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You Must Be Kidding Me: From Mess to Miracle, Brazil’s Boom in the Eyes of the West

By Isaac Lederman

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In June of 1973, not too long before the economic miracle it was trumpeting came to an end,

the Chicago Tribune published a fairly lengthy article on Brazil’s impressive economic growth since

1968.1 “Less than a decade ago,” noted the lede, “Brazil was the economic joke of South America.”2

In the early 1960s, the Tribune observed, one only had to consider the Brazilian cruzeiro, then “the

laughing stock of monetary circles,” to grasp that nation’s financial malaise.3

But whatever misgivings had existed about Brazil’s economic health prior to 1968 certainly

seem to have faded away by the heady summer of 1973. “In 10 years, Brazil has produced an

economic ‘miracle’ comparable to the rebirth of Japan and West Germany,” proclaimed the Tribune.

Or as the Wall Street Journal had put it in April of 1972, the Brazilian economy had gone “from mess

to miracle.”4

What accounts for this seismic semantic shift so keenly noticed by Chicago Tribune? When,

why and how did Americans and Europeans start talking about Brazil as an “economic miracle,” as

opposed to some basket case Latin American economy?

As early as November 1970, it seems, commentators from developed nations started using the

phrase “economic miracle.” Though only a few discerned positive economic developments in the

wake of the 1964 coup, it did not take long for the designation to catch on and lead to some

exaggerations that surely seemed ridiculous by 1974, when the critiques that once coexisted with

favorable descriptions of the state of the Brazilian economy had come to dominate them.

Though the boom and subsequent bust in no small way drove these discursive changes, it

cannot be forgotten that concerted public relations efforts by the military regime and allied non-

governmental organizations did much to alter perceptions of Brazil. This paper will examine actions

taken by the dictatorship, the Brazilian-American Chamber of Commerce and the American Chamber

                                                                                                               1 Jeffrey A. Frieden, "The Brazilian Borrowing Experience: From Miracle to Debacle and Back," Latin American Research Review, 22, no. 1 (1987): 99. 2 Anonymous, "Brazil - Economic 'miracle'" Chicago Tribune, June 9, 1973. 3 Ibid. 4 Everett G. Martin, "Turnabout Nation: Brazil's Economy Goes From Mess to Miracle, Grows Over 11% in Year," Wall Street Journal, April 14, 1972.

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of Commerce of Commerce in São Paulo to market Brazil to the world. Work has already been done

on attempts to discredit the regime.5

From Mess to Miracle

Between 1964 and 1974 the attitude of the American and European press towards Brazil’s

economy changed markedly. To be specific, whatever doubts had existed in the wake of 1964 coup

slowly gave way to resounding optimism, which reached a fever pitch by 1972. Nevertheless, after

that point and until 1974, the last year considered in this analysis, thought leaders from industrialized

nations soured on Brazil’s economy, though the miracle never left their minds.

1964 stands out as a natural starting point, as even in the wake of regime change pessimism

about the Brazilian economy hit record levels. “The first order of business for Brazil’s new

government will be an effort to do something about the nation’s poor economic and financial

position,” wrote James Goodsell, the Latin American correspondent for the Christian Science

Monitor, in a dispatch days after the coup.6 To say the least, Goodsell was not particularly bullish

about the Brazilian economy.

This lack of confidence also manifests itself in the title of his piece, “Brazil Turns to

Economics.” The headline makes one wonder how exactly Brazilian policymakers were approaching

their economic problems prior to 1964, if they had never heard of economics. If anything, this slight

reflects a profound distrust of those tasked with guiding Brazil to prosperity.

A little less than a year later, outsiders’ view of the economic situation in Brazil had hardly

changed. In an April 1965 piece entitled “Brazil remains uncertain” Goodsell described what many

perceived to be the failure of the new government to invigorate the economy. He declared that the new

president-general, Castelo Branco, had “accomplished little.”7 In other words, the prospects for

change seemed to have diminished.

                                                                                                               5 James N. Green, We Cannot Remain Silent: Opposition to the Brazilian Military Dictatorship in the United States (Durham, NC: Duke University Press, 2010). 6 James N. Goodsell, "Brazil Turns to Economics," Christian Science Monitor, April 17, 1964. 7 James N. Goodsell, "Brazil Remains Uncertain," Christian Science Monitor, April 15, 1965.

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Nevertheless, Goodsell did point out reasons for optimism. Not only had the terrifying

“inflationary spiral…been curbed somewhat” but also the possibility that the government’s measures

would “prove successful in the long run” could not be ignored.8 Though far from a full-throated

endorsement of Brazilian economic policy, Goodsell’s remarks represent the beginning of a new way

of thinking about South America’s largest nation.

Others were beginning to see glimmers of hope. Ten days before the publishing of Goodsell’s

piece, M.J. Rossant of the New York Times reported that the new regime’s austerity policies were

proving to be of some use. The Brazilian government was in Rossant’s words “slowly winning the

battle against chronic inflation.”9 The fight against rising prices, it seems, struck Rossant not so much

as a rout but rather one long drawn out struggle in which the military regime appeared to have the

upper hand.

