Anne Hanley provides a detailed description of how public finances worked at the administrative level that has traditionally received less attention from the historiography on Brazil: the municipality. The main message of the book is that living conditions for most Brazilians could have been better if tax revenues had been spent closer to where they were collected. During both the Empire (1822–89) and the beginning of the Republic (1889–1930), the periods covered in the book, almost all public revenue went to the central government, while expenditure in several important areas was left to provinces/states and municipalities. Municipalities, therefore, faced the recurring historical problem of how to invest in public goods in a taxation system disconnected from representation.
To demonstrate how public finances worked in the part of the Brazilian political system with the least political power, Hanley collected archival data from seven municipalities in São Paulo. São Paulo, of course, is not Brazil but, given the level of detail at which the book operates, it is necessary to work at the micro level. As Stanley Stein demonstrated in his classic book Vassouras: A Brazilian Coffee County (1957), it is possible to generalise historical experiences from a detailed study of a municipality. Even though the coffee boom indirectly affected the economy of these seven paulista municipalities during most of the period, we can make a series of generalisations from the cases: the constant scarcity of revenues, the difficulty of building public works, and the impossibility of coping with unforeseen expenditures such as health crises. All these situations are treated in different chapters and their lessons can be transposed to other parts of the country.
Shifting from data to method, the book prioritises description over analysis. It offers the reader a wealth of examples so that we can follow the daily problems of Brazilian municipalities. Petitions by residents for public improvements, such as piped water during the late nineteenth century, show that the population demanded better living conditions and was not apathetic towards political life. The examples presented also suggest a local government interested in solving, or at least circumventing, problems of financing in order to make public works viable. This is most apparent in the Republican period, which brought new ways of obtaining resources, through loans, and increased the role of private companies as providers of public services. These innovations, however, did not change the fact that local authorities did not have the resources to meet the growing demands of an expanding society.
Hanley therefore defies part of the traditional argument – to the effect that the origin of inadequate municipal public services was not patronage or clientelism – instead blaming the country's flawed fiscal system. Hanley's overreliance on official documents, however, probably overestimates the willingness of local governments to meet all the demands of their electorates. Municipalities had incentives to invest because consumers of public goods could vote with their feet (the ‘Tiebout hypothesis’) and the book offers evidence for this hypothesis for the early twentieth century, when different municipalities wanted to attract immigrant workers. This is an idea, however, that is difficult to transpose to other periods (because of slavery) and other regions (no coffee boom). The divergence between discourse and practice is evident in the case of education, which was not primarily financed by municipalities. Hanley writes that ‘on paper, then, the province expressed a serious commitment to public education’ (p. 194). The description of multiple educational policies – deemed ‘essential to the progress of the civilization of its people’ (ibid.) – is clearly at odds with the dismal literacy levels in Brazil, including the rich state of São Paulo, in an international comparison for the period (Renato Colistete, ‘Contando o atraso educacional: Despesas e matrículas na educação primária de São Paulo, 1880–1920’, Dados, 62: 2 (2019), pp. 2–37).
In addition to the discussion about the provision of public goods, the book also has a chapter on ‘the municipal ideal’, which presents a detailed description of the rules and laws that organised the seven municipalities in São Paulo. Interesting as it is, the question of whether these rules and laws were followed or even enforced becomes unavoidable throughout the chapter. Enforcement matters because studies of other Brazilian cities show that similar rules, such as laws that tried to regulate slaves’ clothing, were often ignored. João José Reis relates that the authorities in Bahia, too, sought to prohibit slaves from ‘walking around improperly dressed’ (Ganhadores: A greve negra de 1857 na Bahia, Companhia das Letras, 2019, p. 33) in the city, but we know these rules were costly to implement and often ignored. It would be interesting to know whether São Paulo was different. Another example (from Hanley's book) is the prohibition on ‘batuque’ (percussion music) in the municipality of Ribeirão Preto after slavery ended, a clear attempt to subjugate the black population. Although we know that there were several attempts to repress specific cultural expressions after 1888, one wonders if some of these had a similar fate to São Paulo's 1937 law that prohibited the ‘dance of … rock'n roll’ (‘São Paulo proíbe o rock'n roll’, Jornal do Brasil, 13 Feb. 1960, p. 9). But despite the importance of knowing how local governments attempted to shape the life of their constituents, Hanley's list of what paulistas should not do – like the prohibition on making a ‘U-turn’ with an animal-drawn vehicle – feels too long sometimes. One gets the impression that more space could have been devoted to analysing the effects of the most important laws.
The last topic covered in the book is the distributive implications of the Brazilian tax system. Hanley argues that ‘the question of who pays and who benefits is central to our understanding of inequality’ (p. 222). This is undoubtedly important and one of the book's conclusions is that the economic elite barely contributed to but largely benefited from public goods. Because taxation was regressive, Brazilians who engaged in the formal economy and the non-elite were those who ultimately paid for public goods. This conclusion, however, seems a little disconnected from the overall argument of the book. If major public works depended on transfers from other levels of government, whose revenues came largely from international trade, how is it that the financing of local public goods came from the tax payments of non-elites? Of course, import taxes could be passed on to consumers, which would make the poorest pay more in relative terms. Hanley, however, argues that taxes on imported goods ‘were imposed on luxury items such as imported wines, crystal, porcelain, furniture, and other high-end goods that were not consumed by the average Brazilian. Therefore, this tax, while indirect, was hardly regressive’ (p. 90). Luxury items, however, did not represent a large proportion of imports according to customs records. Foreign textiles were the most important component of government revenues during much of the nineteenth century, and there is evidence that low-income people could afford fabrics like British calicos. During the early twentieth century, luxury items were also not particularly important for tax revenues. Brazilian imports were much more diversified than exports, but data over many years from the Commercial Statistics Board on Foreign Trade (COMEX) show that the biggest imports were primary products, like wheat and coal. The fact that import revenues came from everyday products could reinforce the book's overall argument, but it is difficult to assume without further research who was paying for public goods, especially major public works, which were not locally funded. Moreover, the general assumption that more direct taxation, especially property taxes, would increase the supply of public goods is reasonable, but it also raises some issues that the book does not address. This is a methodological choice, as the author states that ‘this book is not a typical economic history with testable hypotheses and counterfactual analysis’ (p. xii), but why should we assume that taxing property was an alternative? Here, the example of the United States does not necessarily represent a viable alternative, because Brazil's fiscal structure was not decentralised; indeed, fiscal federalism was not common in countries with an income similar to Brazil's. Hanley's book, by dealing with the important themes of revenue raising and resource allocation by local governments, naturally raises questions about how other pre-industrial countries have faced their problems of financing public goods at the local level. It is difficult to draw conclusions without ‘testable hypotheses and counterfactual analysis’.
These comments, however, by no mean diminish the book's importance. On the contrary, Hanley encourages us to think more about the multiple causes of Brazilian economic stagnation during the nineteenth century and the possible lost opportunities for growth after the end of the monarchical period. Some topics, like Brazil's reliance on indirect taxes and the political reluctance to impose appropriate taxes on property, are of perennial interest and help us understand our history of inequality. This is a book that should attract anyone interested in Brazilian history. The Brazilian municipality has gained an additional historical narrative written with proper attention to detail.
