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White Magic. Brazil's top men are convinced that the way out, the economic road to the wealth and eminence Brazilians envision for their nation, is industrialization. The postwar manufacturing boom is only a beginning. Before industrial growth can proceed much further, as Cafe Filho and his economic advisers see it, the administration will have to slow galloping inflation to a walk. Because of inflation, much of Brazil's short supply of investment capital runs into real-estate speculation, or takes flight into dollar hoards. Too little capital is available for what Cafe Filho's Finance Minister calls "the two main bottlenecks in the Brazilian economy": railroads and electric power.
Inflation inhibits foreign investment in Brazil, and lessens the country's eligibility for loans or direct aid from Washington. It has also had a disastrous effect on Brazilian workers. The real wages of many workers in Rio shrank within the past five years, as beef soared from 9 cruzeiros a kilogram in 1950 to 46 today, butter from 34 to no. One of the odder symptoms of mass discontent is the mushroom growth of umbanda or espiritismo, a white-magic religious cult with elaborate African rituals. There were 75,000 registered espiri-tistas in Rio in 1949, 124,000 in 1950; today there are some 400,000, and the national total runs into millions.
The Professor's Prospects. To harness runaway inflation, Café Filho tabbed as his Finance Minister one of the nation's top economists: urbane Eugenio Gudin, 68, professor at the University of Brazil. To Gudin's way of thinking, nationalism ranks with inflation as an obstacle to Brazil's healthy economic growth. But for the time being, the administration can do little about nationalism except refrain from encouraging it. The administration's common-sense policy on the Petrobras oil law is to let it stand until nationalistic sentiment subsides, and get as much foreign participation in oil development as the law's loopholes permit. Explains Cafe Filho laconically: "The problem now is not to change the law, but to interpret it."
To slow inflation, Gudin called for cruzeiro-pinching by the government, curbs on bank credit and tax reform. The two preceding Finance Ministers also drew up disinflationary programs, but inflation kept right on. What makes Gudin's prospects sounder is that President Café Filho is backing him up. Getulio Vargas failed to back up his men, Horacio Lafer and Oswaldo Aranha. While Lafer was tightening credit, the Bank of Brazil was loosening it; while Aranha was trying to curb prices, Vargas decreed a 100% increase in minimum wages.
Because the economy was still shaking from the inflationary impact of the minimum wage decree when Gudin became Finance Minister, he was unable to halt the cruzeiro's slide right away. His immediate aim is to slow down the rate of in flation from the recent 2% a month to a mild 6% a year.