A German View of Brazilian Trade and Development, 1935

Abstract

RRITHEN IN OCTOBER 1934 a German government trade VV mission arrived in Rio de Janeiro, its members soon made clear to high Brazilian officials that, besides wanting more trade and closer diplomatic relations, Hitler's Germany was eager to assume a leading role in the military and industrial development of Vargas' Brazil. The two economies were complementary. Germany needed the raw materials such as cotton, iron ore, coffee, and food stuffs which Brazil could offer in return for capital goods, coal, trucks, and military hardware. As both nations were short of foreign exchange, Germany proposed to work outside the depressed international market by trading bilaterally with Brazil in a special nonconvertible currency, the so-called compensation mark. And while this system of balanced payments never worked as smoothly as the Reich had hoped, the compensation trade between Germany and Brazil brought immediate advantages to both nations and served as a long-term instrument of German influence until 1940.1 Berlin's perception of Brazil's economic and political situation is shown in the following document, which certain German industrial and commercial firms submitted to the Rio government. This was nothing less than a proposal to develop Brazil's iron ore, steel, and military industries. After its recovery in 1933, the Brazilian economy required increasing quantities of iron and steel products which in those years of world depression and low domestic production only a modern steel works could provide. Joined to this mounting need for steel were the Brazilian armed forces' demands for weapons, modern transport, and industrial self-sufficiency in the event of war. Military and civilian requirements. moreover, were leavened with a growing