Category Archives: Latin America

China’s Silver Shortage, 1830s

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 304-307:

There was nothing the government could do about the weather, but the root cause of the economic turmoil in the 1830s, and the problem from which many of the others grew, was a human one: China’s monetary system had gone haywire. It was mainly a problem of currency, of which the Qing dynasty had two primary forms: copper for small transactions and silver for large ones. Copper came in minted coins (with holes through the middle so they could be strung on a loop for convenience), while domestic silver—nearly pure and known in English as “sycee”—was unminted, traded by weight in units of measurement called taels that were just under an ounce. In normal times, a tael of silver was worth a thousand copper coins, and, value for value, the excessive difficulty of moving large amounts of copper between provinces meant that silver was the medium through which all long-distance trade was conducted within the empire. Silver was also, significantly, the basis on which tax quotas were assessed. By contrast, copper was the medium of the rural marketplace and menial wages. Nearly all of the income and savings of the lower classes of China—farmers, hired laborers, craftspeople—were in copper coins.

The crisis was that the value of silver had begun to rise sharply, and as it rose the exchange rate between silver and copper skewed out of control. From the ideal rate of 1,000 copper coins per tael of silver in the eighteenth century (even less at times, which was a boon for peasants since it meant their copper money was worth more), it had risen to 1,200 by the time Daoguang came to the throne. By 1830 it reached 1,365 copper coins per tael of silver and showed no signs of stopping. Since taxes were assessed in a fixed amount of silver, which had to be purchased with copper currency, this meant that by the early 1830s the peasants of China had suffered a nearly 40 percent increase in their effective tax burdens for reasons none fully understood. And as with nearly every problem in the empire, the corruption of officials made a bad situation even worse, as tax collectors commonly charged even higher rates of exchange so they could pocket the proceeds. By the late 1830s, some regions were reporting copper–silver exchange rates as high as 1,600 to 1, with tax collectors independently demanding as much as 2,000 copper coins per tael of silver owed. This dramatic decline in the worth of copper currency was disastrous for the general population, piling economic hardship on the poor who could scarcely bear it and sparking widespread tax protests that layered on top of all the other sources of dissent against the government. But although the emperor could occasionally grant tax amnesties to regions afflicted by floods or drought, the government quite desperately needed every tael of revenue it could get and so the exactions continued.

Even with that outflow of sycee silver, however, the inflow of Spanish dollars to purchase tea and silk at Canton should have been able to maintain a relatively steady overall silver supply in China (and in fact, since the late eighteenth century Spanish dollars had been preferred even over native sycee in some of China’s most important domestic markets). But on that count, a range of forces far beyond China’s borders came into play. First, it had been American merchants who brought most of the silver to China in the early nineteenth century (fully one-third of Mexico’s entire silver output between 1805 and 1834 was carried to China by Americans). But a shift in U.S. government monetary policy in 1834 made silver more expensive for American merchants, so they switched abruptly to using bills of exchange—which were acceptable to the Hong merchants but resulted in a decline in the amount of tangible silver entering the country from abroad. With the drop in American imports, China, which for centuries had been the world’s largest net importer of silver, unexpectedly turned into an exporter of the metal.

In the even bigger picture, though, what the Chinese scholars who blamed foreign trade and opium for the scarcity of silver in China did not realize was that it wasn’t just a Chinese problem: by the 1820s, silver was becoming scarce everywhere. Most of the world’s supply at this time had come from mines in Spanish Mexico and Peru (thus the importance of the Spanish dollar), but national revolutions in Latin America that began in the 1810s shut down those mines and choked off the world’s largest fonts of the precious metal. Global production of silver declined by nearly half during the 1810s—the same time its value began to creep upward in China—and it continued to decline during the decade that followed. The ramping up of the opium trade in 1820s China thus coincided fatefully with the onset of a global slump in silver output that would last for the next thirty years.

Regardless of where the specific blame lay, it was a devastating confluence of economic forces for China: the loss of sycee through the opium smuggling trade, the global scarcity of silver after the Latin American revolutions, and the drying up of American silver imports into China together helped cause a catastrophic decline in the empire’s supply of the metal. And it was a vicious cycle, for as silver became more valuable in China, wealthy families and businessmen would hoard it, removing even more from circulation and making the problem worse.

