1942: Brazil

War Declared against Axis.

On Aug. 22, 1942, Brazil proclaimed a state of war with Germany and Italy, following the sinking off her coast of five Brazilian ships in three days by Axis submarines, which brought the total number of ships lost since January to nineteen. Diplomatic relations with all the Axis Powers had already been broken off in January during the Rio de Janeiro Conference (see below). Military preparations had been carried on steadily, supplemental lend-lease funds having been allocated to Brazil on March 3, as one of a series of accords concluded by the United States on that date. In addition to the purchase of military equipment, the funds were to be used for air and naval base facilities in Brazil, which other American countries, including the United States, would be entitled to use. Some months preceding the proclamation of war the partial confiscation of Nazi assets in Brazil had been decreed. Due to the large, compact settlements of German, Italian and Japanese minorities in Brazil, strong measures had already been taken against Axis suspects, and all Axis publications had been banned. On Feb. 19 the Fernando de Noronha archipelago, volcanic islands lying 125 miles off the Brazilian coast, in an almost direct line between Pernambuco and Dakar in Africa, was declared Federal territory, with the intent of strongly fortifying the islands.

The resignation from the Cabinet of Justice Minister Francisco Campos, reputed author of Brazil's still unratified 1937 Constitution, which would establish the authoritarian Novo Estado (new state), and a leader of the totalitarian faction in the Government, was a significant forerunner of the republic's entry into the war. Subsequent war measures against the Axis Powers have been the closing of Italian and German banks and the seizure of the German Condor airline, which had been previously taken over by the Government, as well as of seventeen Axis ships. There has been no proclamation of war against Japan but, following Pearl Harbor, Brazil froze Japanese funds, seized suspicious fishing craft, closed official agencies, and set up special police in São Paulo, where there is a large concentration of Japanese. Uruguay has entered into full military collaboration with Brazil (see URUGUAY). Argentina immediately announced its 'solidarity,' and along with Chile and Peru accorded Brazil non-belligerent rights, but established no equivalent basis of military unity or cooperation. On Sept. 16 general mobilization was decreed.

Rio de Janeiro Conference.

The third meeting of American Foreign Ministers was held at Rio de Janeiro from Jan. 15 to 28. The process of inter-American cooperation and continental solidarity begun at Panama (1939) and Havana (1940) was continued with greater vigor at Rio, due probably to the reality of war in the Western Hemisphere. At the opening session, Under-Secretary of State Sumner Welles held that 'classical neutrality' had become impossible for the states of the Western Hemisphere and pointed out that greater political, military, and economic cooperation, as well as the repression of subversive activity, was essential for common defense. The attempt to get unanimous action on the severance of diplomatic relations with the Axis Powers was blocked by Argentina and Chile, with the result that a compromise resolution was unanimously adopted on Jan. 26, merely recommending but not requiring a diplomatic break with the Axis. Insistence on a more decided stand would have threatened formal hemispheric unity. By the time the Conference disbanded all but these two dissenting states had formally broken off diplomatic relations.

The achievements of the Conference, consisting of forty-one declarations, resolutions and recommendations, were embodied in the Final Act of the Conference. They related to measures for improving hemisphere defense, steps to combat dangerous activities of the Axis throughout the Americas, and an outline of cooperative 'mobilization' of the economic resources of the participating states. The most important resolutions were those dealing with vital economic questions. Resolutions II, VII and XXV concerned respectively the formulation of plans for economic mobilization, the study of a customs union for the Western Hemisphere, and the convocation of an inter-American technical economic conference.

Further Inter-American Cooperation.

Concrete results in the way of collective consultation and action may be seen in the Inter-American Financial and Economic Advisory Committee, set up earlier, and in the Inter-American Conference on Systems of Financial and Economic Control and the Inter-American Defense Board, both of which last sprang directly from the Rio Conference. The former, which met in Washington in July, was concerned with the elimination of all Axis economic influence in the American republics, and came to more or less general agreement on resolutions freezing Axis assets, acquiring Axis patents and trademarks, and controlling the 'illegal' trafficking in United States currency. The Inter-American Defense Board, composed of military and naval men from all twenty-one republics, belligerent and non-belligerent alike, marks the first time in history that representatives of the armed forces of the American states have met continuously to discuss hemisphere defense.

As for the economic mobilization of Western Hemisphere resources, skilled technicians from the United States have been doing a follow-up job, studying the potential production of rubber, metals and other commodities hitherto imported from Asia, while North American health and sanitation experts have visited a number of Latin American countries in the attempt to plan ways and means of preparing a suitable environment for workers. Moreover, Export-Import Bank credits have been widely granted to expand the production of strategic materials, to improve communications and to promote inter-American trade, all of which were economic objectives set by the Rio Conference. Mutual suspension of all tariff and trade barriers which might impede maximum productive effort for the duration of the war was agreed on by the United States and sixteen of the Latin American Republics on Jan. 25. This is part of a program elaborated in Washington to integrate and expand hemisphere production. This in itself shows that more than lip service was to be rendered to the resolutions for collaboration adopted at Rio.

