Railroads and the Brazilian Economy Before 1914

Abstract

Although the railroad was the most celebrated technological innovation of the nineteenth century, its impact varied considerably depending on the setting into which it was introduced. For Brazil, historians often claim that railroad development intensified dependence on foreign product and capital markets in the second half of the nineteenth century. According to this scenario, railroad enterprises, intended mainly to carry plantation crops to port, benefited foreign investors and export agriculture at the expense of the economy as a whole. Based on an extensive array of new evidence and cliometric methods, this study's findings are sharply at odds with standing conclusions about the impact of nineteenth-century railroad development in Brazil. It examines modern Brazil's first wave of transport improvements, which began with the earliest construction of railroads in the 1850s and continued until motor vehicles began to supplant steam locomotion after 1900. The railroad held profound consequences for the economy, but not those heretofore stressed in the historiography. Relying heavily on risk-reducing subsidies, foreign capital, and government regulation, Brazil captured substantial gains from the iron horse. Indeed, the railroad proved indispensable to Brazil's emergence around 1900 as one of the fastest growing economies in the Western world. This study addresses three main questions. First, what direct effects did the railroad have on the economy? Second, what difference did it make that railroads were often owned by foreigners and regulated by the government? And third, what broader set of outcomes might be attributed to the course of railroad development in Brazil? In posing answers to these questions I drew on a variety of sources, including the operating and financial reports of railroad compames archived in London and throughout Brazil, the contemporary commercial press, and railroad censuses and studies of Brazilian government ministries from the 1850s through 1913. These materials permitted the construction of original data sets on pre-rail transport costs, government