London School of Economics and Political Science University of London Entrepreneurship and the Formation of a Business Environme
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LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE UNIVERSITY OF LONDON ENTREPRENEURSHIP AND THE FORMATION OF A BUSINESS ENVIRONMENT IN NINETEENTH-CENTURY BRAZIL: THE CASE OF MINAS GERAIS by SERGIO DE OLIVEIRA BIRCHAL THESIS SUBMITTED FOR THE DEGREE OF DOCTOR OF PHILOSOPHY 1994 1 UMI Number: U615781 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U615781 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 I OS ABSTRACT This thesis is divided into four parts. The first examines the social background of mineiro entrepreneurs and the source of their capital. The second assesses the structural development of mineiro firms. The third investigates the process of technology transfer in nineteenth-century Minas Gerais, the dependence of various firms on foreign technical knowledge, and the limits to the development of indigenous technology. The fourth examines capital-labour relations and the formation of the labour market in Minas Gerais. The objective of the research is to consider - and extend - the debate in the literature about patterns of development in backward economies. According to the "historical determinist" approach, the history of advanced countries traces out the road of development for less developed economies. Opposing this view, the "economic backwardness" approach points out that the development of backward countries differs considerably from the advanced countries in terms of the speed of development and the productive and organizational structures of their economies. This thesis uses the concept of "economic backwardness" to investigate the formation of a "spirit of capitalism" in Minas Gerais and how far the Brazilian economy was able to close the development gap with the more advanced economies. This thesis also contributes to the study of Brazilian economic history by looking specifically at the process of development of the state/province of Minas Gerais. The economic historiography of Brazil on the nineteenth century is heavily based on evidence drawn from Sao Paulo and Rio de Janeiro and overlooks important socio-economic differences between the various sub-regions. As this thesis demonstrates, the rate and character of the development of Minas Gerais were to a large extent determined by its degree of backwardness, intellectual climate and natural potentialities, and accordingly the course of development of the mineiro economy differed considerably from process observed in more advanced countries. In addition, comparison between Minas Gerais, Sao Paulo, and Rio de Janeiro shows important differences among these three economies, mainly in sources of entrepreneurship and labour. 2 To my wife and daughters: Ziz, Gabriela and Juliana TABLE OF CONTENTS Page List of Maps 04 List of Tables 04 List of Figures 09 Acknowledgements 10 Abbreviations 11 INTRODUCTION 12 Chapter 1 - Nineteenth-Century Brazilian and Mineiro Economic History 23 Introduction 23 1.1 - Nineteenth-Century Brazil 23 1.2 - Nineteenth-Century Minas Gerais 39 PART I - THE ENTREPRENEUR Introduction 49 Chapter 2 - A Brief Review on the Literature on the Entrepreneur 50 2.1 - The Concept of the Entrepreneur 50 2.2 - The Brazilian Entrepreneur 57 Chapter 3 - The mineiro Entrepreneur 63 3.1 - Social Background 63 3.2 - Economic Background 82 Conclusion 103 PART II - THE ORGANIZATION OF THE FIRM Introduction 106 Chapter 4 - A Brief Review on the Literature on Organization Theory 107 Chapter 5 - The mineiro Firm in the Nineteenth Century 118 5.1 - The Scope of the Activities 118 5.1.1 - The size of the firm 118 5.1.2 - The market structure 146 5.2 - The Administrative Structure 160 Conclusion 183 4 PART in - TECHNOLOGY Introduction 185 Chapter 6 - A Brief Review on the Technological Progress Literature 186 Chapter 7 - The Process of the Transfer of Technology 192 7.1 - Reliance on Foreign Technologies and the Limits of the Indigenous Technology 192 7.2 - The Handling of the Technologies 213 7.2.1 - The process of selection 213 7.2.2 - The user-supplier relationship 219 7.2.3 - Installation, maintenance, and adaptation 225 Conclusion 242 PART IV - LABOUR Introduction 243 Chapter 8 - A Brief Review of the Literature on the Making of the Working-Class 244 8.1 - The Making of the English Working-Class 244 8.2 - The Making of the Brazilian Working-Class 248 Chapter 9 - Sources of Labour 259 9.1 - The Mineiro Population 259 9.2 - Sources of skilled and unskilled labour 267 Conclusion 295 CONCLUSION 296 BIBLIOGRAPHY 301 5 LIST OF MAPS Map 1 - Late Nineteenth-Century Brazil 24 Map 2 - Minas Gerais: Zones 40 Map 3 - MinasGerais: Location of textile mills founded between 1872 and 1887 67 Map 4 - Minas Gerais: Location of