come full circle. There is a striking contradiction between Gallo and Dieguez, even though the political ingredients considered important by Dieguez - a strong labor movement, an organized working-class party, positively related with a favorable attitude towards industrial development - seem to have worked in Australia. What Gallo seems to imply, however, is that Argentina did not develop an explicit policy of industrialization, not because of the lack of some of these elements, but exactly because of their existence.

What this analysis shows is that there are two elements which are lacking in the model we have been discussing; or at least, they are not taken systematically into consideration. The first is the role and characteristics of the State in which the external impulse is implanted. The second is an explicit consideration of the transition between market mechanisms expressing the aggregate interplay of individual interests and the explicit formulation of policy orientations by organized social groups.

The two elements are closely linked to each other. There is an important difference between a new nation such as Australia, which was created as an outgrowth of the expanding British economy, and "new nations' such as Brazil or Argentina, where the external economic impulse was established within a pre-existing context of political patrimonialism and dependence on the productive activities of the patrimonial state. In these "old new nations," politics never fell into the hands of the new economic groups, even when the old power sectors had to change their style and open the political system to new forms of participation. In Argentina, in spite of massive international im- migration, political power remained basically in the hands of the old traditional elite, who owned large-scale cattle-raising properties and were skilled in controlling the state machinery. (18). In Brazil, the number of immigrants was smaller, and they went mostly to São Paulo, an area which had been marginal to the main- stream of Brazilian society since the Emboabas War until the coffee rush in the late nineteenth century. This geographical division added an element of regionalism to the political and economic differences between São Paulo and the center of Brazilian political life in Rio, which is fundamental for an explanation of what was to happen in the country's political life throughout most of the following decades.

4. The political economy of coffee expansion

The Brazilian coffee economy began its expansion in the mid nineteenth century, and followed a pattern of expanding frontier due to a combination of increasing production and progressive exhaustion of the land. In 1859, almost 80 percent of the Brazilian coffee production came from the state of Rio de Janeiro, 12.1 percent from São Paulo, and 7.8 percent from Minas Gerais. In 1902, São Paulo concentrated 65.2 percent of the production, Minas 22.8 percent, and Rio de Janeiro only 9.7 percent.(19)

The reasons for this dramatic geographic shift in fifty years were related to the availability of virgin lands, but they were also a function of the possibilities of securing a labor supply and financial support. When, after 1897, the production of coffee surpassed the demands of the world market and a crisis of overproduction was declared, the maintenance of high levels of production and income started to depend on an active policy of price "valorization" through control of supply(20). To get labor and capital first, and then influence the conditions of the world market were tasks which demanded active and coordinated efforts by the coffee growers. This was not always possible, and on the whole, the Paulista coffee growers were much more successful than the Mineiros or Fluminenses (from the State of Rio de Janeiro). It was true that the quality of the soil in São Paulo was exceptionally favorable to the expansion of production which took place in that state. But it is not evident that the soil in Minas Gerais was that much worse, or that the differences in the quality of land were so much more important than the political and sociological characteristics of the areas in which coffee was planted.(21)

The best source on the social nature of the early coffee plantations in Brazil is certainly Stanley J. Stein's Vassouras.(22) A small settlement along the route which linked Rio de Janeiro with the gold areas of Minas Gerais, Vassouras and the valley of the Parahyba River became a central area of coffee production in the expansion which took place between 1830 and 1850, raising the volume of Rio's exports from about two million to more than ten million "arrobas" (one "arroba" equals 31.7 pounds) during the period. Decadence came to Vassouras almost as quickly as wealth and progress had a few decades before, and Stein provides a detailed and relevant description of what happened.

A substantial part of the decadence is explained by the worn-out soil, aging coffee trees, dwindling virgin forest and reserves and erosion, all consequences of predatory plantation techniques used in a situation where land was the cheapest and most abundant of productive factors. Celso Furtado has argued that this was the most rational thing to do, since the deterioration of land was the most rational thing to do, since the deterioration of land was compensated by the amount of wealth created by the plantation. This type of reasoning makes sense from the standpoint of the country's economy as a whole, since the land seemed to be endless and the country's production did not cease growing.(23) However, for the individual planter in Vassouras, or, for that matter, for the county as a whole, economic and social decadence was hard and proved impossible to overcome. They were unable to secure a fresh labor force to substitute the aging and expensive slaves, nor did they have credit to finance their crops, to substitute the old coffee trees, or to try more rational and less predatory plantation techniques.

