BRAZILIAN FINANCES.—LAW OF 1860.
The following are the chief leading provisions of this law, which may be called the Banking Law of Brazil:—
1st. To limit the issues of independent banks to the average of the first six months of 1860 during the suspension of cash payments.
2nd. To limit the issues of the Bank of Brazil and its branches to double its unengaged funds, the Government being empowered to grant their issue to be raised to three times the value of the said disengaged funds, but this only in case they do not exceed the average of its issues since its foundation. All this during the suspension of cash payments.
3rd. To abolish small note issues of the independent banks. The Bank of Brazil to withdraw from circulation its small notes if within six months it did not resume cash payments.
4th. To contract the issue of all banks at the rate from 3 to 12 per cent. if within a year they did not resume cash payments.
5th. To subject for the future banks to the Bankruptcy Law, in case of their not paying their notes in gold.
6th. To appoint an official Government Inspector for each bank.
7th. To limit the dividends of all commercial companies to their net profits on each half-year's operations.
8th. To prohibit the issue of promissory, or other notes to bearer, without authorisation of the Legislature, except cheques on bankers.
9th. To allow to the banks the mutual exchange of their notes received in payment.
10. To submit to the Government's approval all sorts of companies and corporations, after certain formalities for the guarantee of the public.
11th. To make concessions for banks of issue for railways and canals dependent on the Legislature.
12th. To regulate the organisation of savings-banks, friendly societies, and pawnbrokers.
13th. To substitute the copper coins by bronze.
14th. Finally, to facilitate the acquisition of the Railways for the State by exchanging their bonds for Government internal stock of 6 per cent., or for external of 4½, both at par.
Of such efficacious character were the provisions adopted by the Law of 1860 that the foreign exchange, infallible thermometer of the circulating medium, was gradually rising, and from 25¾d., where it was at the publication of the said law, it rose to 27⅝d., that is to say, it went above par, and this was the rate at the time when the financial crisis of 1864 occurred. Accordingly the market price of bullion also went down.