Banks, Economics, and Power during the Second Reign: The SociedadeB ancfiriaM aufi, MacGregor & Cia, 1854-1866 Carlos Gabriel Guimar•es DepartmeonftH istory Um'versidaFdeed eraFl luminensBer,a zil The creation of the Brazilian Commercial Code and the end of the slave tradew eree ssentieavl entsfo r thed evelopmeonft urbane conomiacc tivitieisn Rio deJ aneLtdou ringth e 1850sT. hec ommercicaal pitatlh ath adb eene mployed in the profitableA tlantics lavet rade[ Lobo,1 978,p p. 210-13]c ouldn ow be invested in the domestic market. The fearso f theB raziliane conomiecl itec oncernintgh en ewu seso f this commerciacla pitawl erea lsot hoseo f thec onsolidateadn dc entralizeBdr az'dian EmpireS tateS. upportintgh ei nterestosf thed ominanctl asseass sociatwedit ht he slave-a ndc offee-baseedc onomyin the stateo f Rio deJ aneiro[ Mello,1 984,p . 53],t hef ederasl tatera isedo bstacletos investmenitns t hep roductivaec tivitieosf thep mnatya nds econdasrye ctorisn, extractivaen dm anufacturiinngd ustrieTsh. e 1866J usticDe epartmenRt eporst howtsh att hec apitailn vesteadn dt hen umber of corporatioannsd l imitedp artnershioprsg anizeind R iod eJ aneirboe twee1n8 50 and 1865t hatw erea ssociatewdi th the tertiarys ectoro f the economyw eref ar greatert han in the secondarayn d primarys ectorsA. mongt he companies organizedin the tertiarys ectorb, anks,i nsurancea,n d transporct ompanies (raikoadss)t ando ut,w hereaisn thes econdarayn dp rimarys ectorso,n lym ining andt extilec ompaniewse res ignifican[Lt evy,1 977,p p. 78-80]. One of the mosta ctivep articipanitns the procesos f consolidatinthge EmpireS tatew asb usinessmIafinn euE vangelisdtaeS ouzala, terB aron( 1852)a nd Viscoun(t1 875)o f Mau/t[ Mau/t1, 943,p . 327].W ith a groupo f "nationaal nd foreignb usinessmehne," o rganizetdh eS ociedadBea ncfifiMa au/tM, acGrego&r Ciai n Riod eJ aneiroin 1854T. hec reatioonf thise nterprisrea isetsh ef ollowing questionWs:h atw eret hei ntentionosf Mau/ta ndh isg roupin creatinga bank? Andw hatk indo f bankw ast heS ociedadBea ncfiriMa au•,M acGrego&r Cia? Organization TheS ociedadBea nc:ixMiaa u/tM, acGrego&r Ciaw aso rganizeodn J uly2 6, 1854.A ccordingto its charteri,t was a sodgetgn c ommanpdeitr actionwsi th a capitalizatioonf 6,000c ontoTsh. eB arono f Mau/to rganizetdh eb anka longth e BUSINESS• XTD ECONOMIC HISTORY, VolumTew enty-snixo, .2 ,W inte1r 997. Copyrigh¸t1 997 by theB usinesHsi storyC onferenceIS. SN0 894-6825. 382 / CARLOS GABRIEL GUIMAR•ES lines of the Caisse Gfinerale du Commerce et de Industrie of French banker JacqueLsa ffite[ Kindleberge1r9,8 8p, p. 141-46]b, ecausteh atk indo f commercial societwy asn ot coveredin Brazil'sC ommerciaClo de.T his form,a ccordintgo Mau•, was" thew ayt o maket he news ocietyo perateo utsideth e government rulingsth atc orporationhsa dt o submitto , sinceth erew asa ne xorbkanrte gulation in thec odet hatm adeit possiblfeo r corporationtos be administrativedliys solved regardlesosf the interventiono f the shareholdervso' te,a ndt hat seemedto me, concernintgh eu seo f thec apitala, na nomaly["M au&1, 943,p . 232]. Table 1:P artner-Manaogfte hresS odedaBdaen c•rMiaa u•,M acGreg•o r,C ia Commercial Countryo f Name Address Activities Birth IrineuE vangelistdae Ruad a Direita,5 2 NationalB usinessman* Brazil Souza( Barono f TextileW holesale-r mat.n o. Maufi, 1854, and 275, 5/05/1851'* Viscounto f Maufi, Director of Carrothers& Co., 1874) mat. no. 279, 5/05/1851'* Shareholdearn dp resident, Banco do Brasil (1851-53) Presidenot f the ImperialC ia de Navegallo a Vapor (steamboacto mpanya) nd Estradad e FerroP etrtpolis (Railroadc ompany()1 852) Jo•o IgnficioT avares Ruad o Sab•o,1 0 NationalB usinessman* Brazil Director of Banco do Brasil Shareholdeorf theI mperial Ciad e Navegag•oa Vapor and Estrada de Ferro Petrtpolis( 1852) Director of the English companyE dwardJ ohnston & Co. (1848) AlexandeDro nald