Horizontes do Brasil and the Potential of Rubber (Dom Luís's Perspective)
After consulting the Horizontes do Brasil intendant following the capture of Prince Don Juan José de Austria, Dom Luís tried to sum up Horizontes do Brasil and the potential of rubber.
It all began in Carrasqueira, when João spoke to him about going to Brazil. An intuition had first diverted the dream towards the Indies, and they became excellent pirates.
What followed, despite unexpected and surprising successes, took a more tragic turn.
Then, it was reborn: in the Lisbon market square, a melting bullet, at least in part, solidified an intuition: gunpowder, and eventually: rubber.
Obtaining the sesmaria (land grant) was quite easy, and through unprecedented logistical prowess, a lot of luck, with the precious help of indigenous populations and abundant labor, Horizontes do Brasil undertook the transplantation of 150,000 rubber trees to inland areas closer to Salvador de Bahia. This daring initiative, a true semi-plantation ahead of its time, guaranteed a stable supply and yields of approximately 1 to 2 kg of liquid latex per tree per year, exceptional for the era. The company then continued to increase the size of its plantations, reaching 250,000 trees, and supplemented its supply through purchases from indigenous populations.
The cost price of this unique material was meticulously calculated. For one kilogram of vulcanized rubber ready to be sold on the European market, Horizontes do Brasil had to pay approximately 4.35 cruzados. This cost included:
Direct production cost of dried rubber in Brazil (0.25 cruzados/kg). Brazilian export tax (0.10 cruzados/kg). The perilous and costly transatlantic freight to Lisbon (around 1.75 cruzados/kg). Import tax in Lisbon (0.25 cruzados/kg). And the core of the added value: the cost of vulcanization and shaping in Lisbon, estimated at 2.00 cruzados/kg.
Initially, the European market enthusiastically welcomed vulcanized rubber. Its unprecedented properties allowed it to command high prices, enabling Horizontes do Brasil to generate extraordinary annual added value, far beyond what spices or even gold could offer. To achieve a net profit target of one million cruzados, the selling price of vulcanized rubber in Europe had to be around 12.47 cruzados per kilo.
This price level gave it the status of a luxury niche product, like cinnamon, targeting a very specific clientele: the aristocracy, the high bourgeoisie, and, to some extent, the armies. For military buyers, despite a final price that could exceed 10-12 cruzados/kg for a foreign purchaser (including Portuguese export taxes, freight, and import taxes in their own country), rubber offered unparalleled strategic advantages: perfectly waterproof equipment for gunpowder, tents, and officers' uniforms, artillery seals, or rudimentary inflatable pontoons. These vital applications justified investment, but in very limited quantities.
However, the novelty effect began to fade in Europe. The market, though lucrative, showed signs of saturation for these production volumes and at these prices. Increasing production to lower costs to reach a selling price of about 8.72 cruzados/kg to maintain the same net profit of one million cruzados annually would allow access to broader military markets. But even at this price, the European market would remain segmented by cost, unable to absorb new volumes while maintaining such comfortable margins.
This is where the "Captain's flair" struck again: the European niche markets, though profitable, were insufficient for the ambitious needs of a Santa Catarina colony that was breaking development records. The inherent costs of extraction and processing limited expansion potential in the West. That's why "the Captain," constantly under attack from the VOC on our merchant ships bound for Cathay and India, turned eastward, towards the markets of the Indies and China, not primarily to acquire new wealth, but to sell our "Brazilian cinnamon" (rubber) at prices Europe could no longer sustain.
Despite the additional transportation costs from Lisbon to Macao (estimated between 3 and 5 cruzados/kg), the Asian potential was dizzying. In Imperial China, where novelty, exoticism, and unique properties are revered as divine treasures (like jade), vulcanized rubber could fetch astronomical prices, from 40 to 100 cruzados per kilo and more. These margins, far exceeding anything Europe could offer, explain the magnitude of the risks he made us all take in the Indies!
For Horizontes do Brasil, Asia wasn't just an outlet: it was the market for "Brazilian cinnamon," and with exceptional profits!
