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Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28Author(s): Richard DownesReviewed work(s):Source: Journal of Latin American Studies, Vol. 24, No. 3 (Oct., 1992), pp. 551-583Published by: Cambridge University PressStable URL: http://www.jstor.org/stable/156775 .

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Autos over Rails: How US BusinessSupplanted the British in Brazil,1910-28RICHARD DOWNES

The dynamics of Brazil's transportation sector early in this century revealmuch about how and why US industries conquered the Brazilian marketand established a sound basis for investment. Especially during the 1920S,US companies responded to the transportation needs of Brazil's rapidlygrowing economy and won the major share of its automobile and truckmarkets. This was crucial because of the automobile's central role as aleading sector of the world's economy during this period. Sales and thendirect investment by US firms in automobile assembly plants placed USbusiness on a more secure foundation than British investment, prominentin a sector losing the vitality exhibited in the nineteenth century:railroads. Rail systems slowed their extension into the immense Brazilianinterior while the automobile flourished, promoted by a powerfulBrazilian lobby for automobilismo einforced by efforts of US business andgovernment. This process illustrates how the Brazilians' interpretation oftheir economic needs coincided with pressures exerted by US industry tocreate a permanent US presence within Brazil's economy. How HenryFord replaced Herbert Spencer as the foremost symbol of industrialism inearly twentieth century Brazil sheds light on the personal and politicaldynamics of international business competition.1Rapid economic growth in the early twentieth century thrust a host ofnew local and regional demands upon Brazil's woefully inadequatetransportation sector. Capital formation rose without interruption fromi901 onwards and reached very high levels immediately prior to WorldWar I; more than 1,000o industrial firms producing over 67% of theeconomy's 1920 industrial output came into being between 1900 and 1920.

1 'The "leading sector" is that segment of the economy "moving ahead more rapidlythan 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 aproponent of industrialism, see Richard Graham, Britain and the Onsetof Modernizationin Brazil, I8JO-I9I4 (Cambridge, 1968), pp. 236-41.Richard Downes is Director of Communications, North-South Center, University ofMiami.

J. Lat. Amer. Stud. 24, 551-583 Printed in Great Britain 55


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5 2 Richard DownesWhile the war slowed capital formation, new domestic and foreigndemand created by wartime interruptions in world trading patternsstimulated increased production in food and textile sectors. For example,exports of five major commodities (rice, beans, sugar, meat andmanganese) rose from a mere $3 million in I9I4 to over $62 million by1917.2Growth in the 9o20s taxed the transportation system beyond itscapacity. Manufacturing output rose by nearly one-third, with especiallystrong increases in chemicals, pharmaceuticals, food products, beveragesand metal products. By the mid-go20's, Sao Paulo state was experiencingsevere transportation shortages that epitomised the deficiencies of theexisting transportation system. 'The great economic expansion of SaoPaulo state since 91 I ' had taxed railroads beyond their capacity: whereasthe railroads had been required to transport only 350o,ooo sacks of producein 191 , by I924 approximately ten million sacks awaited movement.Movement of cattle by rail had begun only in 1912 and reached 700,000head by I915. By I924, though, the cattle industry required shipment ofover 2, 500,000 head of cattle. Lack of adequate transportation caused sacksof cereal to 'rot and face the consequences of weather', making farmersthe 'principal victims' of a system unresponsive to their needs.3Such calamities exposed the turn-of-the-century weaknesses of Brazil'srailroads, inadequate for a more diversified economy because of theirtraditional orientation to the fortunes of two principal export crops: coffeeand sugar. In south-central Brazil, most rail systems had been borne witha single-minded pursuit of coffee's expansion through Rio de Janeiro'sParaiba Valley and then onto the central plateau during the latter half ofthe nineteenth century. In the northeast, railroads depended as heavily onsugar and focused almost exclusively on serving coastal lowlands in Bahiaand Pernambuco where sugar dominated. Farmers who raised crops in thevast interior found that 'freight rates charged by the railway together withthe costs of reaching the railway' made their use uneconomical, andcotton growers preferred to hire horses to carry their loads to Recife over300 miles of 'bridle paths, and often very bad ones at that'.4The railroads' strong ties with British entrepreneurs and financiers andthe consequent need to pay dividends and loans in foreign currency2 WernerBaer, TheBrazilianEconomy:Growth ndDevelopment,rd edn. (New York,I989), pp. 25, z8, 30 and 32. E. Richard Downes, 'The Seeds of Influence: Brazil's"Essentially Agricultural" Old Republic and the United States, 1910-1930', (PhDDiss., Univ. of Texas at Austin, 1986), p. 2I4.3 Baer, TheBrazilianEconomy, . 27; Revistada Sociedade ural BrasileiraSRB), vol. 4

(I924), pp. I13-4.4 John C. Branner,Cottonn theEmpireof Brazil: TheAntiquity,MethodsndExtentof itsCultivation;Together ithStatisticsof Exportation nd HomeConsumptionWashington,i885), pp. 25-6; Joao Dutra, O sertaoe o centro Rio de Janeiro, 1938), p. I63. See alsoJulianS. Duncan, PublicandPrivateOperationf Railwaysn Brazil(New York, 1932).


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Autos over Rails: How US BusinessSupplanted he British in Brazil, 1910-28 553limited their capacity for expansion. The earliest railroads responded togovernment guarantees of a specific return on investment, such as an 1852law promising a five per cent insured return on investment for approvedrailroad projects. Enterprising Brazilians often secured a concession for aspecific railroad project to sell to British interests, and Brazilian railroadcompanies obtained loans from British financiers to support expansion.Railroads proliferated in the i88os and early I89os, but by the turn of thecentury the sector began to stagnate, forced to pay loans and guaranteeddividends in currency constantly losing its value relative to the pound.5The burden of such payments gradually converted the Braziliangovernment into a major owner of Brazil's railroads. By 1898 the federalgovernment devoted a full one-third of its budget to paying theguaranteed railroad dividends and attempted to remedy the situation bybuying back the railroads. With the 1898 Funding Loan the governmentbought 2, o00 kilometres of railway, I 3 % of the country's rail system, andin I901 the government expropriated twelve foreign railway companies.Between 1901 and 19 4 the federal government attempted to lessen its rolein railroad operation by leasing out lines and allowing formation of newforeign railroad companies, especially the Brazil Railway Company,formed in I907. But the November I914 collapse of Percival Farquhar'sBrazil Railway thrust even more kilometres into the federal and stategovernments' domains. Although the government managed to decreaseits operational role, it retained ownership of 6i % of Brazil's railroads inI9 4.While relieving the state of burdensome payments to foreignshareholders, state ownership of railroads left them vulnerable tosuccessful lobbying by special interest groups seeking low freight rates.Government lines regularly charged lower freight rates than private linesfor beans, corn, coffee, hides and other commodities. As one prominentstate president explained in 1913, 'the State does not necessarily extract anet profit from its railways' and could in fact operate them 'at cost, at aloss, or even for free'. While such policy could have stimulatedagricultural diversification in zones already served by railroads, it removedany incentive for expansion into new areas.7The tangle of railways emanating fron the coast to the interior5 See Graham, Britain and theOnset,p. 3o. Railroad construction recovered between 1905and 913 precisely when the milreis regained some strength against foreign currency.For exchange rates see Thomas H. Holloway, Immigrantson the Land: CoffeeandSociety

in Sao Paulo, 1886-1934 (Chapel Hill, 1980), p. 181. For annual new railroadconstruction, 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', JournalofLatin 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.


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554 RichardDownesprevented efficient shipment of goods in any direction other than betweenthe interior and the nearest port. The US director of Vicosa's agriculturalschool, P. H. Rolfs, explained how shipping citrus shoots from his schoolto the western part of Minas Gerais required intense coordination and aseries of personal favours. At his request, friends in Juiz da Foratransferred the shoots from the Leopoldina station to that of the Central,less than oo00metres away. At Barbarcena another friend performed asimilar favour, transferring the shoots to the Oeste de Minas. On one suchtransfer expedition, a flock of sheep entered the same freight car as thecitrus shoots and 'en route the hungry animals voraciously devoured themudas[shoots] until not enough was left to even justify planting them',explained an exasperated Rolfs. Transferring a carload of cattle from theCentral to the Leopoldina required an order prepared by the statepresident, a situation that Rolfs judged 'an utter waste of time for a manin his elevated position'.8The crisis in Europe's economy and the disruption of trade caused bythe First World War further eroded the sector's efficiency and financialstability. The high price and inadequate supply of foreign coal anddifficulties of importing engines and rails pushed lines to the brink ofsolvency and beyond. In 1918 the Rede Sul Mineira lacked funds for itspayroll, fuel bills, and urgently-needed repairs to its main lines. TheSorocabana Railway Company also confronted extreme difficulties inacquiring material, even as its freight traffic increased phenomenally.9Low freight rates on various lines leased by the government to privatecompanies prevented even a recovery of the costs of operation, and theCentral also suffered high deficits, attributed to uneconomial rates. Thetwo state-run railroads in Bahia also reported losses, while only theBritish-owned Ilheus-Conquista line registered a clear profit. The GreatWestern secured government permission to raise rates to reasonablelevels, but only after promising to contract a o,ooo:0ooo contosde reis ($)loan to improve its shops and rolling stock. The Leopoldina, enmeshedin a three-way regulatory pull involving Minas Gerais and Rio de Janeirostates and the federal government, registered a 13,000:000 $ loss for1918.10In July I9I9 the federal inspector of railroads, Joao Pires do Rio,sketched a bleak image of the state of Brazil's railroads, highlighting the8 TS (typescript), P. H. Rolfs, 'Human Waste', n.d., Box 2, Peter Henry Rolfs Archives,

(PHRA), Universityof Florida.9 Duncan, Private and Public Operationof Railways, pp. 70 and 79.10 'Estradas de ferro', RetrospectoComercialdo 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).


