The Planter as Entrepreneur: The Case of São Paulo

The Planter as Entrepreneur: The Case of São PauloAuthor(s): Warren DeanSource: The Hispanic American Historical Review, Vol. 46, No. 2 (May, 1966), pp. 138-152Published by: Duke University PressStable URL: http://www.jstor.org/stable/2518385 .

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The Planter as Entrepreneur: The Case of Sa-o Paulo

WARREN DEAN

T HE ECONOMY of Saio Paulo is generally regarded with admiration by foreign observers because it exhibits a very high degree of development-higher, perhaps,

than any other regional economy of Latin America. The state's per capita annual income is $575, equal to that of the Italian central and northeastern regions. Industry provides a third of the area's output and is, furthermore, highly diversified and sophisticated, including motor vehicles, petrochemicals, and pharmaceuticals.' Although im- migrauts, foreign-branch factories, and state-owned enterprises have come to share in the ownership of this dynamic economy, the greater part of the wealth of Sao Paulo remains in the hands of its original owners: the coffee plantation aristocracy.

From several points of view this is a curious phenomenon. The culture of Latin America is often judged by observers to contain elements that inhibit entrepreneurship ;2 yet here is a region that dis- plays unconcern for such apprehensions. Is its culture in some regard different from that of other areas of Latin America? The Paulista, with his habitual self-confidence, declares that it is and evokes the bandeircnte, that seventeenth-century slave and gold hunter, as a culture hero, who passed on something unique to his descendants.

Those who initiate one stage of economic growth often seem in- capable of transferring their capital and efforts to more complex forms of production. Latin American landowners are considered to be particularly defective in this regard. Entrepreneurship, it has been theorized, is characteristic of groups that have suffered some

*The author is Assistant Professor of History at the University of Texas. The Foreign Area Fellowship Program and the University of Texas provided grants for the research and writing of this paper.

1 Brazil, Presiddncia da Repdblica, Plano trienal de desenvolvimento econOmico e social, 1963-1965 (Rio, 1962), 9; Sdo Paulo (State), Grupo de Planejamento, Plano de axdo, 1959-1963 (Sdo Paulo, 1959), 31.

2 Thomas C. Cochrane, " Cultural Factors in Economic Growth, " Journal of Economic History, XX (December 1960), 515-530.



THE PLANTER AS ENTREPRENEUR: THE CASE OF SAO PAULO 139

withdrawal of status, or that have never enjoyed status.3 The planter elite, however, has survived the transition from subsistence farming to slave-driving to free labor plantation agriculture to import-sub- stituting industry to finance capitalism. Do the Paulistas therefore possess an entrepreneurial ability superior to that of other land- owning elites in Latin America? This theory finds support among the inhabitants of the state. Of all the Paulistas the members of the plantation elite are most prone to exalt their cultural uniqueness, and the word quatrocentdo, referring to the Paulista descended from the founders of the colony, bears connotations and pretensions similar to "brahmin " in Boston.

It is not necessary to recount in detail all the entrepreneurial achievements of the planters, but a brief mention of their principal undertakings during the transitional period is apropos. Their first concern was to construct a railway network. Without cheap trans- portation the export trade would not have been feasible. The Santos- Jundiai railway, the vital but technically nightmarish road that clambered up the coastal escarpment, may have been financed in London, but it was conceived in Sao Paulo, subsidized by the provincial legislature, and organized by a group of Paulistas led by the Baron Maua. From this main line four trunks were built by different groups of planters to potential producing areas of the interior.4

More difficult to remedy was the scarcity of labor caused by the end of the slave trade. Slavery represented more than a mere technical or financial challenge; it was the social basis in Brazil of three hundred years of agricultural exploitation. Nevertheless, in contrast to the elites of other plantation systems, the Paulistas soon realized that they must actively foster the conversion to a free labor system if the export economy were to continue to grow. Not only did they form companies to transport Italian peasants, but they saw as well the necessity of abolishing slavery quickly in order to encourage the flow of free labor.5 The planters devised a system of short-term wage contracts that provided sufficient incentive to maintain yearly arrivals of

I Everett E. Hagen, On the Theory of Social Change: How Economic Growth Begins (Homewood, Ill., 1962); Bert F. Hoselitz, " Entrepreneurship and Eco- nomic Growth, I I American Journal of Economics and Sociology, XII (October 1952), 104-105.

' Adolfo Augusto Pinto, Historia da viagdo pftblica de Sdo Paulo (Saio Paulo, 1903), 31-54. Anyda Marchant, Viscount Maud and the Empire of Brazil (Berkeley and Los Angeles, 1965), 76-77.