Ruad e S{oP edro, Exchangea*n dP ublicF unds England MacGregor 7 Broker, mat. no. 402, 10/6/1851'* Textilei mporterf rom Liverpool Jos•H enrique Parmero f CarrothersC,a stro, Portugal Reyneldl e Castro & Co. (Manchester) Source*sA: •aanacLka emmAerdt• inistra•'Mvoe,r cane#I nl dusttdiaalC orteeP rovindoaR iod eJ aneiro (Rio de Janeiro, 1851-55); Carttrio do 3 ø Oildo. Livro de Notas n ø 213, 27/05/1854 a 26/10/1854,f olhas8 7-88;C arttriod o 5ø O ffdo.L ivrod oR egistrGo eraln ø 13,2 7/05/1854 a 08/05/1855f, olhas3 7ve 58;S tanleDy. ChapmanM,e rchaEnnt te•risien BritainF:r omth e IndustrialRevoltuotW ioonr ldW arI (CambridgEen, gland1,9 92)p, p.1 04-5. **Registrod e Cartase Matriculasd os ComercianteCs,o rretoresA, gentesd e Leilbes, Trapicheireo As dministradodreAs rmazenes D epositodso T ribunadlo C omercidoa C apital SOCIEDADEB ANC_•RIAM AU_•,M ACGREGOR& CIA, 1854-1866/383 Two aspectosf theb ank'sc hattedr eservaet tentionth: ed kecfiono f the companayn dt hec reatioonf a Londonb ranchT.h eb ankw asc lkectebdy a board composeodf thef ourl argessth areholewrsh, ow erem adep atmet-manag(esrese Table1 ), anda fiscacl ouncilf,o maedb y fivem embercsh osenfr oma mongth e twenty-fivlea rgessth areholdearnsd s ilenpt artnersT.h es ilenpt artnelri sti ncluded mosto f thep rominennt ationabl usinessmoefn t heR iod eJ aneiroT radingC enter sucha sM ilit5oM fi•ximdoe Souza(t heV iscounot f Andarala) ndJ os6A nt6niod e Figueiredoa,s well as representativoefs manyf oreignf irms,m osto f them EnglishT. he presencoef thesefi rmsi s not surprisinsgi,n ceth eB arono f Maufi had numerousc onnectionws ith Englishc ommerciacla pital,p rimarilyt hat associatedw ith the slavet rade. The firm Carruthers& Co., of which he was a partnewr ith RichardC arruthersa,l ongw ith otherf irmss ucha sM ackayM, iller andC o.,H ogg,A dam,a ndC o.,a ndA ndrewa ndE dwardf,i nancedsl avetr aders in Rio deJ aneirob ehindt he facadeo f importsa nde xports[ Marchant1, 950; Tarares1, 988,p p. 129-35]T. he associationf C arruther&s Co.w ith slaved ealer andt radeJr o5oR odriguePse teirad eA lmeida( Barono f Ubfi)c learlyil lustrated thisr elationshi[pG orestein1,9 93,p . 141]. The Londonb rancho f the bank was locatedi n the City, the most importanct ommerciaanl df inanciacle nteirn thew orld,a ndi tsp urposwe ast o attracct apitale, specialtlhy roughe xchangoep erationAs.s a financiacle ntert,h e Cityp layedfo ure ssentiarol lesin Maufi'sp roject1: ) it facilitatetdh ep aymenot f any amount,r apidlya nd safely,w ithout usingc urrency2; ) it financedt he productiona ndt ransportatioonf rawm atehalsa llo vert hew orld;3 ) it centralized savingsa nd investmentsa;n d 4) it centralizede xchangea nd international commerciaolp erations. The startingd atef or theo perationo f theb ankw ass etf or Septembe1r, 1854,a fter the subscriptioonf all its sharesw, orth 1:0005000e ach,t otaling 6,000:$00(0s ixt housancdo ntoTsh).e openingd idn oto ccurh, oweverb,e causoef a controversoyv ert heb ank'so rganizatioEnv. ent houghit hadr eceivead g uaranteef romt heS tateC ouncilt,h eh eado f governmentht,a tt hep roblemo f jointstockc ompaniewso uldb ee xamineodn lyi n thef ollowinlge gislaturdeu, et o open in April1 855[ Carvalho1,9 96p, . 327],t heb ankw asn otp ermittetdo organizaes a joint-stocks ocietyT. he Imperialg overnment,h roughd ecreen o. 1484 on Decembe1r 3, 1854,p rohibitedth isk indo f propertyo rganizatiocnl,a imingth at it wasn otl istedin theC ommericCalo de[ Nabuco1, 949p, p.2 62-63]. Unable to organize the bank as he intended, Maufi summoned a shareholdegresn' eraals sembolyn Decembe2r3 , 1854w, heret hes ocietwy as reorganizeads a joint-stoccko mpanyE.v enw ithout he approvaolf theF iscal Councitlo openb rancheisn Belem( Par/ta) ndR ioG rande(R ioG randed o SUl) [[ornaldCoo mmgr1d8o6, 6p, . 