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AutosoverRails: HowUS Businessupplantedhe British n Brazil,IgIo-28 555unpleasant fact that federal subsidies sustained most lines. As owner of5% of the nation's rail system, the federal government had paid outdividend guarantees of 17, I14:703$ in 918, 60 % of which went to theSao Paulo-Rio Grande route, a former component of the Brazil Railway.Only three Sao Paulo lines, the San Paulo, Moygana, and the Paulista, aswell as a portion of the Leopoldina's lines, 'live by their own resources'.Refusing to recognise the role of special interest groups in loweringfreight revenue, Pires do Rio conveniently blamed the lack of'economicintensity' in most areas served by the railroads for the system's woes.'Railroads administered by the government leave deficits; the leasingcompanies do not prosper and ask for a revision of their contracts,' whilethe private companies receive no federal aid but 'distribute little or nodividend', he lamented. One solution Pires do Rio proposed was 'aresolute end to the construction of railroads in Brazil'. Such arecommendation found a sympathetic ear at the presidency, whereEpiticio Pessoa reasoned that 'since it is no longer possible [to pay] theguarantee of dividends, I no longer count on rail lines' to providetransportation to those vast regions without railroads.llRailway construction withered before such disincentives. As Fig. Ishows, additions to the system slowed markedly from 1914 onward. From19 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 boomperiod.

1 600 -............. ........ ..... ..........................................................................................................1,400-1,200-1,000- I.

800-600 - ..............400200 ................. ........... ................ ...

1900 1905 1910 1915 1920 1925 1930Fig. I. Rail lines added,kilometresperJear, 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.


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556 RichardDownesThe Brazilian-U.S. roadbuildingcampaignWith railroad expansion problematical, Brazilians began turning to motorvehicle transportation - an alternative with important economic advant-ages. States could opt to construct roads navigable by the primitive, butdurable, vehicles of the time without investing vast sums in rights-of-way,terminals and rolling stock. Nor did roads require the large overheads ofexecutive, administrative, secretarial, and other specialists not directlyrelated to the volume of transportation. Lower capital investmentrequirements obviated the search for foreign financing through bur-densome guarantees and monopolistic concessions, but, like railroadconstruction, road building still demanded 'great numbers of workers', asnoted in Augst 1915 by a Northeastern city's municipal council. Whileboth modes depended upon imported equipment, the lower cost ofmotor vehicles made financing easier. From the states' viewpoint, roadsrepresented an economical way of complementing existing rail systemsand expanding exports to neighbouring states, important because statesreceived significant revenues from state export taxes during the period.l2Brazil's rural-oriented elite soon recognised the advantages offered bythis new mode of transportation. Automobilismo pawned new social clubswhere members could simultaneously engage in uproarious weekendadventures and hardheaded lobbying for an improved transportationsystem. Automobile clubs founded in Rio de Janeiro in 1908 and SaoPaulo in 1910 soon pressured public officials to improve the nation's roadsystem through a series of races and contests.13 Of the 190 founding12 Roy J. Simpson et al., DomesticTransportation:ractices,Theory, ndPolicy(Boston:

i990), pp. 62-3; Enrique Cardenas, La industrializacionmexicana durante la GranDepresion Mexico: 1987), p. I6i: Joseph Weiss, 'The Benefits of Broader Markets Dueto FeederRoads and MarketNews: NortheastBrazil',(PhD Diss., CornellUniversity,1971); Letter, PrefeituraMunicipalde Garanhuns, Pernambuco,to InspectoriadeObrasContraas Seccas,28 August 19 5, M (Mago)-2I5A, BrazilianNationalArchive.There appearsto have been no empirical comparison of the merits of expandingBrazil's railroadsystem versus creatinga nationalhighway system. Even today suchcomparisonsare complex, involving assumptionsabout pick up and delivery costs,length of haul,trafficdensity,energycosts, sourceof capital,and interestandexchangerates. See RichardB. Heflebower,'Characteristics f TransportationModes', in GaryFromme(ed.), TransportnvestmentndEconomic evelopmentWashington, I965), pp.43-6, and RobertT. Brown, 'The "Railroad Decision" in Chile', in ibid.,pp. 264-6.13 Underthe Empireprovinces and propertyowners had been responsiblefor buildingand maintainingroads, and hopes for an adequateroad system often fell victim tovague contracts,skimmingcontractorsand the whims of weather.As one account ofthe Empire's agriculturalexperience summarised,'most highways were mere dirtpaths, poorly designed, that permittedonly the passageof mule teams, ox carts, andhorses during the dry season'. StanleyJ. Stein, Vassouras:A BrazilianCoffeeCounty,18 o-I900 (Cambridge, i957), pp. 94-I10; Eulalia Maria Lahmeyer Lobo, Historiapolztico-administrativaa agriculturabrasileira,I808-1889 (Brasilia, n.d.), p. 64.


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Autos over Rails: How US BusinessSupplanted he British in Bratil, I9IO-28 557members of the Sao Paulo club, those with rural ties proved mostnumerous, with a full 41 % describing themselves as a farmer [lavrador] rrancher [fazendeiro].Prominent founding member Antonio Prado Junior,later described as a 'great automobilistic excursionist', roused publicinterest by motoring throughout Sao Paulo and Parana and organising agreat 'raid' from Sao Paulo to Ribeirao Preto.14By 19IO the federal government began to conceive of the automobileas rail's substitute. A 191o law authorised concessions, similar to thoseoffered to railroad companies, to 'persons or private enterprises' toorganise 'a system of transportation of passengers or cargo' between twostates or within one state. As with railroads, the government retainedcontrol over rates and required transport at half-fare of all militarypersonnel, federal employees, colonists, and immigrants and theirbaggage, as well as all government seeds and plants. Further, it requiredthe concessionaire to construct a telegraph line the length of the roadwhile reserving any payment until completion of all construction.15As could be expected under the Old Republic's political structure, stateand local governments took the first hesitant steps toward promoting useof motor vehicles and highways. A I91 I report prepared for the MinasGerais state government dismissed autos as the dominion of tourists, butnevertheless suggested they could link 'railroad stations with the ruralzones in the region', if studies on a case-by-case basis so warranted. Thatsame year Rio Grande do Sul constructed 74 kilometres of road, includinga ten-kilometre stretch tapping the rich Vale das Antas. By 1913 theCompanhia Mineira de Auto-Viacao Municipal of Uberaba, Minas Gerais,was building local roads and planning links with Rio Verde andMorrinhos in the state of Goiis. Minas state agricultural secretary RaulSoares accepted the concept and created a system of concessions designedto build roads between 'centres of production' and railroad stationsduring his 1914 to 1917 tenure.16 State president Arturo Bernardes termedhighway construction 'an undisguisable duty of the state' because theywould provide 'an easy and cheap outlet for [agricultural] production'.1714 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 deJaneiro, 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 Estradasde 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 1922,832.154/33, RG 59, USNA. Rio Grande do Sul, Mensagem, 1912, p. 26; ErnestoBertarelli, '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


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5 58 RichardDownesLarge-scale federal government support for Brazilian highway con-struction 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 wouldpermit the introduction, geologist Roderic Crandall wrote after threeyears in Brazil, of the 'four-wheeled wagon ... constructed "par excellence"by the Studebaker company in the United States' as well as tractors andthe 'cargo automobile'. He felt that highways would especially increasethe region's cotton production, citing a cotton-rich zone Taperoa, Iookilometres west of Campina Grande, Paraiba, that produced 6,ooo to 8,ooobales of cotton yearly beyond the reach of the Great Western. Crandallapplauded road construction already underway in the region, assertingcosts would quickly be recouped by the lowering of shipping costs. Healso endorsed plans for a I6o-kilometre road tying the Ceara cities ofForteleza and Sao Bernardo das Russas as a major improvement over theexisting steamship service and encouraged the introduction of USwagons, automobiles and tractors to overcome the parched region'stransportation deficiencies.18The federal government responded to such recommendations anddevastation in the drought area with a more active role in roadconstruction by funding specific projects. The 19 5 federal budget openeda 5,ooo: ooo$ credit line for various roads in Bahia and Paraiba. By the endof 191 8 over , 17 5 kilometres of road had been constructed in Pernambucostate, with over 400 kilometres constructed in 1918 alone.19The mid-1917 push to increase agricultural production - a campaign to'make abundance be born from the earth, fortune arise from trade, andpatriotism grow from national unity' - intensified federal support forroad construction.20 Federal and state governments began a cooperative

cent of the Old Republic's I I3,oo kilometres of roads were paved by 930. See ArthurR. 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 theNortheast, where 'a few men of great power hold their positions independent ofjustice' while the majority lay 'reduced to poverty or to living as bandits'. Brazil,Inspectoriade Obras Contraas Seccas,Geografia,eologia,upprimento'agua, ransportese afudagemos estados rientaeso nortedo Brasil:Ceard,Rio Grande o Norte, Parahyba[RodericCrandall],2nd edn. (I923; rpt.: Rio de Janeiro, 1977),pp. 54, 55-8, 75 and129.19 'Obras contra as seccas', RC do'JC', 1917,p. I63; USC-Pernambucoo SS, 26 July1919, 832.1 54/28, USNA. The federal government also had ordered studies of the Rio-Petr6polis road in 191I but did not assist reconstruction until the late i29os. See Decree8571, 22 Feb. 1911, in M-i5I, Ministerio de Viacao e Obras Publicas, BrazilianNational Archive. 20 Quoted in Boletim Agricola, io (1916), p. 483.