And in 1966 the idea that Brazil was finally pulling itself out of a deep hole lay downs its

roots. In January of that year, Juan de Onis, another journalist for the New York Times, reckoned that

the nation, which was “beginning to cash in on new investor confidence,” was “making a comeback”

with its 5% GNP growth the year before.10 His informal turns of phrase convey a far more rosy

forecast of Brazil’s future than was previously seen.

de Onis, however, did not have a completely sanguine outlook. He made sure to note in the

same January 1966 piece that it was not clear how far the dictatorship’s measures would “go toward

securing a sustained inflow of foreign private capital from the United States and Western Europe.”11

Doubts still remained about the regime’s ability to attract the investors whose money would fuel

future growth.12

This uneasiness, albeit of a less intense variety, persisted into 1967. In late April, more than a

month after Marshal Artur da Costa e Silva had replaced Castelo Branco as president, the Christian

Science Monitor reified fears with a headline that stated, “Uncertainties Shadow new Brazilian                                                                                                                8 Ibid. 9 M.J. Rossant, "Brazil Bank Chief Cites Slow Gains in Inflation Battle," New York Times, April 5, 1965. 10 Juan De Onis, "For Latin America, Progress Is Painful," New York Times, January 28, 1966. 11 Ibid. 12 Peter Flynn, "The Brazilian Development Model: The Political Dimension," The World Today 29, no. 11 (November 1973): 481-482, http://jstor.org/stable/40394675.

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regime.”13 The article made clear that “Brazil’s dizzy inflation rate” remained “stubbornly at the 40

percent level,” not the cheeriest of pronouncements.14 At any rate, the Monitor soon reversed course.

In early May, Goodsell took to its pages to allege ever so cautiously that “Brazil’s economic picture”

appeared “to be brightening.”15 Was a boom in the offing for South America’s largest country?

Not all thought so. The Wall Street Journal certainly had no qualms about excoriating the

Latin American nation for what the paper regarded as a pitiful economic showing. In a November

editorial entitled “Thermometer for a Fever,” a broadside against the expansionary monetary and

fiscal policy of the Johnson administration, the editorial board of the Journal warned of the dangers of

having a “Brazil-type” economy, which was “tough on the people but yet not a depression like the

1930s.”16

Though the beginning of 1968 seemed to prove the Journal wrong, that year soon provided

ample ammunition to Brazil’s detractors. In January 1968 Arnold Isaacs of The Sun reported that the

Brazilian economy had “scored its best performance in five years” in 1967.17 Though stunning, this

show of dynamism resulted from, as Isaacs put it, “the accident of good weather and bumper crops.”18

The incipient boom thus appeared to be nothing more than a fluke.

The accounts became gloomier, as the year dragged on. The journalist Michael Sieniawski in

late February noted that since January some business articles about Brazil had been “very positive,”

while others had been “very negative.”19 The tide soon turned in favor of the latter. That April the

Boston Globe commended the military regime for recreating “economic as well as political

stability.”20 Still the Globe was not immune to the protests that were shaking Brazil that month.21 It

                                                                                                               13 James N. Goodsell, "Uncertainties Shadow New Brazilian Regime," Christian Science Monitor, April 22, 1967. 14 Ibid. 15 James N. Goodsell, "Brazilians Glimpse Economic Upswing," Christian Science Monitor, May 6, 1967. 16 Wall Street Journal Editorial Board, "Thermometer for a Fever," editorial, Wall Street Journal, November 2, 1967. 17 Arnold B. Isaacs, "Brazil's Economy Best Since 1962," The Sun, January 22, 1968. 18 Ibid. 19 Michael Sieniawski, "U.S. Land Speculators Stung in Brazil Deals," Christian Science Monitor, February 29, 1968. 20 Otto Zausmer, "LATIN AMERICA: Turmoil and Progress--XI: Brazil--economic Progress... Democratic Standstill," Boston Globe, April 18, 1968.

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tempered its praise by noting that real wages had “dropped 42 percent since the coup,” a shocking

figure, to say the least.22

The increasingly oppressive regime and the economy it commanded found shrinking support,

as 1968 slowly and sadly drew to a close. On December 13, following mass mobilizations against it,

the dictatorship in a display of existential fear gave itself virtually unlimited powers with its issuing of

Institutional Act No. 5 (IA-5).23 In no small way did this irk Brookings’ James Rowe, who in a

Washington Post op-ed that month mourned Brazil’s falling into “a quagmire of repression and

military dominance.”24 Rowe also did not have any kind words about Brazil’s economic performance,

which in his opinion consisted of “modern communications and technology” providing “merely more

efficient means of manipulating and subjugating the have-nots.”25 The fact that such harsh criticism

came from the Brookings Institution, the fount of conventional Washington dogma, indicates the

extent to which the regime was failing to win favor both at home and abroad.

Nevertheless, even after the turmoil of 1968, observers began to express a surprising degree

of confidence in Brazil in 1969, though the kidnapping of the American ambassador and the selection

of Costa e Silva’s successor undermined rising expectations. In late January Paul Montgomery of the

New York Times noted that, in spite of the previous year’s tumult, the dictatorship had “achieved new

highs in economic growth.”26 A boom was taking place. This sentiment soon became a matter of

consensus. By early March, Goodsell, then stationed in Rio de Janeiro for the Monitor, was pointing

to “general agreement here that the one area in which Brazil’s military leaders have had clear success

is the nation’s economy.”27

Political problems, however, came to overshadow the strengthening economy in the second

half of the year. After Costa e Silva suffered a stroke on August 29, a triumvirate of generals took the

                                                                                                                                                                                                                                                                                                                                         21 Thomas E. Skidmore, The Politics of Military Rule in Brazil: 1964-85. (New York U.a.: Oxford Univ. Press, 1988), 74-77. 22 Zausmer. 23 Skidmore, 80-82. 24 James W. Rowe, "Squeeze Is Back For Brazilians," editorial, Washington Post, December 22, 1968. 25 Ibid. 26 Paul L. Montgomery, "Regime Disliked, but Brazil Grows," New York Times, January 20, 1969. 27 James N. Goodsell, "Brazil Inflation Tools Questioned," Christian Science Monitor, March 3, 1969.