'NIcia Vilela Luz, "A administraqdo provincial de Sao Paulo em face do movimento abolicionista," Revista de Administragdo, VIII (December 1948), 80-100.



140 HAHR I MAY I WARREN DEAN

immigrants, but at the same time they cannily preserved ownership of the land in their own hands.6

The financing of the coffee trade remained a local business to a remarkable extent. The trade was divided into two parts: the brokers (comissarios), who provided credit for the planters, and the exporters, who dealt with the brokers.7 The brokers were usually planters who had turned to financing their neighbors' crops. Some of them eventually founded exporting houses, obtained importing agencies, or went into banking.8 Foreign dealers captured most of the export side of the trade by 1910, but some of the larger planter- owned houses survived. Although foreign banks gained the major share of the commercial discount business by the outbreak of the First World War, the many local banks managed to outlast their rivals and in time eclipsed them.

It can be seen from these examples that, in order to valorize their holdings, the planters were led to engage in commercial and other activities on a large scale. The railroads and the banks were all joint- stock companies. The brokerage and import houses were partnerships of several plantation families. The spirit of association existed therefore, though often these combinations were reinforced by dynastic marriage or by political affiliations.9

The desire to render agricultural holdings more profitable was behind the first manufacturing ventures as well. Sugar culture was the original export business of the Paulistas in the region northwest

of the capital. In the 1880s several centrals were constructed there, again as joint stock companies. Most of them soon fell into the hands

* Pierre Denis, Le Brdsil au XXe sijcle (Paris, 1909), 132-136. 7The origins of this system are described in Stanley Stein, Vassouras, A

Brazilian Coffee County, 1850-1900 (Cambridge, Mass., 1957), 17-20, 81-85. The identities of coffee brokers, importers, exporters, and bankers were obtained

from incorporations and partnerships filed in the public registry of contracts, or Junta Comercial, of Sho Paulo (hereafter JCSP); from incorporations granted in federal decrees, found in Brazil, Colegdo das leis, 1870-1960; and from innumerable commercial almanacs, including Twentieth Century Impressions of Brazil (London, 1913); Monte Domecq' et Cie., Societ6 de Publicit6 Sud-Americaine, 0 estado de Sdo Paulo (Barcelona, 1918); The Brazilian Year Book, 2nd ed. (Rio, 1909); Commercial Encyclopedia, South America, 3rd and 4th eds. (London, 1922, 1924); 8,o Paulo moderno (Porto Alegre, 1919).

9 Genealogical information was gleaned from obituaries published in 0 Estado de Slo Paulo and other newspapers, and from current biographies, principally Personalidades do Brasil (Sdo Paulo, 1933); Quem 6 quem no Brasil, 1st to 6th eds. (Sdo Paulo, 1948-1961); and Hugo Schlesinger, Enciclop6dia da indi4stria brasileira, 5 vols. (Sao Paulo, 1959). Dunshee D 'Abranches, Governos e con- gressos dos Estados Unidos do Brasil, 1889 a 1917, 2 vols. (Sao Paulo, 1917) illuminates political connections.




of a French corporation that already owned mills in Rio state, but still others were built by planters in the Ribeirdo Preto area, farther to the north, probably with coffee profits. These eventually supplied the major part of the expanded internal market.10 The growing coffee trade called forth other industrial ventures. Coffee beans must be hulled, dried, and sorted to be marketable, and the shortage of labor stimulated experimentation with machines to perform these

tasks. Although the mechanics who perfected the new equipment were often German, English, or Italian, the initiative and capital behind their workshops were Paulista. These same shops produced a great

range of cast and machined equipment, principally for farm and railroad use, such as boilers, pumps, box cars, and the like. The largest industrial employer in Sao Paulo in 1896 was the planter-owned Paulista Railroad. Its repair shops, with 703 employees, made railway carriages."

