This article examines the fiscal transformation of Spain's trade with Spanish America during the 17th century. It analyses the taxation of trade combined with the evolution of the Hispanic Monarchy's long-term domestic debt. To this end, the author looks at the almojarifazgo de Indias (main customs duty), its juro (annuity) obligations and the evolution of the transatlantic trade. He argues that the fall in customs revenue and the increasing non-payment of the juros issued against the almojarifazgo were neither a consequence of the alleged crisis of the Carrera de Indias nor of the higher incidence of fraud. The Crown was not interested in exerting greater fiscal pressure on the trade or fighting fraud at the customs houses of Seville and Cadiz as the increased tax revenue would have gone entirely to service the unpaid juros. Instead, the fiscal burden shifted towards extraordinary contributions that were free of juro obligations.

How are expropriations related to governments' debt defaults? The literature has shown that expropriation episodes and debt defaults have rarely coincided, suggesting that each event resulted from a different set of factors. The aim of this article is twofold. First, I analyse default–expropriation relationships in the years previous to the debt crisis of 1982. I show that while default and expropriation episodes did not always coincide, countries that expropriated at least once during the period were also those that defaulted more often. I observe that countries that expropriated had worse macroeconomic indicators than countries that did not. Second, I focus on the case of Mexico, when its announcement of a debt moratorium in August 1982 was followed, less than one month later, by the nationalisation of its banking system. Both events were outcomes of an acute economic crisis. The nationalisation announcement aggravated the crisis because an agreement with the International Monetary Fund (IMF) seemed increasingly uncertain. I provide evidence from the largely overlooked bond market (on which the government never defaulted) that shows that investors reacted negatively to the bank nationalisation. Finally, I present original, published and unpublished primary sources to demonstrate that commercial banks, as well as international organisations, expressed misgivings about the banks' nationalisation. This fact may have hindered the country's economic recovery through the deterioration of public confidence and a decline in foreign investment.

This article provides aggregate data on credit flows in Santafé de Bogotá, the capital of the Viceroyalty of New Granada (present-day Colombia, Ecuador and western Venezuela). By perusing a thorough report submitted to Bourbon authorities on notarial transactions, which included both ecclesiastical and non-ecclesiastical loans in the city, the article estimates the volume and size of lending activity while exploring how distinct types of credit interacted and shaped the business milieu of the region. It argues that by the late 1770s, Catholic Church lending had ceased to be the main source of investable funds in the region, with merchants and other non-ecclesiastical investors injecting growing funds into sectors traditionally avoided by ecclesiastical lenders such as commerce, mining and manufacturing. Network analysis suggests that merchants became brokers between different credit sources, alleviating information asymmetries and opening the credit market to borrowers with collateral and institutional restrictions willing to pay higher interest rates. Finally, by focusing on New Granada, the largest gold producer of the Spanish Empire, the article identifies some distinctive credit patterns that are different from those developed in silver-driven economies such as New Spain and Peru. Thus, the article provides new paths to study Latin American financial history.

This paper examines the role that resource endowments played in the performance of two New World coinages. Massachusetts Bay and the Viceroyalty of Peru provide a useful study in contrasts, having markedly different institutions and resource endowments. Both colonies originally emphasised the provision of «good» money, that is, the provision of a uniform coin (in weight and fineness) and of a sensible mix of large and small denomination coins that would support the domestic economy. Their outcomes, however, differed. We suggest that in Potosi, the sheer volume of the resource endowment (silver) incentivised fraud and the neglect of the provision of fractionary coinage in the viceroyalty. In contrast, in Massachusetts Bay, the scarcity of the resource produced incentives better aligned with the production of «good» money. The northern colony produced a trustworthy coinage that provided small denomination coins for the domestic market.

This article discusses historical evidence from the Potosi mint and Massachusetts Bay mint that illustrates the importance of the resource endowment (in this case silver) for the provision of small change. We show that the availability of silver was fundamental in shaping incentives. The relative scarcity of silver in Massachusetts Bay contributed to the small scale of the mint's operations, and implied that neither the monetary authority nor the mintmaster faced a significant tradeoff between drawing seigniorage from the mint and the production of small-denomination coins. In contrast, in the Viceroyalty of Peru, the abundance of silver, and the consequent large level of production of the mint's heavy peso coin, heightened the tradeoff between the fiscal and monetary objectives of the coinage. We suggest that these incentives negatively affected the production of fractionary coinage in the Peruvian viceroyalty, whereas in Massachusetts Bay the production of small-denomination coins was the norm.

The shortcomings and potential dangers of international financial flows for the health and stability of domestic banking systems in developing countries have been copiously discussed over the last decades. While the importance of capital controls and regulation as determining factors has been widely emphasised, the extent to which these policies work in episodes of financial crisis is still a matter of debate. This article examines the relationship between supervisory frameworks and banking fragility in Mexico and Brazil in the wake of the international debt crisis of 1982. It shows that the model of international banking intermediation that evolved out of the stringent capital mobility system in Brazil was considerably less vulnerable to crisis than in Mexico, which had a more lightly regulated regime. These findings provide insights into historical debates about the implications of prudential regulation and capital controls for the development and expansion of foreign finance, and whether the risks underlying international banking are necessarily inherent in the process of financial globalisation.

