1. Introduction

The relations between governments and banks were at the very core of the sovereign debt market of the first financial globalisation, which lasted from the 1870s to the outbreak of the First World War. The public associated the governments with the banks in charge of underwriting their debt and vice versa. Defaults imposed penalties on both players: it restricted the former’s credit and downgraded the latter in the hierarchical debt underwriting market. This book addresses the complex relations between banks and governments through the contrasting cases of Brazil and Mexico. The Brazilian government handed a monopoly on its debt to the prestigious London Rothschilds, while the government of Mexico never issued two loans with the same group of underwriters. Rothschilds’ status depended on Brazil’s commitment to debt payments, which allowed the government to pressure for cheap rescue loans during the crises that hit the country in the 1890s and 1910s. Mexico bargained with many banks to improve borrowing terms, but it failed to access cheap credit during the debt crisis that followed the 1910s Revolution.