Most important of the agricultural-transformation enterprises, however, was the cotton spinning and weaving industry that was

created in the wake of the modest cotton export boom of the 1860s. Some of the planters who had grown cotton, foreseeing the eventual return of the American South to the world market, wisely invested

some of their profits in textile machinery. Of the nine mills erected in the 1870s and 1880s, all were sturdily profitable. Still more were

built in the city of Sdo Paulo and in Santos, the latter principally for

coffee bagging. By 1903 there were thirteen mills employing 2,910 looms.'2

Other plants for the transformation of agricultural or mineral

resources, built before the First World War with coffee money, in-

cluded meat packing plants, leather tanneries, corn and manioc mills,

saw mills, lime and cement plants, and kilns for bricks, ceramic pipes,

and glassware. In the 1920s even steel making was attempted on a

small scale by two planter-owned companies. Occasionally planter interests extended beyond the manufacture of goods whose raw mate-

rials they could supply. They owned factories for making drugs, gun- powder, enamelware, and sanitary fixtures. Counting the larger firms

10 Henri Raffard, A inddstria saccharifera no Brasil (Rio, 1882), 42-59; Julio Brandao Sobrinho, A lavouira de canna e a industria assucareira (MSo Paulo, 1912), 5.

"' Antonio de Toledo Piza, Relat6rio apresentado ao cidaddo Dr. Alfredo Pujol ... (Sqo Paulo, 1896), Appendix.

12 Jornal do Commercio, Retrospecto Commercial, 1903 (Rio, 1903), 27-28. Alice P. Cannabrava, 0 desenvolvimento da cultura de algoddo na Provincia de Sdo, Paulo, 1861-1875 (Sao Paulo, 1951), 282-285.



142 RAHR I MAY I WARREN DEAN

in Sdo Paulo, the planters employed almost half of the workers engaged in manufacturing.'3

Finally, there was much interest in urban improvements as companies were formed to provide electric lighting, tramways, water supply, telephones, and for pretentious public construction. Although the public buildings were intended to embody the civic pride of local planters, a good number of them represented useful economic or social overhead that should have been applied to more productive tasks.

Why were the Paulista planters so enterprising? Is it possible to maintain that there was in Sdo Paulo, in the last quarter of the nineteenth century, a concentration of entrepreneurial ability more intense, or a capitalist mentality more highly developed, than in other parts of Brazil or Latin America ? Although the profit motive appears to have been more strongly evident in Sao Paulo than in other parts of Brazil, the capitalist spirit does not appear to have been more intense there at that time. Rather, it encountered historical circumstances more favorable to its wider employment.

The strongest evidence that factors other than cultural or genealogical were at work may be seen in the large number of Paulista landowners who did not shift from subsistence crops to coffee, and the even larger number of Brazilians who migrated from other states to participate in the coffee boom. These came mostly from the states of Minas Gerais and Rio de Janeiro and smaller numbers from Alagoas, Rio Grande do Sul, Pernambuco, and other parts of Brazil. A resident of the Ribeirao Prkto area in 1882 estimated that its population was eighty percent mineiro. Still other planters were second- or third- generation immigrants: Portuguese (Vergueiro, Souza Queiroz), En- glish (Whitaker, Simonsen), or German (Diederichsen). If entrepreneurial talent was not the monopoly of Paulistas, but was dis- tributed more or less evenly geographically, then the large cultural differences among the various regions of Brazil were not relevant to entrepreneurial ability or to the tendency to reinvest. The increase in entrepreneurial activity in SAo Paulo may be better accounted for

18 Antonio Francisco Bandeira Junior, A industria de S&o Paulo em 1901 (Sao Paulo, 1901) provides a long list of companies, indicating number of workers. Companies with more than 100 workers employed 12,680; of these, planter-owned companies employed 5,530. Product information obtained from advertising in Sao Paulo newspapers, articles in the Boletim do Departamento de Indfistria e Conmercio, 1909 to 1925, and in other trade journals.

14 Luz, "A administragho," 91; some outside origins are also mentioned in Aluisio de Almeida, "Notas para a hist6ria de Sho Paulo," Revista do Arquivo Municipat, XVIII (July 1952), 18-20; and Pierre Monbeig, Pionniers et planters de Sdo Pauto (Paris, 1952), 84, 327.




by the more intense operation of the market economy, that is, by the greater profitability of coffee, and by the fuller use of money as a medium of exchange.