2],t heb ankp erfomaewde lli n itsf ttsty earso f operation. A s canb e seenin Table2 , theb ankd istributeddiv idendtso itsp artners, increasintgh emf rom6 15000in July1 857t o 705000in Januas1y8 59.T able3 recordsth e bank'sb alancebse tween1 856a nd 1858;i n nominavl aluest,h ev olume of loansr osef rom 7,798 contoins December1 856 to 13,604c ontoins December 1858, and the casha ccountr ose from 397 to 1,551 contoTs.h ere was an increase 384 / CARLOS GABRIEL GUIMAI•ES Table 2: DistributioonfD ividends July 1857 61 !;000 January1858 61! January1859 70! July 1859 55• 1860 45• 1861 45• 1862 45• 1863 45• ;000 ;000 ;000 ;000 ;000 ;000 ;000 1864 45'. ;000 SourceJ:o rnaldCo ommerdCoo,m merdo1, 858-1864. Table 3: BalancoesrB ancMoa udM, acGreg•o:r• Cia, 1856-1864(i nc ontodser gis) 1856 1857 1858 1859 1860 jun. dec. jun. dec. jun. dec. jun. dec. jun. dec. 1. Assets accounts 1.1 Loans: 1.1.1 Discounted bills 3,099 3,390 1.1.2C autionarbyi lls 343 226 1.1.3M ortgagedb ills 1.1.4 Current accounts 3,576 3,924 1.1.5 Bills receivable 172 258 1.3 Cash account 639 397 2. Liabilities accounts 2.1 Capital 6,0o0 6,0o0 2.2 Reserve fund 71 99 2.3 Deposits 2.3.1 Current accounts 2.3.2 Interest bonds 2.4 Issues 13,604 13,602 13,605 1,551 271 328 357 6,000 6,000 6,000 6,000 6,000 6,000 596 622 163 183 2,215 2,190 1861 1862 1863 1864 13,139 7,515 8,615 8,414 880 849 1,097 815 jun. dec. jun. dec. jun. dec. jun. dec. 1. Assets accounts 1.1 Loans: 1.1.1 Discounted bills 1.1.2C autionarbyi lls 1.1.3M ortgagedb ills 1.1.4 Current accounts 1.1.5 Bills receivable 1,046 1.3 Cash account 332 2. Liabilities accounts 2.1 Capital 6,00o 2.2 Reserve fund 183 2.3 Deposits Z3.1 Current accounts 5,188 2.3.2 Interest bonds 861 2.4 Issues 7,881 6,720 7,964 6,218 6,223 2,328 323 323 506 506 440 653 6,000 6,000 6,000 6,000 6,000 6,000 6,000 220 225 268 286 239 175 3,542 2,789 4,251 2,491 2,235 353 804 610 751 815 1,022 722 SourceJ:o maldoC ommerdBoa,l an5od o BancoM au•iM, acGrego&r Cia,1 856-1864a, nd BrasilC, omissd&eI nqu•titsoo braes c ammd ac risnea P rafad oR iod eJ andind e1 864,.,( Riod e Janeiro1, 865),p . 234. Analysiosf theseb alancerse vealsse veraiml portancth aracteristaicbso ut them aino perationosf theb ankI.t becomecsl earf,o r exampleth, att heb ankd id SOClEDADEB ANCARIAM AU•kM, ACGREGOR& ClA,1 854-1866/385 didn oti ssuev ouchersh,a vingn o entriesre cordeidn theb alanceT.h e bankh ad triedt o issuec ommerciavlo uchersin 1855,v ouchersto bearera nd a five-day term,b ut it wasf orbiddento do sob y theg overnmenTt.h e governmenatr gued thats uchv ouchercso uldi ncreasteh ev olumeo f thec irculatinmg ediumI.n fact, controol vern otei ssuews asp arto f theg ovemmenmt'so netarpyo licye, stablished by the Monetary Reform of 1846 and the Banking Reform of 1853. By establishinthge p arityo f thec urrencayt 15=27p encea, ndb yg ivinga ni ssuing monopoltyo Bancod oB rasi(lt het hirdb anko f thatn ame)c, reatebdy t he 1853 reformst,h eg overnmenmta intainecdo ntrool f thec urrencTy.h er egimes awt his asn ecessartoy prevenfto reigne xchangdee preciatiown,h ichw ouldh indert he entrancoef thef oreignc apitailn dispensabtole B razil'sru rale xpomJnegc onomy. The BrazilianIm periagl ovemmenta'stt emptto followa golds tandarpdo licyis veryc lear[ Pelaeza ndS uzigan1, 981,p p. 67-85]. The 1857 Crisis and the Banco Mau•, MacGregor & Cia The growtho f commercianl dm anufacturinacgt ivitieisn Riod eJ aneiro, asw ella st hed raino f goldt owardth en ortheasret sultinfgro mt hep ressuroef the commercicailr cuiot f Salvadoarn dR ecffee, specialilny r elationto the slavetr ade, from the millst o the coffeep lantationisn Vale do Paraibaa ndM inasG erais, forcedt heg overnmentot allowB ancod o Brasitlo issueth ee quivalenotf three timesi ts availablef unds;t he bank'si ssuesr ose from 15,531 contoins 1854 to 40,128c ontosi1n8 56( seeT able4 ). Table 4: CirculatinP•agp eMr on• andE xchan•Rgaet e Paper Money Issued (contocskr gis) Year Treasury ExchangRe ate( pencep er