Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28 Author(s): Richard Downes Reviewed work(s):

Source: Journal of Latin American Studies, Vol. 24, No. 3 (Oct., 1992), pp. 551-583 Published by: Cambridge University Press Stable URL: http://www.jstor.org/stable/156775 . Accessed: 05/03/2012 12:58
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Autos over Rails: How US Business Supplanted the British in Brazil,

1910-28
RICHARD DOWNES

The dynamics of Brazil's transportation sector early in this century reveal much about how and why US industries conquered the Brazilian market and established a sound basis for investment. Especially during the 1920S, US companies responded to the transportation needs of Brazil's rapidly growing economy and won the major share of its automobile and truck markets. This was crucial because of the automobile's central role as a leading sector of the world's economy during this period. Sales and then direct investment by US firms in automobile assembly plants placed US business on a more secure foundation than British investment, prominent in a sector losing the vitality exhibited in the nineteenth century: railroads. Rail systems slowed their extension into the immense Brazilian interior while the automobile flourished, promoted by a powerful Brazilian lobby for automobilismo reinforced by efforts of US business and This process illustrates how the Brazilians' interpretation of government. their economic needs coincided with pressures exerted by US industry to create a permanent US presence within Brazil's economy. How Henry Ford replaced Herbert Spencer as the foremost symbol of industrialism in early twentieth century Brazil sheds light on the personal and political dynamics of international business competition.1 Rapid economic growth in the early twentieth century thrust a host of new local and regional demands upon Brazil's woefully inadequate transportation sector. Capital formation rose without interruption from i901 onwards and reached very high levels immediately prior to World War I; more than 1,000o industrial firms producing over 67% of the
economy's
1

1920

industrial output came into being between 1900 and

1920.

'The "leading sector" is that segment of the economy "moving ahead more rapidly than the average, absorbing a disproportionate volume of entrepreneurs, [and] stimulating requirements to sustain it.' Walt W. Rostow, The World Economy: History & Prospect (Austin, I978), pp. 104-5, I85 and 208-9. For Spencer's image as a proponent of industrialism, see Richard Graham, Britain and the Onset of Modernization in Brazil, I8JO-I9I4 (Cambridge, 1968), pp. 236-41. Richard Downes is Director of Communications, North-South

Miami.
J. Lat. Amer. Stud. 24, 551-583 Printed in Great Britain

Center, University of

55

52

Richard Downes

While the war slowed capital formation, new domestic and foreign demand created by wartime interruptions in world trading patterns stimulated increased production in food and textile sectors. For example, exports of five major commodities (rice, beans, sugar, meat and
manganese) 1917.2 rose from a mere $3 million in I9I4 to over $62 million by
9o20s

taxed the transportation system beyond its capacity. Manufacturing output rose by nearly one-third, with especially strong increases in chemicals, pharmaceuticals, food products, beverages
and metal products. By the mid-go20's, Sao Paulo state was experiencing

Growth in the

severe transportation shortages that epitomised the deficiencies of the existing transportation system. 'The great economic expansion of Sao Paulo state since 91 I ' had taxed railroads beyond their capacity: whereas
the railroads had been required to transport only 350o,ooo sacks of produce in 191 , by I924 approximately ten million sacks awaited movement. Movement of cattle by rail had begun only in 1912 and reached 700,000 head by I915. By I924, though, the cattle industry required shipment of over 2, 500,000 head of cattle. Lack of adequate transportation caused sacks

of cereal to 'rot and face the consequences of weather', making farmers the 'principal victims' of a system unresponsive to their needs.3 Such calamities exposed the turn-of-the-century weaknesses of Brazil's railroads, inadequate for a more diversified economy because of their traditional orientation to the fortunes of two principal export crops: coffee and sugar. In south-central Brazil, most rail systems had been borne with a single-minded pursuit of coffee's expansion through Rio de Janeiro's Paraiba Valley and then onto the central plateau during the latter half of the nineteenth century. In the northeast, railroads depended as heavily on sugar and focused almost exclusively on serving coastal lowlands in Bahia and Pernambuco where sugar dominated. Farmers who raised crops in the vast interior found that 'freight rates charged by the railway together with the costs of reaching the railway' made their use uneconomical, and cotton growers preferred to hire horses to carry their loads to Recife over 300 miles of 'bridle paths, and often very bad ones at that'.4 The railroads' strong ties with British entrepreneurs and financiers and the consequent need to pay dividends and loans in foreign currency
2 Werner Baer, The Brazilian and Growth Development, edn. (New York, 3rd Economy:
I989), pp. 25, z8, 30 and 32. E. Richard Downes, 'The Seeds of Influence: Brazil's (PhD "Essentially Agricultural" Old Republic and the United States, 1910-1930', Diss., Univ. of Texas at Austin, 1986), p. 2I4.
3 4

RuralBrasileira Baer, The BrazilianEconomy, 27; Revistada Sociedade (SRB), vol. 4 p. and in Methods Extent of its John C. Branner,Cotton theEmpireof Brazil: TheAntiquity, and with Cultivation; (Washington, Together Statisticsof Exportation HomeConsumption in of Julian S. Duncan, PublicandPrivateOperation Railways Brazil (New York, 1932).
i885), pp. 25-6; Joao Dutra, O sertao e o centro(Rio de Janeiro, 1938), p. I63. See also
(I924), pp. I13-4.

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limited their capacity for expansion. The earliest railroads responded to government guarantees of a specific return on investment, such as an 1852 law promising a five per cent insured return on investment for approved railroad projects. Enterprising Brazilians often secured a concession for a specific railroad project to sell to British interests, and Brazilian railroad companies obtained loans from British financiers to support expansion. Railroads proliferated in the i88os and early I89os, but by the turn of the century the sector began to stagnate, forced to pay loans and guaranteed dividends in currency constantly losing its value relative to the pound.5 The burden of such payments gradually converted the Brazilian government into a major owner of Brazil's railroads. By 1898 the federal government devoted a full one-third of its budget to paying the guaranteed railroad dividends and attempted to remedy the situation by buying back the railroads. With the 1898 Funding Loan the government
bought
2, o00

kilometres of railway, I 3 % of the country's rail system, and

in I901 the government expropriated twelve foreign railway companies. Between 1901 and 19 4 the federal government attempted to lessen its role in railroad operation by leasing out lines and allowing formation of new foreign railroad companies, especially the Brazil Railway Company, formed in I907. But the November I914 collapse of Percival Farquhar's Brazil Railway thrust even more kilometres into the federal and state governments' domains. Although the government managed to decrease its operational role, it retained ownership of 6i % of Brazil's railroads in
I9 4.

While relieving the state of burdensome payments to foreign shareholders, state ownership of railroads left them vulnerable to successful lobbying by special interest groups seeking low freight rates. Government lines regularly charged lower freight rates than private lines for beans, corn, coffee, hides and other commodities. As one prominent state president explained in 1913, 'the State does not necessarily extract a net profit from its railways' and could in fact operate them 'at cost, at a loss, or even for free'. While such policy could have stimulated agricultural diversification in zones already served by railroads, it removed any incentive for expansion into new areas.7 The tangle of railways emanating fron the coast to the interior
5 See Graham, Britain and the Onset, p. 3o. Railroad construction recovered between 1905 and 91 3 precisely when the milreis regained some strength against foreign currency. For exchange rates see Thomas H. Holloway, Immigrantson the Land: Coffeeand Society in Sao Paulo, 1886-1934 (Chapel Hill, 1980), p. 181. For annual new railroad construction, see Brazil, Inspectoria Federal de Estradas de Ferro, Estatistica 1934 (Araguary, Minas Gerais, 1936), p. 45. 6 Steven Topik, 'The Evolution of the Economic Role of the Brazilian State', Journalof Latin American Studies, vol. 2 (1979), pp. 336-7. 7 Duncan, Public and Private Operation of Railways, pp. 206-7; Rio Grande do Sul, Mensagem,p. 50.

554

Richard Downes

prevented efficient shipment of goods in any direction other than between the interior and the nearest port. The US director of Vicosa's agricultural school, P. H. Rolfs, explained how shipping citrus shoots from his school to the western part of Minas Gerais required intense coordination and a series of personal favours. At his request, friends in Juiz da Fora transferred the shoots from the Leopoldina station to that of the Central, less than oo00 metres away. At Barbarcena another friend performed a similar favour, transferring the shoots to the Oeste de Minas. On one such transfer expedition, a flock of sheep entered the same freight car as the citrus shoots and 'en route the hungry animals voraciously devoured the mudas [shoots] until not enough was left to even justify planting them', explained an exasperated Rolfs. Transferring a carload of cattle from the Central to the Leopoldina required an order prepared by the state president, a situation that Rolfs judged 'an utter waste of time for a man in his elevated position'.8 The crisis in Europe's economy and the disruption of trade caused by the First World War further eroded the sector's efficiency and financial stability. The high price and inadequate supply of foreign coal and difficulties of importing engines and rails pushed lines to the brink of solvency and beyond. In 1918 the Rede Sul Mineira lacked funds for its payroll, fuel bills, and urgently-needed repairs to its main lines. The Sorocabana Railway Company also confronted extreme difficulties in acquiring material, even as its freight traffic increased phenomenally.9 Low freight rates on various lines leased by the government to private companies prevented even a recovery of the costs of operation, and the Central also suffered high deficits, attributed to uneconomial rates. The two state-run railroads in Bahia also reported losses, while only the British-owned Ilheus-Conquista line registered a clear profit. The Great Western secured government permission to raise rates to reasonable levels, but only after promising to contract a o,ooo:0ooo contosde reis ($) loan to improve its shops and rolling stock. The Leopoldina, enmeshed in a three-way regulatory pull involving Minas Gerais and Rio de Janeiro states and the federal government, registered a 13,000:000 $ loss for
1918.10

In July I9I9 the federal inspector of railroads, Joao Pires do Rio, sketched a bleak image of the state of Brazil's railroads, highlighting the
8

TS (typescript), P. H. Rolfs, 'Human Waste', n.d., Box 2, Peter Henry Rolfs Archives,

9 Duncan, Private and Public Operationof Railways, pp. 70 and 79. 10 'Estradas de ferro', RetrospectoComercial do Jornal do Comercio(RC do "JC"), 1919, pp. 127 and I29; John D. Wirth, Minas Gerais in the Brazilian Federation, I889-1937 (Stanford, 1977), p. 179; USC (US Consul)-Bahia to SS (US Secretary of State), 2 Aug. 192I, 832.77/63, RG 59, US National Archives (USNA).

