COPY NO. .1 € . PRESIDENT OF THE UNITED STATES FOR THE:
Papers. of 
| HARRY 
s, TRUMAN: 
ts SECRETARY PILE| 
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: 
|. 
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“HARRY 
"HARRY 
TRUMAN 
PRESIDENT 
SECRETARY FILE] 
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Published November 1948 
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SR-17 
BRAZIL 
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TABLE OF CONTENTS 
SUMMARY 
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CHAPTER I—POLITICAL SITUATION 
1. GENESIS OF THE PRESENT POLITICAL SITUATION . 
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2. 
PRESENT GOVERNMENTAL STRUCTURE . 
a. 
The Executive Branch 
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b. 
The Legislative Branch 
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c. 
The Judicial Branch 
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d. 
Suffrage™ 
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e. 
State and Local Government 
.. 
. 
3. PouiTicaL PARTIES. 
i 
a. 
Partido Social 
(Social 
‘b. 
Uniao Democratica Nacional (National Democratic Union) 
c. Partido Trabalhista Brasileiro (Brazilian Labor Party) 
d. Partido Commista do Brasil (Communist Party of Brazil) . 
4. OTHER INFLUENTIAL GROUPS 
‘ 
The Army 
b. Big Business 
5. STABILITY OF THE PRESENT REGIME 
CHAPTER II—ECONOMIC SITUATION 
1. 
Foop AND AGRICULTURE 
NATURAL RESOURCES 
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3. 
INDUSTRY 
a. 
Food-Processing Industries 
b. 
Textile Industry 
; 
c. Iron and Steel 
d. 
Chemicals . 
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Construction and Building Materials 
f. . Paper and Pulp . 
Vegetable Oils 
36. 
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4. 
FINANCE 
, 
5. INTERNATIONAL TRADE 
CHAPTER III—FOREIGN AFFAIRS 
1. 
Bases or BRAZILIAN ForEIGN 
. 
2, 
BackcRounp 
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3. CURRENT RELATIONS—INTERNATIONAL ORGANIZATION 
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4. 
CURRENT RELATIONS—LATIN AMERICA 
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5. 
US RELATIONS—GENERAL ESTIMATE . 
6. Summary 
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CHAPTER IV—MILITARY SITUATION 
1. 
GENESISOF PRESENT 
POLICIES 
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. 
. 
. 
2. 
War PoTENTIAL. 
: 
a. Manpower . 
b. Natural Resources. 
. 
Industry 
d. Science 
e. 
Finance 
3. 
Basic MILITARY POLICIES AND PRACTICES . 
b. General Military Organization 
. 
(54 
c. 
Recruitment 
. 
(55 
e. Training. 
Mobilization 
g. Fiscal . 
h. 
Logistics 
. 
i. 
Intelligence and Counter-Intelligence 
E 
4. 
ORGANIZATION, STRENGTH, AND DISPOSITION OF THE VARIOUS ARMED FORCES 
a. Army. 
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Navy 
d. Distribution of Forces 
.. 
|; 
e. Quasi-Military Organizations 
. 
5. 
Genera, Estimate or MILITARY CAPABILITIES 
a. 
Adequacy of Present Forces 
: 
b. Maximum Military Capabilities . 
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CHAPTER V—STRATEGIC CONSIDERATIONS AFFECTING US SECURITY 
APPENDIX A—Topography and Climate 
Y 
APPENDIX 
Characteristics and Statistics 
APPENDIX D—Biographical Data 
“APPENDIX E—Chronology 
Maps: 
The World Around Brazil | 
Brazil: 
Brazil: 
Brazil: 
Density of Population 
Commodities and Natural Secouress 
Terrain and Transportation 
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Papers of 
| HARRY s, 
RESIDENT 
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SUMMARY 
Brazil is a federal republic, the governmental organization and powers of which 
© 
generally parallel those of the US. Although basically the distribution of powers is 
similar to that of the US, the Brazilian federal government constitutionally has the 
power to legislate more extensively on many social and economic matters that are 
traditionally considered in the US to be within state jurisdiction. 
Lack of financial 
resources and an inefficient administrative organization prevent the federal govern- 
ment from exploiting this power to any notable extent. 
Democratic government and 
civil rights are amply provided for in Brazilian law, but, their full enjoyment is 
obstructed by a still-well-defined social caste system and by a bureaucracy that exerts, 
in general, a stultifying effect upon the development of democracy, since a large pro- 
portion of the present bureaucracy is a carry-over from the Vargas dictatorship. 
Events of recent months seem to confirm the conservative orientation of the Dutra 
administration. “It seems equally clear that, failing an unexpected economic Crisis, 
the government has sufficient political and popular support to continue in office until 
the next election in 1950. 
The Brazilian economy shows great eatinees variations. The southern _ of 
- Brazil is the economic as well as the political heart of the country. 
Most of the non- 
agricultural workers live in the south, and a high percentage of them belongs to gov- 
ernment-controlled syndical organizations. 
Agricultural activity, however, provides 
— 
almost half of the Brazilian national income, and considerably more than half of the 
working population is engaged in agricultural pursuits. 
Agricultural production is sufficient to maintain the Brazilian population at the 
__low dietary level it has in common with other Latin American peoples. The only sig- 
nificant food import is wheat. 
Any rapid expansion of food production is very unlikely 
in the immediate future. 
Brazil is endowed with an unusual variety of minerals of strategic value to the 
US. 
The pressing need for Brazilian materials in World War II, combined with 
the lack of previously planned methods for meeting this need, impelled the US to 
_ divert to Brazil a great amount of capital, machinery, and technical personnel that 
were sorely needed elsewhere. 
This experience suggests the desirability of a different 
method of approach for the procurement of strategic materials irr some future emer- 
gency. 
The Brazilian economy and level of technical skill, unaided by outside assist- 
ance, are unequal to the task of full and efficient exploitation of Brazil’s natural 
resources. 
As a result of agricultural, and artes of industrial, development Siiteie the 
past 25 years, the pattern of Brazil’s domestic economy and international trade is in 
Note: The information in this report is as of Senheusher 1948. 
The intelligence organizations of the Departments of the Army, Navy, and the Air Force 
_ 
have concurred in this report; for a dissent of the nN 
Urgantsacion of the Depart- 
ment of State, see footnote, page 71. 
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the initial stages of a rather radical modification. 
Through industrial development 
- 
and agricultural diversification, Brazil has partially alleviated its formerly very great 
dependence on world markets. 
Brazil’s conduct of its foreign affairs has been generally cooperative and com- 
plementary to that of the US. 
There have been, however, divergencies of policy in the 
past; there is no reason to believe that shifts in world affairs may not produce diver- 
gence in the future. 
Brazil has always been one of the strongest advocates of Hemi- 
sphere political cooperation, and has traditionally attached great importance to most 
- 
programs for international action. 
While there is a latent rivalry in Brazil’s rela- 
| 
tions with Argentina, a desire to maintain cordial relations is at Present obvious on — 
both sides. 
Brazil’s military establishment, at 
the largest in 
(Army, 
140,000; Navy, 16,000; Air Force, 14 700), is adequate to maintain internal security, to 
defend Brazil against attacks by any probable combination of neighbors, and to assume 
@ proportionate responsibility in joint Hemisphere defense. Maximum capabilities, 
| 
_ 
in proportion to population and potential resources, will remain low, even assuming US 
| 
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assistance, because of the low quality of Brazilian manpower resulting from unsatisfac- 
tory standards of health, sanitation, and education. 
Brazil's natural resources and 
| 
industrial organization, present and to be expected, are not sufficient for the mainte- 
nance and combat employment of large forces. . Much equipment is, and will continue 
to be, imported. 
Organization, equipment, and training of the Brazilian armed 
forces are modeled as closely after those of the US as limited Brazilian finances and 
capabilities will permit. 
Brazil uses an adequate system of compulsory military serv- 
ice, but no system of periodic training 
of reserves has been instituted. 
Conscript incre- 
ments form a smaller part of the forces than in the average Latin American force 
depending in part on conscription, so that there is no dangerous reduction of forces 
between the discharge of one conscript class and the calling up of another. Forces are 
distributed near population centers, with the largest contingent in the south near 
the Argentine and Uruguayan borders. 
Brazilian intelligence is well organized anc 
of distinct value to the US in World 
' 
as quasi-military forces num- 
be 
ch are trained to supplement military forces in time of war. 
Brazil is of strategic importance to the US from the political, economic, and mili-_ 
tary viewpoints. 
Brazil has considerable latitude for independent action in interna- 
tional affairs and shares with Argentina capabilities for countering US strength by col- 
laboration with extra-Hemisphere forces, or for rallying the more remote countries of 
the Hemisphere to anti-US causes and programs. 
Brazil is one of the most important 
of the Latin American countries as a source of strategic and critical materials. 
The 
military significance of Brazil arises from its geographic position with relation to 
Caribbean defense requirements and to trans-Atlantic movement of military forces. 
rt 
TRUMAN 
LIBRAR 
| 
-ARRY 
TRUMAN. 
Se TRUMAN 
aRY FILE! 
| 
RSTDENT'S SECRETAX 
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1. 
GENESIS OF THE PRESENT PouITical System. 
emi- 
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When the republic was established in 1889, the Brazilians wena a ccniatituiton 
ass 
a 
similar in its basic concepts to that of the United States. Although there has been a 
son 
reasonable amount of progress and political development under the democratic fed-_ 
q 
a3 
eral system, the failures in Brazilian political evolution may in large part be attributed 
a 
eny, 
a 
to the fact that such a system does not fit the realities of Brazilian history and society. 
| 
3 to 
Brazil was one of the last countries in Latin America to attempt the establishment 
' 
if 
me 
of a government which was federally organized and which provided for the whole range 
ies, 
of civil liberties and guarantees that are found in the US system. Thus, Brazil has 
us 
) 
had a minimum of time (59 years) to adjust to a governmental yoem which flies in the 
: 
of an historical tradition centuries old. 
and 
: 
During the colonial period (1502-1822) government was centralized in the hands of 
| 
inite- 
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royal officials, and society continued to have a clear-cut stratification of classes with 
ye 
i 
characteristic upper-class privileges and exemptions. In contrast to the other Latin 
i 
ed 
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American countries, Brazilian achievement of independence (1822) did not entail any 
ond 
| 
radical breaking with the past: it merely involved the exchange of one monarchy for 
i 
cy. 
 #f/ 
 another. 
In 1820 when King Dom Joao returned with his court to Portugal and 
attempted to revive the pre-Napoleonic policy of governing Brazil from the mother 
fe 
i: 
country, 
such a protest was aroused in Brazil that it was declared an independent 
yrees 
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empire with Dom Joao’s son, Dom Pedro I, as emperor. The empire thus inaugurated 
lasted until 1889. 
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Sear 
Dom Pedro I was a man of autocratic convictions and determiried to govern by his 
icvas 
) 
- 
convictions. 
His short reign (1822-1831) was a continual struggle between demo- 
Sime 
cratic forces and the autocratic principles of which he was an almost perfect exponent. 
i 
ee 
The emperor’s highhandedness so aroused public opinion that he was forced to realize 
i 
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that his only course, if he wished to preserve the dynasty, was to abdicate. 
He did so 
ba 
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ae 
in 1831. 
His heir being under age, a regency was established to take charge of the 
role 
i 
government for the nine-year interregnum. 
The regency relinquished power to Dom 
ke: of 
| 
Pedro II in 1840. 
ont 
a 
During his a (1840-1889), Dom Pedro II constantly promoted the democratiza- 
; “ne 
tion of the government and society. 
Centralized government continued, but civil 
| 
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liberties and representative government were legally recognized and encouraged. 
Brazil did not become, however, and has not even now become a democracy in the US. 
sense. 
Moreover, the relative progress between 1840 and 1889 was made over the 
Opposition of vested interests, heirs of centuries of privilege. 
As a result of the aboli- 
tion of Slavery in 1888, the government irrevocably lost the support of the upper classes, 
particularly of the landowners. 
The empire came to an end the following year, and 
@ republic was formed. 
— 
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Papers of 
HARRY S. TRUMAN 
\ PRESIDENT 
SECRETARY FILE 
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nate 
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The republic was established, not to facilitate democratization and the growth 
ce 
of liberty, but to protect vested interests against an all-too-liberal emperor whose pro- 
ie th 
gressive government had allowed new groups to undermine the economic and political 
: 
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bases of the power of the privileged classes. 
In the eyes of the ruling classes it was 
int 
not enough to dispense with the monarchy; centralized government of any kind had 
to go. 
Only under a federal system, with its large measure of local autonomy, could 
of ¢ 
the privileged classes have any reasonable assurance of gaining and holding the politi- 
vide 
cal power necessary to maintain their position against the growing pressures of democ- 
mist 
racy. 
Therefore, when the republic was established in 1889 it was federally organized, 
‘mus 
and the constitution contained provisions relative to civil and political rights and 
yeai 
| 
guarantees quite similar to those in the US Constitution. 
a ser 
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Brazilians were thus among the last people in the Hemisphere to get an oppor- 
. 
i 
i 
tunity to put the concepts of federalism and civil liberties into practice, and have had 
ment 
, 
only a short period of time in which to overcome the deeply ingrained, centuries-old 
gress: 
traditions of centralized autocratic government and a rigid caste society. The several 
ber of 
: 
civil wars and dictatorships during the republican era attest this fact. 
in rey 
i 
_ By far the most important of these dictatorships, in terms of its impact on Brazil, 
E 
regime 
\ 
was that of Getulio Vargas, 1930-1945. 
During Vargas’ long tenure the constitution 
| 
It 
in force at the time was either corrupted or ignored according to whichever procedure 
g 
civil Li 
met, the requirements~of the dictatorship. When the Dutra administration came to 
still 
} 
power in 1945 with the aim of restoring constitutional government, it was forced to 
g 
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draw up anew constitution. 
This constitution, which contains several significant inno- 
are by} 
- 
vations, was promulgated on 18 September 1946. 
relative 
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oy 
The general organization of government as provided in the old constitution was 
2. 
PRE 
retained in the constitution of 1946. 
Selection of the President and Vice-President 
, 
Bra 
: 
by the electoral college system was discontinued, however, and election by.direct popu-_ 
general: 
lar vote substituted. 
The ‘term of Senators was reduced from nine to eight years, 
es 
each org 
one-third of the Senate being elected at one eee 
eer 
thirds at the other quadrennium. 
m 
é 1937 constitution for establishment of a permanent commit- 
F 
tee of the Senate to exercise various checks on presidential action during the period 
| 
term of fi 
when Congress was in recess was deleted from the Constitution of 1946. 
In mostcases 
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of national defense emergency, the President may now take immediate independent 
not be re-t 
action. 
When he does so, however, he is required to issue a call for a. congressional 
- relative su 
session to meet within fifteen days to ratify or disapprove the President’s actions. 
| 
| 
President 
The provisions dealing with the state of siege have been amplified in the con- 
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Senate, 
Cr 
stitution of 1946 in an attempt to protect the country against the President’s abuse of 
tere : 
this power. 
The President may now declare a state of siege only when Congress is not 
of a tie. 
in session. 
He is further limited by the fact that he must call Congress into special 
| 
Th 
session to convene within fifteen days after the declaration of a state of siege. 
AN 
sage to Con 
facts are then reviewed by Congress and a vote of approval or cancellation taken. 
_ 
The Vargas regime, for reasons of political expediency, introduced certain govern- 
mental controls over private property, thus modifying the orthodox capitalistic con- 
with membe 
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cept represented in the old constitution. 
Many of these were made permanent in 
the constitution of 1946, and, as a result, the government may now legally intervene to 
supervise an industry or other economic activity when it is considered in the public 
_ interest to do so. 
_ On paper, the constitution of 1946 appears to be admirably suited to the needs 
of government in Brazil. 
It recognizes the critical problems of the country and pro- 
vides machinery for their solution. 
It makes what seems to be a practical compro- 
mise between individual liberties and the social necessities of Brazilian civilization. 
It 
must be remembered, however, that this constitution has been in force less than two 
years; hence it is too early to decide definitely whether or not the Brazilians will make 
_a serious effort to live by the letter and spirit of their fundamental law. 
: 
_ 
Partly as a result of conditions created by Vargas, the present Brazilian Govern- 
ment is functioning to a large extent on the basis of executive decree rather than con- 
gressional legislation. 
Congress has done little as yet to enact the considerable num- 
ber of laws necessary to implement the new constitution, nor has it made much progress 
in repealing or ‘modifying certain undesirable laws promulgated during’ ' 
the —— 
regime. 
It should not be selene that the benefits of federalism and the enjoyment of 
civil liberties are by no means complete realities in Brazil today. 
The ‘old families” 
still exercise considerable political influence and economic power. 
The poverty- 
stricken and illiterate masses do not participate effectually in politics. 
Civil liberties 
are by no means a farce; yet the measure of their enjoyment is still determined by the 
-Telative few who control the government. 
2. 
PresENT GOVERNMENTAL STRUCTURE. 
Brazil is a federal bier gay the mag organization and powers of which 
states in the union, 
each neni under the republican form of government, with its own 
constitution 
and laws. 
ae The Executive Branch. 
The President and Vice-President of Brazil are elected simultaneously for a 
term of five years. 
full possession of political rights, and at least thirty-five years of age. 
Incumbents may 
not be re-elected to their respective offices for the succeeding term, nor may any blood 
relative succeed them. 
In cases of vacancy in the presidency, the succession is Vice- 
President of the Republic, President of the Chamber of Deputies, Vice-President of the 
Senate, Chief Justice of the Federal Supreme Court. 
As in the United States, the 
Brazilian Vice-President presides over the Senate, being qualified to vote only in case 
a tie. 
The President of Brazil may directly introduce legislation by means of a mes- 
Sage to Congress; that is, he does not, as in the US, merely recommend it. He shares 
with members of the House of Deputies the authority to introduce legislation fixing 
the size of the armed forces as well as finance legislation. 
Only the President may 
| introduce bills creating public administrative offices or modifying the salaries of public 
| 
To qualify for either office one must be a native-born Brazilian, in — 
Papers 
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officials. 
Presidential influence in legislative matters is exerted through the Ministers 
of State, who may be called before either house of Congress, or any of its committees, 
for information or advice. 
A Brazilian cabinet officer, however, may not participate in 
congressional sessions as of right but must be invited by the particular house. When 
attending under these circumstances, he is constitutionally required to limit his dis- 
cussion to those matters previously indicated by the particular house in its summons, 
thereby restricting the extent to which the President may bring his influence to bear. 
While giving Congress exclusive discretion as to the subject matter that may be dis- 
cussed, this arrangement also operates as a protective device for the President in that 
cabinet officers may not be exposed to questioning which was not anticipated and for 
which they are not prepared. 
The President is given ten working days in which to sanction or veto bills that 
have been passed by Congress. 
The Brazilian President, unlike the President of ‘the 
United States, has an item veto which gives him greater influence in the determination 
of legislative policy. 
(The item veto makes it possible for the chief executive to veto a 
part or parts of a bill while approving the remainder.) 
Vetoed bills are returned to 
the President of the Senate who calls Congress into joint session to consider the veto 
message. 
A veto may be overridden by a two-thirds vote of the Senators and Deputies 
present at the joint session> 
The Brazilian President’s constitutional power with regard to special con- 
gressional sessions is not as potent a basis for influencing legislative policy as that of 
other Latin American presidents. 
In the first place, the ordinary session of the Bra- 
zilian Congress is of nine months’ duration, a relatively long period for Latin American 
legislatures; hence there is less likelihood that a special session will be needed. 
In the 
second place, the President’s control over the work of a special session is much less 
than that of other presidents because even in a presidentially-called special session, 
Congress may consider and enact any legislation within its normal competence. Con- 
gress is only morally (not constitutionally) bound to consider the legislative matters 
suggested by the President 
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power in this connection is further limited by the ‘on that ~ dank: aa bane the exclu- 
sive power to call a special session. It must also be called 7 petition of one-third of 
the membership of either house. 
_ The President is required to present the budget bill to the House of Deputies 
within the first two months of the congressional session. 
If Congress has not passed 
the budget by 30 November, the budget of the preceding year is 
alitomatically extended 
for another year. 
