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Department of Economics - Whittemore School of Business & Economics - University of New Hampshire |
Between Sugar and Petroleum: Bahia and Salvador, 1920–1960[1]
The state and capital city, Salvador, experienced a period lasting three decades where very slow economic growth and insignificant population increase occurred. Between 1920-40, the population of Salvador grew at .16% per year while Bahia’s growth was a mere .81% (Table 1). In the decade of the 40s, the growth rates picked up to 3.7% and 2.1%.[2] Table 1. Population Trends in Bahia and Salvador, 1900 – 1970 Bahia:
Salvador:
What emerges also, significantly, is that the proportion of Bahians living in Salvador actually declined from about 1910 through the 1930s. The share of Salvador’s population in Bahia was : 1900………………. 9.6% 1920………………. 8.5 1940………………. 7.4 1950………………. 8.6 1960………………. 11.0 1970………………. 13.4 1980………………. 19.3
In effect, Salvador stagnated during the first four decades of the twentieth century. The economic vibrancy which existed was due to the cocoa and tobacco industries and internal commerce. In 1890, Salvador was still the second largest city in Brazil and the fourth city in the country with a telephone system, but by 1940 Salvador had fallen to fourth place (behind Rio, Sao Paulo and Recife).[3] Indeed, the population of Salvador grew at an annual rate of 1% during the 50 years, 1890-1940. Little new industry was established after 1920, as the new import-substituting factories spouted up in the more prosperous Southeast and South. The city remained a commercial entrepot for the region, but little new economic activity developed until the Petrobras-propelled take-off of the late 40s. In 1939, a government oil agency struck oil within the city limits of Salvador and the Lobato oil well began producing oil. By 1941, four Bahian wells were producing 230 barrels a day. The Censuses of 1940 and 1950 reveal a declining share of employed persons working in industry in Salvador: in 1940, 10,832 (3.7%) persons worked in industry, 9,716 persons worked in commerce; by 1950, the figures were 13,682 (3.3%) and 14,279 (3.4%). As the Table 1 above showed the total population of Salvador in 1940 was 290,443 and in 1950, 417,235 people. The city barely grew in size between 1920-40. Between 1940-50 over 57% of Salvador’s population increase was due to net in-migration, and in the next decade (1950-60) the number would jump to almost 64% (Table 2). The vast majority of migrants to Salvador came from surrounding rural areas.[4] Table 2. Origin of Salvador’s Population growth, 1950 -1970
Sources: Souza, Guaraci Adeodato Alves de, “Urbanizacao e Fluxos Migratórios Para Salvador,” in Bahia de Todos os Pobres (Petrópolis: Editora Vozes Ltda. em co-edição com CEBRAP, Caderno CEBRAP no. 34, 1980) :105 and Faria, Vilmar E., “Divisao Inter-Regional do Trabalho e Pobreza Urbana: O Caso de Salvador, “ in Bahia de Todos os Pobres, op. cit., : 23-40.
