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Southern Exposure: Canadian Promoters in Latin America and the Caribbean, 1896-1930.

Southern Exposure: Canadian Promoters in Latin America and the Caribbean, 1896-1930 This splendid study of the tapestry of international finance and international business is a major contribution to the growing archives-based literature on the history of multinational enterprise. In Montreal and Toronto a small financial elite established important public utilities in Latin America. How and why they did so is the subject matter of this book. Yet, this work is not on a bilateral association; Americans, British, Belgians, Germans, and Swiss join the Canadians as actors in this beautifully presented complex tale. Indeed, the leading figure in the development of Latin American public utilities (until he drowned in 1915 with the sinking of the Lusitania) was not a Canadian, but an American engineer-promoter, Fred Stark Pearson. The other principal insiders were Canadians, and the companies were all domiciled, headquartered, and incorporated in Canada, where the laxity (or flexibility) of Canadian law made it possible to keep secrets and arrange rewards for the insiders.

The West India Electric Company--set up in 1897 to do business in Kingston, Jamaica--was the first utility chartered in Canada specifically for operations overseas. Canadian entrepreneurs soon became participants in British Guiana, Cuba, Trinidad, and Puerto Rico. Nowhere, however, were the Canadians more significant than in Brazil; their activities in Brazil led to sizable ones in Mexico. The largest part of this book traces the course of the formidable hydroelectric power undertakings first in Brazil and then in Mexico.

The Sao Paulo Tramway, Light & Power Company was formed in 1899 in Canada to do business in Brazil. Christopher Armstrong and H. V. Nelles tell of the firm's origins, of the separate ventures in Rio de Janeiro, of the buying out of already existing American, Belgian, and German companies, and of the merger of the Canadians' Sao Paulo and Rio utilities into Brazilian Traction, Light and Power Company (incorporated in Canada in 1912). Brazilian Traction was the enterprise that eventually became Brascan (which sold its vast public utilities properties to the Brazilian government in 1978). In Mexico the principal Canadian companies were Mexico Tramways Company and its affiliate Mexican Light and Power Company.

Very early, the Canadians realized that there was inadequate capital available in their country to finance these giant projects. They thus turned to European capital markets. The story of Canadian-born Jimmy Dunn, who went to London in 1905 and moved there permanently in 1907 to tap European capital markets, is wonderfully told. Dunn had an inner circle in the City that could supply the Canadian-based Brazilian and Mexican public utilities with British capital. In that group was the Scot Robert Fleming, a towering figure in North American finance. Dunn and his partner (C. L. Fischer, a Swiss merchant banker) developed close contacts with Alfred Loewenstein of Brussels, and Belgian capital was also brought in for financing the Latin American operations. So, too, did the Deutsche Bank play a role. Pearson also involved the Canadians in Spanish utilities.

Armstrong and Nelles describe the problems of doing business in Brazil and Mexico in the context of the political and economic changes in the first third of the twentieth century. They deal with diplomatic history as well as with domestic Brazilian and Mexican events. An appendix gives (with all the proper and necessary qualifications) financial statements on the Brazilian and Mexican public utilities. Since new capital was always needed for these ventures, the trans-Atlantic contacts remained imperative throughout. It is very difficult to write about such complex multinational interrelationships, and Armstrong and Nelles are to be congratulated on their skill in presenting this material in a readable and always coherent manner.

My criticisms are few. One is on the information about Canadian-born Edward Peacock who, according to Barings' historians (John Orbell, Baring Brothers & Co., Limited, 1985, and Philip Ziegler, The Sixth Great Power, 1988), moved to London to manage the European affairs of Dominion Securities in 1907; Peacock did not become a Barings director (partner) until 1924. In the interim, he had impressed the men at Barings with his skill (especially after the 1915 death of Pearson) in handling the very utilities about which Armstrong and Nelles are writing. Many of Peacock's activities that Armstrong and Nelles so well describe occurred before he joined Baring Brothers. Armstrong and Nelles tell us that Peacock stepped down as chairman of the board of Mexican Light and Power in 1926; they do not tell us when he became chairman. Likewise, Peacock is given as a director of Brazilian Traction in 1926; we do not know his tenure. In short, more attention could be paid to Peacock's role.

A second criticism relates to the Canadians' links with Robert Fleming & Co. and with Sperling & Co. in the 1920s. These two London houses seem to have provided crucial aid to the Canadians before the First World War; then, without explanation, they drop out of the narrative. The 1920s are not short-changed in this volume, however; the Brazilian and Mexican material for the 1920s are fine, and the data on Loewenstein and Dannie Heineman--on the Belgian role in financial manipulations--is wonderful. We need more on the London merchant banks in the 1920s.

My criticisms are few, for this is business history at its best. It should be required reading for all students of Canadian economic and business history, since it tells a great deal about the industrial structure of the Canadian economy, about promoters and managers, and about service-sector activities. It should also be required reading for those interested in U.S., British, continental European, and Latin American economic and business history. Each set of readers will gain new insights from this marvelous volume on the world economy in the first three decades of the twentieth century.

Mira Wilkins is professor of economics at Florida International University. She has been doing research on the history of multinational enterprise for more than thirty years and has recently published The History of Foreign Investment in the United States to 1914 (1989), which included material on Canadian business and finance in the United States. She is currently doing research on the history of foreign investment in the United States from 1914 to the present.
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Author:Wilkins, Mira
Publication:Business History Review
Article Type:Book Review
Date:Mar 22, 1990
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