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reins on August 31.28 Five days later, guerrillas kidnapped the American ambassador, Charles Burke

Elbrick. Though the regime did manage to have him released, it did not escape the notice of The Sun

that his abduction and the uncertainty surrounding who would replace Costa e Silva had, as the

newspaper put it in a headline, “scared” Rio de Janeiro’s stock market.29 The fear to which the

screamer alluded was overblown: the piece that ran under it told of both an exchange and an economy

that remained “strong and growing.”30 These solid fundamentals boded well for the man chosen to

lead South America’s largest nation that October, General Emílio Garrastazu Médici, and his finance

minister, Antônio Delfim Netto.

Under their watch, in 1970 Brazil took off insofar as the American and European press were

concerned: in November of that year journalists started to talk of the Latin American giant

experiencing no run-of-the-mill boom, but rather something far more extraordinary, an “economic

miracle.” In the first month of this momentous year, Joseph Novitski, a reporter for the New York

Times wrote that in 1969 Brazil had seen “explosive growth,” as its GDP had shot up a jaw-dropping

9% in 1969.31 Seven months later, Novitski was still gushing over South America’s largest nation. The

headline that ran above his August piece proclaimed with a certain poetic flair, “In Brazil, a Boom

Overshadows Prophets of Doom.”32 Novitiki spoke glowingly of a nation with a “rising” stock

market, a “massively favorable” balance of payments and GNP “growing almost explosively.”33 The

land of the future was living up to its name.

By the end of 1970, pundits and journalists alike had bought into this idea of Brazil as an

economic powerhouse. In a November article entitled “Foreign Investment: Alive, Well in Brazil,” the

Washington Post reporter Lewis Diuguid wrote that the director of USAID in Brazil “and others

                                                                                                               28 Skidmore, 95. Anonymous, "Brazil's New Junta Says Economic Policy Will Stay Unchanged," Wall Street Journal, September 2, 1969. 29 Robert A. Erlandson, "Rio Stock Exchange Scared By Brazil's Political Unrest," The Sun, October 5, 1969. 30 Ibid. 31 Joseph Novitski, "Autos Pulling Brazil Out of a Rut," New York Times, January 26, 1970. 32 Joseph Novitski, "In Brazil, a Boom Overshadows Prophets of Doom," New York Times, August 2, 1970. 33 Ibid.

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across the spectrum of economic thought unite in respect for the performance of finance minister

Antonio Delfim Netto in guiding what increasingly is referred to as an economic miracle.”34

What is striking about this first use of the phrase “economic miracle” in reference to Brazil is

that Diuguid was describing consensus. That is to say, none, not even those in the opposition, were

disputing the remarkable growth. As Diuguid explained, the regime’s critics, while “praising Delfim’s

performance,” only raised “questions for the future.”35 And if pro-democracy forces were just merely

praising Delfim’s work, columnists such as Joseph Kraft of the Boston Globe were heralding it as the

solution to the industrialized world’s predicaments. With his devaluation policy Delfim had found the

answer to, as Kraft put in in a December editorial, “the economic problem that seems to be baffling

even the United States.”36 Brazil and its boom were beckoning.

In 1971 the idea that what was taking place in the land of the future deserved to be called an

“economic miracle” gained more traction, as commentators could not help but continue to marvel at

the awe-inspiring growth underway in South America’s largest nation. “Brazil,” the New York Times

declared in January 1971, “made new economic strides last year, shattering all statistical records in

business and industry.”37 One could hardly ask for a more favorable write-up. Plaudits such as these

kept coming. Robert Erlandson, a journalist for The Sun, echoed the New York Times, when he in

August wrote that the Latin American giant “is going places, fast.”38 Even the Georgetown law

professor Joseph Page, who, like many of regime’s critics, drew far more attention to the military’s

injustices than his mainstream counterparts, did not deny in a feature article on Archbishop Dom

Câmara, a key opposition leader, that Brazil’s economy at the very least “appears to be booming.”39

And if Page had his doubts about pronouncing the development happening in Brazil a boom,

business writers still had theirs about describing this rapid progress as an “economic miracle.” In a

September Washington Post article Diuguid referred to Delfim Netto as “the hero of the economic

                                                                                                               34 Lewis Diuguid, "Foreign Investment: Alive, Well in Brazil," Washington Post, November 15, 1970. 35 Ibid. 36 Joseph Kraft, "Brazil Offers US a Lesson in Finance," editorial, Boston Globe, December 17, 1970. 37 Anonymous, "For Brazil, Huge Projects to Fit a Big Country," New York Times, January 25, 1971. 38 Robert A. Erlandson, "Coup Hastens Brazil's Growth," The Sun, August 20, 1971. 39 Joseph A. Page, "The Little Priest Who Stands Up to Brazil's Generals," New York Times, May 23, 1971.