Coffee plantation needs credit, since it takes four years of initial investment for newly planted trees to bear fruit. The initial source of credit were the planter's factors in Rio, who took care of the commercialization of the product and retained the loans, their interests and their profits. When decadence came, the dependence of the planters on these factors increased, and in the 1850's the Brazilian central bank, the Banco do Brasil, started to finance directly the troubled coffee planters. The planter seemed to rely on his political influence, nobility titles, and personal ties to avoid the pressure of his official creditor. Stein refers to several mechanisms through which the planters could keep "their indifference toward fulfilling signed obligations requiring prompt repayment of capital and interest."(24) And a contemporary observer is quoted as saying that "nowhere in all the world - at least not in Netherlands India - are agriculturists granted so many legal securities to enable them to cultivate their lands in peace, as in Brazil"(25) Financial support for the planters was given for a while against all the logic of economics:
The pump priming occurred despite temporarily declining overseas coffee markets, the competition of cheaper coffee grown in São Paulo's expanding groves outside the Parahyba Valley, and lower production in the worn-out debtor areas of the province (26)
This growing indebtedness to and dependence on the government in Rio did not give the planter freedom of action to solve the labor problem, which was crucial.(27)

After 1850, the African slave traffic came to an end, and from then until the end of the slave system, in 1888, labor substitution became very difficult. The price of slaves almost doubled from 1852-54 and grew exponentially until around 1880, when the slave system began to crumble.(28) In spite of substantial internal slave traffic, the slave labor force grew older, the man-to-woman rate became more even, and the slave population became more of a liability than an asset:
This crucial segment of the plantation working force, the fifteen to forty year olds, dropped from a high of 62 percent of the total labor force in 1830-1849 to 51 percent in the succeeding decade, and finally to 35 percent in the last eight years of slavery.(29)
It is difficult to explain the inability of the coffee- growers in the Rio area to overcome the labor problem. One common explanation refers to the difficulties of bringing together slave and free labor, since it could mean an unbearable lowering of the free laborer to the slave's condition. Manual labor would be equated with slave labor, and no free man would ever accept it willingly.

For this psychological explanation to be valid, however, the social, economic and racial boundaries between slaves and low- class freemen should have been much sharper than was the case in nineteenth century Brazil.(30) As it was, other systems of labor had been tried in the Vassouras area before the end of the slavery system, without success. Share tenancy, sharecropping and salaried labor were tried with different degrees of failure, and after the abolition of slavery the "organization of remaining fazenda coffee production crystallized in the form of share-cropping or parceria, supplemented by jobbing."(31)

The share system implied that the proprietor did not have to care too much for the daily activities of his tenancy, while the freedmen could have a resemblance of independence and a small property. Here, as elsewhere, a pattern of exchange between economic decadence and patrimonial dependence can be observed. All influential planters of Vassouras held nobility titles in the Brazilian Empire, and the percentage of coffee barons among all title holders in the Empire rose from 21 to 26 percent from 1840 to 1870. Titles were given, according to Stein, for their "financial contributions in the Paraguayan War, or their local or national prominence in supporting the Imperial regime, or their philanthropic acts."(32) This rather generous distribution of (non-hereditary) nobility titles is an indication of the importance the planters gave to their links with the seat of the imperial government. This link was not only a matter of prestige but, as we have seen, was closely related to the sources of financing and economic support, which they could find only in Rio de Janeiro.

Share-cropping allowed for a combination of export and subsistence agriculture, since the tenant could usually cultivate a piece of land for his own consumption. This feature, combined with the political influence of the planter, increased the ability of the more traditional coffee plantations to survive the impact of economic storms in the short run, but reduced their ability to influence the process in the long run.

