Modern Brazil

Publication
The Empire Club of Canada Addresses (Toronto, Canada), 18 Oct 1956, p. 21-33
Description
Speaker
Borden, Henry, Speaker
Media Type
Text
Item Type
Speeches
Description
A twentieth century that perhaps belong to the New World—North and South America. Two countries destined to share an increasingly important part of the remainder of the century: Canada and Brazil. A shared handicap: they have not been sufficiently known to, or understood by, persons in other lands. Some amusing examples of this phenomenon. A description and history of Brazil; population and politics; economy; agriculture; mineral resources. The current industrial and commercial expansion in Brazil and the resulting rise in the standard of living. Brazil's monetary policy. Brazil as a potential large and profitable market for an exporting country such as Canada. Trade balances. The increasing importance to Canada of Latin-American trade, particularly with Brazil. Brazil's development.
Date of Original
18 Oct 1956
Subject(s)
Language of Item
English
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Full Text
"MODERN BRAZIL"
An Address by HENRY BORDEN, C.M.G., Q.C., President, Brazilian Traction, Light and Power Co., Limited
Thursday, October 18th, 1956
CHAIRMAN: The President, Mr. Donald H. Jupp.

MR. JUPP: We are delighted to have as our speaker today a member of one of Canada's great families which has rendered notable public service and has incidentally borne out the tradition that the Maritime Provinces are the cradle of an exceptional share of the nation's brains. Henry Borden was born in Halifax, N.S. in the year when his uncle Robert Lair Borden was chosen Leader of the Conservative opposition. Within four or five years there was established, unbeknown to the young boy, a connection with the Empire Club of Canada because this same uncle addressed the Club on "Recent Developments in Parliamentary Institutions", and some nine years later, when Prime Minister of Canada, paid a return visit to speak on "Canada and the Great War". Even as we take a justifiable pride in the fact that Prime Minister Sir Robert Borden addressed the club in his day on two occasions, so do we welcome our distinguished speaker today. Henry Borden did not follow the path of politics but after an extensive education which took him to no less than three universities-McGill, Dalhousie and Oxford, he was called to the bar at Lincoln's Inn, London, in Nova Scotia and in Ontario. It was fortunate for Upper Canada that he established himself in legal practice in Toronto and here he was appointed King's Counsel.

It is interesting to record that Henry Borden obtained his BA at McGill in Political Science and Economics, that he was joint author in 1931 of Fraser and Borden's "Handbook of Canadian Companies" and that he formerly lectured at Osgoode Hall on Corporation Law. Obviously the way was open for an outstanding legal career and for a position of top responsibility in a great corporation coupled with activities in the public service. In this last sphere I will mention only Vice-Chairmanship of the Boards of Governors of the University of Toronto and of the Hospital for Sick Children.

Canadians undoubtedly derive satisfaction from the adventures of industrious gentlemen among them in foreign countries and high among such notable adventures is the Brazilian Traction, Light and Power Co., Ltd., which Mr. Henry Borden, C.M.G., Q.C., leads in the office of President. Mastery of the problems of the vast network of public utilities and companies controlled by Brazilian Traction gives our speaker an unrivalled knowledge of his subject which is "Modern Brazil". Mr. Borden.

MR. BORDEN: Gentlemen, my thoughts and my words concern themselves today with that fascinating country, Brazil. That country and its people are close to my heart-not only as a matter of day-today necessity because of my work but also as a matter of real affection. Brazil is a great country and I am very happy that my visits there and my many contacts with its people have given me a genuine affection for and admiration of Brazil and Brazilians.

You are all familiar with the famous prophecy made early in this century by that great Canadian statesman, Sir Wilfred Laurier, that "The twentieth century belongs to Canada."

I do not think that the twentieth century belongs to Canada exclusively. Perhaps it would be more factual to say that the twentieth century belongs to the New World -North and South America. In this New World there are two countries destined to share an increasingly important part of the remainder of the century. I refer, of course, to Canada and Brazil. Brazil and Canada suffer somewhat the same handicap. They are not-or have not been-sufficiently known to, or understood by persons in other lands.

As Canadians we are amused and perhaps more than a little annoyed when we discover that sometimes to people in other countries Canada is a slice of the Northwest Territories or the Arctic barrenlands, with permanent frost in the ground and blizzards in the air.