It is also probable that the apparently greater entrepreneurial ability of the successful planters conceals pre-existing accumulations of capital. In the 1880s the coffee-growing area was not the locale of many rags-to-riches success stories. It is highly unlikely that planter families from the Paraiba do Sul Valley or from Minas moved to the Paulista West because of economic necessity. The new lands had to be bought. Therefore the newcomers must have been already prosperous families -who were transferring assets from a region of declining fertility to one of potentially higher return. For example, in the municipality of Guaratingueta', on the Paulista side of the Paraiba Valley, the shift to coffee production in the 1830s was much more common among sugar growers than among subsistence farmers, since the former had ready cash to buy slaves.15 Still others entered coffee planting from trade, particularly importing, slave dealing, or animal trading. One of the most successful families, the Da Silva Prados, was descended from mule traders. The families who sold their properties often lacked merely the capital to develop the land themselves rather than a capitalistic mentality. Thus the Count of SAo Clemente, who sold 9,000 acres of his patrimony to Schroeder, Gebriider and Company of Hamburg, was capitalist enough to demand debentures in return, not cash, and a place on the board of directors of the new company.'6

It has been suggested, nevertheless, that there was a difference in

the degree of adaptability between the coffee planters of Sao Paulo and those of the Paraiba Valley, and that the difference is to be attributed to cultural traits. Unlike the Paulista planters those of the Paraiba Valley were unable to adjust to a free labor system. They resisted abolition and eventually lost their plantations, retreating to the pro- fessions and the bureaucracy. Was this difference due to a lack of capitalistic mentality on the part of the Paraibans? Pointing to the

avidity with which the planters of the older coffee-growing region sought patents of nobility and to the luxury of their mansions, Maria Isaura Pereira de Queiroz contends that the Paraibans were would-be aristocrats who did not reinvest their profits but spent them on need-

1 Lueila HIerrmann, " EvolugAo da estrutura social de Guaratingueth num perfodo de trezentos anos, " I Bevista de Administragdo, II (March-June 1948), 123-127; Almeida, 17.

16 The Economist (London), LV (June 12, 1897), 854, 872.



144 HARIR I MAY I WARREN DEAN

less luxuries. The Paulistas, on the other hand, she says, were commercial bourgeois, frugal and adaptable, who were interested in or- ganizing a new internal market.17

The contrast is greatly overdrawn. It can be seen that in Sao Paulo, as in Rio state, there were many families who failed to maintain their fortunes when their coffee trees declined in fertility. There were also Paraibans who managed to transfer their wealth to the newer areas in Sao Paulo state. Persons of Paraiba Valley families prominent in the later development of Sao Paulo included Rodolfo de Miranda, Nazareth de Souza Reis, Gabriel Dias da Silva, and A. P. Rodovalho. The fondness for titles existed in both places, but was not a necessary indication of an aristocratic mentality. There were barons in Sao Paulo as well as in the Paraiba Valley, though many of the former were at the forefront of the economic reorganization: the Baron of Piracicaba, the provincial governor who pressed for abolition; the Count of Alvares Penteado, builder of the largest textile plant, the Marquesses of Monte Alegre and Sao Vicente, or- ganizers with Maua of the Santos Railroad; and the Count of Prates, involved in finance, urban real estate, and factories.

The real difference between the planters of the Paraiba Valley and those of the Paulista West lay in the contrasting circumstances sur- rounding the beginnings of their separate development. Coffee production in the Paraiba Valley reached its apogee before 1860; in Sao Paulo it could not begin to increase until the Santos-Jundial railroad was completed in 1867. Paraiba, then, developed entirely in the shadow of slave labor. Even though the trade was banned in 1850, slavery remained viable for another ten years, because the increase in the price of slaves after the end of the trade doubled the value of existing "stocks.' '18 During the 1850s and 1860s, therefore, profits in the Valley were reinvested in an expensive supply of new slaves.

The Paulistas' experience was quite different. There were never enough slaves, and by the 1870s it was already apparent that they were a poor investment. In 1872 they formed only nineteen percent of the state's population, having declined from twenty-eight percent in 1854.1' In 1878, for the first time, the legislature of Sao Paulo passed a prohibitive tax on the importation of slaves from other states. Once diverted from new slave purchases, profits were available in Silo

'T"A estratificagdo e a mobilidade social nas comunidades agrarias do vale do Parafba," Revista de Bist6ria, I (April-June l950), 215-218.

18 Stein, Fassouras, 65, 229. " Samuel H. Lowrie, "0 elpmento negro na populacdo de Sao Paulo,"I Revista

do Arquivo Municipal, IV (193B).




