¹ Cameron, Rondo E. et al. ,Banking in the Early Stages of Industrialization (New York, 1967)Google Scholar; Cameron, , ed., Banking and Economic Development: Some Lessons from History (New York, 1972)Google Scholar; Cameron, “Metropole e Hinterlandia na Historia das Finanças,” Revista Brasileira de Economia, July-September, 1972, Special Issue in Celebration of the 150th Anniversary of the Independence of Brazil.

² Cameron, Banking in the Early Stages, 295.

³ Peláez, “Long-term Monetary Behavior and Institutions in an Underdeveloped Economy, 1869–1971,” paper presented at the Sixth International Congress on Economic History, Session on Monetary Inflation in Historical Perspective, Copenhagen, August, 1974; Peláez, “A Comparison of Long-run Monetary Behavior and Institutions in Brazil, Europe, and the United States,” Journal of European Economic History, in press; Peláez, “On European Foreign Investment in a Tropical Primary Producing Country,” Journal of European Economic History, forthcoming; Peláez, and Suzigan, Wilson, A Política Monetária do Brasil 1800–1973 (Sāo Paulo, 1975)Google Scholar; Peláez, and Suzigan, , “Bases para a Interpretaçāo Monetária da História Econômica Brasileira,” Revista Brasileira de Economia, October-December, 1972Google Scholar. The statistics were computed in accordance with the method of the National Bureau of Economic Research: Friedman, Milton and Schwartz, Anna Jacobson, Monetary Statistics of the United States: Estimates, Sources, and Methods (New York, 1970)Google Scholar. This analysis of the supply of money followed the approach in Friedman, and Schwartz, , A Monetary History of the United States, 1867–1960 (Princeton, N.J., 1963)Google Scholar; Cagan, Phillip, Determinants and Effects of Changes in the Stock of Money, 1875–1960 (New York, 1965)Google Scholar. But the hypotheses of intermediation were also used in the framework of analysis.

⁴ For evidence that this index overestimates the rate of inflation, and for classical non-parametric tests with alternatives indexes, see Luz, Nicia Vilela and Peláez, Carlos Manuel, “Economia e História,” Revista Brasileira de Economia, July–September, 1972Google Scholar.

⁵ On the gold standard and balance of payments adjustment see Peláez, “Theory and Reality of Economic Imperialism in the Coffee Economy of Nineteenth-Century Brazil,” Economic History Review, forthcoming.

⁶ Buesca, Mircea, Evoluçāo Econômica do Brasil (Rio de Janeiro, 1974), 110Google Scholar; Buescu, , 300 Anos de Inflaçāo (Rio, 1972)Google Scholar.

⁷ A quantitative history of Brazilian coffee, statistics, and bibliography, by several authors, is in Peláez, , ed., Essays on Coffee and Economic Development (Rio de Janeiro, 1973)Google Scholar, English and Portuguese editions for gratuitous distribution.

⁸ See Stein, Stanley J., Vassouras: A Brazilian Coffee Country 1850–1900 (Cambridge, Mass., 1957), 53Google Scholar; Taunay, A. E., História do Café no Brasil, Vol. XV (Rio de Janeiro, 1943)Google Scholar, appendix.

⁹ A history of Brazilian economic thought can be found in Denio Nogueira and Carlos Manuel Peláez, “Introduçāo: Ensaios sobre a Economia Brasileira, 1822–1972,” Revista Brasileira de Economia, July-September, 1972, 11 83.

¹⁰ Brazil Ministerio de Fazenda, Legislaçāo sobre Papel Moeda (Rio de Janeiro, 1923)Google Scholar (hereafter Legislaçāo), xxiv–xxvii. This volume contains all of the legislation of Brazil on money and banking, as well as other relevant documents for the nineteenth century. The currency unit in Brazil in the historical period was the mil-réis. One conto de réis was one thousand mil-réis. It was replaced by the cruzeiro in 1942 and by the new cruzeiro in 1967. In nominal terms, one conto de réis would be equal to one new cruzeiro.

¹¹ The remaining rules of the game — convertibility and free international movements of gold, and full impact of gold flows on domestic money and prices — were usually not followed in Brazil in subsequent periods. See Peláez, “Theory and Reality,” and Peláez and Suzigan, A Política, chapters 2–6.

