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Rothschilds and Brazil: An Introduction to Sources in The Rothschild Archive

Published online by Cambridge University Press:  05 October 2022

Caroline Shaw
Caroline Shaw*
Affiliation:
The Rothschild Archive, London
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Abstract

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N. M. Rothschild & Sons (NMR), the banking house which the Frankfurt-born Nathan Mayer Rothschild (1777–1836) began operating from New Court in London in 1809 and which is continued to this day by his descendants, has a long history of involvement in Brazil. Extensive documentation of this history is preserved in The Rothschild Archive in London, where material up to 1930 is available for consultation. The firm's initial business with Brazil was in merchant banking activities and bullion dealing, but in 1855 it became the Brazilian government's financial agent in London and went on to handle the government's borrowing in the London capital markets and to be closely concerned with the country's fiscal, commercial, and exchange rate policy. With the bank at the heart of the development of Brazilian public finance, The Rothschild Archive is an important resource for an understanding of this aspect of Brazilian economic and political history, as well as the history of British informal imperialism and emerging patterns of globalization.

Resumen

Resumen

N. M. Rothschild (NMR) é uma instituição bancária fundada em New Court, Londres no ano de 1809 pelo alemão Nathan Mayer Rothschild, natural de Frankfurt (1777-1836), e que, até hoje, continua funcionando sob a direção dos seus herdeiros. A empresa tem uma longa história de atividades no Brasil e uma extensa documentação desta história está preservada no Arquivo Rothschild em Londres, cujo acervo datado até 1930 está disponível para sua consulta. As primeiras atividades da empresa com o Brasil foram a transação bancária e o comércio de ouro e prata em barra. Entretanto, em 1855 a empresa tornou-se agente financeiro do governo brasileiro em Londres e começou a administrar os empréstimos do governo nos principais mercados de Londres e a interessar-se mais profundamente pela política do país em relação as tarifas fiscais, comerciais e de cambio. Este sistema bancário representa o coração do desenvolvimento financeiro público brasileiro, o que torna o Arquivo Rothschild um recurso fundamental para a compreensão deste aspecto econômico e político da história do Brasil bem como para a história do imperialismo britânico informal e os padrões emergentes da globalização.

Type
Research Reports and Notes
Information
Latin American Research Review , Volume 40 , Issue 1 , 2005 , pp. 165 - 185
Copyright
Copyright © 2005 by the University of Texas Press

Footnotes

1.

I wish to thank Roderick Barman, Gail Triner and my colleagues Melanie Aspey, Victor Gray, and Elaine Perm for comments on an earlier draft of this paper and the comments of the external reviewers: all errors are of course my own.

References

2. That this first correspondence is with Samuel, Phillips & Co. in Rio de Janeiro (Rothschild Archive London [RAL] XI/112/32B), and that Samuel Moses Samuel was Nathan Rothschild's brother-in-law, suggests the importance of family networks in this early stage of the relationship between the bank and Brazil. See Roderick Barman “Nathan Mayer Rothschild and Brazil: The Role of Samuel Phillips & Co” in The Rothschild Archive: Review of the Year April 2002–March 2003 (London: The Rothschild Archive, 2003), 38–45.

3. RAL XI/38/107; XI/38/167; XI/112; XI/38/215; and XI/112 and XI/114/6.

4. RAL I/O.

5. Stockmeyer, Gracie, Hobkirk & Co. to NMR, Rio de Janeiro, 15 July 1834, RAL XI/112.

6. Samuel, Phillips & Co. to NMR, Rio de Janeiro, 19 August 1822, RAL XI/38/215.

7. The financial effects of suppressing these rebellions were obviously of concern to the bank, although as Alphonse de Rothschild wrote to his English cousins, 16 January 1894: “Nous sommes heureux de voir que le Brésil continue à vous faire des remises. Il faut que ce pays soit bien riche pour pouvoir à la fois supporter la guerre civile et payer ses dettes.” RAL XI/101/25.