iron foundries, 1854-1858 87 Map 5 - MinasGerais: Location of iron foundries, 1863-1866 88 LIST OF TABLES Table 1.1 - Slave Population in Relation to the Total Population in Brazil, 1800-1900 27 Table 1.2 - Slave Imports into Brazil, 1831-1855 29 Table 1.3 - Value of Major Brazilian Exports in Relation to Total Exports, 1821-1900 (%) 30 Table 1.4 - Participation of Brazilian production in world coffee output, 1820-1904 31 Table 1.5 - Annual Average Export of Coffee from Rio de Janeiro by Province in Relation to Total Exports, 1858-59 (%) 35 Table 1.6 - Total population of Minas Gerais and Brazil according to the estimates of 1808, 1823,1830, and 1854, and the census of 1872, 1890, 1900, and 1920 46 Table 1.7 - Brazilian population in 1872 per province and divided by nationals and slaves 47 Table III.l - Juiz de Fora: nationality of factory owners, 1858-1912 65 Table III.2 - Minas Gerais: nationality of the main promoters and shareholders of the textile mills established in the 1870s 68 Table III.3 - Minas Gerais: nationality of the main promoters and shareholders of the textile mills established in the 1880s 70 Table III.4 - Minas Gerais: nationality of the main promoters and shareholders of the textile mills established in the 1890s 72 Table III.5 - The city of Rio de Janeiro: nationality of the main promoters of the textile mills established in the period 1878-1895 74 Table III.6 - Distribution of the mineiro industry between the coffee-growing and non coffee-growing regions in 1907 84 Table III.7 - The city of Rio de Janeiro: activity of the main promoters of the textile mills established in the period 1878-1895 98 Table V. 1 - Comparison of the methods of production of pig iron in nineteenth-century Minas Gerais 119 Table V.2 - Output of pig iron in blast furnace in South Wales ironworks, 1812 120 Table V.3 - Estimated number of iron foundries in nineteenth-century Minas Gerais, their annual output, and their annual and weekly averages 121 Table V.4 - Average net output of the US Iron and Steel Industry for 1860-1880 121 6 Table V.5 - Annual output in kilos of the Patriotica and the Morro do Pilar foundries, 1813-1821 122 Table V.6 - The Esperanga foundry: annual output and variation in percentage year by year, 1899-1914 123 Table V.7 - Average work-force in the US Iron and Steel Industry for 1860-1880 126 Table V.8 - Length of the Brazilian railways in 1867 126 Table V.9 - Passenger and freight traffic, and percentage of goods exported in the Uniao e Industria turnpike, 1858-1874 128 Table V.10 - Brazilian textile mills in 1868: number of looms, workers, and annual output 130 Table V .ll - Minas Gerais: textile mills established in die 1870s, 1880s and 1890s 131 Table V.12 - Brazilian textile mills in 1881: number of looms, workers, and annual output 132 Table V.13 - Mineiro textile mills in 1881-1882: number of looms, workers, and annual output of some 133 Table V.14 - Mineiro textile mills in 1885: number of looms, workers, and annual output of select mills 134 Table V.15 - Cedro mill, 1872-1882: annual, accumulated, and average output, number of looms, and number of workers 135 Table V.16 - Cachoeira mill, 1877-1882: annual, accumulated, and average output, number of looms, and number of workers 136 Table V.17 - Annual and average output, number of looms, and number of workers of the Companhia Cedro e Cachoeira, 1883-1900 138 Table V.18 - Companhia Mineira de Eletricidade, 1889-1901: power production 144 Table V.19 - Gross revenue provided by the transport service of passengers and goods and their percentage contribution to the total gross revenue 150 Table V.20 - Coffee freight in the Uniao e Industria turnpike 150 Table V.21 - Length of the Brazilian railway in the main coffee-growing provinces/states, 1873-1905 151 Table V.22 - Number of street and domestic lamps powered by the Companhia Mineira de Eletricidade, 1889-1901 157 Table V.23 - Companhia Cedro e Cachoeira in 1883: individual share participation, occupation, and family connexion of the founders 168 Table V.24 - Companhia Cedro e Cachoeira, 1883-1900: individual share participation of the nine founders 168 Table V.25 - Share participation in percentage of the founders of the Companhia Cedro e Cachoeira - their brothers and sisters, parents and their direct descendants, 1883-1902 169 Table V.26 - List of the members of the board of directors and general managers of the Companhia Cedro e Cachoeira, 1883-1901 170 Table V.27 - Companhia Cedro e Cachoeira, 1883-1899: List of factory managers 171 Table V.28 - Companhia de Tecidos Santanense: share participation of the founders and their relatives 175 Table V.29 - Members of the board of directors of the Companhia de Tecidos Santanense, 1891-1899 176 Table VII.l - Estimated Geographic Distribution of the Brazilian Textile Mills, 1866,1875, 1885 194 Table VIII.