In an attempt to assure a balanced budget, the constitution pro- 
hibits the inclusion of any item of expenditure the income for which is not provided 
also. 
In the past, Brazilian presidents and congresses have successfully ignored con- 
stitutional provisions designed to insure a balanced budget and consequently have kept 
the budget in a chronic state of imbalance. 
The present constitution (adopted in 
1946) contains even more detailed and extensive limitations and controls. 
It must be 
kept in mind, however, that the present Dutra administration (the only one so far under © 
the new constitution) has been unusually economy-minded, and has, therefore, oper- 
ated well withi 
can tell if late 
trols on budge 
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ated well within the letter and spirit of the constitution in this regard. 
can tell if later administrations will be resourceful in evading the constitutional con- 
Only the future 
trols on budget making. 
| 
The Brazilian Civil Service is viateente large, : 
as well as wasteful and inefficient 
-when judged by present-day US or British criteria. 
Admittance to the bureaucracy is 
obtained largely through-political and social influence. 
Some progress is being made 
toward recruitment through examination, especially in the Ministry of Foreign Affairs 
| 
and its Foreign Service. 
The merit system is, however, in its infancy and there is no 
evidence that it will greatly influence public administration for a long time to come. 
The bureaucracy exerts in general a stultifying effect on the development of democracy 
since a large proportion of it is a carry-over from the period of the Vargas dictatorship. 
b. 
The Legislative Branch. 
The legislative branch of the Brazilian Government consists of a Senate and 
a House of Deputies, members of both being chosen by direct popular election. 
The Senate is composed of 63 members; the 20 states and the Federal District 
elect three Senators each for a term of eight years. 
One-third of the membership is 
elected in one quadrennium and the remaining two-thirds in the other quadrennium. 
The constitution vests four special powers in the Senate: it acts as a court of 
impeachment; it is charged, whenever any decree or law has been declared unconstitu- 
tional, with the duty of officially suspending the execution of such law or decree; it con- 
firms the appointments of various public officials; it must approve any foreign loan 
proposed by the Federal District, or any state or municipality. 
‘The House of Deputies is composed of representatives of the states and fed- 
election district. 
Brazil uses a type of electoral quotient system wherein the surplus 
votes of the lesser parties go to the leading party, the method of establishing the quo- 
tient being to divide the total votes cast by the number of seats to be filled. 
If a party 
does not receive a number of votes equivalent to the quotient, then all of its votes are 
added to those of the leading party. 
If a party receives a number of votes greater 
than the quotient, or a multiple thereof, the surplus votes are added to those of the 
| 
leading party. 
For example, if a party obtains 17,000 votes and the quotient is 5,000, 
that party is entitled to three Deputies. 
The surplus of 2,000 over the 15,000 necessary 
for the election of the three Deputies is added to the number of votes obtained by the 
leading party. 
The votes transferred to the leading party are referred to as sobras. 
Although under this system minority parties do gain representation, the lead- 
ing party has greater representation than would be justified under a truly propor- 
tional system. 
Moreover, in extreme and isolated cases, this system makes possible a 
form of gross misrepresentation. 
For example, in the January 1947 elections for 
members of the municipal council of the Federal District the votes of the Christian 
Democratic Party were given as sobras to the Communist Party, thereby causing the 
very anti-Communistic Christian Democrats 
to contribute to the political advancement 
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courts have held it to be constitutional. 
Supreme Federal Tribunal and that-of-the United States Supreme Court. The Bra- 
of the Communists. N aturally, objections to the — have been voiced, but the 
! “Roman 
— 
of oral p 
The House of Deputies, consisting of 304 members, is elected in its entirety 
| 
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every four years. 
The constitution vests two special powers in the House: the im- 
| 
d. 
peachment of public officers before the Senate, and the authority to demand of the 
| 
| 
President a financial accounting of his administration during the congressional recess 
have the 
if he fails to render such accounting within sixty days after the opening of Congress. 
classes of 
Congressional organization and procedure are generally similar to those in the 
themselve 
United States. 
As has been stated, the power to call a special session of Congress is 
those dep. 
not vested in the President alone: a petition signed by one-third of the membership of 
for officers 
either house also requires one. 
The President is thus prevented, should he wish to do_ | 
the countr — 
so, from thwarting the popular will by refusing to call a special session. 
| tion and vi 
c. 
Judicial Branch. 
Compulsor 
| 
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than it is ir 
Brazilians have adopted the same solution of the judicial function in a fed- 
: 
the legislat 
eralized government as that in the United States Constitution. 
That is to say, litiga- 
, 
practical di 
tion involving a national interest or problem is adjudicated with finality in the federal 
| 
| 
court system while litigation exclusively of state interest is heard and decided with 
. 
Alt 
finality within the particular state court system. A second parallelism is foundinthe 
§ 
because of t 
constitutional organization of the federal court system. The Brazilian Constitution 
‘gj 
\RUblic apatl 
establishes only two federal courts (the Supreme Federal Tribunal and the Federal 
Court of Appeals) and leaves the creation of lesser courts to the discretion of Congress. 
The Supreme Federal Tribunal is composed of eleven Justices appointed by 
the President with the Senate’s approval. 
As a bar to “packing the court,” the con- 
stitution provides that the number of Justices may be increased by an act of nee 
when an increase has been proposed by the court itself. 
ae 
ee 
There are no significant differences between the jurisdiction of the Braz 
4,818,108 vot 
Coer 
ing Brazilian 
ticipation in | 
election mach 
how one is to. 
with only isol< 
to have been tl 
original jurisdiction in cases involving the malfeasance and mis- 
feasance in office of certain high government officials, conflicts of jurisdiction between 
federal and state courts, and in cases in which either the federal government or any 
of the states is a party. 
Appellate jurisdiction is so designed as to give the Supreme 
ae 
te gest 
_ 
Federal Tribunal final decision in cases involving an interpretation by lower courts 
i 
_ 
either federal or state, of the treaties, constitution or laws of the republic. 
MOTIESE. baa i 
The Federal Court of Appeals, the other constitutional court in Brazil, is 
| 
cown acanene. 
roughly comparable to the Court of Appeals of the District of Columbia in the United 
| 
peer 
rene 
States. 
It is composed of nine Judges appointed by the President with the approval | 
| 
of the Senate. 
The pos 
Judges of the federal courts hold office during good behavior and may be 
ally that of the si 
removed from office only by impeachment, which requires a two-thirds vote in the 
~ 
may not be aboli, 
Senate. 
assemblies. 
In 1 
new state within 
__Sents, while in Bro 
As in other Latin American countries, the expense of court procedure makes 
justice much more readily available to the litigant who has money. 
It is based, as in all 
HARRY Se 
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Oe 
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“Roman-law” countries, upon written briefs and written replies, involves a minimum 
of oral pleading, and is conducive to excessive Genys. 
d. 
Su ffrage. 
All citizens eighteen years old or above and inscribed in the dectotel registers 
have the right to vote. Brazilian women have had the suffrage since 1934. 
Several 
classes of persons are ineligible for registration: illiterates, those 
e to express 
themselves in the national tongue, most enlisted personnel of the armed forces, and 
those deprived of their political rights by law as the result of a criminal record. 
Except — 
for officers of the armed forces, housewives, judges, other public officials if absent from > 
the country at election time, invalids, and persons over sixty-five years of age, registra- 
tion and voting are compulsory, and failure to do so subjects the delinquent to a fine. 
Compulsory voting legislation is no more effective in “getting out: the vote” in Brazil 
than it is in the other countries of the world which have similar legislation. 
In Brazil, 
the legislation is, as all such legislation must be, — enforced because of the 
practical difficulties involved. 
Although it is estimated that there are 25,000,000 Brazilians of voting age, 
because of the legally prescribed disqualifications, combined with a certain degree of 
public apathy and lax enforcement of the compulsory registration law, Brazil has 
only about 7,500,000 registered voters. 
In the two most important elections since the 
Vargas dictatorship—those in December 1945 and in January 1947—5,843,943 and 
4,818,108 votes, respectively, were cast. 
Coercion has not generally been a significant factor in recent elections in —— 
ing Brazilian voters away from the polls. 
More important obstacles to maximum par- 
ticipation in elections are indifference, weather, and inefficient administration of the 
election machinery such as the dissemination of information as to where, when, and 
how one is to vote. 
The elections of December 1945 and January 1947 were orderly 
with only isolated instances of violence and fraud. 
Competent observers report them — 
to have been the most honest in the history of Brazilian elections. 
: 
A special system of courts has been set up for the settlement of election dis- 
putes. 
These courts perform their duties well and are generally considered to be 
honest. 
The chief criticism of their work is that they are prone to delay in handing 
down decisions. 
es 
State and Local Government. 
The position of the states in the Brazilian governmental organization is virtu- 
ally that of the states in the United States: they have a constitutional right to exist and 
_ May not be abolished or dismembered without the consent of their respective legislative 
- 
assemblies. 
In the United States, however, Congress may abolish a state or erect a 
new state within the territory of an existing one, provided the legislature thereof con- 
sents, while in Brazil such congressional action is subject not only to the consent of the 
if 
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state legislature, but also to the results of a plebiscite of the people residing in the 
area directly affected by such modifications of territorial limits. 
The federal government is one of delegated powers. 
The states have govern- 
ments of reserved powers in that there is reserved to them all powers which are not 
explicitly of implicitly prohibited to them by the constitution. 
Although basically the 
distribution of powers in the Brazilian federal union generally parallels that of the 
US, nevertheless the Brazilian federal government constitutionally has the power to 
legislate more extensively on many matters which are traditionally considered in the 
US to be within state jurisdiction. 
Hence, in meeting the social, economic, and politi- 
cal needs of the pcople of Brazil the federal government could play a greater role than 
that of the US. 
. This situation results from two factors: (a) the powers delegated to 
the federal government are more extensive and detailed, and (b) the Brazilian courts 
and Congress have been more liberal in their interpretation of the implied powers of. 
the federal government. 
Lack of financial resources and inefficient administrative 
organization prevent the federal government from exploiting this power to any notable 
extent. 
There is one other major difference between the US and Brazilian federal unions 
with regard to the distribution of powers. 
The US Constitution contains no express 
a 
» 
» 
* 
guarantees for municipalities against action by their respective state governments. 
The only federal protection municipalities have against state action is that by modern 
interpretation of the “equal protection of the laws” and “due process” clauses of the 
Fourteenth Amendment, municipalities get a limited protection against arbitrary action 
by state governments. In Brazil state governments do not have as complete control 
of municipalities. 
The constitution expressly defines and protects the taxing power 
of municipalities. 
It guarantees their right to determine their own administrative 
organization with regard to matters of peculiar municipal interest. 
There are two 
important limitations upon these municipal powers. 
In those municipalities defined 
by federal law to be important defense and industrial areas the mayor (prefeito) is 
appointed by the State Governor or President of the Republic as the case may be. 
The 
second limitation is that the state government may intervene in the municipality when 
higher authorities consider that. the municipal financial or administrative system is 
being locally mismanaged. 
Although the Brazilian states as geographic units play a 
_ 
very important role in the electoral and general political pattern of the country, their 
legal position and competence is more circumscribed than is the case of the United 
States. 
As in other Latin American federal unions, the constitutional right of the central 
government to intervene constitutes a potent control of state governments. 
The new 
Brazilian constitution, however, goes further in setting up protections against the 
abuse of the power to name interventors than is found in most other Latin American 
constitutions. 
The power to decree an intervention for certain reasons is vested in the 
President, and for others, in the Congress, neither having complete exercise of the 
power. 
The President’s discretion is more limited than that of the Congress. 
Partic 
Uniao 
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3. 
POLITICAL PARTIES. 
FEDERAL. 
FEDERAL CHAMBER 
PARTY AFFILIATION 
SENATE 
OF DEPUTIES | 
Partido Social Democratico 
144 
Uniao Democratica Nacional 
| 
Partido Trabalhista Brasileiro 
as 
18* 
Partido Republicano 
Partido Social Trabalhista 
Partido Social Progressista 
Partido Democrata Cristao 
Partido Socialista Brasileiro 
Partido de Representacao Popular 
Partido Libertador 
Partido Republicano Democratico 
Vacancies because of expulsion of 
: 
Communist members 
Communists elected under PSP label 
ry 
Affiliation uncertain 
Total 
| 
304 
* The PTB lists 24 deputies elected by that party but 6 have either withdrawn or been: expelled. 
** The PRD is not legally registered but Guaraci Silveira, although elected by the PST, con- 
siders himself a member. 
Brazilian political parties are highly unstable both as to membership and as to 
electoral alliances. 
They are markedly personalistic in character, and only during the 
last several years have they been operating on a national basis. 
Under the First 
Republic, all parties were essentially state organizations which made alliances among 
themselves for participation in national elections, and because of this situation, the 
parties in the two most populous states (Sao Paulo and Minas Gerais) used to enjoy 
a great strategic advantage, and the asa esd usually went to the governor of one 
or the other of them. 
Getulio Vargas, with the aid of interventors and other federal officials stationed in 
the various states, broke the power of the state machines and created one of national 
scope. 
To consolidate this success, a new electoral decree was issued for the 1945 
national elections which forbade state parties to participate therein. 
In order to 
qualify as “national”, a party must have adherents in as many as five states. 
_ 
During the closing months of Vargas’ regime, two major parties appeared: the PSD 
(the party of the Vargas-created national machine); and the UDN which united all 
those elements that had played leading roles in the political life of the Republic before 
the Vargas coup. 
These loosely knit parties are not separated by any sharp issues, nor 
does either have a consistent, well-defined political philosophy. 
Of the remaining 
parties, only two—Getulio Vargas’ Labor Party and the Communists—can be said to 
nave a real impact upon national affairs. 
Each of the latter two is built around a 
Papers 
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Although fourteen parties participated in the last national 
elections (January 1947), these four polled 79 percent of the total vote. 
Of the ten re- 
maining parties, three accounted for 15 percent of the total. 
These latter parties were: 
The Republican Party, largely a revival of an old Minas Gerais party, whose policies 
are similar to those of the UDN; the Social Progressive Party, which is the personal 
— 
_vehicle of Governor Adhemar de Barros of Sao Paulo; and the Popular Representation 
_ 
Party, heir of the “Brazilian Integralist Action” (the prewar Fascist movement), 
_ under the leadership of Plinio Salgado. 
Because of this multiple-party system, blocs are necessary fox victory in elections; 
hence government suffers from all those elements of instability inherent in coalition 
government. 
Because a President is by no means sure of winning control of Congress, 
the success of his administration is likely to depend upon his baad to make and sus- © 
tain party alliances within the legislature. 
Although as a result of the instability of Brazilian parties internally and in coali- 
tion, party politics seldom offer an accurate reflection of the actual interplay and rela- 
tions. of the major interest groups in Brazil, there are some policies upheld in common 
by the various parties. 
All major parties accept the principle of government aid in 
developing industry, agriculture, transportation, and communications; commonly urge 
government encouragement of cooperatives; favor anti-trust legislation as a means of 
curbing foreign monopolies; and promise improved educational and public health 
| 
facilities. 
The continuing presence on the political scene of Getulio Vargas on the 
one hand and fear of the Communists on the other, caused even the most conservative 
_ 
parties to endorse for inclusion in the 1946 Constitution the principles of social security, 
_ 
guaranteed minimum wages, the eight-hour day, and distribution among the workers 
of the excess profits of industry. 
The principal parties are as follows: 
- 
a. 
Partido Social Democrdtico (Social Democratic Party). 
The PSD, the Administration party, was formed in 1945. In almost every 
state the Vargas-appointed federal “interventor” served as chairman of the PSD state 
committee, and the key posts in the organization went to government office-holders or 
to officials in government-controlled enterprises. 
During the early months of the 
party’s existence, many members were undecided as to whether to support the official 
party candidate, General Dutra, or to continue their allegiance to Vargas and work for 
his retention of power. 
To this day, party members are plagued by this conflict of # 
loyalties. 
In the important states of Pernambuco and Minas Gerais, Vargas men still 
actually control the PSD machine, and pro-Dutra members retaliate by working with q 
local branches of the UDN. 
The PSD, while paying lip service to progressive government, is in fact giving ; 
Brazil a conservative administration. 
No doubt influenced by the Army, with which 
| 
its relations are intimate, it has successfully prevented the repeal of the undemocratic 
q 
decree-laws of the Vargas regime. 
Moreover, it has been slow in drafting the labor 4 
legislation necessary to implement the liberal labor provisions of the new constitution. 4 
the main 
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Party membership is drawn chiefly from elements deeply committed to 
the maintenance of the status quo: government officials; army officers; representatives 
of industrial and commercial interests; large land-holders; and highly placed church- 
men. The party polled 1,546,000 votes in the 1947 elections. 
(2) Program. 
Domestic: (a) Protective tariffs; (b) government-controlled trade-union 
system; (Cc) anti-Communism; (d) increased production to combat inflation and to ex- 
pand the volume of exports; (e) anti-trust legislation (in practice such would primarily 
affect foreigners); (f) increased income taxes; ( g) government promotion of industry 
and agriculture; (h) introduction of foreign capital provided it is “in the national 
— 
interest”; (i) extension of labor legislation to rural workers. 
International: (a) Hemisphere solidarity; (b) support of the UN; (c) 
vigorous diplomatic action in furtherance of Brazil’s economic interests. 
. 
b. 
Uniao Remocratica Nacional (National Democratic Union). 
‘The UDN was founded early in 1945 by government officials who had suffered 
political eclipse in Vargas’ 1937 coup. 
It is still essentially an anti-Vargas party. It 
claims major credit for the re-establishment of constitutional government in Brazil, and 
professes to regard itself as the long-term guardian of Brazil’s Seereny and civil 
liberties. 
The UDN was originally a coalition of various anti-Vargas elements including 
several of the traditional state parties. Two of the parties originally affiliated with it 
(the Republican Party of Minas Gerais and the Freedom Party of Rio Grande do Sul) 
have withdrawn to form new national parties. 
Another UDN faction, the so-called 
— 
Democratic Left, withdrew on ideological grounds and established what is now known 
as the Brazilian Socialist Party. 
a 
(1) Membership. 
Party membership consists of: members of Brazil’s “old families”; pro- 
fessional groups; many of Brazil’s journalists; intellectuals and students whose Catholi- 
cism bars them to Communism; members of the armed forces (especially the Air 
Forces). 
In the 1947 elections the party = 1,152,400 votes. 
(2) Program. 
Domestic: 
(a) Favors introduction of foreign capital; (b) recognises the 
right to strike and favors free trade unions; (c) stands for decentralization of public 
administration; (d) is anti-Communist, yet in the interest of civil liberties opposes the 
government’s suppression of the Communist Party; (e) opposes all Vargas elements. 
International: (a) Supports the foreign policy of the Dutra administra- 
tion; (b) is pro-US. 
c. 
Partido Trabalhista Brasileiro (Brazilian Labor Party). 
_ 
The Brazilian Labor Party, the political vehicle of former President Vargas, 
_ Was formed in August 1945 under the leadership of certain members of the Labor Min- 
| 
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_ istry and heads of government-controlled syndicates. 
Although Vargas was at the 
time nominally backing the candidacy of the PSD nominee, General Dutra, there is 
his overthrow in October 1945, however, Vargas and his PTB cooperated with the PSD 
continuing to do so until the campaign for the 1947 elections. 
Since the latter date, the | 
' PTB has frankly opposed the Dutra government, and frequently joined forces with the 
Communists against the administration. 
Although the Labor Party sometimes also 
copies the Communists’ propaganda line in attacking “international capitalism” and 
“Yankee imperialism”, there is no real identity of aims or sympathies between the two 
| 
The PTB’s strength and weakness lie in the fact that it is a one-man party. 
Vargas’ personality is the major bond of unity among its members, and Vargas tends 
to look with disfavor upon potential competitors within the party. When in 1947, for 
example, the party’s leader in Sao Paulo, Hugo Borghi, seemed to be developing inde- 
pendent strength within the party, he was expelled, and has ance been trying to organ- 
ize his own labor group. 
(1) Membership. 