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Autos over Rails: How US BusinessSupplanted he British in Brazil, I910-28 559effort to renovate provincial cart roads built during the Empire by'lengthening of curves, decreasing of gradients and providing modernsystems of draining, surfacing and bridges', as a contemporary explained.In June 1917 the federal government authorised a 62 5 :ooo$ (US $156,25 0)expenditure to reconstruct the ioo-kilometre 'Uniao e Industria' highwaylinking Petr6polis and Juiz da Fora, originally constructed in i856. Withcontributions from Petrdpolis and the two states involved, the refurbishedroad was to transport products of the region's 'industrial and agriculturalcentres'. The I918 budget for the Ministerio da Agricultura providedsubsidy of two contosde reis per kilometre for firms that would constructroads suitable for passengers and cargo carried by automobile or trucks.This law required states to make an equal contribution but omitted theonerous conditions that had doomed the 19I0 legislation. In the next twoyears the federal government subsidised building of over 2,300 kilometresof highways throughout Brazil. The vast majority of the subsidisedhighway construction took place in Parana(6I kilometres), where strongdemand for wood, hervamate and cereals 'obliged the government to opennew highways', Minas Gerais (591 kilometres), and Goias, where the onlytwo roads constructed totalled some 511 kilometres.2'Road construction in the Northeast surged on a crest of high cottonprices and political favouritism with the I919 arrival of Epitacio Pessoa tothe presidency, who assured funds for implementation of earlierrecommendations on the need for highways in the Northeast. In AugustI919 the Inspectoria de Obras Contra as Seccas began construction of a275-kilometre road between Natal and Parelhas, Rio Grande do Norte,and in 1920 began building roads to link smaller towns with existinghighways or railheads. Ironically, this programme fell under control ofMiguel Arrojado Lisboa, former head of the Central do Brasil railroad,who supervised construction of over 1,700 kilometres of new roadsthroughout the Northeast. Private enterprise added to the new system, asthe Sociedade Algodoeira do Nordeste Brasileiro purchased a caterpillartractor and repaired 75 kilometres of road to a town deep in Pernambuco'sinterior destined to receive a new cotton mill.2221 Brasil Industrial,vol. 3, no. 29 (1919), p. 49; USACG to SS, I5 June 19I8, 832.154/19,RecordGroup (RG) 59, USNA; Parana,Secretariad'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), p. 391.22 Brazil, Ministerio de Agricultura, Industria e Comercio (MAG), Relatdrio,1918, p. 89;Brazil, Inspectoria Federal de Obras Contra as Seccas, Estradas de rodagem carrofaveisconstruidas o Nordeste Brasileiropela InspectoriaFederal de Obras Contra as Seccasnosannos1919a 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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560 Richard DownesPrimitive by current standards, these dusty trails inspired contemporarypraise. A US automobile salesman reported in 1922 that 'in Ceara, in RioGrande do Norte and in ParaibaI have found some very good roads ... ofgood material and very serviceable'. Paralba'sstate president declared thatthe new highways allowed Parafba to export to other areasof Brazil cottonby-products previously fed to local cattle or 'incinerated to clearwarehouse space'. In retrospect, a historian of the region termed the post-

1920 era in Cearaas the 'cycle of the automobile'. Not only did the autolift commerce from the backs of animals and extend its scope andintensity, it revealed to the backwoodsman 'unknown things, new ideas,new desires, new will, and [these] transfigured him'.23The success of these tenuous efforts generated close Brazilian study ofthe US highway complex. From Ft. Worth agricultural student LandulphoAlves wrote to Minister of Agriculture Simoes Lopes that US state andfederal governments were cooperating to create 'thousands and thousandsof kilometres' of roads. Texas alone had allocated US$2 oo,ooo,ooo toconstruct highways in one year, partially because of the aid of federalmonies, Alves reported.24 Botanist Carlos Moreira offered a highlypositive if idealised image of US roads upon return from a 1918 missionto 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 allthe towns', permitting 'an intense traffic over distances like that from Riode Janeiro to Manaus'. Jos6 Custodio Alves de Lima, former consularagent in the United States and perennial advocate of closer US-Brazilianeconomic ties, had attended a convention of road-building interests inChicago in I9I6. Speaking to Rio de Janeiro's influential engineeringclub, he credited the development of the northern nation to its rapid andinexpensive transportation system while complaining that Braziliansremained 'prisoners of old and worm-eaten European traditions' andfound 'everything difficult'. Highways would be a boon to rural Brazilsince they would improve mail service, let children live at home and stillattend school, allow for more frequent visits between neighbours, andpermit the farmer to 'cease being an object of curiosity in large towns',

Arquivo Ildefonso Simoes Lopes (AISL). Jose F. Brandao Cavalcanti, 'Em prol doalgodao', A Lavoura, vol. 24 (1920), pp. 269-70.23 C. P. J. Lucas, 'The Good Roads Movement in Brazil', Bulletinof the American Chamberof Commerce,S. Paulo, vol. 3, no. 8 (1922), p. 4; Joao Suassuna to Epitacio Pessoa, 30Jan. I925, P-6i, AEP; 'As grandes estradas do Nordeste', O Automovel, 8, no. ioi(I923), pp. 23-5; Raimundo Girao, Histdria economica o 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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Autos over Rails: How US BusinessSupplanted he British in Braiil, 9o10-28 561while selling his goods 'without recourse to middlemen'. To make all thisa reality, Alves de Lima recommended adopting several US road-buildingtechniques.25The most important channel for US influence upon Brazil's roadprogramme, though, was the Good Roads Movement. This agglom-eration of US road-building interests and government officials lobbiedintensely for federal subsidies for road building to remove the burdenfrom state treasuries. The American Road Builders Association and theAmerican Automobile Association, both formed in 1902, and theAmerican Association for Highway Improvement, established in I91o,orchestrated an enduring campaign to promote federal support forhighway improvement. Partly by its efforts, the US Congress passed a lawin July 1916 providing federal assistance for building rural roads overwhich US mail had to be transported. From a base of $5 million for I917,federal appropriations mushroomed to $75 million by 1921.26A similar Good Roads Movement soon took root and grew in Brazil,sustained by a nascent highway lobby substantially strengthened by USties. Both Rio de Janeiro's Autom6vel Club Brasileira and Sao Paulo'sAutom6vel Club sponsored national highway conferences in 1916, 1917and 1919 to pressure public officials to achieve their ends. The Rio deJaneiro conference, in October 1916, featured prominent roles forPresident Braz and his Minister of Transportation and Public Works.Similar gatherings in Sao Paulo in I917 and in Campinas two years latersustained the campaign to convince state officials of the advantages ofhighway versus rail transportation.27The Campinas conference also instituted continuous lobbying forimproving Brazilian highways when prominent politicians and membersof the Autom6vel Club created the AssociaSao Permanente de Estradas deRodagem (the Permanent Highway Association), or APER. At its headstood Washington Luiz Antonio Pereira da Fonseca, first secretary of the25 'Missao Carlos Moreira', Brazil, MAG, Relatdrio, 1918, p. 254; Jose Custodio Alves deLima, Conferenciaobreestradas e rodagem aproveitamentoos sentenciadosSao Paulo,

1917), pp. Io-i and 15-I9.26 [US] Highway ResearchBoard, Ideas & Actions: A Historyof the HighwayResearchBoard, I920-1970 (Washington, n.d.), pp. 2-3; American Highway ImprovementAssociation, The Offcial Good Roads Year Book of the UnitedStates (Washington, I91z),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,PrimeiraExposifaodeautomobilismo,uto-propulsaoestradasde 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 Roadsin 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.