Paulo for more productive purposes. The initial cost of European labor was trifling compared to the traffic with Africa. By 1900 the state program of subsidizing immigration had cost only $7,000,000 and had brought in almost a million immigrants.20

It might be more easily argued that the shift to capitalist forms of land and labor utilization came at the beginning of the Paraiban coffee expansion rather than at its end. In the Paraiba Valley many of the early estates were assembled by merchants from the city of Rio or by men who had possessed mining interests to the north. By the second quarter of the nineteenth century their land acquisitions were greatly augmented as a result of laws in 1835 and 1850 that abolished primogeniture and substituted cash payments for grants in the distribution of crown lands.2'

The willingness to shift to free labor, however, did not necessarily imply a more rational or humane approach to its utilization on the part of the Paulistas. Apparently they originally intended to deal with the new European workers as ruthlessly as they had with the slaves whom the immigrants replaced, but in time the constant shortage of labor forced the planters to relax their hold. A standard labor contract evolved, and the terms of payment expanded sufficiently to discourage debt servitude. To a degree, therefore, the free labor system stimulated a capitalistic outlook, rather than vice-versa. In support of this interpretation one may contrast the pessimism of Max LeClerc's re- port of 1890, which found most of Antonio Prado's "colonists" in

debt and declared the system unjust, with that of Pierre Denis, who found the terms of labor in the same region favorable to the workers in 1909.22

The nature of coffee cultivation, as it was practiced in Brazil, enhanced the selective effects of the market. Because land was very cheap relative to capital and labor, no effort was expended on pro- longing its fertility. As a consequence the pattern of a hollow

frontier developed, gradually moving westward and leaving behind land fit only for pasturage. Contrast this pattern with sugar cultiva-

tion, which enabled the landowners to remain on the same property for generations without any need to improve the land or the agricul-

20 Denis, Le Bresil, 129; Sao Paulo (State), Anuario estatistico, 1906 (Sho Paulo, 1907), 163.

21 Colegdo das leis, Law 56, October 5, 1835; Law 601, September 18, 1850. 22 Max LeClerc, Lettres du BrJsil, trans. as Cartas do Brasil (Sdo Paulo, 1942),

82-90; Denis, Le Br6sil, 132-136. See also Fernando Henrique Cardoso, "As condig6es socikis da industrializaqdo de Sdo Paulo," Bevista Brasiliense (March- April 1960), No. 28, 31-46.



146 HA-UPR I MAY I WARREN DEAN

tural technique. The coffee planter was obliged to reinvest in new estates if he did not want to see his real worth decline. But to develop

lands beyond the settled areas required real estate promotion, in its

broadest sense, and on a grand scale. It meant railroads, urbaniza- tion, sawmills, and the successive waves of woodsmen, wage laborers,

and merchants.23 Repeated dislocations of the casa grand& must have weakened

the planter's identification with his plantation. The past was hun- dreds of miles behind him; his future, or perhaps his son's, was still farther on, for an estate covered with thirty-year-old coffee trees would be but a meager inheritance.

In summary, the entrepreneurial success of the Paulista planters as a class may be attributed not to innate or to cultural endowments,

but (1) to the operation of a profitable market, which attracted out-

siders and rewarded the capable; (2) to capital brought from other

places and other activities; (3) to the necessity of conforming to the

requirements of a market economy, particularly to free labor; and

(4) to the nature of coffee cultivation, which rewarded the capitalistic,

i.e., reinvesting planters. In proposing explanations for the planters' entrepreneurial

prowess, however, the obverse of the argument must not be overlooked:

Why was there so little competition from other economic groups, in-

ternal and external?

One important reason is that the planters controlled the machinery

of government and used it constantly and effectively to advance their

own interests. It is not remarkable that this should have been so.

Because of the confusions of the Brazilian land-holding system

planters could not acquire large domains without some degree of

political influence to legitimize claims. During their long struggle to

promote the coffee trade they also used the provincial and imperial

parliaments to press for government subsidies for immigration, the

abolition of slavery, and the reduction of imperial powers over

Paulista economic policy. When the overthrow of the empire in

1889 offered them an opportunity to improve their position, they ad-

vocated in the constituent assembly a political decentralization that

gained for SAo Paulo all the essentials of sovereignty with few of its

expenses: control of the imperial lands, the right to levy export taxes

and to borrow abroad, and a state army. They also supported dis-

28 The paradoxically invigorating effects of soil exhaustion are hypothesized by Pedro Calmon in Hist6ria do Brasil (Sao Paulo, 1947), IV, 385.




establishment of the Church and increased rights for naturalized citi- zens, partly from a desire to encourage immigration.