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miracle.”40 Such unqualified use of the phrase was the exception, not the rule in 1971. Leonard

Greenwood, a staff writer for the Los Angeles Times, tentatively indicated in an October piece, “Some

observers say the country is experiencing an ‘economic miracle,’ unique among developing

countries.”41 Greenwood did not feel comfortable employing an expression that had yet to represent

majority opinion, let alone a consensus. Similarly, Goodsell only went so far as note in a December

dispatch that the military had “accomplished something of an economic miracle.”42 Nevertheless, it is

clear that the phrase was catching on, as it had been employed only once the year before.

That all changed in 1972, when thought leaders shed their fear and embraced the expression

wholeheartedly. It is telling that even those who attacked the regime for failing to address issues of

poverty and inequality employed the phrase, which evinced the military’s economic success. The year

opened with Erlandson in January writing in The Sun of “the continuing Brazilian ‘economic

miracle.’”43 The fact that Erlandson did not bracket the phrase with qualifications speaks to the

immense confidence he had in those two words. Everett Martin, a staff reporter for Wall Street

Journal, displayed a comparable level of conviction in April, when he reported that Brazil was, as he

put it, “staging an economic miracle.”44 He even claimed that “the country may have a thing or two to

teach the United States, especially about stimulating growth.”45

Though all commentators were not singing the regime’s praises as loudly as Martin, all

utilized this expression that attested to its wondrous economic success. In May Christopher Roper of

The Guardian penned a hard-hitting piece about the dictatorship’s lack of concern for the indigent. He

revealed that “more and more Brazilians are discussing the distributive effects of the economic

miracle” with some even questioning the necessity of the regime taking from the poor to give to the

rich.46 As effective as this critique may be, Roper undercut it by yielding the linguistic high ground to

                                                                                                               40 Lewis H. Diuguid, "France Courts Brazilians With Style and Hardware," Washington Post, September 12, 1971. 41 Leonard Greenwood, "Medicine Harsh but Brazil Recovering," Los Angeles Times, October 10, 1971. 42 James N. Goodsell, "How Loud the Drummer in Latin America," Christian Science Monitor, December 1, 1971. 43 Robert A. Erlandson, "Latin America: Left, Right, Anti-U.S.," The Sun, January 9, 1972. 44 Martin 1972. 45 Ibid. 46 Christopher Roper, "Blemishes on Brazil's Booming Economy," The Guardian, May 8, 1972.

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the regime. Though Roper problematized the idea of the miracle, he did not rob the expression of the

dynamism and prosperity it conveyed.

Where Roper failed, however, Brazil’s bishops in 1973 succeeded: the very phrase once used

by journalists to heap praise on the land of future turned into an object of scorn in the press by the end

of the year. Nonetheless, 1973 began on a very high note. In a ten page special report on Latin

America in late January, the New York Times called Brazil “the New Japan,” in light of the fact that

the Asian nation had experienced its own eye-popping economic miracle.47 The Times did not mention

any repression at all: it merely observed that the Brazilians wished to outdo the Japanese in terms of

growth.48 Indeed, the phrase carried so few negative connotations that in April the Los Angeles Times

columnist Ernest Conine could sketch a deceptively easy choice between “the socialist experiment in

Chile” and “the economic miracle taking place in fundamentally capitalist Brazil.”49

By releasing a 30-page report detailing the regime’s mistreatment of its citizens in May,

Catholic bishops from Northeastern Brazil helped pull the rug from underneath this fantasy.50 The

miracle, they held, served no other purpose but “to make the rich richer and the poor poorer.”51

Miraculous growth that had benefited only a select few came at the price of, as The Guardian so

succinctly put it in a headline, “’Torture, murder, [and] hunger’” for the vast majority of Brazilians.52

The New York Times, the Los Angeles Times and the Washington Post all pounced on the

report in a media feeding frenzy.53 Three days after the report’s publication, the Los Angeles Times

had no reservations about observing in a stinging editorial that “the military could do better— and

should, not only in the name of social justice but in the interest of keeping the economic miracle

                                                                                                               47 Anonymous, "Brazil, 'the New Japan'" New York Times, January 28, 1973. 48 Ibid. 49 Ernest Conine, "Is Peru's Military Revolution a Key to the Future?," editorial, Los Angeles Times, April 22, 1973. 50 Anonymous, "'Torture, Murder, Hunger' in Brazil," The Guardian, May 18, 1973. 51 Ibid. 52 Ibid. 53 Anonymous, "Bishops in Brazil Denounce Regime," New York Times, May 19, 1973. Leonard Greenwood, "Brazil Bishops Attack 'Economic Miracle'" Los Angeles Times, May 21, 1973. Leonard Greenwood, "Brazil Bishops Rap 'Economic Miracle'" Washington Post, May 27, 1973.

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going.”54 The idea that Brazil was booming was taking a beating: the very viability of the miracle

itself was coming into question.

