THE ROLE OF COFFEE IN THE CREATION OF INSTITUTIONS IN BRAZIL:

1830-1930

by

Vitoria Saddi

__________________________________________________________

A Dissertation Presented to the

FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
POLITICAL ECONOMY AND PUBLIC POLICY

December 2002

Copyright 2002 Vitoria Saddi

 ii

Vitoria Saddi Jeffrey B. Nugent, Advisor

ABSTRACT
The Role of Coffee in the Creation of Institutions in Brazil: 1830-1930

Political Economy and Public Policy Program

University of Southern California, 2002

Land in Brazil is the common theme that binds together the seven chapters of this
dissertation. The political and economic use of land is evaluated over one century (1830-1930) by
a through study of the land and labor laws. The objective of this dissertation is to show that the
historical evolution of landownership in Brazil during the Empire (1822-1889) and in Sao Paulo
during the Old Republic (1890-1930) did not follow the evolutionary theory of property rights,
where an increase in the price of land induces changes in the current legal system in the direction
of well-defined property rights. A second objective is to show that the literature on the theme has
led to a distorted view about the coffee period, especially with respect to the land and labor
policies. We analyze the determinants of the first land law enacted in Brazil in 1850 to show that
the legislation was mainly designed to solve problems in the labor market and not to regulate
private property rights. We then address the impacts of the 1850 land law on the land, labor and
credit markets. The fifth chapter covers the institutional changes in the Old Republic in Sao Paulo
(1890-1930) and examines the short and long term determinants of the land and labor laws
enacted by the state. We explain why these were extremely credible laws that enticed immigrants
to become coffee producers. In the sixth chapter we expand the analysis to study the impacts of
these legislations on the land, labor and credit markets. This work proposes two contributions.
The first is to show that the concentration of land in Brazil bears no relationship with the
perceived ‘failure of the 1850 land law’. The second addresses the New Institution Economics to
suggest that the evolutionary theory of property rights should be amended to take into account
why and how private property rights were first created in Brazil and in Sao Paulo.
iii
 iv

ACKNOWLEDGMENTS

Many individuals provided me with support and encouragement before and

during the preparation of this dissertation. My heartfelt thanks goes to my advisor,

Jeffrey B. Nugent, for his patient support from my initial research proposal to this

final product. My advisor guided, stimulated and encouraged this dissertation from

its inception to the end. Professor Nugent went above and beyond his formal

responsibilities as an advisor to write papers with me, as a way of clarifying my

ideas. In the whole process, I appreciate his comments, questions, criticisms which

helped me to hone a very broad project into a focused dissertation. While the errors

are mine, I share any credits of this dissertation with Professor Nugent. Steven M.

Helfand generously gave this project his careful reading, incisive comments and

expertise on Brazilian economy which served only to strengthen it. I thank Nora

Hamilton for her reading and extremely appropriate comments. I am grateful to

Professor Gerard Bakus for the interesting summary on the biology of coffee.

Conversations with Steven Topik also have provided useful insights. My sincere

thanks to Faride Motamedi and the late John Elliott for introducing me to the

Political Economy and Public Policy program.

As a teaching assistant for the department of Economics, I had the privilege

to work under the supervision of Richard Easterlin. His support and unconditional

trust in my work meant a lot to me. A very special thanks to my students, both at
 v

USC and Cal State University at Long Beach, who were a source of inspiration

almost everyday of my life.

During the field work in Brazil, I found the support of archivists and

librarians that made my research easier. Robson da Silva (Arquivo do Estado de Sao

Paulo), Dora Lucia de Lima Simas (Sociedade Rural Brasileira), Luciana da Costa

(Associacao Comercial de Sao Paulo) and Vandete Pereira N. de Medeiros (Instituto

de Economia Agricola) guided me through their collection and helped me finding all

the material I needed to write this work. My thanks to Francisco Pino, head director

of Instituto de Economia Agricola, for explaining the methodology of the early

census data, for his precise and prompt answers to my long emails and for always

making himself available to my requests.

I am lucky to have such a great group of life long friends, Arthur Barrinuevo,

Ricardo Meirelles, Silvio Miazaki and Jose Marcio Rego. I thank them for all our

moments together and for always being in my life. My thanks to my former

professor, Luis Carlos Bresser Pereira for his support and help in different stages of

my life. Yoshiaki Nakano, great friend, mentor and former advisor, deserves special

credit for nurturing me ever since college, for being so kind, generous and patient

with me, a young and highly stubborn pupil.

During this process, I lost three of my dearest friends, Marta Fantini, Claudio

Sato and Celso Daniel. Their early deaths also took part of me, ‘saudade’.

My family has always been the driving force that keeps me going. My

mother, Maria Jose, provided me with great insights (during long international calls)
 vi

that I used throughout this work. I thank my father, Rafic, for loving and supporting

whatever I do. My love and deepest gratitude goes to the two of the brightest, witty,

beautiful, funny and loving girls I have ever met, my sisters, Carla and Loreta Saddi.

My grandparents, Lila and Lamartine, are a source of light and inspiration. Last but

not least, I thank my husband, Robert, for being so supportive of my work, for

reading and editing my early drafts and for offering me nothing but encouragement

throughout this process. It is to my beloved family that I dedicate this dissertation.

 vii

TABLE OF CONTENTS

ACKNOWLEDGMENTS ........................................................................................ iv

LIST OF TABLES .................................................................................................... xi

ABSTRACT .............................................................................................................xiii

CHAPTER 1. INTRODUCTION ........................................................................... 15

CHAPTER 2: LITERATURE REVIEW ............................................................... 20

2.1 Brief Overview of the Literature on the Coffee Period (1830-1930) ............. 25
2.1.1 The Seminal Works on Coffee Period .......................................................... 25
2.1.2 The Regional Studies .................................................................................... 32
2.1.3 Politics, Politicians During the Coffee Period .............................................. 37
2.1.4 The Thematic Studies .................................................................................... 41
2.1.4.1 The Credit and Money Markets ............................................................. 41
2.1.4.2 The Industrialization During the Coffee Period ..................................... 43
2.1.5 Theories of Development of Private Property Rights in Land ...................... 45

2.2 The ‘Distorted Consensus’ on Coffee: the Land Market ............................... 49

2.2.1 The Land Laws .............................................................................................. 49

2.3 The Aspects of the ‘Distorted Consensus’ in the Labor Market ................... 54

2.4 The Laws According to the Lawyers and Legislators .................................... 56

2.5 Conclusions ......................................................................................................... 59

CHAPTER 3: THE DETERMINANTS OF THE 1850 LAND LAW DURING

THE EMPIRE PERIOD IN BRAZIL .................................................................... 61

3.1 Determinants of the 1850 Land law.................................................................. 63

3.1.1 The Previous Conditions in The Land Market ............................................. 63
3.1.2 The Political Conditions............................................................................... 65
3.1.2.1 Relations with England ......................................................................... 65
3.1.2.2 - Revenues from Trade .......................................................................... 67
3.1.2.3 The Politics of the Coffee Producers ................................................... 70
 viii

3.1.3 The Restrictions in the Labor Market: The Labor Laws .............................. 72
3.1.4 The Origins of the 1850 Land Law ............................................................... 75

3.2 The 1850 Land Law ........................................................................................... 83

3.3 The 1854 Statute ................................................................................................. 85

3.4 Conclusions ......................................................................................................... 88

CHAPTER 4: IMPACTS OF THE 1850 LAND LAW ON THE LAND LAW

ON THE LABOR, LABOR AND CREDIT MARKETS ..................................... 91

4.1 The International Market for Immigrants ...................................................... 94

4.2 The Impacts of the 1850 Land Law in the Labor Market .............................. 96
4.2.1 The Impact of the Provincial Laws on the Paulista Labor Market ............. 106

4.3 The Impacts of the 1850 Land Law in the Land Market ............................. 109

4.4 The Impact of the 1850 Land Law in the Credit Market ............................. 114

4.5 Land Rights, Immigrants and Coffee: from Rio to Sao Paulo in 1886 ....... 119

4.6 The Role of Sao Paulo and Immigrants in the Creation of a Republic ....... 122

4.8 Conclusion......................................................................................................... 127

CHAPTER 5: THE DETERMINANTS OF THE LAND AND LABOR LAWS

IN SAO PAULO DURING THE OLD REPUBLIC (1890-1930) ...................... 130

5.1 Institutional changes in the land and labor market during the Old Republic
in Sao Paulo (1890-1930) ....................................................................................... 134
5.1.1 The 1895 Land law...................................................................................... 134
5.1.2 The 1907 Labor (Immigration) law............................................................. 136
5.1.3 The 1921 Washington Luis Land Law ........................................................ 138

5.2 The Short-Term Determinants of the Laws................................................... 140

5.4 The Long-Term Determinants of the Institutional Changes During the Old
Republic .................................................................................................................. 144
5.4.1 Formal and Informal Land Rights in Sao Paulo and Minas Gerais ............ 153

5.5 Conclusion......................................................................................................... 156

 ix

CHAPTER 6: THE IMPACTS OF THE LABOR AND LAND LAWS AND

THEIR LINKAGES IN THE LAND, LABOR AND CREDIT MARKETS IN
SAO PAULO DURING THE OLD REPUBLIC (1890-1930) ........................... 159

6.2 The Impacts of the Labor and Land Laws on the Labor Market: Sao Paulo
1890-1934 ................................................................................................................ 164
6.2.1 The Sao Paulo Immigration Program: Main Features................................. 164
6. 2. 2 Spontaneous Immigrants and Industrialization in Sao Paulo: 1890-1930 169
6.2.3 The Upward Mobility of the Subsidized Immigrants: from ‘Colonos’ to
Coffee Producers .................................................................................................. 172
6.2.3.1 Immigration Policies and Settlements: Further Increases in
Landownership 1906-1920............................................................................... 180
6.2.3.2 The Third Phase of Improvement in Landownership: 1921-1934 ....... 184

6.3 The Impacts of the Labor and Land Laws on the Land Market, Sao Paulo
(1890-1934) .............................................................................................................. 187
6.3.1 The Creation of Small Size properties: An overview ................................. 187
6.3.2 Farm Size and Productivity ......................................................................... 189
6.3.3 A Comparison of Land Tenure Among the Coffee States: Sao Paulo, Minas
Gerais and Rio de Janeiro .................................................................................... 191

6.4 The Impacts of the Land and Labor Laws in the Credit Market: Sao Paulo
(1890-1930) .............................................................................................................. 193
6.4.1 The Quality Problem and the 1906 Taubate Agreement ............................. 193
6.4.2 Immigrants and Brazilians in the Provision of Credit and Transportation for
the Western Farmers ............................................................................................ 198
6.4.3 An Application of Staple Theory to the Coffee Economy .......................... 200
6.4.4 Statistical Tests: The Precision of the Land Laws ...................................... 203

6.5 Conclusion......................................................................................................... 212

CHAPTER 7. CONCLUSIONS ........................................................................... 216

REFERENCES ....................................................................................................... 229

APPENDIX 1 - REGIONAL DIVISION OF SAO PAULO AND THE

BIOLOGY OF COFFEE ....................................................................................... 252

APPENDIX 2: METHODOLOGY FOR THE INDEX OF LEGAL CHANGE

.................................................................................................................................. 263
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APPENDIX 3: METHODOLOGY OF THE RURAL CENSUSES: SAO

PAULO AND BRAZIL, 1905-1930 ...................................................................... 289
 xi

LIST OF TABLES

Table 2.1: Overview of Brazil and the Coffee Regiona: 1830-1930 .......................... 20

Table 3.1 Leading Brazilian Export Products as a Percentage of Total..................... 68

Table 3.2: Coffee Production and Population in Sao Paulo and Rio de Janeiro:
1836 ............................................................................................................................ 69

Table 3.3: Slave Imports to Brazil: 1822-1855 .......................................................... 74

Table 4.1 Amount Spent with Public Land and Colonization, Annual Budget
and Number of Immigrants: 1841-1889.................................................................... 97

Table 4.2 Agriculture Ministry Annual Budget per Expense Category: 1864-
1889 (%) ................................................................................................................... 104

Table 4.3 Number and Area of Private Properties Legalized by the 1850 Land
Law........................................................................................................................... 109

Table 4.4 Number of Parish Priest Registrations ..................................................... 110

Table 4.5 Public Land Measured in 1885 ................................................................ 113

Table 4.6 Coffee Production and Population in Sao Paulo and Rio de Janeiro:
1886 .......................................................................................................................... 120

Table 4.7 Coffee Production in Sao Paulo and Rio de Janeiro, 1836-1886 ............. 121

Table 6.1 Sao Paulo State Taxes: Total, Coffee tax, Immigration expenditures,
Immigration numbers 1892-1930............................................................................. 167

Table 6.2 Landownership and Population in the Rural Areas of Sao Paulo by
Zone and Nationality: 1905...................................................................................... 173

Table 6.3: Rural Establishments and Population by zone and nationality: 1920 ..... 181

Table 6.4: Total Number of Rural properties in Western Sao Paulo as

compared to the total number of coffee farms by nationality, 1920, 1923 .............. 183

Table 6.5: Total Number of Rural properties in Western Sao Paulo and total
number of coffee farms by nationality, 1932-1934 .................................................. 185
 xii

Table 6.6: Total Number of Coffee Trees and Planted Coffee Area by
nationality, 1932 ....................................................................................................... 185

Table 6.7 Sao Paulo State 1905, 1920 and 1930: Comparative Size of Rural
Properties and Areas of Rural Properties ................................................................. 188

Table 6.8: Farm Size and Land Productivity, Sao Paulo: 1934 ............................... 190

Table 6.9: Land Tenure Among the Coffee Producing States: Number of
Properties Mortgaged ............................................................................................... 191

Table 6.10: 1920 Land Prices in the Coffee States: proxy for Land Tenure .......... 192

Table 6.11 : The Total Precision of Land Rights Index and Annual Changes in
Brazil and Sao Paulo land law (1850-1930) ............................................................ 207

Table 6.12: Regressions for the Annual Change in the Precision of the Land
Law (ACLt) in Brazil and Sao Paulo, 1850-1930 .................................................... 210

Table 6.13 Regressions for the Total Precision of the Land Law (TPLt): Brazil
and Sao Paulo, 1850-1930 ....................................................................................... 212
 xiii

ABSTRACT

Land in Brazil is the common theme that binds together the seven chapters of

this dissertation. The political and economic use of land is evaluated over one

century (1830-1930) by a through study of the land and labor laws. The objective of

this dissertation is to show that the historical evolution of landownership in Brazil

during the Empire (1822-1889) and in Sao Paulo during the Old Republic (1890-

1930) did not follow the evolutionary theory of property rights, where an increase in

the price of land induces changes in the current legal system in the direction of well-

defined property rights. A second objective is to show that the literature on the theme

has led to a distorted view about the coffee period, especially with respect to the land

and labor policies. We analyze the determinants of the first land law enacted in

Brazil in 1850 to show that the legislation was mainly designed to solve problems in

the labor market and not to regulate private property rights. We then address the

impacts of the 1850 land law on the land, labor and credit markets. The fifth chapter

covers the institutional changes in the Old Republic in Sao Paulo (1890-1930) and

examines the short and long term determinants of the land and labor laws enacted by

the state. We explain why these were extremely credible laws that enticed

immigrants to become coffee producers. In the sixth chapter we expand the analysis

to study the impacts of these legislations on the land, labor and credit markets. This

work proposes two contributions. The first is to show that the concentration of land

in Brazil bears no relationship with the perceived ‘failure of the 1850 land law’. The

second addresses the New Institution Economics to suggest that the evolutionary
 xiv

theory of property rights should be amended to take into account why and how

private property rights were first created in Brazil and in Sao Paulo.
 15

CHAPTER 1. INTRODUCTION

The common theme that unifies the six chapters in this dissertation is the political

and economic use of land in the coffee producing regions of Brazil during the

Empire (1822-1889) and the Old Republic (1890-1930). The objective of these

chapters is to show that the historical evolution of landownership in Sao Paulo did

not follow the steps dictated in the neoclassical “evolutionary theory of private

property rights”, where an increase in the price of land induces changes in the current

legal system in the direction of well defined land rights. In Rio de Janeiro and Sao

Paulo, Brazil's two leading coffee states during the Empire, the evolution of

landownership was driven by the dynamics in the labor market, not by the price of

coffee or the price of land. In this period, in 1850 to be precise, Brazil enacted a land

and colonization law, whose main goal was to attract immigrants and not to define

land rights. Through the land law the country succeeded in attracting more than half

a million of immigrants even before the fall of the Empire in 1889. Among other

things, immigrants were granted plots land to entice them to come to Brazil.

However, as early as 1870s the provincial governments began to receive more power

to enact laws dealing with slavery and immigration. As a result, Sao Paulo began to

distinguish itself from Rio and other provinces in these respects. By 1890, Sao Paulo

had the largest population of immigrants and Rio had fallen from first to fourth in

numbers of immigrants. During the Old Republic (1890-1930), Sao Paulo was the

only state in Brazil that continued to attract immigrants on a large scale. This was
 16

because the political elite of this state was in full agreement on the need to attract

immigrants. Hence, the laws and incentives favoring immigration became

increasingly more credible relative to those of the other states by further fostering

land rights. At the same time, success in this respect had the effect of decreasing the

size of rural plots.

The second chapter of this dissertation is a review of the literature that analyzes

the impacts of coffee on the markets for labor and land. This chapter begins by

identifying some important points of agreement among authors of various different

nationalities, political persuasions and intellectual traditions. Yet, several of these

points of agreement provide a distorted view of the coffee system and how it worked.

One of them is the "failure" of the 1850 land law. Others were the contentions (1)

that coffee was produced almost exclusively in 'latifundia' until 1930, (2) that

immigrants were unable to buy coffee lands and (3) that Sao Paulo's land rights did

not strengthen during this period.

Yet, it is our view, as demonstrated in the third chapter, that the Land Law of

1850 succeeded in accomplishing its major objective, namely, attracting large

numbers of immigrants to Brazil, even during a time in which slavery continued to

exist. Our research, based on both original and secondary sources, shows that the

determinants of the 1850 land law were found in the labor market and not in the land

market. The law created a set of incentives to attract immigrants and as such, was a
 17

forward looking policy implemented to prevent shortages in the labor market that

would emerge when the abolition of slavery became complete.

The fourth chapter analyzes the effects of the 1850 land law on the labor market,

land market and credit market. In the labor market the law created the financial

incentives required to allow Brazil to compete with the other ‘new countries’ in the

market for immigrants. In the credit market, the law did not induce land to become a

collateral. However, there were no serious credit constraints in Sao Paulo, mainly

because of the close-knit relations between coffee producers and coffee “factors”. In

the land market, the main impact of the 1850 law was that immigrants received titles

on their lands whereas Brazilians did not. Because the intention of the law was to

attract immigrants, the government, private colonization companies and coffee

producers built settlements and granted titled land to foreigners that came to Brazil.

An interesting result is that the increase in coffee prices did not lead to an increase in

land rights, as dictated by the original theory of property rights.

The fifth chapter picks up this institutional story in the Old Republic period. The

main goal of this chapter is to show that the desired inflow of immigrants into Sao

Paulo induced the interest groups and policy-makers of that state to enact the laws

and regulations to make credible their immigration policy. The slogan 'bracos para a

lavoura' was the main determinant of the land and immigration laws enacted during

this period. However, these were credible laws because there was an agreement on

this policy orientation at the state level that was buttressed by the informal political
 18

power at the county level. In a time where the 'colonel' dictated the creation of new

counties, we observe the proliferation of new municipalities in the western frontier,

where immigrants formed the majority of the population and owned more than half

of the land. By contrast, other coffee producing states like Minas Gerais also made

some legal and other institutional changes but these were nowhere near as effective

and credible to immigrants and as a result immigrants did not come there. In fact, the

purpose seemed to be quite different, namely, to raise revenue in the form of a land

tax.

The sixth chapter focuses on the effects of these different laws and institutional

changes during the Old Republic on the land, labor and credit market. In the labor

market, the immigration policy fostered by Sao Paulo solved the shortage of labor in

the coffee farms but also produced linkages in fostering industrialization (a great

number of immigrants owned the first industries in Sao Paulo) and agriculture (a

equal number of immigrants became coffee producers). In the credit market, the

main impact of these laws was the increasing use of the Torrens system of

registration, especially for rural lands, that in turn induced commercial banks started

to accept land as a collateral. In the land market, between 1905 and 1930 the percent

of latifundia decreased substantially and that of small holders increased. A by-

product of this essay is to demonstrate the inaccuracy of the 'distorted consensus'

saying that coffee was produced almost entirely by Brazilians in 'latifundia' type of

plots until 1930.

 19

This dissertation makes two general contributions. The first is one to the New

Institutional Economics. The evolution of land policy, in Brazil during the Empire

and in Sao Paulo during the Republic, is an excellent case study for investigating the

issue of institutional change and economic performance. Our research suggests that

private property rights were created to attract immigrants and not because of the

increase in the value of the land. The second contribution is more specific to the

economic history and political economy literature on Brazil's coffee period (1830-

1930) and to the effects of these legal and other institutional changes on land, labor,

credit markets and linkages.

 20

CHAPTER 2: LITERATURE REVIEW

Throughout much of its history, Brazil has been known as a raw material

exporting country. While earlier these exports were sugar, natural dyes, gold and

other minerals, beginning in 1830 coffee became Brazil’s single most important

commodity export. As shown in Table 2.1, moreover, between 1830 and 1930, the

share of coffee in total exports grew steadily. By 1889, the country was already

responsible for about two-thirds of the world’s total coffee supply. These

accomplishments were even more remarkable if one considers that this was a period

in which world coffee exports were growing at a phenomenal rate (more than

quintupling between 1839 and 1890 and then tripling again between 1890 and 1930).

Table 2.1: Overview of Brazil and the Coffee Regiona: 1830-1930

1830 1850 1872
Brazil Coffee Brazil Coffee Brazil Coffee Region
Region Region

Area (in 1,000 km2) 8,511,189 884,620 8,511,189 884,620 8,511,189 884,620
Total Population 3,960,866 2,121,000 7,677,800 3,000,000 10,112,061 4,034,619
% of slaves 29% 39% 13% 18% 17% 22%
% of immigrants 0.20% 0.05% 0.20% 0.03% 3% 7%
% of adults literacy na na na na 16% 19%
Life expectancy na na na na 27.3 na
Inflow of Immigrants up to 7,882 955 17,044 953 279,582 10,458
Political Regime Parliament +Monarchy Parliament +Monarchy Parliament +Monarchy
Coffee exports as % of total 20% na 40% na 56% na
% of world coffee market na na 52% 52% 50% 50%
Length of railroads (in km2) 0 0 15 15 1,357 1,053
Real GDP (1908=100) na na 35.54 na 64.47 na
 21

Table 2.1: Overview of Brazil and the Coffee Regiona: 1830-1930

(cont.)
1900 1920 1930
Brazil Coffee Brazil Coffee Brazil Coffee
Region Region Region

Area (in 1,000 km2) 8,511,189 884,620 8,511,189 884,620 8,511,189 884,620
Total Population 17,318,556 7,494,350 30,838,301 13,286,005 37,625,436 16,249,906
% of slaves 0% 0% 0% 0% 0% 0%
% of immigrants 7.3% 0.0% 5% 9% 3% 7%
% of adults literacy 26% 28% 24% 28% 26% 32%
Life expectancy (in years) 29.4 na 32.1 na 34.3 na
Inflow of Immigrants up to b 2,141,869 961,881 3,630,243 1,785,979 4,470,558 2,272,228
Political Regime Federative Republic Federative Republic Federative Republic
Coffee exports as % of total 57% na 82% na 46% na
% of world coffee market 76% 75% 70% 66% 62% 57%
Length of railroads (in km2) 13,981 8,714 28,556 13,441 32,000 18,326
Real GDP (1908=100) 74.79 na 171.49 na 266.53 na
Sources: For Area: Anuario Estatistico do Brasil 1940, numero 1, p. XVI. For population: Estatisticas
Historicas do Brasil vol. 3, 1987, p. 29, 30, Anuario Estatistico do Brasil, 1940 p. 6,7, 8, 17. For
literacy rates: Anuario Estatistico do Brasil, 1940, p. 13. For life expectation: Merrrick & Graham
(1980), p. 42. For inflow of immigrants: Boletim do Servico de Imigracao, Sao Paulo, 1940. For
coffee exports and world coffee market: Bacha (1992). For length of railroads: Oliveira (1995), For
Real GDP: Bacha (1992)

(a) coffee region is composed by: Sao Paulo, Rio de Janeiro and Minas Gerais.
(b): For 1830, inflow between 1821 and 1830. For 1850, number of immigrants between 1830 and
1850. For 1872, numbers between 1830 and 1872. For 1900, numbers between 1830 and 1900. For
1920, numbers between 1830 and 1920. For 1930, numbers between 1830 and 1930. For the coffee
region, number of immigrants to Sao Paulo only.

According to the ‘dominant’1 approach reviewed in this essay, coffee was

almost entirely produced on large plantations and until the abolition of slavery in

1888, the labor force was largely slave labor.2 With the complete abolition in 1888,

immigrants became increasingly important as the dominant source of labor supply.

1
The main representatives of this approach are: Prado Jr. (1966) and (1979), Furtado (1965, Stocke
(1986) and Dean (1971) and (1976a).
2
Between 1822 and 1889, Brazil was an Empire.
 22

At the same time, Sao Paulo came to surpass Rio de Janeiro as the leading coffee

province in Brazil. The ‘conquering of the west’ in Sao Paulo by coffee producers

was closely related to the growth of Brazilian railroads and a number of other factors

explored in this dissertation. Since coffee has a long gestation period between first

planting and production, credit was also required. Coffee producers looked to the

state for assistance in supplying all their needs: land, low cost labor, credit, railroads,

marketing, storage and price stabilization and support.

Conventional analysis3 has tended to view coffee producers as homogeneous

(large, mostly Brazilian plantation owners) and as all-powerful in the political

economy sense throughout the period 1830-1930. Likewise, conventional analysis4

has portrayed immigrants as ‘semi-slaves’ who were so poor that they could not

afford to save to acquire coffee land. The conventional analysis also views Sao Paulo

as being no different from the rest of Brazil’s coffee region5. The coffee producers’

monopoly of land enticed them with the control over the labor force. The current

view is that coffee producers (or the state) did not stimulate immigrants to acquire

coffee lands6. In fact, conventional analysis has also argued that coffee producers

were ‘free-riders’, using the state for their own private interests. The institutions

created by coffee producers tended to retard economic growth. Conventional analysis

3
The main representatives are: Prado Jr. (1966), Stocke (1986) and Martins (1986).
4
According to Hall (1968), Truzzi (1986 and Dean (1976a).
5
According to Prado Jr. (1979).
6
Dean (1976a).
 23

also implied that the concentration of land that started during the colonial period

increased even further during the coffee period.7

Broadly speaking, this dissertation proposes a non-conventional (or fresh)

analysis of the coffee period. We find, through the study of the land and labor

policies, that the coffee economy created institutions that improved private property

rights, increased credit and transportation and decreased the concentration of land. If

in 1830 coffee was produced by Brazilians, mostly in latifundio type properties, in

1930 immigrants owned more than 50% of total coffee farms in Sao Paulo. But how

can we have two so distinct approaches to the same subject?

In this chapter, we review two broad sets of works: the consistent consensus

and the ‘distorted consensus’. The first one has been registering a lot of progress

lately, with an increasing number of excellent contributions on the coffee period. The

second type of consensus has not evolved much lately, and needs improvement. In

fact, we found some consensual aspects in this second field that produced agreement

among the authors. The problem is that we also found such ‘agreement’ to be

imprecise and vague, leading us to call this second approach ‘the distorted

consensus’. One should not get the wrong impression that all that has been done is

incorrect and that our intention is to propose a new set of paradigms for the Brazilian

coffee period. On the contrary, we benefited immensely from a great number of

works. Indeed, without them we would not be able to go further. In this sense, we

7
Prado Jr. (1979).
 24

have two major goals to accomplish in reviewing the literature. The first one is to

provide a broad review of the works that influenced this dissertation, and that we

consider to among the best in the field. The second and more specific objective is to

specify the extension of the ‘consensus’, the main authors, their contributions and the

ways in which our approach differs from theirs.

This chapter is divided into five sections. In 2.1 we give a broad overview of the

literature on coffee, under the group we called ‘consistent consensus’. In 2.1.1, we

review the seminal works that provided the ‘foundations’ for the later development

of the literature. The regional approaches, analyzed in 2.1.2, are extremely important

contributions towards a more specific understanding of the economic and political

impacts in one specific municipality or region, during the coffee period. The

different political structures of the two periods (Empire and Republic) discussed in

Section 2.1.3 are pre-requisites for understanding the land and labor policies

implemented during the two periods and analyzed later in this dissertation. In sub-

section 2.1.4, we discuss the thematic studies in two areas: the credit and money

market and the role of coffee in fostering industry. We call these ‘thematic studies’

because they study in depth all the impacts of one single problem. Mainly because

we deal with land rights, we present an overview of the different theories of property

rights in 2.1.5.

Then, in Sections 2.2, 2.3 and 2.4 we tried to accomplish our second objective.

As such, in 2.2 we summarize the research that focuses on the transformations of the
 25

land market (between 1830 and 1930). Interesting enough we found very few

contributions on this theme, but we then found many works on the concentration of

land in Brazil, especially in Amazonia8, that use these studies as the

primary/historical reference. In 2.3, we review the works on the labor market, with

special emphasis on the role of immigrants during the Empire (1822-1889) and then

in Sao Paulo during the Republic. In particular, we examine the role played by the

immigrants in the coffee economy and the possibility of mobility from being workers

to coffee producers. Throughout this dissertation, we deal with land and labor laws,

and sometimes their interpretation by magistrates. In turn, we review in 2.4 the few

outstanding contributions that discuss the land policies in Brazil before 1930. A

summary of our conclusions is in section 2.5.

2.1 Brief Overview of the Literature on the Coffee Period (1830-1930)

2.1.1 The Seminal Works on Coffee Period

In our view, some of the most relevant works on coffee are identified with the

names of Emilia Viotti da Costa (1982), Caio Prado Junior (1979), and Celso

Furtado (1964). In different degrees, these works encompass the whole coffee story

(Empire and Republic) and to some extent integrate labor, land, credit and politics in

their analysis. Emilia Viotti traces a whole view of the coffee economy to explain

under what condition slavery was abolished, the pressure groups involved, the role

8
Indeed according to Foweraker (1981), the 1850 land law remained in full force until 1964 in
Amazon region, parts of Parana, Mato Grosso and Para.
 26

played by Sao Paulo and the importance of the immigrants in this transition. She

explains that the peaceful transition towards free labor was mainly due to the

introduction of immigrants in the coffee provinces of the south and the laws

indicating to the slave owners that slavery as an institution was coming to an end. In

contrast to the U.S. experience, the author explains the peaceful transition from

slavery to free labor due to the positive conditions created by the coffee economy.

Implied in her work is the idea that there was fierce opposition from farmers from

the Paraiba valley (the old coffee region located north of Sao Paulo) who defended

slavery. The complete abolition, in 1888, marked the emergence of the western

planters from Sao Paulo, as an important pressure group in both political and

economic terms.

While Emilia Viotti (1982) provides a broad overview of the coffee economy

with special attention for the labor market, Caio Prado Junior9 is concerned with the

land market. More specifically, he establishes a relationship between the latifundio10

and the backwardness of Brazil. In his view, the plantation is characterized by

exploitation of the workers by the landowners. Ever since colonial times, Brazil was

9
His major works are: A Revolucao Brasileira (1966), Formacao do Brasil Contemporaneo (1969),
and Historia Economica do Brasil (1979).
10
Latifundio is an economic and political term, specific to Brazilian land policies. According to
Helfand (1999):” Many Latin American countries adopted agricultural policy packages in the 1960s
aimed at modernizing latifundios (extensive large estates), as a part of a strategy to control the
pressure for land reform. “ (p. 6). While latifundios are ‘extensive large estates’ what differs this type
of land holding from ‘plantation’ or even from large size farms is the use of land. In latifundios we
find vast idle and unproductive tracts of lands, whereas in a plantation or even in a large land holding
we do not find such a pattern on a regular basis. In legal terms, the Brazilian civil code classifies
unproductive (or idle) land as ‘latifundio’. The decrease in the number of latifundio may be achieved
through a land reform that tends to improve the property rights system (increase in the number of
titles, decrease in transaction costs, increase in investment on land, decrease in tenure insecurity).
 27

inserted in the world as an export economy. In turn, the latifundio was functional for

the export economy during all the major cycles (sugar, rubber, gold and coffee) that

Brazil experienced. In this view, there are opposing classes: large landowners and

landless peasants. Cleary, the slave-based system contributed to the widespread use

of the latifundio, as the dominant agrarian type of export production. The roots of

this type of agrarian organization did not change with the abolition of slaves. In other

words, for Prado, the transition to a free labor economy happened without any

appreciable change in the size of landholdings. The coffee period did not bring any

positive changes for the Brazilian economy. On the contrary, it reaffirmed the

monopoly power of the landowners that in turn translated into their domination over

the labor market. Coffee producers ‘exploited’ the immigrants in a way that bore

close resemblance to how they did so in the slave economy. Thus, the latifundio

survived during the coffee economy mainly because there was little room for the

creation of small and medium sized landholdings. Influenced by Marxist ideas, Caio

Prado argues that the concentration of land in Brazil is a widespread problem that

hampered Brazil’s industrialization.

Celso Furtado’s analysis is contained in his classic ‘Economic Growth of Brazil’.

A question implicit in his analysis is: What explains the different development

patterns between the United States and Brazil? Given that both countries started with

similar initial conditions, why had the U.S. by the first decades of the 20th century

already taken off while Brazil remained stagnant? In brief, for Furtado, England
 28

fostered the development of the United States and hampered the process in Brazil.

The author explains that the northern colonies did not succeed in developing the

conditions for an export-based system, like the southern ones. In turn, England

stimulated in the American provinces of the north the manufactures that were absent

in the mother country to reduce the British import level.11 The author emphasized the

positive interlinkages between the industries in the north and the agriculture of the

South as well as the US insertion in the European economies. For Furtado, while

England contributed positively to industrialization of the US, it hampered that in

Brazil during the 19th century. This was because England imposed protectionist trade

barriers against Brazilian export crops (especially sugar and cotton) in order to favor

production of these crops in the British colonies of North America and the Antilles.

While the United States increased its import tariffs to stimulate the domestic

industries, Brazil could not do the same because of the 1810 commercial treaty that

granted England a monopoly in the Brazilian market for almost fifty years. In

addition to the different roles that England played between the U.S. and Brazil,

Furtado also saw a difference in the political elites of the two countries. The

development of smallholders in the northern colonies induced political competition

among the landowners. Had the plantations from the south been adopted in the

North, political competition would have been absent and probably US history would

11
Furtado explains that while England started these protectionist tariffs in the US in 1699, the United
States preserved this policy after the independence. Indeed, in 1808, the import tariffs for cotton
fabrics reached 17.5% (p. 100).
 29

not have differed so much from Brazil’s. In a slave-based society, coffee provided an

opportunity for the late industrialization of Brazil. Indeed, for Brazil, coffee was

more than another ‘cycle’. Coffee satisfied the last preconditions for Brazilian

industrialization. Furtado carefully provides an analysis of the linkages that were

produced during the coffee period, with special attention to the expansion of the

domestic market. It is clear that coffee was a required phase for industrial

development. Different from Simonsen (1945) whose argument was later supported

by Neto (1959), who saw the coffee period as one that even further delayed the

industrialization of Brazil, Furtado explains that without coffee Brazil would not

have developed the linkages to adopt import-substituting industrialization.

These authors contributed to a better understanding of why backward countries

could not replicate the conditions found in the developed world and what had to be

done for the whole world to be ‘rich’. Whether or not their analysis proved correct is

not our concern here. The role of immigrants and slaves, the peaceful transition to a

free society, the concentration of landholdings, the coffee economy in fostering

industrialization, are important aspects of these works. The political tone, present in

all these works, is excessive in Caio Prado. To make his argument more ‘general’

Caio Prado argued that the Paulista coffee producers replicated the duality

(landowners versus landless peasants) so as to conclude that coffee was produced in

latifundios during the entire period from 1830 to 1930. According to Caio Prado,

coffee producers were hegemonic in both the state and federal government. In is only
 30

after 1930 (with the bankruptcies arising during the post-1929 depression and the

lost of hegemony) that coffee producers started to parcel out their properties.

In particular, for Brazilian scholars, the term ‘latifundio’ has a special

connotation that is stronger than ‘large land holdings’ or even ‘plantation’. In brief,

the concentration of landownership in Brazil is characterized by the presence of idle

land, known as latifundio. In turn, according to Alston, Mueller and Libecap (1999):

Throughout much of its history, Brazil has had a highly concentrated ownership structure
characterized by large, often unproductive properties known as latifundio. (…) Owners of latifundio
have been politically powerful, and they have successfully resisted the expropriation of their lands. As
a result, the tension between the efficiency gains from secure property rights to land and the
distributional goals from land reform have been long standing. (…). The resulting coexistence of large
idle farms and large numbers of landless peasants has made land redistribution or reform a major
issue in Brazil since 1960s. (p. 32)

In Brazil there seems to be a relationship between the existence of latifundio and

the lack of clearly defined rights on the land.12 The widespread presence of latifundio

in Brazil reflected the concentration of land and wealth. These large tracts of land,

according to Prado Junior (1966, 1979), were part of a colonial heritage and

reinforced by the 1850 land law. For Prado Junior (1966, 1979) the Land laws

created by the different states during the Old Republic in Brazil did not affect the

concentration of land and thus preserved the ‘latifundio’ type of system. As we argue

later in this work, the size of land holdings changed in Sao Paulo during the Old

12
Deininger and Binswanger (2001) explain that land reforms are justifiable on distributional,
efficiency and equitable grounds. According to the authors, secure property rights are the basis for
growth and development. In Brazil, the latifundios are widespread and the poor do not have access to
land. Land reform in Brazil implies a decrease in the number of latifundios, by enticing squatters with
a set of secure land rights. In other words, in Brazil, land reform implies a decrease in the size of the
properties achieved through an improvement in the property rights system.
 31

Republic. Different from what claimed by Prado, coffee was not entirely produced in

‘latifundio’ and hence, the concentration of land in Sao Paulo decreased during the

Old Republic.

Alston, Mueller and Libecap (1999) explain that a land reform would have

positive distributional impacts but also would indirectly improve the efficience gains

that emerge from a well-defined system of property rights. According to the authors,

having a title on land decreases the owners’ uncertainty, leading to an increase in

investment on land. A well-defined system of land rights also tends to improve the

provision of credit and tend to create a market for sale and leasing land. Likewise,

access to land, that was left idle, should have a positive impact in output. In other

words, a land reform would eliminate the ‘latifundio’ type of holdings and in turn,

tends to give owners more secure property rights on land, which in turn, tend to

improve the system of land rights, as a whole. 13 The unequal distribution of land in

Brazil led scholars to advocate a reform in the private property rights on land, as a

synonym for land reform.14 Private property rights are not well defined in Brazil not

only because of high administrative costs or because of lack of clarity in the

13
In Brazil, the concentration of land, given by the presence of latifundios, had a negative impact on
the property rights system. In other words, large and idle land holdings tend to block the access to
land to the majority of the population. The landless group, in turn, tend to squat on the idle land.
However, because land is a political asset, land titling is not accessible to the majority of the
population. A well-defined land rights system, would entice squatters with a title on the land, and
hence would follow the procedures dictated by the law. In this dissertation we argue that the size of
the rural properties decreased in Sao Paulo, during the Old Republic, through an improvement in the
system of land rights (mainly through an enforcement of the law).
14
Michael R. Carter and Ramon Salgado. (2001). “Land Market Liberalization and the Agrarian
Question in Latin America” In: De Janvry, A. , Gordillo, G. , Platteau, J. and Sadoulet, E. (eds).
Access to Land, Rural Poverty and Public Action.
 32

contents of the law. The key is that landowners tend to be ‘above the law’ and hence,

the legal rights of squatters are rarely respected. A well-defined system of property

rights would give squatters titles on the land. A title, in turn, reduce uncertainty of

ownership because squatters are no longer subject to eviction threats and are

protected by the civil code.

While the relationship between well defined land rights and size of the land

holdings is not a general proposition, it was valid for Brazil. During the Old

Republic, land was a source of power and latifundio was widespread in different

states of Brazil. The procedures required to obtain titles on land (creation of land

registrars, documents to prove previous use rights, measurement commission) were

not followed because the owners of latifundio usually did not enforce the laws.

In particular, in Sao Paulo coffee region, the focus the object of this study, we

argue that the need to attract immigrants led to a structural change in the land tenure

structure towards a well defined system of land rights (secure titles, easy access to

land registrars, reduced number of documents to prove ownership, enforcement of

the laws). In turn, this process led to positive externalities in the whole land market

such that the ‘latifundio’ type of property became less and less frequently observed.

2.1.2 The Regional Studies

Coffee production in Rio de Janeiro had its golden days between 1830 and 1870

in the municipalities Vassouras, Resende and Saquarema. The regional studies on

 33

coffee in Brazil were initiated by Stein (1957) with his ‘Vassouras’ story. According

to Stein, coffee was produced in latifundios by slaves. Indeed, Vassouras was the

region of greatest concentration of land grants, explaining the origin of the extremely

large size of landholdings in the area. Stein carefully explains the role of “factors” in

the provision of credit and as the planters’ middlemen in Rio de Janeiro. Factors

advanced planters credit in exchange for the future delivery of coffee. This credit

was facilitated by the use of slaves as collateral, especially because slaves were

estimated to account for 70% of the plantations’ wealth (p. 225-226). The Imperial

government devoted special attention to Vassouras and even extended the D. Pedro

II railroad into this coffee region. In Vassouras, slaves were more valuable than

coffee. Hence, the majority of the coffee producers from this region went bankrupt

when slavery was completely abolished in 1888.

While Stein’s contribution is one of the best in this genre, we should mention the

interesting work by Whately15 for coffee in Resende, another leading coffee region in

Rio de Janeiro. Whereas Stein ruled out any possibility of medium size farms,

Whately explained that coffee farms were more evenly spread among large, medium

and small ones.16 Resende did not have as many slaves as Vassouras and in fact, the

planters from that region were not as powerful as the ones from Vassouras

(politicians and senators from the Empire). Before the complete termination of

slavery, some coffee producers, notably the Pereira Barreto family, moved to the

15
Maria Celina Whately (1987). O Café em Resende. Rio de Janeiro: Jose Olimpio Editora.
16
Both authors, Stein and Whately, studied the same period: 1850-1900.
 34

new coffee lands in the western part of Sao Paulo. In fact, the Pereira Barreto group

settled down in Ribeirao Preto in the 1880s to introduce a high quality brand of

coffee – the bourbon – that was subsequently adopted by other farmers in the

hinterlands of western Sao Paulo.

While it seems that the latifundio was the dominant type of property, at least in

Rio de Janeiro, during the Empire (1822-1889), and in its continuation in the hilly

areas of the Paraiba Valley (north of Sao Paulo), other, more recent regional studies

have not confirmed the long duration of this pattern. For example, Marcondes

(1998a, 1998b), based on his work on the Lorena region in the Paraiba Valley, found

that the latifundio did not hamper the development of small and medium size

properties.17 In the absence of data on the size of lands, authors have used number of

slaves as a proxy for the concentration of land and wealth. These regional studies use

the wills of a population sample over a period of time to calculate, among other

things, changes in the Gini coefficients of slave holdings. The greater the index, the

greater is the concentration of slaves owners (and thus land). Marcondes (1998a)

showed the Gini coefficient among Lorena coffee producers to have been very stable

at about 0.56 between 1829 and 1879 and considerably lower than those reported in

the same period in two other coffee producing regions of the Valley (Areias and

Bananal). The author studied 200 wills to find that, while the coffee producers were

17
To some extent, our work was inspired by Marcondes. The author also argued that Caio Prado and
Celso Furtado were responsible for the ‘distorted’ (but dominant) view, that coffee was produced in
latifundio throughout the whole period (1830-1930).
 35

mainly large landowners, we should not underestimate the contribution of small and

medium landowners who represented 30% of his sample. Marcondes (1998b)

compared two coffee regions: Taubate (in the Sao Paulo Paraiba Valley) and Angra

dos Reis (in the coast of Rio de Janeiro).18 Marcondes found an original document

from 1868 with the size distribution of the coffee farms19 showing Angra dos Reis to

have a larger Gini index (0.648) than Sao Paulo (0.573).20 This suggests that not only

was Rio de Janeiro’s coffee production larger than Sao Paulo’s in 1868, but its

inequality in landholdings and coffee production was greater. The largest coffee

producer in Rio de Janeiro produced five times more than the largest one in Sao

Paulo. The interesting aspect is the significant presence of small and medium coffee

producers in the sample. Marcondes also studied the slave owners profile to conclude

that there was an increase in the Gini index from 0.637 in 1872 to 0.657 in 1884.

This work corroborates that his earlier finding for Lorena. In other words, the large

landowners were not absolute as claimed by Caio Prado and Celso Furtado. The

increase in land concentration (measured by the Gini coefficient) during the Empire

did not totally exclude the presence of small and medium landowners in the coffee

economy with a small number of slaves in their coffee farms. Another relevant study

18
The data on Angra is not as conclusive as the one for Taubate because Angra was not a relevant
coffee region in Rio. However, given the absence of data for other regions, the author chose to report
the results he found for this region in Rio de Janeiro.
19
In this case, the sizes are divided according to the coffee output (up to 999 arrobas; between 1,000
arrobas and 4,999 arrobas) and so forth. One arroba is equal to 14.4 kilos or 31.7 pounds.
20
According to Binswanger and Deininger (1997):” The Gini coefficient measures the degree of
inequality in a distribution. A Gini coefficient of zero implies a perfectly equal distribution whereas a
cofficient of one implies perfect unequal distribution, with one unit holding everything and all others
holding nothing.” (p. 1963).
 36

on the same theme was done by Zelia Cardoso de Mello (1985). In this case, the

author studied wills in the municipality of Sao Paulo between 1845 and 1880.

Similar to Marcondes, she reported an increase in the Gini index (from 0.671 in 1845

to 0.880 in 1880), but again noticed the presence of landowners with a small number

of slaves that were able to survive in the coffee economy. The main merit of these

studies is to show that dominance of the latifundio did not totally exclude the

presence of small and medium coffee farmers during the Empire.

Finally, Warren Dean’s (1976a) work on Rio Claro is an important contribution

for this genre. Like Stein, the author provided a set of primary data, including notary

records and the accounts of several plantations and newspapers. Though Dean had

set out to study the century between1820 and 1920, his emphasis is more on years

prior to the abolition of slavery and the transition to free labor. Dean sees the

landowners as ‘exploitative’ of the labor force, both slaves and immigrants. Because

planters exploited the workers, using violence and other coercive methods, Dean

explained the 1905 increase in foreign landownership as an exogenous movement. In

other words, rural land in Rio Claro, according to the author, was not acquired by

‘colonos’ but by the spontaneous immigrants that lived in the urban zones.

While Vassouras and Rio Claro were regions where we found the dominance of

the latifundio, Resende, Lorena, Sao Paulo, Taubate and Angra dos Reis were

counter examples, suggesting that small and medium size farmers were not excluded

from the coffee production during the Empire period.

 37

2.1.3 Politics, Politicians During the Coffee Period

In this section, we provide a brief summary of the political structures of both the

Empire and the Republic, emphasizing the contributions of Faoro (1959), Carvalho

(1988) and Carone (1978).

Unlike the thirteen colonies in British North America, but like colonial

Spanish America, Brazil served no significant apprenticeship in representative self-

government under Portuguese colonial rule. For three centuries, Brazil was governed

by Crown- appointed governors-general (or viceroys), captains-general (or

governors), high-court judges, magistrates, and other lesser bureaucrats.

According to Faoro (1959), the independence of Brazil in 1822 can be

regarded as part of the so-called democratic revolution of the Atlantic world in the

late eighteenth and early nineteenth centuries in the sense that liberal democratic

ideas were widely proclaimed in the struggle against Portuguese colonialism and

absolutism. There was, however, never any intention of establishing in Brazil, a

society looking even remotely like a liberal, representative democracy. Unlike the

newly independent Spanish American states, Brazil did not even become a republic,

but an Empire. Carvalho (1988) explained that the ideological homogeneity of the

political elite, brought from Portugal and mainly composed by magistrates, gave

ideological as well as social homogeneity to support the political stability of the new

regime.
 38

Carvalho rejects Faoro’s idea that the elite represented the power of the

landowners, and the State was simply following the interests of this class. He says

that, because the State depended on agricultural exports (especially in terms of

taxes), the landowners’ interests were important in political decisions. The ability to

deal with conflicts without threatening the constitutional order was a key goal of the

regime.