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Latin America’s IMF Era

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2010), Kindle pp. 576-577:

Essentially, Latin America faced an acute problem of governance after the debt crisis of the 1980s. The IMF had defined the main objectives of policy, which were to curb inflation, deregulate and privatize the economy, and service the foreign debt. But if the goals were clear, the means of achieving them were not. The crux of the problem was finding effective authority to see through the IMF reforms, but effective authority depends on legitimacy, which rests, in turn, on a consensus as to the founding principles of the state. And, as we have seen in this book, the inherent weakness of the state in Latin America lay precisely in a chronic inability since Independence to establish a lasting national consensus of this kind (see Chapter 9, pp. 374–7). All the same, the IMF required governments in these weakly based states to slash public spending and lay off huge numbers of workers in societies that were already the most unequal in the world. Even so, where one might have expected a return to the kind of revolutionary struggles or military dictatorships that marked the 1960s and 1970s, democratic politics endured in virtually all the republics throughout the 1990s and beyond.

The persistence of democracy was due more than anything to the collapse of communism in Eastern Europe in 1989–90, and then in the Soviet Union itself in 1991, bringing to an end the Cold War between the USSR and the USA. As a result of this collapse, Marxism lost its ideological force – Cuba was not regarded as a viable model in the 1980s and 1990s – but it also weakened the extreme right, which could no longer block social reform by inviting the US government to intervene in order to prevent Soviet infiltration into its ‘backyard’. Internal and external events thus drove Latin American politics towards a vaguely defined centre ground, but if the result was democracy, this was democracy that rested on a consensus of despair, for there was nowhere either for the left or the right to go but to the ballot box in order to try to fix the problems of the wrecked economies.

The question was how to induce electorates to swallow the medicine prescribed by the IMF. Governments had to consult the people to win some measure of consent, and electorates grown weary of inflation, violence and disorder did tend to consent to free-market reform in the 1990s. Voters were fed up with the empty promises and corrupt deals associated with traditional parties, so they tended to elect new or independent candidates to the presidency, as in Brazil, Peru, Colombia, Venezuela, Bolivia, Ecuador, and even in Mexico after the ruling party had been forced to give up rigging elections. Many countries reformed their constitutions. In a few cases, such as Colombia or Chile, it was to strengthen democratic institutions by improving representation and accountability. In most others it was to maintain continuity of reform by allowing a president to serve additional consecutive terms. In others, notably in Peru (1993), it was to move towards authoritarianism, or even veiled dictatorship. ‘Democracy’ was still a fairly malleable concept in Latin America, too often permeated by more traditional practices such as patronage and clientship, caudillo-style personalism and electoral manipulation (see Chapter 9, pp. 346–9). Thus, in a few republics such as Peru, Venezuela, Bolivia and Ecuador, there emerged what has been termed ‘delegative democracy’, a new version of the old tradition of caudillo populism, whereby executive power was ‘delegated’ to a charismatic leader via the ballot box, giving him a mandate to override the institutional checks and balances represented by the legislature or judiciary.

The quest for effective authority was shaped by the complexion and recent history of individual republics, but problems of governance were critically affected also by the ebb and flow of the globalized economy, over which nation states had little control. During the years of international expansion – roughly from 1992 to 1998 – governments were able to carry out liberalizing reforms with considerable public backing, but the Thai devaluation crisis of 1997, followed by Russia’s default in 1998, created a backwash that spread unrest through Latin America until about 2002, cutting growth and overwhelming governments, some of which fell to furious protestors. (The period 1998–2002 became known as ‘the lost half-decade’.) However, when world trade expanded from 2002, most Latin American countries experienced an extraordinary boom in exports of oil, minerals and agricultural goods to the developed world, and especially to China, so problems of economic management tended to ease once again. Then in late 2008, the globalized economy lurched into recession once more after a massive banking crash in Wall Street and London, with consequences for political stability and liberal democracy that were hard to foresee.

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Brazil’s Economic Miracle

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 428-429, 435:

The reasons for the failure of the guerrillas are complex. With their predominantly middle-class, university-educated cadres they were unable to break out of their political isolation – the clandestine Communist Party disapproved of the guerrillas’ strategy and blocked their access to working-class organizations. The terrorist attacks on military targets precluded the emergence of any sympathetic groups within the armed forces who might have staged a coup d’état, this being the usual short cut to power for progressive movements in Latin America. But, decisively, the guerrilla campaign coincided with the long-awaited upturn in the economy. From 1968, while the guerrillas were robbing banks and bombing barracks, life was getting better for the middle classes and the skilled workers in the cities, which is where, in a rapidly urbanizing country, the political fate of the nation would be decided. In short, what finally put paid to the prospects of the urban guerrillas was the arrival of the Brazilian ‘economic miracle’.