Economic Mobilization.

In order to take complete advantage of the opportunities presented by the war, a mobilization of Brazil's economic life has been instituted with the appointment of João Alberto Lins de Barros as economic coordinator. Sweeping powers have been accorded him to regulate the activities of public and private enterprises, to fix prices, establish limits on articles, materials and services to be sold, and 'to do everything needed to safeguard public interest and insure maximum production.' One of his first acts was to commandeer the Apial lead mines in São Paulo State.

Export Expansion.

A shift in Brazil's economy since its entry into the war, from an emphasis on coffee and cotton to so-called 'secondary' export items, is in line with a trend noticeable for the last decade. Under existing contracts the United States is taking increasing amounts of these additional commodities, which include manganese, iron ore, rubber, vegetable oils and fibers. A new iron-ore contract, signed with both the United States and Britain in accord with the agreements of March 3, is expected to increase iron-ore shipments. Each country agrees to purchase a certain amount annually, the ore to come from the Itabira deposits, source of some of the highest grade ores in the world, which are to be developed by a mixed United States-Brazilian company. The mixed company is the form in which foreign capital is likely to be acceptable in South America, where the movement for economic nationalism and 'decolonization' is increasing in strength. The United States will provide the capital for the iron-ore project, $14,000,000 having been already advanced for this purpose. To make it practicable, the enterprise calls for port facilities and feeder railways. The rehabilitation of the Victoria Minas Railway, which the Brazilian Government has just taken over, will provide the latter. The mines are already producing about 500,000 tons yearly. Improvements are expected to triple that figure in 1943. Brazil is now the third producer of manganese in the world; of the 1941 export of 437,402 tons, 96 per cent went to the United States, the rest to Argentina and Japan. According to a rubber agreement, also signed on March 3, the United States will spend $5,000,000 in the development of rubber in the Amazon Valley; wild rubber collection will be put on a more profitable basis; and, by an exclusive purchase arrangement, the United States will buy all rubber produced in Brazil over the next five years at a basic price of 39 cents a pound, with a bonus of 2½ cents if deliveries exceed 5,000 tons, of 5 cents if over 10,000 tons. The total sum allocated by the Export-Import Bank, according to the March 3 agreements, amounted to $100,000,000, making the grants to Brazil the largest advanced to any Latin American country.

The general increase noticeable in Latin American trade balances as the result of heavy United States purchases of strategic and other essential raw materials is best exemplified by the rise in net exports from Brazil to the United States. Income from the export of four strategic minerals — iron ore, manganese, industrial diamonds, and quartz crystal — increased by 11 per cent in 1941, with still greater returns expected for 1942. In the first six months of 1942 Brazil's trade with the United States totalled $50,904,000, compared with $22,731,000 for the corresponding period in 1941. By a purchase agreement signed in the fall with the United States, Brazil will receive payment for the unshipped balance of the 1941-42 quota, and the basic 1942-43 quota of 9,300,000 bags of coffee. The United States has also acquired the nation's surplus cocoa for storage in Brazil. By an agreement signed on July 31, the expenditure of $33,000,000 over a twelve-months period, by the United States for the purchase of babassú nuts and oil, castor beans and oil, and other agricultural products was arranged.

Industrial Advance.

Brazil's rapid industrialization, of which the textile industry of São Paulo is an example, will be stepped up by the United States agreement to send a technical mission, headed by Morris L. Cooke, to Brazil, to introduce mass production methods and modern industrial techniques. Its chief tasks are (1) to increase the local production of essential commodities, formerly imported, thus saving shipping space; (2) to convert local industries to the use of native substitute raw materials; (3) to improve transportation facilities; and (4) to provide for long-range industrial expansion. Further industrialization would be stimulated by a plan under consideration for shipping from the United States machinery which is idle as a result of the curtailment of civilian industries, for use in Brazil and other Latin American countries in the manufacture of essential goods where raw materials are available locally.

Sanitation.

A vast sanitation project in the Amazon Valley has been undertaken by the United States, in cooperation with the Brazilian Government, in accordance with a contract signed on July 17 at Rio de Janeiro. It is being directed by the Brazilian Minister of Education and Public Health, and will call for the expenditure of $5,000,000, which the United States has already allotted. Brazil was to contribute 5,000 contos for 1942, and in 1943 a larger amount. Among many other things the undertaking will take over a task which until recently was in the hands of the Rockefeller Foundation, that of fighting the Gambiae mosquito.