thousanrd• is) Banks Total Maximum Minimum 1850 46,884 1,147 48,031 28 263/4 1851 46,684 1,313 47,997 301/2 271/2 1852 46,684 3,631 50,315 281fi 261/2 1853 46,693 5,569 52,262 291/4 271/2 1854 46,693 15,531 62,224 28 5/8 261/2 1855 46,693 21,063 67,756 28 27 1856 46,693 40,128 85,827 281/4 27 1857 43,677 51,540 95,217 28 231/2 1858 41,655 50,905 92,570 27 23V4 1859 40,701 55,172 95,873 27 23 % 1860 37,600 50,391 87,991 271A 241/2 1861 35,108 46,904 82,012 273/4 241/2 1862 3,324 45,740 79,064 273/4 243/4 1863 30,594 51,127 81,721 27 1/8 263/4 1864 29,094 70,449 99,543 273fi 251/2 SourceAs:m aroC avalcanOti, r atiod rculanntaet ional(RdioeJ aneiro1,8 93)p, . 314,a ndA rildaM . C. Teixeira",D eterminantee asr madilhadsap ollticma onet&ibar asileirnao I I Imp&io"0 Diss. 386 / CARLOS GABRIEL GUIMAR_,•_ES Thisa uthorizatiown,h ichc ontradictetdh er egulationgso verninBg anco doB rasipl, ermittetdh ec ontinuationf d irecitn vestmeinnt p roductiobnu, ta tt he expensoef inflationD. uringt hew holey earo f 1850o, nly1 5 sharews eret raded duringfi ved aysO. f theset,w elveb elongetdo banksa ndt her emainintgh reew ere froma steamshcipo mpanyIn. 1855,t herew ere1 32t ransactionosn the stock marketin Rio deJ aneiroa, n increasoef 880p ercenct omparetdo 1850.S ixteen companiewse rer egularlqyu otedo nt heR iod eJ aneiros tockm arketo, f which fourw ereb anksf,o urw eret ranspocrto mpanietsh,r eed ealitn publics erviceosn, e in shipbuildinogn, ei n a perfumerya,n do nei n agriculturcaol lonizatioTnh. e remainintgw oh adl ineso f businesthsa tc ouldn otb ei dentifie[dL evy1, 977p, . 83]. The conservativfea rt hatt he issuingo f currencayn dl iberael conomic practicecso uldg enerataen e conomcicr isiws asa lreadbye ingfe lt.J os•d eA lencar, a famousn ovelisat ndl ifelongs enatoor f the Conservativpea rty,p ublisheda n articlein CorreiMo ercantoiln J anuary1 2, 1855,d escribintgh e excitemenot f the stockm arketC. allingto hisc olleagueastt' entiotnh ed angertsh ats tocks peculation couldp osef or the Imperiaol rder,h ep roposegdr eategr ovemmenint tervention. Politicald isagreemenwto rsenedw ith the deatho f Hon6rio Hermeto CarneiroL eto, the Marquiso f Parantiw, ho wasp residenot f the Councila nd TreasuryM inisterA. imingt o averta politicacl risist,h e Marquiso f Olinda,t he newp residenotf theC ouncila, ppointeldib eraBl ernardod eS ouzaF rancol,a ter Viscounot f SouzaF rancot,o headt heT reasurDy epartmenitn, a positionla ter knowna st he conciliatioonf fice.A ssociatewdi th Maul'sg roupa ndh imselaf n opponenotf theI mperiagl ovemmente'sc onomipco licyS, ouzaF rancop romoted bankingan dm onetarrye formisn 1857t hats upportehdi sv iewsb: ankingp lurality andt hee ndo f thei ssuinmg onopoloy f Bancod oB rasilT. hroughth eser eforms, whichr ecognizetdh e righto f variousp rovinciabla nksto issuec urrencyS, ouza Francop roposead m odificatioin thec redist ystem[A ndfade1,9 87p, p.5 8-59]. Thei mplementationf t hen ewp olicyle dt hed iscounrat tet o dropf rom 11 to 8 percenat ndr einstatetdh er egionaisl suinrge gimeth ath adp recedetdh e monopolyg ivent o Bancod o Brasili n 1853.N ow, howevert,h e new banks "wouldp lacei n circulatiobno ndst o bearera, t sighta ndw ithouti nterestu, nder theS tatea dministration[A" ndfade1,9 87,p . 59]. SouzaF ranco'ps olicieosn lyi ntensifietdh ed isputbe etweena dherentosf theb ankinga ndt he currencsyc hoolsD.u ringh ist hrones peecihn June1 857, beforeth ea pprovaolf then ewb ankinsgt atuteSsa, leTso rresH omema, supporter of the currencsyc hooal ndt henp residenotf theB ancod o Brasilc, riticizedth e newe conomipco licyo f MinisteSr ouzaF rancoT. heT reasurMy inistear nswered thisc riticismm,a kingp ublicth ed ivisioinn theg ovemmeonvt ere conompico licy [Andrada1, 923,p p. 79-84]. By thet imet hep rovinciabla nksw erea uthorizetdo begino perationtsh, e recoveroyf Russiacne reael xportsh adc ausead spectaculdarro pi n