(PHRA), University of Florida.

the Autos overRails: How US Business Supplanted Britishin Brazil, IgIo-28

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unpleasant fact that federal subsidies sustained most lines. As owner of 5 % of the nation's rail system, the federal government had paid out dividend guarantees of 17, I14:703$ in 918, 60 % of which went to the Sao Paulo-Rio Grande route, a former component of the Brazil Railway. Only three Sao Paulo lines, the San Paulo, Moygana, and the Paulista, as well as a portion of the Leopoldina's lines, 'live by their own resources'. Refusing to recognise the role of special interest groups in lowering freight revenue, Pires do Rio conveniently blamed the lack of'economic intensity' in most areas served by the railroads for the system's woes. 'Railroads administered by the government leave deficits; the leasing companies do not prosper and ask for a revision of their contracts,' while the private companies receive no federal aid but 'distribute little or no dividend', he lamented. One solution Pires do Rio proposed was 'a resolute end to the construction of railroads in Brazil'. Such a recommendation found a sympathetic ear at the presidency, where Epiticio Pessoa reasoned that 'since it is no longer possible [to pay] the guarantee of dividends, I no longer count on rail lines' to provide transportation to those vast regions without railroads.ll Railway construction withered before such disincentives. As Fig. I shows, additions to the system slowed markedly from 1914 onward. From 19 5 to 1930, the system grew only an average of 400 kilometres per year, about one-fourth the average yearly growth rate of the 1909-14 boom period. ............................................ ..... .............................. ....................... ...... 1,600 -........ ........ ..... ......... 1,4001,2001,000800600 400 200 1900 ................. 1905 ........... ................. 1910 1915 ... 1920 1925 1930
-

I.

..............

Fig. I. Rail lines added, kilometresper Jear, 3-year movingaverages, i90o-3o. Source: Brazil, Inspectoria Federal de Estradas de Ferro, Estatistica I934 (Araguary, Minas Gerais, 1936), P. 45.
" 'O problema ferroviario', RC do "JC",
1919,

pp.

130

and I32.

556

Richard Downes

The Brazilian-U.S. road buildingcampaign With railroad expansion problematical, Brazilians began turning to motor vehicle transportation - an alternative with important economic advantages. States could opt to construct roads navigable by the primitive, but durable, vehicles of the time without investing vast sums in rights-of-way, terminals and rolling stock. Nor did roads require the large overheads of executive, administrative, secretarial, and other specialists not directly related to the volume of transportation. Lower capital investment requirements obviated the search for foreign financing through burdensome guarantees and monopolistic concessions, but, like railroad construction, road building still demanded 'great numbers of workers', as noted in Augst 1915 by a Northeastern city's municipal council. While both modes depended upon imported equipment, the lower cost of motor vehicles made financing easier. From the states' viewpoint, roads represented an economical way of complementing existing rail systems and expanding exports to neighbouring states, important because states received significant revenues from state export taxes during the period.l2 Brazil's rural-oriented elite soon recognised the advantages offered by this new mode of transportation. Automobilismospawned new social clubs where members could simultaneously engage in uproarious weekend adventures and hardheaded lobbying for an improved transportation system. Automobile clubs founded in Rio de Janeiro in 1908 and Sao Paulo in 1910 soon pressured public officials to improve the nation's road system through a series of races and contests.13 Of the 190 founding
12 and Practices,Theory, Policy(Boston: Roy J. Simpson et al., DomesticTransportation: to FeederRoads and MarketNews: Northeast Brazil', (PhD Diss., CornellUniversity, 1971); Letter, PrefeituraMunicipal de Garanhuns,Pernambuco, to Inspectoria de ObrasContraas Seccas, 28 August 19 5, M (Mago)-2I5A, BrazilianNational Archive. There appears to have been no empirical comparison of the merits of expanding Brazil'srailroadsystem versus creating a national highway system. Even today such comparisons are complex, involving assumptions about pick up and delivery costs, length of haul, trafficdensity, energy costs, source of capital,and interestand exchange of rates. See RichardB. Heflebower, 'Characteristics TransportationModes', in Gary Investment Economic and Fromme (ed.), Transport (Washington, I965), pp. Development 43-6, and Robert T. Brown, 'The "RailroadDecision" in Chile', in ibid.,pp. 264-6. Under the Empire provinces and property owners had been responsiblefor building and maintainingroads, and hopes for an adequate road system often fell victim to vague contracts,skimming contractorsand the whims of weather. As one account of the Empire's agriculturalexperience summarised, 'most highways were mere dirt paths, poorly designed, that permittedonly the passage of mule teams, ox carts, and A horses during the dry season'. StanleyJ. Stein, Vassouras: BrazilianCoffee County,
18 o-I900 (Cambridge, i957), pp. 94-I10; Eulalia Maria Lahmeyer Lobo, Historia da polztico-administrativa agriculturabrasileira, I808-1889 (Brasilia, n.d.), p. 64.
i990), pp. 62-3; Enrique Cardenas, La industrializacion mexicana durante la Gran Depresion(Mexico: 1987), p. I6i: Joseph Weiss, 'The Benefits of Broader Markets Due

13

Autos over Rails: How US BusinessSupplantedthe British in Bratil,

I9IO-28

557

members of the Sao Paulo club, those with rural ties proved most or numerous, with a full 41 % describing themselves as a farmer [lavrador] rancher [fazendeiro].Prominent founding member Antonio Prado Junior, later described as a 'great automobilistic excursionist', roused public interest by motoring throughout Sao Paulo and Parana and organising a great 'raid' from Sao Paulo to Ribeirao Preto.14 By 19IO the federal government began to conceive of the automobile as rail's substitute. A 191o law authorised concessions, similar to those offered to railroad companies, to 'persons or private enterprises' to organise 'a system of transportation of passengers or cargo' between two states or within one state. As with railroads, the government retained control over rates and required transport at half-fare of all military personnel, federal employees, colonists, and immigrants and their baggage, as well as all government seeds and plants. Further, it required the concessionaire to construct a telegraph line the length of the road while reserving any payment until completion of all construction.15 As could be expected under the Old Republic's political structure, state and local governments took the first hesitant steps toward promoting use of motor vehicles and highways. A I91 I report prepared for the Minas Gerais state government dismissed autos as the dominion of tourists, but nevertheless suggested they could link 'railroad stations with the rural zones in the region', if studies on a case-by-case basis so warranted. That same year Rio Grande do Sul constructed 74 kilometres of road, including a ten-kilometre stretch tapping the rich Vale das Antas. By 1913 the Companhia Mineira de Auto-Viacao Municipal of Uberaba, Minas Gerais, was building local roads and planning links with Rio Verde and Morrinhos in the state of Goiis. Minas state agricultural secretary Raul Soares accepted the concept and created a system of concessions designed to build roads between 'centres of production' and railroad stations
during his 1914 to 1917 tenure.16 State president Arturo Bernardes termed

highway construction 'an undisguisable duty of the state' because they would provide 'an easy and cheap outlet for [agricultural] production'.17
14

Business interests were almost equally represented. See Autom6vel Club de S. Paulo, Annuario 1921 (N.P., n.d.), pp. 48-75. 15 Decree 8,324, 27 Oct. 1910, and 'Regulamento...', Colecfdodas Leis de o190 (Rio de Janeiro, 9I 5), vol. II, no. 2, p. I,I 5 I. 16 TS, 'Estradas de Rodagem', p. 2, 21 June I9 1, 9I I.06.2I, Arquivo Raul Soares (ARS); Auto-Propulsao, col. i, no. 7 (I915), p. 9; Minas Gerais, Inspectoria de Estradas de Rodagem, As estradas de rodagemno estado... (Rio de Janeiro, 1929), p. vii. 17 U.S. Consul, Sao Paulo (USC-SP) to U.S. Secretary of State (SS), 30 June 1922, RG 59, USNA. Rio Grande do Sul, Mensagem, 1912, p. 26; Ernesto 832.154/33, Bertarelli, 'As vias comuns de communicaSao nos estados agricolas', O Progresso,vol. I, no. 10 (I914), p. 4; Brasil Industrial, vol. 2, no. 15 (19 5), pp. I4- 5. Only one per

558

Richard Downes

Large-scale federal government support for Brazilian highway construction occurred first as a complement to aid for the barren Northeast, where US technicians urged vigorous road-building programmes through agreements between state and federal governments. Good roads would permit the introduction, geologist Roderic Crandall wrote after three
years in Brazil, of the 'four-wheeled wagon ... constructed "par excellence"

by the Studebaker company in the United States' as well as tractors and the 'cargo automobile'. He felt that highways would especially increase the region's cotton production, citing a cotton-rich zone Taperoa, Ioo kilometres west of Campina Grande, Paraiba, that produced 6,ooo to 8,ooo bales of cotton yearly beyond the reach of the Great Western. Crandall applauded road construction already underway in the region, asserting costs would quickly be recouped by the lowering of shipping costs. He also endorsed plans for a I6o-kilometre road tying the Ceara cities of Forteleza and Sao Bernardo das Russas as a major improvement over the existing steamship service and encouraged the introduction of US wagons, automobiles and tractors to overcome the parched region's transportation deficiencies.18 The federal government responded to such recommendations and devastation in the drought area with a more active role in road construction by funding specific projects. The 19 5 federal budget opened
a 5,ooo: ooo$ credit line for various roads in Bahia and Paraiba. By the end of 191 8 over , 17 5 kilometres of road had been constructed in Pernambuco state, with over 400 kilometres constructed in 1918 alone.19

The mid-1917 push to increase agricultural production - a campaign to 'make abundance be born from the earth, fortune arise from trade, and patriotism grow from national unity' - intensified federal support for road construction.20 Federal and state governments began a cooperative

cent of the Old Republic's I I 3,oo kilometres of roads were paved by 930. See Arthur R. Sheerwood, 'Brazilian Federal Highways and the Growth of Selected Urban Areas', (PhD Diss., New York University, i967), p. 30. 18 Crandall also hoped that good roads would lead to broad social change in the Northeast, where 'a few men of great power hold their positions independent of

justice' while the majority lay 'reduced to poverty or to living as bandits'. Brazil, d'agua,transportes geologia, supprimento Inspectoriade Obras Contraas Seccas,Geografia, do do nos orientaes nortedo Brasil: Ceard,Rio Grande Norte, Parahyba e afudagem estados [RodericCrandall],2nd edn. (I923; rpt.: Rio de Janeiro, 1977), pp. 54, 55-8, 75 and
129. 1919, 832.1 54/28, USNA. The federal government also had ordered studies of the RioPetr6polis road in 191I but did not assist reconstruction until the late i29os. See Decree 8571, 22 Feb. 1911, in M-i5I, Ministerio de Viacao e Obras Publicas, Brazilian 20 Quoted in Boletim Agricola, io (1916), p. 483. National Archive.