As far as the generals were concerned, the ‘miracle’ obviated the need for an explicit political ideology to run the state. The tremendous popular enthusiasm generated by the idea of an economic miracle was manipulated by the junta to rationalize their continued suspension of full democratic rights. The economic upswing was ‘miraculous’ in that it seemed to be a sudden take-off into self-sustaining industrial growth, the hallmark of a modern economy. Brazil was at last on its way to world-power status from the doldrums in which it had found itself for the best part of the 1960s.

The Brazilian rate of economic growth was indeed amazingly good: in 1968–74 the economy grew at an average yearly rate of between 10 per cent and 11 per cent. Even after the sudden rise in the world price of oil in 1973, which seriously damaged all the industrial economies, the Brazilian rate of growth averaged between 4 per cent and 7 per cent a year. By the mid-1970s the volume of exports had quadrupled since 1967. Far more significant was the fact that manufactured goods had replaced coffee as the major component of exports: the stubborn Latin American problem of monoculture – the dependence on the export of a single primary commodity – had been solved.

Without doubt, a substantial industrial revolution had occurred in Brazil; and it had largely been engineered by technocrats sponsored by the armed forces. But this success was built on the programme of industrialization achieved over many years since the foundation of the Estado Nôvo by Getúlio Vargas in 1937. Underlying the intervening conflicts of parliamentary politics, there had been a remarkable continuity in the course of Brazilian development from the Getúlio Vargas era to the military governments of the 1960s and 1970s. Development continued to be based on a sustained drive for industrial growth largely financed by foreign loans and investment, but directed by the state. The military governments of the 1960s and 1970s kept all basic industries and utilities under state control; they largely retained the nationalist policy of import-substitution industrialization by selective tariffs; and they also preserved the core of the social welfare and labour legislation of the Estado Nôvo.

Brazil’s extraordinary drive to modernize in the twentieth century produced a powerful industrial economy in the space of little over three decades. The costs were enormous: acute dislocations of regional economies, the destruction of virgin lands, an imbalance between the countryside and the cities, and deep cleavages between the working class, industrial capitalists and the middle classes. And yet, industry did not become productive enough to absorb the potential labour force, while the countryside remained under-productive and socially divided. Successive governments tried to force the pace of industrial development, as well as increasing spending on welfare programmes to alleviate the social misery. The results were vicious circles of inflation and budget deficits, which spiralled uncontrollably, robbing governments of authority. In 1964 the armed forces intervened to try to restore order, but by the late 1970s they too had been drawn into the spiral of inflation and debt; their historic pursuit of ordem e progresso had led, paradoxically, to a situation where economic progress had become the enemy of social order.

The Brazilian crisis of the 1980s was as much a crisis of the state as of the economy. In the medium term economic improvement might come through an upturn in the world economy combined with a successful anti-inflation programme and international assistance with debt relief. But a lasting settlement of the crisis would require the emergence of a legitimate democratic state, whose representative institutions could command the confidence of the nation as a whole.

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Latin American Debt Crisis, 1980s

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 364-367:

The mounting problems caused by the economic distortions of import-substituting industrialization [= ISI] and the associated weakening of the state came to a head in the 1980s. The crisis had been deferred in the 1960s by strong world growth, and in the 1970s, when international demand was slack, by foreign loans. But a sudden change in the world financial system effectively cut off the flow of capital to Latin America.

In August of 1982 the Mexican government announced that it was unable to pay the interest on its debt to foreign banks. Mexico was followed shortly by virtually all the Latin American countries, including Cuba. (Suspension of debt payments occurred also in African and Asian countries, but the sheer size of the Latin American debt focused international attention on the continent.) The total outstanding Latin American debt in 1982 was estimated at $315.3 billion, although over $270 billion was owed by just five countries – precisely those which had undergone the fastest ISI growth in the 1960s and 1970s. Brazil was the largest debtor, owing $87.5 billion; Mexico owed $85.5 billion, Argentina $43.6 billion, Venezuela $31 billion and Chile $17 billion.

What had caused the crash? The immediate factor was the steep rise in US interest rates in 1979–82. This was a response to the high rates of inflation and the consequent weakness of the dollar caused by the producers’ cartel, OPEC, sharply raising the price of oil in 1973 and again in 1979. A world recession followed, which had a disastrous effect on the economies of Latin America: commodity prices started to fall on world markets just when higher export earnings were needed to cope with sharply rising interest rates on the foreign debt.