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562 Richard DownesCamara Municipal of Sao Paulo and leader of several other nationalassociations, president, Ant6nio Prado Junior, vice-president, and AtalibaValle, an instructor at the Escola Polytecnica, as secretary. Membershipincluded several engineers and public works officials who did not ownautos. On the other hand, Jose Cardoso de Almeida, a founding memberof the Autom6vel Club, owned an auto and had extensive businessinterests and political experience as an ex-state and federal deputy, formerdirector of the Banco do Brasil, and at the time president of theCompanhia Paulista de Seguros, an insurance company. Julio Prestes, atthe time a lawyer and state deputy, also brought several years ofexperience with the Autom6vel Club to the APER's leadership.28

The APER grew quickly and even initiated its own road renovationprogramme supported by a broad coalition of commercial interests. ByAugust 1921 it boasted 5,707 members and was issuing a variety ofpropaganda items urging highway construction. The association con-tracted the repair of 9.5 kilometres between Atibaia and Bragan?a andanother 20 kilometres between Sao Carlos and Descalvado in Sao Paulo,while gathering endorsements for highways from a wide variety ofindividuals and firms. These included 400 members of Sao Paulo'sAssociacao Commercial and industrial magnate Francisco Matarazzo, whopledged two contosdereisannually and applauded the association's goals ofbuilding roads to complement and compete with the railroads. The mayorof Sao Paulo, the Bolsa da Mercadorias (commodities exchange) and theSociedade Rural Brasileira also promised to support the APER'sobjectives, meanwhile, the APER used its magazine to attack railroads forrequiring 'colossal capital', while highways were 'the most advantageoussolution ... to uncover countless hidden riches and awaken a great love forthe natural beauties that make our land a land [that is] singularlyprivileged '.29Significantly, the association also began to gather strength from USbusiness interests whose goals coincided with those of the APER. The USChamber of Commerce established a branch in Sao Paulo in 1920 andbecame an active supporter of the APER. Its president William T. Leewas well-acquainted with the opportunity a good roads movement inBrazil would provide for US business interests through over a decade ofexperience as a founding member of the Automovel Club, former USconsul in Sao Paulo, and as a Sao Paulo businessman. Other officers of the28 A Estrada de Rodagem, vol. i, no. I (I92I), p. 6; Autom6vel Club de Sao Paulo,Annuario I921, pp. 49-162.29 'A necessidade de estradas', A Estrada de Rodagem,vol. i, no. 4 (1921), p. 21; 'ASociedade 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.


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Autos over Rails: How US BusinessSupplanted he British in BraZil, 191o-28 563chamber 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 in1922, had years before migrated to Brazil from Maryland, and in 1915 hadestablished a successful Ford agency in Sao Paulo. An agent for StandardOil of Brazil served as one of the Chamber's directors, as did a memberof the Byington Company, Sao Paulo agent for General Motors Trucks,Cadillac, Buick, Chevrolet and the Firestone Tire and Rubber Company.30Under Lee's direction the Chamber formed a special committee onroads at its 31 August 1920 meeting and announced in September that ithad 'taken upon itself to campaign for members' for the APER and hoped'to interest American capital in improving roads throughout the state'. ByAugust 1921 every member of the Chamber had also joined the APER,and the Chamber successfully placed at least one US businessman into theheart of the road-building programme. L. Romero Samson arrived inBrazil in 1920 as superintendent of Trading Engineers Incorporated, aChicago industrial consulting firm given permission to operate in Brazilin January I921. Samson, who claimed to have travelled 30,000 kilometreswithin Brazil, soon left the company to use his engineering backgroundto offer advice on Brazil's road-building programme through the APER'smagazine, A Estrada de Rodagem.The APER then contracted him tosupervise construction of several highways near Sao Paulo.31The Chamber's influence in the APER gained considerable strengthwhen 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, hadreturned from World War I service in the Lafayette Escadrille to serve asthe $3,500 per year secretary of the Sao Paulo chamber. He functioned assecretary for both organisations until August 1922, when he became acorrespondent for a US wire service.3230 Bulletinof the American Chamberof Commerce,S. 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,

102.1/139 RG 59, USNA; A EvolufaoAgricola, vol. 6, nos. 69-70 (1915), back cover.Jornaldo CommercioSao Paulo], 2 Nov. 21, 191 5, p. 9, cols. 2, 3; USC-SP to SS, I Sept.1922, p. 2, I64.I2/560, RG 59, USNA. Firestone began to conduct business in its ownright in Brazil in 1923. See Brazil, Ministerio do Trabalho, Industria e Comercio,Sociedadesmercantisautoritadasa functionarno Brasil (I8o8-I946) (Rio de Janeiro, 1947),p. I34.

31 Bulletinof the American Chamberof Commerce,S. Paulo, vol. i, no. I (1920), p. 4; vol. I,no. 12 (192), p. 12; Brazilian-American, vol. 2, no. 50 (Oct. 9, I920), p. I5; L. RomeroSamson, 'O problema da Viagao no Brasil', A Estrada deRodagem,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 SS, 28 Jan. 28, 1920, 632.III7I/I9, RG 59, USNA; Boas Estradas, vol. i,no. 4 (I921), p. 23; Bulletinof the American Chamberof Commerce,S. Paulo, vol. 2, no.

3 (1921), p. I.


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564 RichardDownesThe APER also pressed its case for better roads by hosting officialopenings for new stretches of highway. On I May I921 the APER helpedopen the Sao Paulo-Campinas highway - under construction since 1916- with a 3 27-car caravan headed by a presidential committee and festivitiesin Campinas, all designed to inform 'a great number of persons of certainsocial position and certain above normal intellectual preparation' of thebenefits of such a road. The APER also sponsored a special trip for thepress in April 1922 along the soon-to-be-opened highway between SaoPaulo and Itd. Popular novelist and essayist Monteiro Lobato participatedin the trip representing the Revista do Brasil. In October 1923 theassociation, now renamed the Associacao de Estradas de Rodagem (AER

- the Highway Association), helped to sponsor the third public highwaysconference, a six-day-long gathering of the state's mayors, engineers, andrepresentatives of railroad companies, touring clubs and other interestedparties. Aside from reviewing highway construction carried out since1917, the nearly 5oo participants committed themselves to gatheringinformation on road conditions and automobile ownership statewide.They also witnessed an exhibition of road-building machinery andautomobiles - mainly from the United States - and a demonstrationsponsored by the AER of road-building machinery by representatives ofUS firms.33The close relationship between the AER and US business grew evenstronger when a partner in a road-building firm became the secretary ofthe AER. D. L. Derrom was a Canadian engineer and partner ofL. Romero Samson in the firm Derrom-Samson, S.A. The companybecame 'most instrumental in the introduction and sale of American road-building equipment and maintenance machinery' in Sao Paulo at the sametime that Derrom served as the AER's secretary. Derrom lobbied heavilyfor highway construction through close ties with Washington Luiz, otherkey state and local officials, and 'good roads enthusiasts' nationwide, evenauthoring a comprehensive programme for Brazilian road constructionentitled Caminhos para o Brasil (Roads for Brazil).34In its campaign to improve Brazil's roads, the AER received valuableassistance from Washington Luiz. Not only did he serve as the AER's firstpresident but, as Sao Paulo's state president between 1920 and 1924, he

33 'A estrada de rodagem de S. Pauloa Itd', A Estrada deRodagem,vol. I, no. II (1922),pp. 37-8; USC-SP to SS, 19 Oct. 1923, pp. 2-3, 832.I54/36, RG 59, USNA; 'ThirdSao 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 toFred 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.


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Autos over Rails: How US BusinessSupplanted he British in Brazil, 1910-28 565became a powerful advocate of a modern road network. True to hisproclamation to the Sao Paulo state legislature in 1920 that 'we shouldeverywhere construct highways, all hours of the day, all the days of theyear', he sponsored a 1921 state law outlining a road-building programmefor the state. He also collaborated with the AER in a series of annualautomobile rallies designed to draw attention to the need for betterhighways. The first Prova de Turismo featured a circuitous round tripbetween Sao Paulo and Ribeirao Preto in 1924, and the next year the rallypromoted the Rio-Sao Paulo highway as twelve cars and trucks negotiated'hill and mountain... forest, swamp, and prairie' to call for the highway'scompletion. As Washington Luiz's prominence increased, his aid becameall the more useful. The year he became national president (1926), heallowed the rally to carry his name, and the winner of the ,I 8o-kilometrerace throughout the interior of Sao Paulo carried home the WashingtonLuiz cup.35The Brazilian good roads movement also received a substantial boostfrom the US government's support to the 'Pan American HighwayCommission'. This effort was an offshoot of the US Highway EducationBoard, a lobby of educators interested in engineering, governmenthighway officials, and businessmen associated with sales of automobilesand road-building equipment. Delegates to the Fifth Pan AmericanConference at Santiago de Chile, in i923, suggested forming a Pan-American Highway Commission to observe the US highway system andUS means of financing, administering, constructing and controllingmodern highways. The National Automobile Chamber of Commerce inWashington began arranging funding after the notion was endorsed bythe Commerce Department and the Bureau of Public Roads. By DecemberI923 it had requested $6o,ooo in contributions from members of theHighway Education Board, and soon received several pledges of $i,oooor more from 'prominent bankers and leading automotive and roadmachinery manufacturers of the United States'.36Members of the Pan American Highway Commission's executivecommittee, named the following month, had strong ties to US automotiveinterests. These included Roy D. Chaplin, chairman of the board ofHudson Motor Car Company, Fred I. Kent, a vice-president of Banker'sTrust of New York, W. T. Beaty, president of Austin Manufacturing35 'Notable AutomobileEnduranceTest in SaoPaulo,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, Conferenciasinternacionalesmericanas,I889-I936 (Washington, 1938), pp. 214 and 274-5.


