Brazilian Economy in the Colonial Period

A slave market in Brazil, during the colonial period. Painting by Jean-Baptiste Debret, engraved by Johann Moritz Rugendas.
A slave market in Brazil, during the colonial period. Painting by Jean-Baptiste Debret, engraved by Johann Moritz Rugendas. Public domain image.

The Brazilian colonial period spanned from 1500 to 1822, when the country achieved its independence from Portugal. During this time, the Brazilian economy was essentially based on agriculture, cattle raising, and mining, comprising three main regions: the Northeast, the Southeast, and the Midwest. The main Brazilian colonial product was sugar produced in the Northeast, but mining in the Southeast and Midwest also gained some prominence. In the South of the country, extensive cattle ranching was practiced in a region with slightly rugged terrain. In the North, religious orders like the Jesuits extracted spices from the Amazon Forest, known as “hinterland drugs” (drogas do sertão). Overall, the Brazilian colonial economy was poorly integrated and outward-looking, based on a slaveholding society that was brutally unequal.

Sugar in the Northeast and Forced Labor

When Portugal decided to economically exploit America, it chose to encourage the cultivation of sugarcane. There were several reasons for this:

  • This was a crop that Portugal already planted on its Atlantic islands, such as in the Azores and Cape Verde.
  • The Brazilian Northeast had advantages for its cultivation: fertile massapê soil, a sunny and humid enough climate, and a location relatively close to Europe.
  • Sugar was a high-value-added product that would allow Portugal to accumulate wealth, in line with mercantilist thought.
  • The exploitation of sugarcane would help defend the coast, increase the value of the king’s lands, and integrate Brazil into international trade.

The sugarcane economy revolved around the colonial sugar mill — the place that brought together all the facilities needed for sugar production, such as sugarcane fields, mills, boilers, and furnaces. Constructing mills was too expensive and often required investments from Portugal, other countries, religious institutions, or merchants. Moreover, the mills were not self-sufficient, as they depended on the importation of European products.

According to historian Boris Fausto, although Portugal tried to monopolize sugar production, international prices were set in major European consumer centers — such as Amsterdam, London, Hamburg, and Genoa. He also argues that the worst phases of Brazilian sugar production were related to European issues, such as the Thirty Years’ War (1618-1648), the Dutch invasions of Northeast Brazil, and the emergence of competing sugarcane plantations by the French, Dutch, and English.

The sugarcane economy — as well as the Brazilian economy as a whole during the colonial period — depended on forced labor. According to historian Ciro Flamarion Cardoso, because Brazil was abundant in unoccupied lands, it was considered important to force workers to work for somebody else, otherwise they would simply opt to cultivate their own lands.

Initially, Portugal attempted to enslave the indigenous people already living in Brazil, but faced obstacles. There were few of them available, and they lacked experience with mercantilist agriculture. Some of them fled to the interior of the colony or engaged in acts of resistance, such as cannibalism — a case in point is the eating of Pero Sardinha, a bishop, by the caeté tribe. Other indigenous people were affected by diseases brought by the European colonizers, as they were less resistant to them. Moreover, all indigenous people were under the protection of the Catholic Church, provided they accepted being converted into the Church’s faith. According to the concept of “just war”, those who refused to adhere to the Christian faith could be legitimately enslaved.

As historian Ciro Flamarion Cardoso notes, despite religious restrictions and numerous laws prohibiting indigenous slavery since 1570, it was never abolished during the Colonial Period and only lost importance in the mid-18th century.

Nevertheless, the other obstacles to indigenous enslavement were significant, leading to a gradual transition to labor performed by African slaves. These oversea slaves were more abundant, their transport to Brazil generated profits, and their use allowed the indigenous people to remain under the control of the Catholic Church. Generally, the transition from indigenous to African labor was faster in more profitable regions, such as those of sugarcane production, as they were able to absorb the high costs of the slave trade.

Thus, from 1600 onwards, the enslavement of Africans predominated in Brazil — individuals that were considered devoid of rights, but were filled with duties and were subject to punishment by the judicial system. However, it is worth noting that even slaves on sugarcane plantations had what was conventionally called a “peasant loophole” (brecha camponesa): the permission to cultivate lands for subsistence or for their own benefit, without bringing profits to the mill owners.

