steady decline in its external sales. In 1866–70, these crops represented just 30 per cent of exports, while the share of coffee exports-the leading product in the south-eastern portion of the country-jumped from 26 to 47 per cent. Leff (1982, 1997) explains the decline experiences in the north-east in terms of Dutch disease. As coffee exports came to play a greater role in the foreign exchange market, the real exchange rate increasingly reflected the importance of that product, which had a negative impact on the less competitive regions, such as the north-east. It was neither possible to restructure the sugar industry very quickly, nor easy to promote large-scale inter-regional migration flows, although a large number of slaves did move from the north-east to the south-east. Throughout this period, the expansion of the coffee industry was not hindered by any increase in labor costs, since up to 1852 (end of the slave trade), wages were depressed by the presence of slave labor and later by subsidized immigration flows, particularly from Italy (Leff 1997:5). This strengthened the existing pattern in Brazil: an export sector that generated high levels of earnings alongside a large sector that catered to the domestic market and a large subsistence economy, both with very low levels of productivity, with the outcome being low per capita income levels but a high export coefficient relative to the other Latin American economies. Exports remained low, and the domestic economy was depressed. The only segment that expanded was the subsistence economy. Resources (land, slaves, and transport animals) made idle by the decline of the export economy were absorbed into mostly self-consumption activities. American–Brazilian economic relations (1870–1930) In 1870 Brazil's trade with America was valued at about 31 million dollars while the combined trade of all the South American countries was valued at about $29 million. Brazil was a significant producer of coffee and because of this the United States imported about four times as much as it exported to Brazil. In 1885 Brazil was producing more than one half of the world's supply of coffee. Brazil's trade in 1890 was more than $71 million while that of Argentina and Uruguay was $14 million and $6 million respectively. Soon after 1896, the production of coffee started to surpass consumption and prices began to fall in Brazil. Brazil then stored their coffee instead of selling all of it, and when there was bad season