The difference between what occurred in Rio de Janeiro and Minas Gerais, on one hand, and São Paulo on the other, is striking. In São Paulo, the production of coffee was boosted by an active policy of bringing immigrants from Europe and placing them in a system of very intensive and capitalist-like exploitation of labor. There are two general patterns of immigration to Brazil, one known as "colonization" and the other "immigration" as such. The first tended to be directed and induced by the central government, and was an attempt to create an independent, productive, European-like peasantry in the country. The other, promoted more directly by planters in São Paulo, and later by the government in that state, was concerned specifically with obtaining manpower for the coffee plantations.(33) The "'colonization" pattern was relatively successful in the southern states of Rio Grande and Santa Catarina, where large German colonies were established.(34) Immigration, however, was dominant, and São Paulo was, increasingly, the promoter and area of destination of this flux, as the table below shows.(35)
TABLE 13
IMMIGRATION TO BRAZIL AND SÃO PAULO, 1884 - 1888
Year Number of immigrants Percent of Italians Percent going to São Paulo Percent of expenses of the State of São Paulo with immigration in relation to expenses of the Imperial Government
1884 24,800 41 20 38
1885 35,440 61 18 35
1886 33,486 61 28 83
1887 55,963 72 57 119
1888 133,253 78 69 75
Source: Calculated from J. Fernando Carneiro, Imigração e Colonização no Brasil (Rio de Janeiro, Universidade do Brasil, Faculdade Nacional de Filosofia, Cadeira de Geografia do Brasil, 1950), p. 24.

After 1889, when the Republican period began, the pattern of federal and state expenditures was erratic, indicating that a division of attributions between the two levels of government was still to be established. From 1889 to 1891, the federal government seemed to take on the burden of immigration expenses; after that, the contribution of the state of São Paulo was not constant, but always significantly high. From 1902 to 1906, the central government substantially reduced its participation in the financing of immigration, leaving it almost entirely to São Paulo. After 1906, the problem of manpower was practically overcome in São Paulo. The immigration pattern changed, the Italians gave way to the Portuguese and the Spaniards, and the problem which afflicted the coffee planters was no longer labor, but prices in the international market.
TABLE 14
EXPENSES OF THE CENTRAL GOVERNMENT AND SÃO PAULO ON IMMIGRATION, RELATIVE FIGURES, 1884-1906*
Year a. Expenses of the State of São Paulo (1889=100) b. Expenses of the Federal Government (1889=100) a/b (absolute values) a+b (1889=100) number of immigrants who entered the country (per 1,000)
1884 235 15.0 38.3 21 25
1885 230 16.0 35.2 21 35
1886 712 21.0 82.7 38 33
1887 2,014 42.0 118.9 90 56
1888 1,819 60.0 75.1 103 133
1889 100 100.0 2.5 100 65
1890 474 46.0 25.6 57 107
1891 320 169.0 3.0 170 216
1892 437 50.0 21.8 11 86
1893 993 41.0 59.9 24 134
1894 295 14.0 51.8 21 60
1895 1,582 45.0 88.7 82 167
1896 785 76.0 25.8 93 158
1897 1,002 4.0 617.3 28 146
1898 463 7.0 202.7 17 78
1899 383 1.1 889.8 10 53
1900 245 10.0 59.4 16 37
1901 1,196 28.0 104.8 29 83
1902 556 0.9 1,506.5 14 50
1903 69 0.9 183.7 3 32
1904 194 1.4 354.8 6 44
1905 1,149 1.8 1,635.1 30 68
1906 750 1.9 1,248.3 25 72
Source: Calculated from J. Fernando Carneiro, Imigração e Colonização no Brasil (Rio de Janeiro, 1950), pp. 24-28.
*Values from 1889 on are deflated by the exchange rate with the British pound.

A systematic effort to control the supply and influence the prices of coffee in the international market started precisely in 1906, with the Taubaté agreement, signed between the government of the states of São Paulo, Minas Gerais and Rio de Janeiro. A previous attempt to control the supply had been tried before by the government of São Paulo when, in 1902, it forbade the planting of new coffee trees for five years.(36) It is well-known that the initiative behind the Taubaté agreement and subsequent measures of price control came from the Paulista coffee producers; Delfim Netto links this entrepreneurship with the differences in the labor systems of the two leading states, Minas and São Paulo. The labor system in São Paulo was of a contractual and monetary kind (colonato), while in the rest of the country, and especially in Minas Gerais, labor relations were based on share-cropping (parceria). The difference between these two systems appeared when the prices in the international market fell at the beginning of the twentieth century. The coffee entrepreneur in São Paulo was much more vulnerable to price fluctuations than his counterpart working in the parceria system, and this is why, according to Delfim Netto, "it was not surprising that the pressure towards (national) state intervention (in the coffee industry) began in São Paulo."(37)

The Republican system of 1889-1930 started thus with considerable decentralization of power, and with a leading state taking into its own hands the management of its interests in the field of labor supply, control of production, and so on. In the rest of the country, however, other patterns of social and political participation guaranteed that this economic leader- ship would not go too far in political terms.

