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Autos over Rails: How US Business


Supplanted the British in Brazil, 1910–28

Richard Downes

Journal of Latin American Studies / Volume 24 / Issue 03 / October 1992, pp 551 - 583
DOI: 10.1017/S0022216X00024275, Published online: 05 February 2009

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How to cite this article:


Richard Downes (1992). Autos over Rails: How US Business Supplanted the
British in Brazil, 1910–28. Journal of Latin American Studies, 24, pp 551-583
doi:10.1017/S0022216X00024275

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Autos over Rails: How US Business
Supplanted the British in Brazil,
1910—2 8

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
government. This process illustrates how the Brazilians' interpretation of
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
1901 onwards and reached very high levels immediately prior to World
War I; more than 11,000 industrial firms producing over 67% of the
economy's 1920 industrial output came into being between 1900 and 1920.
1
'The "leading sector" is that segment of the economy "moving ahead mote 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, 1978), pp. 104-5, 18 j and 208-9. F° r Spencer's image as a
proponent of industrialism, see Richard Graham, Britain and the Onset of Modernisation
in Brazil, iSjo-1914 (Cambridge, 1968), pp. 236-41.

Richard Downes is Director of Communications, North-South Center, University of


Miami.

]. Let. Amer. Stud. 24, JJ 1-583 Printed in Great Britain 5 51

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5 5 2. Richard Dowries

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) rose from a mere $3 million in 1914 to over $62 million by
1917.2
Growth in the 1920s 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-1920*5, Sao Paulo state was experiencing
severe transportation shortages that epitomised the deficiencies of the
existing transportation system. 'The great economic expansion of Sao
Paulo state since 1911' had taxed railroads beyond their capacity: whereas
the railroads had been required to transport only 350,000 sacks of produce
in 1911, by 1924 approximately ten million sacks awaited movement.
Movement of cattle by rail had begun only in 1912 and reached 700,000
head by 1915. By 1924, 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 Economy: Growth and Development, 3rd edn. (New York,
1989), pp. 25, 28, 30 and 32. E. Richard Downes, 'The Seeds of Influence: Brazil's
"Essentially Agricultural" Old Republic and the United States, 1910-1930', (PhD
Diss., Univ. of Texas at Austin, 1986), p. 214.
3
Baer, The Brazilian Economy, p. 27; Kevista da Sociedade Rural Brasileira (SRB), vol. 4
(1924), pp. 113-4.
4
John C. Branner, Cotton in the Empire of Brazil: The Antiquity, Methods and Extent of its
Cultivation; Together with Statistics of Exportation and Home Consumption (Washington,
1885), pp. 25-6; Joao Dutra, 0 sertao e 0 centro (Rio de Janeiro, 1938), p. 163. See also
Julian S. Duncan, Public and Private Operation of Railways in Brazil (New York, 1932).

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Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28 553

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 1880s and early 1890s, 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 2,100 kilometres of railway, 13 % of the country's rail system, and
in 1901 the government expropriated twelve foreign railway companies.
Between 1901 and 1914 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 1907. But the November 1914 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 61 % of Brazil's railroads in
1914.6
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. 30. Railroad construction recovered between 1905
and 1913 precisely when the milreis regained some strength against foreign currency.
For exchange rates see Thomas H. Holloway, Immigrants on the Land: Coffee and Society
in Sao Paulo, rSU-ipj4 (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'', Journal of
Latin American Studies, vol. 2 (1979), pp. 336-7.
7
Duncan, Public and Private Operation of Railways, pp. 206-7; R'° Grande do Sul,
Mensagem, p. 50.

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5 54 Richard Dowries

prevented efficient shipment of goods in any direction other than between


the interior and the nearest port. The US director of Vic,osa'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 ioo 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 10,000:000 contos de rets ($)
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 1919 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,
(PHRA), University of Florida.
9
Duncan, Private and Public Operation of Railways, pp. 70 and 79.
10
'Estradas de ferro', Retrospecto Comercial do Jornal do Comercio (RC do "JC"), 1919,
pp. 127 and 129; John D. Wirth, Minas Gerais in the Brazilian Federation, 1889-1937
(Stanford, 1977), p. 179; USC (US Consul)-Bahia to SS (US Secretary of State), 2 Aug.
1921, 832.77/63, RG 59, US National Archives (USNA).

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Autos over Kails: How US Business Supplanted the British in Brazil, 1910—28 5 5 5

unpleasant fact that federal subsidies sustained most lines. As owner of


5 5 % of the nation's rail system, the federal government had paid out
dividend guarantees of 17,114:703$ in 1918, 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
Epitacio 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.11
Railway construction withered before such disincentives. As Fig. 1
shows, additions to the system slowed markedly from 1914 onward. From
1915 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

1,400

1,200

1,000

800

600

400

200

1900 1905 1910 1915 1920 1925 1930


Fig. 1. Rail lines added, kilometres per year, }-year moving averages, ryoo-jo. Source: Brazil,
Inspectoria Federal de Estradas de Ferro, Estatistica tpj</ (Araguary, Minas Gerais, 1936),
p. 45.
11
' O problema ferroviario', RC do "JC", 1919, pp. 130 and 132.

