nach oben

Erschienen in:

2018 | OriginalPaper | Buchkapitel

4. Rothschilds’ Troubled Republic: Brazil, 1889–1898

verfasst von : Leonardo Weller

Erschienen in: Sovereign Debt Crises and Negotiations in Brazil and Mexico, 1888-1914

Verlag: Springer International Publishing

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Political turmoil increased the defence budget and caused a debt crisis in Brazil’s first republican decade, which followed the fall of the monarchy in 1889. The Brazilian government pressured Rothschilds for rescue loans with which it defended the new regime and maintained a clean debt record. The debt crisis only finished after the 1898 Funding Loan, which was conditioned on orthodox policymaking. The national currency appreciated, which improved payment capacity but penalised the coffee-exporting sector. The Funding Loan was a case of shared policy ownership rather than an unilateral imposition of economic policy, as it is commonly interpreted in the literature. The officials proposed the deal and threatened to default so that Rothschilds would accept it. Politics had stabilised by 1898, which permitted the government to consolidate fiscal accounts without jeopardising the regime. Rothschilds was a power broker that empowered policymakers committed to orthodox policies, in line with their peacetime priorities but at the expense of coffee growers.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel Rothschilds’ Tropical Empire: Brazil, 1822–1889

Nächstes Kapitel Rothschilds and Coffee Finance: Brazil, 1898–1914

See Flandreau and Flores (2010, 18) for a recent contribution.

The USA was one of the first countries to accept the republican state. Its interference in that conflict was part of its debut as a world power, active in the geopolitics of the Western Hemisphere. Topik (2000, 274) speculates that the USA pressured for the agreement between the Paulistas and President Peixoto.

Summerhill (2015) argues that the government maintained the financial sector backward during the Empire.

Ferguson (1998, 346) measures payment capacity by comparing the required services on the sovereign debt with expenditure. According to his calculations, that ratio remained relatively low, at 10.5% between 1890 and 1899, from which he concludes that the debt crisis was mild. Ferguson’s interpretation is misleading because expenditure was much higher than tax revenue due to warfare, one of the leading causes of the crisis. I evaluate payment capacity based on the ratio between services and tax revenue, which shows a more realistic picture of the government’s capacity to meet debt services. Such ratio is common in the literature; see, for instance, Flandreau and Zumer (2004, 31).

This point appears in Peláez and Suzigan (1981, 167), Franco (1983) and Schulz (1996, 118–19).

Franco (2014, 25–26) and Schulz (1996, 101–13) also acknowledge that political instability led to fiscal deterioration and exchange rate depreciation. Flandreau and Zumer (2004, 34, 53) put Brazil in perspective when they characterise it as a troubled borrower during the 1890s because of both the currency mismatch problem and the country’s unsound tax prospects.

The Economist, 27 July 1895, issue 2711, p. 14.

The Economist, 23 April 1898, issue 2852, p. 8.

The Investor’s Review, 29 April 1898, vol. 18, p. 599; The Investor’s Monthly Manual, 31 May 1898, vol. 28, p. 225.

See Fig. 1.1.

Fishlow (1995) suggests that the external crisis was not determinant, but Mitchener and Weidenmier (2008) found evidence of contagion.

These countries are the ones used in a similar index by Mauro et al. (2006, 30). Calculated from The Investor’s Monthly Manual.

This amount corresponds to 36% of the tax collected in the period and 44% of what the state owed to foreign bondholders up to then. Calculated from IBGE (1990, 616), and Bouças (1955, 192).

RA Finance Minister Rodrigues Alves to Rothschilds, 31 December 1894, XI/142/401F/6.

Average weighted according to the amount issued in each loan. From Bouças (1955, 113–73) and The Investor’s Monthly Manual.

From IBGE (1990), BHMF 332/225 and The Investor’s Monthly Manual.

RA I/158/000/77/4.

RA Rothschilds to Rodrigues Alves, 26 July 1895, XI/142/1895–1900.

Ibid.

The Investor’s Monthly Manual, January to June 1898, vol. 28, pp. 1–6.

Calculate from Bouças (1955, 220) and IBGE (1990, 616–18).

This comparison should not include the period before 1890 because the Army budget grew after the 1889 coup, mainly due to the increase in military salaries, which is natural given the character of the republican movement. See Caravalho (2005, 54–56) and Schulz (1994, 145). The rise in the defence budget appears greater if we include the earlier period. It is 14.3% if the base years are 1889–1892. Calculated from Balanço da receita e despeza da República for the military budget and IBGE (1990, 617–18) for federal expenditure.

Calculated from Balanço da receita e despesa da República for tax revenue from exports and IBGE (1990, 535–36) for exports. This counterfactual is based on the assumption that eventual changes in export tariffs after the regionalisation of the duty did not affect exports significantly, which is consistent with the literature on the Brazilian coffee economy. The demand is inelastic, varying according to taste. Investment has a long maturity term, and in the short term, the supply is also inelastic. See Topik (1999), Furtado (2007) and Bacha and Greenhill (1993).