PTB membership consists of: a high iii of the aiid classes; 
government officials (especially-in the Labor Ministry); small farmers in the south of 
| 
In the 1947 
{ 
Brazil; and businessmen who became wealthy under the — regime. 
elections the party polled 672,400 votes. 
(2) Program. 
Domestic: (a) Universal suffrage; (b) state planning and iil in i 
the economy; (c) curbs on accumulation of large personal fortunes; (d) land reform, 
(e) extension of social security program. 
International: (a) Supports the government's foreign policy; (b) pro-— 
d. 
Partido Comunista do Brasil (Communist Party of Brazil). 
Although the Communist Party has had only brief periods of legal existence | 
in Brazil, it has exercised considerable influence on the political life of the country. 
The “Socialist Party of Brazil”, founded in 1916, joined the Communist International 
in 1921. 
While officially outlawed in 1923, its small membership continued active. 
The 
prestige of the Communist Party was greatly enhanced about 1927 when Luiz Carlos 4 
Prestes, one of Brazil’s national heroes, was converted to Marxism, and subsequently 
| 
spent several years in the USSR. 
Returning to Brazil in 1935, Prestes led the National 
- 
| 
_ Liberal Alliance, 
a Communist front, in an abortive uprising against the Vargas Gov- 
ernment, and was imprisoned for his part init. 
His nine years’ imprisonment increased § 
_. his own and the party’s prestige enormously. 
In 1945, shortly after Brazil established relations with the USSR, Prestes was 
released under a general amnesty decree. .It soon became evident that he had made 4 
Some sort of deal with President Vargas who allowed the Communists (then a legally am 
recognized party) to work freely within the trade unions for the purpose of uniting 
& 
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them inan. 
munists car 
little doubt that he intended to use the party as his own political instrument. 
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them in a national confederation free of government control. 
For their part, the Com- 
munists campaigned for the election of a constituent assembly instead of the scheduled 
presidential elections, a proposal which Vargas himself thereafter endorsed. 
Alarm 
over the party’s increasing political influence was a powerful motivation behind the 
Army coup ousting Vargas. 
| 
On account of Prestes’ organizing ability and personal popularity, the Com 
munists made an impressive showing in the December 1945 elections. 
Prestes was 
elected to the Senate, and fourteen party candidates won seats in the Chamber of 
Deputies. 
The Communists were extremely active in the Constituent Assembly, work- 
ing to incorporate their program into the constitution. 
At the same time, they con- 
tinued their drive for an independent labor movement affiliated with the CTAL. 
They 
. 
also promoted several major strikes, including the nationwide bank employees’ strike, 
the Leopoldina Railway strike, and the continual strikes of the Santos stevedores who 
refused to unload ships from Spain. 
In March 1946 a strong wave of anti-Communist sentiment was aroused by 
-Prestes’ public statement that in case of an “imperialist war” between Brazil and the 
USSR, he would fight against Brazil. 
At this time a Labor Party Deputy petitioned 
the Supreme Electoral Tribunal to revoke the registration of the Communist Party. 
Although initiated at that time, the court action was not really carried forward until 
nearly a year later. 
The Brazilian Army had long been bringing pressure to bear on 
the government to outlaw the party in spite of the strenuous opposition of the UDN 
and possible US disapproval. 
Army pressure increased after the January 1947 elections, 
when the party, although losing in numerical votes, gained slightly in percentage, and 
was largely responsible for electing the Governor of the very important State of Sao 
Paulo. 
The growing influence of the Communists with labor, and the increasing anti- 
Soviet and anti-Communist feeling in the US were other factors contributing to the 
outlawing of the party at this time. 
Although the political registration of the Com- 
munist Party was cancelled on 7 May 1947 by decision of the Superior Electoral Tribunal, 
the Communists continued to participate actively in all phases of Brazilian politics until 
T January 1948, when Congress finally passed the bill withdrawing mandates of party 
officeholders. 
At that time, the Communists had one Federal senatorship, fourteen 
seats in the Chamber of Deputies (two other seats were held by Communist Deputies 
elected by the Social Progressive Party), forty-three seats in the various state legisla- 
latures, and eighteen seats (a plurality) in the Municipal Council of Rio de Janeiro. 
_ 
As a counter move to the cancellation of the party’s registration (7 May 1947), 
the Communists attempted to obtain registration for a front party, the Partido Popular 
Progressista. 
In this they failed, but in the meantime they have infiltrated several of 
the smaller parties in the various states and elected a number of their candidates to 
municipal offices. 
While known Communist Party members will doubtless eventually 
be expelled from office, the Communists will still be able to carry on their work through 
numerous front organizations; for example, the League of Anti-Fascist Intellectuals, the 
Union of Democratic Youth, the Committee of Pro-Democratic Women, the Society of 
the Friends of the Spanish People, and various neighborhood “improvement” clubs. 
‘The most active of their front organizations during the last six months of 1947 and 
— 
PRR 
» S ° 
TRUMAN 
SECREP 
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| 
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early 1948 was the MAIP (Movement to Aid the Popular Press), which succeeded in — 
po 
§ 
the Army as 
collecting a large amount of money, ostensibly: to help the Rio daily TRIBUNA POPU- 
of the officer 
LAR and other Communist newspapers out of their financial difficulties. 
Although 
and (c) the | 
TRIBUNA POPULAR itself has now been closed by executive decree, another Rio daily, | 
Infl 
IMPRENSA POPULAR, has appeared to take its place. The Communists have also § Brazilian Gc 
reorganized their cells for effective underground operation, and there have Deen some § key posts as 
hints that they may initiate a program of violence. 
(1) Membership. 
The party’s members are poner mostly from the urban working class, : 
although it has made considerable efforts to mobilize Brazil’s agricultural laborers. | 
Like other Latin American Communist parties, it has attracted many of the leading 
intellectuals, and has won the sympathy of many university students. 
In the 1947 
elections the Communists polled 452,850 votes. 
(2) Program. 
Domestic: (a) Nationalization of public services, banks, and insurance | 
companies; (b) price-fixing except on farm products; (c) land reform; (d) exclusion 
of US companies from petroleum exploitation; (e) free trade unions with the right to 
strike; (f) worker participation in industrial management and profits; (g) independent | 
labor court system; (h) universal suffrage. 
International: (a) Anti-US; (b) anti-Franco Spain; (c) pro-USSR; (d) 
friendly to the Perén government; (e) opposed to the admission of Displaced Persons 
to Brazil. 
4. 
OTHER INFLUENTIAL GROUPS. 
In addition to the regular political parties, there are several other important groups 
| 
| 
which exert, directly and indirectly, appreciable political influence. 
The basis of the ) 
effectiveness of these groups stems, in large measure, from the fact that their members 
come from a social elite which is closely knit and keenly class conscious. 
The officers 
of the armed forces, the high functionaries of the bureaucracy (including the diplo- 
matic service and the judiciary), the heads of the Catholic hierarchy, the great land- 
holders, the leading bankers, many of the important industrialists and merchants, as 
; 
well as many of the university professors, newspaper publishers and professional men, ‘ 
are drawn from a restricted number of families. 
These “first families”, extensively intermarried, are united in the effort to maintain | 
their class and their way of life against any encroachments. 
They are the backbone 
of the pressure groups discussed below, linking these groups with each other and with 
the Government. 
a. 
The Army. 
The Army is the most powerful single pressure group in Brazil, its influence 
transcending even that of the political parties which are manipulated from time to 
i | 
no government can come to power without the Army's sanction. The effectiveness of 
and prestige 
as that of 
Director of t 
officers. 
Ar! 
government- 
committees s 
An 
Security Cot 
insofar as thi 
confidence 
vis-a-vis the 
thority to det 
as to justify | 
autonomy. 
. 
porated a full 
copies of the 
“too highly 
council has h 
The 
below in Cha’ 
phasis aside, 
the interests : 
officers (such 
dent Dutra) 
them, as well 
b. 
Bigl 
Lead 
upon the gov 
people, are no 
to these “big 
also able to m 
Of p1 
duced by 
couraged to f 
syndical orgar 
Syndicates bei 
confederation: 
. 
| , MARRY» 
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Papers 
LIBRAp 
RESIDENT S SEcREr 
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ON 
. 
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ther Rio daily, 
groups 
BUNA POPU- 
vehants, as 
~*backbone - 
with 
succeeded in 
les. Although 
ists have also 
ave been some | 
Working class, 
| 
ural laborers. | 
pi the leading 
In the 1947 
pid insurance 
exclusion 
} 
© the right to 
) independent | 
-USSR; 
| 
‘.ced Persons 
oasis of the 
Members 
The officers 
| 
. the diplo- 
3reat land- 
sonal men, j 
o-maintain 
- > 
> a 
the Army as a pressure group results from (a) the close social and family relationships 
of the officer class, (b) the high degree of group spirit throughout the Army generally, 
and (c) the practice of having Army officers hold important government posts. 
' 
Influential’ Army officers not only hold numerous elective positions in the 
Brazilian Government (from that of President on down) but are appointed to many 
key posts as well. 
The War Minister is always an Army general, and greater power 
and prestige attach to this portfolio than to that of the Foreign Minister. 
Such posts 
as that of governor of a federal territory, Chief of Police of the Federal District, and 
Director of the National Department of Posts and Telegraphs generally go to Army 
officers. 
Army officers are also frequently appointed as “interventors”, directors of 
government-owned railroads and industrial enterprises, and as members of economic 
committees such as the Central Price Commission and the National Petroleum Council. 
An extremely influential agency dominated by the military is the National 
Security Council which advises the President on national and international policy 
insofar as the security of Brazil is involved. 
It consists largely of “officers in the close 
confidence of the President.” 
To illustrate the political potential of this council 
vis-a-vis the domestic political scene, the constitution gives the Security Council au- 
thority to determine those cities whose importance as ports or military bases is so great 
as to justify their being given a special form of government which restricts their local 
autonomy. 
A statute recently passed by Congress over Communist opposition incor- 
porated a full list of these cities, and when the Communist Deputies attempted to obtain 
copies of the National Security Council’s reports on the subject, these were refused as 
“too highly confidential” in nature for release even to members of Congress. 
The 
council has had an important voice in the recent discussion concerning oil legislation. 
The nationalistic views of the Army on the petroleum question are discussed 
below in Chapter II, Section 2, Natural Resources (pp. 29-31). 
This nationalistic em- 
phasis aside, there is no evidence that the Army advocates policies that conflict with 
the interests of the United States. 
Although some of Brazil’s most influential general 
Officers (such as Gées Monteiro, War Minister Canrobert Pereira da Costa, and Presi- 
dent Dutra) were notably pro-German during the early part of World War II, all of 
them, as well as the Army generany, are wuny intensely pro-US. 
b. 
Big Business. 
Leading businessmen and industrialists, as a group, exert much influence 
upon the government, particularly in the economic field. 
They, like most Army 
people, are normally supporters of the PSD. 
In addition to the influence that accrues 
to these “big business” men from their close social and family relationships, they are 
also able to make their influence effective through various organizations. 
Of primary importance in this connection is the syndical organization intro- 
duced by Getulio Vargas and retained by the present regime. 
Business groups are en- 
couraged to form syndicates somewhat analogous to the trade unions. 
Briefly, the 
syndical organization consists of local syndicates for each trade or industry, the local 
syndicates being members of state federations which are themselves under the national 
confederations of the various state federations. 
As a reward for accepting a consider- 
HARE. 
of 
LIPRAp 
= 8. TR 
ESTD 
P UMAN 
| 
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Influence 
‘n time to 
‘ume that 
iveness of 
|
- 
able measure of government control, each syndicate becomes the officially recognised 
only the Com 
spokesman for the interests of its particular trade. 
Certain material inducements are 
munist suppo 
also offered; for example, concerns belonging to syndicates enjoy preferred status in | 
Of £ 
award of public contracts. 
Liga Eleitora 
The very nature of the syndical organization existing in Brazil places the § 
: 
B 
september 18 
various syndicates in a strategic position for stimulating government action on busi- J of non-Comm 
ness problems. 
During a market crisis in the textile industry several years ago, for 
dates willing] 
example, the Syndicate of Industries of Spinning and Weaving of Rio de Janeiro was } 
: 
The 
in part responsible for the negotiation of an agreement with Argentina that raised the 
laymen have 
Argentine import quota for Brazilian textiles. 
The same syndicate was also very ™ to the Churct 
influential in 1939-1940 in obtaining certain modifications of the labor laws which j men with thc 
it desired. 
- tion, is inclin 
In addition, there are certain commercial and industrial caiiietians of a 
dictate to Bi 
private nature (already in existence at the time the syndicates were established) which ! 
Church on t] 
have been brought within the official syndical framework. 
Conspicuous examples are | 
the Commercial Assotiation of Rio de Janeiro and the Federation of Industries of the 
State of Sao Paulo. 
The former, founded as long ago as 1834, is one of the “old Portu- 
guese associations.” 
It was originally interested in promoting foreign trade policies : 
| 
which were advantageous to traders in the seaports. 
The association was gradually 
expanded to include industry, agriculture, the professions, real estate, and credit con- | 
cerns. 
While it continues, in accord with its long-established traditions, to represent 
the interests of businessmen in Rio, it began, under the Vargas regime, to represent 
| 
numerous trade associations all over Brazil. 
One of its functions is that of represent- 
{ 
ing its members in difficult and complex negotiations with the government depart- 
} 
ments. 
The government frequently turns to it for advice when drafting or amending 
; 
legislation and administrative regulations. 
The Federation of Industries of the State of Sao Paulo in 1942 represented a} 
group of syndicates that accounted for more than 60 percent of the state’s industrial ac- 
tivities. Its major activity is that of submitting recommendations on subjects of interest j 
to its membership for consideration by various governmental agencies. It has been 
responsible for new legislation (or modifications of existing legislation) on labor, manu- § 
facturing standards, taxation, bankruptcy, and innumerable other matters of concern @ 
to industry. 
Cc. 
The Church. 
The Catholic Church in Brazil has never been as powerful a political force as P 
in some other Latin American countries. 
The time has not yet come, however, when 
one can ignore the Church in any discussion of political forces in Brazil. 
Individual 
Liga Eleitoral Catdlica. 
The Church has worked to obstruct the growth of Communism in Brazil. 
In 
the more recent elections, it has actively called upon its communicants to defeat not 
| 
clergymen exert influence, particularly among rural parishioners, and in addition to 
¢ 
‘this, the Church seeks to influence political events through lay organizations such as the 
believe that t 
5. 
 STABILIT 
Events c 
orientation 
economic cri 
until the nex 
The dec 
recent electi 
conclusively 
the Vargas ft 
his denuncia 
clusion of a 
should assur 
in dealing w 
import since 
in Brazilian 
Sao Pau 
structure th 
perous, and 
ambitions fc 
to begin a p 
pirations fo: 
He was Inte! 
and at that ° 
in earnest a 
no importar 
middle class 
commerce oa 
if 
of 
LIBRARy 
| 
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| 
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| 
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| 
=
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| 
| 
jally recognized 
hducements are | 
ed red status in 
aly the Communist candidates but also any candidate believed to have accepted Com- 
munist support. 
Of particular importance in the Chureh’s anti-Communist program is the 
Liga Eleitoral Catdlica established by Carlos Carmelo Cardinal Vasconcelos Mota in 
a 
places the #§ September 1945. 
The league adopted the practice of serving notice on the candidates 
: ction on busi- : of non-Communist parties that they could not expect the league’s support if such candi- 
} years ago, for 
"™ 
dates willingly accepted Communist votes. 
de Janeiro was 
The political effectiveness of the Church is weakened in that many Catholic - 
that raised the | laymen have no hesitancy in entering into political coalitions with groups unacceptable 
was also very #™@ tothe Church hierarchy. 
Because of the family and social connections of high church- 
Z ae which 
[i 
men with those upper-class elements which govern Brazil, the Church, as an organiza- 
tion, is inclined to take its political cue from them. 
The Church is not in a position to 
dictate to Brazil’s ruling class. 
If differences of opinion should arise between the 
nizations of a 
lished) which 
Church on the one hand and the governing class on the other, there is no reason to 
| 
examples are 
j#§ 
believe that the Church could have its way. 
Custries of the 
‘ne “old Portu- 
5. 
STABILITY OF THE PRESENT RecrMe. 
nt oe 
Events of the last few months in Brazil seem to have confirmed the conservative 
| nd credit ts 
) 
orientation of the Dutra government. It seems equally clear that, failing an unexpected 
c 
economic crisis, the government has sufficient political support to continue in office 
s. t 
until the next election in 1950. 
fot 
ae 
The decisive defeat of the pro-Vargas Queremistas and the Communists in the 
ment depart- 
recent election (9 November 1947) for Vice Governor of Sao Paulo seems to have 
; ot amending 
conclusively demonstrated to President Dutra that he does not require the support of 
. 
the Vargas forces and need make no particular concessions to labor. 
At the same time, 
a 
nis denunciation of the Queremistas during that campaign smoothed the way for con- 
i ata a 
clusion of a legislative alliance with the UDN. This pact, signed 22 January 1948, 
— inn me 
should assure the administration an easy majority in Congress and give it a freer hand 
sa i 
in dealing with the Communists. 
The election was an event of the greatest political 
| 
| 
import since it was in effect a test of strength involving most of the significant elements 
‘bor, manu- 
in Brazilian politics. 
~* Of concern 4q ) 
Sao Paulo is a key state in Brazilian politics. 
It has a more complex and fluid class 
structure than the other states because it is the most highly industrialized, most pros- 
f 
perous, and has the largest immigrant population. 
For unknown politicians having 
\ 
car itemise ; 
ambitions for national office, these factors make Sao Paulo an excellent area in which 
| } 
vever, ethan a _ begin a political career. 
One of these politicians, Adhemar de Barros, who has as- 
i Pte % 
pirations for the presidency in 1950, is at present serving as governor of the state. 
! 
t aditeann es = 
_ He was Interventor of Sao Paulo for several years (1938-1941) during the Vargas regime 
Is such as ar 
and at that time built up enough of a machine and a fortune to start his political career 
. 
| 
‘n earnest after the fall of the Estado Novo. 
His Social Progressive Party, which has 
: 
| 
: 
no importance outside the state, draws its membership largely from Sao Paulo’s new 
" Brazil, 
In 4 
| 
middle class, many of them second-generation immigrants who have made fortunes in 
| 
defeat not ; mm 
= 
‘ommerce or industry, or succeeded through their own efforts in establishing them- 
| 
| PRESTp 
TRUMAN 
Sie 
| 
ry 
| 
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| 
selves in the professions. 
Although in January 1947 the PSD, the UDN, the Labor: 
Party, and the Communists were all stronger in Sao Paulo than the Social Progressives 
Party, Barros made his way by adroit political maneuvering and personal appeal.: 
After winning the governorship through an electoral deal with the Communists, ~ 
renounced Communist support and attempted to come to terms with President Dutre 
to stave off the threat of federal intervention in the State. 
In the campaign for Vice-Governor, Barros backed Luiz Novelli, Ir. 
r., Dutra’s son- 
‘ 
in-law, who ran as an independent when he failed to receive the PSD nomination.\@ 
| 
The candidate of the PSD State Committee was Carlos Cirilo, Jr., majority leader in| 
the federal Chamber of Deputies, and a member of the Queremista faction. Both 
Queremistas and Communists actively supported Cirilo. 
President Dutra, although 
j 
not endorsing Novelli, publicly condemned the PSD State Committee for its dealings § 
with the Communists. 
Novelli’s decisive victory over Cirilo had aiieiiatitii consequences. 
It showed i 
that the combined forces of the two parties making the greatest appeal to labor could 4 | 
. 
still not carry the state which was believed to have the largest labor vote. 
Communist | 
| 
| 
morale suffered a set-back because the election clearly demonstrated that the party’s | 
voting strength had declined as a result of its being outlawed. 
The election was a i 
: 
severe blow to the prestige of Getulio Vargas, who, believing Sao Paulo to be one of his 
| 
! 
strongholds, had campaigned in person for Cirilo. 
This probably has eliminated Var- 
| 
gas 
as a major factor in the 1950 presidential campaign. 
Governor Adhemar de Barros’ 
! 
position with his own constituents and with Dutra was consolidated. 