The bonanza of lending and borrowing that Latin American governments and Western banks had indulged in throughout the 1970s had its origins in the very phenomenon that would cause it to come to an abrupt end a decade later: the OPEC cartel’s oil-price rises of 1973 and 1979. High oil prices allowed producer countries, especially the Middle Eastern Arab states, to build up huge surpluses on their balance of payments. Profits from oil exports were too large to be fully absorbed by investment in their domestic economies, and so these OPEC countries deposited vast sums of money in European and North American banks. Western bankers then set about looking for ways of getting a good return on these windfall deposits, and their most willing clients were the developing countries of the Third World, who were hungry as always for development capital.

Latin America was especially susceptible to the blandishments of the Western banks, for in the early 1970s, as we have seen, the most advanced of the industrializing countries in the region had come to the limit of the ‘hard’ phase of import-substitution; the process of state-subsidized inward-looking development could be kept going only by borrowing abroad to cover the yawning deficits between national income and expenditure. There followed a mad spiral of irresponsible, profit-driven lending and unwise borrowing, in which Western bankers as much as Latin American officials appeared to overlook the implications of taking out huge loans on ‘floating’ instead of fixed interest rates. However, after the shock of the second oil-price rise in 1979, conservative administrations in the USA and other industrial countries like Britain decided to bring their domestic inflation under control by restricting the supply of money and credit; this economic policy choked off demand in the West and produced a worldwide recession. International interest rates on foreign debt suddenly started to ‘float’ ever upwards until by the middle of 1982 most Third World countries found it impossible to meet their interest payments.

Indebtedness and high inflation were not, therefore, peculiar to Latin America. In fact, most governments in the industrial countries had been running up debts during the 1970s. The US budget deficit in 1982 was actually larger than that of the worst Latin American debtors, and throughout the 1980s the Reagan administration, for fear of electoral unpopularity, was unwilling to cut it by raising taxes or reducing imports. Yet it was the Latin American debt and not the US deficit which caused international alarm, because a country’s economic health was judged according to its perceived ability to overcome its financial difficulties, a factor expressed in terms of the ratio of interest payments to export earnings. Latin American countries scored badly here, given their relative neglect of the export sector in the pursuit of import-substitution. In 1982 most had ratios in excess of 20 per cent of interest payments to exports; Brazil and Argentina came off worst with ratios of 57.1 per cent and 54.6 per cent respectively, while Mexico, despite being a major oil exporter, had a ratio of 39.9 per cent. In other words, the economies that had grown fastest in the 1970s were the most deeply indebted in the 1980s.

What had gone wrong with ISI development? In essence, it had failed to cure the underlying malaise which had begun to show itself as early as the 1920s – lack of productivity. With the aim of achieving self-sufficiency, economic planners had concentrated on substituting industrial imports by setting up national industries and protecting them behind high tariff walls to the general detriment of agriculture and the export sector. (Brazil was a partial exception since from the mid-1970s it had begun to subsidize industrial exports – an expensive exercise that did not tackle the underlying problem of productive efficiency.) National industry had been overprotected for too long and had failed to become efficient and competitive: the price of its manufactures was often up to three times the world price. Latin American economies therefore ended up with not only an unproductive export sector, dominated still by low-value primary commodities, but also an unproductive industrial sector, which nevertheless consumed expensive imports of technology. The chronic shortfall between exports and imports resulted in high inflation and mounting debts.

To make matters worse, the debt problem had been badly aggravated by the financial instability caused by hyperinflation in the 1970s. As confidence in the economy evaporated in the late 1970s, there occurred massive capital flight. Instead of investing their money at home – where the currency was virtually worthless and industries regularly made losses – rich Latin Americans put it into real estate abroad or deposited it in the very banks that were issuing loans to their own governments and companies. Huge sums were taken out of these countries: the World Bank estimated that between 1979 and 1982, $27 billion left Mexico, nearly a third of its foreign debt in 1982, and $19 billion left Argentina, whose debt in 1982 was $43.6 billion. (Brazil and Colombia were relatively unaffected because of their sustained growth and high domestic interest rates.) US and European bankers colluded fully in this crazy financial cycle, pressing high-yield loans on Latin American governments while turning a blind eye to the lucrative deposits coming in from private Latin American sources (which were more often than not the indirect recipients of those very loans).