5. The pattern of patrimonial dependence.

The foregoing discussion suggests a pattern of dependency already implied in the analysis of the effects of economic decadence in chapter three. The expression "patrimonial dependence" may be useful to convey the meaning of the type of symbiosis this pattern implies.

Patrimonial rule, as defined earlier, is a type of traditional domination based on an extension of the ruler's household. The existence of patrimonial domination depends on the control of society's production process by the ruler and his entourage. Hence, there is a link between the Weberian concept of patrimonialism and Marx s notion of "Asiatism," which refers to a pre-capitalist type of society in which private property and isolated fiefs are not present. Patrimonial domination exists, in its classic manifestation, in the hydraulic societies studied by Wittfogel; it also exists in states specializing either in military conquest or in mercantilist trade and colonial exploitation.

The important question is how patrimonial domination survives when its hold over the economic productive or extractive systems starts to dwindle. The history of Portugal, as mentioned before, shows a consistent pattern of obtaining support for political dominance at the expense of economic concessions to England. In his classic work on the British Preeminence in Brazil, Alan C. Manchester gives abundant historical evidence on how this process of exchange remained in Brazil, after its independence from Portugal in 1822. Among the treaties signed between the Portuguese government exiled in Brazil in 1810 and England, there is one that granted privileges of all kinds to British products and British citizens in Portuguese territory; another dealt with political questions, guaranteed a perpetual union between the two countries, included a British pledge "never to recognize as sovereign of Portugal any prince who was not the legitimate heir of the house of Bragança," and added other political reassurances.(38) The same pattern of exchange of economic power for political privilege was apparent in Argentina where, according to the analysis of Gallo and Cortes Conde, a pattern of growth "towards the outside", with intensive use of foreign capital, kept the more traditional political groups relatively protected.

The overall pattern of Portuguese colonization seems to have been one of progressive political centralization, which occurred simultaneously with and was intensified by steady economic decadence in several levels and areas. We have seen how the arrangement with Flemish interests in the sugar economy seems to have given the bulk of economic profit to the Dutch, in exchange for Portuguese sovereignty over Brazilian territory. After its independence from Spain, Portugal increased its dependence on England, and the treaties between the two countries conceded economic privileges to England in exchange for political commitments and guarantees. The climax of this dependent relationship was the treaty of Methuen between England and Portugal in 1703. With this treaty, Portugal was able to guarantee its control over the Amazon against France and over the Colônia de Sacramento against Spain, as well as the access of Portuguese wine to the English market. The price was, according to Furtado, the renunciation of the development of a Portuguese industry, and the transference to England of the dynamic impulse created by the gold production in Brazil.(39)

In Minas Gerais, strict fiscal controls were established over the mining areas, and control tightened as the availability of gold declined.(40) In the South, in spite of the modest success of the dried beef and wheat economies, military activities in behalf of the politics of Lisbon and Rio never lost their importance. And Rio, of course, became the administrative capital of the country in 1763, during the gold rush, thereafter living off the benefits of being the seat of the central administration and the Crown. Political dependence due to colonial status, economic subjugation to Portugal and especially England, and bureaucratic centralization for the exploitation of resources produced by an overall decadent economy - all of these traits comprise the broad setting with which Brazil enters the nineteenth century. During most of the new century, Brazil made mediocre progress, and, as the economy stagnated, the process of political centralization and control grew stronger.(41)

Historical studies will hopefully document the more specific relationships between economic decay and political centralization. Celso Furtado has suggested that the sugar economy in the Northeast was able to resist the fall of sugar prices by reverting to a type of self-sufficient activity, which comes closer than anything else to a Brazilian version of feudal patrimonialism.(42) If this was so, what happened to the administrative and commercial activities related to this retracting economy? Historians have yet to answer this question.(43) But what most likely happened is that as the mere dynamic commercial sectors disappeared or moved out, the governmental administration retreated into a kind of bureaucratic ritualism, to which the highly centralized and formalized Portuguese administrative structure was so conducive.