The pro-Vargas 
Queremista faction in the PSD was discredited, thereby strengthening Dutra’s hand | 
within his own party and enhancing his prestige nationally. 
Novelli’s victory in the important state of Sao Paulo is particularly wastes for 
the Dutra administration. 
The defeat of the Queremista faction of the PSD removed 
the “Vargas taint” which had made difficult any UDN support for the Dutra adminis- 
tration. 
Now that the Queremistas have fallen from favor, President Dutra has been 
able to effect a rapprochement with his “loyal opposition” which bids well to enchance 
his ability to control the political situation in Brazil. 
| 
_ Shortly before the Sao Paulo election, UDN and PSD leaders had entered into nego- 
tiations seeking some common ground of collaboration to facilitate the solution of the 
nation’s economic problems. 
The defeat of the Queremistas removed the last major 
| 
obstacle to such a joint effort. 
An inter-party pact proposed by the UDN and accepted 
by the PSD, contained the following bases of collaboration: (a) immediate execution 
of a plan for increase of production (especially agricultural production), improvement 
} 
_of transportation, and reduction of the cost of living; (b) strict observance of the consti- j 
tution (included to justify the UDN’s collaboration with a party it has consistently ac- 
cused of ignoring constitutional guarantees); and (c) quick passage of legislation 
i 
| 
- necessary to implement the labor and social provisions of the constitution. 
To elabo- 
| 
rate and execute the pact it was agreed that a temporary bipartisan economic com- 
Hy 
mission be set up to draft emergency plans. 
The agreement also envisages the creation 
| 
of a system of committees to facilitate the passage of legislation through Congress and 
to regulate inter-party relations. 
Other parties were invited to participate, but the 
vt 
P 
é 
SID NT'S 
| 
on 
y 
‘ 
he 
i 
>
chance 
2 nego- 
i . of the 
major 
-cution 
-ement 4 
consti- 
ae. 
slation 4 
| the Labor j 
Progressive 
nal appeal. ; 
cunists, he 
Hent Dutra 
| 
utra’s son-4 
o.nination. 
leader inj 
jon. 
Both? 
| although 
dealings 
j 
showed 
} 
for could 
cmmunist 
party’s § 
ton was ai 
cne of his 
ated Var- 
* Barros’ 
>-Vargas 
-S hand 
for | 
emoved | 
‘dminis- 
been | 
‘cepted 
Clabo- 
com- 
-ation 
‘Ss and. 
it the 
| 
Republican Party was the only one to join with the PSD and UDN in signing the pact 
on 22 January 1948. 
While the system of inter-party collaboration is being initiated at the federal level, 
most of the state organizations of the member parties are either undecided or unwilling 
to follow the lead of the national organizations. 
Party relations within most states 
seem to have been steadily deteriorating since the election of governors in January 
1947. 
The failure of governors to obtain majorities in their respective state legislatures 
has prolonged and aggravated local contests for power. 
One of the most difficult 
tasks facing the new Inter-Party Council will be that of creating harmony and inducing | 
cooperation among the respective parties at the state level. 
The Dutra government has, nevertheless, made a major gain in strength. 
Dutra’s 
leadership in his own party is more secure. 
The signing of the Inter-Party Pact by 
the UDN, following closely upon the ousting of Communists from elective offices (8 
January 1948), a congressional measure which the UDN had long opposed as unconsti- 
tutional, is a good indication that the leaders of the UDN consider the Communist case 
closed. 
(By making “strict observance of the constitution” one of the bases of their 
proposal for cooperation, they covered this retreat from principle.) 
The government 
will now be able to use whatever 
police measures seem necessary to keep the Com- 
munists under control. 
Furthermore, the exclusion of the Communists from the gov- 
ernment and the fact that the Sao Paulo elections showed the supposed political power 
of labor to be quite exaggerated leave the remaining parties under less compulsion to 
offer sops to labor. 
In the all-important matters of implementation of the constitu- 
tion and economic planning, the administration will probably not encounter the oppo- 
- Sition of principle which it had to meet in outlawing the Communists. 
For example, 
legislation in pursuance of the labor and social provisions of the constitution is not 
likely to become a major issue, despite the potential dynamite of such questions as au- 
tonomy of labor unions and profit-sharing, for the majority of the members of the 
PSD, the UDN, the Labor Party, and most of the minor ae share a rae con- 
servatism in economic and social matters. 
Of the major economic issues confronting the government at the moment, poli- 
tically most explosive is the implementation of the constitutional provision admitting 
foreign capital for the development of Brazil’s subsoil resources (notably its petroleum 
deposits). 
Both the PSD and the UDN included planks favorable to foreign capital 
in their 1945 platforms, but in the case of petroleum, neither has been willing to take - 
a stand in opposition to the popular attitude of “Brazilian oil for the Brazilians” which 
nas been fostered not only by the Communists, but by the Army and certain powerful 
financial interests as well. 
Thus the Dutra administration may not meet Brazil’s 
economic problems satisfactorily, but it appears to have enough support among the 
politically important elements of the population to continue in office until the end 
of its term. 
The PSD now controls a plurality of the country’s votes. 
If the UDN 
should repudiate its policy of cooperation, the PSD would be exposed to the dangers 
of a possible electoral coalition between the UDN and Adhemar de Barros (although 
such an alliance at the present time seems improbable). 
Both conservative parties are 
Happy 
LIBRAp 
| 
— 
| 
| 
4a 
‘ 
| 
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| 
‘ 
j 
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A 
| 
| 
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|
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elias by the lack of leaders with popular appeal, an asset which Barros is busy: 
‘developing. 
| 
If the PSD-UDN coalition continues in epiretion, some agreement may be made to! 
pass the presidency on to a UDN candidate with little change in the real ruling group. 
_ Governor Octavio Mangabeira of Bahia, the UDN leader instrumental in the inter-party;} 
negotiations, is known to have presidential ambitions, and some observers feel that this} 
_ was the motive behind his efforts to promote collaboration with the Administration. gm the cour 
_ 
Another member of the UDN who could command support among both parties is Os- 4 backwoo 
-waldo Aranha. Any candidate, however, would have to be acceptable to the Army, jm manufac 
and that might give an advantage to Air Brigadier Eduardo Gomes, UDN candidate in #™ however 
1945. 
Another bipartisan presidential possibility who would have Army approval isi 
butam 
Colonel Edmundo de Macedo Soares, Governor of the State of Rio. Largely non-} | pursuits 
partisan himself, Macedo Soares has important family connections in both the major § ‘Toe 
parties and was elected to his present office by a PSD-UDN coalition. 
m 
also the 
The success of the PSD-UDN negotiations seems to have given rise to suspicions jm to them 
‘that some agreement may already have been reached on a mutually acceptable suc- ym 
the othe 
cessor to President Dutra. 
Shortly before the signing of the pact, Adhemar de Barros 
@™ 
ticular) 
_ conferred with the Governor of Minas Gerais, Milton Campos (who has also been men- 
fm 
Strip Hes 
tioned as a potential UDN presidential candidate), and the two governors issued a state- Mm Of capit 
ment that they were entering a political alliance and declared their joint interest in fm can be? 
preventing a “hasty solution to the problem of presidential succession.” 
Since these 
Eco 
two states have at least one third of the total electorate of the country, this was an gm 
Sovernm 
adroit-move. 
It could be the first step in a revival of the old Sao Paulo-Minas Gerais 
# 
mental : 
alliance which for so long controlled the choice of the nation’s President. 
On the other ; 
While ut 
hand, since both governors owe their election to coalitions, their political alliance 4 
ship giv 
will not accomplish much unless they succeed in developing personal machines suffict- | 
other pt 
eee 
éntly strong to free them of the uncertainties inherent in coalition support. 
But in @ 
control 
ee 
any case each governor will be able to use the alliance for bargaining purposes in fur- 
Ak 
thering his own political fortunes. 
BB 
controll 
. 
Dissolution of the Inter-Party Pact and a breakdown of the national party system @™m 
“™™CD 
_— 
would give the advantage to Adhemar de Barros, whereas an effective PSD-UDN alli- 
@™ 
2*cUvitie 
| 
ance would weight the scales heavily for whatever candidate the two ee 
) 
standar 
could agree on. 
low, anc 
{ 
| 
The only foreign power whose actions may be expected to have any effect on the 
The 
es 
continuation in office of the present regime is the United States, but even this effect @™ 
 °°P!*? 
| 4 
| 
would be an indirect one. 
Obtaining economic aid from the US would increase the 4 
wah oy 
| 4 
| 
prestige of the administration, and any damage to the national economy caused by ! 
ey SSP 
channeling of US manufactures to Europe under the Marshall Plan would lower its 
ae 
popularity. 
At the present time, however, it does not look as though US action will 
ae 
17. 
be a vital factor in the stability of the present regime. 
| 
. 
at the! 
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CHAPTER Il 
ECONOMIC SITUATION 
The Brazilian economy is characterized by great variations from one section of 
ministration, #[™ 
the country to another—running all the way from a mere subsistence in the jungle or 
parties is Os- f backwoods country, through the feudal-type agricultural estates and backward hand- 
O the Army, 
manufacturing sections, to modern, highly industrialized areas. 
On an over-all basis, 
candidate in #M- however, almost half of Brazilian national income is derived from agricultural activity, 
| approval is 
fm. but a much greater proportion of the 
, WORKING population is engaged in agricultural 
argely non- 
pursuits. 
the major | 
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‘The southern part of the country is the industrial heart of Brazil; it comprises 
also the important agricultural and animal husbandry areas, and is thus essential 
to the maintenance of current standards of living in the other parts of the country. 
On 
the other hand, the economies of the northern and northeastern regions are not par- 
ticularly well integrated with that of the southern area. 
To the west of the coastal 
strip lies a huge area believed to have a high economic potential. 
A great investment 
of capital and the development of transportation will be necenmary before this potential 
can be realized. 
Economic activity in Brazil has been largely left to private enterprise, but the 
- government exercises varying degrees of control through semi-private, quasi-govern- 
mental associations and corporations, and export and import restrictions are in effect. 
- While the government owns or partly owns the Bank of Brazil (majority stock owner- 
ship gives the government control), a steel mill, a powder plant, railroads, and some 
other public utilities, there is in general no growing trend toward —— government 
control and ownership of industry. 
A large majority of the workers are in syndical organizations, which are closely 
controlled by the government. 
They have become less active during 1947 under gov- 
ernment repression of all signs of industrial conflicts and suppression of Communist 
activities. 
The general well-being of the people is rather poor. 
Health, nutritional 
standards, and housing for the great mass of people is recognized to be abominably 
low, and the standard of living for the workers is barely above the subsistence level. 
‘There has been some improvement in these things, however, and there are more 
people above the subsistence level of living than there were a decade ago. 
Progress has 
been made in converting plentiful raw materials into consumer goods, but Brazil is 
still dependent upon imports of many types of machinery and equipment, coal, wheat, 
and various other products. 
The ocean shipping under the Brazilian flag is considered 
¥ell balanced for Brazilian needs. 
Additional capital would be very desirable for 
Brazilian development, and foreign financial aid is being sought by the government. 
1. Foop anp AGRICULTURE. 
Domestic agricultural production is sufficient to maintain the Brazilian population 
at the low dietary level which it has in common with other Latin American peoples. 
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The only significant food import is wheat, the current annual consumption of which 
1,000,000 bal 
is about 1,200,000 metric tons. 
Brazil produces only about 110,000 tons. 
Most of the 
wheat imports are normally supplied by Argentina. 
Because-of prevailing Argentine: 
prices, however, a large proportion of Brazilian imports are presently being supplied: 
by the US. 
Coffee and cotton are the major agricultural exports. 
The prospects for 
any significant expansion of agricultural production in the immediate future are nots 
Because coffee accounts for nearly 10 percent of total employment, 35 percent q 
| 
foreign exchange receipts, and 9 percent of the national income, the Brazilian economy} 
good. 
is deeply affected by coffee production and prices. 
Postwar developments have con- 
firmed earlier trends that militated against coffee’s former dominant economic role.! 
These trends, moreover, favor a more balanced economy. 
Nevertheless, coffee produc-+ 
tion and marketing are still a crucially important factor in the economy. 
The de-+ 
clining importance of coffee has until recently been a result of the increasing importance} 
of production and exports of other commodities, such as textiles and raw cotton, rather! 
than of declines in production and export of coffee. In the past few years, however, { 
production of coffee has declined slightly, and is expected to decline still further since 
available new coffee lands remain only in less accessible areas, while older lands con-4 
tinue to lose their fertility under the present system of exploitation. 
There appears to! 
be a better balance between coffee production and available markets at present than} 
formerly, and the tremendous, burdensome surpluses of the ’30’s appear to be a thing? 
of the past. 
Coffee’s traditional domination of the Brazilian economic structure has had an § 
effect upon the organization and functions of the Brazilian government which bids fair § ) 
to become a permanent characteristic. 
The early success of Brazil’s coffee-control ¥ 
schemes, for instance, has tended to convince not only the coffee growers, but also the , 
majority of the entrepreneurial class, that the protection and encouragement of do- 4 
| 
mestic enterprise through monopolistic governmental export and financing corpora- 4 
tions is a legitimate governmental function. 
This conception of government has found 
j | 
expression in national institutes to aid in the production and sale of practically all of i 
Brazil’s agricultural commodities and some of its industrial output as well 
Cotton is becoming increasingly important domestically with the growth of the 7 
textile and allied industries. 
It is also important from the standpoint of world cotton 4 
production. 
There have been few years since the mid-1930’s that Brazil has not ac-4 , 
counted for from five to ten percent of the world’s cotton production. 
It has ranked # 
second to coffee among agricultural exports for the past ten years. 
In 1946 it ac- 
counted for approximately 16 percent of the total value of Brazilian exports. 
Cotton production has declined from a peak of 2,'700,000 bales in 1944 to 1.300.000 
: 
bales in 1947. 
Several factors account for the decline, such as adverse weather, the = 
changing relation between the prices of cotton and those of other agricultural products, # 
and a change in government policy. 
Estimates of Brazilian cotton production for 1948 
based on average past yields for acreage planted, do not exceed the 1947 figures. 
In: 
spite of smaller cotton crops, Brazil was able to export approximately 1,607,000 and4 
about 900,00C 
Before the 
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1,000,000 bales in 1946 and 1947 respectively (along with a domestic consumption of 
about 900,000 bales each year) by drawing upon surpluses accumulated during the war. 
Before the end of 1948, however, a surplus probably will no longer exist, and exports 
will be limited to small current excess production over consumption, largely removing 
Brazilian competition with US cotton from the world markets. 
 _/ 
Generally throughout Brazil, subsistence food crops such as corn, manioc, bananas, 
rice, and beans are planted. 
~ 
One of the most significant developments is the growing importance of the live- 
stock industry. 
In recent years, livestock raising has become the greatest source of 
cash farmincome. 
Meat in some form is part of the diet of all segments of the Brazil- 
ian population. The marketing of cattle, however, tends to be irregular, in part be- 
cause of the meat rationing, price controls, and export controls, which the government 
has imposed in order to protect Brazilian consumers against possible exploitation by the 
meat packers. 
Foot-and-mouth disease is a continuing problem in Brazil. 
In addition to its importance to the Brazilian economy as such, this increase of 
livestock production is having a beneficial social effect. 
The great natural pasture 
lands of Brazil lie for the most part in the interior. 
The expanding industry naturally 
gravitates to this area and thereby functions, as cattle raising did in the US, as a means 
of “pushing back the frontier.” 
Although many good fishing areas are snaiiabis to Brazilian fishermen, the indus- 
try is insignificant in that country’s economy. 
Fish is not an important part of the 
Brazilian’s diet. 
Moreover, the development of the industry is further handicapped 
by inadequate refrigeration, transportation, and market facilities. 
_ 
Forest products play a much more important role in the domestic economy than 
in Brazilian exports. 
Wood is Brazil’s principal fuel, providing the energy for running 
the railroads and many of the industrial enterprises. 
More than 65 percent of the working population is engaged in agricultural activity 
in Brazil, as compared to 8 percent in industrial production, and 23 percent in com- 
mercial activity. 
A very large proportion of Brazilian agricultural activity does not 
enter into the money economy. 
Nevertheless, that agricultural production which does 
enter the money economy is approximately equal to one-half the value of industrial 
production. 
Perhaps not over a third of the agricultural workers, working less than 
one percent of the land of Brazil (mostly on large plantations), produce the commercial 
crops for market in the cities and in export trade. 
About two-thirds of agricultural workers (more than 40 percent of all workers) 
in Brazil live and work on a subsistence basis, under extremely primitive conditions, 
far from any means of transportation, without educational opportunities, and without 
social or economic contacts beyond perhaps two days’ walking distance, and with almost 
no means of getting any surplus production to market in the large cities. 
These 
people, consequently, are of little economic, social, and political influence in Brazil. 
The outlook for agricultural production and for food supplies is not so favorable 
as crop harvest statistics appear to indicate. 
Recorded plantings of food crops, such as 
peanuts, corn, rice, manioc, beans, and other vegetables, have increased considerably 
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over the past decade, but a large proportion of the urban population continues, never- } 
theless, tobe underfed. 
This fact is not entirely a result of inadequate production: the 
urban population has increased far more rapidly than the capacity of the nation’s 
transportation system, with the result that. existing railroads and trucks simply cannot 
handle the increased tonnage of foods needed to sustain the millions of persons now 
concentrated in the cities. 
The fact that wheat imports have been irregular as well 
as inadequate has greatly complicated the problem of supplying food for the urban 
areas, which at one time had some rather dangerous political repercussions in the 
form of food riots. . 
Rapid expansion of Brazilian agricultural production is extremely unlikely tor 
| 
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occur, but a considerable increase in available food supplies would take place if capacity} 
| 
of transport and marketing facilities were expanded to take care of the increased ton-4 
nage. 
Improved agricultural techniques undoubtedly would increase production inif™ 
most areas. 
At present less than one-fourth of Brazil’s nearly two million farms have+ 
any farm implements other than the hoe and the axe. 
The existing relationship be- ‘ 
tween commodity prices and labor costs is favorable to increased use of farm machinery, } 
: 
but the very war conditions that have caused existing high commodity prices and § 
brought about the new relationship, have also caused a world-wide shortage of farm 
machinery. 
It is probable that by the time such machinery is in abundant supply 
again, commodity prices will have receded. In that case, the use of farm machinery 
} 
will increase at a relatively slow rate. 
Much of the best farming area in Brazil consists of huge fazendas which produce 4 
i 
‘The others often produce little, and the land is left i 
: 
idle for want of management or labor. 
Small owner-operated farms might be more 
} 
productive, as is evidenced by an efficient group of small farmers in the South. 
At } 
present, however, there is little interest in breaking up the large estates. 
Much land, 
‘ 
moreover, is not under cultivation because it requires fertilizer to bring forth good | 
- crop yields, and fertilizer prices are so high that it does not pay to use the land under 
| 
existing conditions. 
Much highly fertile land also lies unused for lack of transport | 
facilities, and, in some areas, for lack of irrigation. 
Consequently, any truly significant + 
expansion of agricultural production seems possible only on a long-term basis; in the # 
years immediately ahead, only a modest expansion may be expected. 
2. 
NATURAL RESOURCES. 
During the war years Brazil made an effective contribution of strategic minerals $m 
to the war industries of the US and UK. 
In 1944, Brazil was the source of virtually all 
. 
the US imports of quartz crystal, 53 percent of the tantalite, 47 percent of the beryllium | 
ore, 45 percent of the rutile, 17 percent of the mica, 13 percent of the manganese ore, 
12 percent of the tungsten ore, 10 percent of the zirconium ore, and relatively minor 
‘ 
- quantities of metallurgical grade chromite, ilmenite, industrial diamonds, and tale. 
Production of these materials during the war was generally considered to have 
§ 
been at the maximum level possible for the available equipment and facilities. 
By far, 
most of the thought, money, and equipment devoted to mining in Brazil during the 
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war was expended in the procurement of strategic materials needed in the war effort of 
the United Nations, and of the US in particular. 