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5 j6 Richard Dowries

The Bra^ilian-U.S. road building campaign


With railroad expansion problematical, Brazilians began turning to motor
vehicle transportation — an alternative with important economic advant-
ages. 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 bur-
densome 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.12
Brazil's rural-oriented elite soon recognised the advantages offered by
this new mode of transportation. Automobilismo spawned 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
Roy J. Simpson et al., Domestic Transportation: Practices, Theory, and Policy (Boston:
1990), pp. 62-3; Enrique Cardenas, La industrialisation mexicana durante la Gran
Depresion (Mexico: 1987), p. 161: Joseph Weiss, 'The Benefits of Broader Markets Due
to Feeder Roads and Market News: Northeast Brazil', (PhD Diss., Cornell University,
1971); Letter, Prefeitura Municipal de Garanhuns, Pernambuco, to Inspectoria de
Obras Contra as Seccas, 28 August 1915, M (Maco)-2i;A, Brazilian National Archive.
There appears to have been no empirical comparison of the merits of expanding
Brazil's railroad system versus creating a national highway system. Even today such
comparisons are complex, involving assumptions about pick up and delivery costs,
length of haul, traffic density, energy costs, source of capital, and interest and exchange
rates. See Richard B. Heflebower, ' Characteristics of Transportation Modes', in Gary
Fromme (ed.), Transport Investment and Economic Development (Washington, 1965), pp.
45-6, and Robert T. Brown, 'The "Railroad Decision" in Chile', in ibid., pp. 264-6.
13
Under the Empire provinces and property owners had been responsible for building
and maintaining roads, and hopes for an adequate road system often fell victim to
vague contracts, skimming contractors and the whims of weather. As one account of
the Empire's agricultural experience summarised, 'most highways were mere dirt
paths, poorly designed, that permitted only the passage of mule teams, ox carts, and
horses during the dry season'. Stanley J. Stein, Vassouras: A Brazilian Coffee County,
iSjo-1900 (Cambridge, 1957), pp. 94-110; Eulalia Maria Lahmeyer Lobo, Historia
politico-administrativa da agricultura brasileira, 1808-188) (Brasilia, n.d.), p. 64.

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Autos over Kails: How US Business Supplanted the British in Brazil, 1910-28 557

members of the Sao Paulo club, those with rural ties proved most
numerous, with a full 41 % describing themselves as a farmer [lavrador] or
rancher \fa%endeiro\. 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 1910 the federal government began to conceive of the automobile
as rail's substitute. A 1910 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 1911 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 Goias. 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 191410 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 Automovel Club de S. Paulo,
Annuario 1921 (N.P., n.d.), pp. 48-7;.
15
Decree 8,324, 27 Oct. 1910, and 'Regulamento...', Cokcfao das Leis de 1910 (Rio de
Janeiro, 1915), vol. 11, no. 2, p. 1,151.
16
TS, 'Estradas de Rodagem', p. 2, 21 June 1911, 1911.06.21, Arquivo Raul Soares
(ARS); Auto-Propulsao, col. i, no. 7 (1915), p. 9; Minas Gerais, Inspectoria de Estradas
de Rodagem, As estradas de rodagem no estado... (Rio de Janeiro, 1929), p. vii.
17
U.S. Consul, Sao Paulo (USC-SP) to U.S. Secretary of State (SS), jo June 1922,
832.154/33, RG 59, USNA. Rio Grande do Sul, Mensagem, 1912, p. 26; Ernesto
Bertarelli, 'As vias comuns de communicacao nos estados agricolas', 0 Progresso, vol.
i, no. 10 (1914), p. 4; Brasii Industrial, vol. 2, no. 15 (1915), pp. 14-15. Only one per

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5j8 Richard Dowries

Large-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 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 160-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 1915 federal budget opened
a 5,000:000$ credit line for various roads in Bahia and Paraiba. By the end
of 1918 over 1,175 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 113,000 kilometres of roads were paved by 1930. See Arthur
R. Sheerwood, 'Brazilian Federal Highways and the Growth of Selected Urban Areas',
(PhD Diss., New York University, 1967), 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,
Inspectoria de Obras Contra as Seccas, Geografia, geologia, supprimento d'agua, transportes
e afudagem nos estados orient/us do norte do Brasil: Ceara, Rio Grande do Norte, Parabyba
[Roderic Crandall], 2nd edn. (1923; rpt.: Rio de Janeiro, 1977), pp. 54, 55-8, 75 and
129.
19
'Obras contra as seccas', RC do 'JC, 1917, p. 163; USC-Pernambuco to SS, 26 July
1919, 832.154/28, USNA. The federal government also had ordered studies of the Rio-
Petropolis road in 1911 but did not assist reconstruction until the late 1920s. See Decree
8571, 22 Feb. 1911, in M-151, Ministerio de Viacao e Obras Piiblicas, Brazilian
20
National Archive. Quoted in Boletim Agricola, 10 (1916), p. 483.