Brazilians, I know, have feelings similar to ours when they learn that in various parts of the world Brazil is portrayed as a country consisting largely of jungle on the banks of the Amazon River, peopled by Indians who dispatch their enemies with poisoned darts or, alternatively, by sending them off to be a luncheon for the voracious piranha fishes.

The fact is, of course, that just as Canada in one part of its area is host to the Arctic Circle and in the larger part is a reasonably temperate country, so Brazil plays host to the Equator but remains in part a non-tropical country. From north to south, Brazil stretches over 2,600 miles-equal to the distance from Toronto to Vancouver-and its climate varies from tropical in the northern regions to temperate in the southern, where agriculture and industry are chiefly concentrated.

I am sure that all of you here today know that Rio is the capital of Brazil but not all of us may have too clear an idea of just where Rio is or of Brazil's geographical location relative to North America. For example, if you were to journey due south from Toronto you would not pass through Brazilian territory at all-you would be too far west and all of Brazil would be to your east. You would, in fact, arrive at Lima, Peru, on the Pacific Ocean. If, however, you were to travel due south from the southeast tip of Greenland you would reach Rio de Janeiro. While on the subject of geography, I would like to remind you also that if you were at Recife, a Brazilian city on the Atlantic Ocean, at the tip of what is called Brazils bulge, you would be only 1700 miles from West Africa across the south Atlantic Ocean.

Brazil occupies approximately 50% of the land surface of South America. It is larger than continental United States by the size of the state of Texas and somewhat smaller than Canada. It borders on ten other countries in South America, all the countries of that great continent except Chile and Ecuador. It has a population of nearly 60 millions of people, approximately 50% of the total population of South America.

Brazil's history begins in 1500 when it was discovered by the Portuguese Admiral, Pedro Cabral. Not many years later colonization was commenced by Portugal. This accounts for the fact that Portuguese, not Spanish, is the language of the country. The country already had an Indian population and the Portuguese immigrants mixed freely with the native Indian. Then came the African negro as the slave. By the second half of the 16th century the colonists who had settled in the north-east around Bahia and Recife, were beginning to prosper as a result of the great sugar trade which had been developed. This prosperity invited conquest by other European powers, particularly the Dutch who seized Recife and spread their control of the coast north to the mouth of the Amazon. The colonists, without any help from Portugal, gradually pushed back the invaders and recaptured Recife in 1654. The co-operative effort of the whole population, Portuguese, Indians and negroes in expelling the invader built certain loyalties and traditions whose influences are still felt in the north-east of the country.

At this time the settlers in the south of the country, around Sao Paulo, were experiencing considerable difficulties, and it was not long before the more adventurous of them broke away from the settled communities and started expeditions into the interior, driving their cattle with them, living off the land, and enslaving the Indians. In 1700 gold was discovered in the State of Minas Gerais (Minas Gerais means "general mines") by these "bandeirantes' as they are called. The ensuing gold rush saw the growth of interior cities, as seekers from all parts of the country and from Europe swarmed to the area.

For many years after this Brazil was the principal world source of gold which went primarily to Portugal and from there into the world economy. Brazil was from the beginning a colony of Portugal. When Napoleon invaded Portugal in 1807 the Prince Regent of Portugal, the Royal family and the court set sail for Brazil under the protection of the British Navy and established the Royal court at Rio. In 1816, after Napoleon had been satisfactorily disposed of, the Prince Regent, still in Brazil, became King of Portugal and Brazil. He remained in Brazil until 1821 when he returned to Portugal, leaving his 23-year old son, Pedro, as Regent. On September 7, 1822 Pedro declared Brazil's independence of Portugal and was shortly crowned Dom Pedro I, Emperor of Brazil. Thus Brazil gained her independence without the bloodshed that occurred in many other parts of Latin America.

Dom Pedro II, who, after a 9-year Regency, succeeded his father as Emperor in 1840, governed the country until 1889 when Brazil was proclaimed a Republic following the abolition of slavery during the preceding year. Dom Pedro II was a man of culture with progressive and liberal ideas and a keen interest in scientific affairs. He did a great deal to develop Brazil politically, economically and culturally.