When the crash finally came, the wage-earners and the poor felt it most: inflation soared even higher in the 1980s than in the 1970s, real wages fell, and government spending on food subsidies, transport, health and education was slashed. In 1980–84 overall growth in Latin America fell by nearly 9 per cent. Consumption per capita dropped by 17 per cent in Argentina and Chile, by 14 per cent in Peru, by 8 per cent in Mexico and Brazil. Urban unemployment doubled in Argentina, Uruguay and Venezuela between 1979 and 1984, reaching unprecedented proportions everywhere else.

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Latin American Industry in World War II

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle p. 332:

The Second World War turned out to be a watershed for Latin American industrialization. The worsening international situation had exacerbated the historic rivalry between the armed forces of Brazil and Argentina. Sensing the drift to war in Europe, the military establishments in both countries wanted to develop their own armaments industries instead of relying on imports. But the manufacture of arms required the setting-up of steel and electrical industries, and so from the 1940s the armed forces of Brazil and Argentina pressed their governments to develop an industrial base. Furthermore, as the outbreak of war created strong international demand for raw materials and foodstuffs, the Latin American export-economies boomed, and as wartime conditions abroad reduced the flow of imports, especially luxury goods, Latin American countries were able to build up large surpluses in their balance of payments: this enabled national debts to be paid off and led to the accumulation of domestic capital for investment in industrial projects.

The USA played a decisive part in fostering industrial development during these years. Needing Latin American raw materials for its war effort, it offered loans, technical expertise and equipment to assist the Latin American countries in their programmes of industrialization. During the early 1940s numerous US missions went to Latin America and signed trade agreements. The major republics duly declared war on the Axis powers and supplied the Allies with minerals and commodities. The notable exception was Argentina, where sympathy for Italy and Germany within the military junta caused it to adopt an awkward neutrality, for which it forfeited the kind of technical and financial assistance from the USA that Getúlio Vargas was getting for Brazil. The lack of US aid was an important cause of the economic difficulties which General Perón had to face in the post-war years and which contributed to his downfall in 1955. Still, even though the USA helped Latin American countries to initiate industrial development, the policy of industrialization as such was the late product of the nationalism that had evolved since the turn of the century, intensifying in the 1920s and 1930s.

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Argentina’s Boom Years

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 277-278:

With Buenos Aires at its head, the new Argentina was set upon the road to stability and modernization. In the course of the 1860s and 1870s, the liberal presidents Mitre, Sarmiento and Nicolaás Avellaneda created the institutions of a centralized nation state: a professional army, an integrated judicial system, a national bank, a system of public schooling, public libraries, an academy of science and other technical institutions. The railway and telegraphic communications began to link the hitherto fractious conservative provinces to Buenos Aires and, through it, to the world outside. The 1870s were also a time of expanding frontiers and absorption of massive new territories. Victory in the Paraguayan War (1865–70) yielded territory in the north and north-west. Then, in the south, General Julio Roca led another Desert Campaign (1879–80), which exterminated or reduced the nomadic Indians of the pampas, releasing vast acres for settlement and cultivation.

From 1880, the year in which Buenos Aires was constitutionally recognized as the federal capital of the nation, Argentina embarked on an astonishing rate of growth – sustaining an annual average of at least 5 per cent until 1914 – to become one of the richest nations in the world. The territorial acquisitions of the 1870s invigorated the economy, based as it was on cattle, sheep and, increasingly, cereals. As always in Argentina, there was a pressing need for labour, and now more so than ever – labour to work the land, to fence in and convert the barren pampas into wheatfields, and to lay the railway that would link up the provinces and turn the disparate regions into an integrated, modern nation. European immigration was therefore encouraged, and workers – mostly from Italy and Spain – flooded into this vast, empty country. In 1870 the population was less than 2 million; in the next fifty years approximately 3.5 million immigrants would come to Argentina.

The capital investment and technical expertise required for such a massive economic transformation were beyond the resources of a country that had been continually drained by military upheavals and whose economy had been based on rudimentary cattle-raising. Such resources were provided overwhelmingly by the British, who became the major customers for Argentine wheat and meat, the latter now available for export to Europe thanks to faster steamships and the introduction of frigoríficos (meat-chilling plants). A bilateral pattern of trade emerged: Argentina imported manufactured goods from Britain in exchange for her exports of foodstuffs for the British industrial working classes. However, British business also established a commanding position in the internal structure of the Argentine economy: British companies owned the railways, the telegraph, the new meat-processing plants and many of the banks and merchant houses operating in Buenos Aires; this made Argentina potentially vulnerable to external economic pressures, though it was not perceived to be a problem by any political force in the country at the time. A significant Anglo-Argentine community came into being, its upper echelons setting the social tone for the new plutocratic estanciero élite.