19

to 'Obras contra as seccas', RC do 'JC', 1917, p. I63; USC-Pernambuco SS, 26 July

Autos over Rails: How US BusinessSupplantedthe British in Brazil,

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effort to renovate provincial cart roads built during the Empire by 'lengthening of curves, decreasing of gradients and providing modern systems of draining, surfacing and bridges', as a contemporary explained. In June 1917 the federal government authorised a 62 5 :ooo$ (US $15 6,25 0) expenditure to reconstruct the ioo-kilometre 'Uniao e Industria' highway linking Petr6polis and Juiz da Fora, originally constructed in i856. With contributions from Petrdpolis and the two states involved, the refurbished road was to transport products of the region's 'industrial and agricultural centres'. The I918 budget for the Ministerio da Agricultura provided subsidy of two contosde reis per kilometre for firms that would construct roads suitable for passengers and cargo carried by automobile or trucks. This law required states to make an equal contribution but omitted the onerous conditions that had doomed the 19I0 legislation. In the next two years the federal government subsidised building of over 2,300 kilometres of highways throughout Brazil. The vast majority of the subsidised highway construction took place in Parana (6 I kilometres), where strong demand for wood, hervamateand cereals 'obliged the government to open new highways', Minas Gerais (591 kilometres), and Goias, where the only two roads constructed totalled some 511 kilometres.2' Road construction in the Northeast surged on a crest of high cotton prices and political favouritism with the I919 arrival of Epitacio Pessoa to the presidency, who assured funds for implementation of earlier recommendations on the need for highways in the Northeast. In August I919 the Inspectoria de Obras Contra as Seccas began construction of a 275-kilometre road between Natal and Parelhas, Rio Grande do Norte, and in 1920 began building roads to link smaller towns with existing highways or railheads. Ironically, this programme fell under control of Miguel Arrojado Lisboa, former head of the Central do Brasil railroad, who supervised construction of over 1,700 kilometres of new roads throughout the Northeast. Private enterprise added to the new system, as the Sociedade Algodoeira do Nordeste Brasileiro purchased a caterpillar tractor and repaired 75 kilometres of road to a town deep in Pernambuco's interior destined to receive a new cotton mill.22
21 Brasil Industrial, vol. 3, no.
29

Record Group (RG) 59, USNA; Parana,Secretaria d'Estado dos Negocios, Fazenda,
Agricultura e Obras Publicas, Relatdrio, 1919 (Curitiba, 1919), vol. II, pp. 548-9; Romario Martins, 'As estradas de rodagem no Parana', Brasil Agricola, vol. 2 (I917), pp. 262-4; Parana, Mensagem,1917, p. 32. 'Estradas de rodagem', Boletim [MAG], vol.
I, no. 3 (I925),
22

(1919), p. 49; USACG to SS, I5 June 19I8, 832.154/19,

p. 391.

Brazil, Ministerio de Agricultura, Industria e Comercio (MAG), Relatdrio, 1918, p. 89; Brazil, Inspectoria Federal de Obras Contra as Seccas, Estradas de rodageme carrofaveis construidas Nordeste Brasileiropela InspectoriaFederal de Obras Contra as Seccasnos annos no 1919 a I92f (Rio de Janeiro, I927), p. 232; Brazil, Primeiro Congresso Panamericano, Annex 5; 'Mappa demonstrativa das estradas de rodagem ...', Io Aug. I925, I0.08.25,

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Primitive by current standards, these dusty trails inspired contemporary praise. A US automobile salesman reported in 1922 that 'in Ceara, in Rio Grande do Norte and in Paraiba I have found some very good roads ... of good material and very serviceable'. Paralba's state president declared that the new highways allowed Parafba to export to other areas of Brazil cotton by-products previously fed to local cattle or 'incinerated to clear warehouse space'. In retrospect, a historian of the region termed the postera in Ceara as the 'cycle of the automobile'. Not only did the auto 1920 lift commerce from the backs of animals and extend its scope and intensity, it revealed to the backwoodsman 'unknown things, new ideas, new desires, new will, and [these] transfigured him'.23 The success of these tenuous efforts generated close Brazilian study of the US highway complex. From Ft. Worth agricultural student Landulpho Alves wrote to Minister of Agriculture Simoes Lopes that US state and federal governments were cooperating to create 'thousands and thousands of kilometres' of roads. Texas alone had allocated US$2 oo,ooo,ooo to construct highways in one year, partially because of the aid of federal monies, Alves reported.24 Botanist Carlos Moreira offered a highly positive if idealised image of US roads upon return from a 1918 mission to review US agriculture schools and purchase agricultural equipment. US highways, he noted, were 'perfectly constructed of macadam or concrete' and 'cross the country in all directions, linking the principal cities with all the towns', permitting 'an intense traffic over distances like that from Rio de Janeiro to Manaus'. Jos6 Custodio Alves de Lima, former consular agent in the United States and perennial advocate of closer US-Brazilian economic ties, had attended a convention of road-building interests in Chicago in I9I6. Speaking to Rio de Janeiro's influential engineering club, he credited the development of the northern nation to its rapid and inexpensive transportation system while complaining that Brazilians remained 'prisoners of old and worm-eaten European traditions' and found 'everything difficult'. Highways would be a boon to rural Brazil since they would improve mail service, let children live at home and still attend school, allow for more frequent visits between neighbours, and permit the farmer to 'cease being an object of curiosity in large towns',
Arquivo Ildefonso Simoes Lopes (AISL). Jose F. Brandao Cavalcanti, 'Em prol do algodao', A Lavoura, vol. 24 (1920), pp. 269-70. 23 C. P. J. Lucas, 'The Good Roads Movement in Brazil', Bulletinof the American Chamber of Commerce,S. Paulo, vol. 3, no. 8 (1922), p. 4; Joao Suassuna to Epitacio Pessoa, 30 Jan. I925, P-6i, AEP; 'As grandes estradas do Nordeste', O Automovel, 8, no. ioi do (I923), pp. 23-5; Raimundo Girao, Histdria economica Ceara (Ceara, I947), p. 433. 24 Landulpho Alves de Almeida to Ildefonso Simoes Lopes, 25 July 1917, PP. 12, i6, i8, 14. 12.15, AISL.

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while selling his goods 'without recourse to middlemen'. To make all this a reality, Alves de Lima recommended adopting several US road-building techniques.25 The most important channel for US influence upon Brazil's road programme, though, was the Good Roads Movement. This agglomeration of US road-building interests and government officials lobbied intensely for federal subsidies for road building to remove the burden from state treasuries. The American Road Builders Association and the American Automobile Association, both formed in 1902, and the American Association for Highway Improvement, established in I91o, orchestrated an enduring campaign to promote federal support for highway improvement. Partly by its efforts, the US Congress passed a law in July 1916 providing federal assistance for building rural roads over which US mail had to be transported. From a base of $5 million for I917,
federal appropriations mushroomed to $75 million by 1921.26

A similar Good Roads Movement soon took root and grew in Brazil, sustained by a nascent highway lobby substantially strengthened by US ties. Both Rio de Janeiro's Autom6vel Club Brasileira and Sao Paulo's Autom6vel Club sponsored national highway conferences in 1916, 1917 and 1919 to pressure public officials to achieve their ends. The Rio de Janeiro conference, in October 1916, featured prominent roles for President Braz and his Minister of Transportation and Public Works. Similar gatherings in Sao Paulo in I917 and in Campinas two years later sustained the campaign to convince state officials of the advantages of highway versus rail transportation.27 The Campinas conference also instituted continuous lobbying for improving Brazilian highways when prominent politicians and members of the Autom6vel Club created the AssociaSao Permanente de Estradas de Rodagem (the Permanent Highway Association), or APER. At its head stood Washington Luiz Antonio Pereira da Fonseca, first secretary of the
25

sobre de e dos Lima, Conferencia estradas rodagem aproveitamento sentenciados Paulo, (Sao
26

'Missao Carlos Moreira', Brazil, MAG, Relatdrio, 1918, p. 254; Jose Custodio Alves de
1917), pp. Io-i

and 15-I9.

Research [US] Highway Research Board, Ideas& Actions: A Historyof the Highway
Board, I920-1970 (Washington, n.d.), pp. 2-3; American Highway Improvement Association, The Offcial Good Roads Year Book of the United States (Washington, I91 z), pp. 8-25; Gladys Gregory, 'The Development of Good Roads in the United States', (M.A. thesis, Univ. of Texas at Austin, 1926), pp. 13-18.

27 Autom6vel Club do Brasil, Primeira e estradas Exposifaodeautomobilismo, auto-propulsao

de rodagem(Rio de Janeiro, 1925), p. 5; Jornal do Commercio[Sao Paulo], i June 1917, p. 4, col. 3; U.S. Bureau of Foreign and Domestic Commerce (USBFDC), Motor Roads in Latin America (Washington, 1925), pp. I29-30; Decree I707, I3 Sept. 1917, 'Estradas de rodagem', Boletim [Bahia], vol. I, no. 2 (I917), p. 70; vol. i, no. 4 (1917), p. 72.

562

Richard Downes

Camara Municipal of Sao Paulo and leader of several other national associations, president, Ant6nio Prado Junior, vice-president, and Ataliba Valle, an instructor at the Escola Polytecnica, as secretary. Membership included several engineers and public works officials who did not own autos. On the other hand, Jose Cardoso de Almeida, a founding member of the Autom6vel Club, owned an auto and had extensive business interests and political experience as an ex-state and federal deputy, former director of the Banco do Brasil, and at the time president of the Companhia Paulista de Seguros, an insurance company. Julio Prestes, at the time a lawyer and state deputy, also brought several years of experience with the Autom6vel Club to the APER's leadership.28 The APER grew quickly and even initiated its own road renovation programme supported by a broad coalition of commercial interests. By
August 1921 it boasted 5,707 members and was issuing a variety of

propaganda items urging highway construction. The association contracted the repair of 9.5 kilometres between Atibaia and Bragan?a and another 20 kilometres between Sao Carlos and Descalvado in Sao Paulo, while gathering endorsements for highways from a wide variety of individuals and firms. These included 400 members of Sao Paulo's Associacao Commercial and industrial magnate Francisco Matarazzo, who de pledged two contos reis annually and applauded the association's goals of roads to complement and compete with the railroads. The mayor building of Sao Paulo, the Bolsa da Mercadorias (commodities exchange) and the Sociedade Rural Brasileira also promised to support the APER's objectives, meanwhile, the APER used its magazine to attack railroads for requiring 'colossal capital', while highways were 'the most advantageous solution ... to uncover countless hidden riches and awaken a great love for the natural beauties that make our land a land [that is] singularly
privileged '.29

Significantly, the association also began to gather strength from US business interests whose goals coincided with those of the APER. The US Chamber of Commerce established a branch in Sao Paulo in 1920 and became an active supporter of the APER. Its president William T. Lee was well-acquainted with the opportunity a good roads movement in Brazil would provide for US business interests through over a decade of experience as a founding member of the Automovel Club, former US consul in Sao Paulo, and as a Sao Paulo businessman. Other officers of the
28 A Estrada de Rodagem, vol. i, no. I (I92I),
Annuario
29
I921,

p. 6; Autom6vel Club de Sao Paulo,

'A necessidade de estradas', A Estrada de Rodagem, vol. i, no. 4 (1921), p. 21; 'A Sociedade Rurale Brasileira collabora cor a A.P.E.R.', Annaes da SRB, vol. I (I920), p. 6; C. A. Monteiro de Barros, 'Pela solidariedade brasileira', A Estrada de Rodagem,
vol. I, no. I (1921), p. 12.

pp. 49-162.

