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Abstract
This article examines the impact of the British expatriate entrepreneur, and his processes of knowledge transfer, on the industrialization and economic development of Brazil between 1875 and 1914. It focuses on the textiles industry, and combines original trademark data with conventional trade and investment statistics, and also case study analysis about firms and their entrepreneurs. It argues that British investment in Brazil was higher and had a deeper impact on economic development than considered by existing research, as expatriate entrepreneurs ‘disguised’ a substantial amount of foreign investments by acting as shareholders and top managers of newly established local businesses.
Acknowledgments
This project benefitted from the financial support of the British Academy (Research Grant BM130264). The trademark information about Britain, France and the US was collected as part of an Economic and Social Research Council project grant held by Teresa da Silva Lopes (Research Grant RES-062-23-0,193). Bruna Dourado provided invaluable research assistance in the fieldwork undertaken for this research. Elizabeth Santos Souza and also Beatriz Lanna and Amanda Marinho contributed to the development of the trademark database. We would like to thank Mark Casson and three anonymous referees for very helpful comments to earlier versions of this article.
Notes
1. While this is the first study which draws on trademark data from Brazil, there is an emerging group of scholars in Latin America using historical trademark data to explain different economic, political and social phenomena. See for instance Lluch, “Marca Registrada: Reflexiones sobre el Uso de las Marcas”; Escobar, “Female Entrepreneurship.”
2. In 1907 the Brazilian textiles industry (including cotton, jute, wool, silk and linen) employed 34.2% of the total labour force in the country working in manufacturing, used 40.2% of the machinery, and 40.4% of the total capital employed in manufacturing. Throughout the twentieth century the contribution of the textiles industry to GDP was overall quite significant within manufacturing, but decreased over time. Suzigan, Indústria, 129; Versiani e Suzigan, O Processo Brasileiro: “Tabela 3 – Participação Relative dos Géneros da Indústria de Transformação no Valor da Transformação Industrial, 1919–1980,” 31.
3. Knowledge can be tacit and sticky or explicit and smooth. For the purposes of this article they are analysed jointly. Teece, “The Market for Know-How,” 81–86; idem “Capturing Value,” 55–79; Nonaka and Takeuchi, The Knowledge-Creating.
4. Lev, Intangibles, 5–7.
5. Lopes, Global Brands.
6. Wilkesmann and Wilkesmann, “Cultural Characteristics.”
7. Lopes and Casson, “Entrepreneurship and the Development.”
8. See for example Eakin, “British Imperialism and British Enterprise in Brazil.”
9. Casson, Enterprise and Competitiveness, 80. A social background devoid of extreme political, racial or religious intolerance is considered to encourage flexible thinking.
10. When there is no related knowledge within the organisation, absorption of new knowledge transferred can only take place if the sender (e.g. in this case the expatriate entrepreneur) stays in the organisation long enough to give time for knowledge to be transferred successfully through training and also through social interaction. Kedia and Bhagat, “Cultural Constraints”; Minbaeva, “Knowledge Transfer.”
11. See for example Cantwell, Technological Innovation and Multinationals; idem; “The Globalization of Technology”; Almeida “Knowledge Sourcing”; Jaffe et al., “Geographic Localisation”; Almeida and Kogut, “The Exploration of Technological”; Phene, Madhok and Liu, “Knowledge Transfer”; Tsai, “Knowledge Transfer.”
12. Lopes, Global Brands; Lopes and Guimarães, “Trademarks and British Dominance.”
13. While brands can be beneficial to businesses, consumers and society in general by, for example, protecting the manufacturer from imitation through the registration of trademarks and helping consumers to simplify decision taking, they can also contribute to block innovation, creating barriers to entry, and manipulate consumers minds and be wasteful. Lopes, “Brands and the Evolution.”
14. The first trademark law for these countries was passed in the following years: Argentina – 1876; Bolívia – 1893; Colombia – 1890; Costa Rica – 1896; Cuba – 1884; Mexico – 1884; Peru – 1892; Portugal – 1883; Uruguay – 1877; and Venezuela -1877. Mathur and Patel, World Development: Annex 3.
15. Decreto Lei, no. 16,264 (19 December 1923).
16. Textiles marks appear registered in several classes as this was a key industry in Britain’s economy at the time, being a key component of British International trade. Out of the 50 classes, textiles and related products appear registered in 15 (class 23 to class 36, and class 38), and include products such as cotton, linen, jute, silk and wool. Lopes and Guimarães, “Trademarks and British Dominance”: 798; Rogers, A Guide to the Patent Office.