8. Naylor Bros, to NMR, Rio de Janeiro, 11 November 1836 RAL XI/112/122. “We mention for your information that an accredited Agent from the Chilian [sic] Government goes to England by this conveyance, with full powers to make the best arrangement he can for the payment, by yearly instalments of the Chilian Bonds. If the threatened rupture with Peru should not again cramp their resources, from all we can learn Chili [sic] is in a situation to give full effect to any arrangement that may be come to.”

9. It has been suggested that the Rothschilds were wary of doing business with the newly independent republics in Latin American for fear of offending the antiliberal sentiments of important European client states. Brazil, of course, was a monarchy. See Frank Dawson, The First Latin American Debt Crisis: The City of London and the 1822–1825 Loan Bubble (New Haven and London: Yale University Press, 1990), 93.

10. RAL 000/401A. Samuel, Phillips & Co. were suggesting a joint loan with NMR to the “Rio Government” of Dom João VI, king of Portugal and Brazil, as early as October 1820: Samuel, Phillips & Co. to NMR, 2 October 1820. RAL XI/38/215A. João VI returned to Portugal in 1821, but Samuel, Phillips & Co. continued to urge loans: see Barman, “Nathan Meyer Rothschild and Brazil,” 40.

11. “This loan, taken by N. M. Rothschild, formed the remainder of the original sum of £3,000,000 proposed to be raised by the Brazilian Government in 1824 and of which only £1,000,000 was issued … at 75. These terms being considered by the Brazilian Government far below those which the credit and resources of the country justified, induced the Government, at that time, to issue only so much as was called for by the existing wants of the country.” Jules Ayer, A Century of Finance 1804–1904: The London House of Rothschild (London: Wm. Neely, 1905), 25. The second tranche was issued at 85. The profit to Rothschilds from the 1825 loan has been estimated to consist of £40,000 commission and £59,000 of backdated interest. Dawson, The First Latin American Debt Crisis, 93–94.

12. Samuel, Phillips & Co. to NMR, Rio de Janeiro, 14 August 1824, RAL XI/38/215.

13. RAL 000/337.

14. See, for example, Stephen Haber and Herbert S. Klein, “The economic consequences of Brazilian independence” in How Latin America Fell Behind: Essays on the Economic Histories of Brazil and Mexico, 1800–1914, ed. Stephen Haber (Stanford: Stanford University Press, 1997), 253.

15. RAL 000/401. Dawson, 67, suggests that the loan to Portugal might have been intended to “be used to finance an expedition against Brazil.”

16. Dawson, 181–2.

17. RAL XIII/206/1 and 000/337; XIII/208; 000/336 and 000/401.

18. RAL XI/65.

19. Penedo's close relationship with the Rothschilds, which included receiving advice on his private investments and some £200,000 in gifts during his time as Minister in London between 1855 and 1889, is discussed in Richard Graham, Britain and the Onset of Modernization in Brazil 1850–1914 (Cambridge: Cambridge University Press, 1968), 101–2. Penedo (1815–1906) is mentioned on several occasions in the correspondence of Charlotte de Rothschild (1819–1884), wife of Lionel (1808–1879), head of the London bank following the death of his father, Nathan, in 1836. Charlotte de Rothschild to her son Leopold, 20 August 1866: “In the early part of the day, Baron Penedo called to take leave. It really grieves me to see the poor man, so downcast, nay broken-hearted did he appear at the thought of leaving London and Europe.—He positively cried—and though it seems absurd to see men embracing each other, I could not help being deeply and painfully touched when the departing traveller … his tear-stained face on Papa's forehead.—He really is very much attached to your father; probably he has every reason to be grateful, but not every one fulfils with feelings of regard and affection the great duties of gratitude” (RAL 000/84).

On this occasion Penedo was being recalled in disgrace as a result of his financial dealings, although he was reinstated five years later and remained in post until 1889.