Faoro (1959) and Carvalho (1988) explain that under the political system of

the empire, power was concentrated in the hands of the hereditary emperor himself,

his chosen ministers, the counselors of state he appointed (for life), the provincial

presidents he also appointed, and a Senate (appointed for life by the emperor). The

Empire had an elected Chamber but voting in elections was open and oral,

vulnerable to fraud and patronage by local landowners.

The centralization of power during this period shows the weak capacity of

civil society to have political representation. Carvalho explains that the success of

the Empire, in terms of political organization, was related to the common ideological

background of its political elite. In other words, the magistrates came to Brazil to

build a state and they all had a common educational background, which facilitated

the creation of a national identity.

While the political and administrative structure of the Empire was highly

centralized around the Emperor, the Old Republic was a decentralized system that

granted the states autonomy to legislate their own land, labor and credit policies.
 39

According to Carone (1978), democratic regimes brought ‘universal suffrage’

(except for the illiterate and immigrants) in elections for the executive (president and

state governors), Senate, Chambers of Deputies and State Assemblies. The direct

elections, however, did not preclude an immense amount of electoral fraud. The

reason why elections were fraudulent during the Old Republic had to do with the

distribution of power among the three leading states, Rio de Janeiro, Minas Gerais

and Sao Paulo, known as ‘governors politics’(politica dos governadores).

During the Old Republic, elections were contested but only by state parties,

and in each state the Republican Party was dominant. The outcome of the

presidential elections was predetermined by agreements between state governors,

known as ‘governors’ politics’21. No "official" candidate backed by the governors

and Republican political machines of at least one and usually both of the two states

with the largest electorates (Sao Paulo and Minas Gerais) and two or three of the

largest second-rank states (Rio Grande do Sul, Rio de Janeiro, Bahia, and

Pernambuco) ever lost, and no "opposition" candidate ever won a presidential

election. In brief, the ‘politica dos governadores’ implied that the governors

appointed the president of Brazil, who in turn, was confirmed by an electoral

process. The base of support for this system was at the level of the ‘municipio’. In

particular, the greater the number of districts (electoral zones) that the governors

21
This practice was also known as the ‘coffee and milk politics’ (‘politica do café com leite) in a
reference to the presidents coming from Sao Paulo (the coffee region) and the ones who came from
Minas (the ‘milk’ state).
 40

dominated, the greater was the governor’s control over the Republican Party. Each

district (electoral zone) had a member of the party in charge. This member, usually a

‘coronel’, granted his support for the Party in exchange for an increase in the budget

for his region and the ability to nominate judges for his region, among other benefits.

For the Republican Party, the coronels’ support meant that the candidate chosen by

the governor had full support of all members of the Republican party (the coronels’

electorate). “Coronelism” was an important, informal power source present, to

varying degree, in all Brazilian states until 1932.22 While in the northeast it achieved

its extreme form (‘cangaco’, where rival families killed each other in their power

struggles), it was also very much present in the more developed regions during the

Old Republic.

While coffee producers from Rio de Janeiro dominated the political scene

during the Empire, Paulistas were much in evidence, especially on a state level, in

the Republic they had helped to create. All these authors agreed that Brazil was not a

Banana republic. In different degrees, they reject the simplistic idea that coffee

producers dominated the central government during the Empire and even during the

Republic.

22
According to Rosas (1987), the 1932 electoral legislation introduced the secret ballot to reduce the
chances of purchasing the votes. According to Bethel (2000) elections in Brazil until 1989 were
always fraudulent, suggesting that the ‘coronelism’ was probably present in s\ome states.
 41

2.1.4 The Thematic Studies

2.1.4.1 The Credit and Money Markets
There are many excellent studies on this subject. The credit market, during the

Empire was explored by Sweigart (1980) for the Rio coffee market. The author

provided a detailed description of how factors worked as the farmers’ middlemen

and bankers in Rio de Janeiro. In his story, coffee production went down in Rio

during the 1880s because the Imperial government did not subsidize the creation of

mortgage banks at a time when slavery was being abolished.

In Rio de Janeiro, according to Gorenstein (1980) the greatest fortunes were not

in the hands of coffee producers but rather in those of the merchants involved (until

1850) in the slave trade. The most interesting aspect of her work is that these

companies had Portuguese ‘head’ owners but were in fact owned by the British. The

author found more than 50 companies that wired funds obtained through slave traffic

to former British businessmen that lived in Brazil.23 When Brazil succumbed to the

English pressures and finally prohibited the transatlantic slave commerce, the Bahian

merchants threatened a rebellion against the monarchy while the Rio ones remained

silent. The reason for such divergence, according to Gorenstein, was their different

sources of capital: Brazilian and Portuguese in Bahia, and British in Rio.

On the role of commercial banks in fostering coffee and even industrial activities,

we discuss three important studies. The first, by Flavio Saes (1986), covers the
23
By law, British citizens were prohibited to engage themselves directly in slave traffic. The law, in
turn, allowed that British provided insurance for the slave trips (because, in theory, the insurance was
protecting the ships not the slaves). The companies discussed in Goreinstein (1980) executed slave
commerce (trips between the coasts of Brazil and Africa).
 42

period from 1850 through 1930 in Sao Paulo. His work examines the history of

banking and monetary policy in Sao Paulo to show that it reflected the tensions of an

economy in transition from agriculture to industry. Inspired by Saes’ work, Hanley

(1995) argued that Sao Paulo was able to develop from a primary product - export

economy at the end of the nineteenth century into a major industrial center in the

twentieth century thanks to the early and broad development of formal financial

intermediaries which promoted faster and more efficient mobilization of capital for

investment.24 Trinner (1994) provides a very interesting analysis of the role of the

commercial banks and the Brazilian financial system between 1906 and 1930 in

fostering industrialization. Briefly, she successfully demonstrated that the banking

system was dynamically responsive to the Brazilian economy, growing faster than

output, population and the money supply. Trinner then draws a parallel between

commercial agriculture in the US South and that in the Paulista coffee economy. In

both places – Sao Paulo (BR) and Louisiana (US), a dynamic banking system was

developed to support agriculture rather than industry.

The recent historiography on monetary theory has questioned the presumption of

a weak federal government that closely followed the interests of the coffee

producers. These new lines of research suggest that monetary, financial and

industrial policies were often dictated by the federal government’s immediate

financial needs (to accommodate debt service and new infrastructure investment

24
Her work covered the 1850-1905 period.
 43

obligations). For Fritsch (1988), the Federal financial policies were often determined

by the need to meet international debt payments and the coffee producers’ interests

were often sacrificed to this goal. He argues that the needs of foreign capital dictated

the federal government’s national economic policy. The resulting support, at times,

for the agricultural export sector in the form of foreign exchange and coffee

valorization policies was a consequence, not a determinant, of these policies. Topik

(1987) addresses the role of the financial sector in the political economy from the

perspective of government institutions. He has found that, despite liberal

presumptions, the national government pursued interventionist policies in many

economic sectors, including finance.

2.1.4.2 The Industrialization During the Coffee Period

While Baer (1965) does not agree that industrialization was entrenched in the

Brazilian economy prior to 1930, Topik (1987) argues exactly the opposite. The

author carefully compiled evidence showing that prior to 1930 the Brazilian state

granted subsidies and capital for investment in infrastructure (railroads, ports,

housing, electrification) that, combined with the incentives provided by the state of

Sao Paulo, induced considerable industrialization prior to 1930.

As early as 1850, industrialization in Brazil was first fuelled by Ireneu

Evangelista de Souza, known as Baron of Maua.25 He acquired his fortune26 through

25
The information here was taken from two sources: Maua (1878). “Exposicao aos Credores” and
Caldeira (1995). “Maua: Empresario do Imperio”.
 44

a long-lived partnership with Carruthers, the second most important British exporter.

Maua, however, went beyond this to find British partners to finance “The Sao Paulo

(Brazilian) Railway”, the railroad linking Santos and Jundiai (known as ‘the English

railroad’). Highly influenced by British ideas of industrial revolution, he wanted to

create the conditions to pave the way for the industrialization of Brazil. In the

railroad sector, Maua built the D. Pedro II railroad, in Rio de Janeiro, but was forced

to grant it to the Imperial government. Later, however, he had the concession for the

Recife-Sao Francisco railroad. In the Amazon, he had a navigation company based in

Manaus that transported the goods around the northern provinces. His commercial

banks (Banco Maua) were located in almost every province of the Empire and were

later established in Argentina. He founded and owned the gas, sewage, and lighting

companies in Rio de Janeiro. The businesses created by Maua relied on state

financing. Maua opposed the continuation of slavery and was trying to create a

domestic market to fuel industrialization. That market, however, came later,

especially in Sao Paulo after the 1880s. All Maua’s businesses were confiscated by

the Brazilian government and in 1878 he declared bankruptcy. In his exposition to

his creditors, he explained that the political opposition he faced in Brazil is what

drove him down and as such was typical of an agriculture and slave-based society. It

was only then that he understood (according to Maua) that Brazil was not ready to

26
According to Caldeira (1995, p. 32) Maua’s private fortune (in assets) was comparable to the assets
owned by the Bank of England or by the largest American bequest left in the 19th century by
Cornelious Vanderbilt, the railroad king.
 45

take off and to engage in an industrial revolution. Brazil had to create a domestic

market, strong enough to demand the production of goods.

2.1.5 Theories of Development of Private Property Rights in Land

The evolutionary theory of land rights is possibly one of the most widely adopted

view to explain how and why property rights in land were first created in the

different periods of history in distinct countries. The basic contention of the

evolutionary view is that as land scarcity increases, people demand more land tenure

security. As a result, private property rights in land tend to emerge and, once

establish tend to evolve towards greater measures of individualization and

formalization. A common trigger for the development of land rights is often

associated with the rise of the relative price of a land intensive product. In turn, a

spontaneous demand for formal land rights emerges stimulating an expansion of its

supply (typically for export) and growing scarcity of land. The high scarcity value of

land, in turn, raises the incentives to create property rights to capture the rents that

otherwise would be dissipated.27 Numerous applications of this model have been

suggested.28

The perfect illustration of the evolutionary version is provided by Feeny (1988)

in his study of Thailand. Feeny argued that the appreciation of agricultural terms of

trade, during the 19th century, was a good proxy for the increase in the price of land.

Land values rose and with the termination of ‘property rights on men’, land disputes

27
This approach is expounded by: Demsetz (1967); North (1981) and Libecap (1978).
28
Refer to: Thomson et al. (1986), Feeny (1988), Feder and Feeny (1981).
 46

became endemic. This, in turn, induced the Thai government to respond with a series

of procedural and administrative reforms which culminated in the creation of a

formal system of land titling in 1901. In brief, its response to the increased benefits

of defining private property rights in land and to the growing need to resolve and

reduce the incidence of land disputes through a centralized legal mechanism that the

government started to create what was to become the current system of land rights in

Thailand. In this scenario, all the parties involved benefited from the titling process.

Looked at in this way, the task of the government appears essentially non-

problematic. It only consists of supporting a change that is desired by everyone. The

supply/demand mechanism behind the evolutionary theory is explicitly grounded in

the market analogy. There is some sort of ‘political market’, where demand for

institutional change (land titling) is expressed and the supply responds when either

land becomes scarce or conflict over land increase. The main problem with the

evolutionary theory is that the state is implicitly posited as unique and coherent

decision maker that carries out the ‘will of the people’. On the demand side those

who oppose the change are minority and if the change indeed happens it means that

the opposition was defeated and a smooth process towards a better system of

property rights is achieved. Population pressures also leads to an improvement in

property rights on land. However, this pressure is perceived as a ‘demand for

change’ only when land becomes scarce or when the prices of the goods produced by

land increase.
 47

The emergence of private property rights entails at least three types of benefits.

First, by protecting the user’s future claim on the land, the possessor of the land is

induced to invest more on the land. Second, the rights to rent or sell facilitate the

development of market for land such that competitive pressures can usually be

counted on to contribute to its more efficient use. Third, the existence of titles to

such property can be used as a mortgage, thereby facilitating the development or the

access to a formal credit market.

The costs of creating property rights in land, however, can be quite high. In

countries like Brazil, where there is a great number of latifundios, private property

rights are not enforced. Though the administrative costs to obtain title on land are

high, the issue that tends to hamper land registration is the fact that large landowners

tend to block any proposal of land rights and land reforms. In this scenario, the costs

of having a title on land are mostly political because the political elite does not

enforce the laws.

In recent years, we observed a broadening of the model to include various

transaction cost elements, such as the nature and strength of pre-existing informal

arrangement in the joint use of common property or public lands. For example, de

Soto (2000) has argued that property rights will be more efficient and equitably

distributed when the system of formal land rights is congruent with or builds upon

pre-existing informal land rights allocations. He blames the poorly developed

property rights systems and the extreme inequality in the distribution of those rights
 48

in Latin America and other less developed countries on the fact that formal legal

systems have done just the opposite, deliberately rejecting the legality of the pre-

existing informal rules.

While the evolutionary theories of property rights focus on how to achieve

the ‘ideal’ type of property rights, Bates (1990) and Fermin-Sellers (1996) go still

further in arguing that the political foundations for such theory need to be given

greater attention. Weimer (1997) argues that if key agents value heavily personal

political power over economic or social gain, they may defeat rule changes that may

be socially beneficial. Ensminger (1992) and Joireman (2001) provide interesting

case studies of how the state or individual political leaders have manipulated such

systems to introduce changes that serve their own interests even if they are not in the

interest of a majority in the community. These political theories of property rights,

therefore, have the effect of further severing the notion of their natural, endogenous

development as suggested by the evolutionary theory of property rights.

Yet, the political influences need not be autonomous but could be still another

endogenous influence of the rising scarcity value of land. Deininger and Feder

(1998) explain that, as land gets scarcer, it is likely to lead to increasing social

tension and conflicts with neighboring tribes or communities. In such situations, the

rule of might is likely to play an important role and, unless constrained by

democratic or egalitarian institutions and norms, the mighty may expropriate large

blocks of land for their own use, thereby creating private very unequally distributed
 49

property rights. Colonial powers may have an incentive to allocate these rights

disproportionately to citizens of their home country so as to strengthen colonial

presence in the colony.

2.2 The ‘Distorted Consensus’ on Coffee: the Land Market

While the literature on the role of banking and finance during the coffee period

has made significant progress lately, the same has not been true of studies dealing

with the land market. There are two points of consensus in studies of the land

market: (1) the failure of the 1850 land law in regulating private property rights and

(2) that coffee was produced in latifundio type properties until 1930.

2.2.1 The Land Laws

Brazil did not have any formal land legislation until 1822, when the system of

alienating public land (‘sesmaria law’) was suspended. According to Guimaraes

(1968, p. 112-114) and Dean (1971), in the absence of a formal land policy,

squatting on land prevailed and so did violent disputes over land. Hence, as

explained by Smith (1972):

It was an attempt to put an end to this (squatting on public land) that the emperor
promulgated the law of September 18, 1850, which prohibited the acquisition of lands
by any means except purchase and threatened removal, loss of benefits, fines, and jail
time to those, who, in the future, illegally occupied public lands. (p. 268)

Recent research by Mueller (1995) connected the above view – that the law was

created to evict squatters – to the increase in coffee prices. In other words, the

economic importance of coffee (as the leading export crop in 1850) increased the
 50

value of lands. In turn, the costs of evicting squatters in these lands increased. In the

absence of secure property rights, the benefits of eviction were lower than the costs.

Coffee producers then demanded the creation of a new institution, a new land law

that was supplied by the government through its enactment of that law. As explained

by Alston, Libecap & Mueller (1999):

Higher land values also created a demand for a change in institutional arrangement
concerning property rights in order to alter the private costs and benefits of owning land.
As a result of the political pressure to clarify property rights as the competition for
control increased, the Land Law was passed. (…) Enactment of the law reflected the
political influence of landed elites and their desire to limit infringement on their holdings
by squatters. (Alston, Libecap & Mueller, p.35).

For these authors, landowners were demanding a new land policy, as if the

previous one had been ever followed. The success of the law was conditional on the

enforcement of private property rights. According to this view, the purpose of the

law was to regulate the access to land and to a certain extent to allow squatters to

receive titles to their land. 29

According to these authors, the law failed to create property rights because the

government did not have enough land registries in the provinces (Dean, 1971, p.

621) or even because the government did not punish the squatters who continued to

illegally settle on public land (Holloway, 1980, p. 113). Another argument is that the

29
These authors, and even Emilia Viotti (p. 55-61), distinguished between squatters and sesmeiros.
While the former represented the supposed class of small landowners the ‘sesmeiros’ were the large
plantation owners. The squatters however, were not the small landowners. Indeed, according to
Bernardo P. de Vasconcelos, a key figure of the Empire, the provinces of Mato Grosso, Sao Paulo,
Santa Catarina, Minas and Rio Grande do Sul were mainly composed by squatters that had large
landholdings. (Anais do Camara dos Deputados do Brazil, 1843, p. 432-467).
 51

law imposed high costs on those small landowners who wanted to receive titles to

their land (Dean, 1976a).

The connection between the land law and immigration is imprecise in this

literature. To different degrees, the authors agreed that certain clauses in the land law

attempted to attract immigrants to Brazil. However, according to the authors, the

imperial government imposed such a high price on the sale of public land as to

preclude immigrants from becoming landowners upon arrival in Brazil.30 Due to the

high price of public land, the absence of a colonization policy and the lack of

funding for immigration, immigrants did not come to Brazil until the 1880s. As

explained by Stocke (1986):

In 1850, the approval of the Land Law unified the rights of private property and intended
to prevent the immigrants from becoming landowners, by imposing a high price on the
sale of public land. In turn, few immigrants came to Brazil. (Stocke, 1986, p. 23).

In Holloway’s (1980) words: “The law was a nearly unmitigated failure”(p. 115).

Indeed, if the law intended to create property rights and failed and if the same law

intended to attract immigrants without any success, then: “the law of September 18

was only partially executed, and in its major purposes it was completely frustrated.”

(Dean, 1971, p. 621).

In other words, the above views suggest the following conclusions. First, the law

was trying to regulate property rights, due either to the absence of a land policy or to

30
Authors like Hall (1968), Martins (1973), and Dean (1976a), (1976b) portrait a situation where
immigrants were naïve in chosing to come to Brazil, instead of Argentina, United States, Canada or
even Australia. Then, after arriving in Brazil immigrants realized they would have to work as
‘indenture servants’ before being able to buy a piece of land.
 52

the increase in land conflicts. Second, the law was also trying to attract immigrants.

For some reason, the effects of the law contradicted its main intention (attraction of

immigrants) mainly because, according to the authors, the price of public land was so

high that immigrants could not buy it upon their arrival in Brazil. Third, there was no

significant change in the flow of immigrants coming to Brazil after 1850. The

marginal increase in immigration after 1850 was attributable to deteriorating

economic conditions in Europe that drove immigrants to Brazil (even though they

knew the would be ‘exploited’ there). Fourth, it is only in 1880 that Sao Paulo

established the basis for an immigration policy. These four aspects are the critical

parts of what we call later in this dissertation the ‘distorted consensus’.

When Brazil was proclaimed a republic, jurisdiction over land was granted to

each individual state, with the Union retaining the control on the borders of the

territories and the national security zones (where the 1850 land law remained in

effect until 1964). About land policies of the individual state, the literature has not

had much to say. Mueller (1995) is among the few that managed to say anything:

With each state in charge of its own land policy there was very little federal intervention in
land matter until 1963. Each state adopted its own legislation, yet there was no radical
deviation from the basic principles of the Land Law of 1850. By this point the basic pattern
of land tenancy in Brazil had been defined.(Mueller, 1995, p. 67)

Mueller was primarily concerned with the impacts of the 1850 land law on the

Amazon and hence may be excused for not investigating further. The same cannot be

said of studies like that of Holloway (1980) whose main concern was with what

happened to the immigrants that came to Sao Paulo (between 1880-1930). While
 53

Holloway is a little more precise, (to recognize the existence of the 1895 and 1921

Sao Paulo land laws), he also concluded that the Sao Paulo land laws were also

failures. Interestingly enough, all these authors quote Dean (1971, 1976) as a

reference. This author, in turn, explains:

In Sao Paulo (during the Old Republic) nothing changed. As measured by the degree of
concentration, certainly, the Republic has not changed landholding at all (Dean, 1971,p. 624-
625).

In other words, the 1850 land law was ineffective in granting titles on land. The

concentration of land started in 1850 and did not change during the entire Old

Republic.

The concentration of landholdings in Sao Paulo was explored by Caio Prado

Junior (1979), Verena Stocke (1986) and Dean (1976a). Caio Prado argues that the

landowners had no incentive to divide their coffee lands. He identifies a conflict of

interests between immigrants and coffee producers. Despite evidence to the contrary

(the 1920 and 1930s agricultural censuses), Prado continued to argue that not only

was the latifundio the dominant type of landholding in general but also that it was

dominant in the coffee farms of Sao Paulo. Almost half a century later we found a

similar argument in Verena Stocke (1986). Stocke claimed that there was no general

pattern of decrease in the size of landholdings even after the 1929 depression

bankrupted some large planters. At most, what happened after 1929 was possibly a

slight decrease in land concentration in the Paraiba valley, but not in the new areas of

the West. The 1929 crisis impacted the old coffee zones because of the low
 54

productivity of its coffee trees. For Stocke, even after 1929, there was no ‘general’

trend on the ‘democratic’ impacts of the 1929 crisis towards a decrease in the size of

coffee landholdings. Dean (1976a), based on his research in Rio Claro, also denies

that there were changes in the size distribution of landholdings. Although his

analysis stopped in 1920, it is hardly possible that he would not have changed his

opinion as a result of the 1930 census. The fifth aspect of the ‘distorted consensus’ is

the alleged absence of change in the size of the landholdings prior to 1930, the

latifundio remaining dominant until at least 1930.

2.3 The Aspects of the ‘Distorted Consensus’ in the Labor Market

Michael Hall (1969) examined immigration policy promoted by Sao Paulo,

between 1871 and 1914 to conclude:

The story of the first generation of Italian immigrants to Sao Paulo is an almost
unrelieved tale of exploitation and bitter disappointment. (p. 116)

Hall argued that coffee producers used violence against the immigrants who

complained that their wages were delayed. However, even with all these

problems, immigrants continued coming to Sao Paulo:

The fall in wheat prices was accompanied by a price decline in the silk industry, which
was an important source of income in Venetia. Eventually both laborers and tenant-
farmers were led to see in mass departure for South America the only means of saving
themselves from total ruin they feel condemn. (p. 120-121)

Hall emphatically (and ideologically) denied that immigrants became

landowners. It is not only that they could not afford to, but he says (without any
 55

documentation) that the immigrants that came to Brazil did not want to buy land.

In the same line, we have the immigrants that were semi slaves in the Sao Carlos

story by Truzzi (1986), indentured servants in Rio Claro according to Dean or

‘exploited labor force’, according to Martins (1973). Hence, the sixth aspect of

our ‘distorted consensus’ is the denial by these authors that immigrants could

have become landowners by 1905.

The path-breaking study on immigration was provided by Holloway (1980).

The author looks at the Sao Paulo immigration between 1880 and 1930 to

demonstrate how the composition of landownership changed. Although he

showed that more and more foreigners became landowners, he did not explain

how they did so. While he recognized that some immigrants could afford to buy

land, he did not see the state as doing anything to make this possible. We did not

include Holloway in the group of the ‘distorted consensus’ because he provided a

consistent analysis of the immigration process that is by all means superior to the

ones we named ‘distorted’. But, he did miss addressing an important question:

Why and how did immigrants become landowners? For Holloway, the land and

labor laws during the Old Republic played no role in fostering upward mobility

of the ‘colono’.

In sum, the ‘distorted consensus’ has the following seven aspects: (1) the

1850 land law was created to regulate property rights; (2) the 1850 land law

failed to attract immigrants; (3) the small increase in immigration after 1850 is
 56

due to the deteriorating conditions in Europe; (4) it is only in 1880 in Sao Paulo

that the immigration initiative became a priority, with the imminent abolition of

slaves; (5) between 1905 and 1930 there was no change in the size of rural

properties and hence, coffee continued to be produced in latifundio type

properties until 1930; (6) immigrants could not afford to purchase a rural land in

1905, 1920 or 1930 and (7) the land laws during the Old Republic in Sao Paulo

did not induce any changes in the concentration of land nor stimulated an

increase in land titles.

It is clear that we disagree with the ‘distorted consensus’. In the following

chapters we explain what indeed happened in Sao Paulo. We are not concerned

with why the distorted consensus used these arguments. Instead, our purpose is to

provide a more neutral, objective and comprehensive account of what indeed

happened during this period and why.

2.4 The Laws According to the Lawyers and Legislators

Between 1850 and 1889, the 1850 land law was amended eleven times.

While these amendments are in the appendix, we chose to study the evolution

and the application of the law, and thus we had to investigate whether or not the

legislators introduced any amendments.31 Hence, for instance, Dean (1976a)

claimed that the land law failed because the measurement costs were too high for

31
In Sao Paulo, however, during the Old Republic, we did not find changes (amendments) to the 1895
and in the 1921 land laws. Between these two laws, we found immigration laws that were dependent
on the land laws.
 57

the small landowners. Yet, in one of the amendments, (Aviso 4/10/1858) we

found that the imperial government exempted ‘small’ landowners (squatters or

sesmeiros claiming ownership of rural plots up to 121 hectares) from the

measurement and registration costs. The interpretation of these amendments,

sometimes, was not obvious. For example, the 1854 statute defined a whole set

of procedures that granted legal power to enforce the 1850 land laws. The 108

articles divided in nine chapters, explaining, for example, the procedure for

measuring public land for the purposes of colonization, the role of the provincial

presidents in the measurement of private land, and numerous other practical

issues for making the law effective. In this case, for example we used Cardozo

(1954) to understand some aspects of the statute. Another aspect that we found in

the 1854 statute was the possibility of granting public land to subsidized

immigrants. The literature analyzed above concluded that the price of public land

was too high, possibly because the 1843 proposal was included in many

secondary sources. Yet, the 1850 land law and the 1854 statute were not included

and what they said about such matters was very different. Our understanding of

these laws benefited greatly from the interpretations provided by Osorio (1996)

and Linhares (1960).32 These legal studies were extremely useful, both because

of their rigor in interpreting the laws and because they provided a more neutral

approach to these issues.

32
Cirne Lima (1954) is an excellent source for the period before 1850, but not for the 1850 land law.
 58

We undertook field work in Rio de Janeiro and Sao Paulo to obtain these

laws and the political motivations behind them. The question that later became

our main objective was: if these land laws were so ineffective, why did

immigrants come to Sao Paulo, instead of going to Argentina for example? The

harder question to be answered was: How (through what process) did these

immigrants become landowners? Do we have any grounds to exclude the urban

immigrants from this process? In other words, can’t it be that the ‘colonos’ were

poor workers and the urban ones became coffee producers?

The material we use in the following chapters includes the Annals of the

Parliament (for the 1843 proposal). During the Empire, the annual reports, from

the Empire minister (until 1860) and then from Agriculture ministry (until 1889)

had one major item Land and Colonization (‘Terras e Colonizacao’) where the

authorities evaluated the whole immigration process, changed the yearly budget,

announced contracts with new colonization companies, granted extra funds for

the measurement of public land and so on. When necessary, we complemented

these reports with the annual reports released from the provincial presidents

(mainly from Sao Paulo, Minas and Rio). Whereas the Imperial government

produced detailed reports, the provincial ones were not very uniform in what they

provided. During the Republic, we used the laws from the state of Sao Paulo, and

the interpretation of these laws for Minas Gerais. Through the annual presidential

messages (annual reports from the governors), we were able to follow the
 59

application of the land and labor laws in Sao Paulo. In these documents, under

the item ‘Land Services’ (“Servico de terras”) we found the detailed description

on the construction of settlements to receive immigrants, for example. The

hardest part of this work was not to find the material but to explain the laws, why

they were enacted and what were the interests behind them.

2.5 Conclusions

There has been a significant amount of progress in the regional and thematic

studies. Mueller’s is the only contribution that connects the land policies

implemented during the coffee period with the country’s development problems,

although his focus was on the problem of deforestation in the Amazon. His path

breaking contribution, however, is unique. His and other works that explained the

violence and conflicts of titled land due to the disposition of the 1850 land law are

also interesting.

However, one should not generalize these analyses to conclude that the

perceived failure of the 1850 land law was due to the alleged ‘inaction’ by the state

of Sao Paulo in creating enforceable laws or that it resulted in continuing high

concentration of land ownership in Brazil. A related goal of this dissertation is to

emphasize that to understand the concentration of land in Brazil we have to study

each state on a separate basis. Unfortunately, we cannot generalize to say that what

was valid in Sao Paulo, during the Old Republic, was also valid for the second
 60

largest coffee producing state, Minas Gerais. We hope to show that the land

concentration in Sao Paulo decreased during the coffee period due to the

enforcement of the labor and land laws. In fact, we know very little about the other

states, and indeed, we are still unable to answer the question: What are the historical

(or non-historical) reasons that led to such concentration of land in Brazil? Besides

the frontier and national security zones, where it is possible to consider the negative

impact of the 1850 land law on the procedure to acquire land, the current literature

has little to add, mainly because there are few, if any, studies dealing with land laws

and their impacts on landholding patterns.

In reviewing the literature we found few studies that deal with both periods

(Empire and Republic) as well with the three major markets (land, labor and credit)

in a political economy framework. Though it would be probably easier to study one

theme in depth, we found it more interesting to study the impact of these legislations

on all three markets and the interrelationships among them. This broader approached

helped us to realize that the primary impacts of the land laws were to be found in the

labor market. Then, during the Republic, the labor laws had major effects on the land

market. Often dismissed by most of the literature, the Empire period is key to

understanding the foundations of the coffee economy in Brazil.

 61

CHAPTER 3: THE DETERMINANTS OF THE 1850 LAND LAW DURING

THE EMPIRE PERIOD IN BRAZIL

According to the authors discussed in chapter 2, the 1850 land law was

created to regulate property rights. Hence, if the law did not succeed in creating a

system of private property rights, it would be considered a failure. For some reason,

land seemed to have become a national priority that led the State Council, the most

powerful institution of the Empire, known as the ‘monarchy brain’, to formulate the

1843 proposal that in 1850 was incorporated into the 1850 Land and Colonization

Law.

This above view, however, is flawed. First, in a country where the

‘latifundia’ was dominant, there is little reason to see why the political elites would

profit from laws creating new property rights, since this would threaten their

monopoly rents. In other words, it is not rational for the political elites that were

represented in the government to lobby for a policy that would reduce their own

welfare. Second, if the law was a failure it would imply that the increase in

immigration that followed the 1850 land law must have been attributable to

depressed conditions in Europe. The problem with this argument is that there was in

fact fierce competition for immigrants among the various ‘new countries’ that

induced each to create incentives to attract the largest possible number of

immigrants. In other words, the ‘push’ factor given by depressed economic

 62

conditions in Europe was only a general determinant of migration, not an explanation

for why the immigrants came to Brazil and not Argentina.

The view expounded in this essay is that the gradual abolition of slavery and the

peaceful transition towards a free-labor economy became possible due to the

institutional devices introduced by the 1850 land law. Our story, based on the Annals

of the Parliament, departs from the traditional interpretation expounded in chapter 2,

and views the law as a classic example of a rational and forward looking policy to

attract immigrants to Brazil in order to avoid the shortage of labor when slavery

would be completely abolished.

To demonstrate that the 1850 land law was in fact a success, because its main

goal was to attract immigrants and not to regulate land rights, we focus on the

determinants of the 1850 land law. In the next section of this chapter (section 3.1) we

review the determinants in the land market, the political conditions, the problems the

country was facing in the labor market and the 1843 land and colonization proposal.

The 1850 land and colonization law is summarized in section 3.2 and the 1854

statute is explained in section 3.3. A summary of our conclusions is then presented in

section four.
 63

3.1 Determinants of the 1850 Land law

3.1.1 The Previous Conditions in The Land Market

While the history of land policies implemented by Portugal since the discovery

of Brazil until its independence has been exhaustively explored elsewhere33, some

aspects of those policies deserve attention here.

The basic institution for granting land, during the colonial period (1500-1821) in

Brazil, was the ‘sesmaria’. In brief, sesmarias were concessions by the Portuguese

crown to an individual willing to use Brazilian land for productive purposes. In some

cases, the Law of Sesmarias, required the payment of fees, and since 1753, the law

required the previous measurement of the land in order to obtain a title. There were

no restrictions on alienation of the land, the only requirement was that the land be

used for productive purposes. According to the law, the size of these grants varied

from 16.7 to 50.1 square miles. Each claimant was entitled to only one sesmaria. The

frequent changes in the land legislation (the law of sesmarias) and the absence of an

agency to monitor the grants created a situation where relatively few of the sesmarias

had valid titles. Those who lacked the amount required to obtain a title to the

sesmarias, or even those who got the concession but did not pay for the title could

squat on unclaimed crown land and generally do just about as well. Public land, in

theory, belonged to the Imperial government. However, the government did not

33
Refer to: Ruy Cirne Lima (1954), Pequena Historia Territorial do Brazil, Sesmarias e Terras
Devolutas.; Brasil Bandecchi, (1963) Origem do Latifundio no Brasil; Warren Dean (1971).
Latifundia and Land Policy in Nineteenth Century Brazil, The Hispanic American Historical Review ;
Ligia Osorio Silva. (1996) Terras Devolutas e Latifundios: Efeitos da Lei de 1850.
 64

where public land was located and its extension. Adverse possession34 was not

recognized under the Portuguese law, but because it was seldom punished it became

the most common procedure to acquire land in Brazil. During the 1843 debates,

squatting was informally recognized as a legitimate way of acquiring land, upon

satisfying the requirements of (1) productive use of the land and (2) claimants’ main

residence (‘morada habitual e cultura efetiva’). In fact, during the debates,

representatives from Sao Paulo and Minas Gerais explained that more than half of

their provinces were ‘posses’ confirming that adverse possession was the dominant

pattern of land acquisition.

The distribution of the sesmarias was a political matter as well as an

administrative function. When the Portuguese king, Joao VI, lived in Rio de Janeiro,

from 1808 to 1821, such grants were distributed to favorites of the court.35 By the

time the king returned to Portugal in 1821, the number of land grants had more than

tripled and the great majority of them were not up to code because they were neither

measured nor confirmed. The independence of Brazil from Portugal in 1822 brought

an abrupt suspension of the land grant regime.

For a whole generation, no legal substitute for the sesmaria could be devised. The

1823 Constituent Assembly was dissolved by the first emperor of Brazil, Pedro the

34
According to Baker, Miceli, Sirmans and Turnbull (2001, p. 360-361) adverse possession is a legal
doctrine through which trespassers or squatters can acquire a title on land by occupying it for a
statutorily set period of time. Squatters in Portuguese means ‘posseiro’ and adverse possession
(legally speaking) means ‘posses’.
35
To solve the financial difficulties that the king and his court were facing during their stay in Brazil,
the king started to grant noble titles and land to those willing to buy shares of the bank he founded, the
Bank of Brazil.
 65

1st, who then bestowed his own constitution on the country. Neither the Assembly’s

draft nor Pedro’s version provided for alienation of public lands. For the new regime,

this was a difficult and dangerous question. The authority of the Imperial

government was precarious. The legislative power was exercised by a Chamber of

Deputies dominated by a liberal opposition to the young and inexperienced crown.

During the reign of Pedro I (1822-1831) and the regency36 that followed, the liberals

in power granted political autonomy to the provinces that in turn led to numerous

regional revolts.

The 1822 independence from Portugal did not bring political stability to Brazil.

In fact, it fostered a series of rebellions against the monarchy centralization37 that

lasted until 1842. Indeed, political instability proved to be a major problem, and in

comparison, the absence of a land policy38 was not affecting the major political

players.

3.1.2 The Political Conditions

3.1.2.1 Relations with England

English domination over Brazil goes back to the 1703 Methuen treaty, which

forced Portugal to open its markets and give it a privileged position in Brazilian

36
In 1831, Pedro the 1st was forced to resign. He left his five year old son to be the second emperor of
Brazil. During this period, the country was governed by a group of politicians, in charge of the prince
upbringing, chosen by Pedro the 1st. This period, known as’regencia’, lasted until 1842, when Pedro
the 2nd was proclaimed emperor of Brazil.
37
The rebellions were against the monarchy centralization promoted by Pedro the 1st .
38
In our view, a land policy in that specific moment was not a priority because of the abundance of
land in Brazil in 1850.
 66

trade. In 1807, England had enacted the abolition of slavery and requested the same

from its ally and partner, Portugal. In the same year, Napoleon threatened to invade

Portugal, unless the country were to break off its commerce with England. Pressured

by both countries, Joao 6th, the Portuguese king decided to escape to Brazil with the

2,500 members of the royal court39. In 1808 the British navy arrived with the

Portuguese in Bahia. In exchange, Joao 6th signed the 1808 ‘opening of the ports’

where Brazilian ports would be favorably opened to England. In 1810, Joao 6th

signed two other treaties with England. One was a commercial treaty to last until

1826 that granted England preferential tariffs, lower than those on Portuguese goods

and allowed England to appoint special magistrates in all cases involving British

citizens in Brazil (extraterritorial rights). The second was an ‘allied treaty’ where

Portugal agreed to promote the gradual abolition of slavery. 40

In order to recognize the 1822 Brazilian independence, England obtained in 1827

an extension of the 1810 treaty until 1844. For the entire first half of the 19th century,

these treaties hampered the autonomy of Brazil in the economic sector and according

to Furtado (1964), the dominance of England in Brazil was almost absolute. Another

relevant political event was the resignation of Pedro I, in 1831, and the eventual rise

to power of the dominant colonial class composed of the heads of the export

agricultural sector.41 Between 1832 and 1841, Brazil was governed by a group of

39
Bethel (1976), p. 26-30.
40
Bethel (1976), p. 50.
41
Carvalho (1988) explains that the ‘colonial elite’ first originated on the sugar producers from the
Northeast of Brazil but after 1831 included the export coffee sector from Rio de Janeiro. According to
 67

politicians. Known as the “regency period”, the politicians were in charge of the five

year old heir until 1841 when he came of age to assume his position as the second

emperor of Brazil, Pedro 2nd.

The ‘liberal’ doctrine from Adam Smith was not applied in England itself but

was applied abroad. Pressured by West Indies interests that saw the persistence of

slavery in Brazil as the main reason for the decline in their share of the sugar market,

Britain imposed protectionist measures against Brazilian sugar and increased

pressure for the termination of the transatlantic slave commerce. The tension that

prevailed throughout the first half of the 19th century between the two countries

brought financial difficulties to Brazil. From 1810 to 1844, the customs privileges

granted England a general 15 per cent ad valorem customs tariff during a period of

stagnation in the value of foreign trade.42 Since Brazil was thereby unable to raise

revenues from import taxes, it decided to introduce in 1843 an 8% ad valorem tax on

exports.

3.1.2.2 - Revenues from Trade

The decrease in import revenues, between 1810 and 1844, were magnified by the

economic difficulties in the northeastern provinces. Bahia, Pernambuco and

Maranhao, were facing a steady decline in the international price of sugar, while

Carvalho (1988), the convergence of interests in 1831 did not continue until 1889. In other words, in
the 1840s we started to notice more and more divergence between the southeastern and the
northeastern provinces, especially regarding the continuation of slavery.
42
Furtado (1964), p. 103.
 68

cotton prices dropped even lower. In the political arena, the 1830s and 1840s were a

period of rebellions that were also threatening to the parliamentary monarchic order.

In the midst of these problems, coffee, produced in Rio de Janeiro and Sao Paulo,

began to emerge as a new source of wealth for Brazil. By the 1830s it was gaining

ground as the main export crop and showed steady progress.

Table 3.1 Leading Brazilian Export Products as a Percentage of Total

and Total Export Value
Periods\ % Share of Total Brazilian Exports Total
Products Exports in
Coffee Sugar Cotton Rubber Leather Total 1,000₤
1821-1830 18.4% 30.1% 20.6% 0.1% 13.6% 82.8% 39,117
1831-1840 43.8% 24.0% 10.8% 0.3% 7.9% 86.8% 51,898
1841-1850 41.4% 26.7% 7.5% 0.4% 8.5% 84.5% 56,051
1851-1860 48.8% 21.2% 6.2% 2.3% 7.2% 85.7% 104,573
1861-1870 45.5% 12.3% 18.3% 3.1% 6.0% 85.2% 150,540
1871-1880 56.6% 11.8% 9.5% 5.5% 5.6% 89.0% 202,610
1881-1889 61.5% 9.9% 4.2% 8.0% 3.2% 86.8% 283,720
Source: IBGE, Separata do Anuario Estatistico do Brazil, 1939/1940, p. 90.

In fact, coffee exports contributed to improve the financial situation of the

central government. The change in the export composition, between 1830 and 1840

implied that the balance of power was starting to change so as to include more

representatives of the coffee provinces, most of whom were landowners.

 69

Table 3.2: Coffee Production and Population in Sao Paulo and Rio de
Janeiro: 1836
Zones of Sao Paulo Province 1836 Coffee
and Rio de Janeiro a Production
1836 Population
In arrobas % total Total Brazilians % zone Slaves % zone
Capital (1st) - - 27,364 21,989 80% 5,375 20%
Paraiba valley (2nd) 479,496 17% 105,878 77,076 73% 28,802 27%
Sorocaba (3rd) 18,790 1% 25,707 17,747 69% 7,960 31%
Central (4th) 56,369 2% 77,120 53,241 69% 23,879 31%
Mogiana(5th) 821 0% 20,341 17,604 87% 2,737 13%
Paulista (6th) 1,264 0% 2,764 1,827 66% 937 34%
Araraquarense (7th) - - - - - - -
Noroeste (8th) - - - - - - -
Alta Sorocabana (9th) - - - - - - -
Baixa Sorocabana (10th) - - 6,462 5,313 82% 1,149 18%
Southern Coast (11th) - - 18,677 11,562 62% 7,115 38%
Total Sao Paulo(1st-11thzone) 556,739 19% 284,312 206,359 73% 77,953 27%
Paraiba valley (2nd) 479,496 17% 105,878 77,076 73% 28,802 27%
Western Plateau (4th-9th ) 58,454 2% 100,225 72,672 73% 27,553 27%
Rio de Janeiro 2,321,710 81% 591,000 341,000 58% 250,000 42%
Total Sao Paulo and Rio 2,878,449 100% 875,312 547,359 63% 327,953 37%
Note: (a): For more information on the Sao Paulo zones, please refer to Appendix 1. Sources:
Rio Coffee production: 1855 Annual Report from the Provincial President of Sao Paulo,
Anexo A, page 80, Mapa s.n. For Sao Paulo coffee production: Camargo, Vol. 2, p. 62. For
population, Camargo, Vol. 2, p.2-12. For Rio de Janeiro population: IBGE, 1987, vol. 3, p.
29-30, Estatisticas Historicas.

According to table 3.2, Sao Paulo coffee production was concentrated in 1836 in

the Paraiba Valley (2nd zone), a hilly region linking Sao Paulo to Rio. Though more

detail about the zones can be found in Appendix 1, it is important to stress that

besides the Paraiba Valley, Sao Paulo had six distinct (but geographically related)

zones that we call here the ‘Western Plateau’, or the hinterlands. While the Valley

had its golden years during the Empire the western plateau started to emerge in 1854
 70

and flourished as the leading coffee zone in 1905. In 1836, coffee produced in Rio de

Janeiro accounted for 31% of total Brazilian exports. Production there relied entirely

on slave labor.

In 1844, Brazil refused to grant England an extension of the commercial treaty.

In turn, the country increased its import tariffs, which then, fostered a surge of

industrialization. Thereafter, the monarchy regained political and economic control.

In part, the return to the political stability was due to coffee exports that provided the

financial and human resources for the consolidation of the nation state.

3.1.2.3 The Politics of the Coffee Producers

During the colonial period (1500-1821), Brazil experienced both sugar and gold

cycles. While production remained in the colony, Portugal enjoyed the monopoly

over trade and marketing. Therefore, the linkages produced during the former

‘cycles’ were very weak, mainly because of Brazil’s inferior political condition.

Quite possibly, therefore, the coffee story would not have been very different from

those of gold and sugar, had it occurred during the colonial period.

As an independent country, coffee proved to be different from the colonial gold

and sugar, in the sense that it fostered a whole set of linkages in the labor, land and

credit markets. The coffee producers from the imperial period, were people with

previous business experience, accumulated from their activities as merchants in the

former gold cycle.

 71

In general, planters were involved in all the phases of the productive process:

acquisition of land, slave trading, internal transportation, marketing at the ports,

official contacts and involvement in financial and economic policies of the country.

The proximity to the capital of the country was of great advantage to the rulers of the

coffee economy. As explained by Furtado (1964):

But what particularly singles out the coffee men is not merely the fact that they acquired
control of the government; it is rather the fact that they utilized that control to attain
objectives perfectly well defined within the context of a specific policy. It was this clear
concept of their own interests that differentiated them from other dominating groups
previously existing(Furtado, 1964, p. 126)

Among the coffee producers, the ‘Saquaremas’43 emerged in 1840s as an

influential voice mainly expressed through the Conservative party. The most

prominent figures from this party, like Paulino Jose Soares de Souza, Visconde do

Uruguai, Joaquim Jose Rodrigues Torres, Visconde de Itaborai, Pedro Araujo Lima

(Marques de Olinda), Eusebio de Queiroz and others, were part of the ‘saquarema’

group and were the largest coffee producers in the Rio region. Uricochea (1980) and

others agreed that the continuation of slavery was the political basis of (their) support

for the Empire.

By contrast, land never became a political matter during the Empire and hence it

is puzzling to observe authors arguing, all of a sudden, that land regulations became

43
This group was from Saquarema, a leading coffee region in Rio, or had family ties with the leading
coffee producers, from that area. Mattos (1987) explains that, during the Empire period, ‘saquarema’
meant ‘protected’, ‘favorite’ once this group won all the elections in Saquerema, because they
‘protected’ the electors against the any political change in the local elections. We included the Paraiba
Valley coffee producers as part of the ‘saquarema’ elite. There are many reasons for this choice, but it
is enough to say that they were extremely similar to the Rio coffee producers, especially in the
provision of credit (through factors), labor (slaves) and land (mainly latifundio).
 72

a national issue deserving a new law. The question that remains without an answer

is: why would the political elites lobby for a law to reduce their monopoly rents on

land?

3.1.3 The Restrictions in the Labor Market: The Labor Laws

The absence of a land policy contrasts with the regulations in the labor

market. According to Plateau (2000):

When a natural resource, say land, is abundant, there is by definition no competition for it.
The critical issue is access to labor, not to land. In such circumstances, private property
rights in land are not useful nor economically justifiable. (p. 75).

Slavery was a solid institution in Brazil, and the formal market was well

developed. The elastic labor supply was critical for the production of crops and its

sudden termination might threaten the future of the export economy. The market for

slaves was a monopoly. Dominated by the Portuguese, the largest traders were

located in Bahia. British insurance companies provided the necessary hedge against

any random event that might occur on the trips. Slaves were a source of labor and an

investment. In fact, as explained by Engerman and Fogel (1989), the plantations

were economically profitable due to the presence of slaves. As an investment in a

semi-barter economy, slaves assumed the store of value, medium of exchange and

unit of account role of money. Until 1850, carioca44 coffee farmers, received a

certain number of slaves in exchange for their coffee, and used them as collateral for

loans. The market for slaves was heavily regulated, with barriers to entry and

44
Cariocas are the people from Rio de Janeiro, and paulistas are the ones from Sao Paulo.
 73

profitable. The labor market was functional for the export economy and bore close

resemblance to that of the southern part of the United States (Engerman & Fogel,

1989; Conrad & Meyer 1964).