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A u t o s over Kails: How US Business Supplanted the British in Brazil, 1910-28 559
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 625 :ooo$ (US$156,250)
expenditure to reconstruct the 100-kilometre 'Uniao e Industria' highway
linking Petropolis and Juiz da Fora, originally constructed in 1856. With
contributions from Petropolis and the two states involved, the refurbished
road was to transport products of the region's 'industrial and agricultural
centres'. The 1918 budget for the Ministerio da Agricultura provided
subsidy of two contos de 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 1910 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 (611 kilometres), where strong
demand for wood, herva mate and cereals 'obliged the government to open
new highways', Minas Gerais (591 kilometres), and Goias, where the only
two roads constructed totalled some 511 kilometres.21
Road construction in the Northeast surged on a crest of high cotton
prices and political favouritism with the 1919 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
1919 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 (1919), p. 49; USACG to SS, 15 June 1918, 832.154/19,
Record Group (RG) 59, USNA; Parana, Secretaria d'Estado dos Negocios, Fazenda,
Agricultura e Obras Piiblicas, Kelatorio, ifiy (Curitiba, 1919), vol. n, pp. 548-9;
Romario Martins, 'As esttadas de rodagem no Parana', Brasil Agrkola, vol. 2 (1917),
pp. 262—4; Parana, Mensagem, 1917, p. 32. 'Estradas de rodagem', Boletim [MAG], vol.
I, no. 3 (1925), p. 391.
22
Brazil, Ministerio de Agricultura, Industria e Comercio (MAG), Kelatorio, 1918, p. 89;
Brazil, Inspectoria Federal de Obras Contra as Seccas, Estradas de rodagem e carrocaveis
construidas no Nordeste Brasileiro pela Inspectoria Federal de Obras Contra as Seccas nos annos
ipip a 192; (Rio de Janeiro, 1927), p. 232; Brazil, Primeiro Congresso Panamericano,
Annex 5; 'Mappa demonstrativa das estradas de rodagem ', 10 Aug. 1925, 10.08.25,

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560 Richard Dowries

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'. Paraiba's state president declared that
the new highways allowed Paraiba 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 post-
1920 era in Ceara as the 'cycle of the automobile'. Not only did the auto
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$200,000,000 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'. Jose 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 1916. 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 lldefonso Simoes Lopes (A1SL). Jose F. Brandao Cavalcanti, 'Em prol do
algodao', A Lavottra, vol. 24 (1920), pp. 269-70.
23
C. P. J. L u c a s , ' T h e G o o d Roads M o v e m e n t in Brazil', Bulletin of the American Chamber
of Commerce, S. Paulo, vol. }, no. 8 (1922), p . 4 ; J o a o Suassuna t o Epitacio Pessoa, 30
Jan. 1925, P-61, AEP; 'As grandes estradas do Nordeste", 0 Automo'vel, 8, no. 101
(1923), pp. 23-5; Raimundo Girao, Histo'ria economics do Ceara (Ceara, 1947), p. 433.
24
Landulpho Alves de Almeida to lldefonso Simoes Lopes, 2; July 1917, pp. 12, 16, 18,
14.12.1j, AISL.

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Autos over Rails: How US Business Supplanted the British in Brazil, if 10-28 561

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 agglom-
eration 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 1910,
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 1917,
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 Automdvel Club Brasileira and Sao Paulo's
Automdvel 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 1917 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 Automdvel Club created the Associacao 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
'Missao Carlos Moreira', Brazil, MAG, Relato'rio, 1918, p. 254; Jose Custodio Alves de
Lima, Conferemia sobre tstradas de rodagem e aproveitamento dos sentemiados (Sao Paulo,
1917), pp. 10-11 and 15-19.
20
[US] Highway Research Board, Ideas & Actions: A History of the Highway Research
Board, 1920-1970 (Washington, n.d.), pp. 2-3; American Highway Improvement
Association, The Official Good Roads Year book of the United States (Washington, 1912),
pp. 8-2j; Gladys Gregory, 'The Development of Good Roads in the United States',
(M.A. thesis, Univ. of Texas at Austin, 1926), pp. 13-18.
27
Automdvel Club do Brasil, Primeira Exposicao de automobilismo, auto-propulsao e estradas
de rodagem (Rio de Janeiro, 192;), p. 5; Jornal do Commercio [Sao Paulo], 1 June 1917,
p. 4, col. 3; U.S. Bureau of Foreign and Domestic Commerce (USBFDC), Motor Roads
in Latin America (Washington, 1925), pp. 129-30; Decree 1707, 13 Sept. 1917,
'Estradas de rodagem', Boletim [Bahia], vol. 1, no. 2 (1917), p. 70; vol. 1, no. 4 (1917),
p. 72.