Luís sighed, as if tired, then inspiration struck him again: he had to go visit Diogo; business was about to pick up even more in Asia.
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March-April 1663: Gold Ignites on the African Coast
The African wind carried not only sand, but already the smell of gunpowder. The Gold Coast (future Ghana)...
Before London officially declared the inevitable, England had already unleashed its hawks on the Dutch trading posts on the Gold Coast. Their man, Admiral Robert Holmes, had not come to parley. He was a predator, and his ships were hungry beasts. Charles II's order was clear: break the Dutch monopoly on gold and slaves, no matter the cost.
Holmes wasted no time with pleasantries. He struck fast, where Holland was weak. His squadron sought not a major naval battle, but surprise and paralysis. The small, isolated trading posts and lodges along the coast, weakly defended, were the first targets. Lightning landings, brutal raids. Their reserves were seized, their communications cut, panic sown. These were the first drops of blood, the prelude to the hemorrhage.
Then, the English aimed higher. Fort Amsterdam at Cormantin was next on the list. Less imposing than the giant Elmina, but strategic. Holmes shelled it from the sea, while his troops, bolstered by allied African tribes who saw an opportunity to free themselves from the Dutch yoke, swarmed ashore. It was a short, merciless fight. The Dutch garrison, surprised and overwhelmed, could only surrender. The flag of Saint George rose on the mast, a bloody affront to Amsterdam.
Other posts fell like dominoes: Tetra (Takoradi) and other key trading points. Each captured fort was a new base for the English, a knife in the Dutch flank, cutting their routes, seizing their gold and slave convoys.
The final blow on this coast came with the capture of Cape Coast Castle. Less impregnable than the Spanish fortresses, but a vital heart of Dutch trade. Holmes concentrated his firepower on its walls. The bombardment was incessant, a rain of iron that shook the ground.
The English and their African allies launched the final assault, determined to break through. The Dutch garrison fought with the energy of desperation, but no reinforcements would come. Exhausted, isolated, it finally capitulated.
The English flag now flew over Cape Coast. It was a resounding victory, a demonstration of force that would shake the halls of Amsterdam as much as the loss of Ceylon.
These blows struck on the Gold Coast, combined with the fall of New Amsterdam,
The Dutch, for their part, were furious. Their local commanders improvised, but the English tide was too strong. Urgent messages flew to Amsterdam: massive reinforcements were needed, and fast! Their profits were collapsing, their prestige in tatters.
Yes, the war began long before the speeches. It began with the roar of cannons and blood spilled on the beaches of Africa. That's where England showed its fangs, where England had decided to show them even before the VOC's loss of Ceylon.
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For a Reasoned Mercantilism, Beyond the Illusions of Monopoly (by Dom Luís)
The Golden Trap of Monopolies: The Illusion of Absolute Wealth
Yes, gentlemen, the idea of monopoly is appealing. It promises infinite profits, absolute control over markets, the guarantee of inexhaustible wealth for the Nation that holds it. It conjures the image of a bottomless chest, filled with the gold and silver of the entire world. Our neighbors, particularly the Dutch, through fervent commercial ultra-nationalism, strive to build such fortresses of exclusion in Asia, believing they can ensure eternal dominance.
But allow me a question, as simple as common sense: what good is a treasure if no one is there to buy it? What good is absolute monopoly over the rarest spices, the finest silk, or the purest gold, if you no longer have customers to acquire them?
Monopoly, pushed to its extreme, leads to strangulation. It encourages market saturation, where the abundance of a commodity under the control of a single seller drives prices so low that it destroys profitability. We have seen it, and recent history is full of examples: nations have been forced, by the folly of this logic, to destroy entire harvests, to throw precious cargo into the depths of the ocean, not due to lack of demand, but from the artificial necessity of maintaining artificially high prices. This is against Providence, and an absurd destruction of the wealth God grants. "Loss sales," or worse, these "cargo losses" due to planned oversupply, are the very proof of the failure of narrow-minded thinking.