Between June 1959 and March 1964, the democratic governments of Brazilian presidents Juscelino Kubitschek (January 1956 – January 1961), Janio Quadros (January–August 1961), Ranieri Mazzilli (August–September 1961) and João ‘Jango’ Goulart (September 1961 – April 1964) received no support from the World Bank (WB), which refused to fund even a single new project during this period. During this same period, and, more specifically, between July 1958 and January 1965, the International Monetary Fund (IMF), the WB's twin institution, granted financial assistance to Brazil only twice: a controversial and highly conditional Stand-By Arrangement (SBA) signed in May 1961; and a non-conditional and automatically approved Compensatory Financial Facility (CFF), granted in May 1963 to compensate Brazil for the decrease in coffee prices on the international market.

This attitude towards Brazil changed significantly following the military coup of March 1964. Money flowed into the country and by 1970 Brazil had become the largest receiver of WB funds and a chronic borrower from the IMF, signing two SBAs in 1965, and one per year between 1966 and 1972. We use recently disclosed material from the International Monetary Fund and the World Bank archives to analyse the relationship of these two institutions with Brazil and to foster the debate on their political neutrality, arguing that the difference in the IMF's and especially the WB's relations with the military regime reflected, more than anything else, the existence of an ideological affinity between the parties with regards to the ‘right’ economic policy.

Analysing Curaçao as an offshore financial centre from its inception to its gradual decline, we find that it originated and evolved in close concert with the demand for such services from Western countries. Dutch banks and multinationals spearheaded the creation of institutions on the island facilitating tax avoidance. In this they were aided and abetted by their government, which firmly supported the Antilles in getting access to bilateral tax treaties, notably the one with the United States. Until the mid 1980s Curaçao flourished, but then found it increasingly difficult to keep a competitive advantage over other offshore centres. Meanwhile the Curaçao connection had enabled the Netherlands to turn itself into a hub for international revenue flows that today still feed both Dutch tax income and specialised financial, legal and accounting services.

This article analyses the reasons why most Latin American governments frequently defaulted on their debts during the nineteenth century. Contrary to previous works, which focused on domestic factors, I argue that supply-side factors were equally important. The regulatory framework at the London Stock Exchange prevented defaulting governments from having access to the capital market. Therefore, the implicit incentive for underwriting banks and governments was to accelerate negotiations with bondholders, particularly during periods of high liquidity. Frequently, however, settlements were short-lived. In contrast, certain merchant banks opted to delay or refuse a settlement if they judged that the risk of a renewed default was too high. In such cases, even if negotiations were extended, the final agreements were more often respected, allowing governments to improve their repayment record.

The South American Funds National Exchequer was established in 1818 to contribute to the consolidation of the public debt of Buenos Aires. It was the first financial innovation since the revolutionary outbreak in Buenos Aires, and its failure allowed the authorities to understand the limits of the fiscal and financial commitment they proposed by means of that institution. Its suppression, in 1821, offered an antecedent to develop a deep reform of the financial institutional matrix of Buenos Aires, based on the Public Credit office, the Amortization Exchequer and the Bank of Buenos Aires. The South American Funds National Exchequer was, thus, the first movement in the negotiation on the terms of the financial commitment assumed by the nascent State. This paper analyzes the 973 accounting entries of the institution, providing an interpretation of that failure and its importance for the course of public finances in Buenos Aires.

The outbreak of the First World War had a strong impact on Latin American economies, due to the sharp interruption of the influx of capital and the deep disturbances that it caused in international trade. In the Argentine case, a notable aspect was, together with the increase in the fiscal deficit, the growing trade and payment balance surplus. Public indebtedness was reoriented towards the domestic market by the means of a state bank Banco de la Nación, and this institution also granted a large loan to the governments of England and France, to finance the export of cereals to those countries. This work seeks to contribute both to the debate on the financial impact of the war and postwar conflict in Argentina, as well as to the role of public banks to mitigate the ups and downs of the external sector and mitigate its effects on local actors.

The institutional changes of the mid-19th century made the modernisation of the Brazilian economy possible, as well as that of credit relations. We sought to evaluate the mortgage market before and after the 1864 reform and the institution of the Banco do Brasil's mortgage portfolio in 1867. We found a very comprehensive market throughout the territory in 1855-1859, although concentrated in the main urban centres. The evidence shows the expansion of mortgages after the two measures taken, but at the end of the 19th century this expansion came to an end.

Between 1800 and 1820, Buenos Aires and the former colonial Viceroyalty of Rio de la Plata faced an unprecedented fiscal crisis caused by the revolutionary wars, eventually solved by levying forced loans. This paper considers the unintended institutional consequences of these loans. The novel devices allowed (1) the holders of forced-loan coupons to use these bonds to pay off debts incurred in customs duties and (2) the holders of bills of exchange involved in the provisioning of the military to use these bills to pay part of their forced loans. Starting with the conceptualisation of the institutional order as a complex system, this paper examines the interactions among the circulation of financial paper bills, the financing of war and changes in the position of the merchants' guild and the legal framework for Atlantic trade. It thereby contributes to renewing institutional change approaches in the Spanish-American context.