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566 Richard DownesCompany of Chicago, Thomas H. MacDonald, chief of the Bureau ofPublic Roads, F. L. Bishop of the Society for Engineering Education,Harry S. Firestone, the rubber magnate, and B. B. Bachman of the Societyof Automotive Engineers.37The conference they organised allowed for convincing lobbying ofLatin American guests, including two prominent Brazilians: JoaquimTimotheo de Oliveira Penteado, inspector of highways for Sao Paulostate, and Sampaio Correa, founder of Sampaio Correa e Companhia, animporter of US coal and, especially, cement. The conference's sponsorspaid for round-trip steamship and rail transportation between Washingtonand their city of origin in Brazil as well as all travelling expenses fromassembly of the group in Washington on June 2. Once in Washington,they joined 35 other delegates representing 17 countries for a visit to theBureau of Public Roads and an expenses-paid excursion through variousstates focusing on highway construction and automobile manufacturing.Throughout the trip they met with highway engineers, analysts, andmanufacturers of automobiles and road building equipment. DelegatePenteado accepted invitations to visit the Barber Asphalt Company, theBaldwin Locomotive Works, the Ingersoll-Rand Company and GeneralElectric while in New York.38

The Brazilian delegates returned convinced of the benefits of integratingUS equipment and techniques into Brazil's road-building effort. Penteadoreported that Latin American delegates 'played the role of students' while'the role of teachers' belonged to the North Americans because theircountry had 'in a few years accomplished what took the Europeanscenturies to carry out'. He viewed the formal presentations anddiscussions during meetings, meals and while travelling in trains andautomobiles as 'teachings ... of great utility for the other countries'. Heurged adoption of the US example by equipping the state Inspectoria deEstradas de Rodagem with all the tractors and road machines necessaryfor an extensive road construction programme.39Undoubtedly Penteado also promoted formation of the ConfederacaoBrasileira de Educacao Rodoviaria (The Brazilian Highway Education37 Brazil, Ministerio da ViaSao e Obras Publicas, PrimeiroCongresso anamericanoeEstradasdeRodagem:Relatorioda DelegaFao oBrasil (N.P., 1928), pp. 4-5 ; Pyke Johnsonto Francis White, Latin American Div., USDS, 8 Dec. 1923, 5I5.4CI/-, RG 59, USNA;Sao Paulo, Secretariada Agricultura,Commercioe Obras Publicas, Commissaoan-Americanade 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.38 SS to U.S. Embassy, Rio de Janeiro (USE-RJ), I5 March 1924, 5i5.4Ci/23d, RG 59,USNA; Brazil, Primeiro CongressoPanamericano,pp. 6-i ; Sao Paulo, CommisaoPanamericana,. 47.39 Sao Paulo, CommissaoPanamericana,pp. 12, 85 and 90.


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Autos over Rails: How US BusinessSupplanted he British in Brazil, 1910-28 567Board). Like similar organisations founded in Argentina, Chile, Cuba,Honduras and Peru following the 1924 tour of the United States, theBrazilian board sought to 'develop and increase the construction of roadsin all Brazil'. Also prominent in creating the organisation were TheodoroA. Ramos, a professor at the Escola Polytecnica and A. F. de LimaCampos, an engineer with considerable road-building experience with thedrought service. Representatives from groups interested in buildinghighways attended the board's first meeting in Sao Paulo on 20 May I925:the Autom6vel Club, the Sociedade Nacional de Agricultura (NationalAgricultural Society), the Ministerio da Viacao (Ministry of Trans-portation), the Associacao Commercial de Rio de Janeiro, and the AER.The board's establishment proved important more in symbolic than insubstantive terms, however. Almost two years after its initial meeting, thegroup still lacked a formal charter. Nevertheless, the broad interest in thegroup's purpose symbolised the impact of US actions designed to createsupport from commerce, agriculture and government for the road-building movement.40The US automotive and highway lobby's campaign to encourageBrazilian adoption of US techniques and machinery took another stepforward with the First Pan-American Highway Conference. Thisconference, held in Buenos Aires in May 1925, reinforced messagesimparted at the previous year's meeting in the United States. The USdelegation hoped for approval of a resolution urging a 'permanentorganisation' in each nation to carry on 'the work initiated at the time ofthe visit of their delegates to this country last year'. The 33-member USdelegation represented auto industry and road-building interests underthe leadership of a General Motors vice president serving concurrently ashead of the National Automobile Chamber of Commerce. Delegatesincluded Thomas H. MacDonald, chief of the Bureau of Public Roads, astrong supporter of the previous year's meeting, and several state highwayofficials. Stopping in Rio de Janeiro before the conference, MacDonaldurged Brazil to provide strong federal aid for highway construction, anact that 'would greatly stimulate and assist development of adequatehighways in Brazil'.41At least with respect to Brazil, the US delegation accomplished its goalsin Buenos Aires. Brazil's delegation returned convinced of the inadequacy40 J. WalterDrake [AssistantSecretaryof Commerce]to SS, 14 Jan. 1925, 5I5.4Di/I,RG 59, USNA; 'Reunioes semanaes da SRB', Revista da SRB, vol. 6, no. 6i (1925), p.278; 'BrazilianFederation or HighwayEducation', BPAU, vol. 6i, PrimeiroCongressoPanamericano,p. 25.41 Drake to SS, 25 Jan. I925, 5I5.4Di/i, RG 59, USNA; Quoted in Brazil, PrimeiroCongressoanamericano,. ii.


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568 RichardDownesof the 'old idea, still in vogue in Brazil, that highways were a merecomplement to the railroad'. It endorsed the conference's recom-mendation that 'all the American nations create a central body todirect ... the reconstruction, maintenance, and financing of highways', andBrazilian delegate Francisco Vieira Boulitreau played a direct role inimplementing the concept in Brazil. In June 1926 he recommended thatthe Ministry of Agriculture propose a comprehensive highway law, toinclude provisions for a Departamento Nacional de Estradas de Rodagem(National Highway Department) with broad authority to plan, finance anddirect Brazil's highway construction.42Aside from lobbying in international fora for automotive interests, USgovernment officials frequently reported on good roads movements inBrazil's various regions. From Pernambuco, US consul C. R. Cameroninformed the State Department and the US Bureau of Foreign andDomestic 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 theprincipal automobile dealers in the region, 'the most desirable personswith whom to communicate regarding the good roads movement', and ayear later reported formation of the Associacao de Estradas de Rodagem,headed by Pernambuco auto enthusiast Carlos de Lima Cavalcanti. Thegroup launched a combined automobile show and goods roads congressin January I926 that failed to gather a large crowd, however. The consulattributed this to the fact that 'purchasers for automobiles are to be foundalmost exclusively among the upper, educated classes'.43The fervour for automobilismoproved stronger in Rio Grande do Sul. APorto Alegre dealership forwarded one per cent of revenue from its salesof Chevrolets to the AER, suggesting a method of financing the AER thatmay have been more widespread. The assistant trade commissioner, a USofficial, reported creation of a good roads association in Rio Grande doSul in 1926. The Associadao Rio Grandense das Estradas de Rodagemformed around a nucleus of automobile dealers in Porto Alegre, andsimilar associations were 'in the course of formation' in Pelotas, RioGrande and Sao Angelo.4442 Brazil, PrimeiroCongressoPanamericano,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-Pernambucoto 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 50Chevrolets. GeneralMotors, vol. i, no. 6 (i926), p. 19; Richard C. Long 'Highways inRio Grande do Sul', quoted in Brazilian Business,vol. 7, no. 6 (1927), p. 9.