In general terms, the pattern of Portuguese colonization seems to have been composed of two typical movements. First, the administration gave all kinds of facilities to private initiative, and this led both to economic prosperity and to the dispersion of power. During a second stage, the administration increased its grip through a series of centralizing restrictions, leading to unavoidable conflicts with private entrepreneurs. This centralization and increase in control was a reaction to reductions of revenue; this seems to have happened in the sugar economy, and was certainly the case with the decadence of mining in the late eighteenth century. It happened again in the early nineteenth century during the Portuguese Courts' attempts to restore Brazil to its colonial status.(44)

This pattern of external dependence, which was to continue throughout this century, thus meant not only that national resources and wealth were siphoned abroad, which, in a way, is trivial; but also that, in this process, the patrimonial state was able to survive and thwart the chances of independent political organization and manifestation of national groups, which had a productive basis of their own, whether as industrialists, capitalists, or workers. Confronted with a dominant political sector, which had the support of strong foreign economic interests, national political groups could pressure, beg, and lobby for special favors and concessions from those in political power; but they could never aspire to conquer it and direct it towards their own purposes. The consequence was the lack of "political will and purpose," which Argentine economists and historians saw only in Australia, and which could eventually change a relatively deprived situation into a determined policy of industrialization and development. Only the State itself would be able, under given conditions, to try this shift, independently and sometimes at the expense of the political parties and social sectors of the country. This "lack of political will and purpose" is not a cultural or psychological trait, of course, but the outcome of a situation of internal dependence which replicates, as it were, an external dependence on the capitalist centers of the world economy. It is from this type of dependence that emerges the style of political participation which is being referred to as "co-optation," and which will later be considered again in more detail.


Notes

1. Virgílio Noya Pinto (1969), p. 132. The data above are from the same source.

2. Ragnar Nurkse (1968), p. 87.

3. Alan K. Manchester (1933), p. 210.

4. Alan K. Manchester (1933), p. 334.

5. On the "staple theory," see Richard Caves (1965), and M. Watkins (1963).

6. Some of the comparative studies on this topic are Hector L. Dieguez (1968); Arthur Smithies (1965); and A. Ferrer and E. L. Wheelwright (n. d.).

7. Hector Dieguez (1968), pp. 16-17.

8. Ezequiel Gallo (1970), pp. 57-58.

9. Celso Furtado (1959). For a historical re-interpretation of the theory, see Warren Dean (1969) especially chapters vi and x; Warner Baer and Aníbal Villela (1972); Nathaniel H. Leff (1969); and several other sources mentioned in the Baer and Villela article.

10. Dean (1969), p. 10.

11. Gallo (1970), p. 53.

12. Warren Dean (1969), chapter VI. Summing up a careful analysis of the data available, Dean states that "World War I considerably increased the demand for domestic manufactured goods but made it almost impossible to enlarge the productive plant to meet the demand. The fortunes that were made during the war grew out of new lines of exports, twenty-four hour-a-day production, or out of mergers and reorganizations. New plants and new lines of manufactures were not significant. It might be asked if the industrialization of São Paulo would not have proceeded faster had there been no war," (1969), p. 104.

13. G. Long (1947), quoted by Hector Dieguez (1968), p. 20.

14. Dean (1969), p. 71. The same situation of tariffs established with fiscal purposes but providing protective effects appears much earlier, according to studies by Gilberto Paim, which finds it in relation to Brazil's nineteenth century industrialization. Cf. G. Paim (1957), p. 30.

15. Dean (1969), p. 72.

16. Dean (1969), pp. 72-73.

17. Gallo (1970), p. 57. The sources used by Gallo are Carlos F. Diaz Alejandro (1967) and Oscar Cornblit (1967).

18. Summing up a study on the formation of contemporary Argentina, Roberto Cortes Conde and Ezequiel Gallo say that, in spite of being "bastante secularizado y fuera muy dinámico," the political leadership of the country was already too well established in power to yield its place to the emerging immigrant groups: "Por el escaso poder económico y la relativa marginalidad de los grupos que podían haber asumido la dirección de una política industrialista, extranjeros en su mayoría, dentro de una sociedad ya estructurada y con la presencia de un grupo dirigente tradicional, resulta compreensible la dificultad de hacer acceptable una nueva política para la mayoría de la poblacion. Esto diferencia a la Argentina de la mayor parte de las regiones de nuevo poblamiento, donde casi todos eran recien llegados y se encontraban en condiciones similares." The only possible growth was "hacia afuera," outwards, in such a way that well established power situations would not be threatened. Cf. R. Cortes Conde and Ezequiel Gallo (1967).

