The Bumblebee

After World War II, Blacksmith Henrique Pedro de Sanson expanded his Rio shop to make boiler tanks. In 1950 he went into oil-storage tanks, in 1956 into specialized truck bodies--dump trucks, asphalt spreaders, tank trailers. "Business has increased 300% to 400% every year since I started," says Millionaire Sanson. Along with 39,892 other businesses (quadrupled since 1946), San-son's enterprise is riding a boom that has kited Brazil's gross national product up 63% in the past ten years, has boosted the per capita G.N.P. 29%--allowing for a population explosion from 48,348,000 to 62,725,000.

As business booms for Sanson and his brother builders, conservative economists gloom over the facts and figures of what seems to promise serious economic trouble. The cost of living has vaulted 365% since 1948, 27% in the past two years. More than 120 billion cruzeiros, each worth four-fifths of a cent at the free-exchange rate, are bursting pocketbooks (v. only 20.5 billion, each worth 5.4-c-, ten years ago). From a $248 million foreign-trade gain in 1956, Brazil plummeted into a $97 million loss in 1957, a $166 million loss in 1958. Loan interest, loan repayments and massive installments on long-term debts this year will take a $338 million bite out of foreign exchange. Budget deficits were $214 million last year, $230 million the year before.

Nothing to Lose. Some Brazilians like to think that Brazil has stumbled onto some miracle of economic alchemy. "It is like the bumblebee," says Publisher Manuel de Vasconcelos. "According to the laws of aerodynamics, the bumblebee cannot fly. But the bumblebee ignores the law, and flies anyway." Deliberately, President Juscelino Kubitschek ignores usual standards of fiscal stability and gambles instead on a revolution of development. "Fifty years of progress in five," he promises.

Brazil had little to lose in the try. Roughly equal in size to the U.S., it was still a poor, nonindustrial, coffee-based country after World War II. Now Brazil has a spreading highway net, modernized railroads, more than $1 billion worth of new power dams, improved port facilities, even a $100 million new capital in the interior--Brasilia--that focuses the nation's eyes on the untapped west. Along with this public investment, a private industrial giant has grown up at the lively pace of the sambas that are played in some factories to keep production hopping. Samples:

P:Auto production went from zero in 1955 to 66,316 vehicles last year, is shooting for 110,000.this year and 274,000 by 1961--90% made-in-Brazil by weight and 95% by value.

P:Heavy-industry facilities grew up to produce turret lathes, 50,000-kw. generators, 100-ton forgings. Tin and aluminum refineries have sprung up.

P:Steel output, 1,150,000 tons in 1955, rose to 1,500,000 tons last year on the way to a predicted 1962 total of 3,500,000.

P:An appliance industry that scarcely existed in 1955 last year turned out 21,000 vacuum cleaners, 50,000 washing machines. 135,000 floor waxers, 150,000 television sets, 200,000 refrigerators, 300,000 electric mixers, 631,000 sewing machines, 660,000 radios.

Fingers Crossed. The economics of the Brazilian boom is basically a crossed-fingers gamble. The government's . development money comes from the printing press, bringing successively in its train 1) a wave of inflation, 2) the expectable labor rebellion at high living costs, 3) catch-up wage increases, 4) devaluation of the currency abroad. But the basic plant and the factories that get built tend, in the process, to stem inflation--hopefully--by increasing the best inflation stemmer there is, productivity.

"Brazil cannot halt," says Kubitschek.

"Brazil's most urgent need now is to halt," says worried former Finance Minister Jose Maria Whitaker. The net of government policy, shuttling between these poles, is a spending philosophy tempered by periodic, half-successful efforts at cutting the budget deficit, holding down imports, juggling wages, prices, exchange rates. For the inevitable gap between income and outgo, Kubitschek counts on U.S. loans (which Brazil always pays back on schedule). Last year he got $600 million in aid. Last week negotiations were under way in Washington and Rio for a new aid package of as much as $300 million.

In any other South American nation, odds against Kubitschek's gamble's paying off would scare away foreign support. But Brazil, backed by some of the richest untapped resources in the world, may bring it off. In the past four years $1,784,000,000 in private foreign capital--including 23% of all West Germany's investments abroad--has moved to Brazil in the conviction that the prospects are good.

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