Except for quartz crystal and zir- 
conium, almost the entire Brazilian output of strategic minerals went to the US. 
The 
attainment of still higher export tonnages was prevented primarily by inadequate, 
slow, unreliable, and expensive transportation facilities. 
: 
a. 
Minerals. 
| 
Manganese. 
During World War II, the US obtained about 20 percent of total manga- 
-- nese ore imports from Brazil. 
Brazilian exports equaled about 350,000 metric tons 
annually for the years 1941-1943. 
Exports dropped to 146,983 metric tons in 1944, 
. 
part because of transportation difficulties in Brazil and in part because of increased 
. availability of manganese from other areas. 
The important Brazilian deposits are 
found in Minas Gerais, Mato Grosso, and the Territory of Amap4, and are the largest — 
reserves of manganese in. the Western Hemisphere. 
: 
The state of Minas Gerais is the center of manganese mining in Brazil, 
— 
and Lafaiete is by far the most important district in that state. The Morro da Mina 
mine, operated by a subsidiary of US Steel, is the largest producer in the country. 
It is 
_ ideally situated as to transportation, being served by the broad-gauge Central do Brasil 
Railway. 
Open-cut mining is used, and the output approximated 25,000 tons of ore a 
month during the early part of World War II. 
In 1947, the US received from Brazil 
_ 167,000 metric tons of manganese ore, almost the entire Brazilian production for that 
year. With the proper stimulus (firm contracts at an increased price) it is estimated 
that at least 50,000 tons per year over present production could be obtained quickly, 
- and that such production could be maintained over a period of at least several years. 
The largest known manganese deposit in the Hemisphere, the Urucum 
ne property, is located at Corumbé in Mato Grosso. 
Reserves in the deposit may be as 
much as 30 million tons, but are not under development at present. 
During World 
War II, the Sociedade Brasileira de Mineragao worked the mine, and small shipments 
were made via the Paraguay River over 1,700 miles to Rosario. 
Before large-scale ship- 
ments can be made profitably, however, the following problems must be solved: (1) the 
+ normal ones of developing an ore deposit in a remote and fairly inaccessible locality 
where all housing, equipment, and social and sanitary services must be built from the 
ground up, and most mining equipment imported; (2) the development of transporta- 
tion to deep water which will necessitate an expenditure of as much as 20 million dollars; 
and (3) ‘the matter of obtaining mining rights for either governmental or private (for- 
eign) capital. 
In this latter regard, it is estimated that if the Urucum deposits are to 
_ be developed by private (American) interests, the means or equable rights for such de- 
velopment must be settled by negotiation between the two governments. 
Deposits in the Territory of Amapa, for which the minimum estimate is 
' 
five milion tons of ore 
containing 40 to 55 percent manganese, are only about 125 
miles by river and road transport ‘from the Amazon port of Macapa. 
However, the 
' 
Manganese in these deposits contains arsenic as an impurity. 
Arsenic is not com- 
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monly encountered in manganese and may pose a metallurgical problem which must 
_ the coast and the iron-ore region is less than 500 miles. 
Prewar exports did not exceed 
under heavy usage that exports dropped 40 percent. 
The 206,000 tons shipped went 
- 
be solved before the ore can be used profitably. 
| 
Either at Urucum or at Amapé, further exploration and development need 3 
s 
to be done to establish with more exactitude the quantity and quality of ore reserves, 
} 
before extensive large-scale development is undertaken. 
Under prevailing Brazilian ; 
conditions, a large-scale development (250,000 or more tons per year) would probably 
_ 
require two to four years at Urucum until full production could be attained and a some- 
what shorter time at Amap&. 
(2) Iron. 
Brazil has very _ deposits of high-grade fron ore in the state of Minas J 
Gerais. 
Known deposits are estimated at a probable three billion tons or more. 
High- 
} 
grade hematite, canga, and other ores running from 50 to 68 percent probably account 
} 
for one-third of the deposits. 
The facts that open-cut mining is possible and that the + 
hematite ores require no pre-export processing increase the feasibility of exploitation. 
Transportation, however, has been a major difficulty even though the distance between } 
450,000 metric.tons. 
| 
An attempted emergency development was started in June of 1942, when 
a US-UK-Brazil plan was initiated to increase the amount of iron ore coming out of 
the Itabira region. 
This plan required that the mines be mechanized and that the 
railroad and port facilities be redesigned to carry heavier traffic. 
The US Export- 
Import Bank undertook to lend Brazil $14,000,000 for this purpose. 
The UK agreed to 
pay off the British shareholders of the Itabira Ore Co., who had previously owned the 
mines, and present the shares to the Brazilian government in exchange for a promise 
of a certain amount of the ore for a three-year period. 
During 1943, approximately 
340,000 tons of iron ore were exported from this mine to the UK, Canada, and the US. 
It was hoped that, by the end of 1944, the redesign of railway and dock facilities would 
be completed so that ore shipments could be substantially increased. 
On the contrary, during 1944 transport facilities deteriorated so much 
entirely to the UK. 
Work to redesign the railway for heavy traffic progressed very 
- 
Slowly. 
By March of 1947 only 95 miles of the projected 360 miles had been completed, 
at which time work stopped completely because funds to pay the construction company 
were not forthcoming from the Brazilian Government. 
Work continues to be sus- 
mated that from two to five years will be necessary for completion. 
When the work is 
completed, exports should rise to one and a half million metric tons a year. 
(3) Tungsten. 
Ores bearing the strategically important acania have been worked in 
pended pending solution of the financial problems“involved in the project. 
It is esti- : 
| 
_ 
three widely separated areas of Brazil: the northeast, the state of Sao Paulo, and the 
state of Rio Grande do Sul. 
By far the most productive area is the northeast section. 
During World War II, some 12 percent of total US imports of tungsten minerals were 
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obtained from there. 
With a drop in tungsten prices at the end of the war, Brazilian 
product 
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production slumped, but present increased world prices will probably result in some- 
what higher Brazilian production for 1948 (possibly a thousand tons of concentrates). 
Under pressure of emergency conditions, production could be greatly expanded and 
could probably be maintained at a high level for a period of several years. 
(4) Nickel. 
| 
There are substantial reserves.of nickel. in the Brazilian states of Minas 
Gerais, Goias, and Bahia, but only one deposit, that at Livramento in Minas Gerais, is 
‘being worked. 
Small quantities of ferro-nickel are made and consumed locally. 
After 
two years of effort, the American Smelting and Refining Company has abandoned as 
impractical its attempt to develop the largest known Brazilian deposit near Sao José 
do Tocantins in central Goias. 
(5) Beryllium. 
Beryl is mined in conjunction with tantalite from pegmatite deposits 
— 
Located throughout northeastern Brazil, in the states of Paraiba, Rio Grande do N sane 
Ceara, and Minas Gerais. 
‘During the years 1940-44, inclusive, production averaged about 1,500 
metric tons. 
Exports of beryl in 1945 amounted to 510 metric tons but increased to. 
1,294 metric tons in 1946. 
An increase in price could probably raise the volume of pro- 
duction to 2,000 metric tons annually. 
To push production beyond 2,000 tons per 
year, however, would require either a very much higher price or other inducements to 
the individual producers. 
The recovery of beryl requires hand labor and selective 
mining. 
Although it is not susceptible to mechanization, limited technical guidance in 
exploration might contribute substantially to an increase in Brazilian production. 
Brazil’s beryl reserves are unknown, since no development work is carried on in ad- 
vance of the actual mining. 
, 
(6) Zirconium. 
Brazil is of prime interest to the US as a source of zirconium ores (both 
baddeleyite and zircon). 
Brazil supplied 50 percent of US imports of zirconium (most of which was 
baddeleyite) in 1942 and 10 percent in 1944. 
The drop in production from 17,000 metric 
tons in the peak year to 2,152 (shipments, which probably represented total production) 
in:1944 was attributed to diminishing US military demands and increased utilization 
of the metals reserve stockpile in the US. 
Zirconium ore is recovered from alluvial, 
eluvial, and vein deposits in Sao Paulo and southwestern Minas Gerais. 
A minor 
amount is also derived as a by-product from the workings of monazite beach sands. 
Provided the present US defense program is carried out, Brazilian production may be 
_ expected to increase in 1948 and 1949, although it is not expected that the 1942 levels 
could be attained in either year. 
(7) Tantalite. 
Tantalite is found in combination with columbite in the heterogeneous 
pegmatites in Rio Grande do Norte, Ceara, and Paraiba. 
Annual prewar exports of 
tantalite ore amounted to about 25 metric tons, England and the US being the principal 
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purchasers. 
During World War II, tantalite production increased to a peak of 198! 
metric tons in 1944, which constituted 53 percent of total US tantalite imports for that 3 
year. 
At the end of the war, production of Brazilian tantalite ores ‘decreased to 30; 
tons in 1945. 
However, a — increase is now expected owing to US ro 
_ 
purchasing. 
| 
(8) Titanium. 
& 
Rutile and ilmenite are the common ores of titanium. 
Rutile is present in relatively large quantities in Ceara, Goias, and Minas 
Gerais. 
Exploitation in Brazil began in the mid-1930’s. 
metric tons in 1937 to a peak of 4,615 metric tons in 1942, dropping to 28 metric tons } 
Exports increased from 7 68 | 
in 1946. 
An increase in production is largely dependent on price. 
the mouths of the Rio Jequitinhonha and the Paraiba do Sul in the states of Bahia and j 
Espirito Santo. 
These monazite sands were worked 20 to 50 years ago for the recovery 4 
of monazite and are now being reworked for ilmenite with monazite and zirconite as j 
by-products. 
In 1945 exports amounted to 1,030 metric tons of monazite concentrate 
# 
Iimenite is found in beach sands along the coast of Espirito Santo and | 
Bahia and is among Brazil’s long-exploited mineral resources. 
increased from 120 metric tons in 1937 to 5,000 metric tons in 1945. During 1946, the if 
Brazilian affiliates of E. I. Dupont de Nemours of Wilmington, Delaware and the Foote i 
_ Mineral Company of Philadelphia, Pennsylvania, combined in a proposal to mine beach : 
sands along the coast of Espirito Santo for the recovery of ilmenite and other minerals. ; 
| 
(9) Thorium. 
The monazite beach sands of Brazil are, after India, the most important . 
known source of thorium in the world. 
These are found in the coastal belt between 
Exports of ilmenite 
and 1,250 tons in 1946. 
All exports went to the US in accordance with the US-Brazilian 
exclusive purchase agreement for monazite. 
(10) Bauzite. 
Brazil has substantial reserves. 
source. 
Although up to the cto time production of bauxite has been ne gligible, 
Since 1942, Dutch Guiana has supplied more than 90 
_ percent of US bauxite imports. 
Brazilian reserves, estimated at 10 million tons mini- 
mum, are found at Pocos de Caldas and Ouro Preto in Minas Gerais and in a coastal % 
zone in the states of Bahia, Espirito Santo, Rio de Janeiro, and Sao Paulo. 
. 
During the critical period of World War II, small quantities were shipped 
to the US and Canada. 
Under normal conditions, however, exploitation of Brazilian 
reserves is very uneconomical. 
Freight costs to the Brazilian coast, taxes, and the ex- : 
pense of the long overseas haul displaces the advantage of low-cost production at the 
b. 
Non-metals. 
(1) Piezo Electric Quartz. 
Brazil is practically the sole world source of supply for piezo electric quartz 
crystals, which are in demand for the oscillators used in radar and electronics, for the 
production of aircraft and munitions, and for other industrial uses. 
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fH to a peak of 198% 
ite imports for that§ 
res decreased to 30% 
ing to US stockpile 4 
’ 
» 
At present, the US is the principal market for quartz crystal. 
Great Brit- 
ain and France purchase minor quantities. 
The USSR is unable to make open pur- 
chases in Brazil, although a clandestine sale of “a good-sized quantity” to Argentina 
for ultimate delivery to the USSR was reported at the end of 1946. 
In 1947, a $2 million 
order from Czechoslovakia was refused because of the suspicion that transshipment to 
the USSR was contemplated. 
Quartz crystal is found in small, scattered deposits in 
the states of Minas Gerais, Bahia, and Goias. 
Those in Bahia produce the greatest 
quantity, while those of Minas Gerais are of the best quality. 
The largest single con- 
centration of deposits occurs within an area of about 55 square miles, located in the 
Serra dos Cristais range 
in the state of Goias. 
; 
noes 
Quartz crystals are recovered without heavy mining equipment, and 
therefore when there is any lessening of demand, thousands of prospectors and work- 
men are quick to shift into other enterprises. 
Consequently, when US demand de- 
clined following the end of World War II, production dropped below 20 percent of the 
wartime level. 
Exports, which had reached a peak of 2,400 tons in 1943, fell to 170 tons 
in 1946 fallowed by a slight upward trend in 1947. 
(2) Industrial Diamonds. 
“Although Brazil did not contribute more than eight percent of US indus- 
trial diamond imports during any one year of World War II, the importance of that 
country as a US source is likely to increase in the future because of the fact that at 
present Brazilian diamond production is increasing while that of most other important 
industrial diamond producing areas is declining. 
Brazlian production for 1947 was 
estimated at 360,000 carats. 
Furthermore, Brazil is practically the sole world source 
of the type of industrial diamond known as carbonados which resists cleavage better 
creased from 768 § 
; to 28 metric tons 
§ 
| 
‘spirito Santo and 
§ 
<ports of ilmenite 4 
_ 
During 1946, the 
§ 
are and the Foote 
sal to mine beach § 
id other minerals, 
€ most important § 
Stal belt between 
ates of Bahia and 
2 for the recovery 
{and zirconite as 
§ 
azite concentrate 
.the US-Brazilian 
¥ 
than bort and is therefore more useful for cutting where shocks must be sustained, as 
types of drilling with diamond bits. 
; been negligible, 
At the time of World War IJ, the major mica-producing countries of the 
fd more than 90 
world were India, Madagascar, Union of South Africa, and Brazil. 
Brazil supplied the 
af 
jUlion tons mini- 
US with 17.7 percent of its total mica imports in 1944. 
During the war Brazil produced 
And in @ coastal 
mica from pegmatite deposits in the states of Minas Gerais, Goias, Sao Paulo, and 
ho. 
Bahia. 
During 1942, a partially successful attempt was made to train trimmers, 
les were shipped 
qualifiers, and inspectors to Indian, or universal standards. 
Prior to the war, Bra- 
| 
ion of Brazilian 
zilian mica had been shipped to India for processing before its sale to the US. During 
R 
the war it became possible to process a large part of Brazilian mica.in Brazil. 
Although 
price declined with the end of World War II, unstable conditions in India caused the 
quantity of exports to increase, reaching the near-record level of 1,148 metric tons in 
1946. 
The UK and the Netherlands are important purchasers, as well as the US. 
Volume of production is responsive to an increase in price. 
Kes, and the ex- 
duction at the 
| 
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(3) Mica. 
) electric quartz 
c. 
Petroleum. 
tronics, for the 
Brazil may have comparatively large petroleum reserves. 
As a result of gov- 
| 
ernment geological studies, petroleum is believed to exist in five regions, the first being 
“ 
Ren 
~ 
Goi 
| 
GOlas, and Minas 
| 
| 
; 
J 
| 
]
% 
_ Various legislative bills, including the one presented to the legislature early in 1948, 
the Parana basin in southern Brazil. 
The promise of this section arises from the fact 
that geological indications are the same as those in the Argentine and Bolivian oi 
fields. 
The second region centers around Santarém and Obidos in the state of Para 
and the third lies in the states of Maranhao and Piaui. 
Exploration to date has beext 
completely inadequate in these latter two areas. 
The fourth is that part of the Amazon 
region lying within the Territory of Acre. 
The Acre district is probably the mos# 
promising from the potential quantity viewpoint. 
The same geological formations ag 
those found in the abundant oil fields of Peru and Bolivia extend all through this area4 
The region, however, is also the most remote of the five, and difficult transportation 
problems will be involved. 
The fifth region is a coastal belt extending from the 
of Marau, in the northern half of Bahia, to Maceié, capital of Alagoas. 
Geological in 
dications heré are less favorable than in the Paran4 basin or Acre Territory. Beca 
the coastal location of this area presents the least difficult transportation problems; 
the region is now being worked. 
| 
| 
| 
Although the north coastal, or Bahia region, has been exploited since 1939, 
1% 
production in 1945 was only 79,265 barrels, while that for 1946 was 66,697 barrels. 
Esti- 
) 
mated on the basis of the daily production average for J anuary-August 1947, production i 
for the year increased to 97,846 barrels, which was unimportant in relation to Brazil’s j 
domestic petroleum requirements of about 8,000,000 barrels. 
: 
Brazilian oil problems can be solved only by more thorough studies, as well as 
a, far more intensive drilling campaign. 
It has been estimated that, at the present 
rate of progress, seven centuries would be required to complete exploration studies. 
Characteristically, Brazilian capital gravitates toward investments from which a 
_ quick return may be expected; therefore, no great volume of private investment in the } 
able government funds are far from sufficient. 
Hence it would appear that foreign 
capital, more accustomed to the taking of long-term risks, will be necessary for any 
efficient, large-scale exploration and development of Brazil’s petroleum deposits. 
With the overthrow of the Vargas regime in late 1945, the situation seemed 
favorable for foreign private investment. 
The 1946 constitution permits the admis- 
sion of foreign capital. 
President Dutra expressed himself as favoring foreign invest- 
ment. 
The US legal firm of Curtice and Hoover was appointed as his adviser on oil 
| 
legislation. 
| 
| 
uncertain Brazilian petroleum industry can be expected for some time to come. 
Avail- 
In spite of these favorable developments, the trend of legislation in 1947 was 
toward the virtual exclusion of foreign investment in the exploitation of petroleum. 
have been judged by Curtice and Hoover to be such that no US oil company would 
consider operating under the proposed conditions. 
} 
Powerful forces have been working for the exclusion of foreign capital. 
The 
Army, though favoring Brazilian self-sufficiency in oil, has insisted that absolute con- 
trol must rest with Brazil. The Army has been influenced in part by nationalist senti- 
ments of long standing, and in part by bribery from refinery interests (Sampaio). 
The 
method by which the Army hopes to obtain self-sufficiency by exclusive Brazilian effort 
is obscure. 
One member of the Army clique has stated that the US need for oil would 
: 
| 
| 
te 
| 
|
bey 
studies, 
- in the 
@ 
pag 
admis. 
invest- 
On oi} 
was 
1948, | 
(che townd 
ical in- 
| Secause: 
oblems, 
noe 1939, 
Esti- 
Brazil’s 
# 
Well as @ 
oresent 
Avail- 
‘Oreign 
or any 
seemed 
would 
= 
~ 
force the US government to furnish capital for exploitation even if Brazilian legislation 
should exclude private US capital. 
| 
Further opposition to foreign investment in oil has come from the Communists, 
who have found their interest parallel to the Army’s expressed view and have success- 
fully organized student groups with the slogan “Brazilian 
oil for Brazilians.” 
Brazilian 
nationalism, so greatly intensified by Vargas during his ‘regime, has made the propa- 
ganda of the Army and the Communists more effective with the mass of the electorate. 
The US Petroleum Attaché stated in December of 1947 that the anti-foreign-capital 
forces had so thoroughly aroused public oe as to make impossible an early govern- 
mental reversal of position. 
On the other hand, President Dutra continues to affirm a desire that foreign 
| 
capital shall find Brazilian petroleum an attractive investment. 
Furthermore, since 
April 1948, the Brazilian non-Communist press has been notably more favorable to 
foreign investment. 
Since this last development was in response to a presidential re- 
quest made after a conference between Dutra and various military leaders, the infer- 
ence is possible that the Army may be slowly changing its point of view. 
In addition, 
Communist agitation has become a much less potent force since the expulsion of the 
Communists from elective office on 7 January 1948. 
Some revision of the bill now 
before Congress will probably be made, but it remains to be seen whether revision will 
vo far enough to make Brazilian — an attractive investment for foreign private 
capital. 
It is probable that at least some sections of the Army will continue to favor 
investment of the necessary capital and technique by the US Government. 