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562 Richard Downes

Camara Municipal of Sao Paulo and leader of several other national


associations, president, Antonio 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 Automovel 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 Automovel 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 con-
tracted 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
Associa^ao Commercial and industrial magnate Francisco Matarazzo, who
pledged two contos de reis annually and applauded the association's goals of
building roads to complement and compete with the railroads. The mayor
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, v o l . 1, n o . 1 (1921)1 p . 6 ; A u t o m o v e l C l u b de Sao P a u l o ,
Annuario 1921, p p . 4 9 - 1 6 2 .
29
' A necessidade de e s t r a d a s ' , A Estrada de Rodagem, v o l . 1, n o . 4 (1921), p . 2 1 ; ' A
Sociedade Rurale Brasileira collabora com a A.P.E.R.', Annaes da SRB, vol. 1 (1920),
p. 6; C. A. Monteiro de Barros, 'Pela solidariedade brasileira', A Estrada de Rodagem,
vol. 1, no. 1 (1921), p. 12.

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Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28 563

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 1921. 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
Bulletin of the American Chamber of Commerce, S. Paulo, v o l . i , n o . 1 (1920), p . 1; v o l . 2,
no. ; (1922), p. 36; U.S. Consul, Sao Paulo (USC-SP) to SS, 8 Sept. 1915, pp. 1, 4, 16,
102.1/139 RG 59, USNA; A Evolucao Agrkola, vol. 6, nos. 69-70 (1915), back cover.
Jornaldo Commercio [Sao Paulo], 21 Nov. 21, 1915, p. 9, cols. 2 , 3 ; USC-SP to SS, 1 Sept.
1922, p. 2, 164.12/560, RG 59, USNA. Firestone began to conduct business in its own
right in Brazil in 1923. See Brazil, Ministerio do Trabalho, Industria e Comercio,
Sociedades mercantis autori^adas a functionar no Brasil {1808-11)46) ( R i o d e J a n e i r o , 1947),
p . 134.
31
Bulletin of the American Chamber of Commerce, S. Paulo, v o l . 1, n o . 1 (1920), p . 4 ; v o l . i,
n o . 12 (1921), p . 12; Brazilian—American, v o l . 2, n o . 50 ( O c t . 9, 1920), p . 15 ; L . R o m e r o
S a m s o n , ' O p r o b l e m a da V i a c a o n o B r a s i l ' , A Estrada de Rodagem, v o l . 1, n o . 3 (1921),
p p . 1 3 - 1 4 ; v o l . 1, n o . 4 (1921), p . 2 3 ; See also a d v e r t i s e m e n t , A Estrada de Rodagem,
vol. 1, n o . 2 (1921), inside c o v e r .
32
U S C - S P t o S S , zi J a n . 28, 1920, 6 3 2 . 1 1 1 7 1 / 1 9 , R G 59, U S N A ; Boas Estradas, v o l . 1,
no. 4 (1921), p. 23; Bulletin of the American Chamber of Commerce, S. Paulo, vol. 2, no.
3 (1921), p. 1.

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5 64 Richard Downes

The APER also pressed its case for better roads by hosting official
openings for new stretches of highway. On 1 May 1921 the APER helped
open the Sao Paulo-Campinas highway - under construction since 1916
- with a 327-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 Itu. Popular novelist and essayist Monteiro Lobato participated
in the trip representing the Revista do Brasil. In October 1923 the
association, now renamed the Associagao 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 500 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 road-
building 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 0 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 I t u ' , A Estrada de Rodagem, vol. i, no. 11 (1922),
pp. 3 7 - 8 ; USC-SP to SS, 19 Oct. 1923, pp. 2 - 3 , 832.154/36, R G 59, U S N A ; ' T h i r d
Sao Paulo Highway Conference', Bulletin of the Pan American Union (BPAU), vol.
58 (1924), PP. 182-3.
34
USC-SP to SS, 14 Oct. 1926, 832.154/74, RG 59, USNA; Howard T. Oliver to
Fred I. Kent, 5 Feb. 1926, 033.3211/210 (attachment), RG 59, USNA; USC-SP to SS,
10 Oct. 1927, 832.154/86, RG 59, USNA.