Autos over Rails: How US BusinessSupplantedthe British in BraZil, 191o-28

563

chamber had more than a passing interest in bettering Sao Paulo's roads. W. T. Wright, the Chamber's third vice president in 1920 and president in
1922,

had years before migrated to Brazil from Maryland, and in 1915 had

established a successful Ford agency in Sao Paulo. An agent for Standard Oil of Brazil served as one of the Chamber's directors, as did a member of the Byington Company, Sao Paulo agent for General Motors Trucks, Cadillac, Buick, Chevrolet and the Firestone Tire and Rubber Company.30 Under Lee's direction the Chamber formed a special committee on
roads at its 31 August
1920 meeting

and announced

in September that it

had 'taken upon itself to campaign for members' for the APER and hoped 'to interest American capital in improving roads throughout the state'. By August 1921 every member of the Chamber had also joined the APER, and the Chamber successfully placed at least one US businessman into the heart of the road-building programme. L. Romero Samson arrived in Brazil in 1920 as superintendent of Trading Engineers Incorporated, a Chicago industrial consulting firm given permission to operate in Brazil
in January I921. Samson, who claimed to have travelled 30,000 kilometres

within Brazil, soon left the company to use his engineering background to offer advice on Brazil's road-building programme through the APER's magazine, A Estrada de Rodagem. The APER then contracted him to supervise construction of several highways near Sao Paulo.31 The Chamber's influence in the APER gained considerable strength when the Chamber's general manager and secretary since 1920, Charles M. Kinsolving, became also secretary of the APER in August 1921. Kinsolving, son of US Episcopal Bishop in Brazil Lucien Kinsolving, had returned from World War I service in the Lafayette Escadrille to serve as the $3,500 per year secretary of the Sao Paulo chamber. He functioned as secretary for both organisations until August 1922, when he became a correspondent for a US wire service.32
30

S. Bulletin of the American Chamberof Commerce, Paulo, vol. i, no. I (1920), p. I; vol. 2, no. 5 (1922), p. 36; U.S. Consul, Sao Paulo (USC-SP) to SS, 8 Sept. I915, pp. I, 4, i6, RG 59, USNA; A Evolufao Agricola, vol. 6, nos. 69-70 (1915), back cover. 102.1/139 [Sao Paulo], 2 Nov. 21, 191 5, p. 9, cols. 2, 3; USC-SP to SS, I Sept. Jornaldo Commercio RG 59, USNA. Firestone began to conduct business in its own 1922, p. 2, I64.I2/560, right in Brazil in 1923. See Brazil, Ministerio do Trabalho, Industria e Comercio, Sociedadesmercantisautoritadas a functionar no Brasil (I8o8-I946) (Rio de Janeiro, 1947),
p. I34.

31

Bulletin of the American Chamberof Commerce, Paulo, vol. i, no. I (1920), p. 4; vol. I, S. no. 12 (192), p. 12; Brazilian-American, vol. 2, no. 50 (Oct. 9, I920), p. I5; L. Romero Samson, 'O problema da Viagao no Brasil', A Estrada de Rodagem,vol. i, no. 3 (192), pp. 13-14; vol. I, no. 4 (1921), p. 23; See also advertisement, A Estrada de Rodagem, vol. i, no. 2 (1921), inside cover. 2 USC-SP to RG 59, USNA; Boas Estradas, vol. i, SS, 28 Jan. 28, 1920, 632.III7I/I9, no. 4 (I921), p. 23; Bulletin of the American Chamberof Commerce,S. Paulo, vol. 2, no.
3 (1921), p. I.

564

Richard Downes

The APER also pressed its case for better roads by hosting official openings for new stretches of highway. On I May I921 the APER helped open the Sao Paulo-Campinas highway - under construction since 1916
- with a 3 27-car caravan headed by a presidential committee and festivities

in Campinas, all designed to inform 'a great number of persons of certain social position and certain above normal intellectual preparation' of the benefits of such a road. The APER also sponsored a special trip for the press in April 1922 along the soon-to-be-opened highway between Sao Paulo and Itd. Popular novelist and essayist Monteiro Lobato participated
in the trip representing the Revista do Brasil. In October
1923

the

association, now renamed the Associacao de Estradas de Rodagem (AER - the Highway Association), helped to sponsor the third public highways conference, a six-day-long gathering of the state's mayors, engineers, and representatives of railroad companies, touring clubs and other interested parties. Aside from reviewing highway construction carried out since 1917, the nearly 5oo participants committed themselves to gathering information on road conditions and automobile ownership statewide. They also witnessed an exhibition of road-building machinery and automobiles - mainly from the United States - and a demonstration sponsored by the AER of road-building machinery by representatives of US firms.33 The close relationship between the AER and US business grew even stronger when a partner in a road-building firm became the secretary of the AER. D. L. Derrom was a Canadian engineer and partner of L. Romero Samson in the firm Derrom-Samson, S.A. The company became 'most instrumental in the introduction and sale of American roadbuilding equipment and maintenance machinery' in Sao Paulo at the same time that Derrom served as the AER's secretary. Derrom lobbied heavily for highway construction through close ties with Washington Luiz, other key state and local officials, and 'good roads enthusiasts' nationwide, even authoring a comprehensive programme for Brazilian road construction
entitled Caminhos para o Brasil (Roads for Brazil).34

In its campaign to improve Brazil's roads, the AER received valuable assistance from Washington Luiz. Not only did he serve as the AER's first
president but, as Sao Paulo's state president between
1920

and 1924, he

33

'A estrada de rodagem de S. Paulo a Itd', A Estrada de Rodagem,vol. I, no. II (1922), RG 59, USNA; 'Third pp. 37-8; USC-SP to SS, 19 Oct. 1923, pp. 2-3, 832.I54/36, Sao Paulo Highway Conference', Bulletin of the Pan American Union (BPAU), vol.
58 (1924), pp. I82-3.

34 USC-SP to SS, I4 Oct. 1926, 832.154/74, RG 59, USNA; Howard T. Oliver to Fred I. Kent, 5 Feb. I926, 033.321I/210 (attachment), RG 59, USNA; USC-SP to SS,
Io Oct. 1927, 832.154/86, RG 59, USNA.

Autos over Rails: How US BusinessSupplantedthe British in Brazil, 1910-28

565

became a powerful advocate of a modern road network. True to his proclamation to the Sao Paulo state legislature in 1920 that 'we should everywhere construct highways, all hours of the day, all the days of the year', he sponsored a 1921 state law outlining a road-building programme for the state. He also collaborated with the AER in a series of annual automobile rallies designed to draw attention to the need for better highways. The first Prova de Turismo featured a circuitous round trip between Sao Paulo and Ribeirao Preto in 1924, and the next year the rally promoted the Rio-Sao Paulo highway as twelve cars and trucks negotiated 'hill and mountain... forest, swamp, and prairie' to call for the highway's completion. As Washington Luiz's prominence increased, his aid became all the more useful. The year he became national president (1926), he allowed the rally to carry his name, and the winner of the ,I 8o-kilometre race throughout the interior of Sao Paulo carried home the Washington Luiz cup.35 The Brazilian good roads movement also received a substantial boost from the US government's support to the 'Pan American Highway Commission'. This effort was an offshoot of the US Highway Education Board, a lobby of educators interested in engineering, government highway officials, and businessmen associated with sales of automobiles and road-building equipment. Delegates to the Fifth Pan American Conference at Santiago de Chile, in i923, suggested forming a PanAmerican Highway Commission to observe the US highway system and US means of financing, administering, constructing and controlling modern highways. The National Automobile Chamber of Commerce in Washington began arranging funding after the notion was endorsed by the Commerce Department and the Bureau of Public Roads. By December I923 it had requested $6o,ooo in contributions from members of the Highway Education Board, and soon received several pledges of $i,ooo or more from 'prominent bankers and leading automotive and road machinery manufacturers of the United States'.36 Members of the Pan American Highway Commission's executive committee, named the following month, had strong ties to US automotive interests. These included Roy D. Chaplin, chairman of the board of Hudson Motor Car Company, Fred I. Kent, a vice-president of Banker's Trust of New York, W. T. Beaty, president of Austin Manufacturing
35 'Notable Automobile EnduranceTest in Sao Paulo, Brazil', BPAU, vol. 60 (1926), pp.

I,II and 1,117. 36 Pyke Johnson to Francis White, Latin American Div., US Department of State (USDS), 8 Dec. 1923, 5 5.4CI/-, RG 59, USNA;Walter C. John to SS, I3 March I924, 515 .4CI/27, RG 59, USNA. Dotaci6n Carnegie para la Paz Internacional, Conferencias internacionales americanas, I889-I936 (Washington, 1938), pp. 214 and 274-5.

566

Richard Downes

Company of Chicago, Thomas H. MacDonald, chief of the Bureau of Public Roads, F. L. Bishop of the Society for Engineering Education, Harry S. Firestone, the rubber magnate, and B. B. Bachman of the Society of Automotive Engineers.37 The conference they organised allowed for convincing lobbying of Latin American guests, including two prominent Brazilians: Joaquim Timotheo de Oliveira Penteado, inspector of highways for Sao Paulo state, and Sampaio Correa, founder of Sampaio Correa e Companhia, an importer of US coal and, especially, cement. The conference's sponsors paid for round-trip steamship and rail transportation between Washington and their city of origin in Brazil as well as all travelling expenses from assembly of the group in Washington on June 2. Once in Washington, they joined 35 other delegates representing 17 countries for a visit to the Bureau of Public Roads and an expenses-paid excursion through various states focusing on highway construction and automobile manufacturing. Throughout the trip they met with highway engineers, analysts, and manufacturers of automobiles and road building equipment. Delegate Penteado accepted invitations to visit the Barber Asphalt Company, the Baldwin Locomotive Works, the Ingersoll-Rand Company and General Electric while in New York.38 The Brazilian delegates returned convinced of the benefits of integrating US equipment and techniques into Brazil's road-building effort. Penteado reported that Latin American delegates 'played the role of students' while 'the role of teachers' belonged to the North Americans because their country had 'in a few years accomplished what took the Europeans centuries to carry out'. He viewed the formal presentations and discussions during meetings, meals and while travelling in trains and automobiles as 'teachings ... of great utility for the other countries'. He urged adoption of the US example by equipping the state Inspectoria de Estradas de Rodagem with all the tractors and road machines necessary for an extensive road construction programme.39 Undoubtedly Penteado also promoted formation of the Confederacao Brasileira de Educacao Rodoviaria (The Brazilian Highway Education
37 Brazil, Ministerio da ViaSao e Obras Publicas, PrimeiroCongresso Panamericano de
do Estradas de Rodagem:Relatorioda DelegaFao Brasil (N.P., 1928), pp. 4-5 ; Pyke Johnson to Francis White, Latin American Div., USDS, 8 Dec. 1923, 5I5.4CI/-, RG 59, USNA;

PanSao Paulo, Secretariada Agricultura,Commercio e Obras Publicas, Commissao

38

Americana de Estradas de RodagemReunidanos Estados Unidos... (Sao Paulo, 1925), p. 6; E. S. Gregg, Memo, Transportation Div., Commerce Department, 18 Jan. I924, 5i5.4CI/5, RG 59, USNA. RG 59, SS to U.S. Embassy, Rio de Janeiro (USE-RJ), I5 March 1924, 5i5.4Ci/23d, USNA; Brazil, Primeiro Congresso Panamericano, pp. 6-i ; Sao Paulo, Commisao

39 Sao Paulo, CommissaoPanamericana,pp.

Panamericana, 47. p.

12,

85 and 90.