There were other structural imbalances. The opening up of the new territories after the ‘Conquest of the Desert’ did not lead to the emergence of a rural middle class of medium-sized farmers, as had occurred in the Midwest of the USA and as Argentine social reformers had advocated. The sheer volume of land was too great for the number of available purchasers; over-supply kept prices low until the end of the century and this cheap new land was snapped up by established landowners and merchants, who were able to expand their existing holdings. Impoverished European immigrants, on the other hand, could not initially afford substantial holdings; they started off as tenant farmers or sharecroppers in the hope of eventually purchasing their plots and extending their property, as in fact many of them did. Yet the pull of world demand for Argentine foodstuffs was such that agrarian export development encouraged ever greater concentration of resources, so that the pattern of distribution of new land in the end came to resemble the classic latifundia, the huge estates characteristic of the Hispanic seigneurial regimes established in America since the sixteenth century.

The immigrants filled jobs in industry and public works, and worked as seasonal labourers in the countryside, returning to live in the cities out of season. Wages in the country were generally good – good enough to attract the golondrinas, the ‘swallows’ who arrived from Italy and Spain for the harvest and then returned home. But most immigrants stayed and settled in the cities, especially Buenos Aires, where they suffered the vicissitudes of inflation and recession. Towards the end of the century, the market became over-supplied with labour and wages began to fall, exacerbating social tensions. Argentina’s transformation in the last quarter of the century thus resulted in a strangely skewed economic structure: the rural economy was in the hands of a relatively small creole élite of estancieros, the cities were inhabited by a large and growing proletariat, many of foreign extraction, while the booming export-economy was dominated by British financial and commercial interests.

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Brazil’s Path to Independence

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 229-230:

Brazil’s passage to independence, however, was not without its risks of political catastrophe. Though the attachment to monarchy was very strong, there had emerged here and there a considerable feeling for republicanism, as attested by the Inconfidência mineira of 1788–9 and intermittent republican revolts since. In the event of a sufficiently grave crisis of royal authority, these republican sympathies could have cohered to challenge the Catholic monarchy of Portugal. Such a possibility arose in 1820, when events in the Peninsula again placed the Crown in difficulties. After the defeat of Napoleon in 1814 Portugal had been ruled by a Regency Council in the absence of the king, but in late 1820 a series of revolts by liberals led to the establishment of a government committed to a constitutional monarchy. A Cortes was called in Lisbon to draw up a constitution modelled on the 1812 constitution of Cadiz, and the king was summoned to Portugal by the liberal government.

In Brazil there was extensive sympathy for the liberal revolution and John VI came to accept the principle of a constitutional monarchy, but he was torn as to whether or not he should return to Lisbon, fearing that he might lose Brazil if he did, or else Portugal if he did not. Finally, he decided to go back, but he left behind his son Dom Pedro as prince regent in Brazil. Thus the Portuguese monarchy put out an offshoot in its most important overseas colony in an attempt to span the political rift that was opening up between Brazil and the mother country.

That rift was to widen into an unbridgeable gulf once it became evident to the Brazilian delegates at the Lisbon Cortes that the peninsular liberals were determined to return Brazil to its colonial status prior to 1808. The liberal government proposed to cancel the political equality of Brazil with Portugal and the freedom of trade which the king had decreed for Brazil when he had first arrived in Rio. This the Brazilians would not countenance and, when the Lisbon government recalled the prince regent in October 1821, the Brazilians urged him to ignore the order. Perversely, Lisbon was pushing the mostly reluctant Brazilians towards some kind of separation, but it was still unclear what form this separation would take and how it might come about. At this juncture, in the final months of 1821, a political crisis arose which could have led to one of a number of outcomes – even to a republic, for which there was considerable support among radical liberals.

It was Dom Pedro’s chief minister, José Bonifácio de Andrada e Silva, a conservative monarchist who had spent over thirty years in the service of the Crown in Portugal, who steered Brazil towards independence. On 9 January Dom Pedro had declared that he would stay in Brazil, thereby asserting his autonomy from Lisbon. After his appointment a week later, José Bonifácio edged the country along an independent path, allowing indirect elections for a constituent assembly and disregarding orders from Lisbon. The final break with Portugal came when the Lisbon government tried once again to assert its authority over Brazil by recalling the prince regent. On 7 September 1822, on the banks of the River Ipiranga near São Paulo, Dom Pedro finally rejected Portugal and proclaimed the independence of Brazil.