Beyond Bullionism: Solvency as Real Wealth
The true wealth of a Nation is not measured solely by the gold it hoards, but by the solvency of its customers and the vitality of its markets, both domestic and foreign.
A bit like Dom João de Carrasca often says: "A king's wealth, even without coin, is greater than that of the richest merchant." A king can mobilize a nation, a people, even several; a merchant cannot.
Creating Solvent Customers: To sell our products, our spices, our textiles, and tomorrow our revolutionary rubber, we need buyers capable of paying. How do we create them? By investing in others. By allowing them to enrich themselves in turn through their own production and exports. This may seem paradoxical to minds confined by the "zero-sum game" dogma, but it is the path to shared and sustainable prosperity.
The Role of Bankers and Credit: This new idea would encourage bankers not to hoard or demand usurious rates on scarce capital, but to lower their interest rates. Why? Because credit invested in the development of partner nations (or even competing but complementary industries) inevitably returns as purchasing power for our own products, and even military power: imagine an innovation that changes future wars; a country can equip its entire army with these revolutionary weapons in one year, and no other can, because it takes three, four years? 10 years? to build these new weapons. It is a virtuous cycle that avoids "bankruptcies" due to overproduction and encourages the development of domestic markets, and by extension, the development of increasingly vast and demanding foreign markets.
The Cruel Lesson of History: The Fate of Exclusive Monopolies
Let us look at Spain, whose power made Europe tremble and whose galleons brought gold and silver from the newly discovered Americas in an uninterrupted flow. Certainly, it inspired dreams, just as Portugal did when our own Indian expeditions opened the way to the spices and riches of the East. Has not this monopolistic influx, both Portuguese and Spanish, paradoxically led these two countries to repeated bankruptcies? Gold came in, but it flowed out just as quickly to pay for distant wars, debts contracted at exorbitant rates, and a languishing domestic production, unable to compete with foreign products, even in their own colonies.
Yes, my dear colleagues, Portugal has experienced bankruptcies! Despite the fabulous wealth of its trading posts and its Indian trade, our Crown was forced to suspend payments and renegotiate its debts several times over the past two centuries. This was the case during the reign of Philip II (who was also King of Portugal), with payment suspensions in 1575 and 1596, and persistent financial difficulties even after our restoration in 1640.
The reasons were manifold: the exorbitant cost of defending a distant empire, European wars, inefficient tax collection, and most of all, an economy that, gorged on easy colonial revenues, did not sufficiently invest in its own manufacturing or agricultural production.
The "monopoly" blinded nations, like a veil over their eyes, to use a biblical quote, to affirm the necessity of diversifying and investing in the very nation and its people, and later abroad.
The Imperative of Opening New Markets: The Path to Real Prosperity
The opening of new markets is therefore an obligation for any European nation that aspires to lasting prosperity.
Why? Because products sold in Europe are often paid for in gold or silver, and thus, every European country that monopolizes renewable resources, such as spices that grow every year, or timber, or textiles, through this very act, leads to a continuous impoverishment of all other nations that can no longer buy or sell these same products, and thus renders the monopolizer's "wealth" close to worthless, making them poor, perhaps with a pile of gold, but poor nonetheless. It is a perpetual bleeding of wealth, which can only lead to general poverty, and ultimately, to markets unable to buy anything from us.
Some limit themselves, through obstinate commercial ultra-nationalism (I am thinking of the Dutch, although they are brave sailors), to national monopolies that they will have to spend fortunes to maintain without having cultivated what made those fortunes.
But what is conquered by force without the force of the market and reciprocity, will sooner or later be lost: for it is like spending 2 coins to gain only one. History, time and again, proves this to us.
Nations must not fall into this trap. Rather, our future must be to open up, to cultivate clientele, to trade intelligently with everyone, including our rivals, because a rich Europe is a Europe that sells and buys. A prosperous Asia is an Asia that sells to us and buys from us.
True wealth, gentlemen, is in the flow, not in stagnant treasure.