In all the treaties between England and Brazil between 1827 and 1845, there

was a clause requesting the combat and then the termination of international slave

trade. In part, because slavery was a stable source of political support, these clauses

were not enforced by Brazil. In the first half of the 19th century, the most important

treaties between the two countries with clauses regarding the abolition of slavery are:

the 1808 ‘opening of the ports’; the 1827 English recognition of the independence of

Brazil; the 1831 gradual slave combat: for fifteen years slave commerce would be

considered illegal but it would only be after 1845 that slave merchants would be

deported from Brazil.45

We observe in the following table, that the number of slaves imported between

1836 and 1850 was extremely high, especially considering that an 1831 bill to

prohibit the commerce was in place making the trade illegal.

As previously explained, the 1831 treaty with England lasted for 15 years. One

year prior to the termination of the treaty, England enacted the 1845 Aberdeen Act46

that considered it legal to seize and confiscate any ships transporting slaves and the

perpetrators would be extradited and sentenced to prison in England, under its laws.

At first, Brazil did not accept the Act claiming that it was a threat against its

45
Bethel (1976) and Furtado (1964).
46
Bethel (1976), p. 254-258.
 74

sovereignty. Yet, England started to seize most Brazilian ships to the point that the

British navy blocked the Rio de Janeiro harbor to search all the ships leaving Brazil.

The Aberdeen Act led Brazil with no choice but to approve a law, in 1850, that

would effectively end the international slave commerce: the Eusebio de Queiroz

Law.

Table 3.3: Slave Imports to Brazil: 1822-1855

Year Number Year Number Year Number
1822-27 150,000 1837 35,209 1847 56,172
1828 48,000 1838 40,256 1848 60,000
1829 67,000 1839 42,182 1849 54,061
1830 60,000 1840 20,796 1850 22,856
1831 138 1841 13,804 1851 3,287
1832 116 1842 17,435 1852 800
1833 1,233 1843 19,905 1853-54 0
1834 749 1844 22,849 1855 90
1835 745 1845 19,453 Total 812,426
1836 4,966 1846 50,324 (1822-55)
Source: Foreign Office memorandum, August 04, 1864. Adapted
from numbers quoted in Leslie Bethel, The Abolition of the
Brazilian Slave Trade, p. 368.

The 1850 law to terminate the transatlantic slave commerce, known as

“Eusebio de Queiroz” law47, meant that the labor supply for the plantations could

no longer come from abroad. Though the contents of the 1850 Eusebio de

Queiroz law were similar to the 1831 bill, the difference was that the law became

a credible one. With the support of the British navy, the slave merchants would

be arrested and deported from Brazil and the slaves would be freed. It took until

47
Bethel (1976), p. 309-361.
 75

1855 for the transatlantic commerce to end. After that all that remained in Brazil

was the internal commerce of slaves.

As an institution, slavery was officially extinguished in 1888 and between

1850 and 1888 the internal traffic from the northern to the southern provinces

supplied part of the slaves. However, as explained by Merrick & Graham (1980),

the high mortality rate of Brazilian slaves meant that another source of labor

supply had to be introduced to substitute for slaves.

3.1.4 The Origins of the 1850 Land Law

The 1843 land and colonization project provided the basis for the enactment

of the 1850 land law. The project was created by Bernardo Pereira de

Vasconcellos48, a member of the state council, known as the ‘monarchy’s brain’.

The most important laws came from this office: the land law; the law freeing

people born from slave mothers, and the Eusebio de Queiroz law. A project

coming from the state council meant that the issue was or would become a

national priority. While the Eusebio de Queiroz law was proposed and approved

in less than one month, the 1850 Land Law was first presented in 1843. The law

remained in the Senate until 1850, when it was finally approved. We provide

here the main aspects of the 1843 and the 1850 debates that in turn, led to the

1850 land law.

48
Vasconcellos was the leader of the “Saquerema group”, himself a coffee producer and a lawyer
from Coimbra.
 76

The project had the key elements that would prevail in the 1850 land law and

it linked the land and labor problems in one single proposal: “the main goal of

this project is to promote the immigration of workers”.49

The market for immigrants had been increasing since 1700, when England

started sending ‘indenture servants’ to their North American colonies. While the

rules were not as well defined as the market for slaves, migrants chose countries

where they could become landowners. To grant titles to immigrants, the

government had to know the location of its lands. This is why the ‘land law’ was

a way of separating public from private land.

The state council recognized that the project was inspired by the ideas of E.G.

Wakefield, on the colonization of East Australia, where there was plenty of land

and a shortage of labor. The original idea was to increase the price of public land

such that immigrants had to work for a while before acquiring a piece of land.

The proceeds from the sale of land would then be used to bring more immigrants

that, in turn, would work in the fields and then acquire more land. The Wakefield

system was known as ‘self-supporting system’ since the government would not

need to use its resources to attract immigrants, rather the financing would come

from the sale of land.

A revised version of the project was then presented in June 1843 in the house

of representatives by the minister of the Navy, Rodrigues Torres. While the 1843

49
Parecer da Secao do Conselho de Estado, Exposicao e Projeto de Colonizacao e Sesmarias
Aprovados na Sessao de 8 de Agosto de 1842, Arquivo Nacional, Codice 49, v. I.
 77

proposal was inspired by Wakefield, the 1850 law recognized the failure of the

East Australian experience that had been inspired by Wakefieldian theory. As a

result, the 1850 law eliminated the ‘self supporting mechanism’ by granting

immigrants the possibility of acquiring land for a very low price or even for free.

The 1843 project had 29 articles and we summarize here the three main

parts.50 The first part dealt with the revalidation of illegal lands, both land grants

and posses. To receive a title, owners were required to have a surveyor come to

their land to measure it. The maximum size for a posse was 2.18 hectares and 9

hectares for pasture lands. The project established that even unused land acquired

through adverse possession or land grants could receive a title.51 The second part

refers to the role of the government. The project created a land tax equal to $2.08

per 4.36 hectares. Also, the landowners would have to pay the government a fee

equal to $18.72 per 4.36 hectares to start the revalidation process.52 The imperial

government would sell public lands in plots of 2 hectares and no further

concessions of land would be granted. The project prohibited adverse possession

and the ones who did not follow the law could face jail time. The third block of

50
For the proposal of the 1843 land law refer to: Anais do Parlamento Brasileiro, Camara dos
Senhores Deputados, Vol 1, 1843, Secao de 10 de Junho de 1843, p. 592,593.
51
It is important to note that in the 1843 project unused land would receive a title, as long as the
owners paid the land tax. Because the tax was dropped from the 1850 law, landowners would receive
a title only on the fraction of the land that was being used for productive purposes.
52
In comparative terms, the price of one slave, in 1843 in Vassouras, was equal to $312.00 (source:
Stein, 1957, p.229). The land tax represented 0.15% of the slave price and 1.38% of the revalidation
fee. The price of one hectare of land in Rio Claro, in 1857 was equal to $33.47 per hectare. Thus, the
land tax represented 1.43% of the total land price and revalidation fee 13% of the land price (Source:
Relatorio do Presidente da Provincia de Sao Paulo de 1857, Diogo Pereira de Vasconcellos, Sao
Paulo: Typografia Dous de Dezembro, S1-5 to S1-14).
 78

the project dealt with immigration and colonization. The original and optimistic

idea was that proceeds from the public land sale would be used to finance

immigration to Brazil. The immigrants would not be allowed to buy land for

three years after arriving in Brazil.53 However, given the constraints with the

termination of slave imports and the immediate need to introduce immigrants, the

1850 law allowed immigrants to receive free land.

It took two months of discussion and 114 speeches made by 28 of the 101

representatives for the project to be approved in the house of representatives.54

The defense of the project was mainly done by Rodrigues Torres, Bernardo de

Souza Vasconcellos, Eusebio de Queiroz, Paulino Jose Soares de Souza, all of

them members of the ‘saquarema group’, coffee producers and important public

figures; by the representative from Ceara, Manuel Jose de Alburquerque and by

Francisco Diogo Pereira de Vasconcelos, Bernardo’s brother. The most violent

opposition came from the Pernambuco representatives, Urbano Sabino and

Nunes Machado and from Bahia, Manuel Galvao.

In general, there was little disagreement that Brazil needed to solve the labor

shortage before the problem emerged. Both Vasconcellos and Rodrigues Torres
53
The idea, inspired in Wakefield was to have the immigrant for a while as a rural worker before he
becomes a landowner. This restriction was for the immigrants whose transportation was paid by the
government. Mueller (1995) described a very similar procedure for granting land in Virginia and other
American colonies during the 18th century, known as headright system.
54
Approved in September of 1843, the project remained in the Senate until 1850, when it was finally
approved by the Senate and then went again to the Lower House. Here we address only the main
points of the 1843 debate in the house of the representatives. The complete debate can be found in:
Anais do Parlamento Brasileiro, Camara do Senhores Deputados, Tomo 1 e 2 (secoes de 10 de Junho
a 27 de Julho de 1843); Anais do Parlamento Brasileiro, Camara do Senhores Deputados, tomo 1,
(secoes de 20 de agosto a 3 de setembro de 1850).
 79

explained that it was a matter of time for slavery to be completely abolished and

the shortage of labor would cause problems in the rural areas, similar to the ones

faced by Haiti and Argentina:

Mr. President, in this project we have the basis for a perfect colonization system. In its
dispositions I find that public land cannot be freely acquired, neither through adverse possessions
nor through land grants; it is also explained that the sale of land is the only way to transfer
landownership and lastly that the proceeds from land sales will be used to import foreign labor, as
a gradual substitute for African slaves. We should not fool ourselves: slavery will come to an end
in ten years, at the most. If we do not act in advance, we will be facing the same problems as
Haiti. (Bernardo Pereira de Vasconcellos, Anais da Camara dos Deputados, Tomo II,July 24,
1843, p. 389)

The north opposed the immediate termination of slavery and the southern

provinces demanded a long-term solution for the shortage of labor problem. In

the short run, the internal commerce of slaves, from the north to the south, was

an intermediary solution for both regions. In the long run, another permanent

source of labor would have to be introduced to satisfy the labor demand from the

coffee economy. We see the 1850 land law as a compromise solution between

the demands from the north and the south. A radical abolition of slavery would

threaten the political stability of the regime, given the fierce opposition of the

north. The 1850 land law would introduce a transitional period where slave and

free labor would co-exist. The solution was not a perfect one because immigrants

would rather go to a country without slaves and thus the presence of slavery

would decrease the number of immigrants coming to Brazil. However, given the

external constraints imposed by England on slave commerce, the 1850 land law

was a consistent solution for both northern and southern regions.

 80

The three most radical issues in the project, the maximum size for land grants

and posses, the revalidation fees and the land tax received fierce opposition

during the debates. According to Mr. Luiz Carlos da Fonseca from Minas Gerais,

all the land in his region was acquired through ‘posses’ but most of them were

much larger than the maximum size proposed by the law.55 The revalidation

fee56 was considered too high for some distant areas of Brazil. According to the

representatives, there was no incentive for landowners to measure their plots

because land had no value and therefore they would not comply with the

requirement. The land tax received opposition from almost all the members,

except for Vasconcellos and Rodrigues Torres. Mr. Galvao from Bahia argued

that the land tax could induce a civil war against the Empire that would threaten

the constitutional order. Galvao also said that the majority of the landowners

from his province (Bahia) could not afford the land tax.57

The 1843 project was approved and sent to the Senate in the October of the

same year. The two major issues of opposition, maximum size for posses and

sesmarias and land taxes were dropped and the revalidation fee was decreased. In

1844, the conservative cabinet fell and the bill remained locked up in the senate

through successive Liberal governments until the return of the conservatives in

September 1849. In the interval, the economic and political situation of the

55
Anais da Camara dos Deputados, Secao de 24 de Julho de 1843, Tomo II, p. 394.
56
The fee was equal to $18.72 per 4.36 hectares.
57
Anais da Camara dos Deputados, Secao de 27 de Julho de 1843, Tomo II, p. 424, 442.
 81

country had changed. The British government was relentlessly pressing the

Brazilians to abolish the slave traffic. Meanwhile, in Australia, the Wakefieldian

experiment had gone awry whereas the United States was emerging as economic

success, attractive to the landless European immigrants. The 1850 land law is

therefore a combination of the experiences from both Australia and America, as

proposed by the Senator Miguel Calmon from Bahia. 58

The 1843 project remained in the Senate until 1850, when it was finally

approved and, like any other project, went to the lower house. The senators

introduced the possibility of granting public land for free for immigrants willing

to work in agriculture. From the Senate the project went to the lower house,

where it was approved after six rounds of debates. In the lower house, there was

no single representative who believed that the law would improve or even create

land legislation. The overall impression was that the land regulations were not

going to be followed, mainly because land was not a constraint and hence, any

positive amount spent on registration would involve costs greater than the

benefits:

This is a political project to solve the labor problems from the Rio and other southern
provinces. It is clear that the population of my province will not follow the procedures to
receive a title on their lands, mainly because land has no value and the titling process
requires a huge sum of money, for something that has no value (Sr. Franco de Sa,
representative from Maranhao, Anais da Camara dos Deputados, Secao de 2 de setembro de
1850,vol. 3, p. 774)

58
Mr. Calmon seemed to know in detail both experiences (Australia and United States), according to
his statements in the Anais da Camara dos Deputados, 1850, tomo 3, p. 767-775.
 82

Some aspects became clear from the debates. First, the representatives agreed on

immigration as a way to promote a peaceful transition towards a free labor economy.

The costs associated with such a measure were the main source of opposition. The

assumption was that all regions equally needed immigrants and thus would be

willing to socialize the costs to attract immigrants to come to Brazil. In fact, it was

the coffee regions of Rio de Janeiro and, to a lesser extent, those in the Paraiba

valley of Sao Paulo that needed immigrants whereas in the north and northeast, the

need for immigrants was not crucial since the decline of the sugar economy left the

region with excess slaves. According to Urbano, a representative from Para, the

project was benefiting the coffee producers at the expense of all the other regions.59

It is clear that the “Saquarema group”, a wealthy and politically strong coffee region

in Rio de Janeiro strongly supported the law, and its main representatives were

Rodrigues Torres, Vasconcellos and Rio Branco. The second aspect is that the

project was proposing a compromise solution between the regions to preserve the

unification of the country and avoid further regional rebellions. To preserve slavery

the northern representatives agreed on ‘socializing’ the costs of immigrants and, in

exchange for their support, the southern ones agreed on postponing any further

discussion of the complete abolition of slavery.

In brief, the main goal of the project was to create the institutional conditions to

attract immigrants. The first condition was the creation of an annual budget to be

59
Anais da Camara dos Deputados, 1850, tomo 3, p. 432.
 83

used for ‘colonization’ purposes. The second condition was, to grant titles for

immigrants, the government had to know the location of public lands. To avoid

confrontation with private owners, the land law did not expropriate any landowner;

rather it requested private owners to start the revalidation process. Public land was

then defined by exclusion: whatever was not in the private domain was considered

public land.

3.2 The 1850 Land Law

The 1850 Land Law was approved 14 days after the Eusebio de Queiroz law

prohibiting commerce in slaves was enacted. The 23 articles of the 1850 land law

can be summarized in four parts.

a) As regards public lands;60

– Public land could only be acquired through purchase;

– Those that occupied public land, from them on, would be penalized;

– Special reserves would be created;

– The government was creating the General Bureau of Public land (Reparticao

Geral das terras Publicas), to coordinate the measuring, division and description

of public land. This office was in charge of colonization and entitled to an annual

budget to finance its activities.

b) As regards the legitimization of irregular property:

60
The law defines public lands as: Public lands are: those which do not have a private owner and
receive the land as sesmarias; lands not used by squatters (even if it is not up to code).
 84

- The sesmarias which had not followed all conditions (cultivation, demarcation

and confirmation) would be revalidated;

- The posses and sesmarias should be measured and titled within a fixed period of

time. Those who fail to comply with the law would not receive titles to their

property and thus could not mortgage or sell the property. In this case, the

‘owner’ would have only the right to use the land and the unused portion was

considered public land;61

- The posses to be legitimized were limited to an area equal to that which they

cultivated plus four times that area, if available and not exceeding half a square

league (1,089 hectares);

- There was no limit to the number of posses;

- Rules were set for the resolution of eventual disputes from the regularization

(posses might be in a sesmaria);

c) As regards the Empire’s revenues and fiscal matters:

– The government was authorized to sell plots of public land with an area never

less than 121 hectares (250,000 square bracas). The maximum price for 121

61
There are 2 dispositions in the law that contradict each other. According to Art.4 the sesmarias and
posses that did not have a title could acquire one by paying the fees and measuring the productive part
of their lands. According to article 8, the sesmeiros and posseiros who did not register their properties,
would not receive a title but also would not be evicted from their land. Sesmeiros and posseiros were
entitled to use rights but could not mortgage their lands. During the Republic, many lawyers
interpreted that titling process of private land was optional since even without a title, owners would
not lose their lands. The main implication was automatic validation of the property, without
measurement requirements in the 1895 land law in Sao Paulo.
 85

hectares (or 299 acres) was $271 ($2.24 per hectare or $0.97 per acre).62 The

minimum price for the same size plot was equal to $136 ($1.12 per hectare or

$0.45 per acre). Public land was sold in auctions and the sale price was to include

the measurement costs.

d) As regards colonization:

- The price of public land should be set taking into account the interest of

colonization. The government is entitled to grant land for colonization purposes;

- The government is authorized to bring, at the expense of the Treasury, a certain

number of immigrants to be employed in rural areas of Brazil;

- If the proceeds from public land sale and land registration were not enough to

cover immigrants’ travel costs, the government was entitled to use the resources

from the Treasury to such an end;

- The remaining share of the proceeds would be used to measure public land;

3.3 The 1854 Statute

The 1854 statute set the main dispositions to regulate the 1850 land law. Among

other issues, the statute created offices in charge of the measurement and titling

process. It also defined the role of the provincial presidents and judges in the whole

62
In the United States until 1854, Federal government sold public land for $1.25 per acre. After the
Graduation Act (1854-60) land prices decreased to 12.5 cents an acre. In 1862, the American
government promoted the Homestead Act where every person (American or immigrant) that had
never fought against the US could become the owner of 160 acres of land by paying $10 for titling
purposes. Source: Lebergott, Stanley (1985). “The demand for Land in the United States (1820-
1860).” The Journal of Economic History, XLV (2), p. 181-212.
 86

process. The procedures for measuring public lands were different from the ones set

for private land. The provinces had to inform the General Bureau of Public Land

(“Reparticao Geral de Terras Publicas”), the regions where public land was

available. These regions would then be divided into districts and each one would

contain a branch of the general office in charge of measuring and forming plots of

121 hectares.

The measurement of private land was under the provincial president’s

jurisdiction. The president would request the judges, municipal judges, police

officers, district attorneys and ’peace judges’ (juiz de paz) to inform him of the

existence of ‘posses’ or land grants that were subject to validation. With that

information, the presidents would nominate a ‘comissario judge63’ to each of the

districts where illegal properties existed. The whole process would start, however,

only if the private owner requested the ‘comissario’ judge to measure his land. The

deadlines for measuring private lands were set by each provincial president, and they

could always extend or postpone the deadline. After measuring the private plots, the

surveyor would send a copy to the public land office and the original to the

63
It should be noted that the comissario judge was not a figure that came from the magistrate. Any
Brazilian citizen could be nominated a ‘comissario judge’. Even in the literature produced by the
magistrates and lawyers, there is plenty of controversy on why the Imperial government created a
figure (the comissario judge) specifically for the purposes of regulating private properties. In our
view, the comissario judge represented the interests of the major landowners in each region. In turn,
the private land titling process relied heavely on the decisions made by the comissario judge and the
provincial president.
 87

provincial president. Upon payment of the required fees,64 the title was then signed

by the provincial president. Whereas the central government was in charge of selling

and measuring public land, the provincial presidents had full autonomy towards the

measurement and titling of private land.

The ‘parish priest’s registration’ was another device created by the 1854

regulation with the intention of creating a ‘map’ with the location of the private lands

in the different provinces. To such an end, the regulation established that the priests

had to announce during mass that claimants were requested to ‘register’ their lands

with their parish. Each parish then had to create books of registrars, where the

owners would then write a declaration containing the landowners’ name, the district

where the land was located, his status (posseiro, sesmeiro), the plot size (if known)

and the boundaries (if known). The declarations were written by the owners in

duplicate. According to article 102, the priests had to accept any declarations. After

the deadline, set by each provincial president, the registration books were sent to the

director of public land in charge of each province such that he could create a general

registration of private lands. The main aspect is that, according to article 94, the

parish priests’ registration did not entitle the owner to receive a title, to transfer or

mortgage the property. The proof of landownership was the land title, obtained upon

64
The measurement costs for private land ranged from $0.02/acre (0.06/hectare) to $0.05 acre
($0.11/hectare) and the payment of a flat fee ($5.04) for administrative purposes. Small claimants
(with an area less than 121 hectares) were exempt from the payment of these fees on the measurement
of their lands.
 88

fulfilling the requirements of measurement, productive use of the land and payment

of the fees.

Only two provinces, out of twenty, completed the parish priest registration: Santa

Catarina and Sao Paulo. Only in 1895, when Brazil was a Republic, did Sao Paulo

and only Sao Paulo create a land law in which claimants were entitled to use the

‘parish priest registration’as a proof ownership/residence.

3.4 Conclusions

In this chapter our main goal was to investigate the determinants that led to

enactment of the 1850 land law. During the Imperial period, land was not a

constraint and until 1822, the formal land policy, based on the sesmaria system, was

highly ineffective in creating a land market. In fact, adverse possession was the

dominant means whereby land was acquired and ‘latifundios’ were created. The

suspension of the formal land policy in 1822 did not change the previous situation,

given the dominance of adverse possession even prior to the 1822 suspension of the

sesmarias.

The export economy was constrained by conditions in the labor market. The

profitability of the latifundios depended on the continuous supply of labor. The 1845

Aberdeen Act and the 1850 Eusebio de Queiroz law led to the interruption of

commerce in slaves. The 1850 land and colonization law proposed the introduction

of immigrants, during a transitional phase, where slaves and free labor would co-
 89

exist. The law was enacted to solve the bottleneck in the labor market created by the

termination of international slave commerce. It seems that the 1850 land law was not

trying to solve any problems in the land market because the critical issues to be

solved were in the labor market. According to Carvalho (1988, p. 318) the manpower

was the theme that appeared more frequently in the yearly speeches delivered by the

Emperor (34 speeches in 56 mentioned the labor problem).

In brief, the representatives approved the 1850 Land and Colonization Law as

a way of creating the institutional conditions to attract immigrants. There were two

main reasons for the creation of a land law to regulate the labor market. First, the

government had to know the location of their lands in order to start the measurement

process that would provide immigrants with a titled plot of land. Second, before

1850 the country had no legal and regular provisions in the annual budgets to be used

towards colonization. The land law created the Bureau of Public Land, whose main

goal was to deal with colonization and public land. An annual budget was allocated

for this purpose. In brief, in the scenario expounded in this chapter, the 1850 land

and colonization law was intended to prevent a shortage of labor in rural areas with

the inflow of immigrants. Indeed, as demonstrated in the next essay, the law was

extremely successful in achieving its major goal – attracting immigrants. The 1843

proposal came from the State council, and hence, the theme was a national priority.

The termination of transatlantic slave commerce and the future of the export

economy were national priorities, not land.

 90

Very few private claimants received a title on their lands. In our view, this is

not a reason for considering the law a failure because it did not intend to solve the

problems in the land market. In contrast, the law succeeded in paving the way for a

successful policy carried out by Sao Paulo in 1880s to consolidate the transition to a

free economy, given the requirements of the western planters and the institutional

conditions introduced by the 1850 land law. Even if the law was trying to foster land

rights, this was a secondary concern. Engerman (1973) suggested that when one

factor of production – land – is abundant and the other has a definite set of rights,

that he calls ‘property rights on men’, the system does not need another set of rights

(on land, for example). It is only when the rights on men are abolished that we may

observe a gradual change from the rights on men to the rights on land.
 91

CHAPTER 4: IMPACTS OF THE 1850 LAND LAW ON THE LAND LAW

ON THE LABOR, LABOR AND CREDIT MARKETS

Brazil was the last country in the Western world to abolish slavery in 1888.

The gradual abolition of slavery was successful not because of humanitarian reasons,

or even because free labor was more efficient than slave labor. In our view, the

transition towards an economy based on free labor was a peaceful process because

the Empire had devised a set of institutional changes, summarized in the 1850 land

and colonization law, that created the financial incentives required to attract

immigrants. In fact, these incentives were required to allow Brazil to compete with

the other new countries in the market for immigrants. Given the incentives, the four

agents in charge of recruiting immigrants – coffee producers, private colonization

companies, the official settlements built by the Empire and the central government -

cooperated to accomplish the common goal of attracting the largest number of

immigrants even during a time in which slavery continued to exist. It is not until

1870s, with further momentum toward the complete abolition of slavery that the

provincial presidents became the fifth agent in charge of attracting immigrants to

Brazil.

The inflow of immigrants, between 1850 and 1889 was especially important

for the development of the Western plateau in Sao Paulo. Until 1850, coffee was

produced in Rio de Janeiro and in hilly regions of the Paraiba Valley. After 1850, we
 92

observe a gradual but steady increase in coffee production in the Western plateau of

Sao Paulo. The interesting aspect is to observe that as early as 1855, coffee planters

from this region started to use immigrants instead of slaves in their farms. Due to the

1850 land law, planters from the western plateau of Sao Paulo started to benefit from

the law to promote the inflow of immigrants. After the 1870s, the Paulista initiative

towards immigration aimed at introducing immigrants as the main source of labor,

instead of slaves. To reach such a goal, these planters created their own immigration

agency and built the required infrastructure to attract immigrants. Although its

importance is often belittled in the literature, we hope to show in this essay that the

Empire was a critical period for the development of the major institutional conditions

that enabled coffee to boom during the Republic.

This essay has two related goals. The first one is to demonstrate that the 1850

land law successfully created a set of incentives to entice immigrants to come to

Brazil. We did not find any document (official or not) asking for an improvement in

the private property rights system. The second goal is to identify linkage effects of

the 1850 land law on the labor, land and credit market. In particular, we focus on the

Western Plateau of Sao Paulo where these linkages were particularly stronger. In the

labor market, the law created the institutions and incentives to coordinate the inflow

of immigrants. In the land market, we provide an explanation as to why more

immigrants than Brazilians received titles to land. In the credit market, the 1864 and

1885 mortgage laws failed to identify land as a form of collateral. Credit was not a
 93

constraint for the development of the Paulista Western Plateau because of the close-

knit relationships between farmers and factors. The commercial banking system in

Sao Paulo emerged from these relationships to ensure the provision of credit for the

coffee economy and to match the increase in money demand with immigration. At

the same time, the same group developed railroads and infrastructure that was

conducive to increasing both coffee production and immigration. The findings

presented here are almost entirely based on primary sources, namely the Annual

reports of the provincial presidents from Rio de Janeiro, Sao Paulo and Minas Gerais

and the reports from the Empire’s Agriculture ministry.

We divide this essay into seven sections. In section 4.1 we introduce the

international market for immigrants, the common rules and procedures adopted by

the leading countries. The impacts of the 1850 law on the labor market are addressed

in section 4.2. There we discuss the financial incentives provided by the law, the

agents involved in recruiting the immigrants and, later in 1870, the role of the

province of Sao Paulo in fostering immigration. In sections 4.3 and 4.4 we discuss

the impacts of the law on the land and credit markets, respectively. Then, in section

4.5, we provide a brief overview of the Carioca and Paulista coffee market in 1886.

The role of the paulista political elite in the fall of the Empire is the theme of section

4.6 and our main conclusions are in section 4.7.

 94

4.1 The International Market for Immigrants

The 1850 land law was a pre-condition for Brazil to compete in the market for

immigrants. In fact, before 1850 Brazil had no regular provision in the budget to

attract immigrants, and very few came to Brazil. Slavery gave Brazil a bad name

among prospective immigrants. Free land and subsidized transportation were

necessary conditions for Brazil to become a major bidder in the market for

immigrants. The Land and Colonization office established by the 1850 land law

provided the institutional conditions to attract immigrants.

Until 1850, the international market for immigrants was dominated by England.

This country had a surplus population, as a result of the enclosure movement and the

on-going industrial revolution. Fostered by Malthus’ ideas regarding the negative

impacts of population growth on welfare, England followed his short-term

prescriptions by sending the ‘surplus labor’ to their colonies that were under-

populated. The first immigrants that came to the United States, Australia, Canada,

South Africa and New Zealand, were almost forced to leave England (due to the

enactment of laws prohibiting the presence of vagabonds and poor peasants).

Brazil’s experience with immigration was unique among the ‘new countries’

because both slaves and immigrant free labor were the mainstay of its commercial

agriculture.65 But it was by no means alone in subsidizing immigration. In England

65
In the United States, immigrants went to the non-slave regions of the north and mid-west. Australia
and New Zealand never had slaves (Willcox, 1931, Isaac, 1947 and Davie, 1936). According to Davie
almost 90 percent of the 62 million people who left their native countries between 1829 and 1930
went to the Americas. Sixty percent of them went to the US, 11 percent to Canada, 10 percent to
 95

public assistance was granted to subsidized emigration of the poor to the US (Isaac,

1947). Wilcox (1931) showed that both the US and Canada had generous Homestead

Acts of the 1860s and 1870s wherein any persons (including immigrants) over 21

could get public land for a minimal charge or even for free if they agreed to settle on

it. In most immigrant-receiving countries, especially those in South America,

immigrants were given financial assistance to help them acquire farmland. Several

European countries gave out propaganda advocating the advantages of migrating to

their colonies.66

The official reports of the Brazilian government between 1857 and the end of

the Empire in 1889 often cited such actions of other countries as justification for

increases in its own budget for immigration. For European immigrants, it was

cheaper to go to the United States than to South America.67 To compensate for this

differential Brazil and Argentina offered a range of transportation subsidies for

immigrants willing to come to South America. Despite the stiff competition, Brazil

and Argentina were quite successful in these efforts. Between 1850 and 1889,

Argentina, 7 percent to Brazil; 4.5 percent to Australia, 3 percent to New Zealand and 2 percent to
South Africa.
66
According to Wilcox (1931, Vol 2), between 1847 and 1869, 339,000 were sent to Australia ‘under
the auspices of the department at a cost of ₤ 4,864,000.’ (p. 246). In 1873, England paid the
transportation costs for 1,500 immigrants to New Zealand, who in turn, received land from the New
Zealand government. In 1880, the Canadian and British government devised a scheme for developing
jointly the northwest provinces of Canada. The Canadian government provided each settler with 160
acres of land and the British government advanced ₤80 per family for transportation costs.
67
Furtado (1964) attributes part of the high inflow of immigrants in the United States to the low
transportation costs. The tickets to the United States were lower than to any other country because the
American ships that transported cotton to Europe returned almost empty, given the reduced amount of
U.S. imports. The empty space in these ships was sold to immigrants.
 96

875,404 immigrants arrived in Brazil and 1,282,000 in Argentina.68 As a share of the

population, even as early as 1870 immigrants constituted almost 2 percent of

Argentina’s population and 3.4 percent of Brazil’s.

Argentina posed especially serious competition for Brazil in that it recruited

immigrants from roughly the same countries as Brazil and yet its climate and

agriculture were more like those of Europe and slavery had been abolished long ago.

Despite these advantages, Argentina was unable to attract as many immigrants as

Brazil until 1868, when Argentina enacted its first land law. In contrast to Brazil,

which was politically and administratively highly centralized prior to 1889, each

province in Argentina had the right to decide for itself whether or not to foster

immigration.

4.2 The Impacts of the 1850 Land Law in the Labor Market

Despite its shortcomings as a Land Law, the Land Law of 1850 was key to the

success in attracting immigrants to the coffee provinces and to the creation of

counties mainly composed by immigrants. By creating the ‘Land and Colonization

Office’ with its own annual budget, the land law gave Brazil an instrument to use in

the competition for immigrants. For lack of institutional support, few immigrants

came to Brazil prior to 1850, indeed only 17,000 between 1830 and 1850. But,

beginning in 1853 the budget was regularized and as shown in Table 4.1 annual

provisions towards colonization increased and with them also the number of

68
Numbers for Brazil from Carneiro (1950, p.60) and for Argentina from Wilcox (1931, vol. 2, p.
153-155).
 97

immigrants. Articles 18-20 of the land law granted funds also for the measurement of

public lands to be granted for immigrants and created the Bureau of Public Lands

that initiated operations in 1854.

Table 4.1 Amount Spent with Public Land and Colonization, Annual
Budget and Number of Immigrants: 1841-1889

Annual Budget of the Imperial Share of the Immigration

Ministry (until 1860) and budget spent
Agriculture Ministry (b/w 1860 with with
and 1889) (in USD) immigration To Brazil To Sao
and public
Paulo
Total Amount spent lands
(in US with colonization (B as % of A)
current and immigration
dollars) (in US current
dollars)
Year A B C D E
1841 1,941,608 39,040 2.0% 555 0
1842 1,543,123 na na 5,568 0
1843 1,655,141 5,200 0.3% 694 0
1844 1,623,312 5,100 0.3% 0 0
1845 1,422,781 4,680 0.3% 2,364 0
1846 1,562,284 no funds voted na 435 18
1847 1,713,268 no funds voted na 2,350 465
1848 1,604,278 no funds voted na 28 0
1849 1,694,799 no funds voted na 40 86
1850 1,854,425 116,000 6.3% 2,072 5
1851 1,958,303 no funds voted na 4,425 53
1852 1,935,664 no funds voted na 2,731 1,023
1853 2,157,779 13,640 0.6% 10,935 765
1854 2,336,463 61,334 2.6% 18,646 850
1855 2,710,028 121,289 4.5% 11,798 2,200
1856 2,782,502 208,559 7.5% 14,008 1,123
1857 2,753,013 304,830 11.1% 14,334 823
1858 3,130,357 500,701 16.0% 18,529 565
1859 4,067,406 414,097 10.2% 20,114 124
1860 4,597,769 366,007 8.0% 15,774 145
1861 5,551,813 475,405 8.6% 13,003 276
1862 3,821,367 435,842 11.4% 14,295 112
1863 4,516,586 470,373 10.4% 7,642 134
1864 4,859,093 333,018 6.9% 9,578 0
1865 4,723,383 291,261 6.2% 8,422 126
 98

Table 4.1 Amount Spent with Public Land and Colonization, Annual
Budget and Number of Immigrants: 1841-1889 (cont.)
Annual Budget Imperial Share of the Immigration
Ministry (until 1860) and budget spent
Agriculture Ministry (b/w 1860 with with
and 1889) (in USD) immigration
To Brazil To Sao
and public
Paulo
Total (in US Amount spent lands
dollars) w/h colonization (B as % of A)
and immigration
(in US dollars)

Year A B C D E
1866 4,500,847 278,412 6% 7,699 155
1867 5,481,250 285,881 5% 10,842 1,000
1868 4,168,284 243,549 6% 11,311 200
1869 4,502,886 441,180 10% 11,527 152
1870 5,368,878 401,940 7% 5,158 159
1871 5,884,173 417,235 7% 12,431 83
1872 6,828,621 590,580 9% 19,219 323
1873 7,599,647 820,747 11% 14,742 590
1874 8,869,587 1,040,000 12% 20,333 120
1875 9,732,340 1,100,000 11% 14,590 3,289
1876 8,797,956 918,000 10% 30,747 1,303
1877 9,102,371 918,000 10% 29,468 2,832
1878 7,368,967 909,920 12% 24,456 1,678
1879 6,391,618 926,684 14% 22,788 953
1880 9,625,402 na na 30,355 613
1881 8,394,197 88,440 1% 11,548 2,705
1882 9,992,558 411,310 4% 29,589 2,743
1883 11,388,485 353,555 3% 34,015 4,912
1884 10,710,884 337,455 3% 24,890 4,868
1885 9,252,185 354,140 4% 35,440 7,630
1886 13,959,441 1,053,391 8% 33,486 9,534
1887 15,547,094 1,111,046 7% 55,965 32,110
1888 17,998,572 1,309,447 7% 133,253 91,826
1889 19,810,539 1,873,458 9% 65,246 27,694
Total 289,793,326 20,350,746 7% 887,438 206,365
 99

Table 4.1 Amount Spent with Public Land and Colonization, Annual Budget
and Number of Immigrants: 1841-1889 (cont.)
Sources: Column A: Relatorios Anuais do Ministerio da Fazenda: up to 1860 the budget is for the Imperial
Ministry and from 1861 to 1889 we report the Agriculture Ministry annual budget. Column B: “Lei de 30
November 1841, art. 2, § 30,” Brazil, Leis de 1841, I, p. 74; “Lei de 21 de outubro de 1843, art. 2 § 22 and art.
50,” Brazil, Leis de 1843, I, p. 51 and 78; “Lei de 18 de setembro de 1845, art. 48” Brazil, Leis de 1845, I, p. 71;
“Lei de 18 de setembro de 1850, art. 20” Brazil, Leis de 1850, I, p. 312; For 1853 -1859: Annual Reports from
the Empire Minister, under the item “Reparticao Especial das Terras Publicas”. For 1860-1889: Annual Reports
from the Agriculture Ministry, under the item “public lands and colonization”. Column C: Estimate on the
amount spent on immigration and colonization out of the annual budget from the Empire Ministry (until 1860)
and from the Agriculture Ministry (between 1861 and 1889); Column D: Carneiro, (1950), p. 60.; Column E:
Vasconcellos (1941), Quadro A-1.

The enthusiasm of the Imperial government for immigration was based on its

desire to retain power after the foreseeable end of slavery. It delegated part of this

responsibility to proprietors and private companies to promote colonization but

retained part of it for building official settlements. The Bureau of Public Land’s

branches in the provinces (‘land and colonization’ offices) had agents in charge of

establishing contracts with private companies and others to measure public lands to

build settlements. The main idea behind these settlements was to foster the creation

of small properties. This was done largely in the unoccupied zones of the country. In

the beginning, however, few of these came to coffee growing areas.

The Empire’s use of private colonization companies to promote immigration

was a way of shifting the risks of such enterprise from the government and also

avoiding principal-agent problems. These companies, either partnerships or

individually owned, had contracts with the Bureau of Public Land specifying such

matters as whether or not the company was responsible for transporting the

immigrants from Europe, whether public land was granted or sold to the companies,
 100

the total number of immigrants required, the duration of the contracts and the size of

the plots to be granted to immigrants. The companies in turn, signed contracts with

the immigrants in Europe that were binding in Brazil. While the terms of these

contracts varied among companies, there were two commonalities: the immigrant

should receive a title on the land and the immigrant was prohibited from buying

slaves while living on the settlements.

The large colonization companies had their agents in Europe to recruit

immigrants, had permanent contracts with the government and were highly

subsidized.69 These usually colonized large areas. But there were also colonization

companies created by adventurers, assisted by shareholders. Usually, shareholders

were former slave owners with the means or contacts to transport immigrants but

with little interest in screening the candidates. The first corporation established along

these lines was the ‘Central Colonization Agency’ (Agencia Central de Colonizacao)

in 1857, with an annual endowment equal to $500,000 dollars.70 Such an amount was

to be spent with the inflow of 50,000 immigrants over the next five years. The

company was devised to reduce the transaction costs among individual planters. In

1858, the company failed financially but the government created in its place regional

branches in Sao Paulo, Bahia, Pernambuco and Para to which it granted over $3

69 In fact, the municipality of Blumenau, in Santa Catarina, was successfully founded under such
aninitiative.
70
Luiz Pedreira Couto Ferraz, Relatorio do Ministro do Imperio para o Anno de 1857 apresentado a
Assembleia Legislativa na 1a. Sessao da 10a. Legislatura. p. 23-28, Anexo E p. 34, Anexo F p. 1-7.
 101

million (6,000 contos de reis).71 Such an amount, extremely high under any

standards, was created by the Decree 885 (4/10/1856) and according to the Minister

Sergio T. de Macedo:

this amount has to be disbursed in three years with the transportation and establishment of
immigrants. The three year deadline will expire in this coming October (…). (Relatorio do
Ministro do Imperio, 1858, p. 88)

In turn, each one of these companies was supposed to bring 25,000

immigrants in the next five years and grant foreigners with titles on land. In general,

these companies did not bring as many immigrants as required. One should not reach

the conclusion, however, that the Imperial immigration initiative failed because of

the outcome from these early experiments. Instead, we observed during the 1860s,

the Imperial government being actively involved in sponsoring smaller colonization

companies and in enticing the provincial government with some latitude to play a

more active role in screening the colonization companies.

Still another approach was by giving subsidies to individual farmers to bring

immigrants. This was done mainly for coffee growers and mainly those in Sao Paulo

and Rio de Janeiro, especially because of the need for manpower. An important

example was a farm in Sao Paulo owned by Senator Vergueiro. This politician-

planter received a subsidy and brought 55 immigrants from Prussia under share

contracts. In 1855, the immigrants published a manifesto complaining about the

71
Sergio Teixeira de Macedo, Relatorio do Ministro do Imperio, 1858, Apresentado a Assembleia
Legislativa na 3a. seccao da 10 Legislatura. p. 87-89.
 102

treatment they were experiencing on the farm.72 The document was disseminated

widely and led Prussia and Germany in 1859 to prohibit their citizens from going to

Brazil. The most serious complaint was that they could not bear the risks of the share

contracts and found it hard to survive without the right to intercrop food, something

that was prohibited under the contracts.73

Because of the continued existence of slavery and the increasingly aggressive

attempts to stimulate immigration by Canada, the US, Australia and especially

Argentina with its Land Law of 1868, but despite its new subsidy policy, annual

immigration to Brazil remained in the 10 to 35 thousand range. The Vergueiro and

other similar incidents in Brazil made matters worse by tarnishing Brazil’s reputation

in Europe. Given these constraints, Brazil had to do more to attract immigrants from

Portugal, Italy and Spain.

In fact, it was only with the creation of the “Promotora” by the Prado’s brothers

in the late 1880s that an attempt was made to separate the bad image of Brazil as a

whole from a new one to be established for Sao Paulo alone. This campaign was so

successful that it soon became common for foreigners to explain that they were

going to Sao Paulo, not to Brazil.

72
Sources: Pedro Araujo de Lima, Relatorio do Ministro do Imperio de 1857, apresentado a
Assembleia Geral Legislativa na 2a sessao da 10a legislatura., p. 35 and Anexo B, p. 87-91. Thomas
Davats (1980), Memorias de um Colono no Brasil and Jose Vergueiro (1874), Memorial Acerca da
Colonizacao e Cultivo do Café, Apresentado a S. Exa. O Snr. Ministro e Secretario de Estado dos
Negocios da Agricultura, Campinas, p. 6-10.
73
The share contract was designed in order to improve the work effort of the immigrants relative to
fixed wage contracts. The long gestation period in coffee production blunted this incentive and their
lack of capital made the risk bearing burden onerous.
 103

As shown in Table 4.1 the flow of immigrants to Brazil after 1853 was much

higher than had been experienced earlier and was fairly steady. Whereas between

1830 and 1850, only about 17 thousand immigrants had come to Brazil, between

1850 and 1880, almost 452 thousand came. Because of the ever-increasing

competition for immigration, the results were not very exceptional until the late

1880s, the 1850 Land Law was nevertheless instrumental in establishing the

institutional environment that made immigration policy effective. Not only was a

budget for immigration and colonization regularized and the government forced to

establish contacts with their foreign embassies abroad to promote immigration but

also most of the immigrants who came began to receive land titles on land that had

been carefully measured in accord with provisions of the 1850 land law.74

In general, authors like Holloway (1980), usually dismiss the immigration

Empire’s immigration policy because of the small number of immigrants introduced

until 1880s and also because the allegedly small budgetary commitment made to

immigration. Indeed Holloway explains that his choice for 1880s (as the starting

period of his study) is related to absence of a systematic immigration policy before

that date. In other words, for Holloway, the small number of immigrants that arrived

in Brazil between 1850 and 1889 is a consequence of the paucity of resources

allocated for such an end. The amount spent with immigration, presented in table 4.1

was significant and even greater than other expenditure items (like post officers, for

74
Notably, Brazilians were still not benefiting from registration and titling.
 104

example). According to our examination of the budgets of the Ministry of

Agriculture, between 1864 and 1889, land and colonization expenses almost never

ranked bellow fourth, among the expenses items listed in the annual budget for the

Agriculture Ministry, as displayed in table 4.2.

Table 4.2 Agriculture Ministry Annual Budget per Expense

Category: 1864-1889 (%)
Year Railways Subsidies to Public Land and Post Other Total
Shipping Works Colonization Offices expenses
companies
1864 25% 28% 33% 7% 0.5% 7% 100%
1865 28% 30% 21% 6% 11% 3% 100%
1870 29% 25% 20% 7% 6% 12% 100%
1875 30% 11% 25% 11% 8% 15% 100%
1879 45% 8% 21% 14% 8% 4% 100%
1885 37% 7% 22% 4% 12% 19% 100%
1889 28% 7% 20% 9% 9% 26% 100%
Sources: Relatorios Anuais do Ministro da Fazenda para os anos de: 1862, p. 1-8;
1864, p. 2-7; 1865, p. 1-6; 1869, p. 1-7; 1870, p. 1-7; 1875, p. 1-8; 1878, p. 1-6;
1879, p. 1-9; 1884, p. 1-8; 1885, p. 1-4; 1888, p.1-6.

During the 1870s Brazil was moving faster toward the abolition of slavery

with bills enacted to tax slave owners and to free those born from slave mothers.

These measures induced the central government to further decentralize the

immigration process by giving the heretofore subservient provincial governments

more power. The provincial presidents could get their assemblies to enact laws to

finance the inflow of immigrants. A leading example was the Association to Aid

Colonization75 (AAC, known as Associacao Auxiliadora de Colonizacao e

Imigracao) created by the provincial president of Sao Paulo with the financial

75
Decreto no. 4769, 8 de Agosto de 1871.
 105

support of several factors and planters and having Antonio Prado as the president.

The same province enacted laws in 1871 and 1872 to provide the AAC with the

financial resources to bring 15,000 immigrants by 1879, an objective that was almost

reached.76

With existing stocks of slaves, the coffee regions of Rio de Janeiro and the

Paraiba Valley of Sao Paulo developed early. With sufficient slaves they did not

need immigrants and the slaves served as the collateral needed to finance this long

gestating crop. By contrast, as coffee production shifted to the West to Sao Paulo’s

western plateau and slave prices were skyrocketing, farmers there could not afford to

acquire the amount of slaves required for their coffee production. Indeed, on October

12, 1870, Jose Vergueiro77 wrote in the Correio Paulistano (p.12) an article showing

that with $900,000 (US dollars), a farmer could acquire 1666 immigrants from

Europe or 100 slaves. Assuming similar productivity, immigrants were the cheaper

alternative. This situation may have been similar to that of the northern colonies of

the United States during the 18th century where Engerman (1971) argued that the

colonists, being poorer than their counterparts in the South, could not afford to

acquire slaves or large plantations. The northern colonies of America at that time

76
Lei n o. 42, Provincia de Sao Paulo 30 marco de 1872 (authorized the provincial government to
grant subsidies to colonization companies to bring immigrants to the rural areas of Sao Paulo);
Decreto n o. 5351, 23 de Junho de 1873 (authorized the colonization agency to receive subsidies from
the Provincial and the Imperial government).
77
Jose Vergueiro was the son of Senator Vergueiro. He was a leading coffee producer in Limeira and
had a factorage house since 1856 with the Souza Aranha family .
 106

passed laws to facilitate the purchase of land by European immigrants, mainly

indentured servants.

The immigration initiatives between 1871 and 1880s, faced strong opposition

from the Paraiba valley representatives. 78 In brief, they opposed granting public

funds for the benefit of only one region, the Western plateau. In fact, the old region

from the Valley had a stock of slaves large enough to continue their coffee

production without immigrants. During this period, however, the political influence

of the Western planters grew through the creation of the Paulista Republican Party.