20. RAL 000/401.

21. Correspondence: RAL XI/65. Ledgers: I/23, I/24, I/26 and I/231; I/162; and I/25, I/232 and XI/7.

22. For example, compare the table “Brazilian public loans raised in England before 1918” in Graham, Britain and the Onset of Modernization, 100, with the information in Ayer's A Century of Finance and RAL 000/401. Every loan listed in Graham can be found in the Rothschild documentation.

23. See, for example, Carlos Marichal and Gail D. Triner “European Banks in Latin America in the Late Nineteenth and Early Twentieth Centuries: The Cases of Brazil and Mexico: A Story of Diversity,” in A Century of Banking Consolidation in Europe: The History and Archives of Mergers and Acquisitions, eds. Manfred Pohl, Teresa Tortella Casares, Herman van der Wee, 258–98 (Aldershot: Ashgate, 2001).

24. Lord Rothschild to de Rothschild Frères, 22 November 1906, RAL XI/130A/0C. The regular letters from the Rothschilds at the bank in London to their “cousins” at the bank de Rothschild Frères in Paris at this time, series XI/130A, are a fascinating summary of developing events and Rothschild opinion of those events. The business papers of the Paris bank are held at the Centre des Archives du Monde du Travail at Roubaix.

25. Telegram Banco do Brasil to NMR, [November 1906], RAL XI/111/34. This file contains telegrams between NMR, the Ministry of Finance, and the Banco do Brasil on the subject of the Caixa de Conversão, the mechanism by which the gold standard would operate. The file also includes information on this subject sought from various sources including August Belmont in New York and the Brasilianische Bank für Deutschland. Brazil was on the gold standard for the years 1888–1889, 1906–1914, and 1926–1930.

26. Ayer, A Century of Finance, 51.

27. NMR to Campos Salles, 2 June 1898. RAL 000/73 (128) and see also note 8. The French Rothschilds, less involved in Brazil than the English house was, seem to have been more phlegmatic than the London house about the fall of Pedro II in 1889: Alphonse de Rothschild to his English cousins, 19 November 1889: “Puisque tout le monde même l'Empereur est satisfait en Brésil, nous ne voyons pas pourquoi vous [deviez] être plus royaliste que le Roi et ne pas être satisfait vous-mêmes. L'exemple est certainement dangereux pour les autres monarchies. La facilité avec laquelle l'Empereur s'est laissé expedier comme un coli[s] postal, avec laquelle il a accepté lui même comme compensation de son trône une somme d'argent ne saurait qu'encourager les autres pays à se debarasser de la même façon de leurs souveraines.” RAL XI/101/20.

28. Material concerning the 1898 funding scheme can be found in RAL 000/73 (128); 000/401; and 000/1108 (260/77/1). For the 1914 funding scheme see RAL XI/111/29; XI/111/61; XI/111/64; XI/111/65; 000/492; 0000/1099 (250/562); and 000/1108 (260/77/2).

29. There were rare exceptions, notably the 1829 loan of £800,000 to the Brazilian government issued with Thomas Wilson & Co., and P. Cazenove & Co.'s participation in the 1859 loan for £2,000,000 to the São Paulo (Brazilian) Railway Company.

30. American encroachment is a minor but recurrent theme of Edwin Montagu's diary of his time as chair of the financial mission to Brazil, 1923–1924, sponsored by Rothschilds (RAL XI/111 /220 [h]); Henry Lynch, NMR's representative in Brazil is a vigorous supporter of British interests; and see also Eugenio Vargas Garcia, “Anglo-American Rivalry in Brazil: The Case of the 1920s,” Working Paper, CBS-14-00(P) (Oxford: University of Oxford Centre for Brazilian Studies, 2000).

31. Correspondence between the two firms can be found in a number of RAL files covering the period 1921–1930, but the principal location is XI/111/409.

32. RAL XI/111/87.

33. RAL XI/111/220(c).

34. See note 1.7, with additional notarial acts at RAL XIII/215-222; XIII/230; and principally I/52, I/68, I/85, I/96, IX/198, IX/202, IX/203, IX/208, IX/212, 000/73 and 000/97.