¹² Cavalcanti, Amaro, O Meio Circulante Nacional I (Rio, 1893)Google Scholar (hereafter Meio Circtilante), 1–2. These volumes consist of an exhaustive collection of Brazilian documents on monetary policy and institutions during the nineteenth century. See also Ortigāo, Ramalho, A Moeda Circulante no Brasil (Rio, 1914), 23Google Scholar.

¹³ José Arthur Rios, “A Tradiçāo Mercantilista no Brasil,” Revista Brasilcira de Economia, July-September, 1972, contains an analysis of the origins and development of these ideas in Brazil.

¹⁴ Balbi, Adrien, Essai Statiques sur le Royaume de Portugal et d'Algarve compare aux autres Etats de l'Europe, quoted in Nicia Vilela Luz, “A Política de D. Joāo VI e a Primeira Tentativa de Industrializaçāo no Brasil,” Revista do Instituto de Estudos Brasilciros, V (1968)Google Scholar. I am grateful to Professor Vilela Luz for discussing these points with me.

¹⁵ For detailed analysis and description of the measures taken by the Portuguese King see Canabrava, Alice P., “Manufaturas e Industria no Periodo de D. Joao VI no Brasil,” in Pilla, Luiz, ed., Uma Experiência Pioneira de Intercâmbio Cultural (Porto Alegre, 1963)Google Scholar; Luz, Nícia Vilela, A Luta pela Industrializaçāo no Brasil (Sāo Paulo, 1961), 14–17Google Scholar; Souza, Carlos Inglez de, A Anarchia Monetária e suas Conseqüências (Sāo Paulo, 1924), 29–30Google Scholar; Viana, Victor, O Banco do Brasil (Rio, 1926), 79–81Google Scholar.

¹⁶ Vilela Luz, A Luta, 15–16.

¹⁷ Legislaçāo.

¹⁸ Ortigāo, A Moeda Circulante no Brasil.

¹⁹ “Alvará 12 de outubro de 1808, crea um Banco National nesta capital,” in Legislaçāo, 1–3. On the views of Brazilian historians see Freire, Felisbello História do Banco do Brasil (Rio, 1907)Google Scholar; Inglez de Souza, A Anarchia Monetária, 32; Vianna, O Banco do Brasil, 81. See also Normano, J. F. Brazil, A Study of Economic Types (Chapel Hill, N.C., 1935), 170.Google Scholar

²⁰ “Estatutos para o Banco Público Estabelecido em Virtude do Alvará de 12 de outubro de 1808,” in Legislaçāo, 4–8.

²¹ Andrada, Antonio Carlos Ribeiro de, Bancos de Emissāo no Brasil (Rio, 1923)Google Scholar; Inglez de Sonza, A Anarchia Monctária, 39.

²² The data are analyzed and extended by Mircea Buescu, 300 Anos de Inflaçāo, 128–131.

²³ “Exposiçāo do actual estado das rendas e despezas públicas… por Manoel Jacintho Nogueira de Gama,” Rio, February 5, 1812, reprinted in Meio Circulante, 32.

²⁴ Freire, História do Banco do Brasil, 19.

²⁵ “Carta Régia e Aviso de 22 de agosto de 1812,” in Meio Circulante, 26–27. See also Viana, O Banco do Brasil, 99–102 and Ribeiro de Andrada, Bancos de Emissāo no Brasil, 9.

²⁶ “Alvará de 24 de setembro de 1814, concedendo ao Banco,” in Meio Circulante, 29–30.

²⁷ “Lei e Estatutos de 16 de fevereiro de 1816,” in Meio Circulante, 30–31.

²⁸ Inglez de Souza, A Anarchia Monetária, 39; Viana, O Banco do Brasil, 109.

²⁹ See the text of the decree in Meio Circulante, 40–41.

³⁰ Legislaçāo, 8–15; Ribeiro de Andrada, Bancos de Emissāo no Brasil, 31–32.

