April 2, 2025

Some people make a lot of money over their career, some people lose a lot of money, and some people do both. Some people do both very quickly. Manaus has done both. This was a strange place to build a city, in the middle of the rainforest but there is a reason why Manaus is known as the “boom and bust city.” The reason is rubber.

The indigenous people of this area would cut the bark of this native tree and take out the white sap and spread it on their canoes and let it dry to fix any holes in the canoe. Simple, smart, sustainable. The Spanish and Portuguese explorers arriving in the 1600’s saw this strange bouncy substance that looked like dried milk. They did not know what to do with it. One Jesuit priest in 1736 saw the indigenous people making coverings for their feet with the substance and this was the first account of Amazon rubber. In the 1740’s it was discovered that rubber could rub out pencil marks calling it “Indian rubber” though it had nothing to do with India.

The industrial revolution put rubber in great demand. By the 1800’s Manaus had become the wild west of South America. Tires, wires, raincoats were needed, and the Amazon was the only place on earth with the right kind of tree to produce rubber. Two men, you’ve probably never heard of would shape the entire rubber industry and change Manaus forever.

Waldemar Scholz, a German businessman arrived in Brazil during the second half of the 19th century. He immediately saw the opportunity in rubber and built a personal financial empire on other peoples’ backs. He built this financial empire by running his business from Germany. Trees grew wild all over the jungle but to get the latex you needed you needed men, lots of them, going into the forest weeks at a time, hacking, cutting, draining and collecting the sap in cups. The men then had to smoke the sap over fire turning it into small rubber balls for shipping. Scholz owned or leased vast amounts of rain forest filled with rubber trees. Scholz supplied the indigenous workers with all the gear they needed hammocks, tools, food even clothing.

Here’s the catch. The indigenous workers did not get those supplies for free. They were supplied to the workers on credit and by the time they brought back the rubber they often owed more than they earned, and that debt system kept them tied to their job sometimes for life. (As a quick aside, in the early 1980’s I worked as a management consultant with Fran Tarkenton implementing Employee Assistance Programs in the textile industry. Throughout the south, there were “mill towns” where textile companies would provide housing, and a mill store for workers to make purchases. Workers were given company “tokens” in advance of their salaries to buy goods. These types of “token economies” were often used to create predatory indebtedness to exploit workers)

When the rubber made it to Manaus it was sent down river mostly on its way to Europe and the United States. Scholz got paid in hard currency, dollars, pounds, marks and lots of them. Rubber sold for more than gold pound to pound! In 1903, Scholz built the Schotz Palace right in the middle of the rainforest. This palace surpassed all European grandeur with imported Italian marble, French mirrors, English linen and ironwork from Scotland.

Sir Henry Wickham, an Englishmen, (I’ll tell you how he became a Sir later) showed up in Brazil in the 1870’s when Brazil had a global monopoly in rubber production. Wickham was a friend of Joseph Dalton Hooker, the British botanist and Charles Darwin’s closest friend. Hooker was the director of the Royal Botanical Kew Gardens. The British had long planned to create rubber plantations in their colonies in Southeast Asia to brake Brazil’s rubber monopoly.  Wickman began stealing seeds from rubber plantations and falsely declared 70,000 seeds as “academic specimens”, a term the Brazilians frequently used to classify dead animals or plants, not viable seeds. The seeds arrived in London’s Kew Gardens on June 15, 1876. The seeds were secretly germinated, and they were sufficient to jump-start widespread cultivation in Southeast Asia. Asia took over the rubber trade and the Amazon economy collapsed.

They say that “History is written by the victor.” If Waldemar Scholz was one of the first users of a “supply chain” to make his riches, his riches were short lived. By 1918, he lost it all. His palace was taken over by the government and his extravagant lifestyle left him with little. He was the victim of a theft that occurred right under his nose. That theft was the ploy of Henry Wickham, one of the first robbers of “intellectual property” who abandoned all ethics/virtue to steal under false pretenses seeds that did not rightfully belong to him. And by the way, that action awarded him the title of “Sir” by the British government.

They also say, “You get what you give.” In this instance both men had to live with the consequences of their exploitation. The devastating impact on Manaus was abrupt. Many people left the city, and the area feel into poverty. The rubber boom had made possible electrification of the city long before it was installed in many European cities. The rubber bust made generators too expensive to run and the city “went dark” for decades. In Brazil, Wickham is labeled as a “bio-pirate” for his role in smuggling the rubber seeds that broke the South American monopoly

Of note, was that in 1895, before the bust occurred the residents of the city began building a grand opera house with imported marble and crystal from Europe. The cost was 10 million dollars of public funds. Unfortunately, it was effectively closed for most of the 20th century. Only now has it begun to be refurbished.

Thanks for traveling with us.