I have already made mention of the native Indians of Brazil, the Portuguese settlers and the Negro slaves brought from Africa. Inter-marriage among these groups became common, producing offspring of mixed blood, although the Portuguese maintained their position as the solid and predominant nucleus of the Brazilian people. More recent immigration has added further strains with immigrants in large numbers from Europe, as well as from Asiatic countries, such as Japan.

A common language-Portuguese, a common religion -Roman Catholicism, and a common loyalty to their country have together proved a strong cohesive force in this country of mixed origins. In no modern country have the problems of racial relations been solved in such a Christian and democratic manner as in Brazil where racial prejudice is of no real consequence. Brazil is in fact evolving a new and distinct ethnic strain.

Brazil's inhabitants are distributed in a decidedly uneven manner-less than 1/s of the area containing 90% of the people. The remaining 2/3, of course, contain large tracts that are thinly populated, some of them as yet virgin territory. In view of the fact that Brazil's population thirty years ago numbered fewer than 30 millions and that it is capable of supporting a population much larger than . . . it now contains, many estimates have been made of the country's potential capacity. An estimate of 300 millions of people is generally considered to be conservative.

Whatever the ultimate population in Brazil may be, it is a fact that during the past three decades its population has been increasing at the rate of approximately one million a year. There is good reason to believe that this rate of increase will continue and the Government of Brazil has indicated that it believes the population may well be 100 millions by 1975.

It may be of some surprise to you when I tell you that Brazil's capital, Rio de Janeiro, is a city of nearly 3 millions of people. It has often been called the world's most beautiful city and certainly would stand very high in any such ranking. Sao Paulo, another city approximately 250 miles from Rio, and the industrial heart of the country-indeed of the continent-is a modern city in every respect and has become internationally famed as the world's fastest growing city. The tremendous growth of Sao Paulo can best be exemplified by comparison with our own city of Toronto. In 1890 Toronto had a population of 181,000; Sao Paulo had 65,000 people. Today Metropolitan Toronto is home to approximately 1-1/a millions of people, while Sao Paulo, like Rio, has close to 3 millions of people.

However, the population fact of greatest immediate importance to Brazil is a simple one. Brazil has 60 million people. It is true that in many sections of the population the quality of living and the cultural level are high, by any standard, but it is also true that other sections leave great room for progress in these respects. The point is that people-people in numbers whether of high or low degree-are a tremendous asset for any country and Brazil has this asset. Brazil is a democracy. The nation is divided into 20 states each with its own state government, 5 territories in the remote parts of the country governed by the Federal authorities, and a Federal District surrounding the city of Rio.

The Constitution of 1946 is similar to that of the United States of America. There is a congress of two houses, a Senate and a Chamber of Deputies-both elective bodies. There is an elected President, who holds the executive power, but who is precluded by the Constitution from

succeeding himself. Presidential elections are held every five years by secret ballot. In order to vote a citizen must be able to sign his name and must register at an indicated centre.

Agriculture is the basic industry of Brazil and in it and its ancillary occupations are engaged approximately 9-1/2 millions of people. While Brazil is using increasing quantities of commercial fertilizer in farming operations and adopting modern agricultural methods with the use of modern machinery, there is no doubt that much of the land most readily available for intensive agricultural purposes has in the past been mined and also that the mechanization of farms has really only commenced. Partly as a result of this, agriculture is continually pushing to the west and getting further and further from the coast-line in the southern part of the country. This has led to the opening up and development of large unsettled areas and the constant pushing back of the frontiers of civilization. A great many of us here today can well remember in our younger days the almost irresistible appeal or attraction to our own western country and the slogan "Go west young man; go west." For some time a similar situation has existed in Brazil with its general movement of civilization to the west, called by some `the march to the west."

Brazil's economy has always tended to be dependent on one particular commodity over a certain period of time. The first of these basic products was sugar. It attracted people and brought wealth to the north and northeast of the country and first accustomed Brazilians to the idea of producing for world markets. After the sugar cycle came cotton, then gold, then rubber and now, of course, Brazil's biggest and best-known crop--coffee, in the production of which it leads the world and which in dollar value accounts for approximately 60% of Brazil's export trade. Brazil is also among the world's leaders in the production of cotton, cocoa, corn, sugar and rice.

