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Rothschilds’ “Delicate and Difficult Task”: Reputation, Political Instability, and the Brazilian Rescue Loans of the 1890s

Published online by Cambridge University Press:  20 April 2015

LEONARDO WELLER
LEONARDO WELLER*
Affiliation:
Leonardo Weller is an assistant professor at the São Paulo School of Economics—FGV in Brazil. He received his PhD from the London School of Economics. Contact information: Rua Itapeva, 474, andar 10, São Paulo, SP 01332-000, Brasil. E-mail: [email protected].
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Abstract

The London House of Rothschild depended on Brazil to maintain its reputation. This became a problem in the 1890s, when the Brazilian government almost defaulted on its sovereign debt after a change of regime had made politics unstable and economic policy unorthodox. This article shows how the relationship between the bank and the state developed to the point that Rothschilds was forced to rescue its client. Exposure enabled Brazil to implement policies designed to defend the regime at the expense of payment capacity without defaulting. The debt crisis ended only after the political situation stabilized toward the close of the century, when the bank pressured the government to tighten economic policy.

Type
Articles
Information
Enterprise & Society , Volume 16 , Issue 2 , June 2015 , pp. 381 - 412
Copyright
Copyright © The Author 2015. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved. 

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