By the Bootstraps

Like a sick man hanging on the doctor's opinion, Brazil's business and financial world awaited the final report of the Abbink Commission. This joint U.S.-Brazilian team of 105 experts, led by U.S. Economist John Abbink (chairman of McGraw-Hill International Corp.) had begun its study of Brazil's ailing economy six months ago; since then, businessmen and politicians in Rio had speculated endlessly on the probable diagnoses, the possible cures. Some had hopefully regarded "los Abbinks" as advance agents of the U.S. Treasury. Last week, when the U.S. State Department finally published a summary of the report, the optimists got a rude jolt. Uncle Sam's voice was more like that of a Dutch uncle whose main message was: do it yourself--and this is how.

Like Brazil's five-year SALTE Plan--short for Saude (health), Alimentos (food), Transporte (transport), Energia (power)--the report recognized that all sectors of Brazil's economy need shoring up. It offered a wealth of specific advice on raising industrial capital (by limiting real-estate investment, which in some years absorbs as much as two-thirds of Brazilian savings), boosting manpower (by vocational training and selective immigration), improving transportation (by coordinating transport services and expanding storage space).

Many of the blueprints were plainly drawn from U.S. models. Thus, the commission suggested a form of Federal Reserve System to control credit. It counseled that the Brazilian practice of "seeking high profits from a limited market" should be supplanted by a business philosophy of mass production at favorable cost.

Money from Home. Discussing investment from abroad, the report passed gingerly over the touchy political subject of Brazil's undeveloped oil resources, recommended that the country: 1) modify its laws to guarantee outside investors fair treatment, 2) make an "investment treaty" with the U.S. which would eliminate the practice of double taxation on profits earned abroad by U.S. businessmen. But Brazilians should not expect--nor should they want--such foreign investments to supply any great proportion of their capital needs. Progress, said the report, "should, in the main, be financed with domestic funds. Only thus can an excessive future burden be avoided."

One of the report's most controversial sections dealt with the problem of how much build-up to prescribe for industry, as compared with agriculture. It was no secret that Commission Aide Euvaldo Lodi, president of the National Confederation of Industry (Brazil's N.A.M.), had argued heatedly in favor of industrial development, even charging that some U.S. commissioners wanted to leave that field wide open for fellow yanquis. But the commission's finding was that Brazil still lacks resources and equipment for a general advance on its entire economic front. Because stepping up industry would require a prior boost in power, transportation, and raw materials, the commission assigned such increases preference, if not full priority. And it declared that the government must have a major role in the development of that primary type.

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