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Entrepreneurship as Diplomacy: Nelson Rockefeller and the Development of the Brazilian Capital Market

  • Elizabeth A. Cobbs (a1)


This article analyzes the creation of the Fundo Crescinco, a mutual fund that Nelson Rockefeller started in Brazil in the 1950s as part of a larger effort to continue, using private means, the Good Neighbor policy of Franklin D. Roosevelt. Fundo Crescinco reflected both the liberal assumptions of many academicians of that era about the importance of the middle class to economic development and the concerns of business people about placating Latin American nationalism. The fund's history provides insight into the complex and often contradictory nature of U.S.-Latin American relations following the Second World War, and it demonstrates the limits of entrepreneurship as an extension of diplomacy.



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1 Quote cited by Rep. Lawrence H. Smith (Wisconsin) during the testimony of Nelson A. Rockefeller, Hearings before the House Committee on Foreign Affairs, International Cooperation Act of 1949 (“Point IV” Program), 81st Cong., 1st Sess., 91.

2 Packenham, Robert A., Liberal America and the Third World: Political Development Ideas and Social Science (Princeton, N.J., 1973), esp. 4–5, 199218.

3 Rosenberg, Emily S., Spreading the American Dream: American Economic and Cultural Expansion, 1890–1945 (New York, 1982), 231.

4 R.G. 59, Lot File 53D26, Office Files of the Assistant Secretary of State for Latin America, 1949–1953, Box 3, Folder “Business Advisory Council,” National Archives, Washington, D.C. Hereafter, this citation will be abbreviated as “Business Advisory Council.”

5 Butler, W. Jack, “Public Relations for Industry in Underdeveloped Countries,” Harvard Business Review 30 (Sept.–Oct. 1952): 63. For other examples of business concern about “keeping up” with government through responsible foreign investment, see (all in Harvard Business Review): J. Anthony Panuch, “A Businessman's Philosophy for Foreign Affairs” 35 (March-April 1957): 41–53; H. J. Dernburg, “Prospects for Long-Term Foreign Investment” 28 (July 1950): 41–51; M. C. Conick, “Stimulating Private Investment” 31 (Nov.–Dec., 1953): 104–12; W. Jack Butler, “Fighting Communism Overseas” 34 (July–Aug. 1956): 96–104; and Clifton R. Wharton, Jr., “Aiding the Community: A New Philosophy for Foreign Operations” 32 (March-April 1954): 64–72. Also see “Foreign Aid without Tax Dollars,” Nation's Business, July 1957, 82–88.

6 A. Thomas Taylor to Assistant Secretary of State Edward G. Miller, 19 May 1952, 1, “Business Advisory Council.”

7 Rowland, Donald W., History of the Office of the Coordinator of Inter-American Affairs (Washington, D.C., 1947).

8 Rowland, Coordinator of Inter-American Affairs, 212.

9 LaFeber, Walter, Inevitable Revolutions: The United States in Central America (New York, 1983), 90.

10 Skidmore, Thomas E., Politics in Brazil, 1930–1964: An Experiment in Democracy (New York, 1967), 70.

11 Oswaldo Aranha to Raúl Fernandes, 18 March 1947, 1–2. Fundação Getúlio Vargas (Rio de Janeiro), CPDOC, OA 47.03.18.

12 “Certificate of Incorporation,” IBEC, 1, R.G. 2, P.R.-IBEC, box 4, folder: “Certificate of Incorporation,” Rockefeller Archive Center, North Tarrytown, New York [hereafter RAC].

13 Cobbs, Elizabeth A., “Good Works at a Profit: Private Development and United States-Brazil Relations, 1945–1960” (Ph.D. diss., Stanford University, 1988).

14 Discussions concerning local financing, both public and private, were a major part of both of the technical missions that the United States and Brazil jointly sponsored in the immediate postwar period. For relevant records of the first “Joint … Technical Commission,” see Foreign Relations of the United States, 1948, 9:365–75. The “Lafer Plan,” designed to raise local capital through increases in income tax, was a major outcome of the second commission, which operated from 1951 to 1953.

15 Partners in Progress: A Report to President Truman by the International Development Advisory Board, foreword by Rockefeller, Nelson A. (New York, 1951), 84.

16 Dicionário Histórico-Biográfico Brasileiro (Rio de Janeiro, 1984), 1735.

17 Broehl, Wayne, United States Business Performance Abroad: A Case Study of the International Basic Economic Corporation (Washington, D.C., 1968), 161. Also see Howard N. Knowles to Francis Jamieson, 14 Dec. 1950, 1, R.G. 2, P.R., box 4, folder: “IBEC-Chase National Bank,” RAC.

