This paper analyses the long-term trends of ''British business'' in Brazil since 1850. It covers investment and other manifestations of the British presence such as those related to trade as well as financial intermediation. Primary interest is in British involvement in Brazilian private sector activities, whether by direct investment or by the flotation of sterling securities for firms operating in Brazil. The article also considers the role of London as a financial market where Brazilian public loans were floated, the relevance of Britain as a market for Brazilian commodities and as a supplier to Brazil, and British intermediation in Brazilian trade with third countries. It is divided in chronological sections: imperial years (1850-1889); stagnation and boom (1889-1914); first signs of decline (1914-1930), and the divestment period (1930 to the mid-1950's). The final section presents the conclusions and mentions post-1950 trends.
Este artigo considera as tendências de longo prazo das relações econômicas e financeiras britânicas com o Brasil desde 1850. Abrange investimentos e outas manifestações da presença britânica no Brasil, tais como as relacionadas a comércio e intermediação financeira. O interesse fundamental é no envolvimento britânico com as atividades do setor privado no Brasil, seja através de investimento direto, seja na intermediação financeira em benefício de firmas privadas que operavam no Brasil. O artigo também menciona o papel de Londres como centro financeiro no qual eram lançados empréstimos públicos brasileiros, a relevância do Reino Unido como mercado para as exportações brasileiras e como supridor de importações para o Brasil, e a intermediação britânica no comércio brasileiro com terceiros países. O artigo é dividido em seções cronológicas: os anos imperiais (1850-1889); estagnação e boom (1889-1914); primeiros sinais de declínio (1914-1930); os anos de redução de investimentos (1930-meados da década de 1950). A seção final apresenta as conclusões e menciona as tendências pós-1950
The British effort in the Second World War required massive external financing which depended on Lend-Lease and the accumulation of sterling balances. Indebtedness in sterling balances corresponded to almost 38 per cent of this total at the end of the war. Portuguese sterling balances, although a small share of the total, were important because of pre-emptive purchases, especially of wolfram, and because of the 'gold clause' which was to be applied to outstanding balances. Portugal's willingness to finance British purchases contrasts with the requirement of German payments in goods or cash for their purchases in Portugal. The settlement of Portuguese sterling balances in August 1945 was singular as it preceded the Anglo-American settlement of December 1945 which had important consequences for sterling balance holders, as the US insisted that the US$3.75 billion loan should not be used to settle British war debts. Postwar settlement of British debt through a long-term loan from Portugal to Britain contrasts with settlements that involved the sale of British assets. Salazar's concerns about the postwar international position of Portugal, the Portuguese Empire, and the survival of the Portuguese regime are relevant in explaining his pro-British stance during and after the war.
In contrast with former colonies of Great Britain, Brazil could never look at Portugal, and particularly at Portuguese financial institutions, as paradigms to be closely followed, since the former, even though the metropolitan power, remained a rather underdeveloped economy facing difficulties of financial consolidation akin to those faced by its former colony, in spite of some episodes of financial creativity. The paradigm was Britain, even if the institutional inheritance was strongly Portuguese. The whole institutional context including the strong powers of the king could fail, as already mentioned, to provide protection from government action to real assets such as land and slaves in real practice, even though in theory the prevailing legal system based on Roman Law clearly allowed such assets to be legally registered under the names of their owners.Property rights were fragile and constantly undermined in the colonial period and part of that fragility filtered to the 19th century. This paper is a preliminary investigation concentrating only on the projections of such characteristics on the fiscal and financial systems developed in Brazil during the Empire (1822-1889).After this introduction, section 2 of the paper considers the colonial heritage from the perspective of fiscal and monetary regimes. A short section 3 briefly sketches the direct and indirect costs of independence from a financial point of view. The next two sections consider in sucession fiscal policies and monetary aspects of Brazilian finance during the Empire. Aspects related to revenue, expenditure, public debt and the political economy of public finance are examined in section 4. The next section covers monetary issues: changing monetary standards, the several versions of a Banco do Brasil, the alternation of restrictive and lax monetary regimes, changes of policy affecting the note issuing rights of private banks. Section 6 presents the provisional conclusions. The Colonial heritageProduction of sugar was the first economic activity in Brazil in the 16th century which led to the permanent settlement of the colony and which also gave rise to its first fiscal apparatus. The establishment of a royal government in Bahia in 1549 resulted in the
Internal rates of return of Brazilian loans floated between 1824 and 1931 fell below those of British and US government consols and bonds only for some of the loans floated after the beginning of the twentieth century. Higher volatility of yearly rates of return was rewarded by higher returns for all Brazilian Federal loans. Their spreads over consols in 1824-1943 are compared to those of Argentina and Chile and of Brazilian state and municipal loans for 1888-1930. In spite of some deterioration over time, Brazilian loans had a better performance than suggested by the literature, especially in the 1920s.he history of Brazilian foreign debt can be divided into three periods, each involving acccess to world financial markets, followed by balance of payments difficulties, moratoria or default, permanent settlement with debt relief, and regular service payments on the old debt thereafter. The first of such periods started with the first Brazilian foreign loan in 1824. Borrowing ended with the funding loan of 1931. The second period started in the late 1960s: loans were floated until the crisis in 1982, followed by a long period of negotiations ending in 1993. A third period of voluntary lending to Brazil began in 1993.The long-term history of foreign indebtedness by developing economies has been the focus of literature trying to draw lessons from past experience. 2 With much diffficulty it is possible to disintangle successive references to secondary sources in the literature on serial defaulters and trace the dataset on defaults to Christian Suter. 3 Work on foreign debt restructuring and
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