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Autos over Rails: How US Business Supplanted the British in Brazil, if 10-28 565

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 1,180-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 1923, suggested forming a Pan-
American 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
1923 it had requested $60,000 in contributions from members of the
Highway Education Board, and soon received several pledges of $1,000
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
' N o t a b l e Automobile Endurance Test in Sao Paulo, Brazil', BPAU, vol. 60 (1926), pp.
I , I 10 a n d 1,117.
36
Pyke Johnson to Francis White, Latin American Div., US Department of State
(USDS), 8 Dec. 1923,515.4C1/-, RG 59, USNA; Walter C. John to SS, 13 March 1924,
515.4C1/27, RG 59, USNA. Dotation Carnegie para la Paz Internacional, Conferencias
internacionales amerkanas, 1889-1936 (Washington, 1938), pp. 214 and 274-5.

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5 66 Richard Dowries

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 z. 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 Viac^o e O b r a s Publicas, Primeiro Congresso Panamericano de
Estradas de Rodagem: Reiato'rio da Delegacao do Brasil (N.P., 1928), pp. 4 - ; ; Pyke Johnson
to Francis White, Latin American Div., USDS, 8 Dec. 1923, 51J.4C1/-, RG 59, USNA;
Sao Paulo, Secretaria da Agricultura, Commercio e Obras Piiblicas, Commissao Pan-
Americana de Estradas de Rodagem Reunida nos Estados Unidos... (Sao Paulo, 1925), p. 6;
E. S. Gregg, Memo, Transportation Div., Commerce Department, 18 Jan. 1924,
; I ; . 4 C I / 5 , RG 59, USNA.
38
SS to U.S. Embassy, Rio de Janeiro (USE-RJ), 15 March 1924, j i j ^ C i ^ d , RG 59,
U S N A ; Brazil, Primeiro Congresso Panamericano, p p . 6 - 1 1 ; S a o Paulo, Commisao
Panamericana, p . 4 7 .
39
Sao Paulo, Commissao Panamericana, pp. 12, 8 ; and 90.

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Autos over Kails: How US Business Supplanted the 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 1925:
the Automovel Club, the Sociedade Nacional de Agricultura (National
Agricultural Society), the Ministerio da Via$ao (Ministry of Trans-
portation), 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 road-
building 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. Walter Drake [Assistant Secretary of Commerce] to SS, 14 Jan. 1925, 515.4D1 / 1 ,
R G 59, U S N A ; 'Reunioes semanaes da S R B ' , Kevista da SRB, vol. 6, no. 61 (1925), p.
278; 'Brazilian Federation for Highway Education', BPAU, vol. 61, Primeiro Congresso
Panamericano, p. 25.
41
Drake to SS, 25 Jan. 1925, 515.4D1/1, RG 59, USNA; Quoted in Brazil, Primeiro
Congresso Panamericano, p. ii.

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568 Richard Dowries

of the 'old idea, still in vogue in Brazil, that highways were a mere
complement to the railroad'. It endorsed the conference's recom-
mendation 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 1926 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 Associacao 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

42
Brazil, Primeiro Congresso Panamerkano, p . ii; ' E s t r a d a s de R o d a g e m ' , Boletim [ M A G ] ,
15, 2, no. 4 ( 1 9 2 7 ) , p . 429-
43
USC-Pernambuco to SS, 23 A u g . 1923, 832.154/154, R G 59, U S N A ; USC-Pernambuco
to SS, 11 Feb. 1926, 832.154/67, R G 59, U S N A .
44
The check for 4:872$ represented one percent of receipts from the sale of 50
Chevrolets. General Motors, vol. i, no. 6 (1926), p. 19; Richard C. Long 'Highways in
Rio Grande do Sul', quoted in Brazilian Business, vol. 7, no. 6 (1927), p. 9.

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Autos over Kails: How US Business Supplanted the British in Brazil, 1910-28 569

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 Petropolis in 1895, 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 Petropolis highway. Under the leadership of businessman Carlos
Guinle, the club initiated the project through its own resources and by
1923 had arranged for a 16-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 the
Petropolis—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
1925 the federal government opened a special subsidy for 500:000$ 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
fa^endeiro 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 Automovel Club was called the Automovel Club Brasileiro until 1919. Automovel
Club do Brasil, Annuario de 1929 (Rio de Janeiro, n.d.), pp. 13 and 16; 'Rio-Petropolis',
0 Automovel, vol. 9, no. 102 (1923), p. 5; 'A Estrada Rio-Petropolis', A Estrada de
Rodagem, vol. 3, no. 28 (1923), p. 40.