commodities pricesw, hichh ada dominoe ffectt hroughouWt esternE uropea, ffectinbga nks ands tockm arketTs.h iss hocikn terruptead g eneratrle ndo f increasinpgri cetsh at hadb eenc auseidn partb yt hed iscoveroyf goldi n Californiaan di n Australiian SOCIEDADE BANC•ILIA MAU•, MACGREGOR & CLA, 1854-1866/387 The 1857c risisre presenteadni nterruptioin prosperiotyn a globasl cale previousulyn hearodf .W orrieda bouth er epercussioonf tsh ec risisin Brazil, Englischr editorbse ganto applyp ressurneo: to nlyd idt heyd emantdh atd ebtsb e immediateplya ido ff, butt heya lsor efusetdo extendd eadlinewsh, ichh adi n practicael lowead r olloveor f debtT. heg olds tandarhda db eena dopteds,o t his pressulreed t o a neto utflowo f currencsyi,n cteh ec onvertibiloitfy p apemr oney operateads a warrantto creditordsu ringm omentosf crisisT. hen eto utflowo f currencrye presentbeydt hef oreignex changreem ittanciens 1 857w as7 6p ercent greatetrh ani n 1856l Andfade1,9 87p, . 66].E xamininTga ble5 , we cans eet hat thee xchangre mittancetos L ondonin 1857w eref arg reatetrh ani n othery ears of the 1850s. Table 5: ForeigEnx changRee mittancMeasd et oL ondo(nin p ounds) Year Riod eJ aneiro Bahia Pernambuco Totaal 1850 175,000 176,500 118,095 1851 178,000 166,900 143,153 1852 201,227 194,566 189,447 1853 152,000 143,575 180,262 1854 381,915 74,706 33,100 1855 460,107 20,500 72,000 1856 403,241 95,000 40,000 1857 685,000 145,000 118,650 1858 417,000 - - 1859 956,651 64,000 46,500 695 758 561 588 ßV alueso f thep rovinceosf Maranh•oP, ar•,a ndo thersa rer esiduaol r incomplete. SourceB: rasilC, omisslod e Inqu•ritos obreo meioc irculanteA;n a M.R. deA ndfade", 1864" conflitoe ntrem etalistaes p luralista(sD" issd. eM estradoR,i od eJ aneiroIF, CS/UFRJ1, 987), p. 66. Pressurebdy thec onservativewsh, o declarehdi sp olicyt he causeo f the exchangdee preciatioann dt hee conomic risisa, ndu nablet o relyo n Bancod o Brasilw, hosep residenwt ash iso pponentS, ouzaF rancot urnedt o BancoM aufi, MacGrego&r Cia.A s describeidn the 1858T reasuryM inistryr eport,t hatb ank, througha programo f withdrawalfsro m its Londonb ranche, nabledB razilt o overcometh e crisisa ndt o reestablisfho reigne xchang[eB rasil1, 858,p . 9]. The actiono f BancoM aufi,M acGrego&r Cial edt hec onservativewsh, o controlledth eL egislativAes semblyto, accusteh eT reasuryM inistero f favoring the banka ndp romotings peculatioAn.l thoughs ucha ccusationdsid not appear in the inquiryb egunin 1859,t he blamef or the crisisn everthelesfesl l on the speculatioann d monetaryp olicyo f the TreasuryM inistry[ Brasil,1 859]. In responseM, aufis uggestethda tt he speculatiohna db egunw ith the organization of Bancod o Brasil[ Maufi1, 943,p p. 236-39]. Examinintgh ec oursoe fBancoM aufiM, acGrego&r Ciaa ftert he 1857-58 crisiso, nen oticesa tendenctyo wardd ifficultiesE.v eni gnoringth e 1857b alance sheetsi,t can be seent hat in the liabilitiesc olumnt herew asa decreaseo f almost 45 percenitn depositisn currenat ccountfsa,i lingfr om1 3,139c ontions D ecember 1858t o 7,515c ontoins J une1 859.U nfortunateltyh, ea vailabldea tad o not allow 524 54O 601 522 542 222 568 107 538 241 948 65O 388 / CARLOS GABRIEL GUIMAR_•ES a deepear nalysoisf theb ank'sa ssetsh;o weveor,n ec ans eet hatt heb ank'sc ash accoundtr oppedfr om1 ,551c ontions D ecembe1r8 58t o 271c ontoinsJ une1 859. The dividenddsi stributetdo thep artnerdsr oppedfr om7 05000in J anuar1y8 59 to 555000i n Decembe(rs eeT able2 ). The 1857-58c risiss ignifietdh e starto f the difficultieosf the Brazilian financiasl ystemi,n volvingb anksb, ankingh ousesd, iscounht ousesc, ommissionersa, n dp roducersT.h e famousb ankingh ouseA lvesS outoo, ne of the greatesot f the time,s uffereda dangeroursu n,a ndo therss ucha sA ntonioJ os• DomingueFs erreiraa ndA sfleyW ilson& Co.,w hichh adp articipateidn loans with BancoM au•, MacGrego&r Cia,w entb ankruptT. o givea n ideao f the magnitudoef thec risislo, ssews eree stimateadt about1 5,000:00050c0o0n toasn,d then umbeor f annuabl ankrupticiiensc reasefdro mf orty-ninien 1857t o ninety in 1858[ Brasil1, 865,p . 