And in 1974 the good times ended: as the new president, Ernesto Geisel, and his finance

minister, Mario Henrique Simonsen, struggled to lead Brazil through the first oil crisis, commentators

stopped talking of an astounding economic miracle. Energy, noted the William Smith of the New York

Times in January, stood out as “the Achilles’ heel of the Brazilian ‘economic miracle.’”55 The Latin

American giant imported 80 percent of the oil it consumed: that is, when oil prices tripled did, as they

did in 1974, it spelled trouble.56 As early as September, another journalist for the New York Times,

Marvine Howe, reported that some prescient individuals believed “the Brazilian Miracle has ended.”57

All soon subscribed to this idea, namely, that the boom had gone bust.58

The Boom (and Bust)

By 1974, it is clear that the Brazilian economy had undergone a dramatic transformation

in the eyes of its American and European followers. Optimism, which had risen only slowly in

the wake of the coup, skyrocketed in the first three years of the 1970s before plummeting in the

fourth year of the decade. Pundits, in other words, went from describing Brazil as a basket case to

pronouncing it an economic miracle, albeit a short-lived one. A foreign capitalist centered boom

and bust explain much, though not all, of these discursive changes.

Before examining the centrality of foreign capital to the nation’s economy, the first

decade of the dictatorship merits a brief recapitulation. For three years after the coup the regime

waged a costly war against inflation. Though the military undoubtedly triumphed, a recession

ensued.59 In 1967, much to the delight of Costa e Silva, who broke with his predecessor on the

                                                                                                               54 Los Angeles Times Editorial Board, "Brazil's 'Miracle' Skips the Poor," editorial, Los Angeles Times, May 22, 1973. 55 William D. Smith, "In South America, Too, Barely Enough Oil," New York Times, January 27, 1974. 56 Skidmore, 178. 57 Marvine Howe, "Brazil Expects a Slowing of 'Economic Miracle'" New York Times, September 2, 1974. 58 Bruce Handler, "Flaws Appear in Economic Plan of Brazil," Washington Post, November 2, 1974. 59 Skidmore, 62.

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economic policy front, growth resumed.60 Then something quite remarkable happened. Between

1968 and 1973 annual GDP growth averaged an astonishing 11.1%.61 This economic miracle,

however, did not last. The first oil crisis, which started in late 1973, quite literally drained the

Brazilian economy of the energy that had fueled its mind-boggling increase.62

In this period observers’ opinions, for the most part, closely tracked the economy’s ups

and downs. Though the war on inflation won the regime few fans on the home front, it shored up

foreign confidence in Brazil.63 That is not to say, however, that all suddenly viewed the Latin

American giant as an economic dynamo: quite the opposite. Even when the dictatorship notched

growth in 1967, many still had their doubts.64 It took three years of unprecedented expansion

before any foreigner dared to speak of an economic miracle.65

And when this phrase finally entered common usage at the height of the boom in 1972,

Brazil still came under fire.66 Impressive growth did not preclude the existence of a vigorous

opposition to the dictatorship and, if anything, widened the already yawning gap between rich and

poor.67 Before the slowdown brought about by the first oil crisis, the pro-democracy movement

had already created controversy with its messaging.68 This strongly suggests that the American

and European press paid attention to more than just the health of Brazil’s economy: they also

heeded the calls of various political forces.

And if any one group was trying to understand the messages of these groups, it was

capitalists from around the globe, who for better or for worse, powered the Latin American

giant’s economy in the first ten years of military rule. Looking back on the previous decade, the

                                                                                                               60 Ibid., 90.  61 Fernando A. Veloso, André Villela, and Fabio Giambiagi, "Determinantes Do "milagre" Econômico Brasileiro (1968-1973): Uma Análise Empírica," Revista Brasileira De Economia 62, no. 2 (Summer 2008): 222. 62 Skidmore, 206. 63 Skidmore, 69. 64 Wall Street Journal Editorial Board 1967. 65 Diuguid 1970. 66 Roper 1972. 67 Peter B. Evans, "The Military, The Multinationals and The "Miracle": The Political Economy of the "Brazilian Model" of Development," Comparative International Development 9, no. 3 (Fall 1974): 35. 68 Los Angeles Times Editorial Board 1973.  

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sociologist Peter Evans concluded in 1974 that “Brazil’s success in tying its economic growth to

the burgeoning strength of international corporations” stood out as the “single most important

element” in the performance of South America’s largest nation.69

That is to say, foreign capital, above all else, drove economic expansion. This is not an

idea without merit. Between 1964 and 1967 alone, so much money rushed into Brazil from

abroad that it became the fourth largest recipient of foreign funds.70 The pace of capital inflows

certainly did not slow down after 1967: if anything, it sped up. By 1974, foreign direct investment

was nearly six times what it had been in 1968.71

So much international money was sloshing around the land of the future that it

predominated. “Virtually every major portion of the modern economy,” according to the political

scientist Jeffry Frieden, “came to rely on foreign finance.”72 In short, Brazil ran on capital from

abroad. To give just one example, the Latin American giant relied so heavily on foreign

investment in this period that by 1981 a staggering 97% of the sales of major carmakers came

from nonnative firms.73

Such dependence on external resources, however, did not happen by accident. As the

Brazilian political scholar Peter Flynn noted in 1973, the regime’s “open door strategy” provided

“opportunities for foreign, particularly United States, investment and for foreign penetration of

the economy far beyond anything that would have been previously allowed.”74 In more concrete

terms, before the military came to power, it would have been unthinkable for foreign firms to so

completely dominate one market, let alone a large number of them. This reliance on outsiders

                                                                                                               69 Evans, 42. 70 Anderson Caputo Silva, Lena Oliveira De. Carvalho, and Otavio Ladeira De. Medeiros, "História Da Dívida Pública No Brasil: De 1964 Até Os Dias Atuais," in Dívida Pública: A Experiência Brasileira (Brasília: Banco Mundial, 2009), 70. 71OECD (2011), "Geographical distribution of financial flows: Flows to developing countries", OECD International Development Statistics (database). doi: 10.1787/data-00566-en 72 Frieden, 95. 73 Ibid., 99.  74 Flynn, 486.