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5 70 Richard Dowries

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
1919, approved a capital expenditure of $25,000 to establish an assembly
plant in Sao Paulo. Two company officials experienced in selling Fords in
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 1925-6.
Fords became the dominant vehicles in many Brazilian towns. Of the 5 8
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
Hupmobile, Benz, Saurer, Buick, Chevrolet, Adler and Scat. The
46
Brazil, Directoria de Estati'stica Commercial, Commercio Exterior do Brasi/: Importacao,
Exportacao ipij-iy/X (Rio de Janeiro, 1921), vol. t, p. 120; Lillian Elwyn Elliott, Brazil
Today and Tomorrow (New York, 1917), pp. 127-8. Diplomats, however, preferred more
expensive models. In a confidential telegram to the Brazilian Charge in Washington,
Foreign Minister da Gama ordered a draw upon a London account of 56,219.23 to
purchase a Phiama auto for da Gama. Embassy of Brazil, Washington (EBW) to
Ministerio de Relacoes Exteriores (MRE), 4 March 1919, M-232, 2, u , Arquivo
Historico d o Itamarati (AHI). Arno S. Pearse, Brazilian Cotton (Manchester, 1923), p.
141; Inspectoria Federal de Obras Contra as Seccas, Segundo Distrito, T S ,
'Transcripcao de trechos de Relatorios ', P - 6 i , Arquivo Epitacio Pessoa ( A E P ) ;
Camillo Torrend, 'Excursao a Goyaz', Boletim [MAG], vol. 15, no. 6 (1926), p. 770.
47
Noticias Ford, vol. 8, n o . 2 (1979), p . 3 ; Mira Wilkins a n d Frank E . Hill, American
Business Abroad: Ford on Six Continents (Detroit, 1964), p p . 9 3 - 4 . F o r d ' s plant was n o t
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 1920s sold both Ford and General Motors truck chasses for their products. See
Jose Almeida, A implantacao da industria automobilistica no Brasil (Rio de Janeiro, 1972),
pp. 4-5, 14; Benedicto Heloiz Nascimento, Formacao da industria automobilistica
brasileira: politico de desenvolvimento industrial em uma economia dependente (Sao Paulo, 1976),
p. 14. 'A expansao do Ford no Brasil', Automobilisma, vol. 1, no. 1 (1926), p. 20.

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Autos over Kails: How US Business Supplanted the British in Brazil, 1910—28 571

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, Willys-
Knight, 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 50 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 1925, 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 1929 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 t o
12,366 during this period. Santos and Campinas each had over 1,000 autos
in 1928, roughly ten times what they had had in 1917. Overall vehicle
ownership proved widely dispersed geographically, although Sao Paulo
with 12 % of the state's population in 1920, had 31 % of all autos and 24 %
of total trucks in the state.50 In Minas Gerais the number of vehicles grew
48
Wilkins and Hill, American Business, pp. 146 and 148; A Estrada de Rodagem, vol. 1, no.
4 (1921), p. 11; vol. 1, no. 1 (1921), p. 14.
48
' Um grande acontecimento automobili'stico', 0 Automobilismo, vol. 2, no. 8 (1927), pp.
12-16; TS, General Motors do Brasil, Public Relations Department, 'Curiosidades
histdricas', 1972, p. 4; General Motors do Brasil, Public Relations Department,
'General Motors do Brasil — 57 annos de emprendimento industrial', 1982, p. 1, both
in Arquivo, General Motors do Brasil, Sao Caetano do Sul, Sao Paulo [hereafter
referred to as AGMB.]
60
Brazil, Instituto Brasileiro de Geografia e Estatistica, Annuario estatistico 1939/1940 (Rio
de Janeiro, n.d.), vol. v, p. 1,304; 'Quadro do crescimento...', 0 Automobilismo, vol.
4, no. 42 (1929), pp. 31-6. The ratio of automobiles to total population remained much
lower than in the United States, where every state except Alabama had a higher ratio

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5 72 Richard Dowries

from 2,309 in 1921 to over 15,000 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 well-
known 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 16 cars,
trucks and tractors for a 1,400 kilometre, 45-day jaunt through the state's
countryside. The group appeared before a reported 100,000 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 automobilismo and 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. 1, no. t (1926), p. 26.
51
Minas Gerais, Estradas de Rodagem, p. 4 ; USC-Bahia to SS, 8 Oct. 1924, 832.513/-, R G
59, U S N A ; Bahia, Mensagem, 1926, p. 245.
52
'A caravana Ford-Fordson...', 0 Automobilismo, vol. 1, no. 3 (1926), pp. 36-7; USC-
SP to SS, 30 Sept. 1926, 832.154/73, RG 59, USNA; ' O grande circo Chevrolet',
General Motors Brasileira, vol. 5, no. 52 (1930), pp. 8-9.

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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 500 of Brazil's most distinguished citizens...
government officials... and members of socially prominent and wealthy
families of Sao Paulo'. On opening day 100 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 100,000 people shuffled in to
see 19 models of Cadillars, 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 100 hours on a stationary treadmill. After
opening of the entries by a committee made up of the editor of the 0
Estado de Sao Paulo, the vice president of the AER, and the cityfiscal,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

63
B. F. O ' T o o l e [Latin American Div., U S B F D C ] to N . Y. District Office, U S B F D C , 10
Oct. 1925, Box 2232, R G 151, U S N A ; T S , General Motors d o Brasil, untitled
scrapbook, n.d., pt. 1, p . i, A G M B .
64
General Motors, scrapbook, p p . 4, 6; T S , 'Office Bulletin (26 N o v . 1926)', scrapbook,
A G M B . Ford retained a dominant market share, however, in 1950: 5 4 . 9 % versus
General M o t o r ' s 17.1 %. Wilkins and Hill, American Business, p. 202.

