Industry in Brazil - 1840s-1860s

1840s-1860s

The promulgation of the Alves Branco tariff would modify this picture. This tariff succeeded in increasing State revenues and stimulating growth of national industry. The sudden proliferation of capital was directed to investments in the areas of urban services, transports, commerce, banks, industries, etc. Most of the capital invested in industries was directed toward textiles. With unprecedented industrial growth, multiple manufacturing establishments appeared, dedicated to such diverse products as melting of iron and metal, machinery, soap and candles, glasses, beer, vinegar, gallons of gold and silver, shoes, hats and cotton fabric.

One of the main establishments created at this period was the metallurgical factory Ponta da Areia (In English: Sand Tip), in the city of Niterói, that also constructed steamships. It is likely that the textile industry benefited most by the virtue of being the oldest in the country. It first appeared in 1830, with the founding of the Santo Antonio do Queimado plant in the city of Salvador, capital of the province of Bahia. The textile sector was quite dynamic in the monarchic period and received large investments until 1890, when it entered into decline. Various modernizations occurred, principally between 1840 and 1860, when factories with a high level of technological capability were created, able to compete with other major international centers. Other improvements came with the establishment of factories and forges geared for the production of equipment and pieces for textile manufacture. And now Brazil ranks second in the world’s largest producer of denim, the third – for the production of knitted fabrics, the fifth – for the manufacture of clothing and seventh – for the production of yarns and fibers. The concentration of industry that emerged in the province of Bahia considerably expanded its economic scope, reaching the south of Ceará, Piauí and even Minas Gerais.

The extinction of the traffic in African slaves in 1850, contrary to what many authors allege, did not "liberate" credit for industrial development. That claim has no documentary basis whatever. On the contrary, capital employed in the trade was had already been directed to sectors such as enterprises of urban services, transport, banking and trade. But it is possible that there was an indirect contribution to the growth of the industrial sector through banking loans. In 1850, there were 50 factories with a capital of at least Rs 7.000:000$000.

The imperial government created several incentives for the industrialization of the country. The earliest of these date from the reign of Dom Pedro I, through awards of government grants. The first establishment to receive such a grant was the Fábrica das Chitas (In English: Chitas Factory), devoted to paper and printing, by a decree of 26 June 1826. The practice was resumed in the 1840s, when new industrial establishments received subsidies. in 1857, seven factories benefited from this practice of incentives, among them, the Ponta da Areia mentioned above and that was owned by Irineu Evangelista de Sousa (later Viscount of Mauá). One of the criteria for the granting of these subsidies was the exclusive employment of free workers.

The goal, then, was not only the transition from the old colonial economic system to that of the modern capitalist, but also from slave labor to free. Other incentives arose, such as the decree of 8 August 1846 that exempted manufactured products from certain transport taxes (internally as well as externally), shielded from military recruitament a determinate number of employees of industrial establishments and eliminated tariffs on parts and machinery imported for textile factories. The following year in June, a new decree stated that all industrial establishments on national soil would be free of taxes on imported raw materials. Thus, production costs of domestic industry dropped considerably, allowing it to compete with foreign products. The Alves Branco tariff underwent modification in 1857, reducing to 15% the tax on imported products. Later, under the Rio Branco cabinet at the beginning of the 1870s, the tariff on foreign products was newly raised to 40%, and new raw materials were exempted from import taxes.