Perhaps it was because of their thoroughly politicized view of economic development that the planters restricted themselves largely to undertakings that the state government could concede as monopolies, such as railroads, utilities, and emission banks or projects that could be strongly assisted through government favoritism. The railroads received "privileged zones" and guarantees of profit, which by 1904 had cost the government of Sao Paulo the equivalent of $40,000,000.24 Similar guarantees were granted to sugar mills. Other planter-backed companies secured public works contracts, concessions to sell accident insurance required by law, and the right to import agricultural or textile equipment free of tariffs. The government also reduced the risks of foreign competition by imposing high duties on agricultural raw materials from abroad such as cotton and sugar. Foreign branch banks were excluded from government favors and restricted to the commercial discounting business. Finally, if a particular project of the planters proved unprofitable, the government could be induced to buy them out. The resulting public corporation invariably continued to be directed by members of plantation families, presumably in the interests of their group.25

The state government ignored the needs of the landless as effectively as it promoted those of the planters. It did not attempt to create a literate, stable, or skilled citizenry either in the towns or in the countryside. There was no public policy of land distribution, uni-

versal education, or broadened political rights that might have elim- inated the dependence on imported laborers and technicians or in-

duced the immigrants to regard Brazil as a new homeland. The ex-

penditures on primary education averaged 65 cents per capita a year (three milreis) from 1890 to 1900.26 As a result the other classes of

society were deprived of their chance at upward mobility. Nearly all

Brazilian entrepreneurs came from the plantation elite. By 1930 not a single manufacturer seems to have had indubitably native-born

lower- or middle-class origins, and only a very few appeared there- after. This is a striking contrast with industrialization in other countries: Johannes Hirschmeier, for example, points out the im-

portance of peasant and merchant participation in Japanese in-

24Pinto, list6ria, 182-185. 25 JCSP lists directors of all publicly-owned corporations. a Primitivo Moacyr, A instrucdo pilica no estado de Sdo Paulo (Sio Paulo,

1942), II, Appendix.



148 IIAHR I MAY I WARREN DEAN

dustrialization.27 In such circumstances only the urbanized Europeai immigrants could challenge the hegemony of the planters.

Historical circumstances largely account for the ability of the Paulista planters to develop the coffee economy without having to alienate most of their resources to foreigners. The Europeans and North Americans never intruded in the Sao Paulo area to the extent that they did in Cuba, Argentina, Mexico, or Chile for several reasons not connected with the degree of competition offered them by the planters. In the first place, unlike the foreign trade of other Latin American countries, the control of Brazilian trade was divided. Most Brazilian coffee was sold to the United States and Germany, but the

trade was financed in England. The British did not drink much coffee, nor did they regard control of coffee as vital to their foreign trade. For these reasons they did not interest themselves in Sao Paulo as much as in Buenos Aires. Though the British held first place among suppliers of Brazilian imports, the Germans were certainly aggressive competitors, and German exporting and importing houses

such as Theodore Wille engaged in the coffee business, owned plantations, imported electrical and mechanical equipment, and financed factories. The Americans, French, Italians, and Portuguese supplied the Paulista market with fewer goods and invested less capital in

banks and other businesses than either the British or Germans. But the Paulista market was never the private sphere of influence of a single country or a single financial combine.28

Even so, if the European powers had not been discouraged re-

peatedly concerning the prospects of investment in Sao Paulo, or if

they had not suffered the catastrophes of world war and depression, their inroads upon Paulista capitalism might have been far greater.

During these recessions of European influence the Brazilians were

able to work out their own solutions to the shortage of capital and

imports and to buy up foreign interests at bargain prices. The

English, for example, had options to extend the Santos railroad be-

yond Jundiai but chose not to do so, thereby opening the way for Paulistas. On another occasion a group of British investors became unnerved at the revolutionary ferment of 1889 to 1893 and sold out the

2' Johannes Hirschmeier, The Origins of Entrepreneutrship in Meiji Japan (Cambridge, Mass., 1964).

28 Identification of foreign interests are from ownership records already cited; from U. S. Bureau of Foreign and Domestic Commerce trade promotion material, 1911 to 1924; and from antiforeign interest tracts such as Ivan Subiroff [Nereu Rangel Pestana], A oligarchia paulista (Sao Paulo, 1919), 41-54.




Rio Claro line to the Paulista Railway.29 The First World War proved disastrous to German investments. Their banks were liqui- dated, their ships confiscated, and their alliances with local politicians discredited.30 At different times, and in varying degrees, these acci- dents occurred to the rest of the foreigners in SAo Paulo.

Even though the undertakings of the planters seemed ambitious and manifold, they were not a complete program of development. The role of immigrants in the growth of the Paulista economy was large, especially in the manufacture of consumer goods, for if the planters by their efforts created an internal demand, they did not do a great deal to satisfy it. How can their absence from this sector and the considerable success of the immigrants be explained?