270]. Politicallwy eakenedS,o uzaF rancow asr eplacebdy SaleTs orresH omem, whop resentead b ill,n o.5 0,t o theA ssembolyn J une3 0,1 859t,h atr eaffirmetdh e postulateosf t heg olds tandaradn di nsisteodn t her eturno f thei ssuinmg onopoly to Banco do Brasil. The 1860 "Law of Restraints" and the Reform of the Banking System The bankr eformb ill,l awn o. 1083,a pproveodn Augus2t 2, 1860,a nd knowna st he" Lawo f Restraintso,n" lya ddedto thed ifficultiefasc edb yB rae'dian bankingin stitufonsT. he mainp ointso f then ewl awi ncludeda greatecr ontrol over the consftufiono f corporationsw, hich,b esidesn eedingg overnment authorizatioansd ictatebdy t heC ommerciCaol den, owa lsor equiretdh ea pproval of the LegislativAes sembly(A rticle2 ). As for banksa ndb ankingh ousesn, o independebnat nkc ouldis suen otesu nlesist wasc apabloef redeemintgh emi n gold,w hicha ppliedin a declarafoonf bankruptc(yA rticle1 ),a ndo nlyB ancod o Brasila ndi ts brancheos btainedth isa uthorizationA.c cordingto MariaB arbara Levy,t hisl awc learlys howetdh at" theI mperiagl overnmenutn, ableto eliminate thep luralitoy f issuingw, ouldt ryt o restrickt " [Levy1, 977p, . 85]. As a resulot f thisc redit-restrainpinogli cyt,h eb ankingsy stemre tractetdo sucha degreeth ati n 1862o nlyo neb ankingh ousew asc reateda,n dt hen umber of bankruptciiensc reaseIdn. t heg ovemmenot'ps inions,u cha p olicyw ass alutary, becaus"et hosew how erea imings olelya t speculatinwgit hn o realb asisw ithdrew from them arket."T hisv iewd oesn ot correspontdo realityh, oweverf,o r the shrinkaghe ad evidenti deologicacla usesS. ilvaF errae,t hen Ministero f the Treasuryn,o tedt her emarkabdlee creasine commerciaacl tivitiepso, intingo utt he depressioann dt he scarcitoyf investmencta pitala, sw ella sd elaysin payments. Thesef actorsc ausead decreasoef approximate1ly0 p ercenitn thep ublicr evenuesw, ithoutc onsideriningf lationw, hichh adn oty eta bated[L evy1, 977,p . 85]. Thes ituatioonf theb ankinhgo usebse cameev enm orep recariowusit ht he advenot f the firstB rifshp rivateb ankinge stablishmeinnt sB razilT. he new legislafonw,h ichd emandegdo ldr eservefos rn otei ssuews,o rkedin favoro f the Britishw, how ereo peratinign a markewt hereth ec onverfbilitoyf thec urrency SOCIEDADEB ANCARIAM AUA,M ACGREGOR& CIA, 1854-1866/389 The presencoef Britishb ankss ucha sL ondona ndB raziliaBn ankL, td. [Born1, 984p, p. 116-18G; rahan1, 973p, p. 101-6J; oslin1, 963]in theB razilian markebt roughat ni nnovatioinn theb ankingar enat:h ec heckT. his" newo rder of paymenwt hicha llowedo net o writeu poni t the exacta mounto be paid, regardlesosf thec hangea,n dw hicho, ncer edeemebdy theb ankc, onstitutead receipot f acquittadl,e mandead l evelo f trustm uchg reatetrh ant heb ankn ote," a levelt hato nlyt heg reatb anksc ouldc ommand[L evy1, 977,p . 89]. Fromt heb eginninogf the1 860ss, everafal ctorcso nvergetod p recipitate a crisisth: ea pplicationf a restrictivcere dipt olicby yt heg ovemmenwti,t hB anco do Brasirl estoretdo itsi ssuinmg onopolyth; ep resencaen dc ompetitioonf the Britishb anksa; ndt hei nternationsailt uationin, cludintgh eU .S.C ivilW ar.M aufi expressehdis f earsin an 1860l ettert o them anageoxf BancoM aufi& Ciai n Rio Grande,R icardoJ osdR ibeiro: The scarcitoyf moneyh erea ssumeths ep roportionosf a crisisa, nd Bancod o Brasiol penlya ttackms yh ousein sucha wayt hat,e ven with the bestp apersin my handsI am not ablet o raisem oney; fortunateltyh, ec arefupl athI haveb eenf ollowindgo esn otl eave usu ncovereidn the currentr ansactionIs i.n tendedto sendy ou todaya greats umi n bills,h avinga djustedso mew ithdrawalisn ouncesa gainsth is house,b ut the demandw as