Mining in the Southeast

At the end of the 17th century, inhabitants of São Vicente, known as ‘paulistas’, discovered abundant gold reserves in the interior of this captaincy, in a place that came to be known as Minas Gerais. They were pioneers like Borba Gato, who were concerned with not attracting a wave of people interested in easy wealth. Around 1694 and 1695, the paulistas began negotiations with the Portuguese Crown about how the economic exploitation of the region would occur.

The discovery of gold came at a time of increasing Portuguese trade deficits, as the export of metropolitan (salt, wine, fruits) and colonial (sugar, tobacco) products did not compensate for the large volume of imports (grains, textiles, manufactured goods). The exploitation of the Minas Gerais gold mines would quickly revive the Portuguese economy, enriching the Crown, the Court, and the Church. Therefore, it was in the Crown’s interest to negotiate with the paulistas, who controlled the mining area.

Initially, mining in Brazil was managed by the paulistas, with minimal intervention from Portugal — partly because the potential of gold reserves in Brazil was not fully known. Even at this time, the overcrowding of the mines was evident, leading to a situation of shortages, famine, misery, and violence. Additionally, as the economy was centered on gold, there was significant inflation, which would only be mitigated with economic diversification.

As Portuguese and northeastern immigrants arrived, the paulistas lost control over the Minas Gerais. This eventually led to the War of the Emboabas (1708-1709): a conflict between the paulistas and the ‘emboabas’, newcomers to the province. The defeat of the paulistas in this conflict led to their migration to the interior of the country.

It is true that the society in Minas Gerais was more diverse than that in the sugarcane regions, as it included urban middle classes: muleteers, officers, bureaucrats, soldiers, and professionals, for example. It is also true that the possibility of social mobility in the mining zones was greater, due to wealth accumulation — even allowing slaves to buy their freedom.

However, as noted by historian Laura de Mello e Souza, the mining society was poor, as its benefits were concentrated in the hands of a few. One of the categories that most benefited from mining was that of the large-scale merchants, who were responsible for supplying Minas Gerais with slaves and various products, and who gained even more power.

According to Boris Fausto, it can be said that there was a “gold cycle” in Brazil, because there were phases of greater and lesser gold extraction, and, with the depletion of its reserves, the mining cities became declining “historic cities”. Nonetheless, even after the end of this cycle, the Brazilian economy and politics would continue to be centered in the Southeast of the country.

Cattle Ranching and Mining in the Midwest

In the Brazilian Midwest, the colonial economy was based on cattle ranching and, in a subsequent moment, on mining.

Cattle raising was prohibited on the Brazilian coast as a measure to preserve the massapê soils, advantageous for sugarcane cultivation. On the other hand, cattle ranching was a complementary activity to the sugarcane economy, for cattle provided traction for mills, transport for sugar, and food for the Northeastern society. Thus, although this economic activity increasingly migrated to the Midwest Region, it never lost its ties to the Northeast Region of Brazil. It is worth noting that, due to the transhumant nature of cattle ranching, the labor in this sector tended to be family-based or free, though indigenous people and slaves also took part in it.

From 1709, following the end of the War of the Emboabas, the defeated paulistas migrated to the interior of the country, in search of unoccupied areas that they could control. Once again, they discovered gold mines, this time in the Midwest, in valleys such as those of the Cuiabá River and the Guaporé River. These contained alluvial gold, which is easy to extract, and were exploited despite attacks by indigenous people against the paulistas. Mining in the Midwest never reached the fame of that in Minas Gerais, but it contributed to the interiorization of the colonial territory.


Throughout the entire colonial period, Brazil was unable to develop economically in an adequate manner. In 1500, the country began to be occupied by the Portuguese based on the primary sector and, upon gaining independence in 1822, remained tied to this sector. Sugar stood out for a long time, but its importance relatively declined following the discovery of gold mines in the province of Minas Gerais and in the Midwest Region. In the South and the North, respectively, cattle ranching and the extraction of Amazonian spices continued to be practiced. As a whole, colonial Brazil was integrated into international trade, but it was inserted in a subordinate manner.


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