In this 
connection, it may be noted that the record of US-Brazilian cooperation for the ex- 
ploitation of sub-soil resources during World War II does not show complete failure, 
out it is not encouraging. 
d. 
Power. 
Hydroelectric plants and wood are almost the only sources of industrial power 
‘n Brazil. 
Currently, Brazil is very deficient in coal and petroleum, and the timber 
‘esources are seriously depleted in areas easily accessible to industrial demand. 
How- 
ever, the hydroelectric potential could supply the need. The only three areas in Brazil 
not favored with potential water-power resources of appreciable magnitude are the 
‘Sému-arid northeast, the state of Rio Grande do Sul (to which, however, thermo-electric 
powes is available), and the states of Piauf and Maranhao. 
The remaining states have 
sufficient water power to meet their present and probable future requirements. 
Development of this potential source of power, though slow, has generally 
progressed as industrialization has increased. 
Hydroelectric power increased from 
+4,022 millions of kw hours in 1939 to 79,917 millions of kw hours in 1945. 
Neverthe- 
iess, development lags consistently behind need, and bureaucratic chaos leads at times 
. — 
n serious difficulties as the almost complete breakdown of the power system of 
as 
The government attitude toward foreign investment in this field is compara- 
¥ favorable. Although Brazilians have constructed, maintained, and operated 
q 
| 
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l.vian oil 
of Para, 
been 
Amazon 
the most 
lations as 
area, 
ortationi 
‘ 
| 
The 
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| 
 senti- 
|. 
Thea
‘ 
~ 
TRUMAN 
HARRY S. TRUMAN 
| 
‘SECRETARY FILE| 
> 
some of the smaller plants, about 80 percent of the electric power is furnished by the 
Brazilian Traction, Light and Power, Ltd. (a Canadian corporation) and Electric Bond 
and Share (a US 
The known coal resources of Brazil are too limited to provide self-sufficiency 
in this regard even at the present level of industrialization. 
Under the stimulus of 
q 
war, and with the help of American engineers, Brazilian coal production rose from 
883,000 metric tons in 1938 to a maximum of 2 million tons in 1943. 
Including imports, 
the normal consumption rate is about 2.5 million tons a year. 
If greater quantities 
— 
i 
were eaSily available, the consumption rate would undoubtedly be considerably higher. 
e. 
Coal, 
t 
| 
__. For many years the principal producing field has been that in Rio Grande do 
; 
Po 
Sul, west of Porto Alegre. 
The annual production rate has been between 750,000 and 
- 
; 
1 million metric tons, most of which is consumed locally. 
At times small quantities 
f 
are exported to Argentina, but in general, the quality is too poor economically to justify 
shipment to distant markets such as Rio de Janeiro or Sao Paulo. 
Total remaining 
| 
reserves are not known. 
It is estimated that the field has passed its period of maximum | 
production. 
The second major coal field mi in the southern part of Santa Catarina just 
inland from the ports of Laguna and Imbituba. 
The principal seam lies near the sur- 
face and is exploited by means of a large number of small drift mines, primitively 
equipped. 
The mining is4 difficult process as the coal must be laboriously hand sorted 
from the waste at the working face. 
‘ 
| 
_ 
This coal is of particular importance because of its excellent coking character- 
istics. 
Experience at the Volta Redonda steel plant has shown that it can be used 
either alone or mixed with up to 50 percent of some non-coking coal and still produce 
a coke which, while high in ash and sulphur, possesses excellent agglomerating quali- 
ties, hardness, and porosity for blast furnace use. 
Total recoverable reserves are esti- 
mated at 400 to 500 million tons. 
= 
ms 
* ~* 
Mn 
3. 
Inpustry. 
Rapid increase in manufacturing production, in the number of manufacturing 
establishments, and in the variety of products manufactured has taken place in Brazil 
during the past decade. 
World War II increased the generai rate of industrial expan- 
sion, though in many lines expansion was handicapped by lack of necessary imports of 
‘machinery and fuels. 
The increasing industrial activity has accelerated farm-to-city 
e 
migration, which in turn greatly complicates Brazil’s transport, housing, and finance 
¥ 
problems. 
The government has taken an active interest in promoting the develop- 
ment of many industries through loans, import restrictions and tariffs, and various 
other devices. 
Most of the larger industries have effective lobbies or associations 
which can effect political pressure for their interests, and the government has been 
— 
responsive to such pressure. 
a 
Although foreign participation in the industrial development of Brazil early took 
| 
the form of financing new local industrial projects, the more recent trend has been 
‘ 
‘ 
~ 
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a, 
> 
‘i 
‘ew 
> 
»
the establishment of branch plants in Brazil by foreign firms such as the Goodyear 
Company, the General Electric Company, and General Motors Company. 
The United 
States Government has assisted in some industrial development schemes through loans 
by the Export-Import Bank, one of which was as — 000 loan for the Volta Red- 
onda steel mill. 
There has been no tendency toward a policy of naitimatiention of industry in Bra- 
zil. On the contrary, the government encourages foreign capital participation in the 
industrial development of the country with some, but by no means excessive, restric- 
tions on the withdrawaljof profits and capital. The government’s investment policy 
‘with regard to petroleum and some kinds of mining are exceptions, —, _ 
have been taken to make these more attractive to foreign capital. 
| 
Industrial development in Brazil has been uneven as between areas and as between 
one industry and another. 
Most of the industries of Brazil are concentrated in the 
southern and more temperate section of the country; the northern, northeastern, and 
central states, though they comprise five-sixths of the area of the country, contain only 
a few textile mills, alcohol distilleries, and sugar mills, particularly in Pernambuco and 
Bahia. 
Concentrated in the southern section (comprising only 17.2 percent of the 
national territory) are 85 percent of the industrial production, 90 percent of the 
factories, 90 pertent of the electric power, and more than 50 percent of the population. 
The most industrialized state is Sao Paulo, which produces about 42 percent of the 
industrial output of the entire nation. 
Rio de Janeiro, the Federal District, and Minas 
Gerais account for 25 percent. The three extreme southern states (Parana, Santa 
Catarina, and Rio Grande do Sul) contribute 23 percent of the industrial output. 
a. 
Food-Processing Industries. 
The most important industry in Brazil, in tmnee of the money value of the 
products, is the food-processing industry, accounting for about 40 percent by value of 
all industrial production. 
This industry includes such activities as sugar refining, 
flour milling, bread baking, bottling of milk, cheese making, canning fruits and vege- 
tables, meat packing, and cleaning and grading coffee. 
The food-processing industry 
may be considered the core of the small middle class in Brazil since there are over 
20,000 food-processing and liquor-making establishments reported in Brazilian sta- 
tistics. 
These establishments are mostly moderate-sized concerns, employing an aver- 
age of twelve each. 
The — clans about 18 aioe of the industrial jobs in 
Brazil. 
b. 
Textile 
textile industry is the 
of Brazil. It is esti- 
mated that more than 2,200 textile plants produce approximately 1,200,000,000 meters 
of cloth each year and employ an average of 112 workers each. 
Employment in the tex- 
tile industry represents over 27 percent of industrial employment, the greatest number 
of workers in any single industry, though the product represents only 18 percent by 
value of all industrial production. 
In addition the closely allied clothing industry ac- 
counts for another 2 percent of industrial production and 4.5 — of —— 
| 
in more than 2,800 establishments. 
— 
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The textile industry has been able to meet most Brazilian textile needs. The 
bulk 
of the textile output consists of coarse cotton cloth and jute bagging to meet the 
special demands 
of Brazilian consumers. There is also production of the finer grades of 
cloth sufficient to meet most domestic requirements. 
Imports of piece goods have 
dwindled from a value of pss sesarangsoed —" 
O00 in 
1 1927 to a negligible amount 
Furthermore, 
World War II, Brazil 
an important supplier of 
sing foreign markets such as Uruguay, Argentina, Chile, and Paraguay, as well as 
- the Union of South Africa, exporting about 200,000 meters of cloth a year. Brazilians 
hope to be able to retain and expand these markets, which formerly were dominated 
largely by the Japanese. 
The outlook for continuing high exports of textiles, however, 
is dim, because: (a) lower-priced competition by the US for the textile markets is ex- 
pected to develop; (b) Brazilian costs are comparatively high; (c) to reduce costs would 
require replacement 
of most of the equipment in Brazil, which would take five to seven 
years if 
all operators made a determined effort to rehabilitate their plants. 
_Jron and ‘Sted. 
“If the development of heavy iis is considered a measure of the progress 
trial development. ‘ Although iron and steel production began over a century and a half 
ago, it advanced slowly, largely as a result of lack of adequate fuel supplies. 
In recent 
years the industry has done much to overcome this handicap by more efficient exploi- 
tation of the coking coal available (see section 2, above, Natural Resources, p. 32), 
by using electric furnaces, and by importing coal. 
Iron ore and limestone are plentiful 
in Brazil and are not therefore factors limiting production. 
| 
-’ In 1935, a large steel mill was constructed at Monlevade, near the iron deposits 
of Itabira. 
. This mill (Cia. Siderugica Beljo-Mineira) and the Sabara mill, owned by 
the same company, produce about 100,000 tons of pig-iron and 82,000 tons of steel prod- 
uctsayear. 
The national steel mill at Volta Redonda, built with the help of $45,000,000 
Export-Import Bank capital, began production in the summer of 1946. 
It produces 
pig-iron, rolled plates, rails, and shapes. 
Brazilian alloy steel production has been in 
the hands of two small German-Brazilian firms, whose technical skill is reported high, 
but which have not expanded as much as they could to meet the demand. 
Over-all production between 1934 and 1946 increased from 58,559 to 339,847 
metric tons of pig-iron; from 61,675 to 317,849 metric tons of billets and ingots; and 
from 48,699 to 217,552 metric,tons of other steel products. 
Currently, iron and steel 
production amounts to about 10 percent of the value of all manufacturing production. 
The range of steel products manufactured in Brazil has increased considerably in the 
last few years. 
Now, over 5,000 separate establishments are engaged in metallurgical 
production and employ over 11 percent of the industrial labor force. 
. Considerable quantities of iron and steel enter Brazil in the form of machinery 
and automotive vehicles, and in the form of grey iron castings and malleable iron fit- 
tings. Exports have been largely limited to pig-iron and cast iron pipe. 
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Chemicals. 
The chemical industry has been one of the fastest growing industries in Brazil. 
It has developed from‘almost nothing since World War I, and now consists of more than 
© 
2,000 establishments employing nearly 5 percent of the industrial labor force and sup- 
plying nearly 8 percent of the industrial production by value. 
Its rapid development 
will probably continue since Brazil not only needs more chemicals, but also possesses 
_ ample hydroelectric power and the necessary raw materials for its further expansion. 
A variety of oils, gums, essences, botanicals, and minerals are produced. 
In addition, 
carnauba wax, beeswax, ipacac, cube root, oiticica oil, castor seed, perfumary essences, 
resins, and other chemicals (which are only partially processed) are exported in quan- 
tity. A start has been made with more advanced chemical processing for export, and 
some foreign shipments have been made of paints, starches, cosmetics, and calcium 
carbide. 
The bulk of pharmaceutical and toilet preparations used in Brazil are manu- 
factured within thecountry either by local companies manufacturing their own brands 
or by laboratories which compound and package according to the formulas and under 
the trademarks of foreign companies. 
The manufacture of acids and other industrial 
chemicals made rapid strides in the inter-war period. Large quantities of alkalies are 
still imported, but local manufacture is soon expected to fill this demand since a 
$7,500,000 loan to the Cia. Nacional de Alkalf was made by the Export-Import Bank in 
1947 for the construction of a caustic soda plant at Cabo Frio in the State of Rio de 
Janeiro. 
| 
e. 
Construction and Building Materials. 
Building activity in Brazil has been booming since the end of World War I, 
and demand for building materials is at an all-time high. For the most part, manu- 
_facturers of building materials have expanded production, but not rapidly enough to 
Satisfy the present demand. 
The industry furnishes over 7 percent of the industrial 
jobs and nearly 5 percent of the industrial production by value. 
The production rec- 
ord appears to be good, but high costs keep proper housing beyond the reach of all but 
the very wealthy. ” Precarious financing injects an additional element of instability in 
this inflated industry. 
| 
Cement production was approximately 900,000 tons in 1946, which is about 
maximum production with present facilities including the newest plants at Belo Hori- 
tonte and at Capos. 
This production did not meet demand, and over 300,000 tons of 
cement were imported. 
There are no plans for further expansion of production. 
The 
Soom demand is not expected to continue, and there is little prospect for greater pro- 
duction during 1948. 
{. Paper and Pulp. 
sila 
Among the smaller but important industries of Brazil is the paper and pulp 
156.00 es About 260 paper and pulp mills averaging 60 employees each produced over 
~~» 
“Ons of paper in 1946 and accounted for over 2 percent of Brazilian industrial 
oe For some years domestic mills have supplied most of the wrapping paper, 
board, and coarser varieties, as well as some special types, such as carbon paper 
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and cigarette paper. 
Local wood pulp and newsprint production, however, has been 
- about 8,000 tons a year as compared to 60,000 tons annual consumption. 
Pulp and 
newsprint imports, consequently, have been about 52,000 of the 70,000 tons of imported 
paper and pulps of all-kinds.. In 1947, a large integrated mill in the state of Parana 
was brought into production. It has a maximum annual capacity of 40,000 tons of 
pulp and newsprint, and can produce.mechanical pulp for other manufacturers as well 
as cardboard and other heavy paper products. 
This plant, of course, should materially 
. 
_ reduce Brazil’s dependence upon imports for pulp and newsprint. 
_ In the early 1930’s, Brazil began developing its 
vegetable-oil industry and there 
has been a steady increase in production since then. 
During World War IJ, Brazil was 
one of the main sources of US. imports of vegetable oils and waxes. 
Total production 
for 1947 was 118,15Q metric tons. 
Cottonseed oil accounted for about 55,000 tons of 
this total. 
Almost 70 percent of the cottonseed is processed in Sao Paulo and the re- 
mainder in Pernambuco, Paraiba, and Cearé. The production of babassu oil in 1947 
was 15,000 metric tons. 
It is processed chiefly in southern Brazil and on the northern 
coast. 
Castor oil production (12,000 metric tons in 1947) is centered in Sao Paulo, 
as 
is that of peanut oil. Cear& produces most of the oiticica oil. Flaxseed 
oil from Rio 
Grande do Sul and tucum oil from Piaui also make important contributions to Brazil’s 
total vegetable oil production. 
Brazil unquestionably has a great potential as a producer of vegetable oils. 
Oleaginous plants, which are both native and cultivated, can be produced on a very 
large scale. 
As more and more commercial uses are developed, the production of these 
oils may become an — — factor in the Brazilian economy. 
* 
4. 
Forance. 
Brazil 
may well have reached a turning point in its financial history. 
After almost 
150 years of unsound and unstable conditions, there are some signs that Brazil is de- 
veloping a sounder financial system. 
Central bank functions, which have been make- 
shift throughout Brazilian history, will probably be placed entirely under the control of 
a new central bank to be established in the near future. 
The foreign exchange value of 
Brazilian currency has remained relatively stable for the past decade, though internally 
the currency has continued to decline in purchasing power. 
Federal revenues, aftera ¥# 
deficit in almost every year for a century, showed a surplus in 1947. Anunmanageable 
external debt was renegotiated in 1943 and brought well within Brazil’s capacity to pay. 
On the other hand, private banks are not carefully regulated, and several unsound 
commercial banks are known to be supported for political reasons by the Bank of Brazil. 
4¢ 
Furthermore, prospects are uncertain for an access of revenues over expenditures in # 
1948. 
In addition, the Brazilian currency is at present —" overvalued in terms of 
- 
; 
foreign exchange. 
| 
a 
Central bank functions have been makeshift, at best, aia Brazilian nustoryg 
In 1905, 
reorganizations, failures, and dis 
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HARRYDS. TR 
| PRESIDENT!  SBCHETARY FILE 
~ 
ment on banking principles, the present Bank of Brazil was organized. 
The bank is a 
joint private and publicly owned corporation, in which slightly over 50 percent of the 
stock is owned by the federal government. 
The Bank of Brazil retains all normal 
commercial functions, and in addition is the banker for the federal government. 
All 
federal revenue is deposited in the Bank of Brazil, and federal expenditures are drawn 
against it by check. 
The bank also handles exchange-control activities, gold purchases 
for the account of the government, and financing of exports. 
In 1945, the Superinten- 
dency of Money and Credit was set up as the policy-making agency to exercise, through 
the Bank of Brazil, 
control over all central banking functions. 
The Bank of Brazil has 
been primarily an operating agency. 
Within the near future, however, both the control and iin fainattone will 
probably be brought under one head through the establishment of a new central bank. 
A bill for that-purpose 
has been submitted to the Brazilian Congress. The powers 
ac- 
corded to the proposed bank are extremely broad. 
Supported by five specialized semi- 
governmental credit banks, it is to regulate currency, credit, investment, and Brazil’s 
foreign trade. 
Consequently, if the bill passes in its present form, the bank will be a 
| 
dominant economic and financial factor in the economy. As far as the control 
,of 
credit and the stimulation of investment are concerned, such a central bank would be 
a notable step toward a sounder financial system. A feature of the bill which should 
measurably strengthened the banking structure is the provision that the casas bancdrias, 
or small, poorly financed banking houses, must meet reserve and other usual require- 
ments of regular banks within three years if they are to continue in existence. 
The Brazilian unit of currency was officially designated the milreis prior to 1 No- 
vember 1942. 
Although the name was changed to cruzeiro on 1 November 1942, the 
‘unit remained substantially the same. 
Currently the cruzeiro is equivalent to US 
$.05405. 
Comparison with the prewar ratio cannot be precise, because of the multiple 
exchange rate system prevailing at that time (1939 official, .0594; free market, .0507; 
Special free, .0464; curb, .0480). 
However, the cruzeiro has remained stable or perhaps 
appreciated slightly in terms of the dollar. 
This development is in contrast to the 
trend of depreciation of the currency in relation to the dollar which has ee over 
the past century. 
Within the country, however, Brazilian currency has continued to decline in pur- 
chasing power. 
Like other Latin American countries, Brazil was subject to a wartime 
inflation. 
Since 1939 the internal value of the cruzeiro has declined more than 60 
percent. 
The cause of the inflation was the rapid wartime expanison of bank deposits 
and increase of currency in circulation, unequaled by the increase in production, im- 
Ports, or the growth of the money economy. 
The rate of inflation was somewhat re- 
tarded in 1947 by the influx of imports and by the balancing of the federal budget, but 
_ 
basic necessities such as transportation, meat, rice, bread, and beans have continued to 
increase in price. 
The 1947 budgetary surplus was achieved in part by the severely restrictive spend- 
‘Ng Policy of President Dutra and in part by business prosperity which caused receipts to 
the government has a surplus of about US $20 million carried over from 1947, certain 
“xceed expenditures. Although President Dutra’s budget policy shows no change, and — 
ROMAIN DLL. 
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expansion. 
Such an expansion has taken place practically every year for a decade or 
numerous extra-budgetary credits approved but not drawn upon in 1947 will be carried 
ation of the French franc debt. 
The Dutch debt is relatively small. 
- 
to keep the cost of vital imports low, as well as to avoid additional cost in the servicing 
tions of a comgeete revaluation of the currency. 
| 
1% 
— 
factors may impede the balancing of receipts and expenditures in 1948. The estimate 
of receipts is predicated to a considerable extent upon continued business and industrial 
more, but there were several signs in 1947 that the peak of the wartime business boom 
and of rising prices may have been reached, 
Another factor is the probability that 
over to 1948 and will thus increase the cxpeiiditure figure for the current year. 
Brazil’s present external debt service is well within its financial capacity. 
Although 
service on the Brazilian external debt had been in default several times since 1898, and 
several attempts at a viable debt adjustment were made, no adequate solution was found 
for the problem. 
In November 1943, however, the US and Great Britain, the principal 
creditors, agreed with Brazil on a debt readjustment which was based on the premise 
that Brazil’s annual debt service capacity amounted to US $32 million per year.. Service 
(including state, municipal and “special” obligations, as well as federal) was 11,817,744 
in US dollars and 4,936,040 in pounds sterling (slightly less than US $32 million). 