17. Jones, Multinationals and Global, 255; Feinstein, “Britain’s Overseas.” About the British informal Empire see, for example, Brown, “Informal Empire in Latin America.”
18. See as an illustration Haber, How Latin America Fell Behind; Cardoso and Faletto, Dependencia y Desarrollo; Evans, Dependent Development.
19. Stein, The Brazilian Cotton. Several authors disagree with this view. See for example Medina et al., Beyond Imported Magic; Stepan, Picturing Tropical Nature; Joseph, Le Grand, and Salvatore, Close Encounters of Empire.
20. Cardoso and Faleto, Dependência e Desenvolvimento; Furtado, Formação Económica; Fernandes, Capitalismo Dependente; Mello, O Capitalismo Tardio; O'Brien, “Path Dependency”; Haber, How Latin American Fell.
21. Cottrell, British Overseas; Stone, The Composition and Distribution; Platt, Britain’s Investment Overseas; Ridings, “Business Associationalism.”
22. Tavares, Da Substituição de; Prado Jr., História Econômica do Brasil. CitationBeatty (2015) makes a similar argument about how the US were leading registrants of patents in Mexico, having transferred knowledge and technologies into the country. He argues, however, that all these investments greatly contributed to Mexico remaining technologically dependent on the US in the long-term. Beatty, Technology and the Search for Progress.
23. Gonçalves, Evolução das Relações Comerciais, 48; Needell, “The State and Development”; Love, “The Brazilian Federal State”; Manchester, British Pre-Eminence; De Fiore and De Fiore, The British Presence in Brazil. Edgerton (2006) considers that the cultural and economic gap developed by countries such as Brazil cannot be explained solely by looking at the history of technological invention and innovation. His argument is that, for countries affected by Imperialism and Colonialism, discussions should focus on the importance of ‘things’, and the fact that these countries followed different paths of industrialisation, in many cases resulting from their own choice to industrialise later. Edgertson, Shock of the Old, 39.
24. Britain’s share decreased from about 46% of total imports during the period 1880-1884 to about 32% by 1910–1913. Gonçalves, Evolução das Relações Comerciais: 48.
25. Trade and Navigation – Accounts Related to Trade and Navigation of the United Kingdom.
26. The Brazilian tariff system was then considered one of the most complicated in the world. Many British and other European textile exporters had to hire own staff, with expertise on Brazilian tariffs, as it was quite impossible to operate in that market intelligently without such knowledge. The tariffs on imports reduced the national cost to produce in Brazil. Electricity, inputs and skilled labour were very expensive in Brazil in comparison with industrialised countries. Decree no. 3,396 (24 November 1888); Decree no. 25 (30 December 1891); Stein, The Brazilian: 85; Suzigan, Indústria Brasileira: 155; Versiani, “Industrial Investment”; Needell, “The State and the Development under the Brazilian Monarchy,” 79–99; Love, “Brazilian Federal State in the Old Republic”: 100–115; Garry, “Textile Markets,” 18.
27. Reis, O Imposto de Importação. Firms such as Companhia de Fiação e Tecidos Aliança, Companhia América Fabril, and Companhia Progresso Industrial do Brazil, are among the leading firms producing jute. Clark, “Cotton Goods in Latin America,” 6, 60.
28. The US did not have an Empire, and Brazil was one of the few foreign markets of large size where they could be assured a reasonably high level of sales. Bulmer-Thomas, “British Trade,” 6.
29. Rippy, British Investments, 25; Kenwood and Lougheed, The Growth of the International, 27–28; Stone, “British Direct and Portfolio,” 695.
30. Guimarães, A Presença Inglesa.
31. Stone, “British Direct and Portfolio Investment,” 694–695; Levy and Saes, “Dívida Externa Brasileira,” 50; Levy, “The Banking System”; Born, International Banking.
32. Rippy, British Investments, 151, chapter 14; Bethell, História da América Latina; Castro, As Empresas Estrangeiras, 98–99. British Investment becomes more diversified in Latin America in the early twentieth century, and Argentina becomes the main host country, receiving large investments in the production of wheat and cattle. Railways, which connected the producing areas to Buenos Aires, and also public utilities, were important industries receivers of British foreign investment until World War I. Lanciotti and Lluch, ’’Gran Bretaña y Argentina”; Miller, ‘‘Britain and Latin America’’; Castro. As Empresas Estrangeiras no Brasil, 37–88, 64–66, 78–79, 98–99, 116–122.