The turning point occurred during the governorship of Antonio de Queiroz Telles

(1885-1887), a leading coffee producer in the West, and one of the few that also

owned vast tracts of land in the Paraiba Valley. For political reasons, the Sao Paulo

provincial assembly approved the Western planters demand towards the creation of a

permanent immigration system, known as ‘Sociedade Promotora da Imigracao’, or

“Promotora”. 79

4.2.1 The Impact of the Provincial Laws on the Paulista Labor Market
Having benefited from the land law (as explained above) and the

decentralization of the late Empire period, Sao Paulo under the leadership of two

influential planters, the Prado brothers, brought about the second and much larger

wave of immigration. As a way to overcome the negative publicity about Brazil from

78
In fact, the Valley also opposed the concession of profit guarantee towards the construction of
railroads in the Western region, among other issues.
79
Sources: Martinho Prado Junior, In Memoriam, 1944; Emilia Viotti da Costa (1982) p. 172-180;
Fala dirigida a Assembleia Legislativa pelo presidente da provincia de Sao Paulo Antonio de Queiroz
Telles (Barao de Parnahiba), no dia 17 de Janeiro de 1887, p. 120-127.
 107

some of the earlier immigrants, Sao Paulo’s provincial president suggested the

creation of an independent company to take full control of immigration services. In

1886, the Sociedade Promotora da Imigracao or ‘Promotora’ was created under the

leadership of the brothers Martinico and Antonio Prado. During the 1880s the Prado

brothers’ were both very active in dealing with labor and land problems of the coffee

growing areas of Sao Paulo.80 Martinico was a politician, coffee producer, an

original owner of the Mogiana railroad company, a shareholder of three banks,

‘capitalist’, founding member of the Lavoura club and a leading voice in the creation

of the Paulista Republican Party.81 His older brother, Antonio, had similar activities

but he was primarily involved in politics at the Empire instead of provincial level.

Martinico was crucial to the success of the Promotora in that he had researched

abroad the market for immigrants and thereby could identify a set of incentives that

could succeed in attracting immigrants. The ‘Promotora’s Board of Directors was

composed of coffee producers from Western Sao Paulo who were already using

immigrants on their farms.

In contrast to what had happened in the first immigration stage with its many

colonization companies, the ‘Promotora’ centralized all activities regarding

immigration. The private colonization companies were closed in Sao Paulo. In its

80
For example, Antonio, as the minister of Agriculture, introduced a proposal for changing the 1850
land law that was later used as the blueprint for the 1895 Sao Paulo land law. Martinico, in turn,
passed bills to tax slave owners and to increase funds for immigration. He also lobbied for the
creation of more railroads for the hinterlands of Sao Paulo.
81
The main source we used for the “Promotora” and for the Prado brothers is: In Memoriam Martinho
Prado Junior, 1944.
 108

first three years of operation, the ‘Promotora’ brought 133,470 immigrants to Sao

Paulo, three times the number that had come between 1849 and 1885. The provincial

budget allocated to immigration increased from $20,000 during the 1870s to

$250,000 per year.82 It created permanent offices in Genoa and Lisbon and recruiters

were sent to the farming regions of Italy, Portugal and Spain to distribute brochures

containing information about Sao Paulo and employment opportunities on the farms.

These brochures ensured potential migrants about free transportation and

accommodation in newly built hostels on arrival and free transportation all the way

to the farms. With respect to land, immigrants would have to pay only the

administrative fees to receive titles to their land. Immigrants were sent almost

exclusively to the coffee municipalities of Sao Paulo’s western plateau.

The 1850 land law was still relevant in that the Bureau of Public land started

to build official settlements in coffee-growing regions of Sao Paulo.83 A crucial

function of the Promotora was in providing continuity in the immigration program

through the period of reorganization from the late years of the Empire to the first

ones of the Republic. The buildup of Sao Paulo’s immigration program quite

conveniently coincided with the decline of slavery. Indeed, so many farms had

switched to exclusive use of free workers in Western Sao Paulo that the 1888 coffee

82
Relatorio da Secretaria da Agricultura, 1893, Anexo 2, p. 37; Lucy Maffei Hutter, “Imigracao
Italiana em Sao Paulo, 1880-1889” pp. 69-70; Adelino Riccardi, “Parnaiba, o Pioneiro da imigracao.”,
p. 147.
83
In fact 10 of the 14 official settlements were built by the Bureau of Public Lands between 1885 and
1889. Source: Fala do presidente da provincia da Sao Paulo Francisco de Paula Rodrigues Alves,
apresentado a Assembleia Legislativa em 10 de Janeiro de 1888, p. 31-34.
 109

crop, harvested in the months immediately after the abolition law was enacted, was

larger than that of the preceding year. By this time also, coffee production in the

Western plateau had surpassed that of the Paraiba Valley.

4.3 The Impacts of the 1850 Land Law in the Land Market

Regarding the landownership situation, few Brazilians received title on their lands.

In the whole country, a total of 448 properties (land grants and posses) received a

title, between 1855 and 188684, according to the annual reports of the imperial and

agriculture ministry.

Table 4.3 Number and Area of Private Properties Legalized by

the 1850 Land Law
Provinces Number of Measured 1920 Total Measured
private Area by the Area b area as %
properties 1850 law of total area
with a titlea (B as % C)
(in Hectares) (in Hectares)
A B C D
Ceara 12 1,311.16 14,859,100 0.01%
Bahia 5 1,429.33 52,937,900 0.00%
Minas Gerais 2 8,774.59 59,381,000 0.01%
Sao Paulo 47 20,064.43 24,723,900 0.08%
Parana 89 156,636.22 19,989,700 0.78%
Sta Catarina 132 156,979.87 9,499,800 1.65%
Espirito Santo 161 32,096.66 4,468,400 0.72%
Total 448 377,292.26 185,859,800 0.20%
(a) Private properties with a title ((1850-1889). (b) This is the total
area reported in the 1920 Brazilian Census.
Sources: 1864 Agriculture Ministry Annual Report, Annex A-X-N6;
1886 Agriculture Ministry Annual Report, Annex B-D-O3; 1920
Brazilian Census, vol. 3, p. 5.

84
Source: Relatorio de 1864, Ministerio da Agricultura. p. 29-50, Anexo X-N6. In: Relatorio do
Ministro da Agricultura,Antonio Francisco de Paula Souza para o Anno de 1864 apresentado a
Assembleia Legislativa na 4a. Sessao da 12a. Legislatura. Rio de Janeiro: Typografia Perseveranca.
 110

If data in table 4.3 were the criterion for evaluating the 1850 land law, it is clear

that the law was a complete failure. However, the question that still remains is: why

claimants did not use the 1850 land law to their advantage by claiming title to their

lands? In our view, there are two related explanations.

The first has to do with the contents of the law. As previously explained, the

procedures to obtain a title on the land were different from those established for the

‘parish priest’s registration’. The latter did not grant titles, but at a time where

communications were difficult and the majority of the free population illiterate,

priests were a powerful tool to announce major changes in the provinces. Hence, one

explanation as to why the law failed to increase private property rights may be due to

the fact that claimants assumed that the registration with the priests was the required

proof of ownership.

Table 4.4 Number of Parish Priest Registrations

Number of Number of
Provinces parish priest Provinces parish priest
registrations registrations
Alagoas 11,441 Paraiba 21,310
Amazonas 2,722 Parana 12,203
Bahia naPernambuco na
Ceara 31,842 Piaui 21,259
Espirito Santo 4,480 Rio de Janeiro (capital) 694
Goyas 7,361 Rio Grande do Norte na
Maranhao 10,730 S. Pedro Rio Grande do Sul 19,380
Mato Grosso naSao Paulo 38,979
Minas Gerais 74,294 Sergipe 12,725
Para 19,320 Sta Catarina 21,718
Total Brazil 162,190
Sources: Relatorio Annual do Ministro da Agricultura para 1860, Anexo D, p. 2-76
and Relatorio Annual do Ministro da Agricultura para 1864, Anexo D, p. 1-49.
 111

According to the Ministers of Agriculture85, the two provinces that finished the

parish priest registration were: Sao Paulo and Santa Catarina. In other provinces, like

Minas Gerais the registration books were incomplete because some priests did not

send the books with the registrars and/or incorrect because, according to the same

Ministers, some people registered their properties with more than one parish.

We did not find any evidence to support the idea that the parish from certain

provinces were trying to block the registration process. In fact, as previously

explained the ‘parish priest’ did not grant the claimant with a title on the land. The

idea was to generate a map of all the private properties in Brazil. As we argue in the

next chapter, the 1895 land law was first presented by Antonio Prado, as the Minister

of Agriculture in 1886. 86 Mr. Prado, a Paulista, was proposing a change in the 1850

Land Law. His most innovative idea was to allow claimants to receive a title on their

lands, upon the condition that they had a ‘parish priest registration’. Though it was

rejected in 1886, it was adopted by Sao Paulo in 1895.

The second explanation for the failure of Brazilians to obtain titles to their land

has to do with the autonomy granted to the provincial president in the measurement

of private lands. The president, in turn, appointed the ‘comissario judge’, who was
85
Sources: Relatorio de 1865, Ministerio da Agricultura. p. 29-50. In: Relatorio do Ministro da
Agricultura,Antonio Francisco de Paula Souza para o Anno de 1865 apresentado a Assembleia
Legislativa na 4a. Sessao da 12a. Legislatura. Rio de Janeiro: Typografia Perseveranca; Relatorio de
1871, Ministro da Agricultura, Anexo B, p. 1-21, Anexo D, p. 1-64. In: Relatorio do Ministro da
Agricultura, Candido Borges Monteiro para o Anno de 1871 apresentado a Assembleia Legislativa na
4a. Sessao da 14a. Legislatura. Rio de Janeiro: Typografia Universal de E & H. Laemmert.
86
Source: Relatorio do Ministro da Agricultura,Antonio da Silva Prado para o Anno de 1885
apresentado a Assembleia Legislativa na 1a. Sessao da 20a. Legislatura, 1886. Anexo A-I, (Inspetoria
Geral de Terras e Colonizacao under the supervision of the Francisco de Barros e Acciolli de
Vasconcellos) p. 1-27. Rio de Janeiro: Imprensa Nacional.
 112

then in charge of the whole process. The ‘judge’, however, was not a lawyer or a

magistrate and was especially created by the 1850 land law. According to two

Agriculture Ministers87, the ‘judges’ were the largest landowners in their respective

districts.88 Landowners, in turn, had strong informal power over the population

because they usually increased the scarce provincial budgets with their own funds.

Even if private claimants wanted to initiate the process, they had to request formal

authorization from the ‘judge’/landowner, according to the land law. In brief, this

figure was in fact, more powerful than the provincial president and centralized the

whole private titling process. In a time where land was a source of power and the

large landholdings were the dominant, the incentives to formalize the land ownership

situation were very low. 89

The above scenario started to change with the introduction of immigrants. In the

regions suffering from a shortage of labor, like in the western plateau of Sao Paulo,

landowners realized that one way to reduce immigrants’ mobility was to make

credible promises regarding titles to land. Hence, it was under the landowners’

interests to inform the Bureau of Public Land, or the land and colonization offices, of

87
Source: Relatorio de 1865, Ministerio da Agricultura. p. 29-50. In: Relatorio do Ministro da
Agricultura,Antonio Francisco de Paula Souza para o Anno de 1865 apresentado a Assembleia
Legislativa na 4a. Sessao da 12a. Legislatura. Rio de Janeiro: Typografia Perseveranca; Relatorio de
1871, Ministro da Agricultura, p. 1-21, Anexo D, p. 1-64, In: Relatorio do Ministro da Agricultura,
Candido Borges Monteiro para o Anno de 1871 apresentado a Assembleia Legislativa na 4a. Sessao
da 14a. Legislatura. Rio de Janeiro: Typografia Universal de E & H. Laemmert.
88
Leal (1949) explains that the large farmers, from the imperial period, became the ‘coroneis’ during
the Old Republic.
89
Source: Relatorio de 1864, Ministerio da Agricultura. p. 84-99, Anexo X, p. 2-25. In: Relatorio do
Ministro da Agricultura, ,Jesuino Marcondez de Oliveira e Sa, para o Anno de 1864 apresentado a
Assembleia Legislativa na 3a. Sessao da 12a. Legislatura. Rio de Janeiro: Typografia Nacional.
 113

the location of public lands. This is why the Imperial government succeeded in the

measurement of public land, even though the private land situation remained

virtually unchanged.

In fact, according to table 4.5 the amount of measured public land was

significantly greater than private land, especially considering that more than ¾ was

granted to colonization companies.

Table 4.5 Public Land Measured in 1885

1885 Measured
1885 Measured 1920 1920 Rural Public Land as a % of
Public a Total Area a areaa
Provinces Total area Rural area
Espirito Santo 184,767 44,468,400 1,279,699 0.42% 14.44%
Sta Catarina 136,640 9,499,800 3,567,757 1.44% 3.83%
Parana 182,617 19,989,700 5,302,709 0.91% 3.44%
Rio Grande do Sul 205,364 28,528,900 18,578,923 0.72% 1.11%
Alagoas 101,070 2,857,100 1,348,241 3.54% 7.50%
Para 202,139 136,296,600 9,830,280 0.15% 2.06%
Sao Paulo 252,674 24,723,900 13,883,269 1.02% 1.82%
Minas Gerais 193,136 59,381,000 27,390,536 0.33% 0.71%
Total 1,458,407 325,745,400 248,391,414 0.45% 0.59%
Note: (a) All areas are expressed in hectares.
Sources: Relatorio do Ministerio da Agricultura para 1885, Anexo I, p. 1-27;
Censo Agricola de 1920 for total and rural areas.

During the Empire, it seems clear that immigrants acquired more titles than

Brazilians. As explored in the next two chapters, the immigration program was

preserved by Sao Paulo during the Republic. In turn, to preserve the high

immigration inflow, landowners/colonels/judges started to enforce the land laws.

 114

Therefore, we observe in Sao Paulo an overall improvement in the pattern of

landownership: more titles became available to both – Brazilians and immigrants.

While Sao Paulo and Minas Gerais started with similar land tenure situation

during the Empire, the continuation of the Paulista immigration process during the

Old Republic, and the termination of the same program in Minas Gerais, explains

why Sao Paulo evolved towards a well-defined land rights system while Minas did

not change much. The fact that Sao Paulo completed the “parish priest registration”

while Minas Gerais did not has no relationship with the land tenure system in the two

provinces during the Empire. We did not find any documents to support the idea that

Sao Paulo had a superior pattern of landownership than Minas during the Empire.90

Indeed, the parish priest became a relevant issue in Sao Paulo only because it was

used in the 1895 as a proof of ownership.

4.4 The Impact of the 1850 Land Law in the Credit Market

The 1850 land law produced two major impacts on the credit market. The least

successful one was the creation of mortgage banks, in Rio de Janeiro and in Sao

Paulo, that were fostered by the 1864 and the 1885 mortgage laws. The idea was to

induce the creation of long-term credit by using land as a collateral. Even with the

abolition of the ‘forced adjudication’91 in the 1885 law, land was hardly accepted as

collateral. This is so because the land registry and the commercial registry were two

90
In other words, Sao Paulo and Minas had similar landownership patterns during the Empire. One
should not extend this conclusion to all Brazilian provinces mainly because the southern regions had a
much more definite set of land rights than both Sao Paulo and Minas, even during the Empire.
91
Under forced adjudication, the creditor that wants to foreclose a mortgage, has to accepts the results
of the first auction, even if the maximum bid fails to match the amount of the original loan.
 115

separate entities that, in turn, enabled landowners to mortgage the same land more

than once. It is only after 1921, with the creation of the ‘Torrens system of

registration’ in Sao Paulo that unified the two registries that we observe a surge in

the creation of mortgage banks.

The second impact of the 1850 law was the increase in money demand induced

by the rise in immigration. While factors provided the bulk of coffee farmers’ credit

needs until 1850, the greater demand for credit induced the creation of more formal

lines of credit. Rio de Janeiro, as early as 1854 already had a considerably well-

developed banking system. In Rio, very few farmers became factors or were

associated with commercial banks92. In other words, Rio coffee farmers did not

(need to) create close-knit relationships with the formal credit system.

The increase in money demand led to profound changes in Sao Paulo. The

Paulista banking system until 1871 was a mere extension of the Rio banks and as

such, insufficient, to meet the requirements of an increase in immigration coupled

with rising coffee production in the western plateau. Starting in 1872, we observe

that Paulista coffee farmers and factors amplified their close-knit relationships. Not

only did we find the same names (factors and coffee farmers) in the board of

92
The leading positions in commercial banks were: officers (president, vice president, secretary) and
directors (board of directors, board of auditors). Between 1854 and 1889, we used newspapers and
Almanacs, to research the former branch of business the commercial banks officers and directors were
associated. We then found that out of the 19 commercial banks that existed in Rio de Janeiro between
1854 and 1889, there were 70 factors and only 6 coffee farmers. In contrast, in Sao Paulo, we found
29 coffee producers and 34 factors.
 116

directors of newly created commercial banks but we also found them, in the same

period, creating new factorage houses.

According to Hanley (1995), during the 1870s, we observed in Sao Paulo a

decline in discounting93 and an increase in the formal lines of credit (known as

‘guaranteed lines of credit’). Usually, this type of credit was granted to companies or

large investors and required extremely liquid collateral (e.g., diamonds or

government bonds). As a way to preserve the supply of credit to coffee farmers, the

newly created factorage houses started to guarantee farmers’ loans, by taking (or

sharing) the risks with the farmers. In other words, coffee farmers and factors, as the

board members of commercial banks, had a certain amount of discretion to select the

main creditors of the bank. Because they had to act under the rules, one way to profit

from being on the board of directors was to grant credit to new factorage companies,

that would bear the liabilities of a third party, in case of default, but would also foster

coffee production. However, judging by the fact that most of these banks survived

two financial crisis (1891 and the 1930) and that the credit to coffee farmers through

factorage firms remained active until 1930, coffee farmers’ default rate was probably

low. Factorage firms were more flexible than commercial banks, were not chartered

by the government, and hence had more autonomy to screen applicants for credit.

93
Discounting was the practice where farmers signed different bills of exchange (promissory notes,
planters’ draft and merchants credits) to obtain credit through their factors. The bills were legal
obligations for all parties involved in their acceptance, payment and transference. The factor that first
received the bill would endorse and transfer the letter to any other party. The holder of the bill would
typically sell it to another party or a bank at a ‘discount’.
 117

We mentioned before that Rio de Janeiro had the largest immigrant population in

1872, while Sao Paulo was in fifth place. The initiative of the “Promotora” was

extremely successful because Sao Paulo, in 1886 had the required infrastructure to

receive immigrants. In other words, besides commercial banks, paulista coffee

producers also created four railroads between 1872 and 1889, to link the capital of

Sao Paulo with the hinterlands. The same coffee producers on the board of

commercial banks, owned factorage firms and were on the board of directors of these

railroads.

Besides the commercial banks and factorage houses, the ‘coffee railroads’ also

made the western plateau accessible for foreigners that in turn, induced the coffee

boom that made Sao Paulo the world largest coffee producing state during the Old

Republic. Until 1867, the ‘Inglesa’94, linking Santos to Jundiai, was the only railroad

in Sao Paulo. Jundiai, however, was only barely into the coffee growing region of

Sao Paulo. At that time, one of the Prado brothers, Antonio and some of his relatives

(Queiroz Telles and Souza Prado) pledged some shares in a new company that would

extend this line into the coffee growing area of Campinas and beyond.95 In 1872, the

‘Paulista’ railroad opened its services to link Jundiai to Campinas. While all the

previous railroads in Brazil had been financed by British and other foreign investors,

the Paulista railroad was essentially entirely Brazilian financed and without all the

94
The colloquial name stems from the fact that the engineers, construction, management and
financing were English. “Sao Paulo railway” was the official name.
95
In: Odilon Nogueira de Matos (1981), Café e Ferrovias, p. 64-79.
 118

guarantees required for foreign-financed lines. To raise additional capital locally,

commissioners were selected to sell shares throughout the western coffee region of

Sao Paulo. In 1872, Martinico, the younger of the Prado brothers, obtained the

authorization to build the Mogiana line from Campinas to the hinterlands (Ribeirao

Preto, Casa Branca) where it linked with the Paulista line. The Mogiana was the first

railroad to reach Minas Gerais in 1890. After obtaining the concession, the board of

directors (Souza Aranha, QueirozTelles, Paes de Barros, Arruda Botelho, Prado)

started to sell the shares to other farmers from the Western plateau, where the

railroad was supposed to serve. It became clear that to have the line closer to the

farm, the planter had to be a shareholder. If all coffee growers were in the same area,

this would not have been necessary, allowing growers to get away with free riding

knowing that some, perhaps the largest grower would act on their behalf. But, since

the landowners interested in the railroad were from many different locations and the

railroad could only go through or near some of them, it gave maximum incentive to

participate. When one railroad would take a negative decision on a certain route

close to one set of landowners’ properties, these would try start another line, perhaps

as simply a feeder line to the main line.96

During the entire period under study, railroads received different types of

concessions and subsidies from the government. The lines built in Sao Paulo until

1889, received from the Imperial government a 5% profit guarantee – composed by

96
This is a nice application of a rather neglected one of Olson’s group characteristics deemed
favorable to collective action, namely “heterogeneity in goals”.
 119

interest and amortization guarantees - essentially assuring a minimum 5% rate of

return. The provincial government offered 2% interest on top of the 5% to attract the

companies.97 Among the incentives offered to such investors were monopoly rights

for the railroad within a specified distance from the tracks (typically 30 kilometers),

duty-free imports of capital and intermediate goods. In Sao Paulo, railroads were

privately financed by paulista coffee producers through issuance of shares, as a way

to raise capital. According to Hanley (1995), railroad guarantees did not necessarily

translate into easy access to capital. Without a stock market, these companies had to

use the commercial banking system every time they decided to raise their capital.

4.5 Land Rights, Immigrants and Coffee: from Rio to Sao Paulo in 1886

Coffee production increased 200% between 1854 and 1886, with Rio de

Janeiro explaining 55% of such rise and Sao Paulo 45%. Rio coffee lands were older

than Sao Paulo and with the 1888 slave abolition most farmers went bankrupt, due to

their inability to compete with a new zone based on free labor that was booming: the

Western plateau.

97
Flavio Azevedo Marques Saes, As Ferrovias de Sao Paulo, 1870-1940, ch. 1, p. 37-69.
 120

Table 4.6 Coffee Production and Population in Sao Paulo and Rio de Janeiro: 1886
Zones of Sao Paulo a 1886 Coffee
Province and Rio de Janeiro Production 1886 Population
In arrobasb % of Total Total % Brazilians % Immigrants % Slaves
Capital (1st) - - 74,895 82% 17% 1%
Paraiba valley (2nd) 2,117,134 7% 335,022 90% 1% 9%
Sorocaba (3rd) 1,198,963 4% 51,446 82% 2% 15%
Central (4th) 3,446,888 12% 154,337 82% 2% 15%
Mogiana(5th) 2,366,599 8% 178,795 86% 2% 12%
Paulista (6th) 2,458,131 9% 133,697 81% 6% 13%
Araraquarense (7th) 633,896 2% 33,151 94% 0.0% 6%
Noroeste (8th) - - - - - -
Alta Sorocabana (9th) - - 71,903 95% 2% 3%
Baixa Sorocabana (10th) - - 54,805 96% 1% 3%
Southern Coast (11th) - - 42,430 97% 1% 2%
Total Sao Paulo(1st-11thzone) 12,221,610 42% 1,130,480 87% 3% 9%
Paraiba valley (2nd) 2,117,134 7% 335,022 90% 1% 9%
Western Plateau (4th-9th) 8,905,514 31% 571,883 85% 3% 12%
Rio de Janeiro 16,586,471 58% 1,357,366 81% 7% 12%
Total Sao Paulo and Rio 28,808,081 100% 2,487,846 84% 5% 11%
Note: (a) For more information on the Sao Paulo zones, please refer to Appendix 1. (b) One
arroba equals 14.40 kg or 31.7 pounds. Sources: Rio coffee Production adopted from Anuario
Estatistico de 1937, Instituto do Cafe do Estado de Sao Paulo, p. 64. Sao Paulo coffee
production from Camargo (1954), vol. 2, p. 62. For Sao Paulo population: Camargo (1954),
vol. 2, p. 2-12. For Rio de Janeiro population: adopted from the 1890 Census of Brazil. The
Rio de Janeiro slave population is taken from the 1887 Annual Report from the Rio de Janeiro
Province, Anexo 1, Mapa SN, Quadro Estatistico dos Escravos Existentes na Provincia do
Rio de Janeiro e Matriculados em Virtude da Lei 3270 de 1875.

Even before the Republic, the Western Plateau emerged as the leading coffee

region in Sao Paulo; the Paraiba Valley ranked second in 1890 and last in 1930.

Without the 1850 land law, few immigrants would have come to Brazil and thus, a

shortage of labor would have emerged in 1888 with the complete abolition of
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slavery. Imperial government’s initiative, coupled with the “Promotora”, fostered

immigration at a time when slavery was being completely abolished.

Table 4.7 Coffee Production in Sao Paulo and Rio de Janeiro, 1836-1886
Sao Paulo major zones and Coffee Production (in Arrobas)a
Rio de Janeiro
1836 % of Total 1854 % of Total 1886 % of Total
Paraiba valley (2nd) 479,496 17% 2,737,639 28% 2,117,134 7%
Western Plateau (4th-9th ) 58,454 2% 709,792 7% 8,905,514 31%
Total Sao Paulo(1st-11thzone) 556,739 19% 3,578,755 37% 12,221,610 42%
Total Rio de Janeiro 2,321,710 81% 6,038,992 63% 16,586,471 58%
Total Sao Paulo and Rio 2,878,449 100% 9,617,747 100% 28,808,081 100%
Notes: (a) One arroba equals 14.4kg or 31.7 pounds. Sources: for 1836 refer to table 3.1 and for
1886 refer table 4.6. For 1854: Rio de Janeiro coffee production is from 1874 Annual report of the
provincial president of Rio de Janeiro, mapa 19. Sao Paulo coffee production is from Camargo
(1954), vol. 2, p. 62.

In table 4.7 we notice that the increase coffee production in the Western

Plateau (from 2% in 1836 to 31% in 1886) offsets the relative decrease in Rio de

Janeiro coffee production. The Paraiba Valley, as extention of Rio coffee production,

also registered a decline, especially after 1854. The 1,000% increase in Brazilian

coffee production, between 1836 and 1886, is almost evenly explained by Rio de

Janeiro (55%) and Sao Paulo (45%). Whereas in 1836, Rio de Janeiro responded for

more ¾ of Brazil total coffee production, its gradual decline did not affect the overall

performance of Brazil mainly because the Western Plateau emerged as the single

most important zone of coffee production, as early as 1854. In 1886, it responded for

35% of the total Brazilian coffee production and in 1905, according to Ulker, the Sao
 122

Paulo hinterlands became the single most important cluster of coffee production in

the world.

Immigration and the abolition of slavery were closely connected to the

demise of the Empire. Despite Sao Paulo’s increasingly economic importance after

1870, the Imperial government did very little, in terms of public works, for Sao

Paulo. From railroad building, to immigration, to the improvements in the Santos

harbor, and to credit and banking, small groups of planters were the leading force

behind all these initiatives. The absence of political support from the central

government for so many years led this group to voice their demands against the

mainstream order by creating in 1870 their own political party: the Paulista

Republican Party (‘Partido Republicano Paulista,or PRP’).

4.6 The Role of Sao Paulo and Immigrants in the Creation of a Republic

Paulista leadership at the federal level began simultaneously with the creation of

Sao Paulo’s Republican Party. No other provincial Republican organization could

match the experience of the Paulista Republican Party (PRP) in the last two decades

of the Empire. The party, created in 1873 mainly by farmers from the West of Sao

Paulo, defended federalism, provincial autonomy in politics, provincial control of

banking and immigration policies, and the decentralization of tax revenues. In fact,

when the Paulistas organized a Paulista Republican Party in 1873, they emphasized

that the new regime would serve Sao Paulo.

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Paulistas of various political persuasions had chafed at what they considered

neglect of the province by the Imperial government. Sao Paulo entered its classic

export phase with the completion of the Santos-Jundiai railway in 1867, but revenues

in 1870 were not sufficient to meet the provincial government’s responsibilities for

road construction, public health and education.98 Despite the lack of passable roads

and other public works, Sao Paulo was one of three provinces that had never

received direct financial aid under the Empire.99 In 1886-1887, Sao Paulo

contributed eight times as much to the central treasury as it received back in outlays.

Politically, the province was unable to remedy this state of affairs, for it was clearly

underrepresented in the imperial parliament by the 1880s.100 The Republicans of Sao

Paulo called for a distribution of revenues that would allow the province to meet the

requirements of the expanding export economy, and for political autonomy to

maximize Sao Paulo’s economic potential.101

One feature of the PRP distinguishes it from its counterparts: separatism, the

abolition of slaves and even the substitution of a republic for the monarchy.

Regarding the slave issue, though the Paulista Republicans had rejected abolition in a

conclave in 1872, they skirted the issue at the party’s organizing congress the

98
Howard Marcus (1973), Provincial Government in Sao Paulo: the administration of Joao Teodoro
Xavier, p. 28, 92 and 94.
99
Oliveira Torres (1964), p. 354. The other two provinces were Rio Grande do Sul and Rio de
Janeiro, both of which had significant republicans movements.
100
Alfred Marc (1890), Le Brazil, p. 178.
101
Aureliano Tavares Bastos (1870), p. 355; Tavares Bastos (1889) A Provincia de Sao Paulo, 3 de
marco de 1889, p.1
 124

following year at Itu (where slave owning planters predominated). 102 Slavery was

declared to be a ‘social issue’ that had to be solved by the ‘whole nation’, but on a

province by province basis. The point that was clear in Itu was that slave-owners

would be compensated for financial losses. One vocal abolitionist, Luis Gama, left

the party, though another, Bernardino de Campos, remained. 103

For the Republicans, as for the other Paulista politicians, the abolition issue was

indissolubly linked with the immigration question. In 1885, Prudente de Morais,

Brazil’s president from 1894 to 1898, emphasized in a speech in the imperial

parliament that Paulista planters of all political hues would not abandon slavery

without an alternate source of cheap labor.104 On the immigration issue, Republicans

were closely allied with western planters of the Conservative Party. Indeed they were

more than closely allied as in the case of the two of the Prado’s brothers: one,

Martinico, was the chief Republican spokesman on the issue and a founder of the

‘Promotora’; the other, Antonio, was a leader of the province’s Conservative Party.

Among Republican groups in Brazil, Paulistas had strong support in their

province in contrast to other provinces where even in the late 1870’s and the 1880’s,

Republicans were largely ignored. The PRP was rooted in the richest agricultural

area of Brazil, the Central zone of Sao Paulo, and its adherents included some of the

102
George Boeherer (nd), Da Monarquia a Republica, p. 265.
103
George Boeherer (nd), Da Monarquia a Republica, p. 268.
104
Jose Maria dos Santos (1942), Os Republicanos Paulistas e a Abolicao, p. 225.
 125

province’s most prominent planters. In 1877, three Republicans won seats in the 36

representative provincial assembly, the first republican victory anywhere in Brazil.

As the Republican Party matured in the final years of the Empire, its major

problem remained the internal tension over abolition. While the western planters

privately defended slave abolition it faced serious opposition from the Paraiba

valley group. The final crisis came in 1887, when the central zone and its fringes in

the west witnessed repeated slave uprisings while the rest of the province remained

quiet 105. Since the disorder and violence interfered with immigration,106 such

disturbances hastened the collapse of slavery in the Central zone in Sao Paulo, and in

Brazil as a whole. In March 1887, the Sao Paulo assembly, accepted the proposal

drafted by Martinico Prado and voted a $200 tax on all slaves in the province.

Meanwhile, the immigration into the west was succeeding brilliantly, and by May

some 60,000 Italian immigrants had been placed on Sao Paulo coffee farms.

In September 1887, planters of all parties in Campinas, promised their slaves

liberty provided they would continue to work for their masters until the end of the

1890s. The death sentence of slavery in Sao Paulo was read at the founding of the

Emancipation and Labor Organization Society in December 1887, under the

presidency of Marques de Tres Rios, from Campinas. In the event, the province’s

most powerful planters set December 1890 as a deadline for slave abolition in all Sao

105
Robert Toplin (1972), The Abolition of Slavery in Brazil, p. 211, names six counties that
experienced revolts, all in the West. On the politics of abolition in Sao Paulo see also Conrad (1972),
ch. 16; Luz (1948); Hall (1969), Holloway (1980), Viotti da Costa (1982) and Beiguelman (1968)
106
Robert Toplin(1972), The Abolition of Slavery in Brazil, p. 219.
 126

Paulo. After 1887, the provincial police refused to help planters capture runaways,

and total abolition had almost been achieved in the western counties by January 1888
107, four months before the golden law freed all slaves. Antonio Prado played a

critical role as Minister of Agriculture in bringing about nationwide abolition and

equally well established is his interest in the immigration program, the central issue

for the planters of the west. Sao Paulo took out its only foreign loan during the

Empire ($1,500,000 in 1888) explicitly to subsidize immigration.108 Before abolition

in May 1888, political leaders throughout the province had apparently been won

over, since the assembly unanimously passed legislation providing an inflow of

100,000 immigrants.109

Republicans, it is widely assumed, if not proven, profited politically by abolition,

as disgruntled planters apparently turned away from the imperial parties that passed

abolition without indemnification in Parliament. Republicans were ‘blameless’ since

none of them had been elected for that section.

The end of slavery and the success of the immigration program accelerated a

trend toward political convergence in Sao Paulo. In 1889, when the Empire finally

came to an end, Sao Paulo was the only state in the whole federation with strong

political parties, where the republican side was strong. The PRP played a significant

107
Nicea Vilela Luz (1948), “A Administracao Provincial de Sao Paulo em face ao Movimento
Abolicionista”, p. 96-98.
108
Peter Eisenberg and Michael Hall (1973), “Labor Supply and Immigration in Brazil: A comparison
of Pernambuco and Sao Paulo”, p. 12.
109
Joao Camilo Oliveira Carvalho (1888), A Provincia de Sao Paulo em 1888: Ensaio Historico
Politico.
 127

role in the overthrow of the Empire, though the coup that terminated it was

essentially a military operation. Indeed, the Paulistas were the only group outside

Rio de Janeiro to participate.110 In the wake of the Republic, Sao Paulo emerged as

the only state of the federation with a strong, coherent and homogeneous political

party, the PRP. While it is true that there was no competition against the PRP, the

absence of political competition was not necessarily bad for Sao Paulo. The political

elite, during the republic, preserved the immigration initiative, that in turn,

contributed to a decrease in the size of landholdings and improvement in the private

property rights system.

4.8 Conclusion

The immigration initiative started during the Empire, and not during the

Republic, as claimed by most of the literature. Indeed, in this period the government

created the institutional basis for attracting immigrants. Specifically, by granting free

land with the 1850 land law; by offering subsidized transportation and by recruiting

in Europe rural workers. The 1850 land law was a forward-looking policy created to

avoid a shortage of labor on the coffee farms. In 1850, the Imperial government

knew that without an alternative source of labor to substitute for slaves, the export-

based economy would be in danger and would probably follow the path of Haiti, a

110
Manuel Ferraz Campos Salles, (1908), Da Propaganda a Presidencia, p. 43-44; Antonio Assis
Cintra (1953), “O PRP na primeira campanha Presidencial da Republica”.
 128

large coffee producing country that went into serious economic problems due to the

abolition of slavery.

In Sao Paulo, the 1850 land law produced stronger impacts in the land, labor

and credit market than elsewhere because of the coffee boom in the western plateau.

Fostered by the Imperial government immigration initiative, the Paulista provincial

government and the Prado brothers organized the “Promotora” to increase the inflow

of immigrants to Sao Paulo. The Promotora was a success because the 1850 land law

produced strong linkages between the land, credit and transportation markets. The

close-knit relationship between coffee farmers and factors was intensified during the

1880s and led to the creation of commercial banks that ensured coffee would also

have credit and the railroads to transport both coffee and immigrants to the

hinterland. While it seems clear that coffee producers were a homogeneous pressure

group whose actions were translated into projects during the Empire, their political

role was important in the overthrow of the Empire.

It is interesting to note that, while laws are important institutions for any

country, informal arrangements are sometimes a pre-condition for the success of

laws that intend to benefit the majority of the population, as was the case with the

1850 land law and the improvement in private property rights. The political elite did

not block the titling process from immigrants mainly because they knew that the

benefits they would receive from the having surplus labor in the coffee economy was

greater than the costs of granting a piece of land.

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Finally, the original theory of property rights should be amended so as to be

consistent with the Brazilian experience, especially, during the coffee boom. Instead

of an overly simplified model wherein an increase in product or land prices increases

the demand for property rights, changes the legislation and improves the land rights

system, additional political economy factors and external competitive conditions

should be included. In developing countries, the rule of law is not as strong as it is in

the developed countries. However, one should not reach the simplistic conclusion

that the result is necessarily a lack of improvement in property rights. An increase in

coffee prices could quite possibly lead to increasing concentration of landholdings or

even decline in the coffee economy. As we hope to illustrate in our next essay,

private property rights improved in Sao Paulo because immigrants produced positive

externalities for the political, land and labor markets. The informal and formal

institutions worked together to enforce and enhance the credibility of the laws.
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CHAPTER 5: THE DETERMINANTS OF THE LAND AND LABOR LAWS

IN SAO PAULO DURING THE OLD REPUBLIC (1890-1930)

In 1889, Brazil was proclaimed a republic and its 1891 constitution gave the

states autonomy over many issues that were previously reserved for the Imperial

government. In the land market, the major change introduced by the 1891

constitution was the transference of jurisdiction over land from the central

government to the states. The 1850 land law, however, remained in effect in the

portions of the Brazilian territory where the union retained ownership. In particular,

the union preserved under its domain only land in the frontier and national security

zones. While Sao Paulo decided to preserve the immigration program in place since

1886, the two other coffee states, Rio de Janeiro and Minas Gerais, discontinued

theirs. In this regard, Paulista coffee producers had more influence on the state

politics than the coffee planters from Minas or Rio.111

During this period, the Paulista coffee producers started to display features of a

pressure group using state power to protect their interests and influence the federal

government. While we do not dismiss the political influence of this group, the

literature derives the conclusion that most of the institutions created during this

period were enacted to benefit the coffee producers’ interests at the expense of the

111
In Sao Paulo, the economic dominance of coffee induced producers to have a common and strong
interest: defend and foster coffee production. In Minas Gerais and Rio de Janeiro, coffee responded
for a small share of their production, hence producers’ demands were more heterogeneous. In turn, the
political scenario was more fragmented than the one in Sao Paulo.
 131

whole society.112 In particular, the conclusion has several dimensions. First,

immigrants were believed to be mere substitutes for slaves in the sense that the

immigrants had to work as hard as slaves and were monitored similarly (contracts

not being respected) and the coffee fields had infrastructure that was too poor and

unsuitable for free labor. Second, in a country where the status quo blocked laws that

benefited the majority of the population, the coffee boom in Sao Paulo was not seen

as producing any significant improvement in property rights or even any decrease in

the size of landholdings with latifundia remaining dominant. Third, any immigrants

that became landowners were seen as a small minority. Fourth, it was not believed

that the state had ever implemented a comprehensive colonization policy during this

period to foster an increase in foreign landownership. Hence during the Republican

period, coffee was seen as produced on latifundios owned almost entirely by

Brazilians. In brief, the monopoly over land enabled Brazilians to exercise

monopsony power over the labor market, keeping colonos’ wage rates at very low

levels.

Given the above scenario, the literature concludes that the laws enacted by Sao

Paulo regarding landownership and even those concerning labor market regulations

were either not enforced or did not produce any significant institutional change. If

this were true, then immigrants were irrational (to become semi-slaves) in choosing

112
The most relevant names that defend this positon are: Stocke (1986), Martins (1973), Hall (1969),
Dean (1976a), Truzzi (1985). To a certain degree we can also include Prado Junior (1979).
 132

to go to Sao Paulo, knowing that they would be better off in Argentina or elsewhere

where free transportation was offered.

To refute the above claims our two main goals in this chapter are: (1) to provide

an overview of the often dismissed institutional changes promoted by the state of Sao

Paulo in the labor and land markets; and (2) to indicate the economic and political

short and long term determinants of the laws enacted in the land and labor markets.

These changes, especially in the beginning, were enacted under the auspices ‘arms

for agriculture’ (‘bracos para a lavoura’). However, to prevent shortages of labor, the

state had to enforce the laws. In other words, assuming that immigrants were

rational, their preference for Sao Paulo over Argentina, for example, must have been

based in the following factors: (1) enforceable land and labor laws; (2) concrete

possibility of acquiring land and becoming coffee producers; and (3) similar

infrastructure and rule of law.

An attractive explanation as to why the laws were only enforceable in Sao Paulo

is based on the higher educational level of the Paulista political elite and which

therefore produced ‘better’ leaders. However, this type of claim has already been

dismissed.113 A more convincing reasoning is the one we provide here. In brief, the

common aspect that explains the credibility of these different laws is that the

113
Love (1980) compiled the studies from Levine (1978) and Graham (1973) about the features of the
political elites from Pernambuco and Minas Gerais during the Old republic, respectively. He then
built the same index for Sao Paulo. An interesting conclusion is that the political elites from the three
states had a similar number of members with college degree, mainly in law. Pernambuco, however,
was the state with the smallest number of leaders that did not have a college degree, followed by Sao
Paulo and Minas Gerais.
 133

political elite in Sao Paulo did not derive its power from their monopoly over land,

as was the case in Minas and Rio. Not only did the Paulista elite have sources of

wealth other than land but also, these ‘other sources’ provided them with more

efficient and complex networks of influence over the state decisions than those with

only ‘plain/simple’ monopoly over land. Their activities ranged from coffee

factorage, to coffee railroads, exporting, banking, external financing, and other

activities.

To accomplish these goals, we divide this chapter into four sections. The most

important institutional changes in the land and labor market are presented in the next

section (5.1). We briefly summarize the 1895 land law (section 5.1.1); the 1907

immigration law (section 5.1.2) and the 1921 Washington Luis land law (section

5.1.3). The short-run determinants (or the necessary conditions) of each one of these

regulations are then analyzed in section 5.2. Then, in section 5.3, we provide the

sufficient condition – given by the agreement between the formal and informal

politicians – that, in our view, explained why these changes led to permanent

institutional devices that were not reversed when the immigration program was

terminated. A summary of our conclusions is in section 5.4.

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5.1 Institutional changes in the land and labor market during the Old Republic

in Sao Paulo (1890-1930)

5.1.1 The 1895 Land law

In 1895 Sao Paulo became the first state in the Republic to pass a new land

law that substantially changed the dispositions of the 1850 land law. The 1895 land

law recognized that, due to the rigid deadlines imposed by the 1850 law, most

private land remained without titles. As a consequence, the new law allowed private

claimants (squatters and sesmeiros) to register any lands acquired between 1850 and

1895. To prove possession of their land, the 1850 law allowed private claimants to

present the parish priest’s registration or any document indicating that the person

was living on the plot at least one month before the enactment of the law. Under the

1850 law, this did not entitle the claimant to receive a title. For example, in 1860, the

priests from all parishes in Sao Paulo sent the Imperial government a list of 38,894

plots of land in that province that were claimed in this way by private parties.114

Hence, these properties had been ‘registered’ since 1860 but their owners did not

have titles and thus the land could not be mortgaged or sold. The 1895 law, however,

accepted the parish priest’s certificate directly as proof of ownership. No other state

in the federation followed suit. As a result, titling remained elsewhere a much

lengthier and more costly process than it was in Sao Paulo thanks to its 1895 Land

114
Sao Paulo and Santa Catarina were the only two provinces, out of nineteen, that presented a
completed version of the Parish priests registration. Source: Manuel Felizardo da Silva, Relatorio do
Ministro da Agricultura, 1864, p. 26-28 and Anexo D, p. 1-77. Antonio da Silva Prado, Relatorio do
Ministro da Agricultura, 1886, Anexo X, p. 1-44.
 135

Law. The point here is that while the Minas Gerais land law had many requirements

for private claimants to obtain a title on their lands, the Sao Paulo land law required

the parish priest registration as a proof of residence. Different from Minas, the 1895

Sao Paulo land law allowed claimants to receive a title on their whole properties, and

not only on the part of the land that was being used for productive purposes. In other

words, extremely influenced by Antonio Prado’s 1886 proposal to change the 1850

land law, the 1895 Sao Paulo land law had all the features of a liberal law, a law that

did not intend to change people’ behavior.115 Instead, the legislators legalized many

procedures that were being informally and efficiently adopted by private claimants.

The process to receive a title started at the municipal registrars office where

the claimant had to (1) pay the registration fees ($1.66/hectare up to 2000 hectares

and $1.4 per hectare for each additional area above 2000 hectares), (2) present the

Parish priest’s registration or other proof of ownership and (3) request state land

officers to survey his possession. The principle of squatter’s rights became a central

element in Sao Paulo’ s land tenure legislation.116 The measurement costs, under the

1895 land law were 445% higher than those imposed by the 1850 land law, and yet,

we observe an increase in the number of rural titles. Instead of imposing a rigid

115
By changing people’s behavior we mean that the 1899 Minas Gerais land law announced that
claimants would only receive a title on the part of the land used for productive purposes. The unused
part would become public land. In our view, the law was trying to change people’s attitute towards
their own property: now they would volutarly go to the registrar to lose part of their lands and obtain a
title on the ‘productive’ part. The market mechanism and people’s behavior, however, was and is
much more creative than the law. By the end, the number of properties that held a valid title in Minas
Gerais, as a by-product of this law, was possibly much lower than the one in Sao Paulo.
116
Lands obtained by squatting after 1895, however, were still not recognized as legal.
 136

deadline, the law allowed a period of ten years (until 1905) for owners to claim

ownership on their lands. It was only in 1905, that unclaimed sites were considered

‘public land’ and then sold by the Department of Agriculture (for $3.00/hectare).

The 1895 law incorporated the central features of Antonio Prado’s 1886

proposal to change the national 1850 law. Indeed, it was Antonio, already a wealthy

Paulista coffee producer, who created and presented the 1895 law. In brief, Prado

claimed that the Brazilian situation was similar to the one in the American West. He

proposed that public land should be granted free of charge to settlers and that

squatters lands used for productive purposes be legitimized.

The land laws in Sao Paulo were very liberal in making it easy for private

claimants to receive a title on their lands. The best example is its acceptance of the

‘parish priest’ or any other ‘legal’ proof of ownership. Another coffee producing

state, Minas Gerais, did not follow such a path. Indeed, Minas enacted its first land

law as a republican state in 1899 (Law 269, 8/27/1899). This law allowed properties

created under private domain after 1878 to be registered any time before 1904.

However, the law did not allow the parish priest’s registration to be used as a proof

of ownership and it imposed a land tax that discouraged titling.

5.1.2 The 1907 Labor (Immigration) law

Law 1458, enacted on April 10, 1907 during the continuing crisis in the

coffee economy, further regulated immigration, colonization and foreign labor in the
 137

state. Of the law’s 334 articles, we summarize only the five that are most relevant to

immigration and colonization.

First, the law was clear in assigning priorities among those who wanted to

purchase land in the settlements: first, immigrants to Sao Paulo arriving after 1895;

second, immigrants already in the state, and last, Brazilians. Having a family was

also a pre-requisite for the right to buy land in these settlements. Out of 3,225 plots

in these settlements, 91% belonged to immigrants. On average, the plots were

between 35 and 55 hectares in size.

Second, the law institutionalized state financing to help immigrants (but not

Brazilians) to purchase plots. In 1904, two offices were created just to protect and

regulate colonos’ contracts and to match the supply of and demand for immigrants in

the different municipios.117 While at first foreigners did not plant coffee, they did

plant cash crops and with the proceeds, they could buy coffee lands.

Third, the law established rules for private colonization. The state offered

companies and landowners willing to create settlements on their lands the same

benefits as for state settlements and paid them US$ 5,000 (10,000 milreis) for each

group of 50 families brought to the settlements.

Fourth, Article 193 of the law stipulated that the government was in charge of

measuring and dividing the plots, and managing the settlements. Possibly inspired by

117
A 1907 Law increased the budgets of these offices and charged the colonization office with
responsibility for acquiring private land to create more settlements.
 138

the American west colonization experience, the law also financed railroad companies

by awarding them with land along the tracks for specified additions of rail lines to

the new settlements. These were especially important measures for railroad

companies that were generally in the position of having to lay the track before coffee

was grown. In this way, some foreign corporations with interest in the coffee

business were able to buy relatively large parcels of land in the western plateau that

they then resold to other foreigners.

Finally, the government was asked to provide long term credit (with a ten

year pay back period) for small farmers to buy their first or second rural plot.

Especially in the Noroeste and Alta Sorocabana zones of the western frontier, private

individuals and land companies took advantage of such facilities to open virgin

territory for small farmers.