After his famous Grito de Ipiranga the prince regent was crowned emperor and the former colony became a constitutional monarchy in its own right. Portuguese troops in various captaincies in the north and north-east put up violent resistance to independence, but by 1824 the whole territory had been won for Dom Pedro’s regime. In the following year Portugal, under pressure from Britain, recognized the independent state of Brazil; Britain also extended recognition, in return for a promise from Brazil to abolish the slave-trade and a commercial treaty which accorded imports from Britain a preferential tariff.

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Elite Unity of Portugal and Brazil

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 208-209:

It was generally recognized in Portugal that Brazil was the engine of the imperial economy. Though Portugal might have reversed her trade deficit with Britain, it was only because she was herself in chronic deficit with her largest colony. The imbalance, however, did not lead to political frustration in Brazil. The Portuguese had been conspicuously successful in creating a unitary sense of empire in which the colonial élites could strongly identify with the mother country. In contrast to Spanish America, there was no great resentment against peninsular Portuguese: there existed little by way of a separate Brazilian culture for the élite; the involvement of sugar planters in the export-economy made for a common interest with Portuguese merchants, slave-traders and royal officials; finally, the massive presence of Africans and mulattos reinforced the identification of white Brazilians with their European cousins (family ties were, indeed, close).

The political value of this unitary sense of empire was well understood by Portuguese statesmen. Pombal, for instance, was careful not to alienate the Brazilian élites by his reforms. Posts in the bureaucracy and in the newly founded militias were open to Brazilians; local oligarchies were allowed to invest in the monopoly companies; the introduction of new crops into hitherto unsettled areas and the general expansion and liberalization of trade were designed to favour American as much as European Portuguese. Even the expulsion of the Jesuits, who had always opposed the white settlers’ Indian slaving and occupation of native lands, met with Brazilian approval – the large, well-managed estates of the Jesuits, as well as the Indian labour released by the destruction of the missions, provided excellent economic opportunities for wealthy merchants and planters. Brazil was considered to be fully a part of Portugal, even though it happened to be situated on the other side of the Atlantic Ocean; so much so, that the possibility of transferring the imperial court to Brazil in a time of peril had been mooted in Lisbon as early as the middle of the seventeenth century.

The American and French revolutions were to plunge all of Europe, Portugal included, into ideological and military turmoil.

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From Habsburg to Bourbon Spain

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 195-197:

The state of Spain was embodied in the weak and imbecilic Charles II, the last of the Habsburg line and a monarch incapable of male issue. Upon his death in 1700 there followed a war among the European powers to decide the Spanish succession. Philip of Anjou, the grandson of Louis XIV of France, eventually acceded to the throne of Spain, but his right to it was recognized by his enemies at the price of important concessions set out in the Treaty of Utrecht of 1713. Flanders and the Italian dominions were lost to Austria and Savoy; Great Britain kept Gibraltar and Minorca, and was allowed the exclusive right to supply African slaves to the Spanish Indies, and to an annual shipload of merchandise for trade with the American colonies; Portugal retained her smuggling centre of Colônia do Sacramento on the east bank of the River Plate. These concessions to Britain and Portugal underscored Spain’s imperial debility, since they infringed, at least for a time, the monopoly of trade with the Indies, which she had done so much to defend. Spain’s sovereignty was now reduced to the Peninsula and her realms in America and the Philippines.

This curtailment of power, though humiliating, at least unburdened Spain of dynastic possessions in Italy and the Low Countries which had drained her over the past two centuries. The Treaty of Utrecht, in fact, forced Spain to relinquish the Habsburg concept of empire, based as it had been on an essentially medieval vision of a supranational constellation of kingdoms under a single sovereign pledged to the defence of Catholic integrity in Europe. The new dynasty of French Bourbons would rule Spain as a European nation state among others, and her still very substantial dominions overseas would be regarded as resources to be exploited economically so as to strengthen her position in the theatre of European power politics. Over the course of the new century, therefore, the Bourbons were to recast the aims and methods of Spanish imperial government.

