If the exports which moved to the coast on British-owned railways initially stoked the engine of Brazilian modernization, the resulting complex of British export–import interests acted as a brake. When the economy began to pulse with its own life and some energies began to turn to industrialization, they found the forces that had given birth to growth now seeking to smother it. The British were directly connected with almost every aspect of this export-oriented system. The grip which the British held upon the railroad, the exporting firm, the import business, the shipping company, the insurance agency, the financial bank, and even the government treasury now tended to choke off any efforts to reduce the reliance on British imports. So did the wide currency of free trade doctrines coined in Britain. The Brazilian minister in London noted as early as 1854 that ‘the commerce between the two countries is carried on with English capital, on English ships, by English companies. The profits, … the interest on capital, … the payments for insurance, the commissions, and the dividends from the business, everything goes into the pockets of Englishmen’.

On the other hand, the very fact that Brazil did begin to industrialize suggests that that grip was not a stranglehold. There were significant areas of productive activity which the British did not dominate, and there were some points at which, as will be made clear in later chapters, they even fostered industrialization. But here emphasis is placed on the way in which they slowed it down by controlling and channeling one current of Brazilian economic life after another.

Brazil has been modernizing for at least a century, despite the survival today of some characteristics of a traditional society. If the pace of change has been slow, it is because so many of the economic, social, and psychological prerequisites for a modern system were not present in 1850. The pre-conditions cannot be formed overnight, and the steps taken to establish them, be they ever so small, are as significant as later changes that are more easily measured. These early changes are what interest us here. Brazil began to move closer to the modern world during the period from 1850 to the First World War.

This period may be sub-divided at two points: 1865–70 and 1888–90. The pace of change was initially so sluggish that the modifications of the established order during the first fifteen or twenty years after 1850 were not easily perceived. But they were very real, nevertheless, and, working in subterranean ways, these changes softened the foundations of the old regime to such an extent that only a major crisis was needed to send cracks up along the exterior walls and spread alarm among the guardians of the ancient structure. Such a crisis was the war with Paraguay which began in 1865 and lasted for five frustrating years. At its end, Brazil entered a period in its life characterized by increasingly virulent attacks upon the traditional society. Slowly, the aging edifice began to crumble, and, in twenty years, some of the staunchest pillars of conservatism had given way.

The British contributed substantially to Brazilian industrial development. Despite the strength of the British-controlled export-import complex which was indifferent to manufacturing, Britishers helped directly and indirectly to begin the transformation of Brazil from an agrarian to an industrializing economy. First, they built the major part of the transport system on which industry was to depend for the receipt of raw material and access to markets. Second, much of the industrial machinery and supplies which were used by Brazilian factories were produced in Britain and sold through a distributive system created by the British. Third, they advanced not only the credits to finance these sales but often provided the loan capital that enabled Brazilians to invest in manufacturing enterprises. Fourth, the technicians who installed the equipment, directed its operation, and taught the workers to operate it were frequently British. And, finally, they invested directly in textile plants, shoe industries, sugar factories, and flour mills. The idea that the struggle for Brazilian industrialization was simply a conflict between Brazilians and foreigners is so patently erroneous that it would require no comment were it not so widespread. Although it cannot be said that their actions were the chief cause of industrialization, the British shared significantly in that task, and in so doing helped begin the modernization of Brazil.

Economic development requires certain physical facilities—e.g. roads, railroads, power plants, and port facilities—which economists have labeled the ‘infrastructure’. The fact that the British built railways and harbor works primarily to serve an export economy did not prevent these facilities from being used by industrialists.

Nineteenth-century Brazilians who took an interest in English developments recognized the Reform Bill of 1832 as one of the most important events in British history. Indeed, it had meant a transformation in the texture of British politics and was the result of new patterns in the economic and social fabric of the nation. Napoleon is supposed to have said that England was a nation of shopkeepers; but it was only through the Act of 1832 that the shopkeepers secured political power to match their pre-eminent position in the economy. And throughout the first half of the nineteenth century the British middle class sought to strengthen this newly acquired power by propagating ideas which would clear away the vestiges of the old aristocratic order or protect its position from any threat posed by the lower classes. Nineteenth-century political liberalism served these purposes abundantly. Although intellectuals heaped a growing pile of criticism upon these concepts, the bourgeoisie continued to accept most of them without question at least until the First World War. Their example was not lost on similarly motivated groups in Brazil.