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extended beyond just market control: the regime also received massive loans from abroad.75 The

military was in essence gambling that foreign capital would goose production more than enough

to pay off the debt incurred from borrowing.76

This bet turned out quite nicely for those involved. Brazil was second only to Panama in

offering the highest rate of return on United States direct investments in Latin America in 1971.77

Even before then, however, outsiders were benefiting from this arrangement. In 1969 General

Electric’s Brazilian subsidiary, for instance, obtained via the regime a $6 million Import-Export

Bank loan to finance its construction of electric locomotives.78 Given these sweet deals, it is not

all too astonishing that Du Pont used an advertisement in 1970 to declare it “believes in Brazil.”79

Nevertheless, such faith in the Latin American giant did not come easily. The regime and its allies

worked hard after 1967 to court foreign capital and the media on which it relied.

The Selling of Brazil

Solid economic performance alone did not attract capitalists to Brazil or upend the way the

American and European press talked of South America’s largest nation. Though it played a significant

role in these processes, it did not act in isolation. Although the regime fared extremely well in its

attempts to woo foreign capital, it did not have as great success with foreign journalists. The same can

be said of two of its most stalwart allies, the American Chamber of Commerce of Commerce in São

Paulo and the Brazilian-American Chamber of Commerce.

The dictatorship put a great deal of effort into cultivating a positive image abroad. Antônio

Delfim Netto, who served as finance minister from 1967 until 1973, did much to market Brazil to the

world. In 1972 The Guardian reported that Netto, who was “constantly making trips abroad,” was

                                                                                                               75 Frieden, 99. 76 Ibid., 96. 77 Evans, 28.    78 Ibid., 30. 79 Anonymous, "Foreign Investors Prosper," Brazilian Information Bulletin, July 1971.

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“seeking to create a foreign trade ministry,” which he wanted to fall under his jurisdiction.80 This was

a bold move on Netto’s part: he was challenging the authority of Itamaraty, Brazil’s foreign ministry,

which traditionally managed the nation’s foreign policy.81 Nevertheless, the fact that he was even

considering this idea shows the lengths to which he was going to charm foreign capital.

Even before the publication of The Guardian piece, Netto had much to show for the extreme

measures he was taking or at least was thinking about taking. Between 1965 and 1969 long- and

medium-term loans’ annual rate of increase tripled, hitting $780 million by 1969.82 Likewise, in the

same time period the pace at which Brazil undertook short-term liabilities grew almost eightfold to

$338 million a year.83 These millions of dollars, however, pale in comparison to the massive foreign

debt Brazil was racking up under Netto’s watch. By 1970 the Latin American giant owed its foreign

creditors some seven billion dollars.84 Its yearly interest payments alone totaled nearly a billion

dollars.85 But these huge numbers did not send fear in the hearts of the world’s bankers, whose trust

Netto clearly had won.86 If these lords of finance did not have faith in him, it is highly unlikely they

would have given such large sums of money in the first place.

While Netto traveled abroad to schmooze foreign capital, others in the regime decided it

would be best to invite journalists from abroad to Brazil to show them the promise of the land of the

future. In May 1970 the Brazilian Embassy in Washington received authorization from the minister of

foreign affairs to use $10,000, then a substantial sum, to sponsor the visits of journalists and other

important figures to Brazil.87 As Itamaraty explained in a telegram to the embassy, these trips served

no other purpose but the “commercial promotion” of the country.88 That is to say, those who came

                                                                                                               80 Roper 1972. 81 Ibid.  82 Evans, 29. 83 Ibid. 84 Ibid. 85 Ibid. 86 Ibid. 87 Green, 213. 88 Ibid.

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over on the government’s tab had to return the favor with a glowing assessment of the situation in

Brazil.89

This strategy paid dividends for the regime. After his all-expenses-paid-trip, Selden Rodman,

a writer for the conservative National Review, published a piece that raved about, as he put it,

“Brazil’s extraordinary financial boom and economic advances.”90 The military, he declared, had laid

“the groundwork for a prosperous and democratic society.”91 Rodman was the not only one who

extolled the dictatorship after his visit. In late 1970 the columnist Joseph Kraft also took Itamaraty up

on its offer. Upon his return to the United States, Kraft informed readers of the Washington Post of

“the roaring success of a private enterprise development program” in Brazil.92

As wonderful as these results may have been for the regime, its strategy did have its failings.

The military could not buy off every journalist. Furthermore, despite its best efforts, it could not

prevent the circulation of negative reports outside Brazil.93 In sum, then, while it did not have quite as

much control over the press as it would have liked, the regime did manage to attract a great deal of

foreign capital.

The American Chamber of Commerce in São Paulo had a similar experience, as it used many

of the same tactics as the regime to have journalists from abroad portray Brazil in a favorable light and

to encourage the entry of foreign capital. The Chamber, it should be noted, saw its interests as being

very much aligned with those of the dictatorship. In 1968 the regime gave itself nearly limitless

powers with its issuing of IA-5, an act that cost it a great deal of support both at home and abroad.94

This sudden change of opinion did not shake the Chamber’s confidence in the regime. “IA-5,” the

President of the Chamber told the U.S. Consul General in 1968, was the “best thing that could have

                                                                                                               89 Ibid. 90 Ibid. 91 Ibid., 215. 92 Joseph Kraft, "Brazil's Big Push," editorial, Washington Post, December 13, 1970. 93 Skidmore, 134. 94 Green, 92.