5.1.3 The 1921 Washington Luis Land Law

Immigration policies were successful in Sao Paulo in large part because they

complemented existing land laws. In 1921, the governor of Sao Paulo, Washington

Luis, enacted Law 1844. According to the new law, land could be given free to

private individuals – Brazilian or immigrant – under any of the following conditions:

(1) the squatter had claimed the land at least one year prior to the new law; (2) the

claimant held some proof of land ownership even if it had not been considered valid

under the 1895 law; or (3) the land was not under private domain until the enactment
 139

of the law. In other words, the law reaffirmed the validity of squatters’ rights by

recognizing as legitimate the posses occupied between 1895 and 1921. The law also

provided free surveying services for farms wishing to subdivide and credit facilities

for the purchase of farm inputs.

Often belittled by the literature as the ‘squatters’ feast’ (jubileo do grileiro),

the law was indeed encouraging a trend toward smaller farms. Based on the

historical evolution of land laws in the United States in which squatters’ rights and

other informal arrangements were gradually incorporated into formal law, de Soto

(2000) argues that this incorporation of pre-existing informal practices into formal

law makes laws more credible. While de Soto provided no examples of this from

Latin America, Sao Paulo’s Land Law of 1921 could be viewed as such an example.

The law recognized that private individuals were otherwise either unable or

unwilling to pay for land and thus would have the incentive to keep squatting on

public land, and for this reason allowed this informal practice to be incorporated into

the formal law, making land available formally at only the cost of homesteading.

The law tried to enforce the Torrens’ registrar, especially in the rural areas.

During this period, the Torrens was being successfully adopted in Australia and in

Canada. The main advantage of this system is the unification of the land and

commercial registries, in one place, such that it tends to inhibit landowners from

double-registering the same property in order to obtain credit. The Torrens system

was created in 1890 by the Provisional government and with the 1891 Republican
 140

decentralization, it became optional for each state to enforce it. According to two

reports (1924, 1925) from the state of Sao Paulo, the new municipalities created in

the western plateau after 1921, were adopting the ‘Torrens system’, by unifying the

commercial and the land registries in one place. The same report attributed to the

‘Torrens system’ the increase in the number of mortgages where land was the

collateral.

5.2 The Short-Term Determinants of the Laws

The fact that coffee was booming in the western plateau since the end of the

Empire induced legislators to create new institutions to foster such development. A

constant source of concern, for both the government and the coffee producers, was

the manpower supply. The “Promotora” initiative, during the transition from the

Empire to the Republic, was successful in supplying enough immigrants for the

coffee fields. In 1892 Sao Paulo created the Office of Land, Colonization and

Immigration Services under the head of the department of Agriculture. In 1895 the

“Promotora” was formally terminated, mainly because its administrative structure

was incorporated by the Sao Paulo department of Agriculture. The state continued its

subsidized immigration policy until 1926, by providing free transportation to Brazil,

a hostel to receive immigrants, an employment agency in charge of matching the

supply of workers with the farmers and a set of recruiters in Europe to screen the
 141

candidates. However, to make it attractive to immigrants Sao Paulo had to organize

its land policy to grant titles for immigrants and to build new settlements.

The 1850 land law did not foster an increase in land tenure. It was up to Sao

Paulo to devise a land law that would stimulate an increase in land ownership rights.

In this context, as a way of avoiding a shortage of labor and to assure a large inflow

of immigrants, Sao Paulo enacted in 1895 its first land law. By allowing claimants to

present almost any proof of previous residence in the site, the law was clearly trying

to stimulate private owners to claim ownership of their land. The reason that this

state was the first one to enact a land law has to do with the ongoing general

perception that the attraction of immigrants relied on its land policy. From the

“Promotora” experience, it was known that Europeans went to places that offered a

clear possibility of becoming a landowner in a matter of years. Hence, the main

explanation of the 1895 land law was the attraction of immigrants.

Clearly the 1907 immigration law number 1458 was the most comprehensive

piece of legislation in attracting immigrants and the creation of private and state

settlements. Once more, the law was trying to avoid a shortage of labor for the coffee

farms by encouraging a constant inflow of immigrants. However, this law depended

upon the existence of a previous land law. In other words, the Office of Land and

Colonization had to follow the stipulations of the land law in alienating and

measuring public land. In the absence of a land law, the Colonization office would

not have been able to survey or grant titles to immigrants. Even the creation of state
 142

settlements, during the republic, depended on the existence of a previous land law. In

general, immigration policies were successful in Sao Paulo because they

complemented the existing land laws. Without land policies, immigrants would not

have come to settle down on the Western Plateau of Sao Paulo.

Though it was not an official policy, the colonato type of contract was

recognized to be a major incentive for European immigrants to come to Sao Paulo.

The colonato wage was divided into two parts: the money wage and the non-

monetary share. While the former accounted for less than half of immigrants income,

the latter was the critical part of contract. Coffee farmers allowed colonos to practice

intercropping in their fields. The sale of the cash crops, allowed colonos to received

a regular and profitable source of income. This type of contract, mainly found in the

coffee fields from the west of Sao Paulo, was also functional for the farmers, because

it avoided any need to increase wages when food prices were high. However, after

five years, intercropping started to damage the coffee harvest. The farmer, in turn,

allowed the colonos to open up new lands where coffee was planted with

intercropping. While it was an efficient solution for both parties – colono and farmer

– the aggregate outcome was ‘prisoners’ dilemma’ type of situation, where the

private individual’s ‘optimum’ produced an inferior outcome for society. In this case,

intercropping led to an overproduction of coffee in 1903. The state identified

intercropping as a major cause of the crisis, prohibited planters to open up new

coffee fields, implying that intercropping had to be abolished. In turn, in the next two
 143

years immigration to Sao Paulo dropped abruptly but not the demand for labor on the

farms. As a way to attract immigrants, even without the right to ‘intercrop’, the 1907

immigration law provided a set of incentives to compensate foreigners for their loss

of intercropping income. In brief, the prohibition of intercropping in the colonato

contracts was an indirect determinant for the 1907 immigration law.

In our view, the 1921 Washington Luis land law was intended to decrease the

size of the rural properties and to allow immigrants coming to Sao Paulo to become

landowners.118 In this sense, the law accomplished its short term goals: between

1920 and 1934, the number of properties registered in the State of Sao Paulo

increased by 210 percent, slightly faster for immigrants119 than for Brazilians. Yet,

because of the larger size of the Brazilian population of the state, by 1934 the

incidence of land ownership in the state was three times as high for foreigners as for

Brazilians.

In brief, the necessary determinant of the three major institutional changes

analyzed here was the need to attract immigrants to ensure an elastic labor supply for

the coffee economy. These institutional changes were the incentives provided by Sao

118
According to Washington Luiz: “ It is imperative to subdivide the large landholdings, the non-
productive ones, to pay a fair price to its owners and to grant these lands to those without a piece of
land who is willing to work on the land. It is convenient to grant free measurement services and to
subdivide farms in plots of 20 hectares; create incentives to the owners who subdivide their lands;
excempt them from taxes; grant free plots of lands; create and foster credit bureaus for the small
landowners(…) I ask you members of this house the immediate approval of the land law number 1844
proposal.” Source: Washington Luis, 1920, Mensagem do Presidente de Sao Paulo a Assembleia
Legislativa, 14 de Janeiro de 1920, p. 8-10.
119
The majority of the new immigrants were Italian and Italians were especially prominent among
those who became landowners in the Western plateau of Sao Paulo. We provide the data to support
this claim in the chapter 6.
 144

Paulo to attract a large and relatively constant number of European immigrants. The

key point that ensured the continuous flow of immigrants was that these laws were

indeed credible and in turn, enabled immigrants to acquire titles on land.

As argued in the next chapter, land concentration decreased between 1905 and

1930. In 1905, only 10% of Sao Paulo’s rural area was comprised of small farms (up

to 25 alqueires) while 20% of it was comprised of ‘latifundio’ (over 500 alqueires).

By 1920, ‘small’ farms accounted for 15% and by 1930 for 30%. In addition, by

1930 the latifundio share had dropped precipitously to just 4%. Since Brazilians at

all times comprised the majority of landowners, it was the positive externalities

brought by the inflow of immigrants that explains the overall change in farm size.

The same transformation in the size structure of farms was not found in other coffee-

growing states. This leaves us with the question of “Why only in Sao Paulo?”

5.4 The Long-Term Determinants of the Institutional Changes During the Old

Republic

The prima facie answer to this question as we have suggested above is that the

promised incentives including land rights to immigrants were more credible in Sao

Paulo than elsewhere. But, this still raises the question: “Why didn’t the other states

mimic Sao Paulo since it was obviously very successful? To answer these questions

we have to compare the political structure and incentive system at a municipio level

in Sao Paulo with those of the other coffee states. In brief, the laws were credible and
 145

hence followed in Sao Paulo because at the lowest political and administrative level,

i.e., the municipio or county, leaders had direct interest in the outcomes.

During the Old Republic, the Paulista Republican Party (PRP) was the only party

in the state until 1926. It was founded in 1873 by coffee producers from western Sao

Paulo. The constitution of the Republic created universal suffrage for all literate

Brazilian men 21 and older and provided for direct voting for state government

officials, the president, senators, state and federal representatives. At the county

level, the informal political leader was known as the ‘coronel’ (colonel120). He (and

his group) made sure that the local voters voted for the candidates he supported. In

exchange, he would receive from the state government to which his people had been

elected ‘favors’ like an increase in the county budget, railroads, and hospitals, among

other things. The ‘coronel’ respected his electors, protected them and used violence

to defend his power from challengers. Land was a source of power for the colonel.

Leal (1948) and Carone (1978) identify the ‘colonel’ as the principal landowner of

the county.

The coronel’s informal power meant that he was (or appointed one of his allies)

to occupy positions in charge of granting land titles. Early in the Republic, when the

1895 law had just been enacted, the ‘coronel’ and his group were the ones to decide

on whether or not to grant titles. Usually, the ‘coronel’ appointed the ‘justices of the

120
According to Leal (1948), coronel is a military position that came from the Imperial Guard
(Guarda Imperial). Though the people that were known as ‘coroneis’ had no ties with the Imperial
Guard, being a ‘coronel’ in the Guard was the highest honor a military could obtained.
 146

peace ’, members of the measurement commission and oversaw land titles in his

jurisdiction. The absence of any other administrative officers in the counties implied

that the colonel had considerable and autonomous power at the country level. The

state government was supported by the colonels and, in exchange for votes,

supported the colonels’ actions.

The above political scenario prevailed to different degrees in all the states of

Brazil during the Old Republic. It tended to decrease only after 1930 with

industrialization, population growth and the bureaucratization of state and local

government. What singles out Sao Paulo from all the other states was that many of

the ‘coroneis’ were often simultaneously coffee producers, allied with the PRP,

politicians, justices of the peace, board members of railroads and factors. By

contrast, in Minas and Rio, the coronels were mostly landowners only, and spent

virtually all their time on their land. Had land ownership become regularized in those

states, their political power that depended so heavily on their discretionary powers

would have been reduced. In Sao Paulo, because their landholding were regularized,

the coronels could spend more time on other activities. As a result, the coronels’

wealth became increasingly diversified in line with the diversity of their activities

and contacts. Yet, coffee was common in one way or another to most of these

activities. With the end of slavery especially, the universal priority among these

landowners/coffee producers/colonels was the urgent need for field hands in the

coffee fields. This shortage of labor was especially prominent on the Western
 147

Plateau and virtually non-existent in the old and stagnating coffee area, the Paraiba

Valley. Notably, the Paraiba colonels constituted a relatively weak opposition to the

policies of the dominant group from the Western Plateau.

According to Love (1980), another important feature displayed by the Paulista

political elite was its interlocking nature: almost fifty percent of the Paulistas who

occupied political positions between 1890 and 1930 was related to at least one other

member (through first cousin or by marriage). Love also points out that there were

considerably fewer family ties in Minas Gerais. The close ties (linked by family and

business relationships) among the Paulista elite members, during the Old Republic,

was especially well articulated by Martinico Prado Junior, in a 1891 speech:

This is nothing more than a government of ‘compadres’ (1891 speech by Martinico Prado in 1891,
quoted in Love, 1980, p. 175).

According to Carone (1978) compadrio was the ‘family’ unit organized around

the figure of the coronel. Carone makes a clear distinction between the political elite

in Sao Paulo and the one in Minas Gerais. In Sao Paulo, according to the author, the

most prominent political figures (Washington Luiz, Rodrigues Alves, Campos

Salles, Jorige Tibirica, Francisco Glicerio) that held important political positions at a

state or federal level had groups of political supporters in the hinterlands.

In Sao Paulo there were at least two features that facilitated the provision of the

collective good (enforcement of the laws through the provision of titles on land for

immigrants) by the coroneis. First, the hegemonic feature of the PRP meant that each
 148

coronel and his group had control over one of the ten districts in Sao Paulo. Different

from the Minas Gerais Republican Party, the Sao Paulo counterpart had a clear

structure of leadership in the party that facilitated access of the politicians to the

coroneis, and vice-versa. Besides the PRP political dominance, a second factor that

fostered to provision of the collective good was the fact that each coronel had a

different type of incentive to participate in the purchase of the good. For example,

let’s say that the collective good was the enforcement of the land laws (that enticed

immigrants with a title on land). In this case, we can say that Rodrigues Alves

(governor of Sao Paulo, President of Brazil), for example, whose group controlled

the votes in the Central zone, had clear ties with commercial banks and his family

owned factorage houses. 121In turn, because factorage houses provided credit for

coffee, the coroneis from the Central zone bought the collective good and enforced

the land laws. Ataliba Leonel, the coronel and political leader of the Alta Sorocabana

zone, was the largest individual shareholder of the Sorocabana railroad.122 Clearly,

Ataliba Leonel was also interested in the provision of the collective good, not

because he was involved directly with coffee but because he knew that by enforcing

the land laws, the Sorocabana railroad would have a great inflow of passengers

(immigrants) that would in turn, tend to expand the coffee frontier. In a matter of

121
Rodrigues Alves story comes from: Pereira (1980, p. 132-188). According to Pereira, the family
owned factorage houses in the Western Plateau (Jau and Piratininga) and were major shareholders of
the Sao Paulo Commercial Bank (Banco Comercial de Sao Paulo).
122
According to Love (1980, p. 172). Leonel was a lawyer, the responsible for the creation of the
Sorocabana railroad. His region before the railroad, had almot no population and as a way to boost the
region (and thus increase the number of votes controlled by Leonel) he succesuflly became a major
shareholder in the Sorocabana company.
 149

years, the railroad was going to transport coffee from the hinterlands to the Santos

harbor.

In Ribeirao Preto two groups dominated the region: the ones linked to the coronel

Joaquim da Cunha Diniz Junqueira and another linked to Coronel Schmidt. Both

were large coffee producers with the difference that Schimidt was a more urban

oriented character, involved in the Sociedade Rural Brasileira and had voice in the

PRP decisions. Schimidt also had factorage houses and commercial banks in

Ribeirao Preto.123 Despite their political divergences, both coroneis, also bought the

collective good (enforcement of the land laws) to entice immigrants to come to the

Western Plateau.

In brief, we noticed that each of the leaders described had a different type of

incentive to participate in the purchase of the collective good. In turn, the coroneis’

support towards the enforcement of the land laws in Sao Paulo is a nice application

of Olson’ group features deemed favorable to collective action, named ‘heregeneity

of goals’. The chances of free riding were low because all the municipalities in the

Western Plateau needed immigrants. In case, one single coronel chose to free ride,

immigrants would move to the closest place where the land laws (the collective

good) were enforced. The fact that immigrants were evenly distributed among the

different municipalities in the Western plateau is a strong indication that the

promises of becoming a landowner were binding anywhere in the plateau. Credible

123
Schimidt information is drawn from: Revista da Sociedade Rural Brazil, ano VI, numero 60, Junho
1925, p. 206-215. Diniz Junqueira information is from Carone (1978, p. 267-269).
 150

promises, in turn, meant that the paulista elite due to their urban-rural feature,

diversified wealth portfolio and high degree of coalition successfully avoided the

presence of free riding and hence solved the shortage of labor in the rural areas and

enticed immigrants to become coffee producers.

In Minas Gerais, according to Carone (1978, p. 267), the situation was different

from the one found in Sao Paulo. First, the Mineiro Republican Party (PRM) did not

display the same degree of cohesion as the PRP. In part, this weaker cohesion was

due to the different economic power of the regions in Minas. The most powerful

elite, according to Font (1990,p. 308), came from the Zona da Mata and the south of

Minas, the areas used for coffee cultivation. The northern part of the state was

mostly occupied by cattle ranchers. According to Font (1990), the north of Minas

was not as politically organized as the central and southern parts of the state. Not

only did the party have a low degree of coalition, which increased the chances of free

riding in the provision of collective goods but also, some of the most important

voices of the Party were the largest landowners in Brazil. According to Carone

(1978):

In Minas Gerais, there is dominance of some families in the PRM, that in almost all the cases came
from the Colonial times: the Viera Resende, from Cataguazes; the Peixoto de Melo, from Uba, the
Aires Gomes, from Minas Novas, os Mello Franco, Paracatu. The conservative position of these
groups is based on their vast tracts of lands, which in turn, enticed these groups with some type of
regional power over the population (Carone, 1978, p. 267)

The low degree of coalition in the Minas Republican Party was a factor that

hampered the provision of the collective good. The poor infrastructure in Minas
 151

Gerais meant that the state had few railroads, very few commercial banks were

created before 1930 and basically Minas was an agrarian economy (Wirth, 1977 p.

89). While in Sao Paulo the railroad network integrated the different zones in the

state, in both economic and political terms, in Minas, the absence of such an

integrated system accentuated the economic disparities among regions.

In contrast to Sao Paulo, the coroneis in Minas Gerais had little incentive to

participate in the provision of the collective good (enforcement of the law) mainly

because the costs of free riding were lower than the benefits from the provision of

the collective good. The coroneis from Minas had on land their single most

important source of wealth. The provision of this collective good would have a high

political cost for the coronel, and hence his best response was to not to enforce the

laws. While Minas Gerais had the highest share of immigrant population according

to the 1872 census, it chose to terminate the immigration program during the Old

Republic. In fact, this choice meant that the political elite possibly knew that the

continuation of the program implied the enforcement of the laws. In other words, the

continuation of the Paulista immigration program was the trigger effect that

compelled the Sao Paulo political elite to provide the collective good and the

termination of the same program in Minas worked in the opposite direction and thus

hampered the enforcement of land laws in Minas Gerais.

Indeed, enforcement of the land laws is a collective good, because it depends on

the individual incentives held by each coronel. In Sao Paulo, we explain the
 152

enforcement of the laws by the ‘heteregeity of goals’. Under an Olsonian framework,

each coronel had an incentive to participate in the provision of the collective good

(enforcement of the laws) because they needed immigrants to work in the coffee

farms, to increase the number of passengers in the railroads to increase the number of

customers in the factorage firms, to become consumers. The heterogeneity of goals

of the Paulista political elite derived from their greater diversification of wealth and

resulted in greater provision of collective goods not only enforcement of land laws

but also railroads and immigration offices at the local levels, among other things.

The state of Sao Paulo’s initiative to subsidize immigration was but the first of a

set of measures to solve the labor shortage on the coffee farms of the state. The 1895

and 1921 Land Laws were not fundamentally better than those proposed or even

legislated in other states. The difference was that they were not only accepted but

even demanded forcefully by the local political forces (the coronels) as measures

they deemed necessary to attract immigrants and thereby solve the labor shortage

problem. Since the Western colonels had other sources of wealth than land, the

regularization of land tenure did not necessarily reduce their political power. Indeed,

it may have enhanced it by allowing them to be more mobile so as to move back and

forth to the state and federal capitals and even abroad.

The expansion of the coffee frontier further and further to the west had other

positive consequences. First, thanks to their mobility and contacts in different areas,

it encouraged them to form associations such as the Sociedade Rural Brazileira, Liga
 153

Agricola, and Associacao Comercial to link those with common interests over a

wider geographic area. Second, because of the population growth and colonization of

the new areas in the west, it led to the proliferation of new counties (over 150

between 1905 and 1930), something that did not occur in the other coffee-growing

states. The increasing number of counties and ‘coroneis’ in that part of the state

further enhanced the political strength of this group from the Western Plateau. Third,

among the new and large immigrant landowners were some (like the powerful

Colonel Schmidt124) who quickly became naturalized and thus qualified to vote and

hold office.

5.4.1 Formal and Informal Land Rights in Sao Paulo and Minas Gerais

The enforcement of land rights in Sao Paulo had at least three components:

political, economic and legal. The first one, expounded in 5.4, led the political elite

to agree in the enforcement of the land and labor laws. The incentive to participate in

the provision of the collective good was present in Sao Paulo because of Olson’s

‘heterogeneity of goals’. A similar feature was not found in the Minas political elite.

The economic element to explain the enforcement of laws has to do with the fact that

coffee was a labor intensive activity. In turn, coffee growers needed immigrants to

124
Francisco Schmidt (1851-1924) arrived in Sao Paulo with his parents as a subsidized immigrant in
1859. In the 1890s he bought his first coffee farm – Monte Alegre- in Ribeirao Preto. Known as
“King of Coffee”, he owed the largest coffee farms in Sao Paulo. His political ties to the Brazilian
coffee producers gave him with political power, and hence the name ‘colonel’. He was elected to the
Riberao council. He is known to have financed many immigrants to acquire coffee lands, granting
them with his political support. (Revista da Sociedade Rural Brasileira, 1925, “Coronel Francisco
Schmidt”p. 206-215).
 154

avoid an eventual labor shortage that would induce an upward pressure on wage

rates. The legal component of law enforcement is related to the contents of the laws.

In Sao Paulo, the laws enacted during the Old Republic tended to incorporate

previous informal practices as major aspects of laws. The 1895 law was inspired by

Antonio Prado’s 1886 proposal to change the 1850 land law. It was Antonio Prado

who suggested the adoption of parish priests as a proof of residence. The state was

willing to grant titles on land and, hence, the provisions of the 1895 land law were

extremely liberal on the documents required to prove previous residence. The law

accepted the parish priests registration as a valid document. The 1895 land law was

not only simpler than the 1850 land law (in terms of the steps required to obtain a

title) but also it eliminated the requirement of ‘productive use of the land’ for

claimants to obtain titles. In other words, the 1895 Sao Paulo land law increased the

number of private rural titles because it decrease owners’ uncertainty on the share of

their lands they would receive a title (on the whole property or on the productive part

of the parcel). The recognition of squatters’ rights, by allowing a ten year period for

squatters to claim ownership, also implied that the law was formalizing a strong

informal principle of land rights: squatter rights. In effect, the law broadened rights

by transforming squaters’ use rights to true ownership rights.

If the 1895 land law incorporated some informal elements as part of the law,

the 1921 land law went even further in this respect. By recognizing that squatters

could not afford to pay the measurement costs, the 1921 law granted plots of land
 155

free of survey costs. To encourage the division of rural properties, the law used the

market mechanism (the state would pay the market value for each piece of land)

instead of simply expropriating the plots or granting titles on the productive part of

the lands. While the 1921 law formalized the informal procedures, it was an

extremely credible law, especially regarding the land registration. In other words,

after the termination of the registration process (wherein both homesteaders and

former claimants would register their lands), the government would void all the

remaining petitions such that any unclaimed land was then considered public land. It

seems that laws worked well in Sao Paulo possibly because of the incorporation of

the ‘social norms’ in the laws. The laws in Sao Paulo were not a replacement for

informal land rights; rather they worked in tandem with the informal system.

While the contents of the laws were an important component to explain why

some laws are more successful than others (incorporation of informal rights in the

laws), we cannot say that the Minas land laws were inferior to the ones enacted in

Sao Paulo because they did not incorporate the ‘social norms’ given by the informal

rights. In Minas Gerais, however, we noticed a lack of political or economic reasons

for the creation of credible land laws. It seems that the formalization of informal

rights did not occur in Minas because there was disagreement among the local

political leadership on the enforcement of these rights. Likewise, Minas Gerais had

no economic reason to enforce the laws. Cattle ranchers in the north of the state were

not interested in obtaining a title on land. In the coffee growing regions, the absence
 156

of immigrants did not create incentives for the enforcement of laws. While the

formalization of social norms usually enhances the credibility and enforcement of the

laws, they are not the only factor to explain why land laws were enforced in Sao

Paulo but not in Minas Gerais. In political terms, the Republican Party in Sao Paulo

had a greater degree of coalition than the one in Minas. On the economic side, the

Paulista political elite ‘heterogeneity of goals’ had a strong connection (direct or not)

with the coffee complex. Not only the Minas Republican Party did not display a

strong degree of coalition but also the different economic zones implied divergent

economic interests. Hence, it was the weak convergence of interests, in both

economic and political terms, that prevent the land laws from being enforced in

Minas Gerais.

5.5 Conclusion

The laws regarding the land and labor markets have often been belittled by the

literature as irrelevant to attract immigrants, especially in a country famous for

creating laws ‘for the British to see’ (‘para o ingles ver’). Up to now, the literature

has not moved beyond the simplistic conclusion that the laws were inefficient to

promote any significant change in terms of landownership in Sao Paulo. The

subsidized immigration program, in turn, was responsible for attracting immigrants,

considered by most of the authors to have been ‘semi-slaves’ in order to prevent any

shortage of labor in the coffee farms.

 157

We decided to challenge this explanation mainly because all the other countries

that were attracting large numbers of immigrants in the first thirty years of the 20th

century offered free land, transportation, and education, among other public goods.

Europeans usually migrated to regions/countries where the rule of law was enforced.

If that were true, we had to find the laws that enticed immigrants to come to Sao

Paulo. This led to a thorough investigation of the legal framework and its

implications for the flow of immigrants, and the whole coffee complex.

Briefly, we reach two solid conclusions. First, that the subsidized immigration

program from Sao Paulo was successful because it was complemented by credible

land and labor policies. Second, the short term determinant of these laws – to attract

‘arms for agriculture’ (‘bracos para a lavoura’)– should not leave one to conclude

either that immigrants were semi-slaves or that very few of them came to own a

piece of land. The positive externalities produced by these laws affected the labor,

land and credit markets. In turn, the high demand for immigrants induced a long-

term effect derived from the enforcement of and the credibility achieved by these

laws. The nature of the political elite and their diversified wealth portfolio, implied

that they were willing to grant land rights and to enforce the law, mainly because

immigrants were needed to remain in the fields while they themselves were

gradually moving to the urban areas.

While there are many reasons why Sao Paulo became the world’s largest coffee-

producing region during the Old Republic, we tried to emphasize the critical role
 158

played by the laws as a major determinant for the success of the Paulista immigration

program. The feature that distinguished Sao Paulo from the other coffee states, Rio

and Minas, was that the coordination to enforce these laws came from those at the

local level who indeed decided whether or not the laws were enforceable, the

‘coroneis’. In the Paulista counties, the coroneis’ political influence was based not

only on land, but also on coffee commerce, banking and railroads. In Rio and Minas,

the land tenure situation did not evolve as much as in Sao Paulo because land was

still the ultimate source of power of the ‘coronel’.

 159

CHAPTER 6: THE IMPACTS OF THE LABOR AND LAND LAWS AND

THEIR LINKAGES IN THE LAND, LABOR AND CREDIT MARKETS IN
SAO PAULO DURING THE OLD REPUBLIC (1890-1930)

In the previous chapter we identified short and long-term determinants (the

necessary and sufficient conditions) of the creation of the land and labor laws. The

need for labor for the coffee farms was the major short-term reason for the enactment

of these laws. These laws did not reflect the ‘altruistic’ or farsighted long-term

development objectives on the part of the political elite. Based on this ‘selfish’

pattern of action, some historians125 have downplayed the effects of these laws on the

labor, land and credit markets. Indeed, they have said that there is little reason to talk

about written regulations in a country where ‘credible laws’ are enacted by the

‘coroneis’ and not by the constitution. In dismissing these laws, the literature also

missed important aspects of the coffee period in Sao Paulo. In our view, it remains to

be explained (1) how immigrants became coffee producers as early as 1905126 and

(2) why we observed a decrease in the size of rural plots.

The broad question that we try to answer in this chapter is: How do we

know that these laws were credible? What were the factors that explain the

credibility/enforcement of these laws? In this essay, we answer this question by

125
Among the most prominent were: Prado Jr. (1945), Holloway (1980), Dean (1974), Faoro (1959),
Petrone (1977), Beiguelman (1973) and Fausto (1977).
126
In appendix 3 we explain the methodology of the Agricultural censuses that allowed us to have the
number of rural plots as the number of owners with titles on land.
 160

studying the impacts produced by these regulations in the labor, credit and land

markets.

In the labor market, we address the credibility issue by demonstrating that the

increase in registered land in the state of Sao Paulo had two major determinants.

First, until 1920, the land and labor laws were the main factors that explain the

increase in the number of titles granted to immigrants. Second, we observed an

overall improvement in land ownership, i.e., with both Brazilians and immigrants

receiving titles to their land. An indirect impact of these laws was the attraction of

‘non-subsidized’ immigrants who chose to come to Sao Paulo instead of Argentina

because of its diversified immigrant community. These immigrants, often dismissed

by the literature, are important because through their experience we can understand

how and why the first industries were created in Sao Paulo, and hence one aspect of

the linkage between coffee and industrialization.

In the land market we address the credibility issue by comparing the land

tenure situation among the three largest coffee producing regions: Sao Paulo, Rio de

Janeiro and Minas Gerais. As a proxy for the ‘credibility effect’, we use the number

of mortgages in each state such that the greater is the enforcement of the law, the

higher should be the number of mortgages. Another by-product of these laws is the

decrease in the size of rural properties between 1905 and 1930. As previously

discussed, the 1907 immigration law and then the 1921 Washington Luis land law

provided various incentives to landowners to subdivide their properties.

 161

In the credit market, we identify three impacts of these laws. First, in part due

to the colonato, the overproduction of coffee in 1903 led to the 1906 Taubate

agreement. This treaty aimed to reduce the coffee price fluctuations and placed an

emphasis on quality by prohibiting low quality coffee from being exported. We

discuss the role played by the state in fostering the production of high quality coffee

and why the ‘push’ for quality did not really work in Sao Paulo. The second impact

from the land and labor laws in the credit market was the increase in the number of

commercial banks in the hinterlands of Sao Paulo that were managed by immigrants.

The third and broader issue concerns linkages of the labor, land and credit market

extending beyond the coffee economy. In other words, why does coffee matter? Our

argument is that coffee created the conditions for the ‘export led growth’ economy

and indeed created a domestic market strong enough to foster industrialization.

Coffee matters because, without these linkages, Sao Paulo would have experienced a

much weaker industrialization process (similar to the one in Argentina) that in turn,

would not have allowed Brazil to take off during the 1950s. Brazil’s industrial

structure is stronger than Argentina, and in fact than any of the Latin America

countries, because the positive conditions created during the coffee period were

subsequently spread to other Brazilian states but were never replicated in the other

Latin American countries.

This essay has two broad objectives. The first one is to demonstrate the positive

linkages produced by the labor and land laws in the output and credit markets. These
 162

linkages are, in our view, useful in order to dismiss the widespread idea that coffee

producers were trying to maximize their own welfare at the expense of the whole

society such that the institutions created during the coffee period were not conducive

to economic growth. The second objective is to provide a different view of how

private property rights were first created. For the Paulista case, the credibility of the

laws was driven by the need to attract immigrants. In our view, private property

rights were first created in Brazil to attract European immigrants. The laws evolved

and became more and more credible as a way of preserving the immigration flow to

Sao Paulo. Especially during the Republic, these laws led to an overall improvement

in landownership, and hence, were already working as ‘real land laws’. The

innovative aspect of this approach is to suggest that the improvement of land rights

happened not because coffee prices were high but because there was a strong

political element that was conducive to a superior outcome. In the absence of

cooperation among the political elite, like in Rio de Janeiro and Minas Gerais, the

two other leading coffee producing states, land rights evolved much more slowly.

To accomplish these goals we divide this essay into six sections. The impacts of

the laws on the labor market are the main themes of section 6.2. We provide an

overview of the whole immigration program (sub-section 6.2.1) and then explain

why coffee producers chose immigrants over the native population. The reasons for

the upward mobility of immigrants are the subject of two sections. We first indicate

the role played by the spontaneous immigrants in creating the first industries in Sao
 163

Paulo (sub-section 6.2.2) and then explain how and why colonos became coffee

producers (sub-section 6.2.3). In particular, in 6.2.3 we use the Sao Paulo censuses

(between 1905 and 1934) to illustrate that the improvement in land rights was

extremely significant for the immigrants as well as for Brazilians. In 6.2.3 we

provide evidence that immigrants accomplished upward and not downward mobility

(immigrants were not ‘semi-slaves’ as claimed by Truzzi (1986).

Then, in section 6.3 we investigate the impacts of these laws on the land market.

More specifically, our concern in 6.3.1 is to investigate whether or not there was any

significant change in the size of the rural properties by comparing the evolution of

different land size categories from 1905 to 1934. The main motive behind this sub-

section is to provide sound numbers to refute the claims expressed by Prado (1945),

Dean (1974) and Stolcke (1984) that the political dominance of the coffee producers

hampered any change in the land structure. In sub-section 6.3.2, land is still the

broad theme, but now the idea is to evaluate the productivity of immigrants coffee

farmers as compared to their Brazilian counterparts in Sao Paulo. Finally, in sub

section 6.3.3 we compare the land tenure situation between 1905 and 1930 among

the coffee states (Sao Paulo, Minas Gerais and Rio de Janeiro), as a way of

supporting our claim that Sao Paulo had a better land ownership record than the two

other states.

The credit market is the theme of section 6.4. Our analysis focuses on the

impacts produced by the land and labor laws on this market. The incentives for
 164

improvements in quality are often dismissed, but were a relevant aspect of the 1906

Taubate agreement that we discuss in 6.4.1 The increasing role of commercial banks

in granting credit is discussed in section 6.4.2, with special emphasis on the banks

managed by immigrants. In the last section of the credit market (section 6.4.3), we

provide a brief explanation as to why we see the coffee boom in Sao Paulo as an

application of the staple theory, especially in the provision of public goods

externalities that in turn, fostered industrialization. In section 6.5 we provide some

statistical tests that in fact corroborate our idea on the immigrant effect in enhancing

the credibility of the laws. Our main conclusions are in section 6.6.

6.2 The Impacts of the Labor and Land Laws on the Labor Market: Sao Paulo

1890-1934

6.2.1 The Sao Paulo Immigration Program: Main Features

During the Old Republic, Sao Paulo’s immigration program preserved the main

features of its former agency (the ‘Promotora’, created by the Prado brothers at the

end of the Empire). As discussed in chapter 4, the main idea of the Promotora was to

centralize all the steps of the immigration process into one single unit. During the

Old Republic, the Land and Colonization office in the Department of Agriculture

was in charge of coordinating the recruiting process in Europe, the transportation of

immigrants to Brazil, their reception in Santos, the accommodation of immigrants in

the Sao Paulo hostel and the hiring process. There were two main types of
 165

immigrants: subsidized and non-subsidized (or ‘spontaneous’). The former received

free transportation to Brazil, came in family units and were usually rural workers in

their countries of origins while the later paid for their transportation, were in

industrial or commercial activities and usually came alone to Sao Paulo.

The bulk of the immigration process was concentrated in the ‘subsidized’ type of

immigrant. According to Holloway (1980), the coffee zones in the western plateau

received the greatest number of immigrants during the Old Republic, followed by the

capital of Sao Paulo. The Paraiba valley did not receive a significant number of

immigrants during the Old Republic because it was a decadent zone as compared to

the land in the West of Sao Paulo. Besides free transportation, subsidized immigrants

also received parcels of rural land in the settlements.127 Immigrants were not simply

transported to the Western Plateau of Sao Paulo; instead they could choose where

they wanted to go while in the labor office in the Sao Paulo hostel. A contract

between the two parties was signed in the labor office, and in case of a dispute,

immigrants were entitled to free protection by the Patronato Agricola.

In terms of funding, the immigration program was entirely sponsored by the state

of Sao Paulo. As we can see from table 6.1, coffee taxes were the single most

important source of revenue for Sao Paulo between 1890 and 1930. On average, for

the whole period, coffee accounted for 56% of the total tax revenue. Coffee taxes

127
Only in 1906 did these subsidized immigrants receive parcels of land, because the 1895 land law
granted a ten-year period for private claimants to register their lands. It was only after this that the
state could start to construct settlements for the immigrants.
 166

however, were used for the provision of public goods, and on average only 6% were

spent on all phases of the immigration program. In comparison to Brazil’s

immigration program during the Empire period, Sao Paulo spent twice as much and

therefore received more than two times the number of immigrants that Brazil had

received between 1850 and 1889.

 167

Table 6.1 Sao Paulo State Taxes: Total, Coffee tax, Immigration
expenditures, Immigration numbers 1892-1930
Total tax Coffee C as State expenses E as Immigration To SP
revenue a
exports tax a % with a%
Immigration a
a
revenues of B of B
E % %
Year B C D F Total subsidized Spontan.
1892 8,748,480 6,372,720 73% 361,680 4% 42,061 95% 5%
1893 7,675,680 5,595,120 73% 897,120 12% 81,745 92% 6%
1894 6,918,400 5,112,200 74% 244,000 4% 48,947 91% 9%
1895 9,276,800 6,479,400 70% 1,455,800 16% 139,998 97% 3%
1896 7,531,200 5,327,820 71% 836,100 11% 99,010 96% 4%
1897 7,055,040 5,358,720 76% 948,320 13% 98,134 97% 3%
1898 5,632,350 3,903,900 69% 410,850 7% 46,939 95% 5%
1899 5,782,500 4,357,650 75% 341,700 6% 31,172 89% 11%
1900 7,271,300 5,563,580 77% 214,510 3% 21,038 91% 9%
1901 9,412,520 7,357,470 78% 1,035,230 11% 70,348 93% 7%
1902 7,920,720 5,980,320 76% 502,560 6% 37,831 86% 14%
1903 7,182,240 5,315,040 74% 57,120 1% 16,553 53% 47%
1904 8,303,750 6,204,250 75% 167,000 2% 23,761 67% 33%
1905 8,827,520 6,175,040 70% 1,015,040 11% 45,839 85% 15%
1906 11,493,900 8,644,350 75% 861,300 7% 46,214 85% 15%
1907 11,941,200 8,674,110 73% 514,290 4% 28,900 63% 37%
1908 10,048,340 6,878,900 68% 620,310 6% 37,278 76% 24%
1909 13,654,880 10,295,100 75% 808,790 6% 38,308 77% 23%
1910 10,119,450 5,765,100 57% 1,021,680 10% 39,486 81% 19%
1911 16,091,840 8,821,440 55% 1,146,560 7% 61,508 72% 28%
1912 19,329,600 11,732,800 61% 1,903,680 10% 98,640 78% 22%
1913 18,861,440 13,102,080 69% 2,103,040 11% 116,640 79% 21%
1914 14,205,650 10,080,400 71% 950,330 7% 46,624 77% 23%
1915 15,296,500 10,271,500 67% 359,750 2% 15,614 66% 34%
1916 13,578,280 7,713,740 57% 406,870 3% 17,011 76% 24%
1917 14,741,250 6,182,250 42% 926,500 6% 23,407 82% 18%
1918 13,030,750 4,566,500 35% 631,500 5% 11,447 75% 25%
1919 18,807,360 8,148,140 43% 510,120 3% 16,205 64% 36%
1920 16,258,830 5,918,010 36% 733,320 5% 32,484 51% 49%
1921 10,697,050 3,765,580 35% 1,028,040 10% 32,678 67% 33%
1922 11,651,770 3,802,240 33% 752,310 6% 31,281 58% 42%
1923 12,434,200 4,327,600 35% 897,800 7% 45,240 53% 47%
1924 15,616,150 5,779,840 37% 1,866,260 12% 56,085 61% 39%
1925 27,980,880 11,866,160 42% 1,961,280 7% 57,429 73% 27%
1926 32,985,540 17,952,480 54% 2,156,980 7% 76,796 78% 22%
1927 33,077,040 17,755,680 54% 843,360 3% 61,607 63% 37%
1928 32,772,600 14,322,240 44% 316,680 1% 40,847 48% 52%
 168

Table 6.1 Sao Paulo State Taxes: Total, Coffee tax, Immigration
expenditures, Immigration numbers 1892-1930 (cont.)
Total tax Coffee C as State expenses E as
revenue a
exports tax a % with a% Total
a % %
revenues a of B Immigration of B Immig. to subsidiz. spontan
E
Year B C D F SP
192935,817,360 17,454,840 49% 480,000 1% 53,362 na Na
1930 28,118,750 14,580,500 52% 440,000 2% 30,924 na na

Total 566,149,110 317,504,810 56% 32,727,780 6% 1,919,391 76% 23%

Note: (a) In current dollars. Sources: Column B: Sao Paulo, Departamento Estadual de Estatistica,
Publicacao, pp. 11-22; Column C: Sao Paulo, Secretaria da Fazenda, Relatorio, various years;
Column E: Boletim do Departmento do Trabalho Agricola, (1932) no. 73-74, pp. 67-68.

There are at least two main reasons why Sao Paulo had to attract foreign labor

instead of using the domestic work force. First, the Brazilian population in 1890 was

only one-sixth as large as that of the United States. Second, coffee farmers

discriminated against the native population arguing that in comparison to the

perceived laziness Brazilians (both native and former slaves), Europeans were hard-

working, ambitious and diligent people, whose goal was to become landowners128.

In terms of nationalities, Sao Paulo attracted a more diverse group of Europeans

than Argentina, which relied almost entirely on the Spanish. Between 1890 and

1930, according to Carneiro (1950), the majority of immigrants came from Italy

(30%)129, Portugal (18%), Spain (15%) and Japan (15%). During this period, the

‘others’ were mainly from the Middle East and from the western European countries.

128
In: Sociedade Nacional de Agricultura (1920), p. 32-39, c81,87, 100, 117, 131, 172,190,192, 207,
220, 246,, 253, 265 and 359.
129
The 1902 Prinatti decree prohibited Italian citizens to use the subsidies to go to Sao Paulo as a way
to reduce the immigration to the region. According to Davie (1936) the late unification of Italy led
this country to create laws to prevent Italians from leaving the country. In other words, Italian
immigration to Brazil, United States and Argentina decreased between 1902 and 1920 (Davie, 1936).
 169

The fact that the Paulista Republican Party (PRP) was the only political party

that existed in Sao Paulo until 1926 gave continuity to the immigration program. In

1927, the newly created Democratic party vetoed the funds for subsidized

immigration that in turn was discontinued until 1935. The general opinion was that

in 1927 Sao Paulo had created the structural conditions to attract the inflow of

spontaneous immigrants.130

6. 2. 2 Spontaneous Immigrants and Industrialization in Sao Paulo: 1890-1930

Different from the subsidized ones, the spontaneous immigrants that came to

Sao Paulo until 1930 were not rural workers. Instead, the great majority had had

previous experience with manufactures and commerce. These foreigners chose Sao

Paulo, instead of Argentina, because there was a large and diverse immigrant

community in the state of Italians, Turks, Arabs, Russians and Armenians.131 Until

1890, the few existing industries (mainly cotton mills) were located in Rio de Janeiro

and owned by Portuguese immigrants. During the Old Republic, Rio discontinued its

immigration program and its industries did not move forward mainly because the

domestic market remained stagnant. The increase in the size of the domestic market

in Sao Paulo is a consequence of the booming coffee economy. In fact, it seems that

the foreign merchants first established themselves in Sao Paulo with small factory

units to meet certain specific demands from the coffee economy. In Franca, for

130
Schmidt & Reis (1942: 164-202).
131
Mamigonian (1976), p. 83-72.
 170

example, two Italian immigrants started producing boots for the coffee colonos.132

During the 1930s, Franca became the leading shoe industry in Brazil. Sao Paulo did

not have any factory to produce flour (that was part of the European diet). Then,

Francisco Matarazzo arrived in Sao Paulo from Campania (Italy) in 1891 and

became a small wheat importer in Campinas.133 In 1902, he founded the first wheat

mill in Sao Paulo. In the absence of any company making cloth bags (in which to

place the wheat), Matarazzo began the textile industry by opening a cloth factory and

then a textile company. Mr. Matarazzo had previous contacts in Italy that in turn,

enabled him to open a branch of the Bank of Naples in Sao Paulo and in 12 other

municipalities of the western plateau. Another interesting case, is Mr. Arthur

Diederichesen134 who opened two companies in Ribeirao Preto in 1914. This

German who arrived in Brazil in 1898, and acquired Brazilian citizenship in 1902, is

known to be the pioneer in introducing machines for drying coffee (dryers) and other

machines used in processing coffee. His friendship with colonel Schmidt (a

subsidized German immigrant who became a coffee producer) brought him political

influence (‘coronel’), and in 1924 Mr. Diederichesen became the President of the

Sociedade Paulista de Agricultura.

Spontaneous immigrants were also employed by first generation coffee

producers in the production of glass (Santa Marina, owned by Antonio Prado),

132
Bresser Pereira (1964), p. 33.
133
Souza Martins (1967), p. 22-34.
134
Simonsen (1940). p. 185-191.
 171

cement (Votorantim owned by Lacerda Franco), beer (Antartica, owned by Teodoro

Sampaio).

In 1920, out of the 36,338 companies in Brazil, 11% were in Sao Paulo. The

state accounted for 33% of total Brazilian industrial production and for 38% in

1930135. In Sao Paulo, the food complex responded for 30% of the 4,145 companies

in 1920. Almost 50% of these factories were, in some ways, related to the coffee

economy (coffee processing, grinding, benefiting). The textile and the clothes

(vestuario) industry accounted for 24% of the total number of industries in Sao Paulo

in 1920 and for 30% of the Brazilian factories. The main conclusion is not only that

coffee fostered industrialization but also that the later was promoted by foreigners.

From the 4, 145 industries in Sao Paulo, there were 2,966 privately owned

companies and 49% had Italian owners. The Italian companies employed at least

10% of the total Paulista industrial labor force and accounted for at least 9% of total

industrial production in Sao Paulo.136 Indeed, Sao Paulo hosted 52% of the total

number of companies that were privately owned by foreigners in Brazil.

In different degrees, these immigrants contributed to the industrialization of

Sao Paulo. While they did not directly benefit from the labor and land laws created

during this period, there is a consensus in the literature that the choice of Sao Paulo

135
The number of industries and ownership are from: Separata do Anuario Estatistico do Brasil 1940,
p. 29, table II (for Brazil) and Recenseamento do Brazil, vol. V, parte 1, p. LXII, LXIII, LXIV, 11, 30,
31, 42, 43, 22 (for Sao Paulo).
136
We say ‘at least’ because we do not have the value of production and the number of employees for
Sao Paulo privately owned industries.
 172

over Argentina was motivated by the larger and more diversified immigrant

community that prevailed in Sao Paulo.

6.2.3 The Upward Mobility of the Subsidized Immigrants: from ‘Colonos’ to

Coffee Producers
During the first ten years of the Old Republic (1890-1900), the State of Sao

Paulo attracted more immigrants (756,023) than Argentina (648,000).137 Subsidized

immigrants going to the coffee zones of the Western Plateau accounted for 40% of

this total. By comparing the figures on numbers of landowners and population from

the 1905 Census for the Western Plateau region, it can be seen that the incidence of

landownership was relatively higher for immigrants than for Brazilians.138 How was

this upward mobility possible?

The ‘colonato’ contract established between the farmers and the immigrants

had two components, namely, monetary and non-monetary. The monetary part called

for a fixed piece rate wage set before the harvesting season. The non-monetary

component consisted of rights to intercropping and free housing. The sale of cash

crops139 (from intercropping) was so important to the immigrants’ income that in

case the owner prohibited intercropping after the required five years, the colonato

family usually moved to another farm. The cash income from crop sales and wages

enabled many immigrants to acquire land in the coffee regions of Sao Paulo’s

137
Numbers for Argentina are from: Maurice R. Davie (1939), World Immigration, New York.
138
In 1905, immigrants accounted for 16.5% of the population but owned 22% of the private
properties in the Western Plateau.
139
Usually, the crops were composed by: rice, corn and beans. Also, colonos usually sold poultry, in
addition to the crops. Given the dominance of coffee in the Sao Paulo rural area, the State lacked
adequate production of other crops. This is why the sale of these crops were so lucrative.
 173

Western plateau. This process was facilitated after 1897 when overproduction of

coffee began to push prices down sharply, threatening many large plantation owners

with bankruptcy. To avoid this, many of them chose to subdivide their estates and

offer some of the subdivided land to new buyers.