It is in the ability to create demand, not to stifle it. It is in the discernment of knowing when an iron fist is necessary to protect what is unique and vital, and when an open hand is the path to mutual enrichment.
This is the path of reasoned mercantilism, and the promise of lasting greatness for our Portugal, and for every nation and people.
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João lifted his head, looking intently at Luís. "Well, that... yeah!! That's exactly it!!!"
Luís squinted his eyes: "I was thinking about the dam on our Algarve lands, did you know our 'customers' buy more ready-made clothes than anywhere else?"
"Oh no... but what I do know is that I got chewed out because we're not applying any 'mill tax,',nor the feudal trade tax, that it's setting a dangerous precedent, that it's supposedly not good for the future, especially coming from a marquis..."
"Precisely..."
"So you want to publish it? With the 'marquis approved' label, maybe it will reach a wider audience?"
"Yeah: approved by the marquis who single-handedly conquered Ceylon."
"Hahahaha... No, you don't think that's funny?"
"Yes, but I know you: you're laughing because it's nonsense, because it's the team, and you're probably thinking down to the smallest cabin boy in the crew."
"Oh yeah, you have that problem too..." João sighed... "Anyway, it could reach illustrious mercantilists, who knows, maybe even this new movement..."
"The humanists?"
"Yes, that's it... Still, even for them, the 'marquis approves' label holds a lot of interest for this pamphlet; it's still almost an obligation to reach them."
"Still far from your 'work with' dream?"
"At least it would probably bring us closer."
"Yeah, so let's publish it with (Luís adopts the posture learned at the nobles' school): 'With the keen interest of Dom João de Carrasca, Marquês de Carrasca'."
Luís thought: ah, all that has to be done to achieve dreams...
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August 1663
João visited some of the English mercenaries he had hired and paid for three years upfront,iwith all the crew, while negotiations had already begun with Madrid.
"By the way, please excuse my ignorance on this matter, but what was the reason for this civil war in England before Charles II's arrival?"
The mercenaries spoke one after another:
"You want to know, Marquês? There isn't one reason, but a Gordian knot of bitterness and faith. We didn't take up arms for the pleasure of shedding English blood, but because the King, Charles I, betrayed the trust of the country, of God, and of his Parliament."
"King Charles believed in the Divine Right of Kings, Marquês. For him, his word was law, above any Parliament. He even ruled without Parliament for eleven years! He levied taxes as he pleased, like the famous 'Ship Money,' even on inland lands, without our consent. For us, that was tyranny, an infringement on our ancestral liberties, those of the Magna Carta itself."
"The New Model Army was forged by Parliament. We fought for Parliament to have a say in laws, in taxes, and so that it couldn't be ignored by the King."
"Charles had married a French Papist, Henrietta Maria, and he leaned towards 'Popish' (Catholic) practices within the Church of England, with his Archbishop Laud. Rituals, decorations, sermons that smelled of Rome's sulfur to us, Puritans. We feared he wanted to drag us back under the Pope's yoke, Captain!"
"For us, the war was also a holy war. We fought for the true Protestant faith, to purify the Church of the 'superstitions' and 'errors' that, we believed, corrupted the soul of England. Our officers, like Lord Protector Cromwell, were men of faith, convinced they were God's instruments."
"The King's taxes were not only illegal, they ruined us. Trade was hampered, and many of our fellow citizens, small landowners (the gentry), merchants, artisans, felt that the King and his court spent recklessly while the people suffered."
"We wanted a just nation, where honest labor was rewarded and not plundered by a monarch's whims."
"Ultimately, Captain, the war was the struggle for England's soul. Was it an absolute monarchy where the king commanded without challenge, or a nation where God's law and the people's liberties, represented by Parliament, prevailed? We, the New Model Army, chose God and liberty, and fought that battle to its utmost consequences so that the blood spilled would not be in vain."
The discussions continued quietly. João thought of Brazil, perhaps in what, 1000 years? (As you may have noticed, it took less than a thousand years), although of Portuguese origin, this country would develop its own traditions; in fact, it had already begun, just like these Englishmen.