21 LAS 24

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574 Richard Dowries

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 two-
week 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 $i5,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
65
'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, 033.3211/210, R G 59, USNA.
67
U S E - R J t o S S , 1 J u l y 1926, 0 3 3 . 3 2 1 1 / 2 1 1 , R G 59, U S N A ; R o b e r t K a i s e r , U S D S ,
Memorandum, n.d., encl. to Thomas A. MacDonald, Bureau of Public Roads, to R. E.
Olds, Assist. SS, 24 Aug. 1926, 033.3211/213, R G 59, USNA.
68
Robert Kaiser, Memorandum, pp. 2-3, 6.

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Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28 575

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
ones'. 59

British-US business rivalry


The great contrast between the US and British approaches to Brazil's
transportation needs in the 1920s 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 1917 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

68
New York Times (NYT), 19 April 1927, p. 9, col. 1.
60
Antonio F. P. Almeida de Wright, Desafio americano a preponderancia britanica no Brasil,
1808-18jo (Sao Paulo, 1978); Norman Strauss, 'Rise of American Growth in Brazil:
Decade of the 1870V, Americas, vol. 32 (1976), pp. 437-44. Herbert H. Smith, Brazil:
The Amazons and the Coast (New York, 1879), p. 492; Graham, Britain and the Onset, pp.
298-318; E. Bradford Burns, The Unwritten Alliance: Rio Branco and Brazilian-American
Relations (New York, 1968).

21-2

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576 Richard Dowries

British stopping of the German merchant ship Santa Catarina shortly 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.61
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 1918 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 it — or 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
61
Emily S. Rosenberg, 'Anglo-American Economic Rivalry in Brazil During World War
I', Diplomatic History, vol. 2, no. 2 (1978), p. 133; John I. Merrill [Central and South
American Telegraph Company] to EBW, 2 April 1917, M-234, 2, 7, AHI; Manoel
Coelho Rodrigues to MRE, 16 July 1919, M-234, 2, 12, AHI; USE-RJ to SS, 21 Oct.
1914, 300.115/134}, RG 59, USNA; USE-RJ to SS, 23 Oct. 1916 and Memorandum,
Solicitor, USDS, 16 Nov. 1916, both in RG 59, 332.114846, USNA.
62
TS, 'General Situation in Brazil', 9 Dec. 1917, ONI Files, WA-7, Brazil, USNA;
Confidential encl. to USE-RJ to SS, 18 April 1918, 632.1116/1, RG 59, USNA.
63
USE-RJ to SS, 16 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 1919, 800.8830/205, RG 59, USNA.

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

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 1923 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, afinancialexpert 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 willing-
ness 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
06
Joseph Smith, 'American Diplomacy and the Naval Mission to Brazil', Inter-American
Economic Affairs, vol. 35, no. 1 (1981), pp. 85-6; Stanley E. Hilton, 'The Armed Forces
and Industrialists in Brazil: the Drive for Military Autonomy (1889-1954)', Hispanic
American Historical Review, vol. 62 (1982), p. 640.
66
USC-London, Memorandum, 28 Nov. 1923, 033.4132/13, RG 59, USNA; The Times,
28 Nov. 1923; Brazil, Directoria de Estatistica Commercial, Commercio Exterior do
Brasil: Importacao, Exportacao, Movimento Maritimo 19/9-1923 (Rio de Janeiro, 1928), pp.
23-5; The Times, 22 March 1924, p. 22, col. 1; 2 Feb. 1924, p. 12, col. 3.
67
The Times, 22 March 1924, p. 22, col. 1; British Financial Commission, 'Report
Submitted 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 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.88
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 Jornai 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 6,000 cars licensed in Rio de Janeiro. This revealed
that there were no British makes with more than 50 copies in the city,

68
British Financial Commission, ' R e p o r t ' , pp. 27-8 a n d 33.
69
USE-RJ to SS, 5 March 1924, 033.4132/30, RG 59, USNA; USE-RJ to SS, 11 Oct.
1924, 033.4132/39, RG 59, USNA and end., Jornai do Brasil, 11 Oct. 1924; 0 Pai%, 9
Oct. 1924.

