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

Abstract

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 forautomobilismoreinforced 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.1Rapid 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.