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happened to the country."95 The implications of the statement are clear: no matter what, the Chamber

would stand with the regime.

The Chamber showcased this loyalty by doing its best to bring foreign capital into Brazil and

have the media underline the positive aspects of military rule. Like the regime, the Chamber feared

that any negative report about Brazil would be bad for business. In 1970 it outlined this concern in its

annual report. “Brazil,” it wrote, “was the target of a constant and tenacious vilification campaign by

large sectors of the foreign press.”96 This “campaign of demoralization,” according to the Chamber,

thankfully “did not manage to cloud the view of foreign investors,” who were expressing

“considerable interest” in Brazil.97 In a nutshell, the Chamber worried that articles about torture and

the murder of Amazonian Indians in Brazil might hurt the profits of its members who had investments

there.98

It was not the most noble of concerns, but nonetheless one which the Chamber did not take

lightly. “Both the government [of Brazil] and some foreign companies,” it revealed in the same report,

“sponsored visits of foreign newspaper men who wished to take cognizance of the true state of affairs

in Brazil.”99 Though it did not say who paid whom, the disclosure is still shocking. It seems easy to

claim that the Chamber had no part in this payola. After all, one could argue, the Chamber was merely

reporting what it heard.

The annual report, however, tells a different story. The Chamber, it appears, was running a

campaign, not so imaginatively called “Brazil’s Image Abroad,” to do exactly what its name suggests:

improve foreigners’ opinion of the Latin American giant.100 In the report the Chamber made it clear

that “the basic objective of this campaign” was “to dissipate the original image,” which centered on

                                                                                                               95 James N. Green, "“Restless Youth”: The 1968 Brazilian Student Movement as Seen from Washington," in 1968: 40 Anos Depois, História E Memória, ed. Carlos Fico and Maria Paula Araújo (Rio De Janeiro: 7Letras, 2009), 30. 96 American Chamber of Commerce in São Paulo, Annual Report: 1970, report (São Paulo: American Chamber of Commerce in São Paulo, 1970), 4. 97 Ibid. 98 Ibid. 99 Ibid. 100 Ibid.

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atrocities such as the “torture of political prisoners.”101 Though it did not explicitly give the name of

the campaign, the Chamber put all this information in a section entitled “Brazil’s Image Abroad.”102 It

is not too much of a leap to conclude that this served as the name of the campaign. Though it is

difficult to quantify how much business benefited from “Brazil’s Image Abroad,” there is no question

that the Chamber was doing its utmost to repair the Latin American giant’s global standing.

The Chamber was striving as well to increase capital inflows into Brazil. On this front, it

succeeded. Between 1968 and 1974 its membership swelled: nearly 300 joined the organization in that

period.103 Those who became a part of the Chamber at this time more often than not had or were soon

to have significant interests in Brazil.

In 1972, for instance, the new members included, but by no means were limited to Du Pont,

Caterpillar and Westinghouse Electric.104 Du Pont had its own subsidiary in Brazil by 1970 and

Caterpillar had been in the country since 1954.105 Westinghouse, in this regard, was the odd one out:

only in 1972 did it set up shop in South America’s largest nation.106 Westinghouse’s expansion,

though late in coming, represented significant investment.107 For that reason, it stands out as just one

example of the considerable success the Chamber had in attracting foreign capital to Brazil. It seems

fair to conclude that the Chamber did a much better job encouraging investment than it did improving

Brazil’s tattered image abroad.

The same holds true for the Brazilian-American Chamber of Commerce, which also had a far

easier time coaxing foreign capital into Brazil than it did countering negative portrayals of the regime.

Like the American Chamber of Commerce in São Paulo, the Brazilian-American Chamber of

Commerce identified closely with the dictatorship. In 1970 the organization, which had only been

                                                                                                               101 Ibid. 102 Ibid. 103 American Chamber of Commerce in São Paulo, Annual Report: 1968, report (São Paulo: American Chamber of Commerce in São Paulo, 1968), 18. American Chamber of Commerce in São Paulo, Annual Report: 1974, report (São Paulo: American Chamber of Commerce in São Paulo, 1974), 12. 104 American Chamber of Commerce in São Paulo, Board Meeting Minutes: 1972(São Paulo: American Chamber of Commerce in São Paulo, 1972), 4. 105 "Foreign Investors Prosper." Caterpillar, "Caterpillar in Brazil," Caterpillar, http://brasil.cat.com/cda/layout?m=273363&x=7. 106 Skidmore, 193. 107 Ibid.

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founded in 1968, bestowed for the first time its highest honor, the Man of the Year Award, upon then

finance minister Antônio Delfim Netto.108 The meaning of this action was unambiguous: the regime

enjoyed the backing of the Brazilian-American Chamber of Commerce.