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Autos over Kails: How US Business Supplanted the British in Brazil, if 10-28 579

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 1925 of
similar but smaller operations in Rio de Janeiro, Porto Alegre and Recife,
and plans for a larger factory in the Mooca 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
2,000 machines per month. General Motors, meanwhile, assembled nearly
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 1,500 persons, and Brazil became the third largest importer of
US trucks in 1925, 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 1920s to satisfy the burgeoning demand for
automobile tyres. The Overseas Motor Export Corporation began to offer
70
'Roads and Cars in Brazil', Monthly Bulletin of the British Chamber of Commerce in Brazil,
vol. 5, no. ; 1 (1923), pp. 90 and 96; 'Why we need American ships', Bulletin of the
American Chamber of Commerce, S. Paulo, vol. 4, no. 5 (1923), p. 5. In 1922 'vehicles for
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.
" 'Na Rua Solon...', Noticias Ford, vol. 8, no. 2 (1979), p. 4; ' O commercio de
automoveis em Sao Paulo', 0 Automobilismo, vol. 3, no. 24 (1928), pp. 27-9; TS,
General Motors do Brasil, Production Control, ' Units Produced Cumulative Through
194;', 1959, AGMB; 'A filial da GMB na Bahia', General Motors Brasileira, vol. 3, no.
26 (1928), p. 7; 0 Automobilismo, vol. 1, no. 5 (1926), p. 45; USBFDC, The Automotive
Market in Brazil (Washington, 1930), p. 9; USBFDC, Commerce Yearbook ipjo
(Washington, 1930), vol. n, pp. 161-2.

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5 8o Richard Downes

equipment for painting cars and other products to repair General Motors
vehicles. The Johns-Mansville Company opened a branch in 1923 and
began to supply asphalt products, clutches and lining for brakes. Agents
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 13.5 times faster than
the increase in railroad rolling stock during the same period (see Fig. z).73
Such figures also mirror trends in the relative vitality of US and British

4.52
3j?4
- 3.
/

1.8S''
1.26 1.23
„--•' 1.12 r )6

1 1

1923 1924 1925 1926 1927


Fig. 2. Comparative rates of growth, Brazilian rail and auto sectors, rp2j-/. Sources: USBFDC,
The Automotive Market in Brazil (Washington, 1930), p. 9; USBFDC, Commerce Yearbook
'93° (Washington, 1930), vol. 11, p. 76. growth of rolling stock, imports of
autos and trucks, 1923 = 1.0.

72
' O commercio de automoveis em Sao Paulo', 0 Automobilismo, vol. 2, no. 24 (1928),
p. 34; 'Caravana Ford-Fordson', 0 Automobilismo, vol. 1, no. 3 (1926), pp. 36-7; Brazil,
Ministerio do Trabalho, Industria e Commercio, Sociedades mercantis autori^adas a
funcionar no Brasil (1808-1946) (Rio de Janeiro, 1947), pp. 131-42; Brazilian American,
vol. 3, no. 70 (1921), p. 37; Ambassador Morgan to Raul Soares, 8 March 1923, 23-30-
08/1, ARS. Sales of gasoline by Standard Oil of New Jersey also probably increased
significantly during this period. Established in Brazil through a subsidiary in 1896, by
the war years annual profits from the company's Brazilian operations consistently
topped $1 million. George S. Gibb and Evelyn H. Knowlton, History of Standard Oil
Company (New Jersey): The Resurgent Years, 1911-1927 (New York, 1955), pp. 182 and
197.
73
Calculated from figures compiled from consular reports by USBFDC. See USBFDC,
The Automotive Market in Brazil (Washington, 1930), p. 9; USBFDC, Commerce Yearbook
'93° (Washington, 1930), vol. 11, p. 76.

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Autos over Rails: How US Business Supplanted the British in Brazil, 1910-28 581

export sectors during the period. Between 1913 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 1920s 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
construction of new roads, as between 1918 and 1924 over 3,700
kilometres of the new highway went into service. By 1924 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 %pna 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 100,000:000$ 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
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 ipjo (Totowa, N . J . : 1983), p. 221. Rostow, The World
Economy, pp. 70-4.
76
[Jose Bento] Monteiro Lobato, How Henry Ford is Regarded in Brazil (Rio de Janeiro,
1926), pp. 4 and 8. John Nist, The Modernist Movement in 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. 151-2.

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58z Richard Dowries

year the federal government expanded funds for road building con-
siderably, 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 10,000 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 3 7 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
76
' A s estradas de r o d a g e m ' , Boletim [ M A G ] , vol. 14, part 1, no. 3 (1925), p- 388; Boletim
[ M A G ] , vol. 16, part 1, no. 1 (1927), pp. 31 and 35; U.S. Consul General, Rio d e
Janeiro ( U S A C G - R J ) t o SS, 7 N o v . 1928, R G 59, 832.51/531, U S N A .
77
' O trafego r o d o v i a r i o ' , Boletim [ M A G ] , vol. 17, part 2, n o . 1 (1928), p. 65.

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Autos over Rath: How US Business Supplanted the British in Brazil, 1910—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.

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