18 Arthur Vandenberg, Jr., to Francis Jamieson, 6 July 1951, 2. Also see Howard N. Knowles to Francis Jamieson, 14 Dec. 1950, 1. The second letter attributes the inspiration for the investment firm to David Rockefeller, who, Knowles said, was “depending on NAR [Nelson A. Rockefeller] to go along with him.” R.G. 2, P.R., box 4, folder “IBEC-Chase National Bank,” RAC. For the background to Fundo Crescinco see Broehl, United States Business Performance, 160–66.

19 Broehl, United States Business Performance, 162.

20 IBEC press release, 18 July 1951, 2, R.G. 2, P.R., box 4, folder “IBEC-Chase National Bank,” RAC.

21 Broehl, United States Business Performance, 162. Cr$ = cruzeiro; the exchange rate in 1957 was 64.5 cruzeiros = one U.S. dollar; by 1963, one U.S. dollar = 600 cruzeiros.

22 Broehl, United States Business Performance, 162.

23 Interview with W. D. Bradford by Wayne Broehl, 115, Broehl Papers, box 18, folder: “Interview-Bradford,” RAC.

24 Author's interview with Richard S. Aldrich, Burlingame, Calif., 8 Jan. 1988 [hereafter, Interview with Aldrich].

25 Carter, William D., “Mutual Investment Funds,” Harvard Business Beview 27 (Nov. 1949): 716, 720–21.

26 At least one Brazilian warned Nelson Rockefeller that Interamericana had been operating “in too sophisticated a manner for the Brazilian market.” Interview with Jayme Bastian Pinto by Wayne Broehl, Rio de Janeiro, 7 July 1964, 107, Broehl Papers, box 18, folder: “Interview with Jofre, et al.,” RAC.

27 Broehl, United States Business Performance, 166.

28 Interview with Nelson Rockefeller by Wayne Broehl, 12 July 1965, 7, Broehl Papers, box 18, folder: “Interview-NAR,” RAC.

29 Author's conversation with Richard Aldrich, 4 Oct. 1988 [hereafter, Conversation with Aldrich].

30 Broehl, United States Business Performance, 166–67.

31 Quotes from Emancipação, translated by Henry Bagley for Francis Jamieson, 21 Aug. 1951, 3. Also see Bagley's letter to Jamieson of 13 Aug. 1951, recounting the opposition of the newspaper Ultima Hora and its editor, Samuel Wainer. R.G. 2, P.R., box 4, folder: “IBEC-Chase National Bank,” RAC.

32 Fred Gardner to Francis Jamieson, 19 June 1956, 1, R.G. 2, P.R., box 4, folder: “Interamericana Finance and Investment Company,” RAC.

33 Ibid. The next day Jamieson passed the letter to Rockefeller for his personal consideration. Quotes from Bagley taken from author's interview with Henry W. Bagley, New York City, 5 Aug. 1987.

34 Author's interview with Lucas Lopes, Rio de Janeiro, 16 Oct. 1986.

35 Bagley to Jamieson, 30 Jan. 1957, R.G. 2, P.R., box 12, folder: “Bagley, Jan.–Dec. 1957,” RAC.

36 Interview with Aldrich.

37 Broehl, United States Business Performance, 168–69.

38 “Publicity Survey,” 26 April 1962, 1, Broehl Papers, box 7, folder: “Funds-Brazil-2,” RAC.

39 Broehl, United States Business Performance, 171.

40 Richard Greenebaum to Philip Bauer, Jr., 12 Nov. 1959, 1–2, Broehl Papers, box 7, folder: “Funds-Brazil-2,” RAC.

41 Ibid.

42 Interview with Aldrich.

43 Broehl, United States Business Performance, 168–70. In 1962, IBEC officials estimated conservatively that the average annual return on shares in Crescinco, when all earnings were reinvested, was 29.06 percent. This figure did not reflect the adjustment for inflation, however. José Augusto Ferreira to Richard Aldrich, et al., 24 Aug. 1962, Broehl Papers, box 7, folder: “Fund-Brazil-3,” RAC.

44 Marek Lubomirski to Richard Aldrich, 22 Jan. 1964, 1, Broehl Papers, box 7, folder: “Fund-Brazil-3,” RAC.

45 Broehl, United States Business Performance, 175–79.

46 Richard Aldrich and Humberto Monteira to Marshall Humberto de Castello Branco, 18 Jan. 1965, Broehl Papere, box 7, folder, “Fund-Brazil-3,” RAC.