This paper analyses the role of Mompox in New Granada's interregional trade during the late colonial period. It focuses on the value, structure and destination of exports of domestic goods from Mompox to markets on the Atlantic and the Andes. By unearthing unexplored sources, this paper provides evidence that will help to understand, indirectly, some issues such as the nature and timing of economic growth, the degree of regional specialisation and, above all, the role of inland ports in the economic geography of the viceroyalty. The paper contends, first, that the region experienced a boom–bust cycle during the late colonial period. The export of domestic goods doubled between 1770 and 1800 but subsequently collapsed during the 1802-1809 years. Second, evidence suggests that the region experienced a process of market deepening and widening. Trade flows, then, played a larger role in shaping the economic history of the region than previously thought.

This article explores the impact of Asian goods in the Rio de la Plata area through the navigation course of two frigates of the Royal Company of Phillipines, forced by the maritime conflict between the Spanish and British Empires, dock in the Southern estuary. Examining the value and traits of the shipment and the details of the ‘comercio de pacotilla’, this study analyzes the distribution of the goods from China, Philippines and in particular, India, in the port basin, the hinterland of the Viceroyalty, and its connections to the Alto Peruvian space, the trans-Andean region, and the Littoral way to Paraguay. This episode enables an understanding of the distribution of goods, as well as a more detailed recognition of the actors of this traffic and a renewed evaluation of the role of the company in the global market of Asian goods.

This article scrutinizes the results of the mission carried out by Edwin Walter Kemmerer in Mexico during 1917. Based on unpublished materials from his private archive, as well as other Mexican archives, this article analyses the process of approval, installation and implementation of the reforms introduced by Kemmerer's mission in Mexico. It is argued that Kemmerer's work as a financial advisor for Venustiano Carranza was not a total failure, as the existing literature on the subject claims. Indeed, on the eve of Great Depression, Mexico exhibited the main institutional features of ‘Kemmererized’ countries: a central bank, the gold standard and a centralized tax system. It is also suggested that the economic knowledge brought into the country by the money doctor moulded the ideological foundation of the new financial and economic elite of revolutionary Mexico.

Through the analysis of Argentina-World Bank (WB) relations between 1971 and 1976, this article examines how democracies and dictatorships, as well as political and economic constraints did (or did not) impact WB lending to Latin America. This period is especially revealing. Between May 1971 and September 1976, the WB did not grant any new loans to Argentina, thereby generating an exceptional and unusually long break in WB lending to the country. Drawing on previously undisclosed files from the WB Archives and additional primary sources from Argentina and the United States, this article unveils the actual mechanisms, criteria and justification that stood behind the decision to lend or not to lend to Argentina. It maintains that the WB’s self-imposed principle of «neutrality» played a crucial role in facilitating the WB’s relations with Argentina during the politically and economically unstable early 1970s.

The recent European debt crisis has renewed interest as to why debtor countries honour their foreign debts and subscribe to respectively burdensome rescheduling conditions. While the cost of defaulting in a domestic financial system has been recognised as a main motive for repayment, the factors that cause sovereign states to refrain from debt repudiation are not fully understood. This article investigates the reasons behind the repayment decision and weak negotiating position of the Mexican government following the 1982 debt crisis. It shows that leading commercial banks had considerable amounts of external loans in their books, and that Mexican policymakers lacked the foreign exchange access they needed to secure the stability of the domestic banking system. The high exposure of domestic banks to Mexican debt and their heightened dependence on foreign capital worked as mechanisms that allowed international creditors to enforce their claims and deterred Mexico from declaring a unilateral default.

This article examines Argentine relations with multilateral agencies and bankers during the first years of the last military dictatorship. It begins with an overview of relations and the external situation before the rise of the military and why a new economic team sought and restored Argentine credit standing. There follows a review of how links with the U.S. Treasury and international institutions lost significance and how cross-country financial intermediation, carried out mainly by leading state banks, gave foreign bankers a key role in the financing of Argentina’s foreign exchange needs. It also emphasises explicit and underlying motivations in the behaviour and policies of all actors involved and offers an evaluation of former Minister Martínez de Hoz’s efforts to justify these policies in the early 1980s.

The Douro Wine Company was one of the most emblematic mercantilist companies promoted by the Marquis of Pombal. It was established in 1756 and has played an unquestionably important role in the Port wine market since then. Port wine exports to Brazil were significantly lower than exports to England over time. Generally, the oscillation of Port wine exports to Brazil has been explained by particular episodes in the Douro Wine Company’s business. Employing structural break analysis and vector of error correction models to analyse data between 1756 and 1826, we concluded that Port wine exports to Brazil were robustly explained by the monetary dimensions of the world economy of the time.