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Autos overRails: How US BusinessSupplanted he British in Brazil, I910-28 569US businesses played a more direct role in supporting lobbying forbetter highways in Rio de Janeiro state. There the Automovel Club doBrasil, an outgrowth of a civic club founded in Petr6polis in 895, becamethe major private lobby for a road-building programme. Like its SaoPaulo name sake, this group espoused 'the development of automobilismoand the construction of new highways' and associated goals. Although theclub sponsored the second and third national highway congresses, itsmajor accomplishment was instigating construction of the Rio de Janeiroto Petr6polis highway. Under the leadership of businessman CarlosGuinle, 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 first-class road to a traditional resort area, but it also linked up to thePetr6polis-Juiz da Fora road and demonstrated highway-buildingtechniques and materials while allowing contributors to advertise theirproducts. The American Rolling Mill company, for example, donated allculverts needed for the highway. The club soon found voluntarycontributions insufficient, though, and suggested that the federal and Riode Janeiro state governments also support the road's completion. In lateI925 the federal government opened a special subsidy for 500:ooo$ forthat purpose, and on 13 May 1926, the road opened with great fanfare.45The arrival of US automobile companiesLobbying by US businesses for good roads in Brazil complemented agrowing acceptance of US vehicles, paving the way for US automotivemanufacturers to establish themselves firmly in Brazil during the OldRepublic's final decade. Before 1917 Brazilians displayed only moderateinterest in US automobiles as French, German and British cars accountedfor nearly 75 % of Brazil's auto imports in 1913. With the war the trendshifted, as Brazilians imported more US-made cars in 1917 than in thethree previous years combined and imported almost exclusively US-madeautos. This change stemmed partially from the difficulty of trading withEurope under siege, but it also represented Brazilian affinity for a low-costyet durable car. As magazine correspondent Lillian Elliott recorded, 'withthe introduction of the inexpensive car of North American build, thefazendeirois acquiring a car for country use'. Even British cotton expertArno S. Pearse depended upon a Ford: when departing from Natal on oneof his treks inland, Pearse carried with him on the train 'two Ford motor45 The Autom6vel Club was called the Autom6vel Club Brasileiro until I919. Autom6velClub do Brasil, Annuariode 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 deRodagem,vol. 3, no. 28 (1923), p. 40.


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570 Richard Downescars, the only kind which can be used in country of this nature'. In theNortheast Ford trucks were converted into buses, and one sertanejo inAcari, Rio Grande do Norte, even linked the engine of his Ford truck toa 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 itis strong, deserves to be considered one of the greatest benefactors of thebacklands of Goyaz.'46

Impressed by the wartime demand for US-made autos, Ford'sexecutives soon resolved to open an assembly plant in Brazil. In April1917 they asked the Brazilian consul in Buffalo to furnish them with lawson road conditions and maintenance to aid the decision, and on 24 Aprili919, approved a capital expenditure of $25,000 to establish an assemblyplant in Sao Paulo. Two company officials experienced in selling Fords inArgentina 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 toconstruct its own building on Rua Solon, a few metres from whereW. T. Wright had established his successful agency during the war.47

Output at the plant reflected both the increasing popularity of thevehicles and the soundness of the venture. Production shot up from 2,447in 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 58automobiles owned in 1921 by residents of Sorocabana, Sao Paulo state'sthird largest city, three were Fiats, two were Overlands, one each was aHupmobile, Benz, Saurer, Buick, Chevrolet, Adler and Scat. The46 Brazil, Directoria de Estatistica Commercial, CommercioExterior do Brasil: Importafao,

Exportafao i9i3-i918 (Rio de Janeiro, 192I), vol. I, p. 120; Lillian Elwyn Elliott, BratilTodayand TomorrowNew York, 19 7), pp. 127-8. Diplomats, however, preferred moreexpensive 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 topurchase a Phiama auto for da Gama. Embassy of Brazil, Washington (EBW) toMinisterio de Rela96es Exteriores (MRE), 4 March 1919, M-232, 2, I , ArquivoHist6rico 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, AmericanBusinessAbroad: Ford on Six Continents Detroit, I964), pp. 93-4. Ford's plant was notthe first auto assembly plant in Brazil. In 1904 Luiz and Fortunato Grassi organised acompany that in 1907 assembled the first Fiat to operate in Brazil. The same companyin the I920S sold both Ford and General Motors truck chasses for their products. SeeJos6 Almeida, A implantafdoda industriaautomobilisticano Brasil (Rio de Janeiro, 1972),pp. 4-5, 14; Benedicto Heloiz Nascimento, Formafao da industria automobilisticabrasileira:pol'tica dedesenvolvimentondustrialemuma economiadependenteSao Paulo, 1976),p. 14. 'A expansao do Ford no Brasil', Automobilismo, vol. i, no. I (1926), p. 20.


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Autos overRails: How US BusinessSupplanted he British in Brazil, I910-28 57Iremaining 43 were Fords. A similar survey of Pirassununga revealed that,of the 21 vehicles in the town, one was a Maxwell, two others wereChevrolets, and 18 were Fords. A later survey in Bahia counted 256 Fordsout of a total of 671 autos. None of the other makes - Overland, Willys-Knight, Buick, Studebaker, Chevrolet, Dodge, or Essex - had more than52 of their make registered.48Brazil's growing affinity for motor vehicles soon attracted a secondmajor US manufacturer to the Brazilian market. In 1921 the federalgovernment ordered 5o five-ton trucks with trailersfrom General Motors,and the following year James D. Mooney, vice-president of GeneralMotors Export Corporation, visited Brazil 'to study conditions, especiallythe motor car industry, with the idea of extending the business of mycorporation'. Significantly, the trip represented the 'first executive of thatcorporation who has ever visited a foreign country'. Mooney left 'amazedat the wonderful possibilities of the motor car industry in this country'and convinced that 'Brazil will become one of the greatest automobilecountries in the world'. After further study of the Brazilian market, theGeneral Motors Export Corporation organised a Brazilian subsidiary in1925 with an investment of $270,000. In a rented warehouse on AvenidaPresidente Wilson in Sao Paulo, the company started assembling 25 unitsper day. By the end of I925, it had put together 5,597 vehicles.49Both General Motors and Ford became an integral part of the post-warexplosion in motor vehicle ownership in Brazil. A partial surveyconducted in Sao Paulo state in I929 portrayed the dimensions of a trueinvasion of automobiles and trucks. Total vehicles in the state hadincreased from 2,661 in 1917 to 59,213 by 1928 - 38,787 autos and 20,426trucks. In the city of Sao Paulo auto ownership had risen from 1,757 to12,366 during this period. Santos and Campinas each had over I,ooo autosin 1928, roughly ten times what they had had in 1917. Overall vehicleownership proved widely dispersed geographically, although Sao Paulowith 2 % of the state's population in 1920, had 3 % of all autos and 24 %of total trucks in the state.50In Minas Gerais the number of vehicles grew48 Wilkins and Hill, AmericanBusiness,p. I46 and 148; A EstradadeRodagem,ol. i, no.

4 (I921), p. II; vol. I, no. I (1921), p. 14.49 'Um grande acontecimento automobilistico', O Automobilismo,vol. 2, no. 8 (1927), pp.I2-16; TS, General Motors do Brasil, Public Relations Department, 'Curiosidadeshist6ricas', I972, p. 4; General Motors do Brasil, Public Relations Department,'General Motors do Brasil - 57 annos de emprendimento industrial', I982, p. i, bothin Arquivo, General Motors do Brasil, Sao Caetano do Sul, Sao Paulo [hereafterreferred to as AGMB.]

50 Brazil, Instituto Brasileiro de Geografia e Estatistica, Annuario estatistico1939/1940 (Riode Janeiro, n.d.), vol. v, p. 1,304; 'Quadro do crescimento...', O Automobilismo, vol.4, no. 42 (1929), pp. 3i-6. The ratio of automobiles to total population remained muchlower than in the United States, where every state except Alabama had a higher ratio


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572 Richard Downesfrom 2,309 in 1921 to over I5,oo0 in 1927. In Bahia the US consulreported that 'the desire to own such machines is becoming verywidespread', with prospective buyers joining clubs that promised thechance to win an automobile, either a 'low-priced American car of a well-known make', or a 'higher priced automobile, also American'. By 1926over 900 kilometres of road in the state were being used by 'more thana hundred automobiles and trucks'.51

The vehicles' utility obviously attracted buyers, but carefully stagedactions of the auto companies themselves boosted their popularity. Fordsent 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'scountryside. The group appeared before a reported Ioo,ooo persons in 25cities, demonstrating the vehicles' capabilities by day while entertainingevening audiences with films depicting the Ford factories and the buildingof good roads. Even though one town's residents panicked at the noisyarrival of the caravan, mistaking it for 'an invading army', Fordconsidered the journey 'a complete success'. Not to be outdone, GeneralMotors sent out its 'Chevrolet circus', an extravaganza featuring a circustouring the states of Rio de Janeiro, Minas Gerais and Sao Paulo,transported entirely by Chevrolet vehicles. The circus always held twoshows: at 6 p.m. for individuals invited personally by the local Chevroletdealer, and another later for the general public. General Motors consideredthe concept 'the best means of publicity developed in Brazil to thisdate' 52The companies also generated support for automobilismoand drewpotential customers by sponsoring public automobile expositions andtrips to the United States to visit elements of the automotive industry.Exhibitions of US autos accompanied the highway conventions, but werealso organised as independent events 'creating extraordinary interest andprospects ... for sales of automobiles and agricultural machinery'. In 1926

of cars to population. Even with Alabama's ratio, Sao Paulo would have had 400,000autos, instead of less than 39,000. See Automobilismo, vol. I, no. i (i926), p. 26.51 Minas Gerais, Estradas de Rodagem,p. 4; USC-Bahia to SS, 8 Oct. 1924, 832.513/-, RG59, USNA; Bahia, Mensagem,1926, p. 245.52 'A caravana Ford-Fordson...', O Automobilismo, vol. i, no. 3 (1926), pp. 36-7; USC-SP to SS, 30 Sept. I926, 832.I54/73, RG 59, USNA; 'O grande circo Chevrolet',GeneralMotors Brasileira,vol. 5, no. 52 (1930), pp. 8-9.