Table 6.2 Landownership and Population in the Rural Areas of Sao Paulo
by Zone and Nationality: 1905
Zones of Sao Paulo Number of Rural Properties in 1905 Total rural
state a Total Brazilians Immigrants area (in
alqueires)
Number % Zone Number % Zone
Capital (1st) 2,524 2,028 80% 496 20% 82,331
nd
Paraiba valley (2 ) 14,252 13,535 95% 717 5% 516,928
rd
Sorocaba (3 ) 2,570 2,439 95% 131 5% 227,461
Central (4th) 7,680 6,200 81% 1,480 19% 417,371
th
Mogiana(5 ) 8,087 6,884 85% 1,203 15% 839,355
th
Paulista (6 ) 4,563 3,042 67% 1,521 33% 569,904
th
Araraquarense (7 ) 5,597 3,938 70% 1,659 30% 592,834
Noroeste (8th) 341 274 80% 67 20% 220,770
th
Alta Sorocabana (9 ) 5,050 4,140 82% 910 18% 788,027
th
Baixa Sorocabana (10 ) 4,078 4,000 98% 78 2% 365,581
Southern Coast (11th) 2,442 2,220 91% 222 9% 83,644
th
Total (1-11 zone) 57,184 48,700 85% 8,484 15% 4,704,206
th th
Western Plateau (4 -9 ) 31,318 24,478 78% 6,840 22% 3,428,261
 174

Table 6.2 Landownership and Population in the Rural Areas of Sao

Paulo by Zone and Nationality: 1905 (cont.)
Zones of Sao Paulo Population 1905b
state a Total Brazilians Immigrants
Number % Zone Number % Zone
Capital (1st) 281,256 188,442 67% 92,814 33%
nd
Paraiba valley (2 ) 405,334 396,292 98% 9,042 2%
Sorocaba (3rd) 103,185 90,853 88% 12,333 12%
Central (4th) 309,556 272,558 88% 36,998 12%
th
Mogiana(5 ) 464,091 417,682 90% 46,409 10%
Paulista (6th) 275,079 265,795 97% 9,284 3%
th
Araraquarense (7 ) 148,400 99,279 67% 49,121 33%
th
Noroeste (8 ) 7,815 4,978 64% 2,837 36%
Alta Sorocabana (9th) 118,905 93,935 79% 24,970 21%
th
Baixa Sorocabana (10 ) 80,820 73,546 91% 7,274 9%
th
Southern Coast (11 ) 85,167 47,572 56% 37,595 44%
th
Total (1-11 zone) 2,279,608 1,950,932 86% 328,676 14%
th th
Western Plateau (4 -9 ) 1,323,846 1,154,227 87% 169,619 13%
Notes: (a) For a list of the municipalities in each zone, please refer to Appendix 1.
(b) There is no population data for 1905, so we used the 1900 Sao Paulo population from
Camargo.
Source: Camargo (1954), vol. 2 Tables: 12,13, 23, 28, 41, 52 and vol. 3, pg.176,177.

The agricultural censuses elaborated by the State of Sao Paulo, between 1905 and

1934, used the landowners who had a title on the land as the criteria for including the

rural properties in the data or not. It is only in 1953 that Sao Paulo started using

samples of the population for censuses purposes. Pino (1996, 1999), explained that

the 1905 and the 1930s Sao Paulo agricultural census were good approximations for

the number of rural landowners with a title on land.

Dean (1976a, 1976b,) and Hall (1968) argued that this increase in foreign

landownership had no relation with the subsidized immigration program, whereas

Belgueiman (1973) argued that ‘colonos’ bought marginal land in 1905. While Hall
 175

claims that immigrants did not have any aspiration to become landowners, Dean

provides a more detailed explanation as to why, according to the 1905 census,

‘colonos’ had not bought land. The author reported the wages from the largest coffee

farm in Rio Claro and the colonos’ proceeds from the sale of crops. According to his

estimate (between 1890 and 1905) the average income for a ‘colono’ family was

$202.4 (880.00 milreis) per year. Dean then explains that, due to inflation, ‘colonos’

were unable to save. In brief, his main conclusion is that ‘colonos’ could not afford

to buy land and hence the 1905 increase in foreign landownership is explained by the

‘spontaneous’ immigrants.

However, we used Dean’s numbers and used an 1895 survey from Sao Paulo

secretary of agriculture, reported in Holloway (1980, p. 84), that indicated that half

of the ‘colonos’ annual income was spent on the family’s maintenance (food,

clothing, tools and other needs).140 In turn, it means that colonos saved 50% of the

$202.4 yearly income. 141 In this case, the annual amount of savings was equal to

$101.4 per year. In contrast to Dean, this would make it seem that ‘colonos’ could

buy land in 1905. We isolated the municipalities in the western plateau where coffee

production accounted for 70% or more of the total rural area. Then, in each one we

140
The IBGE cost of living study (for the city of Rio de Janeiro, between 1912 and 1939) shows that
housing and food accounted for 70% of the total expenditures. Source: IBGE, Separata do Anuario
Estatistico do Brasil 1939/1940, p. 94. Holloway (1980, p. 80) reports another cost of living study
done in 1934 for Sao Paulo with a sample of 185 urban working class. In this report, housing and food
accounted for 75% of expenditures.
141
Colonos had free housing, hospital and schooling, that enabled them to avoid these expenses.
 176

counted the number of foreigners landowners142 and found that almost 50% of the

total foreign landowners bought land in these regions (called ‘coffee cities’). We

then found the average and standard deviation of the price of coffee land to be $32.7

and $14.1 (per alqueire) in these municipalities. Finally, we could then estimate that

to buy 10 alqueires (24.2 hectares or 49.80 acres) of coffee lands, a family of three

colonos had to save for 3.22 years. In other words, it is possible to conclude that

colonos could have saved enough to buy rural land as early as 1905. While we did

not find stories of spontaneous immigrants that bought rural land, we found some

illustrative stories of immigrants that became landowners as early as 1905.

Taquaritinga, one of our ‘coffee cities’ located in the Araraquarense zone,

became famous for having more foreign landowners (208) than native Brazilians

(144), according to the 1905 census. In this municipality, in 1901 Guissepe Mortari,

an Italian immigrant who owned coffee land in this city, gave the following account

for the annual income and expenses of a colono family made up of three people in a

working wage:143

TAQUARITINGA, 1901
YEARLY INCOME FOR A FAMILY OF 3
1. cultivation of 4,000 trees at 80.00 per 1,000 trees ….… 320.00

2. Harvest of 480 alqueires at 0.50 per alqueire ……………240.00

3. Sale of 5 carros (6,000 liters ) of corn

142
The 1905 census does not provide a breakdown of the area owned by Brazilians and by
immigrants. Data taken from: Camargo (1954) and land prices from: Estatistica de Producao e
Comercio da Secretaria de Agricultura do Estado de Sao Paulo para 1905.
143
Income data from Mortari’s report are reproduced from Pio di Savoia, Gherardo (1905). “Lo Stato
di San Paolo (Brasile) e l’emigrazione italiana” Bolletino dell’Emigrazione, p. 36-37.
 177

@ 20.00 per carro…………………………………………..100.00

4. Sale of 10 bags (1,000 liters) of rice

@ 4.00 per bag………………………………………………. 40.00

5.Sale of poultry and animals………………………………..150.00

(A) TOTAL INCOME 890.00

YEARLY EXPENSES FOR A FAMILY OF 3

Purchases of food inputs, clothing, tools and other supplies
Calculated at 0.5 per person per day………………………..547.50
(B) TOTAL SPENDING 547.50
Savings = (A) – (B) = 342.50

The family would be able to save 38% of its income, and if we convert to the

1905 exchange rate the 342.50 milreis was equal to $109.44 dollars.

The greater the number of working people in the family, the higher was the

amount of savings, though the marginal propensity of savings seemed highly stable

among immigrants. According to another example, provided by Mr. Maistrello, a

coffee farmer in Pirassununga, in 1902, a colono family of 10 people, where 6 were

at working age the annual income was:144

PIRASSUNUNGA, 1902:
YEARLY INCOME FOR A FAMILY OF 10, WITH 6 WORKERS
Cultivation of 16,000 of coffee trees
@150.00 per 1,000 trees……………………………………….2,400.00
milreis

1. Harvest of 960 alqueires

@ 0.5 per alqueire………………………………………………480.00 milreis

2. Sale of corn, beans and rice…………………………………600.00

milreis

144
Income data from Maistrello report are reproduced from: Ramos, Augusto (1923). O Café: no
Brasil e no Estrangeiro, p. 558-559.
 178

(A)TOTAL INCOME ……………….3,480.00

milreis

(B) TOTAL SPENDING……………….2,350.00

milreis

Savings = (A) – (B) = 1,130.00 milreis.

Such family was able to save 32% of its income. At the average exchange

rate of 1902, the savings of 1,130 milreis was equivalent to U.S. $271.20.

In the Mogiana zone, 20% of foreign owners were located in two

municipalities: Ribeirao Preto and Sertaozinho. Martinico Prado found in Ribeirao

the ‘terra roxa’ in the early 1880s. Sertaozinho, a few miles west of Ribeirao, was

found in the same time by Martinico, due to its exceptional soil quality. Both were

essentially ‘coffee cities’ in 1905 with 99% and 97% of coffee planted in the rural

areas respectively. While Setaozinho had more Brazilian landowners (171) than

Ribeirao (156), each of these coffee cities had exactly the same number of foreign

owners (105) in 1905. This third story is from the Italian consul in Ribeirao Preto,

for a family of two workers:145

RIBEIRAO PRETO 1905

YEARLY INCOME FOR A FAMILY OF 3, WITH 2 WORKERS
1. Cultivation of 5,000 of coffee trees
@60.00 per 1,000 trees……………………………………….300.00 milreis

2. Harvest of 450 alqueires

@ 0.4 per alqueire………………………………………………180.00 milreis

145
Source: Brandao Sobrinho, Julio (1903). Apreciacao da situacao agricola, zootechnica, industrial
e commercial do 3o. districto agronomico do estado de Sao Paulo com sede em Ribeirao Preto.
 179

3. Sale of corn, beans and rice…………………………………270.00

milreis
(A)TOTAL INCOME ……………….750.00 milreis

(B) TOTAL SPENDING……………….550.00 milreis

Savings = (A) – (B) = 200.00 milreis or US $64.00 per year.

According to the above examples, it seems that between 1890 and 1905,

immigrants were able to save. Clearly, these examples do not intend to explain the

whole movement of why and how immigrants became landowners. Likewise, we are

not denying the possibility that some foreign landowners came from the urban areas.

However, while the records and stories on the upward mobility of the ‘colono’ are

mounting, we did not find a single case where an urban immigrant bought land in the

hinterlands of Sao Paulo.146 Hutter (1972) explains that the Italian immigrants that

came to Sao Paulo aimed at becoming landowners. Hutter, researched nine years of

Italian immigration to Sao Paulo (1880-1889). The author explains that she did not

find any type of evidence that spontaneous immigrants became landowners.

According to table 6.2, we observed that a higher share of immigrants (one in

every twenty five) than Brazilians (one in every forty-seven) owned a plot of land in

the western plateau in 1905.In turn, such a fact, corroborates the idea that the sale of

146
Even the two most successful foreign coffee producers, Schimdt and Lunnardelli, were former
‘colonos’ in the early 1880s.
 180

cash crops and the bankruptcy of some Brazilian coffee producers contributed to an

increase in foreign landownership.

When the state of Sao Paulo prohibited intercropping in 1904 at the behest of

badly hurt landowners, many of the immigrant workers left, creating another labor

shortage crisis and forcing the government to create another set of incentives to

attract immigrants.

What was needed was a mechanism to compensate the immigrants for the

loss of income due to the prohibition of intercropping but without again inducing

overproduction of coffee.

6.2.3.1 Immigration Policies and Settlements: Further Increases in

Landownership 1906-1920

Subsidized immigrants experienced upward mobility even after the prohibition of

intercropping in 1904. Table 6.3 shows that, according to the 1920 Agricultural

Census, the share of immigrants in the number of registered private properties was

quite high, especially in the Western Plateau area of the state. Whereas only 56% of

the Brazilian-owned farms in Sao Paulo were located in the Western Plateau, 89% of

the foreign-owned farms were in this zone. For the plateau as a whole, almost 40

percent of the properties were owned by immigrants. The table also shows, not

surprisingly, that the land parcels belonging to immigrants were smaller than those of

Brazilians.
 181

Table 6.3: Rural Establishments and Population by zone and nationality:

1920
Zones of Sao Paulo state a Rural Area (in alqueiresb)
Rural Establishments in 1920
Total Brazilians Immigrants Av. Areac
Number % Zone Number % Zone Total Area Brazilians Immigrants
Capital (1st) 2,211 1,900 85.9% 311 14.1% 56,273 25 14
Paraiba valley (2 )
nd 11,045 10,105 91.5% 940 8.5% 476,749 35 75
Sorocaba (3rd) 6,702 6,375 95.1% 327 4.9% 212,793 32 33
th
Central (4 ) 6,501 4,049 62.3% 2,452 37.7% 389,088 50 21
Mogiana(5th) 10,149 7,301 71.9% 2,848 28.1% 940,752 98 29
Paulista (6 )
th 7,586 4,141 54.6% 3,445 45.4% 694,381 106 33
Araraquarense (7th) 13,395 7,163 53.5% 6,232 46.5% 937,956 89 33
Noroeste (8 ) th 3,239 1,098 33.9% 2,141 66.1% 327,938 179 39
Alta Sorocabana (9th) 9,265 6,837 73.8% 2,428 26.2% 1,012,910 105 40
Baixa Sorocabana (10 )th 3,781 3,715 98.3% 66 1.7% 488,119 123 224
Southern Coast (11th) 2,436 1,561 64.1% 875 35.9% 176,656 52 32
Total 1-11 th 76,310 54,245 71.1% 22,065 28.9% 5,713,615 75 34
Western Plateau (4th-9th) 50,135 30,589 61.0% 19,546 39.0% 4,303,025 95 32
Notes: (a) The total area per zone is the whole area not the cultivated area. (b) One alqueire
equals 2.42 hectares or 5.98 acres. (c) Average area is the total rural area (by nationality)
divided by the number of rural establishments. Sources: Censo Agricola 1920, Vol. 3, p. 193-
207 and 280-294.

While many immigrants had become landowners by 1920, the inflow of

immigrants also had positive externalities for Brazilians. The incidence of

landownership also grew for them quite significantly between 1905 and 1920, in part

as an effect of the 1895 land law147 and also due to the incentives provided by the

1906 immigration law.

147
The 1895 land law gave claimants a 10 year period within which to register their lands. In turn, it is
possible that some of these claimants were not included in the 1905 because their titling process
finished only in 1905. However, these claimants were included in the 1920 census.
 182

Table 6.3: Rural Establishments and Population by zone and

nationality: 1920 (cont.)
Zones of Sao Paulo Sao Paulo State Population 1920
state a Total Brazilians Immigrants
Number % zone Number % zone
Capital (1st) 654,578 438,499 67.0% 216,079 33.0%
Paraiba valley (2nd) 484,699 472,620 97.5% 12,079 2.5%
Sorocaba (3rd) 188,131 163,531 86.9% 24,601 13.1%
Central (4 )
th 564,393 490,592 86.9% 73,802 13.1%
Mogiana(5th) 811,974 672,424 82.8% 139,550 17.2%
Paulista (6th) 530,257 423,175 79.8% 107,082 20.2%
Araraquarense (7th) 583,771 453,608 77.7% 130,163 22.3%
Noroeste (8 ) th 136,454 103,608 75.9% 32,846 24.1%
Alta Sorocabana (9th) 341,754 293,250 85.8% 48,504 14.2%
Baixa Sorocabana (10th) 134,227 132,298 98.6% 1,929 1.4%
Southern Coast (11 ) th 161,950 119,023 73.5% 42,927 26.5%
Total 1st-11th 4,592,188 3,762,627 81.9% 829,561 18.1%
Western Plateau (4th-9th) 2,968,603 2,436,657 82.1% 531,947 17.9%
Note: (a) For more information about the zones refer to Appendix 1. Source:
Camargo (1954), p. 176 and 177, Table 125 and 126;

As previously mentioned Belgueiman (1970) and Stocke (1986) claimed that

immigrants acquired only marginal land but not coffee land before 1930. The 1920

Agricultural Census, unfortunately, did not distinguish coffee land from other land.

But, by making use of a 1923 survey of coffee farms by the State’s Department of

Agriculture, in Table 6.3 we show that immigrants owned 20,493 properties in the

Western Plateau. According to table 6.4 immigrants owned 12,939 coffee farms in

the same region. Therefore, combining both tables (6.3 and 6.4) we are able to show
 183

that some 63 percent of immigrant farms in the Western Plateau were owned coffee

farms compared to 56 percent for Brazilian farms. As a result, by this date the

foreign share of coffee farms in the coffee zone was up to 43 percent. Given the

enormous early lead of Brazilians in coffee, this represents a remarkable turnaround

in favor of immigrants. In some of the individual zones within the plateau,

immigrants accounted for more than half of all coffee farms and in some of the

municipios within these zones immigrants accounted for as much as 80 percent of all

coffee farms.

Table 6.4: Total Number of Rural properties in Western Sao Paulo as

compared to the total number of coffee farms by nationality, 1920, 1923
Rural Establishments and Coffee Properties Number of Coffee Trees
Planted area of Coffee
in the Western Sao
Zones of Sao Paulo Number of Coffee % of coffee zone (Alqueires), 1923
Paulo, 1923
state Rural
propertie
Establishm Brazilian Immigrants Brazilians Immigrant Brazilians Immigrants
sa
. (1920)
Central (4th) 6,501 5,338 70% 30% 57,380,000 19,874,000 29,201 10,114
Mogiana(5th) 10,149 7,004 67% 33% 174,937,000 51,237,000 89,026 26,075
th
Paulista (6 ) 7,586 5,258 48% 52% 111,422,000 54,893,000 56,703 27,935
Araraquarense (7 )th 13,395 7,632 42% 58% 99,045,000 79,080,000 50,405 40,244
Noroeste (8th) 3,239 536 66% 34% 19,672,000 7,681,000 10,011 3,909
Alta Sorocabana
4,323 61% 39% 67,637,000 19,982,000 34,421 10,169
(9th) 9,265
Western Plateau
57% 43% 530,093,000 232,747,000 269,767 118,446
(4th-9 th) 53,666 30,091
Note: a) Coffee data is from 1923. Notes: (b) The planted area was estimated by using the fact that in
there are 1,965 coffee trees in one alqueire. Source: Camargo (1954), p. 174-189, vol. 3 and Boletim
do Departamento Estadual do Trabalho, Nos. 50-51, p. 23-28.

As detailed in the previous chapter, the 1906 law institutionalized state financing

to help immigrants (but not Brazilians) to purchase plots. By receiving land in the

rural settlements (known as ‘viveiros’), immigrants continued to plant cash crops and

with the proceeds they could buy coffee land. Between 1905 and 1920, we noticed
 184

an increase in the land tenure (measured by the number of rural properties in the

Western Plateau) in Sao Paulo.

6.2.3.2 The Third Phase of Improvement in Landownership: 1921-1934

In 1920, Washington Luis discontinued the set of incentives summarized in the

1906 immigration law. According to the Paulista governor, he intended to approve a

land law that would to a certain extent, include the incentives from the 1906

immigration law.

In fact, the 1921 law is considered by some experts148 to be one of the most

liberal laws ever enacted in Sao Paulo. We see at least two reasons for such liberal

law. The first is motivated by political reasons since he intended to run for President

and he needed all the support he could get by granting free titles to land. The second

reason for such a liberal law has to do with its credibility. Washington149 Luis

announced that the main reason for offering free measurement was because the state

wanted to grant titles to private claims only until 1927. After that year, he explained,

the usufruct land in private hands would no longer be transferable, mortgaged or

sold. From 1927 onwards, private claimants would have to file suits against the

government to claim ownership. Claimants benefited from the 1921 legislation and

in fact registered their lands. In 1927, Sao Paulo indeed created a disposition enticing

the state to bring the unclaimed land under private domain.

148
This is the opinion of two highly respected magistrates: Lacerda (1961, Livro 1, vol.3 and 4) and
Cardozo (1954, vol 1, titulo I) and Cardoso (1947, p. 134-191).
149
Washington Luis to Epitacio Pessoa. Rio 19 de Outubro de 1919. Washington Luis Achive,
Arquivo Nacional, pastas 43 and 44;. Washington Luis, Mensagem do Presidente do Estado de Sao
Paulo, 1919: p. 12-19, 1920: p. 8-11 and 1922: p. 71-75.
 185

Table 6.5: Total Number of Rural properties in Western Sao

Paulo and total number of coffee farms by nationality, 1932-1934
Zones of Sao Paulo state Rural Properties and Coffee Propertiesa
Total number Coffee % of coffee zone
of properties. Properties 1932
1934 Brazilians Immigrants
Central (4th) 27,972 8,067 65% 35%
Mogiana(5 ) th 19,810 10,848 67% 33%
Paulista (6th) 15,628 9,842 50% 50%
Araraquarense (7th) 33,212 21,333 48% 52%
Noroeste (8th) 31,786 17,434 44% 56%
Alta Sorocabana (9th) 26,548 11,477 47% 53%
Total Western Plateau (4th-9th ) 154,956 79,001 52% 48%
Notes: (a) For more information about the methodology of the Sao Paulo
Agricultural Censuses, refer to Appendix 2. Sources: For rural properties Camargo
(1954), p. 176-177, vol. 3. For coffee properties: Estatistica Agricola e zootechnica:
1931-1932. p. 32 and 33, Sao Paulo: Secretaria de Agricultura.

Table 6.6: Total Number of Coffee Trees and Planted Coffee

Area by nationality, 1932
Zones of Sao Paulo Number of Coffee Trees in Planted coffee area (in
state a
Western Plateau 1932 alqueires) 1932
Brazilians Immigrants Brazilians Immigrants
Central (4th) 63,428,000 34,375,000 32,279 17,494
Mogiana(5th) 224,915,000 62,000,000 114,461 31,552
Paulista (6th) 133,158,000 74,135,000 67,765 37,728
Araraquarense (7th) 219,855,000 194,735,000 111,885 99,102
Noroeste (8th) 144,091,000 130,564,000 73,329 66,445
Alta Sorocabana (9th) 97,180,000 70,969,000 49,455 36,117
Total Western Plateau (4-9) 882,627,000 566,778,000 449,174 288,437
Notes: (a) For more information about the zones, refer to Appendix 1. (b) For
more information about the methodology of the Sao Paulo Agricultural Censuses,
refer to Appendix 2. Sources: For rural properties Camargo (1954), p. 176-177,
vol. 3. For coffee properties: Estatistica Agricola e zootechnica: 1931-1932. p. 32
and 33, Sao Paulo: Secretaria de Agricultura.

Comparing the 1934 land tenure situation with the 1920 one, we may conclude

that the 1921 land law produced positive effects in the land market. Between 1920

and 1934 in the Western Plateau of Sao Paulo, the number of private titles held by
 186

Brazilians increased by 202% and to immigrants by 256%. The second effect was a

decrease in the percentage of coffee properties owned by Brazilians (57% in 1923 to

52% in 1934) and a further upward movement for the immigrant group (from 43% in

1923 to 48% in 1934).

It is our view that the land and labor laws produced major changes in the land

market. We had three distinct phases of improvement in the land market. The first

one, until 1905 was driven primary by the saving from intercropping (through the

colonato contract) that in turn, explained how immigrants acquired land as early as

1905. Our argument contrasts sharply with Dean (1976a) who argued that

immigrants could not save and hence, they could not buy any type of land. The

prohibition of intercropping in 1904 was in great part offset by the 1906 immigration

law that granted land and other incentives for immigrants. In this second stage

(between 1906 and 1920), immigrants’ upward mobility remained fairly constant in

relative terms (one in twenty six immigrants owned land in both censuses 1905 and

1920) but relative downward mobility for Brazilians (one in every 47 had rural land

in 1905 and one out of 80 owned rural land in 1920). The 1906 immigration law

explains this distinctive pattern of ownership between the two groups (immigrants

and Brazilians). Finally, the 1921 land law is best appreciated in the Paulista 1932

and 1934 censuses. This law indeed led to an improvement in the overall pattern of

land ownership and both groups benefited from its liberal dispositions. In brief, the

396% increase in land ownership in the western plateau between 1905 and 1934 is
 187

explained by the rise in the number of Brazilians who became landowners (64%) and

by a similar increase (44%) in foreign landownership.

6.3 The Impacts of the Labor and Land Laws on the Land Market, Sao Paulo
(1890-1934)

6.3.1 The Creation of Small Size properties: An overview

The classification used here was proposed by Millet (1941). As shown in

table 6.6, land concentration decreased between 1905 and 1930. In 1905, Sao Paulo

had only 10% of its rural area comprised of small farms (up to 25 alqueires) while

20% was comprised of ‘latifundio’ (over 500 alqueires). By 1920, ‘small’ farms

accounted for 15% and by 1930 for 30%. Also by 1930 the latifundio share had

dropped precipitously to just 4%. Since Brazilians at all times comprised the

majority of landowners, it was the positive externalities brought by the inflow of

immigrants that explains the overall change in farm size. Possibly, the same

transformation in the size structure of farms was not found in other coffee-growing

states.

As time went on, the growth in coffee supply began to outstrip that in

demand and also problems in the quality of Brazilian coffee began to arise, causing

coffee prices to fall. Significantly, however, it was Sao Paulo coffee producers that

led the drive to introduce grading standards and hence to mitigate the problem.
 188

Table 6.7 Sao Paulo State 1905, 1920 and 1930: Comparative Size of Rural
Properties and Areas of Rural Properties
Size Number of Rural Properties Area Rural Properties
category
1905 1920 1930 1905 1920 1930
(alqueires)
a
Total % Total % Total % Total % Total % Total %

Up to 10 20,021 35% 33,255 41.1% 85,287 52.4% 200,210 4% 7% 852,870 14%

332,550
11-25 12,051 21% 16,161 20.0% 38,841 23.8% 301,275 6% 8% 971,025 16%
404,025
26-50 9,567 17% 15,970 19.7% 19,714 12.1% 478,350 10% 16% 985,700 16%
798,500
51-100 6,648 12% 8,170 10.1% 10,316 6.3% 664,800 13% 16% 1,031,600 17%
817,000
101-250 5,150 9% 5,432 6.7% 6,179 3.8% 1,287,500 26% 27% 1,421,170 23%
1,358,000
251-500 2,188 4% 1,112 1.4% 2,077 1.3% 1,094,000 22% 11% 623,100 10%
556,000
500 and up 1,559 3% 821 1.0% 461 0.3% 987,782 20% 16% 230,500 4%
821,000
Total 57,184 100% 80,921 100% 162,875 100% 5,013,917 100% 100% 6,115,965 100%
5,087,075
(a) The alqueire in Sao Paulo was equivalent to 2.42 hectares or 5.98 acres.
Source: For 1905: Camargo, (1954), table 104, p. 142; for 1920: Brazil, Diretoria Geral de
Estatistica, Recenseamento do Brazil de 1920, Vol.3, part 1, Rio de Janeiro, 1923, p.232 and
for 1930: Estatistica Agricola e Zootechnica, 1930-1931, p. 31, Sao paulo: Directoria de
Estatistica, Industria e Comercio.

In 1930, there were still latifundio types of properties in Sao Paulo. We

cannot, however, generalize the argument to conclude that Sao Paulo had marginal

changes in its land policy, as claimed by Dean (1976a), Prado (1979) and Stolcke

(1986). The changes in the land ownership pattern in Sao Paulo started as early as

1905 as a result of the land and labor laws created during the Old Republic in Sao

Paulo. The decrease in the number of latifundios between 1920 and 1930 probably

reflects the monetary incentives granted by the 1921 Washington Luis land law for

large farmers to subdivide their lands.

 189

6.3.2 Farm Size and Productivity

So far, we argued that immigrants contributed to a decrease in the average

size of farms. The question that remained to be answered is: were these trends

toward foreign farm ownership and smaller farms in the direction of greater

efficiency? While detailed data on all inputs other than land is unavailable making it

impossible to construct proper TFP measures of efficiency, Table 6.8 provides some

relevant information on yields (land productivity) for different sizes and owners.

Since fertilizers and other non-labor inputs were probably more available to coffee

production on large farms than small ones, their omission probably biases the

observed yields in the direction of large farms. Since intercropping, that can lower

yields, was presumably more common on small farms (to satisfy liquidity needs)

inability to control for intercropping would again bias observed yields in favor of

large farms. On the other hand, we might expect more labor use per unit of land on

small farms and hence higher yields on small farms. As can be seen from the table,

for both Brazilians and immigrants, yields tended to rise moderately with size up to

about 50 alqueires (about 125 hectares) but only very slightly if at all after that. More

clear, however, is the difference in the yields between small immigrant and small

Brazilian farms. Yields were significantly higher for immigrants than for Brazilians

up to 50 alqueires.150

150
Admittedly, however, other factors could be at work in the determination of yields. In particular,
since without fertilizers, yields tended to decrease with time in production, the more recently opened
up areas in the most western part of the plateau would quite naturally have greater yields. These farms
were also larger and more frequently immigrant-owned than those elsewhere.
 190

Table 6.8: Farm Size and Land Productivity, Sao Paulo: 1934
Brazilians Immigrants
Area Yieldb Area Yieldb
Size Category
(alqueires) a Production Production
Planted
Planted coffee area coffee/planted coffee/planted
coffee area
coffee area coffee area
up to 4.9 9,279 70 9,381 85
5-9.9 23,400 73 49,601 90
10-24.9 37,700 84 83,538 101
25-49.9 38,457 92 61,192 106
50-199.9 112,675 102 81,771 101
200-499.9 85,173 110 28,351 108
500 and up 64,776 110 18,488 110
Total 371,460 100 332,322 101
Note: (a): One alqueire equals 2.42 hectares and 5.98 acres. (b) Coffee production is measured in
arrobas where one arroba equals 14.4 kilos or 31.7 pounds. Source: Resenceamento Agricola-
Zootechnico, 1934, Secretaria de Agricultura de Sao Paulo, pp: 29,
35,61,65,85,89,109,110,129,130,149,153,173,177,197
and 198.

During the Republic Sao Paulo became the leading coffee producer in Brazil.

Part of this superb performance is due to the immigrants and the actions taken by the

State. Indeed, in our view it was Sao Paulo’s land laws and its immigration policies

that explained the increasing importance of immigrant-owned farms. Therefore, our

explanation contrasts sharply with the current literature on the theme, e.g., the widely

quoted Prado (1979) and more recent Stolcke (1986) works, that assert that

immigrants became coffee producers only after 1930 due to depression-caused farm

sales and that until that date coffee production was largely confined to ‘latifundios’.
 191

6.3.3 A Comparison of Land Tenure Among the Coffee States: Sao Paulo,
Minas Gerais and Rio de Janeiro

In order to provide evidence that the improvement in private land rights in

Sao Paulo was not due to the coffee boom but to the inflow of immigrants, we

compare the land situation among the coffee states.

Minas Gerais and Rio de Janeiro were also relevant coffee producers during

the Republic. Both states imposed a land tax in their land laws, which in turn,

discouraged titling. Besides, none of the two land laws was as ‘liberal’ as the 1895

Sao Paulo law in accepting the ‘parish priest registration’ or almost any proof of

informal ownership.

Since titles allow one to mortgage the property and thereby better qualify for

badly needed agricultural credit, the comparative numbers of mortgaged properties

across states can also be used to assess the impact of different states’ land laws. As

shown in Table 6.9, throughout the 1920s, Sao Paulo had about 10 times the number

of mortgaged properties as rival coffee growing states Minas Gerais and Rio de

Janeiro.

Table 6.9: Land Tenure Among the Coffee Producing States: Number of
Properties Mortgaged

States 1920 1922 1924 1926 1928 1929

Sao Paulo 7,041 9,200 11,158 12,904 16,084 15,727
Minas Gerais 713 1,012 1,011 1,800 1,317 1,421
Rio de Janeiro 833 996 1,208 1,116 1,410 1,402
Brazil 14,437 18,109 21,349 25,458 30,380 29,691
Source: Anuario Estatistico, IBGE 1939/40, p. 52-59.
 192

So far, we have argued that the three largest coffee producing states in Brazil,

Sao Paulo, Rio and Minas had different land ownership systems. However,

according to Alston, Mueller et alli (1994), one of the variables that need be

considered in the degree to which property rights are defined is the average price of

an alqueires of farm land in each state, the greater the price the more defined is the

system of property rights.151 Here are the 1920 land prices for the coffee provinces:

Table 6.10: 1920 Land Prices in the Coffee States: proxy for Land Tenure
States Land price (A) in Total Value of (B) in current
Milreis/hectare current Land (milreis) dollars
(A) dollars (B)
Sao Paulo 161.00 33.81 2,237,007,668 469,771,610.3
Rio de 106.00 22.26 322,454,204 67,715,382.8
Janeiro
Minas 60.00 12.60 1,630,509,169 342,406,925.5
Gerais
Source: IBGE, Recenseamento de 1920, Censo da Agricultura, “Custo das Terras
Recenseadas no Brazil”. Vol. 3, parte 1. Exchange rate = .21 ($/milereis).

Sao Paulo has the highest land price per hectare among the coffee provinces,

56% and 168% higher than Rio and Minas Gerais, and among all the remaining

Brazilian states.

On average (between 1890 and 1930), Minas and Rio de Janeiro together

contributed for 18% of total world supply whereas Sao Paulo had 53% of total world

151
As explained by the authors: “ The variables that need to be considered to define property rights
are the average priceof a hectare of farm land in each state (…) secure property rights should increase
the value of land, however, higher land values also increase the demand for more secure property
rights. “ (Mueller, Alston, Libecap and Schineider, 1994, p. 266).
 193

coffee production.152 In other words, these were the three largest coffee producing

regions in the world.

As we argued before, the key that made Sao Paulo land laws better is the

presence of a homogenous political elite that enforced the private property rights. It

was not because the Paulistas’ laws were better but because the ‘colonels’ needed

the immigrants to work in their farms. Their diversified wealth portfolio, in turn, not

monopoly power over land, was the source of their political and economic power.

The agreement between the formal and informal political elite revolved around three

issues: the need to attract immigrants, to enforce the laws and to defend coffee

prices. This political elite enforced the law because of the ‘immigrant effect’ that

was in turn absent in Minas Gerais and Rio de Janeiro.

6.4 The Impacts of the Land and Labor Laws in the Credit Market: Sao Paulo

(1890-1930)

6.4.1 The Quality Problem and the 1906 Taubate Agreement

The view among coffee producers was that the falling world coffee prices (since

1897) was the result of speculation by exporters who bought heavily and cheap in

Santos (Sao Paulo) in times of large harvests with the intention of hoarding to

capture the benefits of higher prices in low production years that otherwise would
152
In the same period (1890-1930), Colombia was responsible for 7% of the world coffee production
while all the other Latin American countries accounted for 17% of total coffee supply, all the Asian
coffee growing countries for 4% and all the African coffee producing countries for 1% of total world
coffee production.
 194

have gone to producers. With the intention of boosting the international price of

coffee, the presidents of Minas Gerais, Rio de Janeiro and Sao Paulo signed in

February of 1906 in Taubate what has become known as the Taubate agreement153.

In brief, the agreement provided that the signatories undertake to maintain a price

of 7.9 to 9.34 cents per lb (55 to 65 francs per bag of 60 kilos) in Brazilian markets.

Inferior quality coffee, mainly produced by Rio de Janeiro and Minas Gerais, was

not to be covered by the agreement. Over-production of the inferior quality coffee

would be handled by action of the states themselves to stimulate domestic

consumption. The finance for intervention and storage of coffee stocks would come

from an external loan of 15 million British pounds. The loan would be secured by a

tax of 3 francs per bag of export that would be charged by each state. The states were

to petition the federal government to create an Office for the Conversion of Currency

(caixa de conversao) whose purpose was to stabilize the exchange rate. The need for

such an institution was based on the idea that successful valorization would induce

upward pressure on the exchange rate. This would occur if either the external loan to

buy the excess of coffee or the future increase in coffee prices would induce an

appreciation of the currency. If so, the external success of the valorization could be

offset by a demand-decreasing appreciation of the currency.

153
This section is based on Mlambo (1989), Hutchinson (1908), Netto (1959), Bacha (1968 and
1992), Furtado (1964), Fritsch (1988), Topik (1980), Ramos (1923), Sociedade Paulista de
Agricultura (1902).
 195

Yet, by excluding the inferior quality coffee from the government purchases

under the scheme, political leaders from Minas Gerais and Rio saw little benefit of

the scheme to the producers in their states. As a consequence, Minas and Rio

abandoned the agreement in September, 1906.

The Taubate agreement as an administered price policy and currency board

(that according to Bacha (1992) was inspired in the 1904 Argentina price

stabilization policy) has already been widely discussed in the literature. In brief, the

agreement was extremely successful in increasing coffee prices and the external

loans taken by Sao Paulo and later by the Federal government were repaid on time.

The aspect that is often dismissed is the quality issue. According to the first

coffee proposal from Mr. Siciliano in 1902, the improvement in the prices of Paulista

coffee abroad required an improvement in quality. Indeed, according to other experts

154, Brazil could export even more coffee if the country could stimulate an

improvement in quality. Hence, because Rio and Minas types were of lower quality,

as compared to Paulista coffee, they were excluded from the agreement. We now

briefly analyzed the incentives provided by Sao Paulo’s Department of Agriculture

as a consequence of the agreement to stimulate an improvement in quality.

Until 1930, the highest quality coffee produced in Brazil was known as

‘bourbon’. Known as ‘mild’ (‘soft’) coffee this variety of the arabica155 coffee could

154
See: Ulker (1938) ‘All about coffee’.
155
Since 1985 the arabica has been losing ground in favor of the ‘connilon’ bean in Brazil. The
connilon is more resistant to whether oscillations than the arabica. (FGV/IBRE, 1998).
 196

only be produced in certain regions of the Western plateau where the soil was

adequate (Ramos, 1924).156 According to this specialist, this was the only type of

coffee that could compete with the Colombian coffee. However, as Ramos explains

the production of the ‘bourbon’ requires two other conditions besides seedlings and

adequate soil. First, the harvesting of the cherries requires attention because the

pickers could only pick the mature cherries. The second condition was that the

drying process had to be done by machines and not by leaving the cherries to be

naturally dried by the sun.

One of the Western plateau regions that produced the ‘bourbon’ type was

Ribeirao Preto. Introduced in 1890s by the Pereira Barreto family in this municipio,

the bourbon production increased even more after 1906. This is so because the Sao

Paulo government, as a by-product of the Taubate Agreement, granted tax

exemptions and even subsidized credit for farmers willing to install in their

properties the driers and other machines required to the production of the ‘bourbon’

type of coffee. Sao Paulo was fostering the increase in high quality coffee. While we

do not have data, several factors suggest that Ribeirao Preto increased its production

of bourbon. This is so because of the related stories. First, the ‘quality’ issue was

fostered by Mr. Arthur Diederichesen and Mr. Alexander Siciliano in the 1902

156
According to Ulker (1938) and Ramos (1923) there are different varieties of ‘arabicas’. For
example, under the hard (or green) type of coffee we have: Santos, Rio and Nacional. The ‘bourbon’
and the ‘colombians’ type are ‘soft’ (or mild) display are considered to be high quality coffee.
 197

valorization plan presented at the Sociedade Paulista de Agricultura.157 Both

Siciliano and Diederichesen were from Ribeirao Preto and both were importers of

machines to benefit coffee (driers and other machines).158 Mr. Diederichesen and

Colonel Schimidt were close friends and through this friendship the ‘bourbon’ type

started to be produced in the Monte-Alegre farm, belonging to Colonel Schmidt.

Possibly Schmidt had begun to benefit from the incentives provided by the state and

started the production of ‘bourbon’ by acquiring the drying machines and then

doubling the number of workers in his farm. Schmidt divided his farm into small

plots such that a team of workers was in charge of a much smaller number of trees. It

is possible to infer that some of the immigrants in this coffee region started to

produce the ‘bourbon’ type after the 1906 coffee valorization. It seems that high

quality coffee was produced in some parts of the western plateau, by immigrants. 159

According to the 1934 agricultural census, foreign landowners invested almost four

times more than the Brazilians in machines and equipments in their coffee farms.

This in turn suggests that high quality coffee was indeed produced by immigrants in

the some regions of the Western Plateau.

157
Interestingly enough, according to Mamigonian (1976), the two foreigners were involved with the
import of dryers and other machines to sort the beans by size, quality and color.
158
In 1920 there were 77 factories to benefit coffee in Ribeirao Preto. Only Campinas had more
companies (136) to benefit coffee. Source: Reseamento do Brazil de 1920, vol. III, p. 88-103.
159
In brief, according to the 1934 Sao Paulo agricultural census, foreigners coffee farmers with small
and medium rural properties (up to 25 alqueires) invested two times as much as their brazilians
counterparts in machines and equipments. On average, small and medium foreign coffee farmers
(with properties ranging from: 0 to 25alqueires) invested US$1,200 in machines and equipments for
coffee whereas their Brazilian counterparts invested US$651. Source: Recenseamento Agricola
Zootechnico realizado em 1934, p. 19, 83, 109, 129., 149, 173, 197.
 198

6.4.2 Immigrants and Brazilians in the Provision of Credit and

Transportation for the Western Farmers

We argued above that the immigrants became coffee producers through the sale

of intercropping, the 1906 immigration law and the 1921 Washington Luis law. In

contrast authors like Dean (1974) and Hall (1968) had argued that immigrants did

not save because their wages were too low.160 At best, according to Dean, the

spontaneous immigrants who remained in the urban areas were the ones who

acquired the rural lands and had them registered in all the censuses discussed here.

The literature claims that, even if immigrants became coffee producers, they did

not have sources of credit to finance the long gestation lag of coffee..161 Pereira

(1980) presented detailed research from the Santos and Sao Paulo chambers of

commerce, where she found twenty-one factorage houses in 1904 located in three

coffee municipalities (Amparo, Casa Branca and Ribeirao Preto) at the Mogiana

zone. These municipalities had almost as many foreigners as Brazilian landowners

(413 versus 384 immigrants). A similar pattern was found in the Araraquarense zone

(zone 7): seven factorage houses in the two municipalities (Jau and Dois Corregos),

known as ‘terras de imigrante’ (lands of immigrants), for having the highest cluster

of immigrants.

160
The authors did not consider that in Sao Paulo (until 1904) cash crops were in high demand (80%
of the Paulista rural area was coffee) and this is why intercropping was more important than the
monetary wages.
161
Some authors even suggest that small farmers solved the lack of credit by cultivating cash crops.
With this proceeds from the sales, they were able to finance the long gestation lag from ecoffee.
 199

Similar to the credit system that operated during the last years of the Empire,

these factorage houses were opened by the same people that were major shareholders

of the Banco Melhoramentos de Jau162 (founded in 1899 by Brazilian planters). By

1921 the western frontier moved further to reach the Noroeste and the Alta

Sorocabana and so did the factorage houses. We also noticed a significant number of

regional banks in which the major shareholders were foreigners.163

In the hinterland, small coffee producers, no matter whether immigrants or

Brazilians, did not seem to have faced more difficulty in finding credit than others.

In other words, the immigrants who bought coffee farms faced similar credit

constraints that other larger coffee producers were experiencing.

During the Empire, railroads were opened in the wake of coffee’s expansion.

During the Old Republic, the state offered a variety of subsidies for the construction

of the Sorocabana, Noroeste and the Araraquarense railroads. In these three regions,

the state built settlements for the immigrants after 1906. Indeed, the municipalities in

these three zones were created as a result of the railroads (Camargo, 1954). For

example, the Noroeste (located in zone 8) had only one ‘municipio’ until 1913 but

twenty by 1934. A similar process was observed with the Sorocabana railroad that

162
Diario Oficial do Estado de Sao Paulo, 1/7/1899, p. 1433. Major shareholders involved in the
factorage business: Silva Prado family, Ferraz do Amaral and Maria Almeida Campos.
163
In Mococa (Banco Regional de Mococa, president: Nciola Centola); in Piracicaba: (Banco di
Sconti de Piracicaba; Mr. Matarazzo, director); in Campinas (Banco Popular de Campinas, Mr.
Rosseti); in Ribeirao Preto( Banco de Credito Agricola de Ribeirao Preto); Sorocaba: (Banco de
Napoles, Mr. F. Mattarazo). Banks whose boards of directors were composed of both Brazilians and
foreigners included the Banco Italo Popular, Banco Campineiro; Banco Popular de Guaratingueta.
Sources: Saes (1986), Dean (1969) and Bresser Pereira (1964).
 200

opened up zone (9) and led to the increase in ‘municipalities’ as well as the inflow of

immigrants in that zone. The profit guarantee still prevailed in Sao Paulo and

Paulista coffee producers were, to some extent, involved in the opening up of new

railroads.

The question that remains to be answered is the following: Did the railroads

promote economic activity, stimulate settlement of new areas and integrate the

markets? In our view, the answer is yes. Railroads were critical for the creation of

new municipalities and hence new internal markets. Also, railroads encouraged

production for the internal market by charging freights proportional to the distance

traveled rather than giving rebates to long-distance haulers. Finally, railroads

stimulated the creation of foundries and metal working plants that, in 1920,

according to Topik (1980) contributed 3% of Brazil’s GDP. In Sao Paulo, especially,

the linkage effect was significant and, again according to Topik, the Sorocabana

railroad had the largest repair shop in South America in the 1920s.

6.4.3 An Application of Staple Theory to the Coffee Economy

There are at least two approaches in economic history that can help us understand

this period in Brazilian history. There are a small number of economists (like Pelaez

and Neto) who argued that the coffee valorization policies delayed even further the

industrialization (that would have happened earlier in the absence of coffee) because
 201

the costs of these policies were greater than their benefits. On the other end, we have

more moderate views associated with Bacha (1968, 1992) and Fritsh (1988) arguing

that coffee valorization policies were supported by the central government to

preserve the external value of the domestic currency and to avoid a decrease exports

(that was mainly composed of coffee)164. The critical issue that distinguishes these

two approaches is the role of coffee in the creation of linkages to foster

industrialization. Neto and Pelaez argued that coffee was not a capital-intensive

activity and did not directly stimulate the creation of related industries in Brazil. This

view is flawed for at least two reasons. First, the valorization policies allowed the

survival of a whole structure (banking, railroads, external financing) that was later

used in the industrialization process. Second, if coffee did not contribute to the

subsequent industrialization of Brazil, why did the industrialization initiative

fostered by Maua in the 1850s fail? In brief, Maua (1878) started his ‘exposition to

the creditors’ claiming that he had the right ideas but that they came at the wrong

time. He meant that the insertion of a slave-based society in the industrial revolution

required the creation of a complex set of financing, commercial banks, railroads,

solid domestic market and government support. These were the

structural/institutional conditions created by the coffee economy that that were

absent in 1850. In brief, Neto and Pelaez view does not take into account that the

coffee valorization policies were benefiting the commercial banks (strongly involved

164
Bacha (1992) explained that these coffee policies were adopted (though not as frequently) until
1980s, mainly because after 1930 coffee exports financed the import substituting industrialization.
 202

in coffee financing), the incipient stock exchanges, the railroads and even the

industries were being created in 1906.

Coffee producers created a complex network that benefited coffee but also led to

positive externalities to other markets. Railroads, commercial banks and stock

exchanges, were some of the ‘by products’ created by the coffee producers. These

public goods benefited the whole society and generated long-term spillover effects

that allowed a whole set of industries to be created in Sao Paulo. Another important

issue is whether the staple (coffee, in our case) was able to create a domestic market.

It seems that the wealth generated by the coffee economy fostered the creation of

small industries to attend the demand of the domestic market created by the coffee

economy. A major voice in favor of the linkages approach was provided by

Hirshman (1977). According to this author, coffee differs from most commodities

because the producing countries had the power to set the prices. In turn, Hirshman

argued that the nature of coffee production and processing may have stimulated

native entrepreneurship and industrial development.