Of 
the total, federal debt service was 384 million cruzeiros (c. US $20 million) or about two- 
thirds. 
This debt readjustment is believed to have placed Brazil’s external debt service 
on a sound basis, and payments have been maintained since it was effected. 
Brazil’s 
additional obligations in French francs and Dutch florins have been less troublesome. 
A fund has been constituted and negotiations are under way for the complete repatri- 
Service of all federal government debts is also well within the fiscal capacity of the 
government since it totals only nine percent of the total budget: 384 million cruzeiros 
(three percent) external debt service; 570 million cruzeiros (four percent) internal debt 
service; and 330 million cruzeiros (two percent) floating debt service. 
The present 
situation is thus radically different from that of less than twenty years ago when the 
servicing of the external debt alone required @ very. substantial part of Brazil’s gold 
and foreign exchange receipts. 
In addition to banking and budget problems there is the problem of the stabiilty 
of the cruzeiro in terms of foreign exchange. 
Rumors of a change in official valuation 
of the cruzeiro persistently recur. 
Depreciation has been urged for several years by the 
powerful éxporter and industrialist groups and the adverse balance of trade in 1947 
gave added force to the arguments for this course of action. 
Furthermore, Brazil has 
not declared a par value for the cruzeiro to the International Monetary Fund as was re- 
quested in late 1946. 
Presumably the reason for this inaction was the desire of the 
Brazilian Government to manipulate the external value of the cruzeiro. 
Nevertheless, 
the value of the cruzeiro has been maintained to date in spite of the fact that it is 
probably over-valued and in spite of the pressure for depreciation. 
Rigid import con- 
trols, currently in force, were apparently adopted in preference to depreciation in order 
of the foreign debt. 
Possibly a system of multiple rates may be instituted to reduce “4 
the strong pressure for depreciation, since this might enable the Brazilian Government 4 
to aid needy and/or influential exporters and importers without incurring the disloca- q 
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but has not yet achieved a thoroughly stable system. 
| 
§. 
INTERNATIONAL TRADE. 
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As a result of agricultural, and particularly of industrial development during the 
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past 25 years, the pattern of Brazil’s international trade is in the initial stages of a 
rather radical modification. 
The success achieved in this economic development will 
determine the volume, and of more significance, the variety of export offerings and im- 
port requirements. Expanding industrialization will increase the demands for imports 
of capital goods for a long time to come and will augment the need for fuel and chemi- 
cals which Brazil lacks in sufficient volume to sustain a high degree of industrializa- 
tion. 
It will draw in its wake an increased demand for those commodties, both con- 
sumer and capital, made by a manufacturing process too complicated for the Brazilians 
_ to achieve within-the foreseeable future. 
It does not follow, however, that the total 
volume of international trade will necessarily increase, because an increase in expo 
= 
sufficient to maintain 
the 1947 record-high level of imports is unlikely. 
| 
: 
— 
Since the Brazilian economy has been largely underdeveloped, Brazil’s ability to 
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feed and clothe its population has been to a great extent dependent on uncontrollable 
variations in the world markets for coffee, rubber, and cotton. 
It was realized in the 
19th century that there could be little chance of stability in the domestic supply of 
consumer goods until exports were diversified and dependence on the outside world 
for consumer goods was reduced. 
Diversified exports, diversification of domestic agri- 
cultural production, and the development of light manufacturing would be necessary 
before any greater stability in government revenues and domestic consumption pat- 
terns could be achieved. 
It was not, however, until the present century, under the 
impetus of the two World Wars, that Brazil was able to make any notable advance in 
thisdirection. 
Since 1913, Brazil has achieved virtual self-sufficiency in many essential consumer 
goods. 
Furthermore, expended production of a variety of agricultural products, to- 
gether with a slowing of coffee expansion after 1933, has meant a gradual diversification 
in Brazil’s export pattern. 
Consequently, Brazil has succeeded in insulating itself to 
some extent against variations in foreign trade which are beyond its control. 
The 
effects of a fluctuation in coffee prices at present would therefore be much less severe 
than they were during the 1920’s, since coffee now accounts for only 35 percent of the 
country’s exports as compared to 70 percent during the earlier period. 
Similarly, the 
eg ects of a reduction in imports are now much less pronounced as compared to earlier 
times. 
At present the only major food import is wheat, and more textiles are now 
*xported than imported. 
Purchases of durable goods which now account for a greater 
Percentage of imports can be more easily postponed than purchases of fodd and clothing. 
The development of light manufacturing enabled Brazil, during World War II, to 
-€xpand exports of manufactured goods to the less developed Latin American countries. 
The increased industrial. production for domestic and export demand was also an 
‘mportant factor in establishing Brazil’s large export balance of trade. By the end 
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Rather than raise the required 
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from soft-currency areas were relatively free, because the imports classified as essential % 
_ was adverse in 1947 by about US $300 million. 
Even Brazil’s total balance of trade v 
of 1946, Brazil had accumulated more than US $700 million in gold and foreign 
exchange. 
The accumulation of foreign exchange, saieiete was not an unmixed blessing. 
Since exports exceeded imports, foreign exchange receipts exceeded expenditures. 
Ex- 
porters, of course, needed domestic currency to continue production operations. 
The 
government was obliged to hold a great part of the foreign exchange surplus and pay 
issue. 
Thus, between 1939 and 1947, currency in circulation 
from five to twenty 
billion cruzeiros, contributing markedly to inflation. 
Furthermore, the fact that many of Brazil’s import requirements could be and were 
postponed, meant that the accumulation of foreign exchange was in large part com- 
mitted, and represented a reserve against future essential imports. 
In effect, it was not 
a real surplus. 
Brazil’s immediate postwar policy did not reckon with this situation. 
Despite the fact that the mechanism for control of exchange operations has beenin 
j 
existence since 1931, little effort was made to conserve foreign exchange for the most 
essential imports then available. 
On the contrary, imports of virtually all kinds were 
permitted. 
By the end of 1946 imports were unprecedentedly high, not only because of 
the long pent-up demand which had accumulated during the war and which American 
manufacturers began to satisfy in greater volume in 1946, but also because of the in- 
flated price level.in Brazil which made some imports less expensive than competing 
domestic merchandise. 
Brazil’s balance of trade with the US became adverse in Novem- 
ber of 1946, although the total balance remained favorable. 
Since many of the cur- 
rencies which Brazil received for its exports were not sinc convertible into dollars, the 
situation had inherent difficulties. 
A large part of Brazil’s foreign exchange reserve was in the form of soft currencies 4 
and hence unavailable for imports from the US. The sterling balance alone accounted 
4m 
for well over US $200 million. Thus while dollar reserves were decreasing, reserves of + 
soft currencies continued to increase. 
This tendency was accentuated by credits which 
had been extended in 1946 to soft-currency areas (US $20 million to Czechoslovakia, -; 
US $25 million to France, US $25 million to Belgium, and US $10 million to Finland). g 
Consequently, at the end of February 1947 the Bank of Brazil for a time ceased to ac- | 
cept British, Czech, or Belgian currencies. 
By June, Brazil had reinstituted 
a more @ 
restrictive system of exchange control with priority for essential imports. 
This priority 4 
system was essentially a restriction on imports from hard-currency areas. 
Imports 
funds by taxation or by floating a domestic loan, the ation role 
rom to currency 
| 
were generally not available from these ‘areas, and goods of any description were con- @m 
sidered more useful to the Brazilian economy than further accumulations of inconvert-.4 
iblecurrency. 
The possible alternative of an export embargo on shipments to the soft- 4 
currency areas would have caused serious economic dislocations, pave in the@ 
_ tobacco economy of the northeast. 
. 
Despite the more rigid control of imports, Brazil’s ‘balance of trade with the us. 
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adverse by US $83.2 million in 1947, and, in addition, Brazil’s non-merchandise trans- 
actions are a deficit item in the Brazilian balance of payments. 
In order to meet the adverse balance without resorting to the sale of gold, and not 
being a participating member of the International Monetary Fund, Brazil invoked the 
© 
- provisions of its Stabilization Agreement with the US. 
The Agreement, as amended 
and renewed in 1942, provided for cruzeiro sales for US dollars up to the equivalent of 
US $100 million. 
In April of 1947, therefore, $40 million were drawn, followed by $20 
million more in May and another $20 million in June. 
By means of delay in payments, 
amounting virtually to a forced loan from US exporters, the use of probably another 
$100 million was obtained. 
In early 1948, a system of prior permit for all exports and 
_ 
imports was introduced in a more stringent attempt to restrict Brazilian imports from 
the*US to Brazil’s capacity to earn dollars. 
During 1937, principal Brazilian exports were coffee (35.6 percent), cotton (14.3 
percent), cotton piece goods (5.9 percent), cocoa beans (4.9 percent), and pinewood 
(3.9 percent). 
The US took 39 percent of total exports, Argentina 11 percent, UK 8 
percent, and France 4 percent. 
(The percentage of the latter t 
three is for the first nine 
months.) 
_ 
Approximately 60 percent of Brazilian imports came from the US. 
Major import 
items were machinery, tools, and apparatus (23.3 percent), wheat and wheat flour 
(10.8 percent), petroleum and products (6.4 percent), automotive vehicles (9.4 percent), 
iron and steel (6.1 percent), and coal (2.3 percent). 
Total Brazilian imports in 1947 came to 22.7 billion cruzeiros (US $1,180, 400 000). 
Exports were valued at 21.1 billion cruzeiros (US $1,097,200,000). 
Thus resulted an ad- 
verse merchandise balance of trade amounting to 1.6 billion cruzeiros (US $83,200,000), 
the largest trade deficit ever experienced by this country, whose balance of trade 
is normally favorable. 
Brazil’s present import controls should improve the balance 
for 1948. 
The Brazilian Government and businessmen in the face of the 1947 adverse 
balance of trade are agreed on the necessity of reducing imports. 
Hope of easing the 
severity of present import restrictions apparently lies in increased domestic industrial 
production rather than in increased export capacity. 
Brazil’s new exchange regulations will probably result in a drop in volume of im- 
ports for 1948. 
Brazil has neither the exchange reserves nor the current earning ca- 
pacity to continue to import at the rate prevailing in 1947. 
Exports cannot be ex- 
panded sufficiently to fill the gap. 
Coffee exports will probably be maintained ~ 
at present levels for the next several years, but a substantial increase is unlikely. 
Bra- 
il’s second export, raw cotton, is expected to decline. 
The third ranking export of 
recent years has been cotton textiles. 
In spite of relatively uneconomic production, 
Brazil may well maintain a portion of its overseas sales of cotton textiles for the next 
Several years until prewar producers are able to regain their markets. 
Exports of foods 
Such as rice and meat are limited by the needs of the domestic market. 
While there 
may be an increase in exports of lumber, this can hardly result in an appreciable change 
in total exports. 
The elimination of less essential items in accordance with Brazil’s 
new import control should go far to balance imports and exports. 
- 
— 
| 
PRESIDENT!S; SECRETARY FILE 
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A reduction of imports to the level of exports, and the achievement of multilateral 
convertibility of currency, will not, however, solve Brazil’s foreign-exchange problem. 
Brazil usually has a large debit balance in non-merchandise transactions. 
Even with 
severe restrictions, it is improbable that this can be reduced below US $75 million, un- 
less there should be a substantial 
increase in new foreign investments in Brazil. 
Hence, though it is clear that Brazil will continue to have foreign-trade problems, 
these problems may be somewhat less important than they were in the past. 
Formerly, 
foreign markets were the major outlets of the chief productive enterprises of Brazil. 
Consequently, Brazil’s prosperity depended almost exclusively on the maintenance of 
foreign demand. 
This condition has changed. 
Currently the greatest contribution to 
farm cash income does not come from coffee, the chief export commodity, but from 
livestock, for which the major market is domestic. 
The contribution of coffee to na- 
tional income has declined in this century from over 40 percent to only 9 percent. 
Thus, although continuous attention is required to adjust the country’s pattern of 
trade under present payments difficulties, Brazil, through industrial development and 
agricultural diversification, has partially alleviated its former dependence on world 
markets. 
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PRESIDENT! ‘SPCRETARY FILE 
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Se 
CHAPTER 
FOREIGN AFFAIRS 
1. Baszs or BRAZILIAN FoREIGN POLICY. 
To understand the core of Brazilian foreign policy, to comprehend its long-run 
development as well as its day-to-day operations, one must keep in mind certain basic 
factors: (a) Brazil’s vulnerability to trans-oceanic attack because of proximity to 
Africa, a long and exposed coast line, and a very limited military potential; (b) its 
great dependence upon international trade; (c) the need of foreign capital for internal 
developments (conditioned by the determination to keep control thereof in Brazilian 
hands); (d) the rivalry with Argentina for military supremacy and political leader- 
_ Ship in South America; and (e) a cultural — and tradition different from 
that of Spanish America. 
| 
There are also several factors of secondary saiiiiiaiai: (a) since Brazil has no © 
unsettled territorial claims or border disputes, its foreign and military policies are 
essentially defensive; (b) the country has a deep-seated desire to be counted among 
_. 
the world powers; (c) it has a highly developed spirit of conciliation in meeting inter- 
national problems and controversies; (d) the mass of the population feels friendly — 
toward the US; and (e) there is a strong anti-Communist and anti-Soviet bias among 
the ruling classes, especially in the army. 
Although the net effect of these factors is 
to steer Brazilian foreign policy toward “Cooperation with the US, Brazilian policy will 
not inevitably be consistent with and complementary to US policy. 
In the past, vary- 
ing patterns of world affairs have produced divergencies between US and Brazilian 
_ 
policies, and there is no reason to believe that similar Cirerpeeses will not occur in 
the future. 
Be 
2, BACKGROUND. 
Although Brazilian-US friendship is traditional, the present close relationship 
between the two countries is of relatively recent origin. 
During the first five years 
of independence (1822-1827), the British clearly established their economic and politi- 
cal pre-eminence in the new Brazilian Empire. 
Although Britain’s political dominance 
Was short-lived, its economic supremacy in Brazil continued practically unimpaired 
until the first World War. 
Since that war, British influence has been steadily 
declining. The period of truly important Brazilian-US economic and political rela- 
tions, therefore, did not really begin until World War I. This trend toward closer 
relations continued in the inter-war period with only one serious competitor: in the 
1930’s Germany, not Britain, was the aggressive competitor of the US in Brazil. 
When Vargas assumed dictatorial powers in November 1937, the approaching war 
Was already posing a major problem for Brazilian foreign policy. 
The US had, by then, 
become Brazil’s largest market and chief source of imports; the Good Neighbor Policy 
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had strengthened the cordial relations between the two countries. 
Moreover, Brazilian 
relations with Germany were strained by German support for the Integralistas, a 
Fascist group, which, after Vargas outlawed it, led an unsuccessful attempt (in May. 
1938) to assassinate him and seize the government. 
The Brazilian Foreign Ojfice sub- 
sequently declared the German Minister persona non grata. At the same time, how- 
ever, Vargas attached great value to Brazil’s expanding trade relations with Germany, 
while Japan was an even more important market for Brazil’s cotton exports. 
, 
Many Braziiian army officers were deeply impressed with Germany’s growing 
military power, and German successes in the early stages of World War II greatly 
increased their admiration. 
Vargas’ determination to be identified with the victors 
forced him into the exceedingly difficult position of maintaining Brazilian neutrality 
during the first three years of the war. 
The very German victories which stimulated 
the admiration of the pro-Axis army cliques cut off European markets and made Brazil 
more economically dependent upon the US, a development which resulted in a great 
increase of pro-Allied feeling among the civilian population. 
Under the pressure of public opinion and economic necessity Brazil began visibly 
to swing toward the United Nations by the middle of 1941. 
In October of that year, the 
- first Lend-Lease Agreement was signed, and Foreign Minister Oswaldo Aranha pro- 
claimed Brazil’s break with the Axis at the Third Meeting of Foreign Ministers of the 
American Republics in Rio in January 1942. Even “before German submarine action 
against Brazilian shipping had provoked Brazil’s declaration of war in August 1942, the 
_ nation was cooperating intensively with the Allies, and particularly with the US. 
Extensive credits had been made available to Brazil by the Export-Import Bank 
in 1939 and were supplemented in 1940 by a loan of $20,000,000 earmarked for the 
Volta Redonda steel plant. 
In 1942 this US investment was augmented by an elabo- 
rate economic arrangement looking to complete wartime mobilization of the produc- 
— 
tive resources of Brazil. 
Brazil increased production and export of strategic raw 
materials to the Allies. 
The US granted technical aid and financial assistance for the 
development of Brazilian transportation and industry, with a view to postwar expan- 
sion as well as to wartime necessities. 
With the termination of war the US showed interest in Brazil’s peviniead return to 
democratic government. Ambassador Berle, speaking before a conference of Brazilian 
newspapermen in September 1945, expressed the satisfaction of the US Government 
over the democratic trend in Brazil and reportedly stated that the convening of a 
Constituent Assembly (favored by the Communists and Vargas: forces as a substitute 
for immediate presidential elections) need not interfere with the scheduled presi- 
dential elections. 
Berle’s speech was branded as “intervention” by the Communists 
and President Vargas himself, but was very favorably received by the UDN press. 
After the overthrow of Vargas on 29 October, the provisional government, headed 
by Chief Justice José Linhares, was quick to receive US recognition. 
Shortly after his 
victory in the subsequent presidential election, General Dutra declared that his gov- 4 | 
ernment would maintain close friendship with the US. 
Brazil's participation in World War II and its adherence (in February 1943) i the 4 
Joint Declaration by the United Nations paved the way for establiahment of diplo- 4 
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matic relations with the USSR. 
The establishment of relations with the Soviet Union 
met with popular ‘approval because of the war record of the USSR. 
But for Vargas, 
this development was also part of a plan to keep himself in power by adding Com- 
munist support to his own following among Brazilian labor. Diplomatic relations 
were established between the two countries in April 1945. 
Relations between Brazil 
and the USSR mirrored the relations of the Brazilian Government with the Brazilian 
Communist Party, as well as the relations of the US with the USSR. 
After the 
Brazilian Communists were outlawed in May 1947, Soviet Ambassador Suritz left Rio. 
In October 1947, following publication in the Soviet press of an article insulting 
President Dutra and the Brazilian Army (published soon after the arene —s 
President Truman), Brazil broke relations with the USSR. 
3. 
CURRENT RELATIONS —INTERNATIONAL ORGANIZATIONS. 
The Brazilian Government has traditionally attached great importance to most 
programs and organizations for international action. 
It is an enthusiastic and active 
participant in the work of the United Nations, extremely proud of the fact that Brazil 
was selected as one of the temporary members of the original Security Council. 
A 
Brazilian, Oswaldo Aranha, served as president of two successive General Assemblies 
in 1947. 
Brazil has always tended to cooperate closely with the US in the work of the 
General Assembly. 
Brazil’s interest and activity in inter-American affairs is likewise noteworthy. A 
strong champion of a Hemisphere defense system, Brazil has ratified (March 1948) 
the Inter-American Treaty of Reciprocal Assistance. 
At the Ninth International Con- 
ference of American States at Bogota, Brazil’s policy and conduct paralleled those of 
the US more closely than was the case with any other important country represented 
at the conference. 
Brazil joined with the US in opposing the introduction of any 
_Tesolution on European possessions in the Western Hemisphere, and both abstained 
from voting on the final text. The two countries acted together in the formulation and 
adoption of the resolution against totalitarian systems—the so-called anti-Communist 
resolution. 
Both countries opposed any detailed elaboration of the rights of labor in 
the Inter-American Charter on Social Guarantees on the ground that economic con- 
ditions vary so from country to country that no useful purpose would be served by 
attempting international action along such specific lines at this time. 
4. 
CURRENT RELATIONS—LATIN AMERICA. — 
Brazil has always been a strong advocate of Hemisphere political cooperation, and 
prides itself on maintaining and promoting peaceful relations in Latin America. 
