Order Against Progress: Government, Foreign Investment and Railroads in Brazil, 1854-1913 (review)

Complaints about the deplorable state of routes into the interior and of overland transport in general were constant from the early years of the eighteenth century when the highlands of southeastern Brazil became the focus of intense migration after gold strikes. Mountainous topography and heavy tropical rains rendered road maintenance a nightmare while most Brazilian rivers, with the exception of those in the Amazon basin, had many impediments to navigation or flowed into foreign territory. Thus the author plausibly argues that a transportation bottleneck constituted the single most serious obstacle to economic development in Brazil before the introduction of railways. Summerhill's study centers on the first phase of transport modernization, beginning with railroad construction in the 1850s and terminating on the eve of the First World War and the initial substitution of steam locomotion by motor vehicles.

This is a story that has often been told in a number of ways, although most contemporary historians tend to put it in a distinctly negative light. Accordingly, railroads were the fruit of parasitic foreign (i.e. British) investments attracted by government profit guarantees aimed at shoring up the export sector and landowner interests. Since railway construction failed to stimulate heavy industry and resultant economic growth was exclusively of the export-led variety, clearly railroad expansion further contributed to a dependency with roots in the so-called colonial system and to a perpetuation of Brazil's chronic underdevelopment. The study's explicit objective is to refute such dependency theory-inspired arguments by applying "new economic history" theory and methodology to an impressively large and original database. As such, the work is extremely ambitious and, appearing as it does at a moment when most solid advances in Brazilian historiography focus on regional developments, the employment of a national approach spanning both the provincial and republican periods is certain to attract criticism. Nevertheless, the text is admirably well written and its arguments are generally constructed in a lively and compelling fashion.

Until the Imperial government put into place a policy of guarantees no vital foreign investments were forthcoming in an economy with virtually no capital market at mid-nineteenth century. In the event, government backing proved to be of minimal cost when compared to benefits. Much more important were the rate regulations aimed at benefiting shippers which invariably accompanied guarantees, as well as state takeovers of lines which failed through mismanagement or lack of a viable regional market. In other words, state policies were designed to encourage overall development in regions served by railroads. The author's findings strongly suggest that, at the aggregate national level, those policies proved enormously successful. Initial railway development set the stage for the prolonged period of solid economic growth, which would last most of the twentieth century. Some of the most compelling evidence marshaled shows that the share of exports, in freight shipped, rapidly declined from 1870 to 1913 even as exports increased.

The implications here are as obvious as they are contrary to a "dependentista" interpretation: rapid expansion of the rail network, in tandem with an already well honed coastal shipping system, served as a catalyst for domestic market integration. Integration, in turn, stimulated agriculture and manufacturing and spawned regional specialization. Indeed, Summerhill asserts that productive activities geared to the domestic market were the principal sources of growth by the last quarter of the nineteenth century and would remain so into the twentieth. In the event there were regional winners and losers and in maintaining the political "order" alluded to in the title, policy makers tended to ignore the consequences of investments in loss-sustaining lines. Even though its findings corroborate those of studies concerned with rail development elsewhere this work will likely spark controversy, particularly in Brazil. Admittedly the dependency theory is now somewhat dated but...