Autos over Rails: How US BusinessSupplantedthe British in Brazil, 1910-28

567

Board). Like similar organisations founded in Argentina, Chile, Cuba, Honduras and Peru following the 1924 tour of the United States, the Brazilian board sought to 'develop and increase the construction of roads in all Brazil'. Also prominent in creating the organisation were Theodoro A. Ramos, a professor at the Escola Polytecnica and A. F. de Lima Campos, an engineer with considerable road-building experience with the drought service. Representatives from groups interested in building
highways attended the board's first meeting in Sao Paulo on
20

May I925:

the Autom6vel Club, the Sociedade Nacional de Agricultura (National Agricultural Society), the Ministerio da Viacao (Ministry of Transportation), the Associacao Commercial de Rio de Janeiro, and the AER. The board's establishment proved important more in symbolic than in substantive terms, however. Almost two years after its initial meeting, the group still lacked a formal charter. Nevertheless, the broad interest in the group's purpose symbolised the impact of US actions designed to create support from commerce, agriculture and government for the roadbuilding movement.40 The US automotive and highway lobby's campaign to encourage Brazilian adoption of US techniques and machinery took another step forward with the First Pan-American Highway Conference. This conference, held in Buenos Aires in May 1925, reinforced messages imparted at the previous year's meeting in the United States. The US delegation hoped for approval of a resolution urging a 'permanent organisation' in each nation to carry on 'the work initiated at the time of the visit of their delegates to this country last year'. The 33-member US delegation represented auto industry and road-building interests under the leadership of a General Motors vice president serving concurrently as head of the National Automobile Chamber of Commerce. Delegates included Thomas H. MacDonald, chief of the Bureau of Public Roads, a strong supporter of the previous year's meeting, and several state highway officials. Stopping in Rio de Janeiro before the conference, MacDonald urged Brazil to provide strong federal aid for highway construction, an act that 'would greatly stimulate and assist development of adequate
highways in Brazil'.41

At least with respect to Brazil, the US delegation accomplished its goals in Buenos Aires. Brazil's delegation returned convinced of the inadequacy
40

J. WalterDrake [Assistant Secretaryof Commerce]to SS, 14 Jan.

Panamericano,p.

1925, 5I5.4Di/I, RG 59, USNA; 'Reunioes semanaes da SRB', Revista da SRB, vol. 6, no. 6i (1925), p. 25.

278; 'BrazilianFederationfor Highway Education', BPAU, vol. 6i, Primeiro Congresso RG 59, USNA; Quoted in Brazil, Primeiro

41

Drake to SS, 25 Jan. I925, 5I5.4Di/i, Panamericano, ii. Congresso p.

568

Richard Downes

of the 'old idea, still in vogue in Brazil, that highways were a mere complement to the railroad'. It endorsed the conference's recommendation that 'all the American nations create a central body to direct ... the reconstruction, maintenance, and financing of highways', and Brazilian delegate Francisco Vieira Boulitreau played a direct role in implementing the concept in Brazil. In June 1926 he recommended that the Ministry of Agriculture propose a comprehensive highway law, to include provisions for a Departamento Nacional de Estradas de Rodagem (National Highway Department) with broad authority to plan, finance and direct Brazil's highway construction.42 Aside from lobbying in international fora for automotive interests, US government officials frequently reported on good roads movements in Brazil's various regions. From Pernambuco, US consul C. R. Cameron informed the State Department and the US Bureau of Foreign and Domestic Commerce in August 1923 that while the automobile owners 'constitute an element naturally favorable to a good roads movement', state spending on urban improvements, such as sewer and water works, had depleted public funds. Nevertheless he also enclosed a list of the principal automobile dealers in the region, 'the most desirable persons with whom to communicate regarding the good roads movement', and a year later reported formation of the Associacao de Estradas de Rodagem, headed by Pernambuco auto enthusiast Carlos de Lima Cavalcanti. The group launched a combined automobile show and goods roads congress in January I926 that failed to gather a large crowd, however. The consul attributed this to the fact that 'purchasers for automobiles are to be found almost exclusively among the upper, educated classes'.43 The fervour for automobilismo proved stronger in Rio Grande do Sul. A Porto Alegre dealership forwarded one per cent of revenue from its sales of Chevrolets to the AER, suggesting a method of financing the AER that may have been more widespread. The assistant trade commissioner, a US official, reported creation of a good roads association in Rio Grande do Sul in 1926. The Associadao Rio Grandense das Estradas de Rodagem formed around a nucleus of automobile dealers in Porto Alegre, and similar associations were 'in the course of formation' in Pelotas, Rio Grande and Sao Angelo.44
Brazil, Primeiro Congresso Panamericano,p. ii; 'Estradas de Rodagem', Boletim [MAG], 15, 2, no. 4 (1927), p. 429. 43 USC-Pernambuco to SS, 23 Aug. 1923, 832.1 54/ 54, RG 59, USNA; USC-Pernambuco to SS, ii Feb. 1926, 832. 54/67, RG 59, USNA. 44 The check for 4:872$ represented one percent of receipts from the sale of 50 Chevrolets. GeneralMotors, vol. i, no. 6 (i926), p. 19; Richard C. Long 'Highways in Rio Grande do Sul', quoted in Brazilian Business,vol. 7, no. 6 (1927), p. 9.
42

Autos over Rails: How US BusinessSupplantedthe British in Brazil, I910-28

569

US businesses played a more direct role in supporting lobbying for better highways in Rio de Janeiro state. There the Automovel Club do Brasil, an outgrowth of a civic club founded in Petr6polis in 895, became the major private lobby for a road-building programme. Like its Sao Paulo name sake, this group espoused 'the development of automobilismo and the construction of new highways' and associated goals. Although the club sponsored the second and third national highway congresses, its major accomplishment was instigating construction of the Rio de Janeiro to Petr6polis highway. Under the leadership of businessman Carlos Guinle, the club initiated the project through its own resources and by 1923 had arranged for a i6-kilometre stretch linking Pavuna and Pilar. Construction of the highway served club members by providing a firstclass road to a traditional resort area, but it also linked up to the Petr6polis-Juiz da Fora road and demonstrated highway-building techniques and materials while allowing contributors to advertise their products. The American Rolling Mill company, for example, donated all culverts needed for the highway. The club soon found voluntary contributions insufficient, though, and suggested that the federal and Rio de Janeiro state governments also support the road's completion. In late
I925

the federal government

opened a special subsidy for 500:ooo$

for

that purpose, and on 13 May 1926, the road opened with great fanfare.45
The arrival of US automobile companies

Lobbying by US businesses for good roads in Brazil complemented a growing acceptance of US vehicles, paving the way for US automotive manufacturers to establish themselves firmly in Brazil during the Old Republic's final decade. Before 1917 Brazilians displayed only moderate interest in US automobiles as French, German and British cars accounted for nearly 75 % of Brazil's auto imports in 1913. With the war the trend shifted, as Brazilians imported more US-made cars in 1917 than in the three previous years combined and imported almost exclusively US-made autos. This change stemmed partially from the difficulty of trading with Europe under siege, but it also represented Brazilian affinity for a low-cost yet durable car. As magazine correspondent Lillian Elliott recorded, 'with the introduction of the inexpensive car of North American build, the fazendeiro is acquiring a car for country use'. Even British cotton expert Arno S. Pearse depended upon a Ford: when departing from Natal on one of his treks inland, Pearse carried with him on the train 'two Ford motor
45

The Autom6vel Club was called the Autom6vel Club Brasileiro until I919. Autom6vel Club do Brasil, Annuario de 1929 (Rio de Janeiro, n.d.), pp. I 3 and i6; 'Rio-Petr6polis', 0 Automdvel, vol. 9, no. o02 (1923), p. 5; 'A Estrada Rio-Petr6polis', A Estrada de Rodagem,vol. 3, no. 28 (1923), p. 40.

570

Richard Downes

cars, the only kind which can be used in country of this nature'. In the Northeast Ford trucks were converted into buses, and one sertanejo in Acari, Rio Grande do Norte, even linked the engine of his Ford truck to a cotton gin and drove from farm to farm ginning cotton for his clients. A Jesuit who travelled frequently into Goias praised the car and its maker: 'The great North American industrialist, inventor of a car as simple as it is strong, deserves to be considered one of the greatest benefactors of the backlands of Goyaz.'46 Impressed by the wartime demand for US-made autos, Ford's executives soon resolved to open an assembly plant in Brazil. In April 1917 they asked the Brazilian consul in Buffalo to furnish them with laws on road conditions and maintenance to aid the decision, and on 24 April to establish an assembly i919, approved a capital expenditure of $25,000 in Sao Paulo. Two company officials experienced in selling Fords in plant Argentina hurried to Sao Paulo to arrange for assembling the vehicles' imported components (only jute to stuff seats would originate in Brazil) in a refurbished skating rink. Within a year the company began to construct its own building on Rua Solon, a few metres from where W. T. Wright had established his successful agency during the war.47 Output at the plant reflected both the increasing popularity of the vehicles and the soundness of the venture. Production shot up from 2,447 in 1919 to 24,500 in 1925, and earnings totalled $4 million for I925-6. Fords became the dominant vehicles in many Brazilian towns. Of the 58 automobiles owned in 1921 by residents of Sorocabana, Sao Paulo state's third largest city, three were Fiats, two were Overlands, one each was a Benz, Saurer, Buick, Chevrolet, Adler and Scat. The Hupmobile,
46 Brazil, Directoria de Estatistica Commercial, CommercioExterior do Brasil: Importafao, Exportafao i9i3-i918 (Rio de Janeiro, 192I), vol. I, p. 120; Lillian Elwyn Elliott, Bratil (New York, 19 7), pp. 127-8. Diplomats, however, preferred more Todayand Tomorrow expensive models. In a confidential telegram to the Brazilian Charge in Washington, Foreign Minister da Gama ordered a draw upon a London account of $6,219.23 to purchase a Phiama auto for da Gama. Embassy of Brazil, Washington (EBW) to Ministerio de Rela96es Exteriores (MRE), 4 March 1919, M-232, 2, I , Arquivo Hist6rico do Itamarati (AHI). Arno S. Pearse, Brazilian Cotton (Manchester, I923), p. 141; Inspectoria Federal de Obras Contra as Seccas, Segundo Distrito, TS, 'Transcripcao de trechos de Relat6rios....', P-6i, Arquivo Epitacio Pessoa (AEP); Camillo Torrend, 'Excursao a Goyaz', Boletim [MAG], vol. I5, no. 6 (I926), p. 770. 47 Noticias Ford, vol. 8, no. 2 (1979), p. 3; Mira Wilkins and Frank E. Hill, American BusinessAbroad: Ford on Six Continents(Detroit, I964), pp. 93-4. Ford's plant was not the first auto assembly plant in Brazil. In 1904 Luiz and Fortunato Grassi organised a company that in 1907 assembled the first Fiat to operate in Brazil. The same company in the I920S sold both Ford and General Motors truck chasses for their products. See no Jos6 Almeida, A implantafdoda industriaautomobilistica Brasil (Rio de Janeiro, 1972), pp. 4-5, 14; Benedicto Heloiz Nascimento, Formafao da industria automobilistica industrialem uma economia brasileira:pol'tica de desenvolvimento (Sao Paulo, 1976), dependente p. 14. 'A expansao do Ford no Brasil', Automobilismo, vol. i, no. I (1926), p. 20.