Between 1940-60, Bahia experienced large out-migration towards the richer, growing states of the southeast and south. Between 1940-50, out-migration exceeded 100,000, but soared to over 600,000 (or 11.4% of the state population) between 1950-60 as the Rio-Bahia highway BR 116 was completed in 1949.[5] Trucks started carrying Nordestinos to work in the massive civil construction of the Southeast. As of the 40s, cattle-raising started being substituted for sugar cane causing unemployment among unskilled farmhands.[6] The port and warehouses remained bustling centers. The rich gambled at the lavish Hotel da Bahia (until gambling was outlawed in 1946). The Companhia de Navegacao Costeira ran ships between Salvador and Rio. Much of Bahia’s tobacco and cacao from the Reconcavo passed through the port. Some cigar-making factories operated in Sao Felix and Maragogipe and the Usina Alianca (built in 1892) in Santo Amaro processed sugar cane. The old British commercial houses of Stevenson's and Duder's operated in Salvador, chiefly occupied with the cacao export trade.[7] Duder's also had a fleet of modern whaling vessels and a factory for refining whale-oil in Bahia.[8] Duder & Brother was established in 1900, F. Stevenson & Cia. Ltda in 1895, and the Swiss firm, Hugo Kaufman & Cia. in 1908, were all involved in cacao exports.[9] The large local cocoa enterprises of Correa Ribeiro and Barreto de Araujo prospered throughout this period. The S/A Moinho da Bahia flour mill was established in Salvador in 1923. A report published in 1924 noted that there were 24 sugar mills operating in the state of Bahia producing a total of 30,000 metric tons annually.[10] The large Usina Alianca in Santo Amaro had also begun to produce alcohol for industrial purposes by that time, encouraged by Federal inducements. The Companhia de Bebidas Leao do Norte started making the traditional table wine Jurureba Leao do Norte in the 20s.[11] Pierre Verger noted that in 1946, all transport was still made by sea as there were practically no roads to or from the interior of the country.[12] The Feira de Santana road was nothing but a muddy trail used by cattle on their last voyage, to the Retiro municipal slaughterhouse (built in 1912) on the outskirts of Salvador. Fishing boats cluttered the sea front. Until 1929, Salvador had two distinct tram systems: the lines of the Municipality in the Lower City; and Eduardo Guinle's Linha Circular in the Upper City. In May 1929, Guinle sold out and both systems were united by the U.S. conglomerate, Electric Bond & Share Company, which continued operating the Companhia Linha Circular [the "CLC"]. Electric Bond & Share's subsidiary, American Foreign & Power, obtained concessions in 1927, to provide electric power in ten Brazilian states, including Bahia. In 1930, the people of Salvador protested the poor tram service and its high prices, setting fire to 60 trams.[13] For the next twenty years, complaints about the tram service persisted. The City of Salvador finally took over the “CLC” tram system from Electric Bond & Share in 1955, replacing trams in the Lower City with Fiat trolley buses in 1959 and eliminating trams from the expanding commercial area of the Upper City in 1960. Buses became the vehicle of choice. Up until then, the trams of American & Foreign Power’s Linha Circular criss-crossed the city and Western & Bazilian Telegraph Co. provided wire service.[14] Power holdings in Brazil were nationalized [in 1964 with payment] during the Goulart government of the early 1960s, including electricity generation and phone services in Bahia. The Lacerda elevator got a facelift acquiring its Art-Deco façade and was expanded. The two old cabins were replaced with four capable of carrying 27 persons each.[15] The new structure was inaugurated on January 1, 1930.[16] The giraffe-like cabins of the Taboao elevator (1895-1961) brought working people to the downtown commercial center. Some new commercial centers sprouted up like the Baixa dos Sapateiros and the Av. Sete de Setembro. A few new factories making non-durable consumer goods were built after 1920: Chadler making chocolates in Monte Serrat, the SANBRA vegetable oils plant in Lobato set up in the 40s, Souza Cruz and Leite & Alves factories manufactured cigarettes in the Monte Serrat/Bomfim district, and the factory of Café America in Piraja roasted coffee. By 1960, six industrial enterprises were involved in cocao processing – 4 located in Salvador (including a chocolate enterprise established in 1960, most probably the Chadler factory in Monte Serrat)[17]. The main industries were food processing, furniture-making, flour and crackers, textiles, hats, shoes, cigars, apparel-making (seamstresses), matches, soaps, candles, distilled spirits, and simple metal fabricating. Some venerable department stores like the Mesbla and Sloper date back to this era. The first supermarket (Paes Mendonca) appeared in the 1958. The incomparable Pierre Verger gives us the flavor of Salvador in the 40s: “the commercial activities such as export, import and banking were concentrated between the Conceicao da Praia Church and the Chamber of Commerce Building. People were accustomed to discuss their business in the quiet streets where only few cars passed. Air conditioning was not yet in fashion, and the streets were infinitely better ventilated than the offices. Bahia retained its provincial character and its rhythm of life stayed geared to the habits established at the beginning of the century. Telephones functioned badly and people preferred to discuss their affairs at certain street corners chosen because they were cooler at certain hours of the day…”[18] In 1944, Bahia produced small quantities of mineral resources – petroleum, manganese, chromium, magnesite, copper, gold, diamonds, carbonados, emeralds, asbestos, and barite (on Camamu islands).