This became quite obvious in 1972, when the business group defended the dictatorship’s

building of the Trans-Amazon Highway in the New York Times. In March Robert Hummerstone, an

editor of the magazine Life, penned a feature entitled “Cutting a Road through Brazil’s ‘Green Hell’”

on the project for the Times.109 Hummerstone quoted Richard Aldrich, then the president of the

organization, as saying, “The highway is terrifically important to the development of the

hinterland.”110

The Life editor did not find Aldrich to be very credible. As Hummerstone put it, Aldrich as “a

relative of the Rockefeller brothers who have vast cattle-ranch holdings in the western Amazon basin”

was “naturally enthusiastic” about the highway.111 That is to say, the seasoned journalist was too

polite to admit he had little faith in a man whose family stood to profit from the highway. In brief, the

business group did not perform so well in its only appearance in an American newspaper of note

between 1968 and 1974.

The organization compensated for this lackluster performance by excelling in drawing foreign

capital to Brazil. According to A Chronicle of 40 Years: The Brazilian-American Chamber of

Commerce in New York, the group’s account of its history, it had “success” in its “efforts to new

recruit new members in the first half of the ‘70s,” as “the roster reached 198 at the end of 1974.”112

Given that the organization in its own words seeks to promote “commerce, investment and cultural

ties between Brazil and the United States,” it is safe to assume that those new members, like their

counterparts at the American Chamber of Commerce in São Paulo, were more concerned with the first

two goals than with the last.113 To come to the point, it appears that they too were investing heavily in

                                                                                                               108 Brazilian-American Chamber of Commerce, Inc., A Chronicle of 40 Years: The Brazilian-American Chamber of Commerce in New York (New York: Brazilian-American Chamber of Commerce, 2010), 4 and 45. 109 Robert G. Hummerstone, "Cutting a Road through Brazil's 'Green Hell'" New York Times, March 5, 1972. 110 Ibid. 111 Ibid. 112 Brazilian-American Chamber of Commerce, Inc., 14. 113 Ibid., 12.    

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Brazil. Thus, just like the American Chamber of Commerce in São Paulo, the Brazilian-American

Chamber of Commerce encountered less difficulty in its quest for capital than it did in its quest for

foreign approval of the regime.

BRICs and Beyond

In the ten years between 1964 and 1974 Brazil went from being the last place any savvy

investor would want to park their money to an “economic miracle” in the eyes of the American and

European press. This seismic semantic shift did not happen overnight. Business writers, many of

whom had been, at best, slightly optimistic in the latter half of the ‘60s, spent the beginning of the

‘70s dithering before they felt very confident employing this new phrase to describe the boom that had

enthralled them to the point of hyperbole. By 1974, these heady days had come an end, as the critiques

that had used to exist alongside more glowing reports of the state of the Brazilian economy place rose

to predominance.

Two forces underlay these discursive changes. First, the actual state of the Brazilian economy

did, by and large, factor into commentators’ assessments of it. In other words, when journalists and

pundits were writing of Brazil’s boom and bust, they were describing events that really did happen.

Nevertheless, it would be a mistake to think that nothing else influenced their accounts. The regime

and its staunch supporters, the American Chamber of Commerce in São Paulo and the Brazilian-

American Chamber, went to great lengths to ensure that foreign capital and the media on which it

relied had only a positive image of the rapidly industrializing nation.

Though nearly forty years have passed since the last year considered in this analysis, it is still

possible to discern the effects of these forces, as they have left an indelible mark on Western

conceptions of Brazil. In 2001 a then unknown Goldman Sachs economist and investor named Jim

O’Neill coined the term “BRICs” to group together Brazil, Russia, India and China, the four countries

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whose growth, he imagined, would in the future propel the global economy.114 It did not take long for

this designation to gain currency and for O’Neill to win a fair amount of fame because of it. As he

explained in his 2011 book The Growth Map, “The whole world now sees that Brazil’s economic

transformation, from hyperinflationary basket case to a potential twenty-first-century Latin American

superpower, finally had legs.”115

This notion of Brazil as an economically dynamic nation indeed did become widely accepted.

It became so widely accepted, in fact, that Ruchir Sharma, an investor at Morgan Stanley, felt the need

to challenge it. In his 2012 book Breakout Nations Sharma notes, “There is no better example of how

absurd it is to lump all the big emerging markets together than the frequent pairing of Brazil and

China.”116 This grouping struck him as ridiculous, because, as he puts it, the Latin American giant

lacks “the profile of a rising economic power.”117

Now whether or not O’Neill is right is beside the point: the rub is that both he and Sharma

cannot ignore the economic miracle. Even Sharma, who has little, if any, faith in the nation, writes

that in the 1960s “professors of development economics from South Korea to Argentina held Brazil up

as a paragon of economic virtue.”118 Now these professors most likely read newspaper articles about

Brazil, some of which undoubtedly bore the influence of, if not the regime, the American Chamber of

Commerce in São Paulo. Though others may have been more objective, it does not change the fact

that the economic performance and the concerted public relations efforts of the dictatorship and its

allies still continues to affect the discourse surrounding the miracle. For this reason, the period must

be approached cautiously, unless of course one is prepared to declare, as many investors surely must

have at the height of the boom, “You must be kidding me!”

                                                                                                               114 Jim O'Neill, The Growth Map: Economic Opportunity in the BRICs and beyond (New York: Portfolio / Penguin, 2011), 3. 115 Ibid., 47. 116 Ruchir Sharma, Breakout Nations: In Pursuit of the Next Economic Miracles (New York: W.W. Norton & Company, 2012), 61. 117 Ibid. 118 Ibid., 63.

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