19. Cf. Elisa Maria Pereira Reis (1972), p. 6.

20. For an account and evaluation of the Brazilian policy of sustaining the coffee prices, see Antonio Delfim Netto (1959).

21. An official publication of the State of Minas Gerais estimated that, in 1929, there was still about 11,000,000 hectares of virgin land suitable for coffee plantations, and that with only half of that land it would be possible to plant more than 5,000,000,000 coffee trees, or about five times what São Paulo had at that time. Estado de Minas Gerais (1929).

22. Stanley J. Stein (1957).

23. Celso Furtado (1968). Predatory use of land was rational, for him, not only from the individual capitalist's point of view but also from society's point of view as a whole: "If the exhaustible reserve (of soils) is utilized so as to start a process of development, not only will the present generation be benefited but also those to come, which will be inheriting that mineral deposit in the form of reproductive capital." Furtado (1968), p. 179

24. Stein (1957), p. 241.

25. Stein (1957), p. 242.

26. Stein (1957), p. 244.

27. Cf. C. Furtado (1968), chapters xxi to xxiv, for an analysis of the problems of manpower in Brazil during this period.

28. Stein (1957), pp. 65 and 229.

29. Stein (1957), p. 78.

30. Cf. Herbert S. Klein (1969). A pattern of intensive racial miscegenation is observed, giving rise to a substantial freed population. The article concludes saying that the fact that so many freedmen were being manumitted at such a constant and rapid rate in the nineteenth century, during the greatest expansion of the plantation economy, suggests the fundamental acceptance by white Brazilians of the possibility of a functioning interracial free labor society well before the institution of slavery itself was seriously challenged. Klein (1969), p. 52.

31. Stein (1957), p. 271.

32. Stein (1957), p. 122.

33. An overview of the immigration patterns in Brazil is given by Manuel Dieguez Jr. (1964). A basic reference is Artur Hehl Neiva (1945). Figures on immigration from 1819 to 1947 broken down by year and country of origin can be found in Artur Hehl Neiva and J. Fernando Carneiro (1950), and in J. Fernando Carneiro (1950).

34. For an analysis of the "colonization" pattern, mostly in southern Brazil, see R. Paula Lopes (1936).

35. For a detailed description of the migratory flow and types of settlement in São Paulo, see Salvío de Almeida Azevedo (1941).

36. Elisa Maria Pereira Reis (1972), p. 8.

37. Antonio Delfim Netto (1959), pp 43-44. The comparison between the '"colonato"' and the "parceria" systems is based on Augusto Ramos (1934).

38. Manchester (1933), p. 91.

39. Cf. Celso Furtado (1959), p. 47. For the relationships between Brazil and England, see Alan K. Manchester (1933), as well as the summary given by Furtado in Chapter vii of his book.

40. R. Faoro (1958) for a description of this process.

41. The image of the second half of the eighteenth century as one of continuous decadence is not quite correct. There is a period of economic resurgence at the end of the century, due mainly to new crops and a recuperation of the sugar prices. This development is analyzed by Dauril Alden for the Viceroyalty of Rio, and he sums up by saying that "the record of the attempts of Viceroy Lavradio and his successor to diversify the economy of the lands under their jurisdiction was a mixed one. There were some modest successes, such as indigo, rice, and wheat growing, and there were some notable disappointments, particularly cochineal, hemp and tobacco." Dauril Alden (1968), p. 381.

42. Followíng the analysis of the economic decline in the sugar area, Furtado says that ít led to a sharper reversion to forms of subsistence economy, with atrophy in the division of labor, reduction in productivity, dissolution of the system into increasingly smaller productive units, extinction of the more complex forms of social intercourse, and substitution of general law by local custom. Furtado (1968), p. 77.

43. This analysis is intended, but not quite achieved, in Antonio de Barros Castro (1971).

44. A major event in Brazilian history is the arrival of the whole Portuguese court to Rio de Janeiro in 1808, flying from the French invaders under British protection. A detailed description of this trip is given by Alan K. Manchester (1969). The political independence of Brazil from Portugal is linked to the attempts of the Portuguese parliament, the "Cortes," to recall the royal family from Brazil and reinstate the colonial status which had existed prior to 1808. See a summary of these events in E. B. Burns (1970), pp. 105-116.