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The Treasury as a Monopolist Note-Issuer: 1866–89

In: The Political Economy of Money and Banking in Imperial Brazil, 1850–1889

Author

Listed:
  • André A. Villela

    (Fundação Getulio Vargas)

Abstract

The chapter analyzes monetary and banking policy in Brazil between 1866 and 1889, a period when the Treasury exercised a monopoly of note issues. Initially—and amid the demands on the imperial budget stemming from the war with Paraguay—issues of paper money were made in conjunction with the floating of debt, domestically and abroad. Recourse to seignoriage would reappear, albeit to a lesser degree, in the late 1870s, in connection with expenditures with drought relief. Throughout, government policy in the monetary realm sought to institute a fully convertible circulation, an objective that was eventually achieved in mid-1889. The attainment of the “mythical” 27 pence/milréis parity paved the way for the Ouro Preto government to reintroduce plurality of gold-backed note issues by private banks. A generous program of subsidized credit to planters was not enough to secure the survival of the constitutional monarchy, which was toppled by a military coup in November 1889.

Suggested Citation

  • André A. Villela, 2020. "The Treasury as a Monopolist Note-Issuer: 1866–89," Palgrave Studies in the History of Finance, in: The Political Economy of Money and Banking in Imperial Brazil, 1850–1889, chapter 0, pages 93-136, Palgrave Macmillan.
    • Handle: RePEc:pal:psitcp:978-3-030-32774-3_4
    DOI: 10.1007/978-3-030-32774-3_4
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