47 Marek Lubomirski to Richard Aldrich, 5 March 1965, 1; Richard Aldrich to Roberto Campos, 9 March 1965, 2, Broehl Papers, box 7, folder: “Fund-Brazil-3,” RAC.

48 Marek Lubomirski to Robert Purcell, 6 July 1965, Broehl Papers, box 7, folder: “Funds-Brazil-3,” RAC. Also see Lubomirski to Aldrich, 1 April 1965, same folder.

49 Broehl, United States Business Performance, 179–80.

50 Cobbs, “Good Works at a Profit,” 130–34.

51 Interview with Aldrich; see also Hearings, Senate Committee on Rules and Administration, Nomination of Nelson A. Rockefeller of New York to be Vice President of the United States (Washington, D.C., 1974), 544.

52 A search for further data on Aldrich's CIA connection is presently under way by the author on the basis of the Freedom of Information Act.

53 Broehl, United States Business Performance, 201.

54 Conversation with Aldrich; conversation with Rodman Rockefeller, 4 Oct. 1988.

55 The records of IBEC are housed at the Rockefeller Archive Center, which has yet to process them or the complementary records of Wayne Broehl, which contain a variety of key documents lent to him at the time of his study. Since both of these extensive collections are in neither chronological nor topical order, the researcher is limited in arriving at a precise financial analysis.

56 Information from IBEC's “preliminary prospectus” for the sale of common stock, “Registration Statement under the Securities Act of 1933,” Securities and Exchange Commission, Washington, D.C., Jan. 1970, 17, 20, and 24. Copy obtained from Walther Moreira Salles.

57 Dicionário Histórico-Biográfico Brasileiro, 3046–48. Quote from interview with Walther Moreira Salles, Rio de Janeiro, 19 Nov. 1986.

58 Broehl, interview with Bradford, 7–8, Broehl Papers, box 18, folder: “Interview-Bradford,” RAC.

59 Financial estimated calculated by Broehl, United States Business Performance, 201.

60 Author's interview with Rodman Rockefeller, New York City, 4 Aug. 1987.

61 Conversations with Aldrich and Rockefeller.

62 Interview with Lucas Lopes; interview with Paulo Pereira Lira, Rio de Janeiro, 27 Oct. 1986.

63 Hans Horch to Richard Aldrich, 20 Aug. 1960, and B. David Lanes to Hans Horch and Marek Lubomirski, 25 March 1965, Broehl Papers, box 7, folders (respectively): “Funds-Brazil-2” and “Funds-Brazil-3,” RAC.

64 Robock, Stefan H., Brazil: A Study in Development Progress (Lexington, Mass., 1975), 122.

65 The Economist Intelligence Unit, Country Profile: Brazil, 1987–88 (London, 1987), 4445.

66 See, for example, the New Alternatives Fund, the Pax World Fund, and the Dreyfus Third Century Fund. According to columnist David Horowitz, mutual funds wield “tremendous power” in financial markets, which many “investors want to see used to promote peace, protect the environment and enhance the quality of life.” San Diego Union, 12 Jan. 1987, D:3.

67 Nelson Rockefeller to John D. Rockefeller, Jr., 6 Sept. 1946, 1, R.G. 2, Economic Interests, AIA, box 1, folder 4, RAC.

68 See Business Week, 10 Sept. 1955, 27 April 1957, and 4 Feb. 1967.

69 Cited by Broehl, United States Business Performance, 277.

70 John D. Rockefeller, Jr., to Nelson Rockefeller, 24 Feb. 1950, 1, R.G. 2, Economic Interests, IBEC, box 2, folder 8, RAC.

71 Broehl, United States Business Performance, 57–74; Cobbs, “Good Works at a Profit,” 211–25.

72 Interview with Aldrich.

73 Interviews with Lira, Moreira Salles, Oswaldo Gudolle Aranha (Rio de Janeiro, 14 Nov. 1986), Roberto Campos (Rio de Janeiro, 13 Oct. 1986), Alzira Vargas (Rio de Janeiro, 18 Nov. 1986).

74 Interview with Aranha. Aranha, son of Brazil's foremost twentieth-century diplomat, is a prominent businessman in Rio who knew Rockefeller in both his official U.S. capacities and his role as entrepreneur.

75 See Cobbs, “Good Works at a Profit,” for a comparison of government and private development efforts.


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