[Palácio do Catete, Brazil – 5:37PM, 28th of October, 1930]
As I walked up the steps of what was, for the moment, the centre of government of Brazil, I could not help feeling slightly tense even though this was not my first time here because these were not ordinary circumstances.
There were soldiers everywhere.
Not the ceremonial sort one occasionally encountered around government buildings, standing stiffly in uniforms and pretending not to notice the tourists. These men had rifles. They watched everyone who entered. Their faces were hard, their movements abrupt, and there was a palpable tension in the air which I could almost taste.
It was not directed at me. The killing intent was simply there, everywhere.
These men had marched into this palace two or three days ago and overthrown the President of Brazil. They had, quite literally, just participated in a revolution. Naturally they were on edge.
I told myself this several times as I walked inside, but it did not help. In hindsight, this was probably the dumbest fucking thing I had ever done in either life.
It would probably not remain so forever, but in this moment, it held that distinction.
I was about to ask three Brazilian military officers who had just overthrown their government not to do the thing they had already decided to do.
I chuckled to myself. that there are easier ways to spend an afternoon.
I was eventually brought before the three men who now, however temporarily, held Brazil in their hands.
General Augusto Tasso Fragoso, General João de Deus Mena Barreto and Admiral José Isaías de Noronha, who was head of the Brazilian Navy.
I knew enough about all three to understand that none of them had overthrown the Republic because they had suddenly decided that they personally ought to rule Brazil. They had become convinced that the existing political system was collapsing and that if the army did not intervene now while they still had nominal control, the country would break out into civil war.
They had intervened and arrested the president after he refused to resign, and now they intended to hand power to Getúlio Vargas.
That, of course, was why I was there.
I shook hands with one of the generals. He said something in English, heavily accented and rather broken. "I am very interested as to why one such as yourself wishes to meet with us."
I took my seat when it was gestured towards.
"Gentlemen, I know that you intend to hand power to Vargas." There was a moment of silence at my words. "I also understand why you will not simply return power to Congress. The Congress you would be returning it to is part of the system you have just overthrown. You would be removing one president and restoring the machinery which produced him."
Fragoso nodded slowly and said as he featured to the trio. "That is broadly our view."
"I thought it might be," I said as I opened the folder I had brought with me. "I represent several commercial interests, and there is a matter which I believe you ought to know before you make your final decision."
I paused before speaking. "We have found oil."
That got their attention.
'Found' is perhaps an imprecise word since I knew where to look, sent people to look, and boom, they struck oil. But like, a little white lie was nebulous.
I proceeded to explain what we knew of the Campos region, the size of the deposits we believed existed and, more importantly, what would be required to exploit them.
"The difficulty is not finding oil. The difficulty is getting it out of the ground in sufficient quantities to matter. Campos is remote. The infrastructure is poor. It would require drilling equipment, transport, storage, pipelines, refineries, port facilities, trained engineers and an enormous amount of capital, none of which Brazil presently possesses."
"No," one of them said after a few seconds of thought.
I turned a page and spoke. "We are prepared to invest the necessary capital ourselves. Not merely to extract the crude, but to construct refineries in Brazil, build the necessary pipelines and storage facilities, and establish export terminals. We believe the deposits are sufficiently large to supply the Brazilian domestic market and potentially provide a substantial export industry besides."
Mena Barreto looked at the papers.
"And what would you want in return?"
I leaned back. "I am not asking for a monopoly, nor am I asking for permanent control of the fields, and I am definitely not asking Brazil to surrender its sovereignty. For the first ten years, we would propose a fifty-fifty division of profits."
There was some discussion between them.
"After that," I continued, "the Brazilian government's share would increase by five per cent each year until, ultimately, ninety-five per cent of the profits went to Brazil and five per cent to us."
That produced considerably more silence. "And you would accept this?"
For the time period, this was stupidly generous.
"Furthermore," I continued, "we would be willing to make a substantial advance to the Brazilian government. One in the realm of seventy million pounds."
Thanks to Morgan. I had a substantial amount of cash lying around at the moment since the full effects of the depression were still rippling. Might as well use it.
I closed the folder in an attempt to speak frankly, "Brazil needs to industrialise. Properly. Not simply by having a few factories in Rio and São Paulo while the rest of the country remains economically disconnected from them. You need roads. Railways. Ports. Electricity. Machinery. Fuel. You need a domestic market large enough to support domestic industry. And on top of this, if you create massive public works to build these things, you will also stem the tide of unemployment until the rest of the world starts buying your agricultural goods again."
"To be clear, if the Revolution had never happened, I still would have invested in the oil. I just wouldn't have offered the advance because the government would have spent most of it on meaningless corruption." They nodded, since that was true enough.
One of them then asked, "But you have concerns about Vargas."
I took a breath. "Yes." That was, technically, also true. "I am becoming concerned about some of the rhetoric coming from Vargas and those around him. There is uncertainty regarding the security of foreign investment under his government. I am not asking you to give me special privileges. I am perfectly willing to operate under Brazilian law. I will obey whatever regulatory framework a legitimate Brazilian government establishes." I said while I looked directly at Fragoso. "But we need to know that the framework will still exist in ten years."