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Autos over Rails: How US BusinessSupplanted he British in Brazil, 1o10-28 573the newly-arrived General Motors subsidiary conducted an exhibition tohighlight models (other than the Chevrolet) that were relatively unknownin Brazil, and to gather an extensive list of prospective buyers. Beyondholding the event on Rua Consolacao 'only two blocks from the AvenidaPaulista, Sao Paulo's 'Fifth Avenue', the company underwrote a massiveadvertising campaign. Promotional posters decorated Sao Paulo'sstreetcars, aircraft dropped leaflets from the sky, and 20,000 engravedinvitations 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 'acarefully selected list of 50o of Brazil's most distinguished citizens...government officials... and members of socially prominent and wealthyfamilies of Sao Paulo'. On opening day Ioo cars paraded for five hoursthrough Sao Paulo's streets.53Such theatre attracted a large audience, including many prospectivebuyers. The company estimated that some oo00,000 people shuffled in tosee I9 models of Cadillacs, Oaklands, Buicks and Oldsmobiles clusteredaround a raised platform where 'a gray Cadillac sport Phaeton turnedslowly, its headlights piercing through a bath of colored lights, the twinbeams ... searching out every corner of the great building'. To add to theattraction and gather names of potential customers, the companyconducted a charity lottery with an Oldsmobile Sport Roadster as theprize. Entrants paid i,ooo$ to guess the total kilometres the car wouldtravel while operating for Ioo hours on a stationary treadmill. Afteropening of the entries by a committee made up of the editor of the OEstado de Sao Paulo, the vice president of the AER, and the city fiscal, theticket stubs were 'sorted and turned over to our dealers for their prospectfiles'. The company also registered 71 sales during the nine-day affair andjudged that the event 'sold the General Motors organisation' and madeit 'doubtful today [that] there is a better known merchandisingorganisation in Brazil'.54On a more individual basis, the companies arranged visits to the UnitedStates for outstanding salesmen or prominent members of society as partof their campaign to gain acceptance in Brazil. V. E. Lucca, a formeremployee of Armour do Brasil and a Cadillac and Oakland salesman fortwo and a half years, was awarded a US trip in 1927 for his 'superb58 B. F. O'Toole [LatinAmericanDiv., USBFDC]to N. Y. DistrictOffice,USBFDC, io

Oct. 1925, Box 2232, RG I51, USNA; TS, General Motors do Brasil, untitledscrapbook, n.d., pt. i, p. i, AGMB.54 GeneralMotors, scrapbook,pp. 4, 6; TS, 'Office Bulletin(26 Nov. 1926)', scrapbook,AGMB. Ford retaineda dominant market share, however, in 1930: 54.9% versusGeneral Motor's I7.1%. Wilkins and Hill, AmericanBusiness, . 202.21 LAS 24


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574 Richard Downesservices' as General Motors' sales manager.55The road-building firm ofDerrom-Samson arranged invitations for prominent Brazilians to visit theUnited States through the National Automobile Chamber of Commerce inWashington. In early 1926 the firm suggested that the Pan American[Highway] Confederation invite Washington Luiz to visit the UnitedStates. The suggestion arrived at the desk of Fred I. Kent of Banker'sTrust, a member of the Highway Education Board and of the PanAmerican Highway Commission. Kent in turn passed the idea on to PykeJohnson of the National Automobile Chamber of Commerce whotransmitted the proposal to the State Department.56Although Washington Luiz never travelled to the United States, hispolitical associate and automobile advocate Antonio Prado did agree to anextended visit as the guest of the US automotive and highway lobby. Withan official charter from Washington Luiz to 'study city administration andgood roads', Prado and his son, daughter, and son-in-law accepted a two-week tour of the US automobile and road industries. Representatives ofthe National Automobile Chamber of Commerce, the Packard Motor CarCompany, Ford and several other interests met the Prado party atdockside in New York. The entourage visited officialdom in Washingtonand then departed for Maryland, Pennsylvania and Detroit for tours ofautomobile factories, the General Motors proving ground, varioushighways 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 sitesin upstate New York.57Throughout the journey the elderly Prado displayed a keen interest inthe subject matter. He requested reflecting road signs and studies on theutility of electric traffic signals and reported that he was impressed with'the great superiority' of the US highway system over that of Europe. Hecooperated with his hosts by participating in motion pictures destined foruse with 'the standard highway films which are being sent to Brazil for usein the "Good Roads Campaign" in that country'. Prior to departurePrado purchased three US-made autos worth a total of $ 5,ooo.58His visit symbolised the Brazilian elite's newly-found preference for USindustrial products over the European variety. A member of the Brazilianentrepreneurial elite who had travelled to Europe dozens of times turnedto the United States because of the attractions offered by this new leading55 'Homeagem ao snr. V. E. Lucca', 0 Automobilismo, vol. 2, no. 13 (1927), p. 20.56 Howard T. Oliver to Fred I. Kent, 5 Feb. 1926, 033.32II/210, RG 59, USNA.57 USE-RJ to SS, i July i926, 033.3211/211, RG 59, USNA; Robert Kaiser, USDS,Memorandum, n.d., encl. to Thomas A. MacDonald, Bureau of Public Roads, to R. E.Olds, Assist. SS, 24 Aug. 1926, 033.3211/213, RG 59, USNA.58 Robert Kaiser, Memorandum, pp. 2-3, 6.


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Autos over Rails: How US BusinessSupplanted he British in BraZil, 9g10-28 575sector of the industrial revolution. The analogies he drew between theUnited States and Brazil, while generally unfavourable to Brazil, made itclear that he felt the US economic model held great relevance for Brazil'sfuture. His thoughts were soon echoed by another member of Brazil'seconomic elite, the president of the Companhia Commercio e Navega(ao.Travelling to the United States to attend the 1927 version of the PanAmerican Commercial Conference, Count Pereira Carneiro delighted hishosts by noting that not only was 'the American automobile... makingmore Brazilian roads desirable', it was also 'driving out the European'.True to his word, Pereira purchased two US cars to 'replace my European' 59ones.59British-US business rivalryThe great contrast between the US and British approaches to Brazil'stransportation needs in the I92os dramatises the shift away fromEuropean economic influences toward those of the United States. Britishand US economic interests in Brazil had a long history of competition ifnot conflict. In the nineteenth century US traders and investors had beenunprepared to challenge the dominant British position. With the turn ofthe century, however, US and German goods became more competitivewithin the Brazilian market, and US and German banks encroached intofinancial circles traditionally dominated by Britain. Increasingly cordialtrade agreements between the United States and Brazil and a mutualunderstanding to support each other's actions in respective spheres ofinfluence solidified into what one analyst termed the 'unwritten alliance'.60Brazil's wartime cooperation with the United States only increasedBritish uneasiness about its economic position in Brazil. BritishAmbassador Sir Arthur Peel warned that Brazil was falling 'practicallyunder US control' in early I9I7 and concocted a coffee-purchase plan torestore British influence. Although his effort fell victim to higher wartimepriorities, British economic interests continued to block US advanceswherever possible. British monopoly of commercial cable facilities alertedBritish businesses to possible moves by US firms, and some US officialssuspected the British of using wartime measures to stifle non-Britishcompetition. US Ambassador Morgan reported in careful detail the59 New York Times (NYT), 19 April 1927, p. 9, col. I.60 Ant6nio F. P. Almeida de Wright, Desafio americanoa preponderancia ritanica 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:TheAmazons andthe Coast (New York, 879), p. 492; Graham, Britain and theOnset,pp.298-3 18; E. Bradford Burns, The UnwrittenAlliance: Rio BrancoandBrazilian-AmericanRelations(New York, 1968).21-2


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576 Richard DownesBritish stopping of the German merchant ship Santa Catarinashortly afterthe war's outbreak. The ship carried machinery for Continental Products'new meat packing plant and several other US businesses in Brazil. Afterbeing detained by the British cruiser Glasgow,a 'fire originating throughspontaneous combustion of her bunker coal' destroyed the ship's cargo.While the Ambassador judged the destruction unintentional, StateDepartment officials did later question British motives for protesting USsales to Brazilian firms on the trade restriction ('black') list, hinting thatsuch moves were merely a disguised effort to weaken the US commercialpresence.6US officials also carefully tracked British wartime commercial activitiesin Brazil. The US naval attache cautioned in late 1917 that commercialrivalry was imperiling the war effort, and in April I918 a US intelligenceagent warned that the United States was 'fast losing ground', threatenedby 'the loss of all this good trade, either to England - who is franklygoing after it- or to Germany who still has many friends here'.62 Thevisit of a British commercial delegation the following month caused USAmbassador Morgan to caution that 'our commercial and politicalinterests were threatened and that the policy of peaceful penetrations inthe southern Hemisphere... might find new barriersplaced in its way'. AsUPI correspondent Roy Howard reported cryptically: there was an'undisguised animosity British American commercial interests...untempered unmodified by common purpose French battlefield'.63The competition only intensified after the war. The US consul in PortoAlegre charged in June 1919 that the British firm Wilson, Sons andCompany, plying freight between Rio Grande and Porto Alegre,discriminated against US firms. US products ordered by W. R. Graceoften lay in a warehouse unsold because Wilson delayed their deliverywhile their own goods were being sold. All this was just more evidence,the consul remarked, that 'British distributors are quite alarmed at ourprogress in the market, and they never miss an opportunity to criticize ourgoods and methods'.64 The United States scored an important gain inpossible commercial benefits at British expense when Brazil accepted a US61 Emily S. Rosenberg, 'Anglo-American Economic Rivalry in Brazil During World WarI', Diplomatic History, vol. 2, no. 2 (i978), p. 133; John I. Merrill [Central and SouthAmerican Telegraph Company] to EBW, 2 April I9I7, M-234, 2, 7, AHI; ManoelCoelho Rodrigues to MRE, i6 July I919, M-234, 2, 12, AHI; USE-RJ to SS, 21 Oct.I914, 300.II5/1343, RG 59, USNA; USE-RJ to SS, 23 Oct. I916 and Memorandum,

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, Telegramto 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.