Part of the reason for this success may lie in certain advantages which they possessed but which have usually been ignored by those accepting uncritically the statements of the "self-made" immigrant industrialists. Many of the immigrants who went into trade pre- ferred the import business, in which they could more easily estab- lish and maintain connections with the industry and capital of their home countries. Most of those who eventually became industralists had started out as importers.3' It is true that the capital for their machinery usually came, not from savings frugally extracted from the import business, but directly from their overseas mercantile and industrial contacts. For example, most of the capital for Puglisi and his group in milling and sugar refining came from the Banca Com- merciale Italiana. Francisco Mlatarazzo was financed by an English bank.32 The function of importing was nevertheless useful to their later manufacturing activities, since it provided them information concerning demand, tariffs, and relative costs. Furthermore, as members of the immigrant community they shared tastes in food, clothing, and furnishings that were remote from the planters' experience. Finally, it is likely that as a group the immigrants possessed a higher level of technical and commercial skill, considerable business experience, or even a formal technical education. Matarazzo and Puglisi

29 Pinto, HFist6ria, 36-47, 199-201. 30Percy A. Martin, Latin America and the War (Baltimore, 1925), 81-82. 81 Origins of immigrant entrepreneurs are from biographical sources cited

in footnotes 8 and 9, and in memorials, published interviews, and occasional writings too numerous to list exhaustively, including Conde Francisco Matarazzo, Scelta di discorsi e interviste (Sao Paulo, 1926); Lino Finocehi, In memorial (Sao Paulo, 1926); Ant6nio D. Maria, Quem sao os Jafet (Sao Paulo, 1951); and Alfredo Cusano, Gli italiani di oltre mare (Rome, 1913).

82 0 Estado de Sdo Paulo, November 20, 1921; Al conte Francesco Matarazzo, glaoria del ingegno e del lavoro (Sao Paulo, 1954), 24.



150 HAHR I MAY I WArRTIEN DEAN

Carbone had been independent merchants in Italy; Briccola, Boyes, and Kenworthy were all engineers who went into banking and textiles; and Crespi was a textile salesman for an Italian firm before he constructed his own factory. There were only a few exceptions: Pereira Ignacio, the founder of the Votorantim group, was a cobbler's son.

It would be a mistake to assume that the immigrants completely dominated the manufacturing sector, or that their success in this area foreshadowed control in other sectors of the economy. Some statistical evidence indicates that a sizable part of industry remained in the hands of planters. The 1940 census showed that 56 percent of all industrial capital in SAo Paulo then belonged to "Brazilians." Some of these Brazilians would have been second-generation immigrants, how many is difficult to determine. A survey made in 1961 showed that 35 percent of all Paulista industrial groups with more than a billion cruzeiros in capital had agricultural holdings.33 Furthermore, the impact of the immigrant industrialists is somewhat less than the gross totals would suggest. From the beginning the planters have been silent partners of many immigrant entrepreneurs, especially in

machinery and metalworking. The bulk of immigrant enterprise has always been on a very small scale; as late as 1950 the average Paulista firm employed only nineteen or twenty workers. The effective economic and political power of these craft shops was slight. In other fields of economic activity the planters apparently continued to hold a majority interest. Of the thirteen largest Paulista banks eight are owned by planters.34 In land promotion, insurance, urban real estate, and exporting planters own the largest firms.

The immigrant industrialists, furthermore, proved not to be an instrument for progress, in the sense of redirecting the export-orienta- tion of the Paulista economy. Instead the planters managed to neutralize the political and economic threat which the immigrants represented; indeed the planters even obtained their cooperation. The immigrants never captured the machinery of the state government, much less the federal. Very few of the first generation foreigners sought Brazilian citizenship, for naturalization would have

cost them too much. It would have depreciated the value of their

prestigious European origins, especially of their dearly-purchased patents of nobility, and would have been a bad example to set for their

38 Brazil, Instituto Brasileiro de Geografla e Estatistica, Recenseamento Geral do Brasil (Rio, 1950), XVII, Part 3, 462-463; Mauricio Vinhas de Queiroz, "Os 'grupos economicos' no Brasil," Ciencias Sociais, I (July-December 1962), 157- 168.

