No. 207.
Mr. Blow to Mr. Fish.
Sir: Your dispatch of August, (circular,) though received by the September steamer, owing to its being in pamphlet covering, was not opened [Page 284] until the beginning of this month. I have read the same with great interest, and in connection with it the information communicated to the United States Senate on the condition of trade with the “South American countries.”
Very early after my arrival in Brazil, stimulated by the views and wishes of the President, and in accord with the progressive trade movements of the United States, I commenced a thorough investigation into the existing trade with Brazil. In my dispatches on this subject I have endeavored to show that while we were by far the largest consumers of Brazilian products, our exports had not kept pace with our imports, and that owing principally to the outrages perpetrated on our merchant vessels during the war, we were left almost without the means of transporting these imports and exports, and thus compelled to rely on other nations to replace a merchant marine which had been the pride of our country and the admiration of the world. In addition to a result so disastrous to our agricultural, manufacturing, and commercial interests, we had to confess that other nations, and especially England and France, had made rapid strides in the construction of sea-going vessels, and had ultimately occupied the position we were forced to abandon, and before the close of the war had their bankers, merchants, products, and manufactured goods firmly established not only in Brazil but in all portions of the world. We may thus add to the cost of our war, indirectly, a loss which may be estimated by hundreds of millions, and which it will require the best statesmanship of the age and years of enterprise to overcome. In complying with the request contained in your circular, I will ask, therefore, that my Nos. 30, 79, 84, 93, 98, 104, 114, and 119 may form a portion of this reply, and that you will excuse, in this general review, those defects which must necessarily occur when a subject of such vast import has to be considered in the few remaining days left before my departure for the United States.
Brazil, in its people and form of government, is entirely unlike the Spanish-American states. Discovered, settled, and always held by the Portuguese and their descendants, with but little addition to its population, except by natural increase, continued emigration from Portugal, and importations from Africa, the Brazilian of to-day is in his character and impulses the most quiet and perhaps the least enterprising of South Americans, while his condition, strange as the proposition may appear, is quite equal to that of the people who formed the adjoining Spanish republics. It must be understood, however, that at this moment Chili, the Argentine Confederation, and Peru are all thoroughly occupied in progressive movements, by which they will rapidly outstrip Brazil in the race for material development, unless the recent awakening in the empire is followed by a similar spirit and consequent advances.
It cannot be denied that this substantial condition is the result of government. Whatever other nations or the United States may say of the empire, the fact is constantly before us that Don Pedro II has been a mild, honest, and enlightened ruler, nay, more, successful in inspiring and retaining confidence at home and abroad. If the form of government administered was not progressive, it was at least stable. The people were taught frugality and economy, and thus, while the strongest and most enlightened nations of the earth have been convulsed by wars or civil commotions, Brazil has kept on the even tenor of her way, and after thirty years on the throne the Emperor, even with his prodigality in destroying General Lopez, by which a heavy burden has been imposed upon his subjects, rules to-day as quietly, and, to all appearances as securely, as at any time before. I mention these facts, Mr. [Page 285] Secretary, that you may understand what can be accomplished by others not so favored by race, soil, climate, or form of government as the people of the United States, and who are remote from that vast belt which holds in its embrace the wealth and enterprise of the world. This becomes the more interesting as we have to contemplate trade relations with Brazil, which at present are anything but satisfactory to us. Permit me to make an approximate estimate of this trade with South America, and thus show this fact more distinctly:
| Our imports from Spanish South American republics and the empire of Brazil in 1869 were, in round numbers | $41,600,000 |
| Exports to same | 18,600,000 |
| Balance against us | 23,000,000 |
Of this trade Brazil alone furnished twenty-five millions of her products, or over sixty-one per cent, of the whole, and received from us six millions produce, or not quite fifteen per cent, of the whole, and not one-fourth of what we bought of her, or, reduced to actual figures, the result was this:
Imports from Brazil in 1869, $25,000,000; exports, $6,000,000; balance against us and for which gold was remitted, $19,000,000.
While this immense balance stares us in the face, let us see what Brazil is doing with our nineteen millions of gold. Why, simply investing it in iron, cotton, and woolen goods, building her roads, cultivating her fields, and encouraging the manufactories of England, Belgium, and Germany. This is clearly the result, while at the same time, from her additional exports she keeps nearly square with France, Portugal, Italy, Austria, and Spain, for all that is imported from them.
I have had many conversations with Baron de Cotegipe and Mr. do Amaral on this subject, and finally addressed the baron a note on the 1st of July last, a copy of which was sent to the Department, and I beg may also form a portion of this reply. Up to this time this note has not received the attention which the baron acknowledged was due so important a matter, which will be explained in a separate dispatch.
The condition is one for which we cannot blame Brazil; this would be weakness. We really are not much at fault ourselves, for it is mainly the result of misfortunes and outrages, which we did not have the power to prevent; but it is nevertheless one which the President and the two Houses desire to have changed, and to the manner of doing this we must now address ourselves, not failing in anything on our part, and relying on the good feeling and sagacity of Brazil to perform her part. Our portion of the work is to prepare for selling Brazil everything she requires from abroad as cheap or cheaper than other nations, and especially those articles which we are so well fitted to produce.
Before, however, any suggestions are made, as requested by you, permit me to state what has been accomplished by other nations, so that you may understand the magnitude of any undertaking which contemplates the restoration of our ocean prestige, and especially an extended trade with South America. This becomes the more important from the favorable position of Brazil, and the value to us of her coffee and sugar; for this extended trade with South America means largely extended trade with Brazil. These people are in a great measure familiar with those of England, France, Germany, Italy, Portugal, and Spain, through a long commercial intercourse, conducted in person. The splendid steamers which have reduced the time between Rio and Lisbon to fourteen [Page 286] days, between Rio and Bordeaux to eighteen days, and between Rio and Liverpool to twenty-one days, have for years carried thousands of Brazilians to Europe, and brought back thousands of European traders and travelers to Brazil.