sucht hat it was necessatroy resorto 120c ontoosu to f whath adb eens eta sideto sendt o you.B ancod o Brasial bsolutelrye fusedto discounat ny sumf or us,e venw henw eh ads ent hems uperiobri llsr epresenting purchaseasn d salestr ansactionasn, d abovea ll endorsedb y the house![ IHGB, ColeqCtMoa ufi,1 860]. In Septembe1r8 64,a crisisb rokeo utt hatb ecamek nowna st he "Souto crisis,a"f tert heb ankruptcoyf theb ankinhgo useA nt6nioJ os•A lvesd oS outo & Cia.T he Imperiagl overnmenret sortedto a serieso f measureasm, ongth em decreen o. 3306,d atedS eptembe1r3 ,1 864w, hicha uthorizeBda ncod o Brasitlo increase its issues to tbxee times its available funds, and decree no. 3307, of Septembe1r7 , 1864,w hichi n its five articleso utlinede xtraordinamrye asures, amongth emt her egulatioonf bankruptcioefs b ankerasn db ankingh ousews ithin sixtyd ays,s tartingo n the 9t ho f thatm onth. The Septembecr isiws asv eryh ardo nB ancoM au•,M acGrego&r Cia.A n analysios f its balancerse vealsa worseningo f its financiasl ituationC. urrent accoundte positisn Decembe1r 864a mountetdo 354c ontowsh, ereaisn Juneo f the samey eart het otalh adb een2 ,236c ontoAss. for assetsin, theb illsr eceivable accountth, erew asa decreasf•eo m6 ,223c ontionsJ ulyt o 2,328c ontions D ecember, a reductioonf 73 pexcenint sixm onthsT. hec asha ccounwt ass imilarlayf fected, movingf rom5 06 contoins D ecembe1r 863t o 239c ontoins J ulya nd2 52 contoins December1 864.I n ordert o balanciet s accountsB,a ncoM aufi,M acGregohr ad to resortt o the rediscounthoagf Bancod o Brasil,a n amountt hat reached 5,246:440513c6o ntoins d iscountbse tweenS eptembe1r0 and3 0, 1864[ Brasil, 1865,p . 204].T he valueo f dividendssi nce1 860h adb een4 55000f or each1 :0005 390 / CARLOS GABRIEL GUIMAP•ES Facedw ith thiss ituationM, aufia ndh isp artnersto oka serieso f stepsto reducteh eirlo sseTs.h eyl iquidateCda rrotherdse,C astro& Ciai n Manchestaenr d suspendethde openingo f BancoM aufi,M acGrego&r Cia in Paris[ IHGB, ColeggMo aufi,1 864].M aufia lsoa ttemptetdo negotiataen associatiowni th the London and Brazilian Bank. This associationw, hich included Banco Mau,4, MacGrego&r Ciai n Riod eJ aneiraon di tsb ranchin LondonB, ancoM au,&q Cia in MontevideoU,r uguayR, osfirio(A rgentinae) S •oP edrod o RioG rande( Rio Granded o Sul-Brasila),n d the Londona nd BrazilianB ank,t ook the name LondonB, raziliana ndM aufiB ank( seeT able6 ). The mergerp rovideda great influxo f capitaflo r Mau,5f,u ndamenttaol hisb usinesws,h ichw asn ot goingw ell According to Maufi himself, "The capital of the new and powerful credit institutiown ill be 5 millionp oundss terlinga,n dt hee stablishmeonft i ts branches will function under the name of London Brazilian and Maufi Bank..." [IHGB, Coleggo Maufi, 1865]. Table 6: Parmer-Manageorfs t heL ondonB, raziliana ndM aufiB ank Name/Countroyf Birth Irineu Evangelistad e Souza( Baron of Maufi)/ Brazil Henri Louis Bischoffsheim/France PhilipC harlesC avan/England PaschoaCl harlesG lyn/England EdwardJ ohnston/England Edward Moon/England William Freer Scholfield/England Activity/CommerAcidadl ress Banker/Rua de Direita, 42 - Rio de Janeiro Banker and businessman/Angel Court, 10 - London Businessman/Lidenhall Street, 16 Banker, Lombard Street, 67 - London Businessman, Great St. Helen's, 6 Businessman/CookS treet,3 - Liverpool Esquire/SusseSxq uare2, 2- London SourceA: rquivoN acionalJ, untaC ommercialB, ook 5; London,B raziliana nd Mau• Bank, Memorandum of Association, 1865. Authorizedb y the Imperialg overnmentth roughd ecreen o. 3587 of December2 0, 1865,t he LondonB raziliana nd MaufiB ankd id not prosper. IndeedM, aufip ulledo ut of them ergerI.n a reportp resenteodn Decembe5r , 1866,t o the silentp artnersh, e saida boutt he failedm erger: WhenI wass eekintgo organizien Londona corporatiotno satisfy theseo perationsa,n dl ookingt o gatherth en ecessaeryle mentfso r