" Geraldo Banas, "Nos bastidores do setor bancario" (Sdo Paulo, 1959), mimeographed.




workers, immigrants like themselves whom they were satisfied to keep out of polities.35 The immigrant industrialists therefore chose the path of collaboration. When they needed favors they sought them individually through political representatives of planter interests. As for their children, these generally married into planter families, acquired landed wealth of their own, and came round to the view that the coffee crop and its producers must be supported above all else. It was the immigrant Alexandre Siciliano, for example, owner of the largest foundry in Sdo Paulo, and a son-in-law of a prominent planter- politician, who conceived the coffee valorization scheme of 1906.36

It has been assumed that the revolutions of 1930 and 1932 represented a major setback for the political interests of the Paulista planters and marked the arrival of the industrial bourgeoisie to power. Such an interpretation is difficult to reconcile with the initial hostility of the Vargas regime to industries that did not employ domestic raw materials and the support that most manufacturers gave to Vargas' opponent in 1930 and to the rebellion in 1932. At best the industrial- bourgeois revolution, if such it was, came only gradually between 1920 and 1955. The argument possesses even less significance than appears at first, however, given the above-described correspondence of interest and even of identity between the groups. Furthermore, measures taken by the Vargas government to support the price of coffee were instrumental in preserving most of the plantations, as Celso Furtado has shown. By 1940 foreigners and naturalized Bra- zilians together owned only a quarter of all land in use in Sao Paulo. Nor had the concentration of land ownership diminished.37

In spite of the challenge of other interest groups, then, the planters maintained their position in the regional economy. They continued to open new coffee lands and by the 1930s and 1940s had found other sources of agricultural income: cotton exporting, cattle raising, vege- table oils, dairying, and truck farming. Their unimpaired political and financial power enabled them, perhaps more successfully than the immigrants, to expand into heavy industry, since the recent surge of industrialization is so thoroughly the creation of state intervention. Among the very largest metallurgical companies one now finds firms belonging to the Villares, Vidigal, Simonsen, Monteiro-Aranha, Souza

"Jose Arthur Rios, Aspectos politicos da assimilagJio do italiano no Brasil (Sio Paulo, 1959), 15-16, 62.

8' Alexandre Siciliano, Valorizagdo do cafe'; bases de contract entre un syndi- cato e o Governo Federal apresentadas d Sociedade Rural Paulista de Agricultura (Sao Paulo, 1903).

8" ecenseamento .. . , XVII, part 3, 12-13; Celso Furtado, Formagdo econ6rnica do Brasil (5th ed.; Rio, 1963), 215-220.



152 IIAHR I MAY I WARREN DEAN

Rezende, Pessoa de Mello, and Barcellos Correa groups. It would be hard to imagine a firm better connected than planter-controlled Cobrasma, the largest Paulista heavy machinery company, that buys its raw materials from government steel mills, obtains its financing and part of its capital from the national Development Bank and nationalized railways, sells principally to government-owned companies, and has directors who have also held high federal financial posts.38

It may seem strange that the planters accepted an industrialism unconnected with agricultural valorization, in spite of the inevitable conflicts of interest between export agriculture and an incipient industrial system. There were several factors that mitigated rivalries and enabled the planters not only to acquiesce in the new order but in large measure to take charge of it. The most important was probably the obvious deterioration of the world coffee market. None of the repeated attempts to restore prosperity through new export products- beef, citrus, cotton, and minerals-was entirely successful. The planters appear to have come, by the 1940s, voluntarily to invest in manufacturing activities even beyond those that valorized their own landholdings. By the time the federal government greatly accelerated this redistribution in the 1950s by exchange policies that favored industry, the planters appear to have been in a position to exercise effective control over the disbursement of these funds as industrial loans and subsidies. As a result not only has the economic position of the planters remained constant within the state, but the predom- inance of Sdo Paulo in the Union has constantly grown, so that it now contains relatively more of Brazil 's population, industrial output, and personal income than ever before.

The ease of the Paulista planters demonstrates that a change in the means of production does not necessarily require a change in the composition of the elite that controls and enjoys the new sources of wealth. It does not seem to show, however, that the success of this elite is due to a greater endowment of entrepreneurial skills or that the failure of other groups is culturally pathological. Instead I suggest that the major determinants have been historical-economic: (1) the advantages of prior successes, such as capital accumulation, and possession of political power; (2) the objective economic stimuli, including potentially high profits, and the challenge of the tasks involved, technological and organizational; and (3) factors discouraging competition from other groups, or encouraging their assimilation.

88 Visdo (September 25, 1964), 26-29; Anu4rio Banas: mdquinas e ferramentas, 1963 (SAo Paulo, 1963).



Documents

The Planter as Entrepreneur: The Case of São Paulo