³¹ There is undisputed agreement of Brazilian historians on this point. This paragraph is based on the documents of the time, analyzed exhaustively in a large number of scholarly works by Brazilian historians. See Inglez de Souza, A Anarchia Monetária, 42; Viana, O Banco do Brasil, 109–110; Cavalcanti, O Meio Circulante Nacional I, 38–39. The operations of the Bank and its association with the government were the subject of careful inquiries by committees in parliament, especially in preparation for the legislative act that ordered the liquidation of the Bank. It is a generally accepted historical fact that the insolvency of the Bank was caused by its uncontrolled policies of lending to the government.

³² It is not entirely irrelevant to the comparison discussed in this essay that the inflationary process in Brazil in subsequent periods has resulted also from the financing of budget deficits by the Bank of Brazil. Recent reforms in the financing of the budget deficit have altered this mechanism. For developments from 1853 to 1965, see Peláez and Suzigan, A Política Monetária, chapter 8.

³³ Cândido Baptista de Oliveira quoted in Viana, O Banco do Brasil, 217.

³⁴ “Lei N. 59,” in Legislaçāo, 17–24; Meio Circulante, 127–129.

³⁵ Viana, José Araujo Marquis of Sapucahy, Relatório (Rio, 1833)Google Scholar.

³⁶ Franco, Bernardo de Souza, Os Bancos do Brasil (Rio, 1848), 41–43Google Scholar. The author, who subsequently became minister of finance 1857–1858, and who was already a prominent leader in parliament, researched carefully earlier and contemporary experience in banking and monetary reform in England, the United States, and several European countries. His conclusions are similar to those derived presently by monetary historians. In addition, the volume contains a detailed description of the development of the banks of issue and their charters. Souza Franco's work and policy actions have been generally criticized in Brazil. For an exception see Nogueira and Peláez, “Introduçāo,” and Peláez and Suzigan, A Política Monetária, chapter 3, where references of the criticism can be found.

³⁷ Souza Franco, Os Bancos, 19–20; Inglez de Souza, A Anarchia Monetária, 29-30; Normano, Brazil, A Study of Economic Types, 172.

³⁸ Viana, O Banco do Brasil, 315–316.

³⁹ For detailed description see Souza Franco, Os Bancos do Brasil, chapter II.

⁴⁰ Souza Franco, Os Bancos do Brasil, 23.

⁴¹ Os Bancos, chapter III.

⁴² Os Bancos, chapter IV.

⁴³ Os Bancos, chapter V.

⁴⁴ See de Mauá, Visconde, Autobiografia (Rio, 1942)Google Scholar. The experience in France can be found in Cameron, Rondo E., France and the Economic Development of Europe (Princeton, 1961)Google Scholar.

⁴⁵ This paragraph is based on three independent primary sources that coincide in interpretation. The banks and their operations were carefully scrutinized by Souza Franco, Os Bancos do Brasil, writing in 1848. A commission of monetary inquiry was organized in 1859 to probe the evolution of the monetary system of Brazil and to assess whether the severe economic contraction of 1857 had been caused by the rapid development of the banks of issue. This was an extremely detailed inquiry that covered all of the banks of Brazil and their operations. See Brazil, Ministério da Fazenda, Relatório da Commissāo de Inquérito Nomeada por Aviso de 10 de Outubro de 1859 (Rio, 1860?)Google Scholar. The banking law of 1853 ordered the establishment of another government-related Bank of Brazil. It was established by merging all the banking institutions in the country with the new Bank of Brazil. Its reports are still available and are very detailed as to the composition of bank credit. See the yearly reports, Banco do Brasil, Relatório (Rio, 1854–1859)Google Scholar. The data are analyzed on a monthly basis for the 1850s and 1860s in Peláez and Suzigan, A Política Monetária, chapter 4. All three sources indicate that bank assets consisted mostly of short-term bills of exchange, and more limitedly, shares of private corporations and high quality railroad and long-term government bonds.

⁴⁶ Stein, Stanley J., The Brazilian Cotton Manufacture (Cambridge, Mass., 1957)CrossRefGoogle Scholar, partly reprinted in Peláez, ed., Essays on Coffee and Economic Development.

⁴⁷ This is one of the major conclusions in Dean, Warren, The Industrialization of Sāo Paulo 1880–1945 (Austin, Tex., 1969)Google Scholar. See Dean, “The Coffee Trade Begets Industry,” in Peláez, ed., Essays on Coffee and Economic Development.

⁴⁸ Cameron, Banking in the Early Stages, 295.