Foreign Relations of the United States: Diplomatic Papers, 1943, The American Republics, Volume V

811.20 Defense (M) Brazil/5330

Memorandum by the Second Secretary of Embassy in Brazil (Walmsley)⁶⁷

[Rio de Janeiro, undated.]

Amazon Rubber Program

What most deeply impressed me in my visit to the Amazon is the futility of reform by outsiders. Foreigners, and by this I also mean non-Amazon Brazilians, are helpless in the face of the problems of distance, of scarcity, of hunger and disease.

Belém, Manáos and even Santarem and Pôrto Velho, for example, are not the real Amazon. They are comparatively luxurious islands in an endless morass where the struggle between water and land is still unsettled.

The Amazon has been abandoned for centuries to adventurers and their descendants, the trading families. Only once before, I was told, had the Federal Government turned its attention to the Valley. That was in the early 20’s when, with the renewed fall of rubber prices, the Brazilian Government facilitated the exodus of destitute seringueiros. It is little wonder that the controlling class in the Valley has resisted the outsiders at the first sign of a new prosperity.

No darker picture exists anywhere of what in more progressive countries we choose to call corruption and exploitation. Yet the established society, with its century-old tentacles stretching up all the thousands of tributaries, was totally ignored in our earlier rubber program. The river trade is the bloodstream of this feudal social organization. We have attempted to cut across these arteries expecting that the body would not only survive but would also be useful to us.

We have failed to consult those who, through long experience have accumulated the only accurate knowledge of the region. We have entered someone else’s property and ignored the owner. We have made decisions not only in Belém and Manáos, which is bad enough, but also in Rio and Washington, which is worse, on problems with whose character we have not the faintest familiarity. Despite our recent concessions to them, both local business men and local officials continue suspicious and sullen. These Amazon people, during our period of maximum energy and mistakes, and of minimum results, did not content themselves with being cut out of the deal, but actively sabotaged even our wisest measures.

The Amazon trade is a hierarchy of middlemen feeding on the body of the seringueiro. The importing firms of Belém and Manáos which supply the aviadores, and through them the floating retailers, the seringalistas, and eventually the seringueiros, necessarily burden the last with the entire high cost of transportation from southern Brazil to the remote seringal. In turn, the seringueiros’ credit for rubber delivered is discounted by the same down-river costs of transportation and the various taxes which accumulate en route. The margin between the cost of supplies to the seringueiro and the credit for his rubber is further widened by the margins of profit in each direction, and the safety allowance of each trader for the grading and classification of the rubber when it reaches the down-river depots.

Cash means little to a seringueiro buried in his pest-ridden barracão. What he needs is food and medicine to keep him alive and alcohol to keep him from despair. What difference is it to him if he gets out of the red and can’t eat. If a seringueiro is credited with a higher price for his rubber, he is debited with a higher price for his supplies. Neither the Rubber Bank nor the RDC nor any other entity without the river organization of the commercial firms, has anything to offer the seringueiro in return for added rubber production. The inducement can only follow the normal line through the commercial firms; the aviadores, etc. It is useless, as sorry as we may feel for the seringueiro, for us to try to reach him direct. There seems to be the same difficulty in the co-existence in the Valley of both government-operated commercial enterprise and private commercial enterprise as in the co-existence of free and slave labor.

Many of our steps have had an element of timidity and of the half-way measure. We have planned in a vacuum, on a large scale, without knowledge of local conditions and somehow expecting that a man whose right hand we cut off will offer us his left.

We have undertaken a program of false starts and we have entrusted our organization to a series of executives who, as fast as they have discredited their predecessors have been discredited themselves. Without proper accounting we have spent uncalculated amounts of money for supplies, equipment, large overhead, development, migration and graft; and we have scattered capital equipment about without inventory.

These have been the fundamental errors. It would be unproductive to catalog specific mistakes, which are endless.

We have done all this without increasing rubber production and at a cost that no one seems able to estimate. I confess that in the past few months laudable efforts have been made to appease, if not to win, the cooperation of what we may term the Amazon powers. We have progressed in the elimination of unnecessary functions and personnel. In stressing measures to reach maximum production by 1944, we have eliminated a great many expensive projects. Whether these steps will result in increased rubber output remains to be seen.

My own opinion is that if all the functions we have assumed were turned over to Brazilian organizations approved by the Amazon powers, the remaining cost of our program would be reduced substantially; the distribution of funds would be wider and make more people happy; and we might even get more rubber.

Everyone told me, Amazonenses, southern Brazilians and Americans alike, that the secret of increased rubber output is the timely arrival of the right supplies in the rubber areas. This allegedly did not happen in many of the rich up-river zones this year. The distribution, timing, and selection were apparently equally faulty.

Specifically I would suggest that RDC take the following measures in agreement with representatives of Amazon officialdom and trade and of the Federal Government.

1) Draw up at once a schedule of transfers to Brazilians of development, financial and commercial functions within Brazil.

2) Continuation of RDC responsibility as long as necessary for the purchase of American supplies and their delivery at Belém.

3) Participation as officers or auditors of selected RDC American personnel in the Brazilian organizations in which we have a stake.

4) Loan, where required, of American technical personnel to Brazilian organizations (SNAPP, for example).

5) Maintenance, independent of Brazilian organizations, of small RDC liaison offices in Rio and Belém, and possibly Manáos.

6) Maintenance of a small corps of rubber technicians (the Klippert type⁶⁸) with adequate travel facilities.

7) Establishment of a formula for equalization of prices in different areas. At present tax and transportation differentials appear to produce inequalities of returns from rubber sales in some zones.

8) A careful survey by the Brazilian organizations of their needs for equipment, to be filled by a judicious distribution of RDC’s existing equipment.

9) Abandonment of the RDC-operated aviation services to be supplanted, if necessary, by contracts with Brazilian aviation companies, including Panair do Brasil.

10) Limitation on the use of air transportation to the delivery of emergency supplies and essential passenger service (the cost of the personnel and of the overhead of the present RDC Aviation Section appears to be inordinately high).

11) Accommodation of the operations of the Rubber Bank to existing trade practices in order to increase financing rather than to compete with existing financing. Furthermore, the monopoly of rubber exports by the Bank should begin at point of export in order to permit existing trade its full normal activity.

12) Assure sufficient labor to Ford that he may tap all his trees. He is now losing tappers from proven producers in favor of doubtful high returns up river.

A great many detailed recommendations would undoubtedly stem from the foregoing ones, if adopted. I have in mind the preparation of a detailed memorandum on my observations which may be of use if the foregoing merits favorable consideration.

In conclusion, I should like to mention the repeated observations of a number of highly placed RDC officials in the Amazon. The ambitious programs not directly connected with rubber production were originally and solely motivated, they say, by military considerations. The Amazon was being prepared, they allege, for military defense in case the theatre of war moved toward this continent. Mr. Kaiser⁶⁹ specifically stated that the expenditure of vast sums by RDC was justified 100% by the military factors involved. After all, he inferred, the Amazon rubber program was born in the General Staff.

I could not help recalling in this connection the difficulties some of us in the State Department had in persuading Reed Chambers to consult the War Department in the course of blue-printing his Amazon program.

W. N. Walmsley, Jr.

67. Copy transmitted to the Department by the Ambassador in Brazil in his despatch No. 13146, October 18, 1943; received October 25.
68. Walter E. Klippert, assigned to the rubber procurement program in April 1943.
69. Presumably Edward E. Kaiser, in charge of the Belém office of the Rubber Development Corporation.