[19] Small amounts of chromite mined at the Cascabulhos mine near Campo Famoso, Bahia, were exported to Germany, as were small quantities of tungsten. By 1910, the American Consul-General in Brazil was reporting that American capital had obtained possession of practically all the diamond-bearing territory in the finest Brazilian region known as the "Diamantina country" and modern dredging machinery had been installed along the Jequitinhonha River in Minas Gerais. The attempts by foreign companies to introduce large-scale methods of diamond recovery between 1919-29 mostly failed, with output coming chiefly from small-scale hand workings.[20] Some years earlier, a French company, the Boa Vista Co. was established in 1899, capitalized at 2mn francs then, to engage in diamond mining at Boa Vista [BA] just east of Diamantina City [M.G.] on the northern bank of the Sao Francisco River above the Paulo Afonso Falls. It used modern electric dredging equipment, but it too failed as the price of diamonds was too low and the system of utilizing water pumped up from the stream in a level was unsound.[21] The Sao Jose [Brazil] Diamonds and Carbons Ltd. was formed in 1903 to acquire nine concessions from the Anglo-Brazilian Diamond Syndicate, around the Sao Joao River [near Lencois] in Bahia and lease lands elsewhere for one half a million dollars.[22] Subsequently, two Brazilian companies operated in the area with some success.[23] The Bomfim [Bahia] mine produced 13'500 metric tons of chromite in 1918.[24] A U.S firm had operated a large proven field of industrial diamonds [carbonados] and another firm reportedly mined chromite in the 30s.[25] Indeed, an American firm - Bahia Corp.- had a virtual monopoly on the black diamond fields of Bahia, employing 1'400 workers in the early 30s, and having negotiated a 30 year concession. The Bahia Corporation had been formed by the Bandler family in 1927, with an issuance of 60'000 shares of $25 each as a holding company for Bernard Bandler & Sons Inc. [a New York City dealer of black diamonds] and the Cia. Brasileira de Exploracao Carbonifera.[26] The Company was engaged in the production and marketing of carbon black diamonds used in drills. Its Cia Brasileira Carbonado was organized in Brazil to own and operate mine properties in the Piranha district of Bahia under a 30 year concession [1927-57]. The mines were valued at $50 mn.[27] It controlled the Cia. Exploracao Diamantina which owned 14 1/2 square miles of proven territory along the Paraguassu River.[28] Bahia supplied almost all of the world's black, or industrial, diamonds used in industrial grinding and cutting.[29] During the 1930s as the world price of gold rose, garimpero (artisanal, wildcat miner) activity in the Serra do Jacobina gold mining grew. During the 50s, three new gold mines were opened up: Canavieras, Joao Belo, and Serra Branca. Canavieras was the largest, processing 115,653 tons of ore bearing earth and recuperating on average 18.13 grams of gold per ton. The three mines closed in the 1960s.[30] The famous magnesite deposit of Brumado in the Serra das Eguas district of Bahia, was first mined in 1912-3. A banded iron formation (called itabrite) was mined and smelted by local inhabitants. Emeralds were also discovered shortly thereafter in the Piraja valley and were mined for the next thirty years by garimperos. In the 40s, two naturalized Brazilian citizens, Pierre Cahen and Georges Minvielle, started prospecting the area for magnesite. The two organized a mining company under the name of Magnesita S.A. The Brazilian Moureo Guimaraes group would start mining magnesite in Brumado [BA] in 1949. For decades, the mines of Brumado – especially. the fabulous Pedra Preta mine – would yield high-grade magnesite but also a wealth of precious metals.[31] The Philadelphia-based company of E.J. Lavino & Co. had invested in Bahian manganese mining and exporting in 1917. Lavino acquired four mines in Bahia near the Central do Brasil railway, close to Nazare, where manganese had long been produced.[32] The Cia. Minas da Bahia was exporting manganese in the 40s from its mine near Santo Antonio de Jesus [Bahia]. An interesting industrial innovation were carried out by an American entrepreneur during World War II. The Monsanto Company opened a factory [Monsanto of Brazil Inc.] in southern Bahia, in 1943, to produce crude theobromine from cacao. The theobomine was shipped to Monsanto's U.S operations to manufacture caffeine, used as an additive to soft drinks, coffee, and medicines. Monsanto built a $1.5 mn plant in St. Louis in 1945 to manufacture synthetic caffeine, but the innovation proved unsatisfactory.