Autos over Rails: How US BusinessSupplantedthe British in Brazil, I910-28

57I

remaining 43 were Fords. A similar survey of Pirassununga revealed that, of the 21 vehicles in the town, one was a Maxwell, two others were Chevrolets, and 18 were Fords. A later survey in Bahia counted 256 Fords out of a total of 671 autos. None of the other makes - Overland, WillysKnight, Buick, Studebaker, Chevrolet, Dodge, or Essex - had more than 52 of their make registered.48 Brazil's growing affinity for motor vehicles soon attracted a second major US manufacturer to the Brazilian market. In 1921 the federal government ordered 5o five-ton trucks with trailers from General Motors, and the following year James D. Mooney, vice-president of General Motors Export Corporation, visited Brazil 'to study conditions, especially the motor car industry, with the idea of extending the business of my corporation'. Significantly, the trip represented the 'first executive of that corporation who has ever visited a foreign country'. Mooney left 'amazed at the wonderful possibilities of the motor car industry in this country' and convinced that 'Brazil will become one of the greatest automobile countries in the world'. After further study of the Brazilian market, the General Motors Export Corporation organised a Brazilian subsidiary in
1925 with an investment

of $270,000. In a rented warehouse

on Avenida

Presidente Wilson in Sao Paulo, the company started assembling 25 units

per day. By the end of I925, it had put together 5,597 vehicles.49

Both General Motors and Ford became an integral part of the post-war explosion in motor vehicle ownership in Brazil. A partial survey conducted in Sao Paulo state in I929 portrayed the dimensions of a true invasion of automobiles and trucks. Total vehicles in the state had
increased from 2,661 in 1917 to 59,213 by
1928

- 38,787 autos and 20,426

trucks. In the city of Sao Paulo auto ownership had risen from 1,757 to 12,366 during this period. Santos and Campinas each had over I,ooo autos
in
1928,

roughly ten times what they had had in 1917. Overall vehicle in
1920,

ownership proved widely dispersed geographically, although Sao Paulo

with
2 % of the state's population

had 3 % of all autos and 24 %

of total trucks in the state.50 In Minas Gerais the number of vehicles grew
48

Wilkinsand Hill, American de vol. Business, I46 and 148; A Estrada Rodagem, i, no. pp.
4 (I921), p. II; vol. I, no. I (1921), p. 14.

49

50

'Um grande acontecimento automobilistico', O Automobilismo,vol. 2, no. 8 (1927), pp. I2-16; TS, General Motors do Brasil, Public Relations Department, 'Curiosidades hist6ricas', I972, p. 4; General Motors do Brasil, Public Relations Department, 'General Motors do Brasil - 57 annos de emprendimento industrial', I982, p. i, both in Arquivo, General Motors do Brasil, Sao Caetano do Sul, Sao Paulo [hereafter referred to as AGMB.] Brazil, Instituto Brasileiro de Geografia e Estatistica, Annuario estatistico1939/1940 (Rio de Janeiro, n.d.), vol. v, p. 1,304; 'Quadro do crescimento...', O Automobilismo, vol. 4, no. 42 (1929), pp. 3 i-6. The ratio of automobiles to total population remained much lower than in the United States, where every state except Alabama had a higher ratio

572

Richard Downes
2,309

from

in 1921 to over I5,oo0

in

1927.

In Bahia the US consul

reported that 'the desire to own such machines is becoming very widespread', with prospective buyers joining clubs that promised the chance to win an automobile, either a 'low-priced American car of a wellknown make', or a 'higher priced automobile, also American'. By 1926 over 900 kilometres of road in the state were being used by 'more than a hundred automobiles and trucks'.51 The vehicles' utility obviously attracted buyers, but carefully staged actions of the auto companies themselves boosted their popularity. Ford sent its products on a tour of the interior of Sao Paulo to provide a 'practical demonstration' even into the 'recesses of our backlands'. The 'Ford-Fordson' caravan set out in May 1926 from Sao Paulo with i6 cars, trucks and tractors for a I,400 kilometre, 45-day jaunt through the state's countryside. The group appeared before a reported Ioo,ooo persons in 25 cities, demonstrating the vehicles' capabilities by day while entertaining evening audiences with films depicting the Ford factories and the building of good roads. Even though one town's residents panicked at the noisy arrival of the caravan, mistaking it for 'an invading army', Ford considered the journey 'a complete success'. Not to be outdone, General Motors sent out its 'Chevrolet circus', an extravaganza featuring a circus touring the states of Rio de Janeiro, Minas Gerais and Sao Paulo, transported entirely by Chevrolet vehicles. The circus always held two shows: at 6 p.m. for individuals invited personally by the local Chevrolet dealer, and another later for the general public. General Motors considered the concept 'the best means of publicity developed in Brazil to this
date' 52

The companies also generated support for automobilismoand drew potential customers by sponsoring public automobile expositions and trips to the United States to visit elements of the automotive industry. Exhibitions of US autos accompanied the highway conventions, but were also organised as independent events 'creating extraordinary interest and
prospects ... for sales of automobiles and agricultural machinery'. In
1926

of cars to population. Even with Alabama's ratio, Sao Paulo would have had 400,000 autos, instead of less than 39,000. See Automobilismo, vol. I, no. i (i926), p. 26. 51 Minas Gerais, Estradas de RG Rodagem,p. 4; USC-Bahia to SS, 8 Oct. 1924, 832.513/-, 59, USNA; Bahia, Mensagem, 1926, p. 245. 52 'A caravana Ford-Fordson...', O Automobilismo, vol. i, no. 3 (1926), pp. 36-7; USCRG 59, USNA; 'O grande circo Chevrolet', SP to SS, 30 Sept. I926, 832.I54/73, General Motors Brasileira, vol. 5, no. 52 (1930), pp. 8-9.

Autos over Rails: How US BusinessSupplantedthe British in Brazil, 1o10-28

573

the newly-arrived General Motors subsidiary conducted an exhibition to highlight models (other than the Chevrolet) that were relatively unknown in Brazil, and to gather an extensive list of prospective buyers. Beyond holding the event on Rua Consolacao 'only two blocks from the Avenida Paulista, Sao Paulo's 'Fifth Avenue', the company underwrote a massive advertising campaign. Promotional posters decorated Sao Paulo's streetcars, aircraft dropped leaflets from the sky, and 20,000 engraved invitations went out to 'persons of means' in Rio de Janeiro, Sao Paulo, Santos, Campinas and Belo Horizonte. On the eve of the public opening, the company invited its dealers from throughout the country and 'a
carefully selected list of 50o of Brazil's most distinguished citizens...

government officials... and members of socially prominent and wealthy families of Sao Paulo'. On opening day Ioo cars paraded for five hours through Sao Paulo's streets.53 Such theatre attracted a large audience, including many prospective
buyers. The company estimated that some oo00,000 people shuffled in to see I9 models of Cadillacs, Oaklands, Buicks and Oldsmobiles clustered

around a raised platform where 'a gray Cadillac sport Phaeton turned slowly, its headlights piercing through a bath of colored lights, the twin beams ... searching out every corner of the great building'. To add to the attraction and gather names of potential customers, the company conducted a charity lottery with an Oldsmobile Sport Roadster as the prize. Entrants paid i,ooo$ to guess the total kilometres the car would travel while operating for Ioo hours on a stationary treadmill. After opening of the entries by a committee made up of the editor of the O Estado de Sao Paulo, the vice president of the AER, and the city fiscal, the ticket stubs were 'sorted and turned over to our dealers for their prospect files'. The company also registered 71 sales during the nine-day affair and judged that the event 'sold the General Motors organisation' and made it 'doubtful today [that] there is a better known merchandising
organisation in Brazil'.54

On a more individual basis, the companies arranged visits to the United States for outstanding salesmen or prominent members of society as part of their campaign to gain acceptance in Brazil. V. E. Lucca, a former employee of Armour do Brasil and a Cadillac and Oakland salesman for two and a half years, was awarded a US trip in 1927 for his 'superb
58 B. F. O'Toole [LatinAmericanDiv., USBFDC] to N. Y. District Office, USBFDC, io
TS, General Motors do Brasil, untitled

54 GeneralMotors, scrapbook,pp. 4, 6; TS, 'Office Bulletin (26 Nov. 1926)', scrapbook, AGMB. Ford retained a dominant market share, however, in 1930: 54.9% versus

Oct. 1925, Box 2232, RG I51, USNA; scrapbook, n.d., pt. i, p. i, AGMB.

General Motor's I7.1 %. Wilkins and Hill, American Business, 202. p.

21

LAS 24

574

Richard Downes

services' as General Motors' sales manager.55 The road-building firm of Derrom-Samson arranged invitations for prominent Brazilians to visit the United States through the National Automobile Chamber of Commerce in Washington. In early 1926 the firm suggested that the Pan American [Highway] Confederation invite Washington Luiz to visit the United States. The suggestion arrived at the desk of Fred I. Kent of Banker's Trust, a member of the Highway Education Board and of the Pan American Highway Commission. Kent in turn passed the idea on to Pyke Johnson of the National Automobile Chamber of Commerce who transmitted the proposal to the State Department.56 Although Washington Luiz never travelled to the United States, his political associate and automobile advocate Antonio Prado did agree to an extended visit as the guest of the US automotive and highway lobby. With an official charter from Washington Luiz to 'study city administration and good roads', Prado and his son, daughter, and son-in-law accepted a twoweek tour of the US automobile and road industries. Representatives of the National Automobile Chamber of Commerce, the Packard Motor Car Company, Ford and several other interests met the Prado party at dockside in New York. The entourage visited officialdom in Washington and then departed for Maryland, Pennsylvania and Detroit for tours of automobile factories, the General Motors proving ground, various highways under construction, and even the Detroit River via speed boats. After a dinner hosted by the National Automobile Chamber of Commerce, they journeyed to rubber factories in Akron and tourist and industrial sites in upstate New York.57 Throughout the journey the elderly Prado displayed a keen interest in the subject matter. He requested reflecting road signs and studies on the utility of electric traffic signals and reported that he was impressed with 'the great superiority' of the US highway system over that of Europe. He cooperated with his hosts by participating in motion pictures destined for use with 'the standard highway films which are being sent to Brazil for use in the "Good Roads Campaign" in that country'. Prior to departure Prado purchased three US-made autos worth a total of $ 5,ooo.58 His visit symbolised the Brazilian elite's newly-found preference for US industrial products over the European variety. A member of the Brazilian entrepreneurial elite who had travelled to Europe dozens of times turned to the United States because of the attractions offered by this new leading
55

56 Howard T. Oliver to Fred I. Kent, 5 Feb. 1926, 033.32II/210,

13 (1927), p. 20. RG 59, USNA. RG 59, USNA; Robert Kaiser, USDS, 57 USE-RJ to SS, i July i926, 033.3211/211, Memorandum, n.d., encl. to Thomas A. MacDonald, Bureau of Public Roads, to R. E. RG 59, USNA. Olds, Assist. SS, 24 Aug. 1926, 033.3211/213, 58 Robert Kaiser, Memorandum, pp. 2-3, 6.

'Homeagem ao snr. V. E. Lucca', 0 Automobilismo, vol. 2, no.