its succesosn, eo f them ainb rokerso f thatc enters uggestetod m e ani nterestinmg ergewr ith theL ondona ndB razilianB ank. OnceI hadg ivenm yw ord,n othingm adem e retrea-t not even theg reat ragedoyf lastM ay,w hichs hedth ed arkeslitg htu pont he pathso f thec ompan/ethsa tf unctionin Londonu nderth ep rinciple SOCIEDADEB ANCfidLIAM AU•, MACGREGOR& CIA, 1854-1866/391 returninfgr omE uropeI, noticedin my friendasb outh em erger projectc, ausebdy t hep rofouncdh angien circumstanctheast h ad takenp laces inceth es igninogf thec ontractasn; o ppositiotnh atI hoped to overcome... Howeveru, ponm yr eturnf romR io deP rataI, realizedth att he resistancoe f my friendsa nd interestedp artiesh ad become invinciblea,n dI hadt o givei n, exercisinmgy lawfurl ightt o reject an agreemenotf a conditionanla turem, adeu nderc ircumstances thats harpldyi fferedfr omt hep resenot nes...[ [ornadlo C ommerdo, December 9, 1866]. The 1866c risihs adr epercussioinn tsh eC ityt, heg reatesotf w hichw ast he failureo f ani mportanfti nanciahlo useO, verendG umey& Co.A sh ew asd eeply acquaintewdi tht hef inancialilf ei n LondonM, aufrt ealizedth att heL ondona nd BrazilianB ankw ass evereluyn derminebdy thec risisa ndt hereforteh ata merger wasn o longera ppealing. With the failure of the merger and the end of the bank's period of operationd rawingn eari,n Decembe1r 866M au• proposetdo hiss ilenpt artners that the bankb e liquidatedM. au• decidedto organizea new societya nd to concentratael l hisw ealthi,n cludingh isp ersonapl ropertyi,n a newb ank,c alled Banco Mau• & Cia. Conclusion Returnintgo thei nitiaql uestionws,e mays ayt hatB ancoM aufiM, acGregor & Ciac onstitutead c ommercibaal nkw hosep rimaryfu nctiown ast o attracftu nds in thef ormo f deposiatsn dt o distributhe ema sc ommercilaola nsA. nalysiosf the bank's balances reveals that its main assets were discounted bills. BancoM aufiM, acGrego&r Ciaw aso neo f thee nterprisbeesl ongintgo the Barono f Mau,4A. n activep articipanint thep oliticaaln de conomilcif eo f hist ime, theB arons awi n bankinga businescsa pableo f attractintgh ec ommerciacla pital oncec onnectetdo the slavetr adeT. he bank'sf ailuret o investt hisc apitailn the ptima•ya nds econdasrye ctorosf thee conomcya nb ee xplaineId b, elieveb,y t he prevailinegc onomiacn dp oliticaml ode- agricultureaxl portbsa sedo n slavela bor - whichf avoredth ea ccumulatioonf capitaol n thep eripherieosf thee conomy. Thev iewo f thisp aperth erefordei sagreewsit ht heh istoriograpthhya ts eesin the Barono f Maufai Schumpetereianntr epreneau br,u sinessmina nth em odems ense of thew ordi n theB razilianE mpire[ Caldeira1,9 95].R athera, sJ acobG orender hass uggestetdh,e B aronw asa transitionafilg ure: The Mau• phenomenowno uldh aveb eeni mpossibilfe t hereh ad not alreadyb eena ccumulatecda pitailn Brazil,w hosea vailability increased after the end of the slave trade. But Mau• himself was no moret hana sorto f transitions,t illa capitalisimt merseidn thes lave establishmenatlt, hough e conflictewd ith the narrownesosf its limitsf or the realizationo f moderne nterprisewsh ich,i n other 392 / CARLOS GABRIEL GUIMAR•ES References AndradaA, ntonioC arlosR . de,B ancoEsm issionisntaoBs rasi(lR io deJ aneiro1, 923). Andfade,A na Maria Ribeirod e, "1864:c onflitoe ntrem etalistaes pluralistas.("D iss.d e MestradoR,i od eJ aneiroIF, CS/UFRJ1, 987). 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MauftI,r ineuE vangelisdteaS ouzaV, isconddee ,A utobiograEfxiap:o sifaos c redoerea sop •ib•co (Riod eJ aneiro,1, 943). MelloJ, oioM anueCl ardosdoe ,O CapitalstToaor •o,3 r ae dn.( SioP aulo1, 984). PelaezC, arlosM ., andW isonS uziganH,i stdrMiao netddrioaB rasi2ln, ae dn.( Brasili1a9, 81). TavaresL, uisH enriqueD ias,C omdraP'mo ibiddoeE scrav(oSsi oP aulo1, 988). TeixeiraA, rildaM agnaC ., "Determinantees A rmadilhadsa p olificam onetldab rasileirnao II