33. In 1865 a report about textile factories in Brazil mentioned that there were nine factories employing 768 people. In 1884 there were 46 plants. In 1875 there were 30, in 1881 there were 51, 109 in 1905, and 137 in 1910. Pearse, ‘Brazilian Cotton’: 26; Diário Oficial, Rio de Janeiro (13 March 1883); Branner, Cotton in the Empire; Graham, Britain at the Onset, 38–39.
34. In 1893, for example, textile machinery imported from Britain represented 42.5% of all textiles machinery imported by Brazil. Suzigan, Indústria Brasileira: 152.
35. Stein, The Brazilian, 117; Cain and Hopkins, British Imperialism, 305.
36. Pargendler, “Politics in the Origins,” 842.
37. Lisboa, Princípios de Direito Mercantil.
38. Vampré, Tratado Elementar de Direito Comercial, 34.
39. ‘Speech of Senator D. Manoel’, Senate Records (1 June 1860): 13, as cited in Pargendler, “Politics in the Origins,” 846.
40. With the independence of Brazil in 1824, the Constitution, article 179, also includes intellectual property rights. After the proclamation of the Republic in 1889, the new Constitution renewed the protection of intellectual property. Vieira, Propriedade Industrial, chapters 2 and 3.
41. Decree nº 2,682 (23 October 1875). Some of its characteristics include: that marks must be distinctive; the registrant is able to claim ownership in case of litigation; first to file has ownership but there is the possibility of proof of prior ownership; trademark registrations have a term of 15 years. The law is applicable to foreigners who have factories in Brazil; and also applicable to foreigners without establishments in Brazil but whose countries have diplomatic conventions which grant reciprocity to the national marks.
42. In Britain a new trademark law was also enacted in 1875 with registrations starting in 1876. In the US there was a system of registration in place by states between 1870 and 1880 (being declared unconstitutional from 1880 until 1904), but national law only came into place in 1905. Lopes and Duguid, Brands, Trademarks, chapter 1; McClure, “Trademarks and Unfair Competition”; idem, “Trademarks and Competition”; Khan and Sokoloff, “History Lessons: The Early Development.”
43. Wilkins, “The Neglected”; Chandler in Scale and Scope (1990) identifies a sequence of changes in business practices during this period – in large scale production, in the integration of professional management, and in mass marketing and distribution, which enabled new ways of packaging, branding and advertising. Chandler, Scale.
44. ‘Moreira & Cia. vs. Meuron & Cia’ Tribunal de Comércio da Bahia, (16 April 1874), 28–29.
45. Nogueira and Fischer Jr., Tratado Theórico e Prático, 26.
46. Trademark nº 1, Junta Comercial da Capital do Império – Registro das Marcas (19 November 1875), Série Indústria e Comércio 9X, IC3 [Arquivo Nacional do Rio de Janeiro].
47. Lopes and Duguid, Brands, Trademarks: chapter 1.
48. Another country which developed new trademark law around this period is Spain. Sáiz and Fernández Pérez, “Catalonian Trademarks.”
49. France remained the country with the largest number of registrations per year until the mid-twentieth century, both in total and per capita terms. Greeley, Foreign Patent and Trademark, 223; “Convention Between UK and Brazil”; Lopes and Duguid, Brands, Trademarks: 15.
50. Before then, the government had already signed some bilateral declarations to share the protection of trademarks from 1876 to 1881: the first agreement occurred with France (consolidated in the Decree nº 6,237 (21 June 1876), followed by declarations with Belgium (consolidated in the Decree nº 6,567 (8 November 1876), Germany (12 January 1877), Italy (21 July 1877), the Netherlands (27 July 1878) and Denmark (25 April 1881). Agapito de Veiga Jr. Marcas de Fabrica. Decree nº 1,628 (23 Outubro, 1875): Acordos Diplomáticos.