Brazil grows wheat. Its annual consumption of wheat is approximately 2-1/2 million tons. Of this amount in 1955 it produced not much in excess of 600,000 tons and was obliged to import the balance. Its chief source over the years for its imports of wheat has been the Argentine, but in recent years it has purchased from Canada and from the United States.

Brazil is a rich storehouse of minerals. While we in Canada can be proud of the relatively recent iron-ore discoveries in our country and of other developments, we should remember that Brazil contains iron-ore deposits estimated at 13 billion tons, almost 1/a of the world's known iron-ore deposits and of exceptionally high quality.

I have already mentioned that when Brazil was a Portuguese colony it was the largest gold producing country in the world and it still contains much mineral wealth including manganese, rock crystal, diamonds and other precious stones of incomparable beauty. In fact, Brazil is the supplier to the democratic world of rock crystal so vital to our defence requirements. Recently a very important discovery of zinc and copper has been reported.

On the other hand, Brazil is sadly deficient in certain minerals so important to modern industry. Its coal deposits found chiefly in the south are not abundant and are of inferior quality. There is a belief which is widespread that Brazil contains large quantities of oil but as yet these reserves have barely been tapped and the method by which these oil reserves are to be explored and developed has divided public opinion and resulted in a burning political problem involving national sentiment and pride. Brazil at the present time imports petroleum products of a value close to $300,000,000 per annum and these importations, along with wheat, result in a heavy drain of her annual foreign exchange availabilities.

Brazil is going through a tremendous industrial and commercial expansion. In the south-east part of the country, in the cities of Sao Paulo, Rio de Janeiro (including the Federal District) and Minas Gerais, there live some 22 million people forming a large and compact market for the products of industry. It is in this area that the industrial growth since World War II has been most striking. The largest manufacturing industry is the textile industry in which approximately 25% of the country's

industrial labour force is employed. Other important industries are iron and steel, aluminum, cement, construction, food processing, leather, glass, chemicals, pharmaceuticals and plastics.

This rapid expansion in every phase of the country's development over the past decade has resulted in a real rise in the standard of living and also a terrific spiral of inflation. Since 1948 the cost of living indices in Rio and Sao Paulo have risen from 100 to approximately 233. In fact these indices show that in these areas the cost of living since 1951 has doubled.

Much has been said and written in the past three or four years about Brazil's foreign exchange difficulties. With her rapidly expanding economy and tremendous increase in the internal price level, the huge demand for consumer and capital goods not manufactured within the country, and the necessity to import large quantities of wheat and petroleum products, there was created some five years ago an external payments problem of major proportions which has not yet been completely overcome. Rigid import control regulations and complicated exchange regulations, however, have been in effect for several years and the country's position foreign exchange-wise is easier now than it has been in recent years.

The monetary unit is the cruzeiro and the official exchange rate in terms of the United States dollar has been 18.82 cr. to the $1. for many years. However, largely as the result of the difficulties to which I have just referred, some three years ago new and drastic exchange regulations were put into effect. These regulations did not abolish the official rate but established a system of auctions for the purchase of foreign exchange with which to pay for imports. All imports were divided into 5 categories depending upon essentiality and the Bank of Brazil at each auction (usually held °twice a week in Rio and Sao Paulo although of course other auctions are also held elsewhere in the country) allocates a certain amount of exchange to each category. Importers thus bid for the available exchange and the successful bidders must then go to the Bank of Brazil and pay the auction premium plus the official rate of 18.82. They may then apply for an import permit for the special goods or materials. The approximate premiums presently being paid in the various categories are-Category 1, Cr. 51; Category 2, Cr. 77; Category 3, Cr. 120; Category 4, Cr. 195; Category 5, Cr. 340. In addition to the auctions for imports, there is a free market in which other transactions (e.g. remittances of interest, payment of debt, etc.) may be made. The present free market rate is approximately Cr. 66 to the $1.

Apart from all of the foregoing there is a special exchange rate of Cr. 43.82 applicable to certain types of transaction including the transactions of public utilities for importation of equipment and for remittance of profits, payment of debt and so on. I am sure I have told you enough to indicate to you that the system of exchange regulation is a complicated. one.