RA Rothschilds to Rodrigues Alves, 21 January 1895, XI/142/1895–1900. Emphasis in the original.

RA Rodrigues Alves do Rothschilds, 16 February 1895, XI/65/9.

See Table 4.1.

RA Rodrigues Alves to Rothschilds, 11 March 1895, XI/65/9B/1895–96.

The customs on imports increased 120% between 1894 and 1898, but only 56% when measured in pounds. Calculated from Balaço da Receita e Despesa da República.

RA Rodrigues Alves to Rothschilds, 11 March 1895, XI/65/9B.

See Table 4.1.

BHMF Azevedo Castro (Treasury) to Bernardino de Campos, 18 February 1898, 332/532.

RA Rothschilds to Bernardino de Campos, 7 March 1898, XI/142/1895–1900.

RA Rothschilds to Bernardino de Campos, 18 and 30 October and 26 November 1897, XI/65/10A.

IHGB Prudente de Morais to Bernardino de Campos, 8 March 1898, ACP66/DL 572. Emphasis in the original.

IHGB Prudente de Morais to Bernardino de Campos, 3 April 1898, ACP66/DL 592.

Calculated from Balanço da Despesa e Receita da República.

RA Rothschilds to Bernardino de Campos, 31 May 1898, XI/65/6.

BHMF 332/225.

Brazil was not blacklisted in the Annual Report of the Corporation of Foreign Bondholders.

The Economist, 18 June 1898, issue 2860, p. 904.

Ibid.

The Times, 16 June 1898, issue 3554, p. 9.

The Investor’s Monthly Manual, June 1905, vols. 28, 31, 35.

BHMF Bernardino de Campos to Rothschilds, June 1898, 332/532.

Figures calculated from the ratios expressed in BHMF Bernardino de Campos to Rothschilds, June 1898, 332/532, and IBGE (1990, 542).

BHMF Bernardino de Campos to Rothschilds, 25 January 1898, 332/532.

Calculated from Bouças (1955) and IBGE (1990, 591–93, 616–18). These contrafactual trends should be considered with caution as they do not take inflation into consideration, but they are useful to demonstrate the impact of exchange rate depreciation in raising the cost of servicing the sovereign debt.

BHMF Campos Sales to Bernardino de Campos, 2 May 1898, 332/532. Abreu (2002, 520) recognises Campos Sales’ commitment to sound policies when running for office.

Paláez and Suzigan (1981, 182–83).

Balanço da Receita e Despesa da República.

RA I/000/77/4–5.

Bouças (1955, 209).

BHMF Biblioteca Histórica do Ministério da Fazenda, Rio de Janeiro.

Contractos dos empréstimos em libras esterlinas do Governo Federal, 1883 a 1927, 332/225.

Funding Loan, Acordo do Brasil realizado pelo Governo Dr. Prudente de Moraes em 15 de Junho de 1898, 332/532.

IHGB Instituto Histórico e Geográfico Brasileiro, Rio de Janeiro.

Private Correspondence.

RA Rothschild Archive, London.

Ledger Balance, I.

Correspondence, XI.

Annual Report of the Council of the Corporation of Foreign Bondholders.

Barbosa, Ruy. 1892. Finanças e política da República: discursos e escriptos. Rio de Janeiro: Senado Federal.

Brasil, Balanço da receita e despeza da República. Rio de Janeiro: Imprensa Nacional.

Bouças, Valentim F. 1955. Finanças do Brasil: dívida externa—1824–1945. Rio de Janeiro: Ministério da Fazenda.

IBGE. 1990. Estatísticas históricas do Brasil: séries econômicas, demográficas e sociais de 1550 a 1988. Rio de Janeiro: Instituto Brasileiro de Geografia e Estatística.

The Economist.

The Investor’s Monthly Manual.

The Times.

Abreu, Marcelo de Paiva. 2002. “Os Funding loans brasileiros—1898–1931.” Pesquisa e Planejamento Econômico 32 (3):515–40.

Bacha, Edmar L., and Robert Greenhill. 1993. 150 anos de café. São Paulo: Salamandra Consultoria Editorial.

Carvalho, José M. 1988. Teatro de sombras: a política imperial. Rio de Janeiro: IUPERJ.

———. 2005. Forças armadas e política no Brasil. São Paulo: Zahar.

Carvalho, Ney O. R. 2003. O Encilhamento: anatomia de uma bolha brasileira. São Paulo: Bovespa.

Catão, Luís A. V. 1992. “A New Wholesale Price Index for Brazil during the Period 1870–1913.” Revista Brasileira de Economia 46 (4):519–34.

Costa, Emília V. 1998. Da monarquia à república: momentos decisivos. São Paulo: UNESP.