Autos over Rails: How US BusinessSupplantedthe British in BraZil, 9g10-28

575

sector of the industrial revolution. The analogies he drew between the United States and Brazil, while generally unfavourable to Brazil, made it clear that he felt the US economic model held great relevance for Brazil's future. His thoughts were soon echoed by another member of Brazil's economic elite, the president of the Companhia Commercio e Navega(ao. Travelling to the United States to attend the 1927 version of the Pan American Commercial Conference, Count Pereira Carneiro delighted his hosts by noting that not only was 'the American automobile... making more Brazilian roads desirable', it was also 'driving out the European'. True to his word, Pereira purchased two US cars to 'replace my European ' 59 ones.59
British-US business rivalry

The great contrast between the US and British approaches to Brazil's transportation needs in the I92os dramatises the shift away from European economic influences toward those of the United States. British and US economic interests in Brazil had a long history of competition if not conflict. In the nineteenth century US traders and investors had been unprepared to challenge the dominant British position. With the turn of the century, however, US and German goods became more competitive within the Brazilian market, and US and German banks encroached into financial circles traditionally dominated by Britain. Increasingly cordial trade agreements between the United States and Brazil and a mutual understanding to support each other's actions in respective spheres of influence solidified into what one analyst termed the 'unwritten alliance'.60 Brazil's wartime cooperation with the United States only increased British uneasiness about its economic position in Brazil. British Ambassador Sir Arthur Peel warned that Brazil was falling 'practically under US control' in early I9I7 and concocted a coffee-purchase plan to restore British influence. Although his effort fell victim to higher wartime priorities, British economic interests continued to block US advances wherever possible. British monopoly of commercial cable facilities alerted British businesses to possible moves by US firms, and some US officials suspected the British of using wartime measures to stifle non-British competition. US Ambassador Morgan reported in careful detail the
59
60

New York Times (NYT), 19 April 1927, p. 9, col. I. Ant6nio F. P. Almeida de Wright, Desafio americanoa preponderancia britanica no Brasil, 1808-i8yo (Sao Paulo, 1978); Norman Strauss, 'Rise of American Growth in Brazil: Decade of the I870's', Americas, vol. 32 (1976), pp. 437-44. Herbert H. Smith, Brazil: The Amazons and the Coast (New York, 879), p. 492; Graham, Britain and the Onset, pp. 298-3 18; E. Bradford Burns, The UnwrittenAlliance: Rio Brancoand Brazilian-American Relations (New York, 1968).
21-2

576

Richard Downes

British stopping of the German merchant ship Santa Catarinashortly after the war's outbreak. The ship carried machinery for Continental Products' new meat packing plant and several other US businesses in Brazil. After being detained by the British cruiser Glasgow,a 'fire originating through spontaneous combustion of her bunker coal' destroyed the ship's cargo. While the Ambassador judged the destruction unintentional, State Department officials did later question British motives for protesting US sales to Brazilian firms on the trade restriction ('black') list, hinting that such moves were merely a disguised effort to weaken the US commercial
presence.6

US officials also carefully tracked British wartime commercial activities in Brazil. The US naval attache cautioned in late 1917 that commercial rivalry was imperiling the war effort, and in April I918 a US intelligence agent warned that the United States was 'fast losing ground', threatened by 'the loss of all this good trade, either to England - who is frankly
going after itor to Germany who still has many friends here'.62 The

visit of a British commercial delegation the following month caused US Ambassador Morgan to caution that 'our commercial and political interests were threatened and that the policy of peaceful penetrations in the southern Hemisphere... might find new barriers placed in its way'. As UPI correspondent Roy Howard reported cryptically: there was an 'undisguised animosity British American commercial interests... untempered unmodified by common purpose French battlefield'.63 The competition only intensified after the war. The US consul in Porto Alegre charged in June 1919 that the British firm Wilson, Sons and Company, plying freight between Rio Grande and Porto Alegre, discriminated against US firms. US products ordered by W. R. Grace often lay in a warehouse unsold because Wilson delayed their delivery while their own goods were being sold. All this was just more evidence, the consul remarked, that 'British distributors are quite alarmed at our progress in the market, and they never miss an opportunity to criticize our goods and methods'.64 The United States scored an important gain in possible commercial benefits at British expense when Brazil accepted a US
Emily S. Rosenberg, 'Anglo-American Economic Rivalry in Brazil During World War I', Diplomatic History, vol. 2, no. 2 (i978), p. 133; John I. Merrill [Central and South American Telegraph Company] to EBW, 2 April I9I7, M-234, 2, 7, AHI; Manoel Coelho Rodrigues to MRE, i6 July I919, M-234, 2, 12, AHI; USE-RJ to SS, 21 Oct. RG 59, USNA; USE-RJ to SS, 23 Oct. I916 and Memorandum, I914, 300.II5/1343, Solicitor, USDS, I6 Nov. 1916, both in RG 59, 332. 14B46, USNA. 62 TS, 'General Situation in Brazil', 9 Dec. 1917, ONI Files, WA-7, Brazil, USNA; Confidential encl. to USE-RJ to SS, I8 April 1918, 632.III6/I, RG 59, USNA. 63 USE-RJ to SS, i6 May 1918, 033.4132/5, RG 59, USNA; Roy W. Howard, Telegram to United Press International (UPI), New York, 14 May 1918, L-46, P-I, N-76, AEP. 64 USC-PA to SS, 19 June I919, 800.8830/205, RG 59, USNA. 61

Autos over Rails: How US BusinessSupplantedthe British in BraZil, 1910-28

577

naval mission in 1922. Since Brazil intended to improve its navy, the US mission portended possible major naval contracts for US shipyards or construction firms. Although Brazil did explore construction of an arsenal, the naval mission had little commercial impact - despite British fears and US aspirations.65 The looming American economic challenge soon provoked an official response from London. US imports dominated the Brazilian markets
through 1921 and, although British imports regained prominence in 1922 and 1923, Brazilians began to turn more often to US financiers for loans.

In I923 the British government sent out a high-level financial commission headed by Edwin Montagu, Parliamentary secretary to the Chancellor of the Exchequer, Sir Charles Addis, a financial expert and 'eminent banker', and Lord Lovat, director of the Sudan Plantation Syndicate and a cotton authority. Seeking the 'opportunities for and conditions necessary to further cooperation between British and Brazilian capital', the mission embarked upon two months of meetings with Brazilian government ministers and department heads, with extensive tours of Minas Gerais and Sao Paulo. The commission's head hoped to nuture 'old-established and friendly Anglo-Brazilian commercial relations' and stressed the willingness of British investors to 'provide further capital if assured that such
capital would be welcome'.66

The commission's recommendations pointed out that capital should be welcomed, especially in the transportation sector. The commission felt strongly that 'when fresh capital is attracted to the country it will be most usefully applied to transportation development'. Along with a more orderly budget process and continuing 'prudent government', improving transportation was an absolute necessity for Brazil. All aspects of Brazil's development-'the production of crops, the mining of materials, the distribution of necessary population and the investment of capital'depended upon 'adequate railway facilities', in the commission's opinion. Since railways lay 'at the root of the whole future prosperity of Brazil', their extension and improvement was 'a matter the urgency of which cannot be overemphasized', the report asserted.67
65

Joseph Smith, 'AmericanDiplomacy and the Naval Mission to Brazil', Inter-American

EconomicAffairs, vol. 35, no. I (198 I), pp. 8 5-6; Stanley E. Hilton, 'The Armed Forces and Industrialists in Brazil: the Drive for Military Autonomy (I889-I954)', Hispanic American Historical Review, vol. 62 (1982), p. 640. RG 59, USNA; The Times, USC-London, Memorandum, 28 Nov. 1923, 033.4I32/13,

66

67

28 Nov. 1923; Brazil, Directoria de Estatistica Commercial,Commercio Exterior do Brasil:Importafao, Movimento Maritimo Exportafao, 1919-1923 (Rio de Janeiro, I928), pp. 23-5; The Times,22 March 1924, p. 22, col. I; 2 Feb. 1924, p. 12, col. 3. The Times, 22 March 1924, p. 22, col. I; British Financial Commission, 'Report

Submitted to His Excellency the President of the United States of Brazil...',

1924,

23

Feb.

p. 27, 033.4132/40,

RG 59, USNA.

578

Richard Downes

The commission devised several measures to ensure that 'capital invested in railways will be able to earn a fair profit'. It urged the Minister of Transportation to reform the administration of railroads in Brazil by creating a Railway Tribunal. This independent body was to be free of anyone linked to any Brazilian railroads but to include 'men of expert railway knowledge recruited from Great Britain, from which so much capital had been forthcoming for Brazilian railways'. The Tribunal would be empowered to approve changes in contracts and carry out an extensive study of Brazil's railway needs. The commission advised the Brazilian government 'not [to] own or operate railways', while suggesting sale of the Central and other government-owned lines to 'Brazilian companies or Brazilian individuals ... perhaps with the assistance of foreign capital'. New owners would discontinue 'uneconomical rates' that were 'unfair to privately owned competing railways' and causing industries to locate along the subsidised government lines. The commissioners also pointedly discouraged stimulating other sectors of the Brazilian economy, to avoid 'new capital enterprises for the present' and to conduct 'a more mature study' before deciding about starting a steel industry.68 Brazilians reacted unenthusiastically to the commission's prescriptions. US Ambassador Morgan, restraining his pleasure, noted that the group received no cooperation from the Brazilian Minister of Foreign Affairs. He criticised chief commissioner Montagu for giving his farewell address completely in English, unaccompanied by a Portuguese translation. President Bernardes, a nationalistic defender of Brazil's mining wealth, proved unwilling to adopt any of the commission's recommendations, and the Jornal do Brasil dismissed them as representing 'very naturally a viewpoint more nearly related to British interests then adapted to our needs'. When Brazilian politicians heard that a British legislator had asked whether Brazil had adopted any of the proposals, they denounced the question as 'unqualified impertinence' and an 'affront to national dignity'.69 British frustration in this effort mirrored their decisive inability to compete with US automotive imports in Brazil. The British Chamber of Commerce, concerned that the United States had 'gained a big lead during and since the war in the supply of motor vehicles to Brazil', ordered a study of the makes of 6,ooo cars licensed in Rio de Janeiro. This revealed that there were no British makes with more than o5 copies in the city,

68 British Financial Commission, 'Report', pp. 27-8 and 33. 69 USE-RJ to SS, 5 March I924, 033.4132/30, RG 59, USNA; USE-RJ to SS, ii Oct. RG 59, USNA and end., Jornal do Brasil, II Oct. I924; 0 Paiz, 9 I924, 033.4132/39,

Oct. 1924.

Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28

579

forced to share the streets with nearly 800 Fords and impressive numbers of Studebakers, Hudsons, Chevrolets, and Dodges and various German and French models. The Chamber blamed the disappointing showing on the shortsightedness of British auto makers and upon the instalment credit extended to buyers of US cars, a system which allowed small investors to pool resources to finance taxis and taxidrivers to purchase their vehicles from their receipts. Another observer credited the more frequent sailings of ships from the United States to Brazil than from Britain, claiming that 'Americans control nearly 90 percent' of the automobile trade partly because frequent ships relieved local dealers 'from the burden of carrying a large stock of machines on hand'.70 US predominance over Britain and other European competitors stimulated continual expansion of US auto assembly activities. Ford's success with its Sao Paulo assembly plant prompted opening in I925 of similar but smaller operations in Rio de Janeiro, Porto Alegre and Recife, and plans for a larger factory in the Mo6ca district of Sao Paulo. By 1928 Ford had 700 agencies and over 2,000 authorised garages throughout Brazil to sell and repair its products, and the Sao Paulo line produced machines per month. General Motors, meanwhile, assembled nearly 2,000 34,000 vehicles at its Sao Paulo plant by 1927 and began planning an expanded plant in Sao Caetano do Sul, about eight miles from Sao Paulo. The company boasted a nationwide network of 400 sales outlets employing I,500 persons, and Brazil became the third largest importer of
US trucks in I925, after Australia and Italy. By 1928, US autos constituted 99 % of all Brazilian auto imports.71

The constantly expanding auto industry attracted many other US firms to Brazil to supply parts, and financing and maintenance for the fledgling industry. The Goodyear Tire and Rubber Company, United States Rubber Company, and General Tire and Rubber Company all opened businesses in Brazil in the I920S to satisfy the burgeoning demand for automobile tyres. The Overseas Motor Export Corporation began to offer
in 'Roads and Cars in Brazil', MonthlyBulletin of the British Chamberof Commerce Brazil, vol. 5, no. 5I (1923), pp. 90 and 96; 'Why we need American ships', Bulletin of the American Chamberof Commerce, Paulo, vol. 4, no. 5 (1923), p. 5. In 1922 'vehicles for S. hire' was the most important category of automobiles registered in Rio de Janeiro. Of 4,645 autos, more than 44% (2,047) were for hire while 40% (1,847) were 'private cars'. USACG to SS, 31 July 1922, 832.797/2, RG 59, USNA. 71 'Na Rua Solon...', Noticias Ford, vol. 8, no. 2 (1979), p. 4; '0 commercio de automoveis em Sao Paulo', O Automobilismo, vol. 3, no. 24 (I928), pp. 27-9; TS, General Motors do Brasil, Production Control, 'Units Produced Cumulative Through I945', I959, AGMB; 'A filial da GMB na Bahia', GeneralMotors Brasileira, vol. 3, no. 26 (1928), p. 7; 0 Automobilismo, vol. i, no. 5 (I926), p. 45; USBFDC, The Automotive Market in Brazil (Washington, 1930), p. 9; USBFDC, Commerce Yearbook 190o (Washington, I930), vol. ii, pp. 16I--2.
70

580

Richard Downes

equipment for painting cars and other products to repair General Motors vehicles. The Johns-Mansville Company opened a branch in 1923 and to supply asphalt products, clutches and lining for brakes. Agents began for US firms associated with road-building began to criss-cross Brazil, offering their wares, often with a letter of introduction from the US ambassador. 72 A comparison of indicators of growth between automotive-related and the rail-related sectors highlights the dynamic nature of the former. While there appears to be no comparison available of new investment in each area, statistics on importation of equipment employed with each sector lends further support for the more dynamic nature of automobile and truck transportation. The number of automobiles and trucks imported into Brazil between 1923 and 1927 grew from 7 to I3.5 times faster than the increase in railroad rolling stock during the same period (see Fig. 2).73 Such figures also mirror trends in the relative vitality of US and British

s~~5
4 3 2 O
0

~4.52 /
/

~~~4~~~~~~~~~

^ 4 ^/

^"

-_

- .-84 '-+----

3.49

1.8 1.12 '

I

/ 1.26 '
I

1.23

1.36 -

1923

1924

1925

1926

1927

Fig. 2. Comparativerates of growth, Brazilian rail and auto sectors, r923-7. Sources: USBFDC, The Automotive Market in Brazil (Washington, 1930), p. 9; USBFDC, CommerceYearbook imports of growth of rolling stock, ---I93o (Washington, 1930), vol. II, p. 76.
autos and trucks,
1923

= I.o.

72 'O commercio de automoveis em Sao Paulo', O Automobilismo, vol. 2, no. 24 (I928), p. 34; 'Caravana Ford-Fordson', O Automobilismo,vol. i, no. 3 (I926), pp. 36-7; Brazil, Ministerio do Trabalho, Industria e Commercio, Sociedades mercantis autorigadas a funcionar no Brasil (r808-I946) (Rio de Janeiro, 1947), pp. I31-42; Brazilian American, vol. 3, no. 70 (1921), p. 37; Ambassador Morgan to Raul Soares, 8 March 1923, 23-30o8/i, ARS. Sales of gasoline by Standard Oil of New Jersey also probably increased significantly during this period. Established in Brazil through a subsidiary in I896, by the war years annual profits from the company's Brazilian operations consistently topped $i million. George S. Gibb and Evelyn H. Knowlton, History of Standard Oil Company(New Jersey): The ResurgentYears, 1911-1927 (New York, I955), pp. 182 and 197. 73 Calculated from figures compiled from consular reports by USBFDC. See USBFDC, Yearbook The AutomotiveMarket in Brazil (Washington, I930), p. 9; USBFDC, Commerce I930 (Washington, I930), vol. II, p. 76.

Autos over Rails: How US BusinessSupplantedthe British in Brazil, I9IO-28 export sectors during the period. Between
I913

581

and

1924

Britain's share

of world trade fell on average 3.5 % annually, precisely when US success in chemicals, machinery and transport equipment expanded the US impact on world markets.74 Beyond establishing US businesses firmly within the Brazilian economy, the automobile touched off a burst of enthusiasm among those who saw it as the ultimate expression of a modern era. Endorsed by authors such as Monteiro Lobato, a wave of admiration for Henry Ford swelled within Brazilian literary ranks. Monteiro Lobato translated Henry Ford's My Life
and Work and Today and Tomorrow for publication in a Rio de Janeiro

newspaper and praised Ford as 'the foremost example of clearness of vision in our day and generation'. In Monteiro Lobato's opinion, Ford's life story was the 'Messianic Gospel of the Future', so important that 'for Brazil there is no literature or study more fruitful than Henry Ford's book'. The auto itself became 'a symbol of progress, a representation of the mechanical world' of Mario de Andrade and the other disciples of the Modernist movement.75 Such enchantment with the automobile represented the culmination of forces that by the end of the I920S gave motor vehicles a permanent and officially-sanctioned role within Brazil's economic system. As railroads became less attractive, federal and state governments gradually became more involved in the building of roads. Subsidies continued to stimulate of new roads, as between 1918 and 1924 over 3,700 construction kilometres of the new highway went into service. By I924 road building in Minas Gerais began to move from 'the theoretical state to that of practical results'. The state organised a bureau of roads and highways and began planning to extend existing roads in the zona da matta and near Belo Horizonte, as well as between the state capital and Rio de Janeiro. In 1926 Sao Paulo state created a Directoria de Estradas de Rodagem (Highway
Office) and authorised borrowing of up to Ioo,ooo:ooo$ to construct,

conserve or improve state roads. In January 1927 the federal government approved a tax on all automobiles, trucks, buses, motorcycles, and accessories to finance highway construction and stipulated inclusion of similar provisions for road funding in all future budgets. The following
74

75

R. C. O. Mathews, C. H. Feinstein, and J. C. Odling-Smee, British Economic Growth (Stanford, 1982), p. 467; James Foreman-Peck, A History of the World Economy: International Relations Since r9jo (Totowa, N.J.: I983), p. 22z. Rostow, The World Economy,pp. 70-4. [Jose Bento] Monteiro Lobato, How Henry Ford is Regardedin Bragil (Rio de Janeiro, I926), pp. 4 and 8. John Nist, The Modernist Movementin Brazil: A Literary Study (Austin, 1967), p. 20. Monteiro Lobato represented the Brazilian expression of 'Fordismus', an international study of Ford's ideas and techniques. See Wilkins and Hill, American Business,pp. I 5 -2.

582

Richard Downes

year the federal government expanded funds for road building considerably, even authorising financing of federal roads through bond sales.76 The strongest symbol of the arrival of Brazil's new era was completion of the Rio de Janeiro-Sao Paulo highway. The highway had been the favourite project of Washington Luiz while governor of Sao Paulo state
from
1920

to

1924.

He had used state funds to rebuild a tortuous cart road

known as the Estrada Real that was unsuitable for heavy cargo, usually moved by sea and rail to Sao Paulo through the port of Santos. Washington Luiz ordered the building of a modern highway within his state toward Rio de Janeiro, and by late 1926 the new road reached the border with Rio de Janeiro. The project soon began to reflect the visions of engineer D. L. Derrom, who foresaw a 'great concrete artery... with its hotel and summer resort at Lages...with road houses, garages, and red gasoline pumps sprinkled along the route', including 'a fine overnight hotel at Bananal for those who like to travel slowly'. By the time the road opened on 5 May 1928 over Io,ooo workmen had laboured on what was called 'one of the first sections of the great Brazilian highway system'. Within two months the new road became the stage for more high drama orchestrated by the AER to advance its campaign in favour of autos over railroads. Two AER members race a US-made Willys-Overland 'Whippet' between the two cities in 13 hours and 37 minutes and argued that the cost of 34:842$ for gasoline, oil and depreciation offered a 'flagrant difference' favouring the automobile when compared with all the expenses associated with the same trip on the Central do Brasil.77
Conclusion

In less than two decades Brazil began the transition from the era of railroads to the era of the automobile, shifting its economic reference point from Great Britain to the United States in the process. The difficulties facing the railroads, the recommendations of US technicians contracted to serve in the struggle against the drought in Northeastern Brazil, and the need to transport greater quantities of new and old products carried Brazil to the edge of the automotive age. Driven by the need to find an economical way of meeting expanding demands for transportation and by the power and appeal of US lobbying efforts, Brazil's elite accepted a high level of US presence within this vital sector of its economy. Concurrently, Brazilian interest in supporting investment
'As estradas de rodagem', Boletim [MAG], vol. 14, part I, no. 3 (1925), p. 388; Boletim [MAG], vol. 16, part I, no. I (1927), pp. 3I and 35; U.S. Consul General, Rio de USNA. Janeiro (USACG-RJ) to SS, 7 Nov. I928, RG 59, 832.51/531, 77 'O trafego rodoviario', Boletim [MAG], vol. 17, part 2, no. I (1928), p. 65.
76

Autos over Rails: How US BusinessSupplantedthe British in BraZil, I9Io-28

583

in a sector (railways) closely tied to British business interests withered, despite aggressive external lobbying. This process that reoriented Brazil's transportation priorities reveals the complex interaction between internal and external factors driving international business competition. It suggests that advocates of emerging new sectors can nourish and strengthen elite proclivities to accept sweeping economic changes to accommodate perceived advantages of a new leading sector. It highlights the critical role of foreign-based but domestically-active interest groups in gaining broad acceptance for a foreign economic presence on a massive scale. Finally, it makes clear that government assistance in foreign arenas - while useful - is by itself insufficient to defend the vitality of economic sectors dominant within its shores. However active both US and British governments were about their relative economic positions within Brazil, private-sector economic conditions and interests proved far more important in rearranging the relative status of US and British business interests there. Review of how and why Brazil shunted aside former railway engineer and British philosopher Herbert Spencer to champion Henry Ford as Brazil's prophet of prosperity not only attests to the strength of foreign influence within Brazil, but it also epitomises the pervasive consequences for international business competition of changes in the world economy's leading sectors.