Brazil, with its millions of people, provides a potentially large and profitable market for an exporting country such as Canada but as you all know we cannot continually sell to Brazil unless we purchase on a corresponding scale. In four of the last five years Brazil has bought more from us than we have from her. Last year, however, i.e., 1955, showed a marked drop in Canadian exports to Brazil, these exports totalling only 11-1/a million dollars while our imports from Brazil totalled 30-3/4 million dollars. We in Canada need and must have enduring and stable markets for our exports but we must at least balance our exports by purchasing from Brazil many of the things which it can supply and which we do not have or produce in Canada.

The importance to Canada of Latin-American trade and particularly trade with Brazil is rapidly increasing. For example, the dollar value of Canadian exports to Latin-America increased by nine times between 1939 and 1955. This compares to a seven-fold increase in our exports to the United States and to slightly less than a twofold increase in our exports to the United Kingdom in the same period. Over the past five years Canada has imported from Brazil more goods in value than from any other country if we exclude the United States, Great Britain and petroleum products from Venezuela.

It would be a mistake, of course, for us to think of our present and future relations with Brazil only in terms of trade. Brazil occupies an important strategic position in the world and is emerging as a truly important world power.

We Anglo Saxons, whose native tongue is English, are inclined, I feel, at times to be very smug and instinctively to feel that those whose tongue is not our own are in some manner inferior, strange, foreign, uneducated. I know you are all aware how erroneous this conception is. Further we are sometimes inclined to criticize the manner in which business is done when it is not done "our way." Then, instinctively, we try to impose "our way" of doing business. This is resented, causes ill will and results in lack of cooperation. Advice from the heart is welcomed but, gentlemen, remember advice is different from dictation or coercion or criticism.

Believe me, in Brazil you will find any number of very able men in business, in government, in the professions. And not only do you find able men, you also find men who are cultured, intelligent and charming.

Brazilian architects and builders have caught the world's attention by their creative designs and projects-functional, yet artistic. In music, Brazilian composers have made use of the folk melodies and rhythms in writing music that is distinctively Brazilian. The same sort of individuality is exemplified in their painting, their sculpture, and in an ever-growing volume of literature. From Brazil have come scientists, statesmen and men of world renown in all walks of life.

Brazilians have, of course, many ties binding them to Europe, but they have not attempted to build in their country a European type of civilization. The climate makes its influence felt in many ways-the gaiety of brilliant sunshine, the abruptness of nightfall, the warmth of tropical nights. These climatic influences produce a way of life differing from ours in many respects. And so the Brazilians are evolving, wisely, a modern civilization adapted to the needs of a tropical region. They are having their economic troubles, as what nation from time to time does not, but no one who has been to Brazil can doubt for a minute that these able and charming people will overcome their problems, will develop their bountiful natural resources, and will furnish the world with an example of a truly democratic nation, happy, prosperous and united.

For a long time now public men, labour leaders and industrialists in all countries have stressed through the press and otherwise the theme of increased production, more productivity per man-hour and all the phrases to which that theme has given birth. With that theme and with the benefits of material progress involved therein, I of course have no quarrel. But perhaps as nations, as citizens and as human beings, we have yielded to the temptation to become so immersed in material pursuit that we have come to accept the high standard of living, the comforts and blessings which we enjoy as entirely of our own handiwork. Such is not my belief and my thoughts in this respect could not be better expressed to you than in the words used by Abraham Lincoln in one of his proclamations of thanksgiving:

"We have been the recipients of the choicest bounties of heaven; we have been preserved, these many years, in peace and prosperity .... but we have forgotten God. We have forgotten the gracious hand which preserved us in peace, and multiplied and enriched and strengthened us; and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of our own. Intoxicated with unbroken success, we have become too self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us."

To me the spirit and message conveyed by the words of that proclamation are most apt at the present time, and because, like Canada, Brazil is a country of deep religious faith, I know that those words would strike responsive chords in the hearts of Brazilians no less than Canadians.

Free and peaceful men everywhere have reason to be ' thankful that Brazil's development has followed a steady, progressive course and that that great country is, with us, ranged in strength and with determination against aggression and oppression and against those who are so shamefully trying to teach millions of people that there is no God.

THANKS OF THE MEETING were expressed by Mr. James H. Joyce, a Past President of the Club.

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