The spirit of reform significantly altered the ideological basis of the Catholic monarchy, which the Habsburgs, having taken it over from Ferdinand and Isabella, had developed as the guiding principle of their imperial statecraft. The peculiarly Spanish symbiosis of Crown and Church, which endowed the Catholic monarchy with its monopoly of legitimacy, gave way under successive Bourbon kings to a more stringent absolutism of French regalist inspiration. According to this new doctrine of the divine right of kings, the monarch was invested with the authority to rule by God Himself; his power, therefore, was not limited in principle by religious and ethical sanctions upheld by the Church, and much less so by the more ancient, medieval sense of contract with or obligation to his subjects which was still latent in Spain and which had always been much closer to the surface among the conquistadors and their successors in the Indies.

The new regalism permitted the monarch to do what the Habsburgs had been restrained from doing by the force of religious counsel: it allowed the Crown to frame policies on pragmatic grounds of national self-interest. Impracticable chimeras upon which Catholic Spain had spent so much blood and treasure – the defence of orthodoxy against Dutch rebels and English schismatics, the crusade against the Turk, the protection of Indian rights in the New World – no longer needed to be pursued beyond reasonable limits, for the light of reason had to be allowed to filter through the blinds that kept Spain in her neo-medieval ‘darkness’. And yet, those blinds could not be removed altogether; the Catholic Church was too well entrenched in the state and society and, in any case, the Bourbons realized the value of the Church as both a pillar of the social order and a unifying factor in a far-flung empire.

The ideology of the Bourbon reformers has been aptly called the Catholic Enlightenment, for it was a cautious attempt to adjust to the scientific and rationalist spirit of the eighteenth century without disturbing the fundamentals of the Catholic faith.

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Filed under Austria, Belgium, Britain, France, Italy, Latin America, Netherlands, philosophy, Portugal, religion, Spain, war

Evolution of Slavery in Brazil

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 172-173:

In practice, the royal legislation concerning the enslavement of Indians was ignored virtually in its entirety by the Portuguese in Brazil. The hunting of Indian slaves was to continue throughout the colonial period. However, the nature of slave-holding in Brazil underwent a slow but eventually decisive change after about the middle of the sixteenth century. Indians along the coast were becoming scarce: as hostilities between settlers and natives grew fiercer, tribes withdrew into the hinterland; at the same time diseases started to thin their ranks. The available labour force was drastically depleted, intensifying the competition between missionaries and planters for Indian manpower.

An obvious solution lay in the importation of African slaves to work on the Brazilian plantations. The Portuguese had been operating a slave-trade along the African coast for nearly a century, and they were splendid mariners, so there was therefore no impediment to extending the trade to the New World. Even though African slaves were more expensive than Indian, there were two distinct advantages to the owners: the Africans had the same immunities to viral infections as the Europeans, and they were reputed to be better suited to the kind of hard labour required on the plantations. The demand for labour in the burgeoning sugar industry of Brazil was to lead to an enormous expansion of the African slave-trade (and demand would grow a few decades later in the 1580s when planters in the islands and coastal areas of the Spanish Indies began to seek a replacement for vanishing Indian manpower).

How many slaves were imported into Brazil is not reliably known, and what figures there are remain in dispute, but it is clear that the numbers were very high. By the end of the sixteenth century there may well have been between 13,000 and 15,000 black slaves in Brazil, constituting some 70 per cent of the labour force on the plantations. The white population of Brazil in around 1585 has been estimated at 29,000. During the first half of the seventeenth century about 4,000 slaves a year were imported into Brazil; from about 1650 to 1680 this figure rose to about 8,000, after which it began to tail off. In the eighteenth century the volume of imports began to increase once more when the gold-mining industry pushed up overall demand – Bahia alone received some 5,000 to 8,000 slaves a year. In the north-east as a whole slaves made up about half the population – over two-thirds in the sugar-growing areas. So many were imported partly because the mortality rate of the black slave population was so high and because its rate of procreation fell consistently below the level of replacement – an index of the tremendous demoralization and physical strain that afflicted the slaves. Philip Curtin estimates that in the course of the seventeenth century Brazil took a 41.8 per cent share of the total number of slaves transported to America.

The arrival of Africans in such huge numbers was to add a new demographic dimension to the Portuguese colonies in the New World. Since such a great part of the population was non-white, race mixture soon produced, as in the Spanish Indies, very many people of intermediate ethnicity – mulattos or pardos (white-black), mamelucos or caboclos (white-Indian) and cafusos (Indian-black). Brazil would become an extremely colour-conscious society, and racial features were an important element in social ranking and cultural identification. The inescapable reality was that the sugar economy, as created in the middle of the sixteenth century, made slavery a founding fact of Brazilian society.

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Filed under Africa, Brazil, disease, economics, labor, migration, Portugal, slavery