51. Bodenhausen, Guide to the Application; Barbosa, “Developing New Technologies.”
52. Decree nº 9,233 (28 July 1884); Nogueira and Fischer Jr. Tratado Theórico, 56.
53. Decree nº 3,346 (14 October 1887).
54. Decree nº 1,236 (24 September 1904); Nogueira and Fischer Jr., Tratado Theórico, 27, 29, 265–275.
55. The Directory launched the journal Propriedade Industrial (Industrial Property) to publicise the trademarks and patents registered, and to publish news and relevant research on the topic. Decree nº 16,264 (19 December 1923).
56. For example, for the period 1894 until 1896, while in France all the trademark applications resulted in registrations in Britain only an average of 34% of applications resulted in registrations. The relatively low number of registrations in the US is very much connected to the fact that the US Patent and Trademark Office (USPTO) took years to introduce a reliable system of categorisation for marks. In 1870 federal trademark law passed, bringing with it federal registration. Nine years after it was passed, however, the Supreme Court declared the federal law unconstitutional. A new US federal law was enacted in 1905. In the interim, however, the Patent Office continued to register marks from US firms. The 1905 law proved more robust than its predecessor, and led to a spike in trade mark registrations after which registrations continued at a significantly higher rate than during the legal ‘interregnum’ of 1880–1904. Lopes and Duguid, Brands, Trademarks, chapter 1; Preeley, “Statistics Regarding the Grant,” 242–245; Lopes, and Guimarães, “Trademarks and British Dominance.”
57. Gonçalves, Evolução das Relações Comerciais.
58. Decree nº. 1,628 (23 October 1875): articles 2, 16 and 17.
59. Dean, The Industrialization; Suzigan, Indústria Brasileira.
60. Decree nº. 5,424 (10 January 1905): article 2.
61. This convention which took place in Rio de Janeiro, focused on several topics, including the registration or deposit of drawings, and models made in the country of origin, and its applicability to the other countries of the Union. The countries participating in this Convention were: Brazil, Ecuador, Paraguay, Bolivia, Colombia, Honduras, Panama, Cuba, Peru, El Salvador, Costa Rica, Mexico, Guatemala, Uruguay, Argentina, Nicaragua, the US, and Chile. There were some exceptions as established by the Mexico Pan American Convention in 1902. A proposal was put forward for the creation of classes of trademark registrations, as a means of standardising registration procedures throughout the American continent. “Report of the Delegates of the United States.”
62. The Brazilian Industry census took place between 1905–1907. Several adverts were published in 1906 highlighting how important it is for firms to register their businesses in the census. “O Brasil em 1906,” O Fluminense (2 December 1905): 1; “Inquérito Industrial,” O Commentário 4, no.3 (Rio de Janeiro, 1906): 60; “Brazil National Exhibition,” The South American Journal and the Brazil and River Plate Mail, 64 (January–June 1908): 53 [Baker Library Historical Collections. Harvard Business School]; Wright, The Brazilian National Exposition of 1908.
63. ”Relatório do Ano de 1895,” Brasil – Ministério da Agricultura (Rio de Janeiro, 1896); “Relatório do Ano de 1907”, Ministério da Agricultura (Imprensa Nacional, 1908), 24–28.
64. IC3 (Arquivo Nacional); “Relatório do Ano 1907,” Ministério da Agricultura (Imprensa Nacional, 1908), 24–28; Bulletin Officiel de la Propriété Industrielle & Commerciale.
65. In 1895, 13 trademarks out of a total of 130 were registered by British firms. Similarly, in 1905, 35 trademarks out of 517 were registered by British firms.
66. Before then, various factors inhibited industrialisation. These included, the presence of a society historically dominated by slavery, an economy highly reliant on coffee production, legislation which redirected labour to industries considered key to the economy such as mining, a lack of local entrepreneurial skills to enable Brazilian businesses to compete with British business, the scarceness of skilled labour force, and the inadequacy of the existing transport system. Saes, “A Controvérsia sobre a Industrialização”; Furtado, Formação Económica; Baer, Industrialization and Economic Development; Leff, Underdevelopment and Development; idem, Reassessing the Obstacles to Economic Development, 57–58, 131, 133; Becket, Empires of Cotton, 169–170.
67. This investment was more prominent in other industries such as the manufacture of wheat flour. Paiva Abreu, “British Business in Brazil,” 396.
68. Summerhill, Order Against Progress; Lewis, “Railways and Industrialisation.”
69. Stein, The Brazilian, 20–21; Carone, “Selecção, Notas e Bibliografia,” 17.
70. For studies that link trademark registration activity with patents registration activity and technological innovation see for example Lopes and Guimarães, “Trademarks and British Dominance”; Helmers and Rogers, “Trademarks and Performance in UK Firms.”