Four ideas of this social class in Britain were to prove most important in Brazil. First, the privileges of special groups or individuals must all be ended as relics of an outworn system. Instead, all members of society, even the sovereign, should be subject to the rule of a uniform law. Second, British industrialists and businessmen placed their faith in results. They believed laws should be formulated for the rational solution of problems even if this were to mean radical departures from past tradition.

The spread of entrepreneurial attitudes and ideas is a basic aspect of modernization, and it is the purpose of this chapter to examine some Brazilian entrepreneurs who were in close contact with the British. Not only is our understanding of some of the problems they faced at this early stage of development enhanced by a consideration of their business activities, but their experience also suggests that businessmen often sought out foreign images to reinforce a position they had already assumed within Brazil. Thus the presence of the foreigner contributed to their success but was not its initial cause, which is not to say that they were not deeply affected by the British. Special attention will be paid to these four: Irineu Evangelista de Souza, barão and later visconde de Mauá (1813–89); the Rebouças brothers, André (1838–98) and Antônio (1839–74); and Luís Tarqüínio (1844–1903). In addition, reference will be made to several other businessmen who were in contact with the British to a lesser extent.

Mauá was a representative of an older generation already in their thirties by 1850. Although not alone, he was widely recognized as the leading industrial capitalist during the period before the Paraguayan War. At the age of thirteen he had begun working for Richard Carruthers, head of a large English importing firm. This was the turning point in his life: seven years later he became a partner in the firm. And the next year Carruthers retired to England, leaving the future visconde de Mauá, aged twenty-four, as manager of the Brazilian house, a position through which he amassed a large fortune.

The belief that government should refrain from meddling in business was one of the most important ideas adopted by the emerging innovators of Brazil in their attack upon the traditional society. The old regime had been characterized by concessions, monopolies, general prohibitions, special privileges, and chartered companies. Government agencies set prices, especially for staple foods. Business activity required a license, and its retention depended on compliance with numerous regulations and no offense to official sensibilities. The transport of goods was slowed at frequent inspection stations where lesser bureaucrats filled their time by demanding to see all requisite papers, duly notarized. Petty taxes caused inconvenience while producing little revenue. All these factors added weight to the other characteristics of a traditional society in discouraging private initiative, slowing the drive for profits, and making all businessmen the clients of the administration, that is, of the landed gentry that controlled the governmental machinery.

The modernizers in Brazil were outraged by this state of affairs and looked abroad for alternatives. The British middle class, probably because they had once been faced by similar problems, had already elaborated an ideology to combat the rigidity of that system. They had derived from Adam Smith, Jeremy Bentham, and other political economists the conviction that every individual should be free in his economic life to do as he pleased; for, it was said, society would only benefit if each man sought to do what was best for himself. Britain had made great strides while preaching this doctrine, and many young Brazilian leaders believed it was the key to British success.

Coffee exports provided the fuel for the steadily accelerating thrust of economic and social change in Brazil during the latter half of the nineteenth century. And the increase of coffee production to meet world demand, that is, the cultivation of coffee on lands ever further from the coast, was made possible by the railways. As already noted, coffee and rails spread together and were partners in the conquest of a new frontier, an economic frontier, from which were to spring the pioneers not only of coffee but of industry. Therefore, the role of the British in fostering the railway system which served the coffee region is central to this study.

Brazilians early caught the fever for stretching rails of steel across the land, and the carrier of the infection was the British engineer and promoter. A Britisher even inspired Brazil's basic railroad law. Thomas Cochrane—a second cousin of the Admiral Cochrane who gained fame in the wars of Latin American independence—prepared a glowing prospectus as early as 1839 for a railroad which, he said, by linking São Paulo and Rio de Janeiro would do for Brazil what the Stockton and Darlington had done for Britain. Although the project had to be abandoned after he had managed to organize a company to build it, his efforts were not without fruit. His experiences and the pressure he exerted led at last to the acceptance of the idea that railroads would not be built in Brazil without government aid: he urged the government to guarantee interest of 5 per cent on approved railroad projects, and after much debate the government finally accepted this suggestion. It became law in 1852.