35. Melanie Aspey (ed.), The Rothschild Archive: A Guide to the Collection (London: The Rothschild Archive, 2000), 5.

36. In addition to the correspondence series for the Ministry of Finance (RAL XI/65), material about loans and proposed loans can be found in a large number of files in the special correspondence series XI/111. See note 59 for Lynch's correspondence.

37. Summerhill argues that, contrary to accepted understanding, the development of railways in Brazil benefited the internal market more than the external and “railroads in Brazil diminished the relative importance of the export sector, if anything reducing the degree of foreign economic ‘dependence’.” William Summerhill, “Transport Improvements and Economic Growth in Brazil and Mexico” in Haber, How Latin America Fell Behind, 113.

38. Nathaniel Leff, “Economic Development in Brazil, 1822–1913” in Haber, How Latin America Fell Behind, 45.

39. RAL 000/401; XI/4/95; XIII/230; I/62.

40. See: RAL XI/111/157 and Leff, 48 “This rate-setting policy led to government subsidies for the railways and, eventually, to nationalization.”

41. RAL 000/401.

42. RAL XI/111/30 and XI/111/84.

43. RAL 1/62, XI/111/157, XI/111/204, XI/111/215, XI/111/247, XI/111/383, XI/111/385, XI/111/390, XI/111/398, XI/111/434, XI/111/570, XI/111/571, and 000/573/5.

44. Niall Ferguson, The World's Banker: The History of the House of Rothschild (London: Weidenfeld & Nicolson, 1998), 871.

45. This was the first instance of the central government openly supporting coffee valorization: see Winston Fritsch, External Constraints on Economic Policy in Brazil, 1889–1930 (Pittsburgh PA: University of Pittsburgh Press, 1988), 19.

46. RAL XI/111/34, XI/111/37, and XI/111/38.

47. Draft telegram NMR to the Minister of Finance, Rio de Janeiro, 19 February 1907. RAL XI/111/37.

48. Telegram the Minister of Finance, Rio de Janeiro to NMR, 29 September 1908. RAL XI/111/37.

49. Fritsch, External Constraints on Economic Policy, 62–69.

50. Ibid., 152–157.

51. Files containing material about the 1922 loan and resulting coffee business include RAL XI/111/218, XI/111/219, XI/111/234, XI/111/236, and XI/111/469.

52. RAL XI/38/25; XI/4/58, XI/42; XI/4/59, XI/43; XI/45; XI/4/81, XI/44.

53. RAL XI/43.

54. Son of the financier Samuel Montagu, Edwin Montagu was a Liberal Member of Parliament between 1906 and 1922, during which time he served first as secretary to Herbert Asquith, and subsequently held various government posts including Secretary of State for India (1917–1922).

55. Garcia, “Anglo-American Rivalry,” 42–45 and RAL XI/111/268.

56. RAL XI/111/194, 220 and 309. See also Fritsch, 86–101 and Garcia, “Anglo-American Rivalry,” 32–38 for further information on the mission.

57. RAL XI/111/398 and XI/111/425.

58. Ronald Palin, Rothschild Relish (London: Cassell, 1970), 76.

59. Telegram Lynch, Rio de Janeiro to NMR 12 June 1930. RAL XI/111/425.

60. Telegram Lynch, Rio de Janeiro to NMR, 11 December 1930. RAL XI/111/425.

61. Main correspondence files for Henry Lynch: RAL XI/111/147, XI/111/204, XI/111/239, XI/111/247, XI/111 /285, XI/111 /382, XI/111/383, XI/111/391, XI/111/425; on exchange stabilization and the Banco do Brasil XI/111/400 and XI/111/465; on the match monopoly XI/111/638; for the São Paulo (Brazilian) Railway Company during Lynch's time as their representative in Brazil XI/111/385; on the Brazil centenary exhibition XI/111/168 and XI/15/19. Files continue beyond 1930 but these are at present closed. General files on Brazilian matters also contain correspondence with Lynch.

62. The Rothschild Archive, New Court, St. Swithin's Lane, London EC4P 4DU. [email protected]