Sovereign Debt Crises and Negotiations in Brazil and Mexico, 1888-1914 (eBook)

Leonardo Weller is Lecturer at the São Paulo School of Economics, Fundação Getulio Vargas, (EESP-FGV), Brazil. He earned his PhD at the London School of Economics, UK.

Preface 6
Acknowledgements 9
Contents 11
List of Figures 14
List of Tables 15
Part I Governments versus Bankers 17
Chapter 1 Introduction 18
Governments and Banks in the First Financial Globalisation 19
The Pre-1914 Sovereign Debt Market 21
Book Outline 24
Part I—Governments versus Bankers 25
Parts II—Brazil versus Rothschilds 26
Part III—Mexico versus Mediocre Banks 30
References 34
Chapter 2 Governments versus Bankers in the Pre-1914 Sovereign Debt Market 36
Theory and History of Sovereign Debt 37
Rescue Loans and the Government’s Side of Sovereign Debt 41
The Government’s Choice: Patron Banking or Competition 45
Analytical Framework 47
Conclusion 52
References 52
Part II Brazil versus Rothschilds 55
Chapter 3 Rothschilds’ Tropical Empire: Brazil, 1822–1889 56
Rothschilds Picks a Tropical Empire 57
Brazil’s First Crisis and Rescue Loan 60
The Return of Rothschilds 61
Paraguayan War and Debt Boom 64
The Falling Empire and Its Exposed Bank 66
Conclusion 68
References 69
Chapter 4 Rothschilds’ Troubled Republic: Brazil, 1889–1898 72
Regime Change, Chaos and Stabilisation 73
The Fiscal Collapse 76
Rothschilds’ Credit Umbrella 79
Brazil as a Free Rider 83
The Funding Loan as Shared Policy Ownership 86
Rothschilds as a Power Broker 89
Conclusion 92
References 92
Chapter 5 Rothschilds and Coffee Finance: Brazil, 1898–1914 96
The Republic Borrows Again 97
Brazil Suspends Rothschilds’ Monopoly 99
The Coffee Lobby 101
Brazil’s Unorthodox Gold Standard 104
Another Debt Crisis 107
Rothschilds Rescues Again: The Second Funding Loan 110
Conclusion 113
References 113
Part III Mexico versus Mediocre Banks 116
Chapter 6 From Defaults to Redemption: Mexico, 1821–1890 117
Wars, Invasions and Failed State 118
The Serial Defaulter 121
The Rise of Porfirio Díaz 124
Railways, Banamex and Fiscal Accounts 126
Díaz, Noetzlin and Sovereign Debt 130
Mexico Returns to the Market 131
Díaz Refuses a Patron Bank 133
Conclusion 135
References 135
Chapter 7 The Bankers’ Beloved Dictatorship: Mexico, 1890–1910 139
The Establishment of a Reputation 140
Gaining the Upper Hand: The 1899 Loan 143
Mexico Goes to New York: The 1904 Loan 149
Porfiriato’s Finest Hour: The 1910 Loan 154
Conclusion 156
References 157
Chapter 8 The Loans of the Revolution: Mexico, 1911–1914 159
The Mexican Revolution 160
The Fiscal Impact of the Revolution 163
The 1913 Loan 164
Paribas, Asymmetry of Information and Conflict of Interest 166
Speyers and the Nacional Railway 170
Conclusion 172
References 172
Chapter 9 Conclusion 175
Appendix: Data and Sources 180
References 183
Index 185