The First World War marked the end of British predominance in Brazil. Even in the years before 1914 the importance of Great Britain was beginning to pale in relation to the total Brazilian scene, first, and most importantly, because of the development of Brazil itself, and, secondly, because of the increasing competition offered by other nations. The monopoly of foreign economic power once held by the British was eroding away and the war speeded the process to its conclusion.

Brazil, because of all the changes since 1850, had been set loose in the rapids of the modernizing process and, although the country might temporarily linger in some peaceful cove or be occasionally snagged by the roots of resistance, it could not return to the starting point. Rather, the persistent pull of the current impelled it ever onward. The corporate society still hung on, not only in some parts of the country and in the beliefs of some persons, but also in some of the attitudes of most individuals; nevertheless, continual modernization was now merely a matter of expanding the geographical areas of influence, increasing the size of the groups that had already been affected, and extending within each individual the logical implications of the attitudes he had accepted or positions into which he had been placed. By 1914 Brazil had begun; the first phase of the process was over.

Most important were the changes in values, ideas, and worldviews. The goal of an industrialized society had been adopted by a well-defined sector of the population.

Modernizers within Brazil's traditional society were in desperate need of intellectual reinforcement for their position. A new ideology which would reorganize and re-explain the nature of their social and institutional environment and which would logically link their work to a meaningful goal could be emotionally satisfying while simultaneously advancing the effort to win over converts. Not surprisingly, this group scoured the resources of Europe in search of useful ideas for this purpose. It is a mistake to consider them, as is sometimes done, as alienated intellectuals agape before Europeans and merely swept along by the prestige of an idea's source. It is also only partially correct to say they failed to understand the full meaning of the ideas they found there, for as they understood them, these concepts were exactly what they were searching for. If they sometimes devoured their intellectual fare without reference to context or logical affinity, as if having red wine with fish, this was because they craved only certain kinds of sustenance and could well afford to forget the niceties of consistency, thorough understanding, and intellectual rigor. Indeed, they exerted surprising though unconscious creativity in establishing the criteria of selection: for they adopted primarily those ideas that served a function within the process of modernization in Brazil.

Ideas which could relate progress, science, and industry to each other had a special appeal for those who were working to destroy the traditional society. The thought of Herbert Spencer did this admirably well, for they understood him to be saying that progress was inevitable, that it led to an industrial future, and that science proved the validity of both assertions.

The onset of modernization in Brazil was not caused by the British. Rather, it was the result of broad trends within which Britishers exercised an important but limited role. Change in Brazil was partly the result of the expansion of the international economy which swept Brazil into its increasingly turbulent course. The spread of new ideas and attitudes which accompanied this economic transformation was also responsible for recasting Brazilian patterns of life. In addition, modernization was the result of factors within Brazil which enabled Brazilians to respond constructively to those foreign stimuli. Thus they were able simultaneously to enjoy the benefits of rapidly increasing exports while controlling a significant portion of the resulting wealth, that is, the capital resources that were needed to develop other sectors of the economy. Similarly, absorption of ideas and attitudes from abroad did not prevent the emergence of an embryonic national consciousness. So internal and external forces combined to launch Brazil into a modernizing trajectory.

Nor were the British responsible if the promise of modern change was unfulfilled by 1914. The process which had then begun has not yet made Brazil over in the image of the modern world because of the obstacles to change presented by the old society. Furthermore, the very process of modernization, like the motion of an aircraft, created waves of opposition which seem to have mounted rapidly in strength when the speed of change increased. At that point where either progress is slowed or the barriers must be noisily broken, Brazil, perhaps because of the qualities of its cultural heritage, has often seemed to hesitate, postponing the inevitable moment of crisis.