England and France have been liberal in their subsidies to these great steamers, and during the five years when we were driven from the ocean they strained every nerve to establish those relations to which I have referred, and which have resulted so well for them and so unfortunately for us. To-day England’s exports to South America are probably greater than her imports, and while our total imports and exports may be fairly estimated for the year 1870 at not exceeding sixty million gold dollars, those of England will probably reach, if not exceed, one hundred and fifty million of gold dollars; and yet the bulk of the exports are articles which we should supply. We must, therefore, become familiar with the fact that the Spanish South American countries and the empire of Brazil have established relations with these countries for their supplies, are familiar with the form and quality of their goods, know their value, and in every way are settled customers, by the power of mutual material interests. In this connection, however, it is well to state at once, as my opinion, founded on close observation, that there is no sympathy in these countries for Brazil, nor on the part of Brazil toward them, growing out of similar institutions, the old dynasties regarding the empire as an upstart, and Brazilians, on their part, regarding them as declining despotisms, and having really more feeling in common with us than with them. The respect for the generous and honest character of our Government is, I believe, common to all, from the throne to the beggar; for governments are a study with the educated people, and while the general feeling is one of confidence in their own, the wonderful prosperity of all classes in the United States is a fact which is absorbing the profound attention of the best Brazilians. I may state, therefore, that our political system and general prosperity are well understood in Brazil, while the people do not appreciate our commercial and manufacturing advantages, as they cannot comprehend the ability of a country which, though buying the bulk of their coffee, has but few steam or sailing vessels in their ports, no banks and but few merchants in their great commercial cities, and which is content to pour a steady stream of gold into their coffers through foreign channels.
There is only one point hitherto insisted on by Brazil which, it seems to me, is extremely unwise for them and unjust to us; that is the export duty of thirteen per cent, on coffee. The nine per cent. export duty on sugar is a heavy burden to the planters of cane, but thirteen per cent, on coffee will eventually bankrupt a majority of the coffee raisers. This thirteen per cent., in the past, may be defended by the pressing financial wants of the empire, especially during the Paraguayan war; but at this time, when duties on imports are being reduced, and the policy is announced that further reductions will be made as the revenues increase, no excuse or argument for its continuance can be sustained. One of the difficulties is that a part of the thirteen per cent. is provincial, but it is only made a difficulty because the Government finds the tax can be so economically and easily collected. In considering this tax, with the baron and others, its excessive and disproportioned, if not unwise character was not denied. Perhaps before I sail the Emperor, or the new minister of foreign affairs, Viscount de S. Vicente, may give me some cheering assurances in regard to its reduction. I have not failed to impress upon this government as well as I could the value of the two cents per pound reduction on coffee made by our last Congress, and the [Page 287] fact that in the past, as well as at the present moment, foreign exchanges and domestic trade in Rio were almost entirely sustained by the coin and credits we furnished, and I am not without hope that our claims for reciprocity will be promptly and fairly considered.
I now proceed directly to place before you the conclusions and suggestions which I think legitimately flow from my dispatches:
1. Our policy for the development of our foreign trade must be as liberal and comprehensive in proportion as our domestic policy, and founded upon justice to all portions of our country.
2. That we must have the best and fleetest mail steamers that this age can produce, and as private enterprise cannot build and run such steamers in competition with those subsidized by other nations, we, too, must grant liberal subsidies, under proper restrictions, for ten years.
3. That our national policy for sustaining our machine shops and ship-yards must be as liberal as that of England.
4. That tariffs must be adjusted so as to encourage imports to and exports from the United States, thereby affording freights both ways to our new merchant vessels.
5. That while no private enterprise can compete with the subsidized vessels of other countries, our own steamers, if subsidized, should be required to protect our trade in the same manner as those, especially of the English and French steamship companies; which means simply low rates of passage and freights to and from the United States.
6. That as a policy founded on justice would place all the commercial cities of the United States in direct communication by steam with those portions of the world with which they can most profitably exchange products, no legislation should occur until notice had been given to each to present their claims for such consideration. The justice of this proposition will not be denied, for no nation can expect the sympathetic support of all its people which favors one portion at the expense of another.
7. The earliest possible return to a specie basis. I am firmly of the opinion, Mr. Secretary, that the losses of our people, growing out of an inflated and baseless currency, are submitted to at home only because they are not understood. But with a system so entirely opposed to all the principles of an enlightened economy and a sound morality, we have no right to expect that we can divide trade with nations whose financial systems are based on gold and silver. Our legislators have no longer the excuse or plea of necessity, and their first act should be to give us back the economy and morality of a sound currency. This done, with consequent reforms, we are ready to enter the great race for commercial supremacy.
We have learned by sad experience in the United States the value of regular and rapid transportation, until the great natural arteries of trade have been dwarfed by the genius and progress which have created fifty thousand miles of railroad, over which passengers and freight are carried with the speed of a racer and the regularity of a clock. The same qualities are absolutely necessary to success abroad.
Our institutions, our vast area and prolific soil, our gigantic internal improvement system, all demand that the progress of the past shall mark our future. If we meet this demand with that wisdom and sagacity which have so distinguished us among the nations of the earth, the products of our soil, the treasures of our mines, the industry of our people, will soon be welcomed in every portion of the world, and the fact forever established that the height, of human attainments can only be reached by a free people.