From the beginning of its expansion down the coast of Africa in 1420, the Portuguese crown always drew a clear distinction between the free access it granted to foreign ships coming to the metropolis and adjacent islands (Madeira, Azores) via seas that had "long been open to all," and its prohibition on their entry into seas and adjacent coasts that it had recently discovered; unlicensed ships found there were subject to seizure. The coast of Brazil fell into the latter category; thus its commerce was, from the beginning, a monopoly reserved for the Crown and its subjects.
Shortly after the discovery of Brazil in 1500, the Portuguese crown decided to lease out its monopoly rights there to a group of merchants led by Fernão de Loronha, a naturalized Portuguese of Italian ancestry. This original lease lasted for three years, with the crown taking, in the final year, 25 percent of the proceeds. In 1506 the lease was renewed for another ten years upon payment of a lump sum, after which Brazilian trade was "royalized" and conducted by the crown for its own account via salaried comisários (agents).
With the definite decision in 1532 to settle Brazil, royal trade policy changed. Portuguese settlers, as well as metropolitan and foreign merchants, were allowed to trade freely with Brazil on condition of paying a 10 percent duty and securing royal licenses for the cargoes. Nonetheless, foreigners were compelled to channel their trade through the Portuguese inhabitants, who were the only persons authorized to deal directly with the Indians. Control was further tightened circa 1550 with the creation of alfândegas (customs houses) in most of the captaincies to collect crown duties.
Trade was conducted through a variety of ports both in Portugal (such a Lisbon, Oporto, Viana do Castelo, and Aveiro) as well as in Brazil (such as Recife, Bahia, Porto Seguro, Vitória, Rio de Janeiro, and São Vicente), although some commodities, such as brazilwood, had to go through the Casa da Índia (India House) in Lisbon, which acted as the crown agency for its monopoly trades. Varying duties, too complex to describe in detail, were levied on both exports and imports at points along the way: this was the primary benefit derived by the crown from the trade. Additional duties were added (and sometimes subtracted) from time to time. For example, in 1592, all import and export trade with Brazil carried a 3 percent ad valorem duty (the Consulado) to defray the expense of an armada to protect shipping to and from Brazil.
Portugal's primary problem during the sixteenth century and the first half of the seventeenth was the growth of illegal (unlicensed) trading in its empire by other European nations: primarily the French in the sixteenth century; the Dutch in the period 1590–1600; and the English intermittently throughout. After 1580, when Philip II of Spain became king of Portugal, the latter found itself swept up into the world conflicts of the House of Hapsburg. At war with the Dutch and the English, Philip closed all the ports of the Iberian Peninsula to their merchants (laws of 1591 and 1605). This drove the Dutch, in particular, to increase their direct trade with Brazil in order to secure the sugar that they had previously been able to acquire in Lisbon. After a short truce (1609–1621) the Dutch renewed their attack on Brazil with the occupation of Bahia in 1624–1625 and the conquest of Pernambuco in 1630–1654, which they gradually extended to all the other northern captaincies. Coupled with these losses, the Dutch also seized Portuguese slave stations in Africa. Piracy at sea also increased after 1625, leading to severe losses until Portugal finally severed its connection with Spain in 1640 and signed a truce with the Dutch in 1641, leading to peace in 1661.
In 1649 the Portuguese crown chartered, on the Dutch model, a joint-stock company that was to control trade and protect commerce via a system of fleets between Portugal and its colony. About the same time, a series of commercial treaties was negotiated with the nations that had been the main interlopers in Portugal's imperial trade monopoly—with the English in 1642, the Dutch in 1661, and the French in 1667. Due to the ambiguous language used, these treaties permitted those nations extensive, though ill-defined, rights to trade within the Portuguese Empire.
During the next century, Portugal attempted to control and profit from its Brazilian commerce more via the establishment of monopoly companies than through the earlier policy of a blanket prohibition on unlicensed foreign shipping. In 1755 a company was created to monopolize the trade with the northern area of Brazil (Grão-Pará and Maranhão), and in 1759 a similar company was established to revitalize the sugar trade with Pernambuco and Paraíba.
Throughout the colonial era Portugal used the products of its empire to balance its trade with the exterior. It achieved this in the period up to 1570 with pepper from India and, from circa 1570 to 1670, with sugar exports from Brazil. The decline in the latter near the end of the seventeenth century, at least partly due to the establishment of competing plantations by the English, French, and Dutch in the Caribbean, forced the crown to initiate a policy of industrialization to lessen Portugal's dependence on foreign imports. The discovery, however, of gold in Brazil circa 1690 again permitted Portugal to balance its trade with a colonial commodity, and the industrial policy was scrapped only a couple of decades after it was begun. When gold gave out at the end of the 1750s, Portugal once again turned to an industrial policy to lessen its dependence upon imports. In the sixteenth and seventeenth centuries, Portugal had not made any attempt to stifle the development of industry in Brazil; in fact, it had encouraged sugar refining there by prohibiting it in the homeland (1559), fearful that the process might consume so much wood that it would deforest the kingdom. At the end of the eighteenth century, however, Brazilian industry was seen as a threat to the exports of a newly industrialized Portugal, and was generally prohibited. Nonetheless, Brazil after 1770 found a new prosperity in a revived and diversified agriculture, much of which benefited Portugal itself, and the colonial period closed on a note of a general prosperity both in Brazil and in Portugal.
Joel Serrão, ed., Dicionário de História de Portugal (1963). V. M. Godinho, Ensaíos II: Sobre a história de Portugal (1978), pp. 295-315.
Jose Gonçalves Salvador, Os Cristãos-Novos e o comércio no Atlântico meridional (1978), pp. 195 passim; Leslie Bethell, ed., The Cambridge History of Latin America (1984).
Frédéric Mauro, Portugal, o Brasil e o Atlântico, vol. 2 (1989), pp. 183-248.
McCusker, John J., and Kenneth Morgan. The Early Modern Atlantic Economy. Cambridge: Cambridge University Press, 2000.
Nardi, Jean-Baptiste. O fumo brasileiro no período colonial: Lavoura, comércio e administração. São Paulo: Editora Brasiliense, 1996.
Harold B. Johnson