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Autos overRails: How US BusinessSupplanted he British in BraZil, 1910-28 577naval mission in 1922. Since Brazil intended to improve its navy, theUS mission portended possible major naval contracts for US shipyardsor construction firms. Although Brazil did explore construction of anarsenal, the naval mission had little commercial impact - despite Britishfears and US aspirations.65The looming American economic challenge soon provoked an officialresponse from London. US imports dominated the Brazilian marketsthrough 1921 and, although British imports regained prominence in 1922and 1923, Brazilians began to turn more often to US financiers for loans.In I923 the British government sent out a high-level financial commissionheaded by Edwin Montagu, Parliamentary secretary to the Chancellor ofthe Exchequer, Sir Charles Addis, a financial expert and 'eminent banker',and Lord Lovat, director of the Sudan Plantation Syndicate and a cottonauthority. Seeking the 'opportunities for and conditions necessary tofurther cooperation between British and Brazilian capital', the missionembarked upon two months of meetings with Brazilian governmentministers and department heads, with extensive tours of Minas Gerais andSao Paulo. The commission's head hoped to nuture 'old-established andfriendly Anglo-Brazilian commercial relations' and stressed the willing-ness of British investors to 'provide further capital if assured that suchcapital would be welcome'.66The commission's recommendations pointed out that capital should bewelcomed, especially in the transportation sector. The commission feltstrongly that 'when fresh capital is attracted to the country it will be mostusefully applied to transportation development'. Along with a moreorderly budget process and continuing 'prudent government', improvingtransportation was an absolute necessity for Brazil. All aspects of Brazil'sdevelopment-'the production of crops, the mining of materials, thedistribution 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 whichcannot be overemphasized', the report asserted.6765 Joseph Smith,'AmericanDiplomacyand the Naval Mission to Brazil',Inter-AmericanEconomicAffairs, vol. 35, no. I (198 I), pp. 85-6; Stanley E. Hilton, 'The Armed Forcesand Industrialists in Brazil: the Drive for Military Autonomy (I889-I954)', HispanicAmerican Historical Review,vol. 62 (1982), p. 640.66 USC-London, Memorandum, 28 Nov. 1923, 033.4I32/13, RG 59, USNA; The Times,

28 Nov. 1923; Brazil, Directoria de EstatisticaCommercial,Commercio xterior doBrasil: mportafao,xportafao,Movimento aritimo919-1923 (Rio de Janeiro,I928), pp.23-5; TheTimes,22 March 1924, p. 22, col. I; 2 Feb. 1924, p. 12, col. 3.67 The Times, 22 March 1924, p. 22, col. I; British Financial Commission, 'ReportSubmitted to His Excellency the President of the United States of Brazil...', 23 Feb.1924, p. 27, 033.4132/40, RG 59, USNA.


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578 Richard DownesThe commission devised several measures to ensure that 'capitalinvested in railways will be able to earn a fair profit'. It urged the Ministerof Transportation to reform the administration of railroads in Brazil bycreating a Railway Tribunal. This independent body was to be free ofanyone linked to any Brazilian railroads but to include 'men of expertrailway knowledge recruited from Great Britain, from which so much

capital had been forthcoming for Brazilian railways'. The Tribunal wouldbe empowered to approve changes in contracts and carry out an extensivestudy of Brazil's railway needs. The commission advised the Braziliangovernment 'not [to] own or operate railways', while suggesting sale ofthe Central and other government-owned lines to 'Brazilian companies orBrazilian individuals ... perhaps with the assistance of foreign capital'.New owners would discontinue 'uneconomical rates' that were 'unfair toprivately owned competing railways' and causing industries to locatealong the subsidised government lines. The commissioners also pointedlydiscouraged stimulating other sectors of the Brazilian economy, to avoid'new capital enterprises for the present' and to conduct 'a more maturestudy' before deciding about starting a steel industry.68Brazilians reacted unenthusiastically to the commission's prescriptions.US Ambassador Morgan, restraining his pleasure, noted that the groupreceived no cooperation from the Brazilian Minister of Foreign Affairs.He criticised chief commissioner Montagu for giving his farewell addresscompletely 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, andthe Jornal do Brasil dismissed them as representing 'very naturally aviewpoint more nearly related to British interests then adapted to ourneeds'. When Brazilian politicians heard that a British legislator had askedwhether Brazil had adopted any of the proposals, they denounced thequestion as 'unqualified impertinence' and an 'affront to nationaldignity'.69British frustration in this effort mirrored their decisive inability tocompete with US automotive imports in Brazil. The British Chamber ofCommerce, concerned that the United States had 'gained a big lead duringand since the war in the supply of motor vehicles to Brazil', ordered astudy of the makes of 6,ooo cars licensed in Rio de Janeiro. This revealedthat 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.I924, 033.4132/39, RG 59, USNA and end., Jornal do Brasil, II Oct. I924; 0 Paiz, 9Oct. 1924.


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Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28 579forced to share the streets with nearly 800 Fords and impressive numbersof Studebakers, Hudsons, Chevrolets, and Dodges and various Germanand French models. The Chamber blamed the disappointing showing onthe shortsightedness of British auto makers and upon the instalmentcredit extended to buyers of US cars, a system which allowed smallinvestors to pool resources to finance taxis and taxidrivers to purchasetheir vehicles from their receipts. Another observer credited the morefrequent sailings of ships from the United States to Brazil than fromBritain, claiming that 'Americans control nearly 90 percent' of theautomobile trade partly because frequent ships relieved local dealers 'fromthe burden of carrying a large stock of machines on hand'.70

US predominance over Britain and other European competitorsstimulated continual expansion of US auto assembly activities. Ford'ssuccess with its Sao Paulo assembly plant prompted opening in I925 ofsimilar 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 1928Ford had 700 agencies and over 2,000 authorised garages throughoutBrazil to sell and repair its products, and the Sao Paulo line produced2,000 machines per month. General Motors, meanwhile, assembled nearly34,000 vehicles at its Sao Paulo plant by 1927 and began planning anexpanded plant in Sao Caetano do Sul, about eight miles from Sao Paulo.The company boasted a nationwide network of 400 sales outletsemploying I,500 persons, and Brazil became the third largest importer ofUS trucks in I925, after Australia and Italy. By 1928, US autos constituted99 % of all Brazilian auto imports.71The constantly expanding auto industry attracted many other US firmsto Brazil to supply parts, and financing and maintenance for the fledglingindustry. The Goodyear Tire and Rubber Company, United StatesRubber Company, and General Tire and Rubber Company all openedbusinesses in Brazil in the I920S to satisfy the burgeoning demand forautomobile tyres. The Overseas Motor Export Corporation began to offer70 'Roads and Cars in Brazil', MonthlyBulletinof the British Chamberof Commercen Brazil,vol. 5, no. 5I (1923), pp. 90 and 96; 'Why we need American ships', Bulletin of theAmerican Chamberof Commerce,S. Paulo, vol. 4, no. 5 (1923), p. 5. In 1922 'vehicles forhire' was the most important category of automobiles registered in Rio de Janeiro. Of4,645 autos, more than 44% (2,047) were for hire while 40% (1,847) were 'privatecars'. 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 ThroughI945', I959, AGMB; 'A filial da GMB na Bahia', GeneralMotorsBrasileira,vol. 3, no.26 (1928), p. 7; 0 Automobilismo,vol. i, no. 5 (I926), p. 45; USBFDC, The AutomotiveMarket in Brazil (Washington, 1930), p. 9; USBFDC, Commerce Yearbook 190o(Washington, I930), vol. ii, pp. 16I--2.


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580 Richard Downesequipment for painting cars and other products to repair General Motorsvehicles. The Johns-Mansville Company opened a branch in 1923 andbegan to supply asphalt products, clutches and lining for brakes. Agentsfor US firms associated with road-building began to criss-cross Brazil,offering their wares, often with a letter of introduction from the USambassador. 72

A comparison of indicators of growth between automotive-related andthe rail-related sectors highlights the dynamic nature of the former. Whilethere appea

Ferrocarril Auto Brazil

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