In the 20s-60s, the very poor began living in the old abandoned homes of the sugar aristocracy in the historic central district of the Pelourinho (like Maciel). The historic district became home to the destitute, vagrants and the working poor. Maciel was a center of prostitution and drugs by the 30s. The working classes lived in Estrada de Liberdade, Cabula and Retiro arriving to work in the lower city by way of the Baixa dos Sapateiros on the streetcars of the Linha Circular. The petit bourgeoisie lived in Brotas, the Matatu, Santo Antonio Alem do Carmo, whereas the wealthy were clustered in Barra Avenida, Vitoria and the Canela districts in the upper city overlooking the sea.[36] Milton Santos (1959) reported that the most common working occupations in Salvador were: “bicheiro, encanador, lavadeira, cozinheiro, bombeiro, pequeno funcionario, portero, engraxante, encerador, viajante ipografo, empregado domestico, vendedor ambulante, chofer, conductor de onibus, camelo, etc… sao pequenos empregados ou pessoas sem uma occupacao permanente ou bem definade, seu local de trabalho era, de preferencia, no centro da cidade.” [37] First the growing activity of Petrobras[38], the highway building programs, and the expansion of the state administration in the 50s, then the establishment of the planned industrial center of Aratu in 1967 (in which by 1975, 68 companies had set up operations) promoted by the state’s SUDENE (created in 1959) and the Polo de Camacari in 1970 built around the nucleus of the Petrobras refinery at Mataripe, would change the landscape of the capital city, the Reconcavo and Bahia. A 1970 publication describing the Centro Industrial de Aratu, listed some 23 firms with factories, employing at least 4-5,000 workers.[39] Odebrecht created his construction company in Salvador in 1945 and quickly became involved in major construction projects across the region. The Universidade Federal da Bahia (UFBA) was formed in 1946. By 1964, Petrobras alone employed about 24,000 persons, mostly the new middle class, in Salvador.[40] In Bahia and Salvador, unlike Sao Paulo and Rio, little immigration of whites occurred. Given the overwhelming black population, the industrial working-class of Bahia was black, both for men and women. Black Bahianas, for example, were the mainstay of the diamond-cutting industry in Diamantina, pottery-making in rural areas, tobacco/cigar work in the Reconcavo, carrying water in the city of Salvador, and the textile factories of Salvador and Valenca. Black men operated the city’s transportation (first the cadeiras and later, the bondes), worked in the docks, at the gas and electricity plants, building railroads, and in civilian construction. The share of economically active persons in Salvador’s total population hovered around 40% in the 1940s-50, dropping to 36% by 1970 as job creation did not keep pace with the city’s population growth: Table 3. Demographics of Salvador
sources: 1940-70 data for (1) from Faria (1980: 38); 1981 data from PNAD 1981, Table 3.11.