Fausto, Boris. 2007. “O sistema oligárquico nos primeiros anos da República.” In História geral da civilização brasileira: estrutura de poder e economia, 1889–1930, edited by Fausto Boris, 17–171. Rio de Janeiro: Bertrand Brasil.

Ferguson, Niall. 1998. The World’s Banker: The History of the House of Rothschild. New York: Weidenfeld & Nicolson.

Fishlow, Albert. 1995. “Latin American Nineteenth Century Public Debt: Theory and Practice.” In La Deuda Pública En América Latina En Perspectiva Histórica, edited by Liehr Reinhard, 23–32. Madrid: Iberoamericana.

Flandreau, Marc, and Juan H. Flores. 2010. “Hamlet Without the Prince of Denmark: Relationship Banking and Conditionality Lending in the London Market For Foreign Government Debt, 1815–1913.” IHEID Working Papers 08-2010. Economics Section, The Graduate Institute of International Studies.

Flandreau, Marc, and Frédéric Zumer. 2004. The Making of Global Finance 1880–1913. Paris: OECD.

Franco, Gustavo H. B. 1983. Reforma monetária e instabilidade durante a transição republicana. Rio de Janeiro: BNDES.

———. 2014. “A Primeira década republicana.” In A Ordem Do Progresso: Cem Anos de Política Econômica Republicana, edited by Abreu, Marcelo P., Campus, 29–44. Rio de Janeiro.

Fritsch, Winston. 1988. External Constraints on Economic Policy in Brazil, 1889–1930. Houndmills: MacMillan.

Furtado, Celso. 2007. Formação econômica do Brasil. São Paulo: Companhia das Letras.

Graham, Richard. 1977. “Government Expenditures and Political Change in Brazil, 1880–1899: Who Got What.” Journal of Interamerican Studies and World Affairs 19 (3):339–68.

Hanley, Anne G. 2005. Native Capital: Financial Institutions and Economic Development in São Paulo, Brazil, 1850–1920. Stanford: Stanford University Press.

Love, Joseph L. 1994. “Autonomia e interdependência: São Paulo e a Federação Brasileira, 1889–1937.” In História do Brasil, edited by Boris Fausto, 58–83. São Paulo: EdUSP.

Mauro, Paolo, Nathan Sussman, and Yishay Yafeh. 2006. Emerging Markets and Financial Globalization: Sovereign Bond Spreads in 1870–1913 and Today. Oxford: Oxford University Press.

Meade, Teresa. 1989. “‘Living Worse and Costing More’: Resistance and Riot in Rio de Janeiro, 1890–1917.” Journal of Latin American Studies 21 (2):241–66.

Mitchener, Kris J., and Marc D. Weidenmier. 2008. “The Baring Crisis and the Great Latin American Meltdown of the 1890s.” The Journal of Economic History 68 (2):462–500.

Moniz, Edmundo. 1987. Canudos: a guerra social. São Paulo: Elo Editora.

Peláez, Carlos M., and Wilson Suzigan. 1981. História monetária do Brasil. Brasília: Editora Universidade de Brasília.

Queiroz, Suely R. 1986. Os radicais da República: jacobinismo, ideologia e ação, 1893–1897. São Paulo: Brasiliense.

Reverbel, Carlos. 1985. Maragatos e pica-paus: guerra civil e degola no Rio Grande. Porto Alegre: L&PM Editores.

Schulz, John. 1994. O Exército na política: origens da intervenção militar, 1850–1894. São Paulo: EdUSP.

———. 1996. A crise financeira da abolição, 1875–1901. São Paulo: EdUSP.

Summerhill, William R. 2015. Inglorious Revolution: Political Institutions, Sovereign Debt, and Financial Underdevelopment in Imperial Brazil. New Haven: Yale University Press.

Topik, Steven C. 1999. “Coffee.” In The Second Conquest of Latin America: Coffee, Henequen, and Oil During the Export Boom, 1850–1930, edited by Steven C. Topik and Allen Wells, 34–72. Austin: University of Texas Press.

———. 2000. Trade and Gunboats: The United States and Brazil in the Age of Empire. Stanford: Stanford University Press.

———. 2014. The Political Economy of the Brazilian State, 1889–1930. Austin: University of Texas Press.

Triner, Gail. 2000. Banking and Economic Development: Brazil, 1889–1930. London: Palgrave Macmillan.

Weller, Leonardo. 2015. “Rothschilds’ ‘Delicate and Difficult Task’: Reputation, Political Instability, and the Brazilian Rescue Loans of the 1890s.” Enterprise & Society 16 (2): 381–412.

Titel: Rothschilds’ Troubled Republic: Brazil, 1889–1898
verfasst von: Leonardo Weller
Verlag: Springer International Publishing
Buch: Sovereign Debt Crises and Negotiations in Brazil and Mexico, 1888-1914
Print ISBN: 978-3-319-73632-7

Electronic ISBN: 978-3-319-73633-4

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-3-319-73633-4_4