World War II greatly increased its commercial interchange with the other American 
republics, 
After the war, one of the most important aspects of its task of economic 
‘econversion was the necessity of assuring markets for the country’s textile industry, 
Which had expanded greatly with the wartime lack of competition, and to this end 
Brazil concluded bilateral trade agreements during 1946 and 1947 with Argentina, 
©, Uruguay, Paraguay, and Bolivia. In July 1947, following a visit to Rio by Chile’s 
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President Gonzales Videla, Brazil signed conventions with Chile relating to Economic 
sufi 
Cooperation, Travel and Tourism, Air Commerce, and a Supplementary Protocol to the 
oth 
Treaty of Commerce and Navigation of 1943. 
The year 1947 also saw meetings of 
tior 
President Dutra with the Presidents of Argentina and Uruguay on the occasion of the 
‘Bra 
opening of the International Bridge between Brazil and Argentina and the signing of 
pos’ 
an agreement for construction of a Friendship Bridge between Brazil and Uruguay. 
to ¢ 
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There is, of course, a latent rivalry 
in Brazil’s relations with Argentina. Brazil’s 
C00} 
participation in World War I and thc material results of its cooperation with the 
Cha 
US gave it a great advantage in the traditional competition between the two countries 
(see 
for leadership in South America. 
Brazil’s military strength was greatly increased 
relative to that of Argentina. 
Brazil assumed the lead in pushing for an active inter- 
wit! 
American policy at a time when Argentina, by its own choice, was spsiemmacd isolated 
hav. 
from the remainder of the Hemisphere. 
last 
In Paraguay and Bolivia, countries which Argentina counts within its sphere, 
jan 
Brazilian influence received a powerful impulse during the war by virtue of Brazil’s 
Bra: 
participation in the war, its i increased military strength, and its expanding production. 
par 
Brazil continues to show an interest in pressing its advantage for more intimate 
‘ 
| 
economic and military relations with these two neighbors. . Brazil is constructing a 
mien 
railroad connecting the Bolivian city of Santa Cruz with the Brazilian river port of 
the 
Corumba with the eventual objective of through rail traffic to the free port of Santos. 
q 
ates 
' A joint Bolivian-Brazilian Commission is exploring for oil in that region of Bolivia 
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opened up by the railroad. 
During the Paraguayan Civil War in 1947, Brazil offered 
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its services as mediator and mane strenuous efforts to get both parties to submit to a 
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Despite the ancient rivalries.and divergent policies of Brazil and Argentina, a desire 
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| 
to maintain cordial relations is presently evident on both sides. 
Brazil, in fact, con- 
. 
siders that one of its roles in Hemisphere relations is that of intermediary and 
— 
conciliator between the US and Argentina. Any estrangement between the US and 
@ 
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, 
Argentina which would impel the Spanish-speaking countries of South America to 
| 
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| 
align themselves with Argentina, thereby isolating pro-US Brazil, would greatly alarm 
Brazilians, Moreover, Brazil’s trade with Argentina is important, and since the 
= 
war Brazil has tried to negotiate an agreement whereby Argentina would supply 
and 
its wheat needs. When the US State Department published its Blue Book on Argen- 
ah 
tina in 1946, a large segment of the Brazilian press received it enthusiastically, but the 
a 
Government, in reply to a US request for its views, expressed itself as favoring conti- 
| 
nental solidarity and the re-establishment of normal relations with Argentina, a view 
sige 
it has consistently supported in recent years. 
Brazil will continue, however, to be 
a - 
jealous of its position as the closest friend of the US in Latin America, and any develop- 
: 
ment indicating that ot eae might supplant it in this position will provoke:a 
bitter reaction. 
Estate. 
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Although the present administration has quite consistently followed a policy 
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of friendship and cooperation with the US, relations between the two countries have am 
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— suffered somewhat from the postwar economic situation. Perhaps even more than 
other Latin American countries, Brazil feels that the US, having enlisted its coopera- 
tion in wartime; should now make generous contributions toward the solution of 
Brazilian economic problems. 
The removal of Ambassador Carlos Martins from his 
— 
- post in Washington (April 1948) seems to have been largely a result of his inability 
to obtain more US aid for Brazil. 
Mlustrative of the obstacles hampering postwar 
‘cooperation between the two countries are the situation of the Itabira project. (see 
Chapter II, Section 2a (2), Iron p. 26), and the question of Brazilian oil “pean 
(see Chapter 
II, Section 2c, Petroleum, pp. 29-31). 
Furthermore, while sympathizing in principle with ERP, many Brazilians agree 
| 
with the late Senator Roberto Simonsen, an industralist from Sao Paulo, that it might 
have detrimental effects on the Brazilian economy. 
Simonsen suggested in a speech 
e last October that if Brazil is not to suffer from the ERP, the US should finance Brazil- 
ian exports to Hurope so that Brazil in turn can purchase machinery from the US. 
- 
Brazil also wants to be able to obtain delivery on 
1 industrial aati at least on a 
‘par with deliveries made to Europe. 
Another difficulty has been Brazil’s failure to participate in and adhere to the 
a | various international economic organizations to the degree the US would desire. 
Since 
_ 
the middle of 1947 shortage of funds and internal political considerations have been 
obstacles to whoiehearted Brazilian cooperation in the International Monetary Fund, 
the International Trade Organization, and the International Emergency Food Com- 
mittee. 
Continuing cooperation with the US for Hemisphere defense is practically assured. 
For several reasons it is most unlikely that Brazil would enter upon any relations with 
the USSR as sympathetic and cooperative as were Brazil’s pre-Pearl Harbor relations 
with NaziGermany. 
Brazil’s economic dependence on the US, now considerably greater 
than it was before World War II, is likely to continue for some time to come, even 
though an attempt is being made to increase trade with other Latin American countries. 
- (Brazil would, of course, welcome additional markets in Europe if sales were financed in 
_ 
Convertible currency.) 
Although the USSR took a few Brazilian exports during 1946 
and 1947, it did not provide a major market for Brazilian goods and was not in a 
_ 
position to supply the imports Brazil needed. 
No change in this situation is expected. 
Furthermore the US is practically the only country at present from which large amounts 
of capital for Brazil’s development and industrialization cancome. 
The Brazilian Army 
_ and ruling classes fear domestic Communism and are bitterly anti-Soviet, as reflected 
_ In the government’s break with the Soviet Union. 
Moreover, the majority of the 
Brazilian people themselves feel a genuine friendliness toward the US. 
It is also most unlikely that Brazil will join Argentina in a “third position” between 
the US and the Soviet Union. 
Brazil looks to the US for modern arms and equip- 
ment, hoping thereby to maintain military superiority over Argentina. 
Cooperation 
with the US has greatly helped Brazil in its attempt to rival Argentine material 
- Progress, and its leadership in Pan American cooperation has enhanced Brazilian 
Prestige vis-a-vis — 
~~") 
TROMAN 
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PRESIDENT! S: SECRETARY FILE 
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Brazil’s identification of aims with those of the US, and its economic and military 
dependence on the US do not imply, however, any supine willingness to make con- 
cessions incompatible with its sovereignty.. When there is an inescapable conflict 
between cooperation with the US and national sovereignty, Brazil shows no hesitancy 
in resorting to independent: action. 
Brazil’s insistence upon establishing and main- 
_ taining the legal fiction upon which the US bases arrangement was founded well illus- 
trates this fact. 
Brazil gave a concrete demonstration of its independence of judgment 
after the Argentine coup d’état of 4 June 1943 when it recognized the new Argentine 
Government without acting in accord with the US or the South American Govern- 
ments. 
At the present time, Brazilian sensitiveness concerning sovereignty probably 
underlies the strong feeling against allowing — oil companies to operate freely 
in Brazil. 
Brazil is in a fairly ibeiateneen position to seek economic advantages trom the 
US, and may be expected to do so. 
It has several important sources of bargaining 
power: (a) strategic raw materials (See Chapter IJ, Section 2, Natural Resources, pp. 
24-31), important to US defense, and (b) a military position of great importance to 
the defense of the Hemisphere. 
Politically, Brazil’s support is necessary to the US in 
all programs of inter-American cooperation. 
Brazil is the largest and most influential 
(except possibly Argentina) of the Latin American countries, and without its backing 
the US would find it difficult to advance measures for united action. 
In broader 
programs of international action, Brazil’s collaboration is also of great value to the 
US. 
Failure of Brazil to cooperate in peacetime would be very detrimental to US 
action in the international fleld; in wartime, it would be even more serious. 
6. 
Summary. 
| 
‘Brazil may be expected within the predictable future to continue its policy of close 
cooperation with the US, a policy which, under present-day conditions, is dictated both 
by preference and by necessity. 
It may be expected to continue to remain free of 
aggressive design in its foreign relations and to concern itself with promoting inter- 
national peace and welfare, supporting, within its mnancia limitations, international 
contributing to those ends. 
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CHAPTER IV 
MILITARY SITUATION 
1. 
GENESIS OF PRESENT MILITARY POLICIES. 
Brazil’s military policies, as well as some of its domestic and foreign policies, have 
- 
been given distinctive shape by the fact that the military has assumed, and continues 
to assume, an important and sometimes dominant role in the direction of the destiny 
of Brazil. 
The Brazilian Army (the army accounts for 80 percent of armed-force 
strength, and an even higher percentage of military influence) is conscious-of the 
- importance of its role in the preservation of the national integrity in the war with 
Paraguay in 1864-1870, and in the establishment of the Republic in 1889. 
Brazilian 
governments have been essentially dependent upon the support of the military, and 
although its influence has been exercised, for the most part, in an interdictive rather 
than in a positive manner, it can be said that governments in Brazil remain in power 
by consent of the military and fall through loss of its favor. 
(See also Chapter I, 
Section 4. a, The Army, pp. 14, 15, for political influence of the Brazilian Army.) 
Brazilian military leaders have concerned themselves primarily with the develop- 
ment of a military establishment capable of preserving the internal security of a 
country whose population is the largest in Latin America; this population also is 
illiterate, socially and economically underprivileged, and possesses only the vaguest 
notions of political rights and responsibilities; and it is scattered over a vast, largely 
undeveloped, land, whose natural barriers and hazards retard the growth of a national 
life. 
In such a population there is a high potential of political instability, which 
has on the one hand called for a considerable degree of readiness on the part of the 
army to support civil authority in the maintenance of order, and on the other offered 
the army chances for interference on its own initiative. 
Brazil’s foreign policy has—as was pointed out in detail in — IIl, —_ 
_ Affairs—been non-aggressive. 
Brazil has, it is true, participated in four wars with 
neighboring countries—two against Argentina over the territory of Uruguay (1825 
and 1851-52); one against Paraguay (1864-1870), in which Brazil joined forces with 
Argentina and Uruguay against Paraguay; and one against Bolivia (1903) when the 
territory of Acre was acquired (Brazil later paid Bolivia for the territory). 
With the 
possible exception of the Acre incident, however, Brazil has manifested no interest in 
aggressive warfare or territorial aggrandizement during the last century, and its ex- 
ternal military policy has been governed by considerations of defense. 
Although the territory of Brazil is almost equal in area to the combined territory 
of the remaining South American countries, and its boundaries join with those of 
every South American nation except Chile and Ecuador, there are great natural 
barriers everywhere except in the South. 
The Amazon basin—comprising approxi- 
mately one third of the country—constitutes a virtually impassable barrier to invasion 
from the north and northwest. 
The marsh region lying between the upper reaches 
_ 
Of the Parané and the Paraguay rivers, and the extensive wooded area of the Mato 
Grosso that extends to the Andes, constitute a considerable barrier against invasion 
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“HARRY! S, TRUMANR 
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from the west. Although the rapid development of aviation during World War II 
makes air operations in these areas possible, air-navigation difficulties and supply prob- 
lems would probably dissuade any enemy that contemplated such operations. 
_ The southern frontier, on the contrary, where Brazil borders on Uruguay, Para- 
guay, and Argentina, has no effective natural defense barriers. 
The problem of this 
frontier is relatively recent, since Brazil’s pre-eminence was generally accepted in the 
Latin American sphere during the period of the Empire, 1822-1889. 
Not until about 
the time of the creation of the Republic in 1889 had Argentina developed sufficiently - 
to be in a position to bid for Latin American hegemony. 
Since that time Argentina 
has continued to challenge the supremacy of Brazil in the Latin American sphere and 
in the world, and regard for Argentine military strength has been a strong factor in 
determining Brazilian military policy. 
The strategic area involved within the con- 
cept of a war with Argentina includes the states of Parana, Santa Catarina, and Rio 
Grande do Sul. 
In recognition of the importance of this region, Rio Grande do Sul 
has been the maneuver area of the Brazilian Army in which problems are set con- 
cerned chiefly with the safeguarding of the country against invasion. 
World War II brought into focus for Brazil’s defense-policy makers an additional 
problem—the vulnerability of the strategically important northeastern bulge. The 
Bulge is remote from the concentration of population and industry in the southern 
seaboard states. 
Since Brazil possesses practically no land transportation, defensive 
measures depend upon air transportation and coastwise shipping; the latter is ex- 
tremely hazardous in time of war, particularly because Brazil’s 3,642-mile coast has 
many almost landlocked bays that form spacious harbors more accessible to a sea- 
borne enemy than to land defense forces. 
Since Brazil cannot hope to defend its — 
long coast by its own efforts, military policy has sought not only the development 
of a more modern military establishment but also closer cooperation with the US 
and other nations of the Hemisphere. 
Until World War I—and, in fact, until World War II as far as the Army was 
concerned—the strongest external influences on Brazilian military thinking were 
those of the French. 
(The influence of French missions on Brazilian training be- 
tween World Wars I and II is mentioned in Section 3, e., Training, pp. 57, 58.) 
US in- 
- fluences are now dominant in army, air force, and navy. 
_ 
2. 
Wak POTENTIAL. 
a. 
Manpower. 
Brazil, with a population of possibly 45,000,000 
(the figure is considered 
liberal by some), has the largest manpower potential of Latin America, having more 
than twice the theoretical mobilization capacity of either of its closest rivals, Mexico 
and Argentina. 
Normal statistical procedure would indicate a total of from 8,000,000 
to 9,500,000 males of military age who are presumed fit for service. 
But the very low 
average age of the population, and known physical disqualifications—confirmed by 4 
experience in recruiting the World War II Brazilian Expeditionary Force—render even - : 
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The Bre 
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S0TY—700 000 train cay Classify their availab] 
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Mobilization ca 
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Hanpower as follows: first cate. 
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With Military °xperience acquired through active sery- 
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the armed forces (US estimates of this 8Toup run ag low as 400,000); second 
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category—1.090 099 Partially trained Teserves with Military &xperience 4cquired in 
Military schools Or in citizeng’ Military training Centers; ang third category—1,650, 000 
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untrained Teserves with Military €xperience acquired in some other way. 
The average 
total of the armed forces Over the past 20 years has been *PProximately 
119 nn, 
| 
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is anticipated that in the future Strength will be 
mo, 
| 
figure: Present strenoth 
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The mili “aly Value of Brazil’s Manpower is Severely limiteg by illiteracy ang 
| 
by the §enera] debility Of the Brazilian Population. 
Illiteracy is estimated as high as 
| 
| 
= 
50 percent of the adult Population: it is therefore normally Necessary to teach con- 
—_— 
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Scripts—drawn Principally from less Privilegeg Classes in Which illiteracy ls highest 
to read ang Write before Starting their basic training. The average Braziyi. N lacks 
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vigor and a88Tessiveness 
fact which is attributable to ter 
Climatic Conditions. Inadequate diet ang 
from’ a 
low standard of living, 
Thane 
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ailments 
Therefore, the above-mentioned third cate. 
| 
Manpower Pool cannot be Considered g rea) asset to the 
i 
armed forces, while imposition of rigorous Selection Standards would sTeatly decrease 
| 
| 
the availables in the first ang Second Categories 
| 
(See also Chapter 1, Section 2, pp 24-32.) 
| 
Brazil has potential] resources Sufficient for the development of an industria} 
| 
"conomy, 
At Present it has 
export Surplus—ang this list is Not likely to be added 
| 
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to in the near future—or iron ore, Some of the ferro-alloying elements, quartz crystals, 
j 
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industria) diamonds, mica, zirconium, ETaphite, bauxite, bery], rubber (in Compara- 
tively Smal] quantities). vegetable Oil, and Taw tale. 
Large Monazite-sands deposits 
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are an important Source of thorium. 
Brazi] is deficient 8nd would be a burden on 
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its allies in the following: Crude oi] and petroleum Products (98 Percent of Brazilian 
| ee 
“equirements are met by importation 
fertilizers Coking coa), Sulphur, asbestos, copper, 
nickel, lead tin, zine antimony, mercury, bismuth, Platinum, Silver, cryolite, ang 
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Brazil is Practically self-sufficient in the major basic items of textiles excepting 
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foods eXcepting Wheat, and fibers excepting jute 
Brazilian transportatio 
in its war potential 
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interior jg lacking 
because of the lack
Papers of . 
PRESIDENT! SECRETARY PILE 
of sufficient capital and the undeveloped economic potential of the interior. 
Inland 
is 
water transportation is not sufficient to compensate for the lack of highways and rail- 
2) 
roads. 
Commercial air transportation is of major importance, serves to connect the 
m 
interior with the coast, and is one alternate to ocean shipping along the coast, but 
; 
it is restricted by insufficient modern airfields and equipment. 
The concentration of 
‘to 
population and industry along the coast would make a re short we 
qu 
tion in ocean traffic extremely serious. 
| 
sig 
c. 
Industry. 
(See also Chapter I, Section 3, pp. 32-36.) 
| 
; 
Particularly important from the military point of view, in addition to specific 
ong 
facts on the munitions industry given in the following paragraphs of this section, are 
the following: (a) even when the Volta Redonda project is fully developed, the Brazilian 
’ 
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steel industry will not be sufficient to care for Brazil’s own wartime needs; (b) hydro- 
| ni . 
electric power sources, potentially great, will require years for development; (c) there 
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is practically no petroleum industry; and (d) more than 70 percent of Brazil’s industry 
the 
is centered around Sao Paulo. 
| 
With the exception-of a limited domestic production of rifles, bayonets, small- 
arms ammunition, light machine guns, gas and gas masks (dependent on imports of 
necessary raw materials), Brazil must purchase military equipment from foreign 
iia 
countries to supply the needs of its army. The six armament and munitions plants 
are concentrated in the Rio-Sao Paulo area. 
Brazil obtains all first-line tactical and transport aircraft from the US in 
% 
nnd 
completed form. 
The Brazilian aircraft industry consists of: (a) four plants assem- 
% 
tinre 
bling a limited number of light training planes from parts and sub-assemblies imported 
; : 
relat 
: 
from the US; (b) one small plant which produces wooden aircraft propellers; (c) a 
Zz 
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factory originally built to produce aircraft engines which is being converted into an 
engine-overhaul shop planned also to manufacture products for civilian consumption; 
tions 
: 
and (d) a motor factory, tooled to build only 500 h.p. motors, in which, although ithas 
univ: 
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been in operation for several years, only three engines have been produced. 
It is 
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doubted that these factories could convert to the production of combat planes because 
g 
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| 
of the lack of matériel, skilled personnel, and technological background. 
So faras 
probs 
is known, none of them has ever produced aircraft armament. Thus Brazilianindustry 
; 
cannot now, and in the foreseeable future is not likely to be able to support the Bra- 
and } 
| 
zilian Air Force in action. 
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All present Brazilian naval construction is taking place in the incite 
ae 
techn 
| 
ways of the Brazilian Navy Yard on Ilha das Cobras and ‘in those of the Henrique 
fare. 
. 
Lages organization on Ilha do Viana, both in Rio de Janeiro harbor. 
These installa- 
= 
Coast 
: 
tions have built gunboats, minelayers, subchasers, and destroyers, and at present are 
4 : 
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working on destroyers, water barges, oil barges, and subchasers. 
While for the most 
of te 
| 
part these vessels have been, and: are being, assembled from prefabricated materials 
| 
bought abroad, Brazilian technicians are gaining much experience in the process, and 
4 qi 
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Brazil seems to be progressing toward a relatively high degree of independence in the “aE 
| 
construction of minor combatant types. 
A small gun and projectile factory in the 
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Arsenal of Ilha das Cobras, which has manufactured tubes and torpedoes for destroyers, 
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