The coffee period analyzed here is a nice application of the staple theory that

argues that industrialization is a by-product of the growth of exports. In our view,

coffee produced strong linkages that in turn paved the way for an industrialization

that, until 1930, was fostered by the ‘export led growth’ idea and after 1930 driven

by import substitution.
 203

6.4.4 Statistical Tests: The Precision of the Land Laws

An interesting application of the new institution economics for the Brazilian

land laws was proposed by Mueller (1995). Indeed, he was among the first authors to

apply the evolutionary165 theory of property rights to the 1850 Land law in Brazil. He

viewed the law as a classical example of ‘induced institutional change’ arising from

a change in the relative price of coffee and thereby the value of land. Following the

lead of Feeney (1988), Mueller used the terms of trade as a proxy for land values. If

the prices of the products of land were determined in international markets and there

were little substitutability between land and other factors of production, real rents

should be sensitive to the terms of trade. The improvement in the terms of trade and

the expansion of coffee land made land scarce, especially in the coffee zones,

thereby stimulating the demand for land ownership rights.

In the same vein, Mueller, Alston, Libecap and Schneider (1994) see the

increase in coffee prices as having changed the costs and benefits of private property

rights, e.g., by raising the benefits to the original owner of evicting a squatter,

justifying greater expense in doing so. The rising economic importance of coffee in

turn led to an increase in the political power of the coffee producers. To reduce the

costs of evicting squatters and hence also the uncertainties associated with

landholding, coffee producers demanded a change in institutions. In keeping with

standard evolutionary rights theory, Alston, Libecap and Mueller conclude:

165
We call this ‘evolutionary’ because it is based on the idea that through time, evolution (or some
other exogenous force) is in charge of eliminating the inferior types and allowing the survival of the
fittest (only the institutions that are conducive to economic growth can survive).
 204

Higher land values also created a demand for a change in institutional arrangements concerning
property rights in order to alter the private costs and benefits of owning land. As a result of the
political pressure to clarify property rights as competition for control increased, the Land Law of 1850
was passed. (…) Enactment of the law reflected the political influence of landed elites and their desire
to limit infringement on their holdings by squatters. (Alston, Mueler and Libecap, 1999, p. 35)

The model of induced institutional change, when applied to Brazil, implies

that the increase in coffee prices led to a rise in the demand for land. In the absence

of property rights, the potential benefits would be frittered away in costly conflicts

over land, much of which derived from the costs of evicting squatters.166 Given

coffee producers’ political influence, they demanded a land law, which was then

supplied by the government (then the Empire of Brazil). According to this

interpretation, the 1850 land law was an institutional change induced by the landed

elite’s demands for well-defined land rights and supplied by a supportive

government.

The idea that an increase in the relative prices of the products produced by

land leads to an increase in the demand for property rights was first developed by

Libecap (1978) to explain the gold rush in the Comstock mines. He argues that in the

absence of legislation to regulate subsurface gold exploration and with the increasing

speed that gold was discovered, miners started to demand more precision in the

166
In fact, there was no increase in conflicts over land especially because there were very few people
who held a title to land. Sao Paulo and Minas Gerais were settled largely through adverse possession
until 1850. The logic of the argument (increase in conflicts due to absence of land legislation) did not
survive an empirical investigation. According to the official documentation researched on the debate
that led to the creation of the 1850 land law (Anais da Camara dos Deputados (ACD), tomo I and
tomo II, 1843, and ACD, tomo III) we found that the great majority of the representatives argued
Brazil did not need a land legislation because land had no value. We did not find a single
representative arguing for the law because they observed an increase in the number of conflicts over
land.
 205

creation of rights. In response, the Nevada representatives (that were supplying the

changes in the legislation) refined the former laws to attend the miners’ demands.

During this process he observed an increase in gold output and, at the same time, the

enactment of new bills to regulate subsurface activities. By the end of the gold boom,

he observed a decrease in the number of the laws suggesting the total precision of the

law (TPL) exerted a negative influence on the annual changes of the law (ACL). The

ACL is positively related to the gold output and negatively related to the TPL (the

greater the past body of knowledge the lower is the need for future change). Based

on this idea, Libecap builds an ‘index of the precision of the law’. He regress ACL

against gold output, the lagged value of TPL and a constant. Using a linear OLS

form he reaches significant results for the period when gold was booming.

Feeny (1988) applied this argument (increases in export prices and increases in

the price of land that lead to a demand for institutional change away from the

existing one) to Thailand and Mueller did so for Brazil. However, except for

Libecap, these other authors have not built a similar index even though they extend

Libecap’s argument for the creation of property rights on land. Our task in this

section is then to build this index and then provide some simple tests, in the same

vein as Libecap, to see if these generalizations (from Mueller and Feeny) in fact

hold. The methodology for the index is provided in Appendix 2.

The index is deliberately constructed along the lines of the index developed by

Libecap (1978) in his analysis of the impact of the gold rush on the development of
 206

property rights in the Comstock Lode, Nevada. The precision index of private

property rights in land was developed on the basis of individual scores for seventeen

different features, some about private claimants, but others dealing with the

measurement of public land, duties of the relevant public officials, and enforcement.
 207

Table 6.11 : The Total Precision of Land Rights Index and Annual
Changes in Brazil and Sao Paulo land law (1850-1930)
Annual Change Total precision of Number of Annual Change in Total precision of Number of
in precision of land rights land rights law precision of land land rights (TPL)- land rights
land rights (ACL) (TPL)- legislative passed rights (ACL) legislative a law passed
Year a Year
1850 13 13 1 1890 0 50 0
1851 0 13 0 1891 0 50 1
1852 0 13 0 1892 0 50 0
1853 0 13 0 1893 0 50 0
1854 15 28 2 1894 0 50 0
1855 3 31 1 1895 14 64 1
1856 0 31 0 1896 0 64 1
1857 0 31 0 1897 0 64 0
1858 3 34 1 1898 4 68 1
1859 0 34 0 1899 0 68 0
1860 1 35 1 1900 7 75 2
1861 0 35 0 1901 0 75 0
1862 0 35 0 1902 0 75 0
1863 0 35 0 1903 -4 71 1
1864 2 37 1 1904 0 71 0
1865 0 37 0 1905 0 71 0
1866 0 37 0 1906 0 71 0
1867 0 37 0 1907 13 84 1
1868 0 37 1 1908 0 84 0
1869 0 37 0 1909 0 84 0
1870 0 37 0 1910 0 84 0
1871 0 37 0 1911 0 84 0
1872 0 37 0 1912 0 84 0
1873 6 43 1 1913 0 84 0
1874 0 43 0 1914 0 84 0
1875 0 43 0 1915 0 84 0
1876 2 45 1 1916 0 84 0
1877 0 45 0 1917 0 84 0
1878 0 45 0 1918 0 84 0
1879 0 45 0 1919 0 84 0
1880 0 45 0 1920 0 84 0
1881 0 45 0 1921 10 94 1
1882 0 45 0 1922 0 94 0
1883 0 45 0 1923 0 94 0
1884 0 45 0 1924 0 94 0
1885 5 50 1 1925 0 94 0
1886 0 50 0 1926 0 94 0
1887 0 50 0 1927 0 94 0
1888 0 50 0 1928 0 94 0
1889 0 50 0 1929 0 94 0
(a) Computed as a running total of column 1. 1930 0 94 0
 208

Table 6.11 presents two measures used in the subsequent analysis. In the first

column of the table is the Annual Change in precision of the Land rights (hereafter,

ACL). This form of the index is the one used by Libecap (1978). In the second

column is the accumulated or Total Precision of Land laws (hereafter, TPL). Not

surprisingly, the large increases in the TPL occurred in 1850, 1854, 1895, 1907 and

1921.167

The indexes ACL and TPL are alternative measures to be used as the dependent

variable in the statistical analysis shown in Tables 6.12 and 6.13, respectively. For

explanatory variables we use two measures suggested by the evolutionary model, the

value of coffee exports (EXPORTS) and the terms of trade (TOT). Each of these

variables should have a positive effect on ACL or TPL. Since slavery was generally

asserted to have a negative effect on property rights, we use the number of slaves

(SLAVES) as another explanatory variable for ACL. When TPL is the explanatory

variable, we use the stock of slaves as the explanatory variable, (SLAVES_S).

Another control variable is the simple time trend (TIME) especially important for

use in explaining TPL. The lagged value of TPL is also used as an explanatory

167
An example may give the reader a feel for how the index is developed. One of the 17 categories
was ‘duties of provincial presidents’. These were first defined in Article 10 of the 1850 land law. We
thus assigned a value of 1 under this category for the ACL of that year. Article 28 of the 1854
supplement to the 1850 law provided a more detailed specification on the role of the provincial
presidents and the officers under his supervision, and thus we assigned a value of 1 to the category. It
should be clear that the ACL is the annual change, and in an year where no land bill was enacted we
input a value zero. The TPL is the sum of past changes in the law, so the TPL is the accumulated
number of annual changes in the law.
 209

variable in estimating ACL. In Libecap’s the lagged TPL has a significant and

negative effect on ACL, implying that the more precise the stock of accumulated

knowledge becomes (the greater is the lagged TPL), the fewer are the changes

required in the ACL. Since our hypothesis is that the relation between the coffee

boom and property rights came by way of the need to encourage immigrants to

come, we use the average flow of immigrants in period t and period t+1 (IMMIGF)

in explaining ACL. The idea here is to investigate if the changes in ACL are

effective to attract current and prospective immigrants to Brazil. When TPL is the

dependent variable we use the stock of immigrants until time t as an independent

variable.

For each dependent variable, several alternative specifications are used. The first

specification for ACL in Table 6.12 is that which is most akin to the one used by

Libecap (1978). It regresses ACL on EXPORTS, the lagged value of TPL and a

constant. The alternative measure TOT is used in the specification in column (5). In

neither case is the coefficient statistically different from zero. As expected, the

lagged value of TPL does have a negative and in all cases significant effect on ACL.

As expected, SLAVES have a negative and significant effect on ACL (columns 2

and 3). The effects of EXPORTS and TOT are negative rather than positive in most

specifications, showing that in the case of ACL, there is no statistical evidence to

support the evolutionary hypothesis. By contrast, IMMIGF has positive (though also

not significant) effects on ACL in almost all specifications.

 210

Table 6.12: Regressions for the Annual Change in the Precision of the Land Law
(ACLt) in Brazil and Sao Paulo, 1850-1930
Independent variables (1) (2) (3) (4) (5) (6)
Constant 3.33 * 3.25* 3.48* 3.21* 6.22** 2.650**
(2.99) (3.25) (3.21) (2.79) (2.53) (2.70)
Total Precision of the -.0527 ** -.123* -.148* -.0544*** -.5064** -.0319***
law in t-1 (TPLt-1)a (-1.82) (-2.87) (-3.08) (-1.86) (-2.47) (-1.80)
Coffee exports b .00004 -.00005 -.00006*** -.000036
(EXPORTS) (1.01) (-1.40) (-1.67) (-.94)
Slave population -7x10-6** -.00001**
in t c (SLAVES) (-2.19) (-2.42)

Immigration flow -.000021 7.2x10-6 .000027 8.96x10-6

in t d (IMMIGF) (-1.14) (0.48) (1.46) (0.59)
Terms of Trade (TOT) -.0207
(-1.58)
R2 .05 .10 .12 .05 .07 .04
Number of observations
81 81 81 81 81 81
Notes: From our index of legal change we generated the annual changes of the land law
(ACL). The methodology and the data are reported in Appendix 2. Our dependent variable in
the six forms is ACLt. (a) The total precision of the law is the sum of all the annual changes
of the law. (b) Average coffee exports of the current and immediate past year measured in
British pounds. (c) Slave population in the coffee provinces (Sao Paulo, Minas Gerais and
Rio de Janeiro) as reported in Estatisticas Historicas do Brasil, p. 29-30. (d) Immigration
flow is the number of foreigners entering Brazil (until 1889) and Sao Paulo (1890-1930). t-
statistics in parentheses. * indicates significance at 1% level. ** indicates significance at 5%
level; *** indicates significance at 10% level.

Since in the Brazilian case laws were evolving much more slowly than in the

gold mining case of the United States used by Libecap (1978), we feel that the TPL

is more suitable as a dependent variable in the Brazilian case. Turning therefore to

the results for TPL in Table 6.13, it can be seen that these results are generally much

stronger. The effect of IMMIGS is consistently positive and statistically significant

in all specifications. When SLAVES_S is added to the specification in columns (2)-

(3), it improves the overall explanatory power of the two forms in comparison to
 211

form (1). When time trend is introduced (forms (4)-(6)) none of the previous results

have any significant changes. The effect of SLAVES_S on TPL is negative and

significant in all the forms. Likewise, IMMIGS has a positive and significant effect

on TPL in all specifications. The impacts of both EXPORTS and TOT are negative

and not significant in all specifications.

Admittedly, this test is rather crude. Yet, the poor results for the EXPORTS and

TOT variables in Tables 6.12 and 6.13 suggest that the Libecap model does not

explain the evolution of land rights for Brazil. Instead, the results, especially those of

Table 6.13 support the immigration hypothesis developed in this dissertation. This

would seem to be a statistical confirmation of the more anecdotal and descriptive

findings demonstrated above showing that land rights in Brazil were refined in order

to attract the desired number of immigrants in the face of international competition

for such immigrants. In particular, in Sao Paulo, land rights became more effective

than in other coffee producing states mainly because the ‘migrant effect’ is a proxy

for the ‘credibility’ of the commitment to the immigrants. If coffee prices or values

alone were the critical determinant of strengthened land rights, we would have

observed similar results in Minas Gerais.

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Table 6.13 Regressions for the Total Precision of the Land Law (TPLt):
Brazil and Sao Paulo, 1850-1930
Independent (1) (2) (3) (4) (5) (6)
Variables
Constant 30.21 * 24.09 * 20.12* 22.26* 22.21* 20.75 *
(31.04) (18.14) (7.06) (13.80) (14.17) (7.31)
Coffee exports a -.00002 -.000075 -.000031 -.00005
(EXPORTS) (-.30) (-1.29) (-.55) (-1.03)
Immigrants .000024* .000027* .000026* .00001* .000018* .000018*
(up to t) b (IMMIGS) (19.01) (22.60) (36.68) (3.89) (4.24) (3.83)
Terms of Trade .02263 .0093
(TOT) (1.58) (.58)
Slave populationc -6.5x10-7* -6.5x 10-7* -4x10-7** -4x 10-7**
(SLAVES_S) (-5.84) (-5.83) (2.34) (-2.21)
Time trend (TIME) .595* .326** .298 ***
(5.73) (2.14) (1.72)
R2 .95 .96 .96 .96 .97 .97
Number of 81 81 81 81 81 81
observations
Notes: Our dependent variable is total precision of the law at time t (TPLt). (a) Average
coffee exports are measured in British pounds. (b) Immigration is the accumulated number
of foreigners that entered in Brazil (1850-1889) and in Sao Paulo (1890-1930). (c)
Accumulated slave population in the coffee provinces (Sao Paulo, Minas Gerais and Rio de
Janeiro) as reported in Estatisticas Historicas do Brasil, p. 29-30. t-statistics in parentheses.
*
indicates significance at 1% level. ** indicates significance at 5% level; *** indicates
significance at 10% level.

6.5 Conclusion

Throughout this chapter we demonstrated that the land and labor laws were

extremely credible during the Old Republic in Sao Paulo. These laws were enforced

not because they were better than the ones created in the other states but mainly

because the Paulista political elite needed to attract immigrants to solve and avoid a

shortage of labor in their coffee farms after the abolition of slaves. The existing

literature on the theme (Hall (1968), Stocke (1984)) argued that coffee producers’

monopolist behavior on the labor and land market is the main reason as to why the
 213

land tenure situation in Sao Paulo did not evolve during the Old Republic. Contrary

to such claims, we found that the land and labor laws produced growth-enhancing

institutions in the labor, land and credit markets. These changes happened because

the political elite knew they had to provide the best set of incentives to attract the

greatest number of immigrants. In other words, it was the competition for

immigrants that led the Paulistas to enforce the land and labor laws.

The informal power of the municipalities during the Old Republic was

sometimes as relevant as the formal one (given by the state government). In the end,

the laws were personified by the figures of the ‘coronels’. In Sao Paulo, this group

had a diversified source of wealth, and land was only one of these assets. In turn, it

meant that the control the colonels exerted over their municipalities was not solely

based on land. For example, other forms of coercion (or control) from the colonels

involved: credit for coffee, free freight for the coffee producers, the creation of

Italian168 schools in the immigrants’ cities, and permission to open up new

municipalities, among others. In other words, the informal political elite had other

channels of influence besides land. In turn, the ‘immigrant effect’ indeed led to the

creation of ‘credible’ laws. These rules were enforced because the colonels needed

the immigrants for their farms. The Coroneis enticed immigrants by giving them land

but did not lose their political and economic power because in the process of doing

so they acquired greater and more diverse sources of wealth.

168
Dante Aligueri, nowadays one of the best schools in the capital of Sao Paulo, was founded by
Colonel Lunnardelli to send the son of immigrants to an “catholic Italian school”.
 214

The coffee complex analyzed in this essay created railroads and commercial

banks, granted titles on land to immigrants and Brazilians, reduced the size of

properties, enabled immigrants to become coffee producers, fostered

industrialization, created policies to boost the price of coffee, expanded the urban

areas, allowed immigrants to conquer the west, among other things. In large part, the

immigrant was the aspect that, in some sense, triggered a chain of positive linkages

among the labor, land, credit and transportation markets that we analyzed in this

essay.

In brief, we emphasized that the credibility of the institutions (that are created

by the laws) relied on the political coalition created to support it. We illustrated the

importance of law enforcement by examining the role of coffee in the creation of

institutions in Sao Paulo during the Old Republic. When the political coalition

‘agreed to disagree’, property rights were hardly enforced and as in the case of Minas

Gerais the privatization of land did not occur.

Finally, we have two suggestions for future research. First, the argument that

the private property rights were first created to attract workers and not as the result of

an increase in the value of land may be applied to other coffee producing regions. In

other words, one suggestion is to apply the argument (‘migrant effect leading to

political coalition and hence credible laws) to other coffee producing countries.

Then, we will be able to indeed determine whether or not the ‘migrant effect’ can

generally be counted on to produce institutions that stimulate economic growth.

 215

Another route not taken, but worth exploring in the future, is the application of our

argument (credible institutions in the land market depend more on the ability to

create a political consensus than on the contents of the law) to the issue of land

reform. The land tenure of a country is the outcome of past political arrangements. In

turn, one way of approaching land reform is by trying to better understand the past

history of the current land tenure. By linking the political structure with the study of

past land laws, we may be able to understand how the dominant group remained in

power and why past land laws did not accomplish a successful land reform.
 216

CHAPTER 7. CONCLUSIONS
Throughout this dissertation we studied the political and economic

determinants of the land and labor laws in the Brazilian Empire (1822-1889) and in

Sao Paulo during the Old Republic (1890-1930). We had three main objectives. The

first was to provide evidence to refute the idea that concentration of land in Brazil is

part of the country’s colonial heritage that was in turn, reinforced by the 1850 land

law. Our second goal was to provide an empirical application of the new institution

economics field to the question of why and how private property rights were first

created in Brazil. A third objective was to provide evidence to refute the incorrect

idea that coffee was produced in large tracts of land, mostly by Brazilians and that

immigrants did not become coffee producers before 1930. In what follows, we

expound the major findings of this dissertation.

From the literature review, in chapter 2, we found two broad sets of works. In

the first set, we reviewed the seminal works, the regional studies, the thematic

approaches and the juridical approach. This field has been registering much progress

lately, with a great number of high quality works. We then shifted the discussion to

the less developed field, the one we named ‘distorted consensus’. The ‘distorted

consensus’ focuses on the labor and land markets during the coffee period in Brazil

(1830-1930) and has several dimensions and implications for the dynamics of these

markets. In brief, the ‘distorted consensus’ rests on the following seven assertions:

(1) the 1850 land law was created to regulate property rights; (2) the 1850 land law
 217

failed to attract immigrants; (3) the small increase in immigration to Brazil after

1850 was due to the deteriorating conditions in Europe; (4) it is only in 1880 in Sao

Paulo that the immigration initiative became a priority, with the imminent abolition

of slaves; (5) between 1905 and 1930 there was no change in the size of rural

properties and hence, coffee continued to be produced in latifundio type properties

until 1930; (6) immigrants could not afford to purchase rural land in 1905, 1920 or

1930 and (7) the land laws during the Old Republic in Sao Paulo neither induced any

changes in the concentration of land nor stimulated an increase in land titles.

Broadly speaking, the ‘distorted consensus’ does not see any major

improvement in the land and labor market during the coffee period (1830-1930).

Authors like Prado (1966, 1979), Stocke (1986), Dean (1976a, 1971) considered the

1850 Land Law a failure that marked the beginning of land concentration in Brazil.

Immigrants came to Brazil only in 1880 and the ones who came earlier did so

because of recessionary conditions in Europe and not because of any disposition

enacted in the 1850 land law. During the whole period (1830-1930) coffee was

produced in ‘latifundios’ by Brazilians. Immigrants did not become landowners and

the land and labor laws, during the Republic, were practically non-existent and hence

did not produce any changes in the land or land market. The message we get from

the literature is that coffee producers reinforced the concentration of land and did not

produce growth-enhancing institutions. Implied in the ‘distorted consensus’ is the

idea that laws in Sao Paulo (during the Old Republic) and in Brazil (during the
 218

Empire) were enacted only for demonstration purposes (‘for British to see’) but not

to be enforced.

We decided to challenge the ‘distorted consensus’ through the study of the

land and labor laws enacted in Brazil during the Empire and the ones enacted by the

state of Sao Paulo during the Old Republic. Instead of a mere description of the

dispositions of the laws we studied the implementation of the 1850 land law, the

amendments to this law during the Empire and the Sao Paulo land laws during the

Old Republic (the 1895 Sao Paulo land law and the 1921 Washington Luis land law)

as well as the 1907 labor (immigraton) law.

In chapter 3 we studied the determinants of the 1850 land law. We found out

that the 1850 land law was not about imposing private property rights on land.

Instead, the 1850 land law was about labor, mainly because the Brazilian export

economy was constrained by the conditions in the labor market. The prohibition of

transatlantic slave commerce through the 1850 Eusebio de Queiroz law meant that

landowners would face a shortage of labor in a near future. The 1850 land law

proposed the introduction of immigrants, during a transitional phase, where slave and

free-labor would co-exist. We see the law as a forward-looking policy created by the

Empire to avoid the shortage of labor in the farms and to promote a gradual

transition from a slave based system to a free labor economy. The reason the

Imperial government had to create a land law to attract immigrants was because the

countries chosen by immigrants were the ones where land was available at a low
 219

price and even free. Mainly because the government did not know the location of its

lands, the government created a land law, such that public land was defined by

exclusion as whatever lands that remained unclaimed by private parties. The 1850

land law created a regular provision in the annual budgets to be used towards

colonization. Very few private claimants received a title on the lands. However, we

do not consider the law a failure because its main intention was to prevent a shortage

of labor and not to solve problems in the land market.

How can we evaluate the impacts of the 1850 land law? The answer to this

question is the basis for chapter 4. We then provided a detailed study of the impacts

of the 1850 land law in the labor, land and credit markets. In brief, we found out that

the 1850 land law made annual provisions for a budget to be used exclusively with

the introduction of immigrants. The financial incentives were key to the success of

the Brazilian immigration program because the other ‘new countries’ (United States,

Australia, New Zealand, Canada and Argentina) were offering cheap (or free land)

and subsidized (or free) transportation for immigrants. For Brazil to compete in the

‘market for immigrants’ it had to offer even better conditions, especially in the

presence of slaves. In other words, we explain that the recessionary conditions in

Europe were only a ‘push’ factor to explain why immigrants left Europe but did not

explain why foreigners chose to come to Brazil instead of Argentina, for example.

We demonstrated, in detail, the agents involved in recruiting immigrants in

Europe and the importance of the financial incentives for attracting both the
 220

immigration agents and the immigrants themselves. The 1850 land law succeeded in

its main objective: attract immigrants to Brazil. Starting in 1870s, with the increasing

number of measures for terminating slaves, provincial governments started to play a

more active role in the immigration policy.

During the late 1880s a group of coffee producers from the West of Sao

Paulo created a company to bring immigrants strictly to Sao Paulo, due to the

eminent abolition of slave and the eventual shortage of labor in the coffee farms. The

“Promotora”, immigration company founded by Antonio and Martinico Prado,

benefited from the budget provided by the Imperial government (that was authorized

by the 1850 land law) and the Sao Paulo provincial budget and was an astonishing

success. While in the labor market the 1850 land law indeed prevented the shortage

of labor that would have emerged without the inflow of immigrants before the

abolition of slaves, the impacts of the 1850 land law in the land market were more

modest. The 1850 land law granted very few private titles to Brazilians, such that

few private parties claimed ownership and followed the procedure to receive a title

on their land. A more interesting result is that despite the stagnation of private titling,

the government succeeded in measuring 1,458,407 hectares of public lands. We then

explain that ¾ of these lands were titled and granted to immigrants. In turn, we

observed that, despite the fact that private property rights to Brazilians did not evolve

very much during the Empire (measured by the number of titles granted to

Brazilians), the majority of immigrants that came to Brazil receive a title on land.
 221

The 1850 land law produced an indirect impact in the Sao Paulo credit

market. The high inflow of immigrants in Sao Paulo increased the money demand

which in turn, triggered the creation of commercial banks. Credit was not a

constraint for the Paulista coffee growers because of the close-knit relations this

group had with the merchants (commercial banks board members and factorage

houses). The inflow of immigrants, through the 1850 land law, to the Western

Plateau became possible due to the construction of a network of railroads to link the

hilly regions of the Paulista hinterlands with the capital of Sao Paulo. The railroads

built by Paulista coffee producers were privately financed through the sale of shares

to the coffee farmers of each region.

While authors like Holloway (1980), Font (1990) and Topik (1987) argued

that the coffee period in Sao Paulo started during the Old Republic, we provide

evidence on the contrary in chapter 4. In the last quarter of the Empire, we observe

the Paulista coffee producers being involved in the construction of railroads, banks,

factorage houses, immigration, among other collective goods. This infrastructure

network, created by Paulista coffee growers during the Empire was an important, but

often dismissed aspect, that enabled Sao Paulo state to take off during the Republic

when Paulista coffee production accounted for almost 75% of total Brazilian exports.

In 1891, Brazil, as a federative republic, enacted a new constitution. Among

other aspects, the jurisdiction over land was transferred from the Federal government

to the different state governments. The Old Republic (1891-1930) allowed the states
 222

plenty of autonomy in a different range of topics, from taxation to foreign policy, to

the ability of raising loans abroad, to different land laws. In chapter 5 we examined

the determinants of the land and labor laws enacted in Sao Paulo during the Old

Republic. While more detail is found in chapter 5, the 1895 land law was a liberal

law in allowing claimants to present almost any type of proof of ownership to

receive a title on their lands. Inspired in Antonio Prado’s 1886 proposal to amend the

1850 land law, the 1895 Sao Paulo law introduced the possibility of presenting the

former ‘parish priest registration’ as a proof of ownership. Different from the 1850

land law, the 1895 law assured that claimants would receive a title on their entire

property, not only on the part that was being used for productive purposes. The 1895

land law was a necessary step for the state to start enticing immigrants with titles on

land. The 1907 immigration law was the most comprehensive piece of legislation to

attract immigrants to Sao Paulo. Subsidized credit for first time foreigner born coffee

producers, free land in the Western plateau, a whole set of infrastructure (schools,

railroads, commercial banks) especially built to attract immigrants, were some of the

benefits granted to immigrants willing to come to Sao Paulo.

The 1921 Washington Luis land law was even more liberal than the 1895

law because it granted free public land for anyone willing to use the land for

productive purposes. This law recognized the informal principle of adverse

possession and granted free land to all claimants. The law also provided financial

incentives for landowners willing to subdivide their properties and granted assistance
 223

to immigrants that owned rural plots of land. The short-term determinant of all these

laws was the immediate need to solve and prevent the shortage of labor in the coffee

farms. During the Old Republic, Sao Paulo preserved its subsidized immigration

program to avoid any upward wage pressure on coffee growers production. The land

and labor laws complemented the immigration program by creating the required

structure to make Sao Paulo attractive to immigrants. We then explained, that more

important than the contents of the laws was their enforcement. In a country famous

for enacting non-credible laws, we found that the informal power (personified in the

figure of the ‘coroneis’), at the municipio level acted in tandem with the formal

government authorities towards the enforcement of these laws.

While it is an interesting finding per se, (informal power reinforcing the

formal power of the laws), the question that remained to be answered was the

following: Why did the ‘coroneis’ from Sao Paulo enforce the laws while those in

Minas did not? In brief, we interpreted the enforcement of both land and labor laws

as collective goods and their provision depending on the group’s incentives to

participate in their production, as first explained by Olson (1965). In our view, the

distinction between the Sao Paulo political elite from the Minas Gerais group stems

from the fact that the Paulista elite had other sources of wealth besides land.

Coroneis and state officials owned factorage houses, were on the board of directors

of the major commercial banks and railroads, owned small industries, among other

activities. This wide range of business activities had three major implications for the
 224

enforcement of the land and labor laws. First, the ‘heterogeneity of goals’ derived

from the fact that the Paulista political elite had a more diversified asset portfolio,

wherein land was only one of the assets. Second, the heterogeneity of goals meant

that no member or grower could afford not to participate in the collective action to

produce the specific public good that was of greatest interest. Third, because of the

diversified wealth portfolio, land was no longer the coroneis single source of power.

The coroneis knew that to attract immigrants to their coffee farms (to avoid a

shortage of labor) they had to enforce the laws (to ensure that immigrants become

landowners). The enforcement of these laws became possible because the informal

political power of the coroneis did not rely only on the monopoly of land. By

granting formal titles to immigrants, the Paulista coroneis prevented an eventual

shortage of labor (because of the high inflow of immigrants), improved the overall

pattern of landownership (by enforcing the laws) and yet, did not observe a decrease

in their political influence. The Minas Gerais political elite did not possess such

‘heterogeneity of goals’, since this group derived its power from the monopoly of

land. The political elites did not have any incentive to participate in the provision of

the collective good (enforcement of the laws) because its entire power on the

population relied on the control over land. Had the Minas’ coroneis granted titles on

land, they would have lost the political basis of coercion over the population.

Finally, in chapter 6, we studied the impacts of the land and labor laws

enacted by Sao Paulo, during the Old Republic, in the land, labor and credit markets.
 225

The overall conclusion is that the laws the enforcement of these laws produced

spillover effects in all the markets. Different from the 1850 land law, the 1895 and

the l921 land laws worked as ‘real land laws’ once they contributed to the

improvement in the overall pattern of landownership among both immigrants and

Brazilians. We use census data (between 1905 and 1934) to show that the number of

rural properties with a title increased between 1905 and 1934. We also reported a

decrease in the size of the rural properties during the same period. During the whole

period, we observe a decrease in the number of latifundios and an increase in the

number of small size properties. A similar trend was found for coffee farms: a

decrease in the size and an increase in the number of coffee farms owned by

immigrants. In our view, the high inflow of immigrants to Sao Paulo (surpassing

even Argentina until 1903) suggests that the institutional conditions provided by Sao

Paulo were credible enough to entice such a high number of foreigners during such a

prolonged period of time. While the labor and land laws created the conditions for

immigrants to become coffee producers, we observed an equally large number of

spontaneous (non-subsidized) immigrants that came to Sao Paulo to create the first

factories. In the credit market, we observed the creation of branches of commercial

banks in several municipalities of the Western Plateau. The interesting aspect is that

these branches were usually managed by foreigners and the municipalities in which

they were located had a higher concentration of foreign landowners than Brazilians.
 226

While it is true that the enforcement of land and labor laws solved the

shortage of labor on the coffee farms, the positive spillovers created by these laws

went beyond the mere inflow of immigrants. Indeed, the ‘immigrant effect’

contributed to decrease the size of rural properties, improved the overall pattern of

landownership, enabled immigrants to become coffee growers, fostered

industrialization and allowed immigrants to expand the Paulista hinterlands, among

other things. In large part, the immigrant was the aspect that to a certain extent

triggered a chain of positive linkages in the labor, land and credit market.

The pattern of landownership in Brazil during the Empire and in Sao Paulo

during the Old Republic suggested that the evolutionary theory of property rights,

expounded in chapters 2 and 6, does not explain why private property rights were

first created in Brazil. One of our main aspects, emphasized along this dissertation, is

that the 1850 land law was created to attract immigrants and not to regulate property

rights. In Sao Paulo, during the Old Republic, the 1895 and the 1921 land laws

contributed to an improvement in the overall pattern of landownership, and in that

sense, worked as ‘real land laws’. In our view, however, these laws were enacted and

enforced because of the ‘immigrant effect’. In brief, this dissertation did not find

evidence to support the evolutionary theory of property rights. In Sao Paulo, the

claim for well defined land rights was a by product of the inflow of immigrants and

it did not come on a spontaneous basis as a demand from coffee growers due to an

increase in the price of coffee.

 227

In this dissertation we find no evidence to support the widespread idea that

the concentration of land in Brazil is a by-product of the colonial heritage, reinforced

by the failure of the 1850 land law. Instead, we showed that the law succeeded in its

main goal, the attraction of immigrants. We also dismissed the argument that the

land laws enacted during the Old Republic in Brazil did not change the pattern of

landownership. In Sao Paulo, we found that the enforcement of the land laws

produced positive impacts on the number of titles in the rural areas of the state,

decreased the size of landholdings, enticed immigrants to become landowners,

increased the provision of credit (mainly because of the creation of a formal land

market), improved the quality of coffee, induced the creation of small factories

(owned by foreigners) and created a solid infrastructure that enabled the late

industrialization of Brazil. One solid conclusion from our study is that the land

concentration in Brazil is not a by-product of the 1850 land law. Hence, the colonial

heritage cannot explain the current concentration of land. Contrary to the claim that

the land laws during the Old Republic did not produce significant changes in the

pattern of landownership, we found that the Sao Paulo land laws led to positive

changes in the system of private property rights on land. Finally, we found that the

evolutionary theory of property rights should be amended to incorporate the

Brazilian experience of creation of land rights. In Brazil, during the Empire, and in

Sao Paulo, during the Old Republic, a well-defined system of private property rights

was forcefully created to attract immigrants and not due to an increase in the price of
 228

coffee or even due to an increase in the conflicts among landowners that were

demanding a change in the legislation. The ‘migrant effect’ was the trigger aspect

behind the changes in the legislations. These institutional arrangements were credible

not only because they incorporated the social norms in the laws but mainly because

there was a strong political agreement between the formal institutions (the Paulista

Republican Party) and their informal representatives at a municipio level, the

coroneis.
 229

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 243

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 244

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APPENDIX 1 - REGIONAL DIVISION OF SAO PAULO AND THE

BIOLOGY OF COFFEE

Sao Paulo is a large state, roughly equivalent in total area to the size of Italy,

half the size of France. Different from Rio, where the ‘hinterlands’ are very close to

the coast, the hinterlands (or the western plateau) is very far from the coast, as shown

in map 1. Sao Paulo is a hilly region, especially between the Paraiba valley, or

‘north’ of the State and the interior plateau, the ‘west’/’’western’/hinterlands.

The division we use here was adopted from Camargo (1954). Camargo

published a study to analyze the relationship between several demographic and

economic indicators in Sao Paulo, from 1836 to 1935. Two of the three volumes of

this work contain all the raw data used in the project down to the ‘municipio’

(county) level. In addition to coffee production and total population figures,

Camargo considered immigration into the state, the proportion of foreign born to the

population, and such indicators as the size of agricultural property, foreign

landownership and the like.

The division used in the present study was adopted from Camargo (1954, vol.

1p. 49-58), with the following changes:in order to better isolate the coffee producing

zones of the state we have divided the “Central” region used by Camargo along an

east-west line, thus creating a separate zone 3, (Sorocaba), to the south of region 4,

(Central). We wanted to divide Camargo’s third zone in two: the coffee producing

one (Central) and the non-coffee producing one (Sorocaba).

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During the Empire, we observed the relevance of the Paraiba valley, the

capital and the Central zones. It is only in 1886 that the other zones started to appear

once new municipalities were created.

The pattern of institutional expansion along the frontier, shows how

immigrants indeed conquered the west. Indeed, the division by municipios allowed

us to observe the expansion of the frontier up to the borders with Minas Gerais and

Mato Grosso. We noticed the creation of muncipios founded by immigrants during a

period in which no other state in the Republic created so many new municipalities.

Instead of including for each muncipio the date of its foundation, we included below

the year only for those established between 1886 and 1934. The ones without the

year were created before 1886. We then found that the number of municipios in Sao

Paulo grew from 46 in 1850 to 121 in 1886 to 206 in 1920 to 261 in 1934. Of the 206

new municipios created between 1850 and 1934, 83% were in the western plateau

and almost two thirds were created during the Republic.

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 255

In the map, we have the 11 zones. In brief, zone 1 is the capital zone, the

commercial and financial center of the state. This zone is not well suited to large-

scale agriculture and coffee does poorly in the inferior soils. Zone 2, on the northern

of the capital, is Paraiba valley. As explained in the dissertation, the valley had its

golden days during the Empire. While in 1886 it produced 21% of Sao Paulo’s

coffee by 1905 its share declined to 5% and then to 2% by 1932. The third zone,

centered around the town of Sorocaba, is not a coffee region, but had a tradition of

diversified agriculture, including sugar and cotton.

The western plateau started in zone 4, the Central zone, as we could observe

from the creation of the municipios, or even the coffee cultivation (see chapter 4).

Before coffee, this zone had sugar farms. Campinas, where the two major railroads

converged (Mogiana and Paulista), was the third leading tranportation center in

Brazil.

Zone 5, the Mogiana (because of the raiload that cuts this zone), is key for the

story of coffee and immigration. Located less than 50 miles of radius from Ribeirao

Preto we noticed the increasing number of municipios where 80% of the landowners

were immigrants. Ribeirao was considered to have the ideal soil for coffee and it

may as well explain why we find high quality coffee being cultivated in this zone

between 1905 and 1930. We found that in 1905, Ribeirao Preto had more foreign

landowners than Brazilians (156 versus 105).

 256

Zone 6 is the Paulista (because of the Compania Paulista railroad). The

railroad developed in 1872 was indeed created to attend the demand of the coffee

producers. This is also another zone of immigrants. In 1920, we found four

municipios where immigrants owed two thirds of the rural lands.

By 1886, the zones 4, 5 and 6 were well-developed zones of coffee

production. These three areas constitute the ‘old’ west, the area most affected by the

boom from the mid-1880s to the 1896. The difference between the ‘old’ and the

‘new’ is related to transportation. The construction of the rail lines into the Central,

Mogiana and Paulista came only after coffee was well established there. Beginning

with the development of the Araraquarense zone, the opposite holds. While in zones

4, 5 and 6 coffee preceeded rails, in zone 7 the two activities (coffee and railroads)

happened at the same time. In 1905, this zone had 16 municipios and 40% of the

foreigner landowners were concentrated in four cities located next to each other.

In brief, while in the ‘old west’ (zones 4, 5 and 6)coffee came before the

railroads, in the ‘new west’ (zones 7,8 and 9) coffee came after the trails. Indeed, the

settlement of zone 8, the Noroeste, took place after the construction of the railroad

with the same name. While the Sorocabana reached Bauru in 1905 the west of

Bauru, was called in the maps ‘land inhabited by wild Indians’ (terra habitada por

indios selvagens).

The last zone of the plateau, zone 9, is the Alta Sorocabana. The Sorocabana

railroad was constructed as far as Botucatu by 1886 and the area. Around the turn of
 257

the 20th century, the Sorocabana began to extend its tracks to the west and by 1909 it

reached Salto and it stopped at the banks of Parana in 1922. The rail line and the

region it served became known the Alta Sorocabana (to distinguish from the

Sorocabana system). Between 1920 and 1934, in 28 out of the 30 new municipios

created the population of immigrants was greater than that of Brazilians.

Zones 4 through 9 of this division are usually referred as the ‘western

plateau’, hinterlands. The natural conditions in the Western Plateau of Sao Paulo

were excellent for coffee. Almost 80% of these zones had ideal land for coffee,

known as ‘terra roxa’. Located within the southern tropic (Tropic of Capricorn), the

area is far from the equator to escape the intense heat. Killing frosts are not frequent

and yet the average temperature is not so high to require a cover shade trees. We

found the use of shade in Ribeirao Preto, in part because they cultivate the bourbon

type that had delicate seeds. Coffee is planted over the tops of the ridges to escape

the freezing temperatures that occur in the valley bottoms.

Zone 10 is called the “Baixa” or lower Sorocabana, after the railroad branch

built through the area between 1900 and 1910, to connect the Brazilian states with

Sao Paulo and points north. The Baixa Sorocabana lies south of the area climatically

suitable for coffee, and hence, has never produced significant amounts of coffee.

Zone 11, includes Santos, and we called the ‘southern coast’. The most

important city is Santos mainly because of its port and its intense shipping business.
 258

It was mainly through this port that coffee was exported and that the ships arriving

from Europe with immigrants landed.

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Regional Division of Sao Paulo by municipio: 1830-1934

(The year means the foundation date. The ones created before 1886 are not
dated)

Region 1: Region 2 (Cont.): Region 4 (Cont.):

CAPITAL 23. Pindamonhagaba 4. Cabruva
1. Capital 24. Pinheiros 5. Campinas
2. Cotia 25. Piquete 1891 6. Capivari
3. Guarulhos 26. Queluz 7. Indaiatuba
4. Itapecerica 27. Redencao 8. Itatiba
5. Juqueri 1890 28. Salesopolis 9. Itu
6. Santo Amaro 29. Santa Branca 10. Joanopolis 1896
7. Sao Bernardo 1889 30. Santa Isabel 11. Jundiai
31. Sao Sebastiao 12. Monte Mor
Region 2 32. Sao Bento do Sapucai 13. Nazare
PARAIBA VALLEY 33. Sao Jose dos Campos 14. Piracaia
AND NORTHERN 34. Sao Luiz do 15. Piracicaba
COAST Paraitinga 16. Porto Feliz
1. Aparecida 1928 35. Siveiras 17. Rio das Pedras
2. Areias 36. Taubate 18. Salto 1889
3. Bananal 37. Tremembe 1896 19. Santa Barbara
4. Barreiro 38. Ubatuba 20. Sao Pedro
5. Buquira 39. Vilabela Region 5 MOGIANA
6. Cacapava Region 3 SOROCABA 1. Altinopolis 1918
7. Cachoeira 1. Angatuba 2. Amparo
8. Campos do Jordao 2. Aracariguama 3. Batatis
1934 3. Campo Largo 4. Brodosqui 1913
9. Caraguatatuba 4. Guarei 5. Caconde
10. Cruzeiro 5. Itapetininga 6. Cajuru
11. Cunha 6. Parnaiba 7. Casa Branca
12. Guararema 1898 7. Piedade 8. Cravinhos 1897
13. Guaratingueta 8. Pilar 1891 9. Franca
14. Igarata 9. Porongaba 1927 10. Grama 1925
15. Jacarei 10. Sao Roque 11. Guara 1925
16. Jambeiro 11. Sarapui 12. Igarapava
17. Jatai 1889 12. Tatui 13. Itapira
18. Lagoinha 13. Una 14. Ituverava
19. Lorena Region 4: CENTRAL 15. Jardinopolis 1898
20. Mogi das Cruzes 1. American 1924 16. Mococa
21. Natividade 2. Atibaia 17. Mogi Guassu
22. Paraibuna 3. Braganca 18. Mogi Mirim
 260
Region 5 (Cont.) Region 6 (cont.) Region 7 (cont.)
19. Morro Agudo 1924 20. Rio Claro 34. Taquaritinga 1892
20. Nuporanga 1890 21. Santa Cruz da 35. Torrinha 1922
21. Orlandia 1909 Conceicao 1898 36. Uchoa 1925
22. Patrocinio do Sapucai 22. Santa Rita
23. Pedregulho 1921 23. Sao Carlos Region 8: NOROESTE
24. Pedreira 1896 24. Viradouro 1916 1. Aracatuba 1921
25. Pinhal 2. Avai 1919
26. Ribeirao Preto Region 7: 3. Avanhandava 1925
27. Santa Rosa 1910 ARARAQUARENSE 4. Bauru 1887
28. Santo Antonio da 1. Ariranha 1918 5. Birigui 1921
Alegria 1890 2. Bariri 1890 6. Cafelandia 1925
29. Sao Joao da Boa Vista 3. Barra Bonita 1912 7. Coroados 1928
30. Sao Joaquim 1917 4. Bica de Pedra 1913 8. Duartina 1926
31. Sao Jose do Rio Pardo 5. Boa Esperanca 1898 9. Galia 1927
32. Sao Simao 6. Bocaina 1891 10. Garca1928
33. Serra Azul 1927 7. Borborema 1925 11. Glicerio 1925
34. Serra Negra 8. Brotas 12. Iacanga 1924
35. Sertaozinho 1896 9. Catanduva 1917 13. Lins 1919
36. Socorro 10. Cedral 1929 14. Marilia 1928
37. Tambau 1898 11. Dois Corregos 15. Penapolis 1913
38. Tapiratiba 1928 12. Dourado 1897 16. Pirajui 1914
39. Vargem Grande 1921 13. Ibira 1921 17. Piratininga 1913
14. Ibitinga 1890 18. Presidente Alves 1927
Region 6 PAULISTA 15. Itajobi 1918 19. Promissao 1923
1. Anapolis 1897 16. Itapolis 1891 20. Vera Cruz 1934
2. Araraquara 17. Jau
3. Araras 18. Jose Bonifacio 1926 Region 9: ALTA
4. Barretos 1890 19. Matao 1898 SOROCABANA
5. Bebedouro 1894 20. Mineiros 1898 1. Agudos 1898
6. Cajobi 1926 21. Mirassol 1924 2. Avare
7. Colina 1925 22. Monte Also 1895 3. Assis 1917
8. Descalvado 23. Monte Aprazivel 1924 4. Bernardino de
9. Guariba 1917 24. Mundo Novo 1928 Campos 1923
10. Guaira 1925 25. Nova Granada 1925 5. Bocaiuva 1924
11. Jaboticabal 26. Novo Horizonte 1916 6. Bofete
12. Leme 1895 27. Pederneiras 1891 7. Botucatu
13. Limeira 28. Ribeirao Bonito 1890 8. Campos Novos
14. Monte Azul 1914 29. Sao Jose do Rio Preto 9. Candido Mota 1923
15. Olimpia 1917 1894 10. Cerqueira Cesar 1917
16. Palmeiras 30. Santa Adelia 1916 11. Chavantes 1922
17. Pirassununga 31. Tabapua 1919 12. Conceicao do Monte
18. Pitangueiras 1893 32. Tabatinga 1925 Alegre 1896
19. Porto Ferreira 1896 33. Tanabi 1924 13. Conchas 1916
 261
Region 9 (cont.) 35. Santa Cruz do Rio Region 10(cont)
14. Espirito Santo Turvo Pardo 13. Ribeirao Branco 1893
1896 36. Santo Anastacio 1925 14. Ribeirao Vermelho
15. Fartura 1891 37. Sao Manuel 15. Sao Miguel Arcanjo
16. Ipaussu 1915 38. Sao Pedro do Turvo 1889
17. Itatinga 1896 1891 16. Taquari 1925
18. Laranjal 1917 39. Tiete 17. Xiririca
19. Lencoes
20. Maracai 1924 Region 10: BAIXA Region 11: SANTOS
21. Oleo 1917 SOROCABANA AND SOUTHERN
22. Ourinhos 1918 1. Apiai COAST
23. Palmital 1919 2. Bom Sucesso 1886 1. Cananeia
24. Paraguacu 1924 3. Buri 1886 2. Iguape
25. Pereiras 1889 4. Capao Bonito 3. Itanhaem
26. Piraju 5. Capoeiras 1924 4. Jacupiranga 1927
27. Piramboia 1891 6. Iporanga 5. Santos
28. Platina 1915 7. Itabera 1891 6. Sao Vicente
29. Presidente Prudente 8. Itai 1891
1921 9. Itapeva
30. Presidente Wenceslau 10. Itaporanga
1926 11. Itarare 1893
31. Quata 1925 12. Ribeira 1910
32. Salto Grande 1911
33. Sapezal 1896
34. Santa Barbara do Rio
Pardo
 262
The Biology of coffee

Coffee is believed to have been discovered in the Kaffa region of

southwestern Ethiopia and first cultivated by Saudi Arabia some 530 years ago.