71. Lopes, Global Brands.
72. See for example Jacob, The First Knowledge Economy.
73. Pearse, “Brazilian Cotton,” 30.
74. Graham, Britain at the Onset, 138; Abreu, “British Business in Brazil,” 389; Hamblock, “Report on Economic,” 310, 311.
75. Haber, “Business Enterprise.”
76. Almanak Administrativo Mercantil e Industrial do Rio de Janeiro (Laemmert, 1879), 47; idem (Laemmert, 1891), 856; Rose, Firms, 173–174. By then it was already a fully-fledged multinational with mills over 16 countries, 60 branches and 150 depots. Kim, “Coats as a Multinational”; Graham, Britain at the Onset of Modernization in Brazil, 144.
77. ”Linhas Para Coser: Empire of Thread,” Brazilian Business 39, no. 7 (July 1959), 34–35.
78. Between 1898 and 1914. J. & P. Coats was selling to the following places in Brazil: Bahia, Pernambuco, Porto Alegre, Rio de Janeiro, Rio Grande, São Paulo, Desterro, Curityba, and Para. “Ledgers for J. & P. Coats Ltd, Central Agency” (GB28/UGD/199/2), [J. & P. Coats Archives].
79. Westall, “The Competitive Environment,” 215.
80. ”Linha Coats,” Diário de Pernambuco (6 October 1879), 2; “Linha Coats Não Tem Igual,” Gazeta de Notícias (20 January 1880), 6; “Linhas Brancas de Côres da J. P. Coats,” O Libertador (11 July 1883), 4.
81. Smith & Youle appears in the Almanak Laemmert as ‘Dealer Farm Wholesale’; ‘Alfred F Youle, Admnistrador of the British Subscription Library’; ‘Agent in Rio de Janeiro’s city of the Guardian Fire and Life Assurance Co (Capital £ 2,000,000)’; ‘Agent in Rio de Janeiro’s city of the The British and Foreign Marine Co. Limited (Capital £ 1,000,000)’. Almanak Administrativo, Mercantil e Industrial do Rio de Janeiro (Laemmert, 1882), 250, 350, 657, 662.
82. ”Indicador,” Almanak Administrativo, Mercantil e Industrial do Rio de Janeiro (Laemmert, 1880), 156, 224, 818; idem (Laemmert, 1884), 783, 1,252, 1,326, 1,648; idem (Laemmert, 1885), 722, 1,468.
83. Mesquita, “A Formação Industrial,” 50–51.
84. Birchal, “O Empresário Brasileiro,” 2.
85. Monteiro, Empreendedores.
86. Apart from textiles they also traded Brazilian goods such as coffee, which they distributed through their branches in Brazil, and in various parts of Europe. “Listagem dos Negociantes Estrangeiros,” Almanak Administrativo Mercantil e Industrial do Rio de Janeiro (Laemmert, 1868), 500; “Coluna Tribunais,” O Globo (18 July 1876), 3.
87. ”Listagem dos Negociantes Estrangeiros,” Almanak Administrativo, Mercantil e Industrial do Rio de Janeiro (Laemmert, 1868), 500; idem, (Laemmert, 1880), 500; idem (Laemmert, 1885), 94; “Exportações – Embarcações Despanhadas no Porto do Rio de Janeiro,” Diário do Rio de Janeiro (20 Outubro 1869), 3; The Rio News (24 July 1882), 7; Ellison, The Cotton Trade, 250.
88. Ricci, Carniello and Dias, “British Investment in Brazil.”
89. Weid, “Estratégias Empresarais.”
90. Birchal, “O Empresário Brasileiro,” 9; O Industrial (16 November 1881), 4; The Anglo Brazilian Times (24 December 1881), 2; Gazeta de Notícias (9 January 1885), 1.
91. Monteiro, Empreendedores, 287.
92. Ibid., 36; Elizabeth von der Weid, O Fio da Meada.
93. The stock market was still under-developed. Stein, The Brazilian, chapters 3, 6.
94. Levy, A Indústria, 150, 153; Monteiro, Empreendedores, 296.
95. Garry, “Textile Markets of Brazil,” 46–47.
96. Wilkins, “The Free-standing Company.”
97. Chandler, Strategy and Structure.