He considered that. "Do you believe Vargas would confiscate your investments?"
I said it immediately after sighing, "I have no evidence that he intends to do so."
That was important. "I am saying something much narrower. I am willing to accept commercial risk. I am willing to accept that an oilfield might produce less than expected. I am willing to accept that a refinery might lose money. I am willing to accept that an investment might fail. I am even willing to accept a partisan blowing some of it up."
I folded my hands. "What I cannot accept is spending ten years building something only for a government to decide that it would prefer to own it."
Nobody spoke for a moment. Then Fragoso asked me a question which I had been hoping he would ask. "If not Vargas, then who?"
I smiled slightly. "That is precisely the problem."
We talked for much longer than I had expected.
It stopped being a negotiation after a while.
We discussed industrialisation. Agriculture. Foreign capital. Roads. Railways. The enormous distances between Brazilian cities. The mountains and rivers that effectively divided parts of the country from one another. The absurdity of attempting to build a modern industrial economy without first creating the infrastructure necessary to move goods, people and energy around it.
At one point, one of the generals asked me directly what I thought Brazil needed politically.
I didn't even have to consider my answer, "A democracy."
That surprised them.
"Then why," one of them asked, "are you asking us to retain control?"
"Because democracy is not created merely by declaring one." I looked at them before continuing, "A democracy is an institution. Institutions have to be built. Laws have to be enforceable. Courts have to be capable of resisting political pressure. Elections have to mean something. Governments have to be capable of losing power without the country collapsing. The military has to accept civilian government. Civilian government has to be strong enough that the military does not need to rescue it every few years."
I paused for dramatic effect and then said, "You cannot simply put the old machinery back together and call it a republic."
I told them what I honestly believed. "If I were in your position, I would retain control temporarily. Not because I believe military government is inherently desirable. Quite the opposite. I believe it is detrimental for the most part. But you have inherited a country in which the institutions necessary to sustain the democracy you want do not exist."
I could see that they were listening. "You would need to build them and then give the country back. For five years. Ten. Perhaps longer. I cannot tell you. But the objective must be the same from the beginning: build a republic which can survive without you."
I could see the objection forming before it was spoken. "And who decides when that has happened?"
These were not power-hungry men. They were patriots. I knew historically they would hand power to Vargas because they believed it was best for Brazil. I almost had them. I could feel it.
"That," I said, "is precisely why you should consult people who understand these things better than any of us."
I told them they should bring constitutional scholars, political scientists, jurists, economists and statesmen from Brazil as well as abroad. They should study constitutions which had succeeded and constitutions which had failed. They should deliberately look for ways their new institutions could be captured.
"Because people will try." I counted them off almost without thinking. "The southern oligarchs will resist you. Vargas will resist you. The old political machines will resist you. Foreign interests will attempt to influence you. Domestic interests will attempt to influence you. Some will offer money. Some will offer votes. Some will offer violence."
I looked at the three men. "You will have to fight them." There was a long silence.
"And if we do this?" Fragoso finally asked.
I said it plainly. "You will be hated. Whether it be by Vargas's supporters, by the old politicians, or by men who believe you have stolen their revolution, or by people who will simply look at three generals who took power and conclude that you are dictators."
I paused. "You will have stolen Vargas's chance. In fact, his hatred for you will be the most intense of all. After all, a man can rationalise not having something that he was never going to get, but I am asking you to take absolute power from his grasp days before he gets it. He will never forgive you."
Nobody moved. "You will bring more war to Brazil. The southern states will rebel. The oligarchs will attempt to restore their power. You may have to put down those rebellions brutally. People will die. People will hate you for the rest of their lives."
I looked down at my hands. "And perhaps history will hate you as well."
That seemed to weigh on them, and I continued more quietly. "But I am not asking you to do this because I want you to be heroes. I am asking you because you have already taken responsibility for Brazil's future. You cannot now pretend that handing the country to Vargas makes that responsibility disappear."
Nobody answered. The conversation continued for what felt like hours. Eventually, there was nothing more to say. They thanked me for coming and said they would consider what I had said.
They would discuss it among themselves.
I shook their hands again and left.
I almost felt sorry for them; it almost seemed like I had put a million tonnes on their shoulders. In fact, I almost felt a spark of kinship with them because of that.
Walking back through the corridors, I found the soldiers just as tense as they had been when I arrived. I wondered briefly whether they knew how close their country might be to another war.
Then I wondered whether anyone did. The truth was that I had no great personal investment in whether the generals listened to me. If they gave Brazil to Vargas, then they gave Brazil to Vargas.
It was not my country. I had made my argument because I believed Brazil becoming stronger would be good for Britain and because I believed that a prosperous Brazil would ultimately be better for everyone involved.
If Vargas came to power, I would just have to help Brazil later.
If the generals did and let me help sooner, excellent.
And that was moreso why I took this risk; after all, I can't reach high without aiming for it.