Coffee comes from seeds that grow on tropical evergreen shrubs or small trees.

Coffee belongs to the genus Coffea which contains more than 25 species mostly

growing wild in the old world tropics (Wilson, 1972). Coffee is in the Family

Rubiaceae with about 500 genera and 7000 species, principally subtropical and

tropical (Heywood, 1993). Other important plants in this family include Gardenia,

and Cinchona from which comes the anti-malarial quinine. Coffea arabica accounts

for the bulk of world production. Other coffee species grown commercially include

C. canephora var. robusta (originally called C. robusta and native to the African

Congo – Coffee Science Source, 2002) and C. liberica. The finest coffees are grown

at elevations of 3000 to 6000 ft (915 to 1830 m). Although the trees normally grow

to 30 ft (9 m) in height, they are frequently pruned down to a height of 15 ft (5 m) to

make harvesting easier, the coffee seeds being collected by hand. Most coffee plants

grow best under taller shade trees. They produce beautiful flowers that last but a few

days. The beans are either rinsed in water or go through an elaborate “washing”

process, are dried then often blended and roasted. Coffee contains an alkaloid called

caffeine that serves as a stimulant. It is a popular beverage throughout the world.

 263
APPENDIX 2: METHODOLOGY FOR THE INDEX OF LEGAL CHANGE

Libecap established 15 categories that were commonly found in mineral right

laws. To build the index of legal change for the mineral rights law in the Nevada

Comstock mines, Libecap studied each statute, law or veridict to determine how

many of the 15 categories were covered. Then within each category the provisions of

the statute or verdict were compared to previous laws. If these provisions were more

detailed and precise in their definitions of rights, he assigned 1 point for each

category included. If the provision essentially repeated earlier legislation or ruling

without changes in specificity, no points were assigned. The total points assigned to

each state or verdict depended on the number of categories covered and refined. The

sum of points for all statutes passed in a year formed the index of the annual increase

in specificity of mineral rights legislation (ACL, column 1). The index has fifteen

categories, seven related to the rights of individuals in working, staking and selling

land and the remaining eight dealt with the enforcement structure required to protect

those rights.

Libecap’s categories:
1. Physical claim boundaries;
2. Actions which the claimant can take to protect his holdings from trespassers
or other competitors;
3. Procedures for establishing a claim;
4. Provisions for the transfer of ownership;
5. Actions which must be taken to maintain the ownership of a claim (including
work requirements and the issue of abandonment);
6. Requirements for the formation of mining corporations and the power of such
corporations over their members;
7. Requirements for the formation of mining partnerships;
8. Taxes: sharing mine revenue with the state
9. Duties of judges in the enforcement of mineral rights;
 264
10. Duties of sheriffs;
11. Duties of juries;
12. Duties of surveyors;
13. Duties of recorders of claims and mine records;
14. Duties of notaries and commissioners of deeds;
15. Provision for jails for punishing law violators;

We adopted the Libecap’s index for land rights in Brazil but add some

aspects we found important for land rights that were not relevant for mineral rights.

To a certain extent, we preserved Libecap’s procedure to assign points for each law,

statute or veredict, but we also admit the possibility of new laws constraining the

development of property rights. In other words, a value of 0 was assigned if one

statute was simply repeating previous legislation, if it improved (explained better, in

more detailed previous legislation), we assigned 1 point. However, if the dispositons

of a new law worsened the previous legislation by creating constraints that, directly

or not, hampered the development of property rights, we assigned a value of –1.

We first analyze each disposition and article in each legislation to to see

which of the seventeen categories were covered. Then, within each category, the

provisions of the statute were compared with previous laws. If those provisions were

more detailed and precise in their definitions of rights, a point was assigned for each

category included. If the provision essentially repeated earlier legislation without

changes in specificity, no points were assigned. If the disposition was precluding the

previous legislation from being used without creating any other device we subtract

one point from the category. The total points assigned to each statute depended on

the number of categories covered and refined. The sum of points for all statutes

passed in a year formed the index of the annual-increase-in specificity of the land
 265
rights legislation, shown in column 1. The cumulative specificities of mineral rights

due to legislative actions listed in column 2 is the running total of the corresponding

annual changes from column 1.

In deciding whether a law refined one of the fifteen categories, Libecap does

not use any general scale; instead he made an ordinal comparison within the context

of existing laws. This ordinal ranking procedure can be illustrated with the changes

in Brazilian land law with the procedures for establishing a claim. The first statute

concerning this category was enacted in 1854. Article 25 and 26 of the Statute

required the private claimant to request the appropriate authorities to measure the

plot, as long it complied with the cultivation principle. This rule was given a value of

1 under the category “ procedures for establishing a claim”, since it was the first law

outlining how to file a claim for land tenure. In 1858, a statute was enacted listing,

with a great deal of detail, the procedures required to claim ownership of small plots.

The 1858 statute is seen as a refinement of the 1854 statute, since the ‘procedures for

establishing a claim’ became more definite for small plots in 1858 than in 1854.

Therefore, we assigned one point for that category due to the 1858 statute. In 1895,

another change in the same category was enacted. In brief, the law simplified the

procedure to claim landownership by eliminating many intermediary steps that

tended to delay the titling process. Thus a point was assigned for the 1895 legislation

under that category. Yet, in 1900 a bill was passed which seemed merely to repeat an

earlier requirement that the Land Registrar should be installed in all townships at the

same day. Accordingly, the bill was given a 0 for that category.
 266

Index of legal change for land rights

Categories

1. Procedures for claiming ownership on a land grant;

2. Procedures for claiming ownership on public land acquired through adverse
possession;
3. Maximum size of a plot (land grand or posses);
4. Statute of limitations to claim ownership on a plot of land;
5. Provision for use rights if the owner do not comply with the law;
6. Provisions for transfer of ownership;
7. Government incentives to reduce size of plots (any form of taxation?)
8. Measurement costs and fees;
9. Measurement procedures for public lands;
10. Concessions of public land;
11. Sales of public land;
12. Maximum size of public lands plots;
13. Duties of judges in enforcing land rights;
14. Duties of surveyors;
15. Duties of provincial presidents/governors;
16. Duties of land registrars in recording the claims and land records;
17. Provision for law violators;

Changes in the 1850 Land law,number 601, September 18:

1. Law 601, September 18, 1850. Different from the US, public land in Brazil
was always sold after being measured. Therefore, the sale price includes the
measurement costs. Trespassers, who acquired public land acquired
through adverse possession, however, did not have to pay for the public
land. The only requirement was registration of the piece of land.
Points by Category (-1, 0 or 1)
C1=1
C2= 1
C3= 0
C4=0 (I assigned a 0 because the law is ambiguous. In article 2, it says that
public land can only be acquired through purchase. In Art. 7 and 8, it says that
the government will set the deadlines for measuring private land. The law does
not say that land acquired after 1850 through adverse possession could not be
measured. We can interpret the law, saying that the statute of limitations expired
when the law was enacted. Still, the index is not an interpretation of the law.)
 267
C5=1(Art.8. It says that in case the owner decides not to register his land, he still
would be entitled to live in the part of the land that is being used, and the
remaining unused land would become public).
C6=1 (Art. 11. Says that the squatters who did not follow the law could not
mortgage his land)
C7=0
C8=1 (Art 11) Measurement costs: $0.02/acre ($0.06/hectare) Fees: ($2.8 for
plots with an area less than 121 hectares and $0.02 (per extra hectare) +$2.24
(flat fee for registration)=$5.04
C9=1 (Art 14) Not very defined since they didn’t know what was public land.
C10=1 (Art.12)
C11=1 (Art. 14 § 2) (cost between $1.12 to $2.24 per hectare (or $0.45 to $0.97
per acre) to buy public land, including measurement costs). At the same time,
the US sold land at $1.25 per acre.
C12=1 (Art. 14 §1o) public land would be sold in plots of 121 hectares)
C13=1 (Art. 2 § unico)
C14= 0
C15=1 (Art. 10, provincial president is the arbitrator in a disagreement and is the
one who signs the title)
C16=1 (Art. 13. Says that land registrars will be formed in each township)
C17=1 (Art.2 and Art. 22)

TOTAL POINTS: 13

2. Statute number 1318, 01/30/1854 (dispositions to execute the 1850 law);

Points by Category (-1, 0 or 1)

C1= 1 (Art. 23, specify which land grants do not need revalidation)
C2= 1 (Art. 24 specify which posses don’t need revalidation. Art 24. §1§, 2 and
§3)
C3= 0
C4=1 (Art. 20) The posses established after this statute should not be entitled to
a title. It should become public land.
C5=0
C6=1 (Art. 25 definition of legitimate title and Art 26)
C7=0
C8=0
C9=1 (Art. 10,11, 64, 54, 66) These articles established a detailed procedure on
how to sell public land, to whom will go the procedures and what to do with
unsold land).
C10=1 (Art. 72, 73, 74, 75, 76, 77, 78, 79, 80, 81) Describes in detail the
procedures on what is being considered reserved land.
C11=1 (Art. 67, 68, 69,70 and 71)
C12=1 (Art. 10, provinces will be divided according to the number of
measurement districts required in proportion to the amount of public land.
(Art.11: Role of Inspector in charge of measuring public land), Art.12 (size of
 268
public land); (Art. 17: measurement starts with public land) Art 15: creation of
maps; Art 18: public land inside private land can be measured.
C13= 1 (Art. 19: juiz comissario and municipal judge in charge of solving
disputes) (Art. 30: create the figure of ‘juiz comissario’) Art 31: the person
nominated by the provincial president for this position cannot decline the offer in
any instance.
C14=1 (Art 13: surveyors will be paid per acre measured, no fixed wage. Art. 35:
surveyors should be recruited in engineer schools or in the Militar school) Art.
11: surveyors are nominated by the provincial president)
C15=1 (art. 28: judges, sheriffs should find out private lands to be validated)
C16=1 (Art. 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104) The land
registrar was under the Federal government jurisdiction
C17=1 (art. 29 and 31)
TOTAL POINTS: 13

3. Regulation from 5/8/1854 (set temporary rules to measure public lands);

Points by Category (-1, 0 or 1)

C1= 0
C2=0
C3=0
C4=0
C5=0
C6= 0
C7=0
C8=0
C9= 1 (Art. 2, paragrafo unico). This is the first act to create a procedure to
measure land. It is very vague and confusing.
C10=0
C11=0
C12=0
C13=0
C14=1 (art 3) Surveyors will measure public land
C15=0
C16=0
C17=0
TOTAL POINTS: 2

4. Portaria 385 12/19/1855: Public Land Federal Office (Reparticao Geral das
Terras Publicas) specifies the technical details for public land measurement,

Points by Category (-1, 0 or 1)

C1= 0
 269
C2=0
C3=0
C4=0
C5=0
C6=0
C7=0
C8=0
C9=1. The measurement procedures are more specific than the 1854 temporary
regulations. The law describes in great detail the procedures to measure and
isolate public land (surveyors have to specify rivers, roads, type of soil, )
C10=1 (After measuring the area, surveyors had to write a report specifying if
there was any land to be given to the Navy)
C11=1 (The reason I gave 1 is because the price of public land was set by the
report prepared by the measurement commission. Price of public land varied
according to to the type of soil, access to the market and other conditions that
were detailed in the report)
C12=0 (though the act says that the maximum size is 121 hectares and that the
surveyors had to divide the land in according to this size)
C13=0
C14= 0 ( There is nothing new in the role played by the surveyor)
C15=0
C16=0 (the act says that the Inspetor geral has to produce a detailed map of
public lands in each state. This would be used to sell public land. However, the
registrar for public land are composed by these maps whereas for private land,
the claims should be filed to initiate the process of obtaining a title.)
C17=0

TOTAL POINTS: 3

5. Aviso 4/10/1858: For ‘posses’ with an area not exceeding 250,000 square
bracas (1 square braca =4.8sq meteres) (minimum size of public plots sold
by the government) the measurement costs were paid by the government.
This ‘aviso’ was suspended in 1881;
Points by Category (-1, 0 or 1)
C1= 0
C2=1 (it is an improvement from the 1854 law because the measurement costs
for ‘small’ owners were too considered to be too high. This is a measure to
foster registration)
C3=1 (I see that as a change from past laws given that this is the first time the
government is paying the measurement costs for small plots acquired through
adverse possession.)
C4=0
C5=0
C6=0
C7=0
C8=1 (The government paid the measurement costs but not the fees for the
posses)
 270
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=0
C17=0

TOTAL POINTS: 3

6. Statute (decreto) number 1067, 07/28/1860: created the Agriculture Ministry

and extinguished the Public Lands Federal Office (Reparticao Geral das
Terras Publicas) and transferred to the provinces the role of updating the
land registration (through the ‘reparticao especial’ in each province).

The Agriculture ministry is a positive institutional innovation. Mainly because it

decentralized the land registration process to the provinces as well as the
colonization offices. With the end of the Reparticao geral das terras publicas, the
process of land demarcation almost stopped. And as we will see it is only in
1876 with a deep reform in the land and colonization institutions that the
demarcation process starts again.
Points by Category (-1, 0 or 1)
C1= 0
C2=0
C3=0
C4=0
C5=0
C6=0
C7=0
C8=0
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=1 (with this change the land registration was transferred to the provinces,
at the ‘special offices’ (reparticoes especiais).
C17=0

TOTAL POINTS: 1

7. Law 1237, 9/24/1864: Mortgage Law: the law establishes that properties with
a clear title could be mortgage. In case the debtor foreclosed the mortgage,
 271
he had to accept the land as part of the payment (‘forced adjudication’). The
process of foreclosing involved a peace judge that assigned three appraisals
to value the property. The law says that the appraisals’ value could not be
lower than the value of the original loan. There was only one auction, and if
the bids were not high enough to cover the appraised value, the creditor
would have to accept the land as the payment for the mortgage. The law
also established that in order to sell, mortgage or donate the land the title
had to be listed in a public registry. It was not enough (meaning, the title
could not be mortgage) if the title was registered in a notary public.

Points by Category (-1, 0 or 1)

C1= 0
C2= 0
C3=0
C4=0
C5=0
C6=1 (It says that land can be sold only if it it is registered in public land
registrations (transcricao publica dos titulos). Land to be sold, mortgage or given
as bequest, that had only the notary public certified (reparticoes publicas).
C7=0
C8=0
C9=0
C10=0
C11=1 (here we have the ‘peace judge’ as the intermediary between creditor
and debtor. Because the judge was part of the community, the appraisals
appointed to value the property were the debtor’s friends).
C12=0
C13=0
C14=0
C15=0
C16=1 (well, I assigned 1 because the condition for mortgage was that the land
had to be registered in a public land registrar to have the associated land
record)
C17=0

TOTAL POINTS: 2

8. Amendment number 515, 11/25/1868 (included slaves as collateral): This

amendment does not change the conditions required to have land
mortgaged.
Points by Category (-1, 0 or 1)
C1= 0
C2=0
C3=0
C4=0
 272
C5=0
C6=0
C7=0
C8=0
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=0
C17=0

TOTAL POINTS: 0

9. Amendment number 534, 12/5/1868 (defined that concessions of public land

could only be mortgaged if the land was registered in a land registrar. There
was no judicial value for titles of public land that were obtained in notary
publics (reparticoes juridicas).
Points by Category (-1, 0 or 1)

C1= 0
C2=0
C3=0
C4=0
C5=0
C6=1 (now public land acquired through concessions or purchases could also
be mortgaged)
C7=0
C8=0
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=1 (to mortgage public land, the owner had to register it in the land
registrars and not only the notary public)
C17=0

TOTAL POINTS: 1

10. Regulation number 6129, 2/23/1876 (decreto): Agriculture Ministry created

the Federal Land and Colonization Office (Inspetoria Geral de Terras e
Colonizacao). This was a federal office composed by the former Federal
 273
Land Commission Office (Comissao Geral das Terras) and the Official
Colonization Agency (Agencia official de Colonizacao). In the provinces, the
regulation extinguished the special offices (reparticoes especiais) and
created the Special Land and Colonization office (Inspetoria especial de
terras e colonizacao). This provincial office had two sub-branches: the
colonization agency (in charge of monitoring the colonies built by the
imperial or provincial government) and the measurement commission (in
charge of measuring land). Clearly, the regulation is trying to simplify the
measurement process, by reducing the number of offices involved and is
also trying to decentralize the process at a provincial level. The provincial
president had the same degree of power as before, by appointing the
‘judges’ and the surveyors, and by being the person who signed all the land
titles.

Points by Category (-1, 0 or 1)

C1=0
C2=0
C3=0
C4=0
C5=0
C6=0
C7=0
C8=0
C9=0
C10=0
C11=0
C12=0
C13=0
C14=1 (now the surveyor had the power to be the comissario judge)
C15=0
C16=1 (create the general statistical regitrar of public land)
C17=0

TOTAL POINTS: 2

11. Aviso, October 4, 1873: Land acquired through adverse possession after
1854 could be legalized after paying the measurement and administrative
fees.
Points by Category (-1, 0 or 1)

C1= 0
C2=1
C3=1
C4=1
C5=0
C6=1
C7=0
 274
C8=1
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=1
C17=0

TOTAL POINTS: 6

12. Law 3272, 10/5/1885. Mortgage law. It excluded the forced adjudication
concept, and made the foreclose process easier for the creditor.
Points by Category (-1, 0 or 1)

C1= 0
C2=0
C3=0
C4=0
C5=0
C6=1
C7=0
C8=0
C9=0
C10=0
C11=0
C12=0
C13=1
C14=1
C15=1
C16=1
C17=1
TOTAL POINTS: 5

13. Brazilian Constititution. 1891. Article 93, transferred from the Union to the
states the jurisdiction over land.
Points by Category (-1, 0 or 1)
C1= 0
C2=0
C3=0
C4=0
C5=0
C6=0
C7=0
C8=0
 275
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=0
C17=0
TOTAL POINTS: 0

14. Sao Paulo state Law 323, 6/22/1895: posses and sesmarias, even without
cultivation, could be legitimate, as long as the ‘owners’ had lived there until the law
was enacted (there is no minimum period). The owners had a 10 year period to
legalize their lands, starting in 1895. Created the Sao Paulo Land Register.
Public land prices: $2 per hectare (4.84/acre) and $4 per hectare ($9.68/acre)

Measurement costs: $1.68 per hectare (up to 2,000 hectares) and $1.4 hectare for
any area above 2,000 hectares.

To acquire a title: $5 (flat fee).

This law is much more clear than the 1850 one. It accepts the parish priests
registrars as a proof of ownership (the registration with the priest, under the 1850
law, did not grant the title for the owner).

Points by Category (-1, 0 or 1)

C1= 1 (art. 31,32, 33, 34, 35, art. 198, 199, 200, 201, 202, 203, 204, 205, 206,
207, 208, 209, 210, 212, 213, …)
C2=1 (because it became easier to register the plots, you didn’t even need to
prove if the title was not fake)
C3=1 (posses: besides the ‘productive land’ squatter can legalize up to 1,000
hectares of contiguous public land, art. 49 §1o)
C4=1 (yes, whoever had acquired land after 1854 and before 1895 was entitled
to receive a title)
C5=0 (no, the law is clear: if you don’t register your land, it will become public
and Sao Paulo would only pay for the improvements made in the land)
C6=1 (the procedure described in art. 97 is really simple: if the owner did not
register his land (in the municipal land registrar) he could not mortgage the land.
C7=0
C8=1 (table b: cost $1.68 up to 2,000 hectares and plus $1.4 if the area is
greater than 2,000 acres, and $2.5 for the title.)
C9=1 (art. 145, 146, 147, 148, 149, 150, 151, 152, 153, 154 until art. 197)
C10=1 (Capitulo II art. 312 until 318)
 276
C11=1 (yes, and it seems very clear: Titulo VI art. 286 until art. 298, also:
“Seccao II” “Da venda direta”: art. 299 until art. 311)
C12=1 (it seems according to art. 325 that public land now had no maximum
size. It would be sold for $1.5 per hectare without previous measurement. It is
the owner responsibility and not the state to claim for measurement. Therefore,
public land was sold without previous measurement. In the price, the
government did not include the registration and measurement costs)
C13=1 (there is no more ‘juiz comissario’. Now, only if the owner has a litigation
or wants to start one is that the civil judge will be asked to participate in the
process. Also, the judges’ roles are restricted in imposing punishment).
C14=1 (the sheriff (highest and better paid position in the Land Offices) was a
public officer that had to have an engineering degree as well as his technical
assistants.; art. 12,13 and 14 detailed their roles)
C15=0 (I didn’t see the role of the governor here)
C16=1 (they created the municipal land registrar art. 88-127. Seen as an
improvement from the 1850 land law because the private owner would have to
start registering the land if he intended to have it measured and then come back,
after the measurement to get the paperwork. )
C17=1 (art. 336-366)

TOTAL POINTS: 14

15. Law 545, 8/2/1898. Posses acquired before 1878 that had a title of
ownership prior to 1878 would be automatically legitimized. The same procedure
applied for ‘private’ land that was being productively used since 1868. In other
words, for posses acquired before 1868 without any proof of ‘legal’ ownership,
the owner would be eligible to start the legitimization process that would, in turn,
give a title to the land. Posses that belonged to only one owner (posses de
primeira ocupacao) that were created/established until 6/22/1895 could start the
legitimization process. The legalization/legitimization of posses de primeira
ocupacao acquired until 1895 that had never been sold (posses de primeira
ocupacao).
Points by Category (-1, 0 or 1)

C1= 0
C2=1 (I assigned a 1 because the law is making even simpler for the squatter to
register the land)
C3=1 (in a sense, this is the first law saying that in the absence of an ownership
proof the squatter can still acquire 2000 hectares of land.)
C4= 1 (the squatter
C5=0 (art. 4 is clear: if owner choose not comply with the law, his land will be
auctioned in 3 years)
C6=1 (art. 7: the law says that the lands without a title cannot be sold because
they will be cleared in the mortgage regitrar, the same place that the owner had
to go register their land)
 277
C7=0
C8=0 (refers to Law 323)
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=0
C17=0

I assigned many zeros because the law does not display a significant change of
conduct with respect to the Law 323, from 1895.
TOTAL POINTS: 4

16. Sao Paulo State, provision (decreto) number 734, 1/5/1900. Regulate the
Municipal land registry (the public registry had to installed in all the comarcas
at the same day) and the sale of public land.
Points by Category (-1, 0 or 1)

C1= 0
C2=0
C3=0
C4=0
C5=0
C6=0
C7=0
C8=0
C9=0
C10=1
C11=1
C12=1
C13=1
C14=0
C15=1
C16=1
C17=1

TOTAL POINTS: 7

17. Sao Paulo State provision (decreto), number 786, 5/22/1900. Set the day
when all the comarcas would receive their public land registry.
Points by Category (-1, 0 or 1)

C1= 0
C2=0
 278
C3=0
C4=0
C5=0
C6=0
C7=0
C8=0
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=0
C17=0

TOTAL POINTS: 0

18. Sao Paulo Executive decree number 1090, 01/09/1903. Imposed a tax of
two thousand mil reis ($480 USD) for each alqueires or fraction thereof of
land planted in coffee for the first time. Oldgroves or dead trees in existing
groves could be replaced without penalty. By prohibiting planters from
opening up new coffee groves, the law was restricting the practice of
interrow cropping by the colonos.

Points by Category (-1, 0 or 1)

C1= 0
C2=0
C3=0
C4=0
C5=0
C6=0
C7=-1
C8=0
C9=0
C10=0
C11=0
C12=0
C13=-1
C14=0
C15=-1
C16=0
C17=-1

TOTAL POINTS: -4
 279
19. Sao Paulo decree number 1458, 4/10/1907, Immigration law. The 334
articles were divided in five parts: immigration, colonization, offices to
enforce the law, creation of a permanent immgration fund and general
dispositions. In Sao Paulo, the government created a labor agency to
allocate the immigrants and abroad, it increased the number of offices and
the amount spent with marketing Sao Paulo. The law created ‘nurseries’
(‘viveiros’) where immigrants were granted land. Immigrants were granted
first priority in these settlements. The law authorized the granting of
subisidized credit to immigrants but not to Brazilians. Likewise, the law
allowed the government to buy private land in the hinterlands to be titled and
granted to subsidized immigrants.

Points by Category (-1, 0 or 1)

C1= 0
C2=0
C3=1
C4=1
C5=0
C6=1
C7=1
C8=1
C9=1
C10=1
C11=1
C12=1
C13=1
C14=1
C15=1
C16=1
C17=0

TOTAL POINTS: 13

20. Sao Paulo State Law 1844, 12/27/1921. All the squatters without a title that
were living in their lands until 1921 could obtain a title to their lands. Also,
those who had any type of proof to show ownership. The law legalized all the
posses and sesmarias that were illegal since 1895. The law granted public
land for free. More important, the law offered subsidized credit and other
advantages for landowners who were willing to divide their properties.
Extinguish the figure of the ‘comissario judge’ that represented the political
interests of each region. Instead, the regular judge was the new arbitrator.

Points by Category (-1, 0 or 1)

C1= 1 (it says that the grant will become public land in 1930, and the owner
cannot do anything to change it. This is the first time that the law says that land
grant would become public land)
 280
C2=1 (I assigned a value of 1 because the law was in fact, giving land for free.
The procedures could not be easier. Claim ownership and register the piece of
land.)
C3= 1 (the maximum size was valid for posses not for land grants)
C4=0
C5=0
C6=0 (not that the law does not include it. It’s just that I don’t see any
improvement)
C7=1 (well, this is the first law to give tax breaks and subsidize credit for farmers
who divide their plots with immigrants)
C8=1 (yes, measurement costs paid by the state)
C9=0 (though the law includes the procedures, but no major innovation)
C10=1 (yes, the law gives public land for free)
C11=0 (nothing new)
C12= 0 (same thing: 121 hectares)
C13=1 (the ‘comissario judge was out and the regular judge was back)
C14=1
C15=1
C16=1
C17=0

TOTAL POINTS: 10

Land Laws in Minas Gerais: 1890-1930 (I used the legislation provided

in Cardozo (1954, vol. 2, 272-281) and Linhares (Vol. 4, p. 1302-1310 to
understand some dispositions)

Minas Gerais state law 269, 8/27/1899: granted public land for free but did not allow
the owner to sell or mortgage the plot (usufruto). Land in the hands of private
claimants after 1854and before 1898 could receive a title. However, claimants were
required a witness to show that they indeed lived in the land. Likewise, to start the
whole procedure claimants had to show that the land was being used for productive
purposes (Sao Paulo dropped this requirement and in my view that’s why people
registered their lands, even with higher measurement costs). Minas did not accept
the parish priest as a proof of previous ownership. Instead the state required: two
witness (could not be blood related or women), and if the parcel was acquired
though purchase the purchasing proof. The law has 345 articles divided in 15 parts
(longer than the Sao Paulo and much more complicated). It seems to me that the
law is trying to incentive the creation of small properties and that is why the
legislators preserved the requirement that the land had to be used for productive
purposes. The 1850 land law proved that this requirement did not work to increase
land registration.
Points by Category (-1, 0 or 1)
C1= 1 (artigos 40, 43,46, 57, 59, 60, 61)
C2=1 (artigos 41, 44, 55, 58, 63, 64)
 281
C3=0 (Why? I did not find any articles saying: ‘there is no maximum size for the
private plots”. And I found in Sao Paulo).
C4=1 (yes, before 1898 and after 1854)
C5=1 (articles 65,66, 67, 68 explain that public land could be be granted for free.
However, they are referring to ‘public land’ (usufruto). Either way, the law is
clear that those who did not register the land until in five years (until 1904) the
state will take the land, becoming then public land)
C6=0 (well, there is no provision (how to transfer)
C7=0 (the law does not include any)
C8=1 ((table 2: cost $1.9 up to 1,000 hectares and plus $2.3 if the area is
greater than 1,000 acres, and $4.5 for the title. Seems expensive.)
C9=1 (art. 154, 166, 176, 184, 194, 203, 207, 219, 228, 242 unitil article 298)
C10=1(articles 65,66, 67, 68. They did not have provision for granting public
land for colonization companies).
C11=0 (say that it will not start before 1904, so it seems that public land will not
be measured until 1904?)
C12=0
C13=0 (allowed the chief of the police to assume the role of the judge. It says is
very vague and does not limit the power of the police/judge. It seems that they
can do almost anything)
C14=1 (the judge/police can also work as the surveyors)
C15=0
C16=0
C17=0(no, if you don’t register your land, you lose it, that’s all. Again: it’s zero
because the law does not explicitly say: “people will not be punished if they don’t
register their lands”)

TOTAL POINTS: 9

2. MG state law 1351, 8/21/1900. land tax. Clearly, rural properties smaller than
121 hectare did not pay the tax. It says that the land cannot be sold or
mortgaged if the owner does not pay the tax. Land tax is valid for both: rural and
urban land. The law explains that properties that already obtained a title had to
pay the land tax to be transferred, mortgaged or sold.
Points by Category (-1, 0 or 1)
C1= 0
C2=0
C3=0
C4=0
C5=0
C6=0
C7=1
C8=1
C9=0
C10=0
C11=0
C12=0
C13=0
 282
C14=0
C15=0
C16=0
C17=1 (punishment is that the land could not be sold)
TOTAL POINTS: 03

3. Aviso 675, 9/12/1916. Says that the owners who had a plot of land prior to
1899 would have until 1918 to register their lands (extended the deadlines from
1899 to 1918).
Points by Category (-1, 0 or 1)
C1= 1
C2=1
C3=0
C4=0
C5=0
C6=0
C7=0
C8=0
C9=0
C10=0
C11=0
C12=0
C13=0
C14=0
C15=0
C16=0
C17=1

TOTAL POINTS: 03
 283
Table 1: Annual Changes of the Brazilian Land Law:
The Empire Period (1850-1889)
Annual Increase in Total precision of land Number of land
precision of land rights (TPL)- rights law
rights due to statutes a passed
Year legislative
1850 (ACL) 13 13 1
1851 0 13 0
1852 0 13 0
1853 0 13 0
1854 15 28 2
1855 3 31 1
1856 0 31 0
1857 0 31 0
1858 3 34 1
1859 0 34 0
1860 1 35 1
1861 0 35 0
1862 0 35 0
1863 0 35 0
1864 2 37 1
1865 0 37 0
1866 0 37 0
1867 0 37 0
1868 0 37 1
1869 0 37 0
1870 0 37 0
1871 0 37 0
1872 0 37 0
1873 6 43 1
1874 0 43 0
1875 0 43 0
1876 2 45 1
1877 0 45 0
1878 0 45 0
1879 0 45 0
1880 0 45 0
1881 0 45 0
1882 0 45 0
1883 0 45 0
1884 0 45 0
1885 5 50 1
1886 0 50 0
1887 0 50 0
1888 0 50 0
1889 0 50 0
(a) Computed as a running total of column 1.
 284
Table 1.1 Annual changes in the Sao Paulo Land law (1890-1930)
Annual Increase in Total precision of Number of
precision of land land rights (TPL)- land rights
rights due to statutes legislative a law passed
Year (ACL)
1890 0 50 0
1891 0 50 1
1892 0 50 0
1893 0 50 0
1894 0 50 0
1895 14 64 1
1896 0 64 1
1897 0 64 0
1898 4 68 1
1899 0 68 0
1900 7 75 2
1901 0 75 0
1902 0 75 0
1903 -4 71 1
1904 0 71 0
1905 0 71 0
1906 0 71 0
1907 13 84 1
1908 0 84 0
1909 0 84 0
1910 0 84 0
1911 0 84 0
1912 0 84 0
1913 0 84 0
1914 0 84 0
1915 0 84 0
1916 0 84 0
1917 0 84 0
1918 0 84 0
1919 0 84 0
1920 0 84 0
1921 10 94 1
1922 0 94 0
1923 0 94 0
1924 0 94 0
1925 0 94 0
1926 0 94 0
1927 0 94 0
1928 0 94 0
1929 0 94 0
1930 0 94 0
 285
Table 1.2 Annual changes in Minas Gerais Land law (1890-1930)
Annual Change in Total precision of Number of
precision of land rights land rights (TPL)- land rights
due to statutes (ACL) legislative a law passed
Year
1890 0 50 0
1891 0 50 0
1892 0 50 0
1893 0 50 0
1894 0 50 0
1895 0 50 0
1896 0 50 0
1897 0 50 0
1898 0 50 0
1899 9 59 1
1900 3 62 1
1901 0 62 0
1902 0 62 0
1903 0 62 0
1904 0 62 0
1905 0 62 0
1906 0 62 0
1907 0 62 0
1908 0 62 0
1909 0 62 0
1910 0 62 0
1911 0 62 0
1912 0 62 0
1913 0 62 0
1914 0 62 0
1915 0 62 0
1916 3 65 1
1917 0 65 0
1918 0 65 0
1919 0 65 0
1920 0 65 0
1921 0 65 0
1922 0 65 0
1923 0 65 0
1924 0 65 0
1925 0 65 0
1926 0 65 0
1927 0 65 0
1928 0 65 0
1929 0 65 0
1930 0 65 0
 286
Raw Data Used in the OLS Regressions (tables 6.12 and 6.13)
Year ACL a TPL b Immigration Immigration Slave Coffee Terms of
to Brazil to Sao Population c Exports d Trade e
Paulo
1850 13 13 2,072 22 600,483 2,684 128.9
1851 0 13 4,425 98 600,483 3,452 136.5
1852 0 13 2,731 1,023 600,000 3,936 142.3
1853 0 13 10,935 765 600,000 4,041 128.9
1854 15 28 18,646 850 508,731 4,894 166.7
1855 3 31 11,798 2,200 508,731 5,547 158.9
1856 0 31 14,008 1,123 508,731 5,862 178.8
1857 0 31 14,334 823 508,731 5,518 184.2
1858 3 34 18,529 565 508,731 5,082 184.2
1859 0 34 20,114 124 508,731 5,815 161.1
1860 1 35 15,774 145 508,731 7,427 200.2
1861 0 35 13,003 276 508,731 7,411 191.4
1862 0 35 14,295 112 508,731 6,229 169.3
1863 0 35 7,642 134 508,731 6,173 155.7
1864 2 37 9,578 10 508,731 6,648 163.9
1865 0 37 8,422 126 508,731 6,764 148.3
1866 0 37 7,699 155 508,731 6,711 135.2
1867 0 37 10,842 1,000 508,731 7,431 135.2
1868 0 37 11,311 200 508,731 7,114 147.5
1869 0 37 11,527 152 508,731 6,224 119.4
1870 0 37 5,158 159 508,731 6,903 129.1
1871 0 37 12,431 83 508,731 7,469 131.3
1872 0 37 19,219 323 361,236 9,593 121.5
1873 6 43 14,742 590 361,236 11,995 160.5
1874 0 43 20,333 120 361,236 12,744 179.1
1875 0 43 14,590 3,289 361,236 13,463 167.6
1876 2 45 30,747 1,303 361,236 12,583 199.4
1877 0 45 29,468 2,832 361,236 11,526 189.4
1878 0 45 24,456 1,678 361,236 12,056 177.5
1879 0 45 22,788 953 361,236 12,025 176.0
1880 0 45 30,355 613 361,236 11,421 216.2
1881 0 45 11,548 2,705 361,236 10,579 194.2
1882 0 45 29,589 2,743 361,236 10,185 155.9
1883 0 45 34,015 4,912 361,236 11,249 123.7
1884 0 45 24,890 4,868 361,236 12,411 148.1
1885 5 50 35,440 7,630 361,236 11,406 148.6
1886 0 50 33,486 9,534 268,488 12,107 139.0
1887 0 50 55,965 32,110 268,488 14,230 160.5
1888 0 50 133,253 91,826 123,987 10,857 224.9
1889 0 50 65,246 27,694 0 18,963 220.8
 287
Raw Data Used in the OLS Regressions (tables 6.12 and 6.13: continuation)
Year ACL a TPL b Immigration Immigration Slave Coffee Terms of
to Brazil to Sao Population c Exports d Trade e
Paulo
1890 0 50 107,474 38,291 0 17,850 214.7
1891 0 50 216,760 108,688 0 17,561 202.4
1892 0 50 86,203 42,061 0 22,028 205.4
1893 0 50 134,805 81,745 0 21,712 245.4
1894 14 64 60,984 48,947 0 20,884 224.0
1895 0 64 167,618 139,998 0 22,385 216.0
1896 0 64 158,132 99,010 0 19,663 189.0
1897 4 68 146,362 98,134 0 16,506 148.1
1898 0 68 78,109 46,939 0 13,830 141.9
1899 7 75 54,629 31,172 0 14,459 137.5
1900 0 75 40,300 21,038 0 18,889 139.0
1901 0 75 85,306 70,348 0 23,979 125.0
1902 0 75 52,204 37,831 0 20,327 124.8
1903 -4 71 34,062 16,553 0 19,076 128.4
1904 0 71 46,164 23,761 0 19,958 157.0
1905 0 71 70,295 45,839 0 21,421 162.8
1906 0 71 73,652 46,214 0 27,616 148.6
1907 13 84 67,787 28,900 0 28,559 133.9
1908 0 84 90,536 37,278 0 23,039 128.7
1909 0 84 84,090 38,308 0 33,475 162.8
1910 0 84 86,751 39,486 0 26,696 195.7
1911 0 84 133,575 61,508 0 40,401 193.3
1912 0 84 177,887 98,640 0 46,558 193.8
1913 0 84 190,333 116,640 0 40,779 145.1
1914 0 84 79,232 46,624 0 27,000 122.5
1915 0 84 30,333 15,614 0 32,191 93.4
1916 0 84 31,245 17,011 0 29,281 90.4
1917 0 84 30,277 23,407 0 23,054 68.9
1918 0 84 19,793 11,447 0 19,041 67.2
1919 10 94 36,027 16,205 0 66,081 103.5
1920 0 94 69,042 32,484 0 40,456 76.6
1921 0 94 58,476 32,678 0 37,067 63.2
1922 0 94 65,007 31,281 0 39,545 104.1
1923 0 94 84,549 45,240 0 44,182 117.1
1924 0 94 96,052 56,085 0 65,747 161.6
1925 0 94 82,547 57,429 0 74,032 162.9
1926 0 94 118,686 76,796 0 69,582 159.9
1927 0 94 97,974 61,607 0 62,689 134.4
1928 0 94 78,128 40,847 0 69,701 164.4
1929 0 94 96,186 53,362 0 67,307 160.9
1930 0 94 62,610 30,924 0 41,179 100.0
 288

Raw Data used for the OLS Regressions (continuation).

Notes: (a) ACL is the annual changes of the law. (b) TPL is the total precision of the
law, a running sum of the ACL. ( c) slave population is the number of slaves in the
coffee provinces of Sao Paulo, Rio de Janeiro and Minas Gerais. (d) Measured in
1,000 british pounds. (e) The base year for the terms of trade is 1930. Sources: For
ACL, Colecao de Leis e Decretos do Imperio Brasileiro, Colecao de Lei e Decretos do
Estado de Sao Paulo. For Immigration to Brazil: Carneiro (1950), p. 60. For immigration
to Sao Paulo: Vasconcellos (1941), quadro A-1; For Coffee exports: Separata do
Anuario Estatistico do Brazil 1939/40,IBGE, p. 84. For Terms of trade: Bacha (1992),
Appendix table 1-10.
 289

APPENDIX 3: METHODOLOGY OF THE RURAL CENSUSES: SAO

PAULO AND BRAZIL, 1905-1930

The first agricultural census in Brazil was implemented by the State of Sao

Paulo (Agriculture Secretary) in 1905 (decreto 1.323, January 1, 1905). Through a

set of questions the researchers obtained information, among other things, about the

rural owner, the nationality of the owner, the number of workers in the rural area and

the type of culture practiced in each rural property. In 1905, Sao Paulo was divided

in 7 districts.169 In each district, the Agriculture Secretary had employees that were

sent to the rural areas for at least one year to collect the data. According to Pino

(1997), (1999), the rural property was going to be included in the ‘map of the

district’ if the owner had a title on the land.170 The author explained that the Sao

Paulo censuses were implemented by a large team of people and the method of

sampling the population (random sample) was not officially adopted. Indeed, it is not

until 1958 that the census in Sao Paulo started to be done by random samples, with a

different methodology.

Until 1936, there were two concepts used to define the agricultural units:

rural property (“propriedade rural”) and rural establishment (“estabelecimento

rural”). According to Pino (2002):

169
In our division of Sao Paulo we used ‘zones’ instead of districts because the former is more flexible
to changes whereas the latter in not. Districts have a geographical and a political role in the
development of states.
170
Font (1990, p. 284) argued that the censuses until 1930 in Brazil and in Sao Paulo might have
excluded the small landowners who did not have a title on the land but were cultivating coffee, as
early as 1905.
 290
“Rural property is all the continuous area that entice land rights (title or ‘escritura) registered
according to “Bureau of Land Registrar” as productive unit, located in the rural zone or used for rural
activities.”

The rural property was the criteria used for Sao Paulo censuses between 1905

and 1936 (Pino, 1999, Pino 2002). In all the Sao Paulo censuses (between 1905

and 1936), we have the following information: total number of rural properties;

number (and area) of properties owned by Brazilians; number (and area171) of

properties owned by Italians, Portugueses, Spanish, Japoneses, other

nationalities. In fact, the data is presented as: ”Area and value of agricultural

properties of the State, according to the nationality of the owner”

(Recenceamento Agricola, 1934, p. 29). The concept of ‘rural property’ was

adopted as a proxy for the number of titles on land.

The rural establishment was used by IBGE since 1920. According to Florido

(2002), the 1920 agricultural census produced by IBGE defined ‘rural

establishment’ as:

“ For censuses purposes, rural establishment is defined as all extension of land subjected to the
exclusive management of one owner (proprietario), renter (arrendatario), interested (interessado) or
manager (administrador), who produce agricultural or cattle goods, alone or with the help of
remunerated employees. The rural establishment is constituted by a single set (lote) of land (…).
However, it may be represented by many sets (diversos lotes), separated from one another and located
in the same district or in different districts, as long as it subjected to one single management.”
(Florido, 2002).

While the ‘rural property’ is related to the ownership of the property, the

‘rural establishment’ is related to the type of management plus the type of

ownership. However, there is a clear correspondence between the two concepts. The

171
The 1905 census presented the total area (not the cultivated area). This census did not present a
breakdown by nationality.
 291
1920 IBGE census presented the number and the area of rural estates (‘imoveis’)

according to the owners’ nationality and the type of management (owners or

managers or rental). For example, according to the 1920 census, Sao Paulo had

80,921 rural establishments. These rural establishments were divided in two

categories: type of ownership (propriedade do imovel) and type of management

(‘qualidade do responsavel pela exploracao’). In turn, according to the first category,

there were 54,245 (68%) estates owned by Brazilians (‘imoveis the propriedade

individual de brasileiro nato’), 22,065 (27%) owned by foreigners, 4,441 (5%)

owned by more than one person and 42 (.05%) estates owned by the government.172

In terms of the type of management, out of the 80,921 estates, there were 72,320

managed by the owner, 6,247 under the managers’ responsibility and 2,354 that were

rented (arrendatario).

According to Pino (2002), there is a clear correspondence between ‘rural

property’ and ‘rural establishment’ in the 1920 census. We reproduce here the

examples provided by Pino (2002). First, one ‘rural property’ is the rural area whose

title on the land belongs to the same person, the owner, with one single producer. In

this case, rural property equals rural establishment. Second, one rural property, with

a single owner but with more than one producer (for example one producer is the

owner and another was renting part of the property) but with centralized

management. In this case, we also have ‘rural property’ equals ‘rural establishment’.

Third, many ‘rural properties’ in different regions that belong to one single owner,

172
In the 1920 census the category “estates owned by companies”(‘imoveis the propriedade de pessoa
juridica’) did not exist. It was included in the 1940 IBGE census.
 292
with one single producer (that can be the owner or the renter). Again, we have the

correspondence between rural properties and rural establishments. In brief, we have

equality between ‘rural property’ and ‘rural establishment’ when the owner has one

(or more than one) property, rented out parts of his properties but preserved a unified

management.

Because we were interested in the breakdown by nationality, we excluded

from the 1920 Sao Paulo data, the estates (imoveis) that had more than one owner as

well as the areas that belonged to the government. In turn, according to the 1920

census data for Sao Paulo, there were 76,310 estates owned by a single owner

(brazilian or foreigner). Out of the 76,310 estates, 95% were managed by the owner

(not by managers or renters). In brief, while the distinction between ‘rural property’

and ‘rural establishment’ may be relevant for later census, we considered ‘rural

establishment’, used in the 1920 census, as a good proxy for ‘rural property’.

According to Florido (2002) the establishments, in turn, included in the 1920

censuses had to be registered in the General Bureau of Land (Registro Geral de

Terra), that is, they required a title on the land. The author explained that the 1920

census excluded establishments whose annual production value was below $125

dollars (500 milreis).

In the later census, according to Pino (2002) the correspondence between the

two concepts became increasingly difficult. This is so because there was a division

of the properties (the original owner renting out parts of the property). For example,

when one farm is subdivided in 10 parts (9 were rented and managed by independent
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producers) but the original owner preserves 1 part of the land, we have one ‘rural

property’ but ten different ‘rural establishments’. Before the 1930s, according to

Pino (2002), what usually happened was the owner to ‘rent’ parts of his properties to

third parties in a sharecropping format. The owner still retained full control over the

whole property, which was in turn, equal to the establishment.

According to Pino (1999, 2002), the first Agricultural census of Sao Paulo, in

1905 used the sample unit known as ‘rural property’. Indeed, the same author

explains that all the agricultural censuses between 1928 and 1939 used the same

concept. The same concept was used by the IEA (Sao Paulo Agriculture Secretary)

between 1943 and 1972. After 1972, the IEA adopted the concept of ‘rural estate’

(imovel rural).173 With the adjustments made in the 1920 census, described above,

we think that the rural establishment is a good proxy for the rural property

concept.174

As explained by Aristides Amaral (1932), the responsible for the agricultural

census of Sao Paulo during 1930s, there were many problems to obtain the number

and the area of rural properties because the researchers could not force the owners to

declare the value or even the size of their properties.

173
Rural estate (imovel rural), according to Pino (1999 and 2002) is a concept created by INCRA
during the 1960s defined as “ the set of contiguous properties from the same owner, that can be used
for agricultural purposes. This concept has been used by the National Institute of Colonization and
Land Reform (INCRA) to build the system of rural registration. By including in the same estate
(imovel) all the contiguous properties belonging to one single owner, INCRA tries to avoid one
latifundio to be sub-divided in small units to preclude expropriations for land reform purposes” (Pino,
2002).
174
According to conversation to Pino, there is a clear equivalence between ‘rural establishment’ and
‘rural property’ until the 1936 census.
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The data presented here for Sao Paulo, has limitations. However, we did not

find any other set of information (like the notary publics, for example) that provided

such a vast picture of the State between 1905 and 1930.

For the 1905 census, we had to use Camargo (1954) mainly because the 1905

census was lost after 1977 (due to an administrative change in Sao Paulo). As

explained by this author, the 1905 released only the breakdown by nationality of the

owners. However, the census did not report the corresponded area that belonged to

foreigners and Brazilians (only the total and cultivated area). This is why we did not

present the 1905 area by nationality. For the 1920, 1923, 1932 and 1934 we had and

used both: Camargo (1954) and the original sources.

Finally, we could have chosen to follow another route and report that there

was no ‘reliable’ information on the evolution of private property rights in the rural

areas of Sao Paulo. We chose to report the information and to use it as a proxy for

landownership, mainly because we did not find any measure that provided such a

large time period and a detailed analysis at a municipio level. We argued that the

system of private property rights in Sao Paulo evolved between 1895 and 1930

because we observed a decrease in the size of rural plots, an increasing share of

foreigners among the coffee landowners and an increase in the number of rural

properties. Clearly, the increase in the number of rural properties reflects two

movements. First, it suggests that the fraction of land that is cleared increased,

possibly because new municipios were being created between 1905 and 1934.

Second, it also suggests that the number of titles on land, owned by immigrants and
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brazilians, also increased. Mainly due to the ‘lack’ of reliable data (to find the gini,

TFP and other measures), the works that dealt with the concentration of land do not

even report the data on this period and assume that the failure of the 1850 land law

and the subsequent inaction from the states, explained the concentration of land in

Brazil. In this work we found that such claim does not hold for the Sao Paulo

experience until 1930.