The population of Salvador would begin to grow at over 4% per year in the 50s and 60s, as the city attracted tens of thousands of rural migrants. A growing industrialization – between 1950 and 1970 about 80,000 industrial jobs[41] were created in 50 or so new enterprises set up in Aratu and Camacari - and accompanying growth in service sector jobs (banking, business services, construction and state administration)[42] existed side-by-side with Salvador’s persisting poverty. Hence, during the decade of the 60s, the population of Salvador grew (by 4.5% per year), employment grew (especially in the construction and services branches), average GDP per capita is estimated by have risen from Cruz 1,835 in 1960 to 2,410 in 1970 (which in US dollars meant respectively 350 and 460).[43] But data on income distribution in Salvador gathered for 1961/2 by the Fundacão Getulio Vargas (FGV) by means of a sample survey of family budgets and then in 1971 by the Centro Brasileiro de Análise e Planejamento (CEBRAP) and the Federal University of Bahia in another sample survey, reveal a significant worsening of income distribution. The category of ‘very poor’ – that is, those families earning on less than Cruz 170 a month (or US $ 32) – rose from 7.0 to 16.1% between 1961/2 and 1970 (Table 4). At the other end of the spectrum, those families – the ‘very rich’ – earning at least Cruz 3,550 (or US $ 670) a month grew from only 0.7% of families to 3.8%. In effect, all the growth in average per capita income during this decade was due only to the increase in this proportion of the very rich families. The average monthly income of all remaining families actually fell from Cruz 712 (US $ 135) to Cruz 671 (US $ 127) in 1971. Singer suggests a couple elements which explain such a worsening condition: a contraction of jobs for domestic servants which severely hit unskilled women; the military government’s post-65 wage policy with its reduction of the minimum wage (from Cruz 206 in 1961/2 to Cruz 170 (US $ 32) by 1971.[44] The lowered incomes also translated into rising food caloric deficiency: in 1961/2, 70.4% and in 1971, 71.5% of all families in Salvador consumed less than the minimum standards of nutrition at the time. Growth, industrialization, factories and buildings were no guarantee that the minimum needs of Salvador’s population were met (Table 5).
Table 4. Income Distribution in Salvador 1961/2: Family monthly income (in Cruz) % families in bracket Cumulative % families
0 – 170 (US $ 0 -32) 7.0% 7.0% 171 - 259 9.5 16.5 260 – 349 24.3 40.8 350 – 529 14.5 55.3 530 – 859 16.1 70.4 860 – 1,379 15.3 85.7 1,380 – 2,059 8.2 93.9 2,060 – 3,549 5.4 99.3 3,550 and more 0.7 100.0
1971: Family monthly income (in Cruz) % families in bracket Cumulative % families
0 -170 16.1 % 16.1 % 171 – 259 13.4 29.5 260 – 349 12.8 42.3 350 – 529 15.9 58.2 530 – 859 13.3 71.5 860 – 1,379 12.2 83.7 1,380 – 2,059 7.2 90.9 2,060 – 3,549 5.3 96.2 3,550 and more 3.8 100.0 Table 5. A Profile of Poverty in Salvador’s Metropolitan Region (SMR), 1970
Sources: Faria (1980: 24) *or, US $ 83.39 in 1970 (or, $ 386.59 in US $ 2002) **or, US $ 31.35 in 1970 (or $ 145.35 in US $ 2002). The figure of two minimum salaries as constituting a poverty line for a family of five, was argued for in G. Pferfferman and R. Webb, “ Pobreza e Distrucao de Renda no Brasil,” Revista Brasileira de Economia 37,2 (April-June 1983).
By 1981, a mere 178,000 industrial jobs existed in Salvador’s metropolitan region for a work force of almost 700,000. Just as many people worked in personal services. Only half of the population ten years old and over, was “economically active.” The other half eked out a day-to-day existence in the massive and growing informal sector.[45] Table 6. Structure of Employment in Salvador RMS, 1981 – 1997
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by MARC W. HEROLD
