9. BANKING AND FINANCE. The principal banks in Brazil are: Banco do Brazil, Banco Nacional Braziliero, Branch of the Na tional City Bank of New York, British Bank of South America, Limited, Brasiliansche Bank fiir Deutschland, London & Brazilian Bank, Limited, London & River Plate Bank, Limited, Banco EspatIol del Rio de la Plata, Banco Commercial do Rio de Janeiro, Banco Anemic) Transatlantico, Banco do Commercio, Banco do Estado do Rio de Janeiro, Banco Nacional Ultramarino. All of the foregoing are in Rio de Janeiro; the Banco Francesco 6 Italiano per l'America del Sud is in Sao Paulo. The mon etary system is nominally based on the gold standard. The milreis, the gold unit, which is divided into 1,000 reis, weighs 0.89645 grammes ofgold .917 fine, or .82207 grammes of fine gold, and its par value in terms of the cur rency of the United States is $0.5463. One dol lar, currency of the United States, is there fore the equivalent of 1$831 gold milreis. The reader will notice that the sign $ for milreis is placed after the units and before the deci mals. The circulating medium, and the only legal money in Brazil, consists of government notes guaranteed redeemable at the rate of thd. per milreis. This rate is maintained through a conversion fund known as the Caixa de Converge. (Compare: ARGENTINA — Bank ing). The theoretical unit of the paper circu lation represents 0.48816 grammes of fine gold, and its equivalent in terms of the currency of the United States is $0.32444. The par value of $1, currency of the United States, is there fore 3$08226 expressed in terms of Brazilian paper currency. The method of quoting ex change rates in Brazil under normal conditions (consult 'Latin American Monetary Systems and Exchange Conditions,' by Joseph T. Cosby) is the following: 90 D/S London 16-3/52d=1$000 Berlin 1 Mark .730 Paris 1 Fran .593 • Sight London I 5-7/8d.1$000 Berlin 1 Mark= .740 Paris 1 Fran .600 New York $1.00 U. S. Cy.=3$113 Exchange fell to 14d. on receipt of the news of the outbreak of the European War. A bank holiday (15 consecutive days) was declared, specie payment was suspended by the Caixa de Conversio, and the rate of exchange remained at 14d. (more or less nominal) until the banks reopened on 18 August. After that date the rate declined steadily until early in October, when a low point of 10d. was reached. The
principal factors in bringing about this heavy decline were: First, the action taken by the Caixa de Conversio, second, the closing of London credits in favor of Brazil, and, third, the fact that the government authorized an issue of treasury notes amounting to $81, 120,000 or 250,000 contos (one conto=.1,000 milreis; 1,000 milreis$324.44 currency of the United States). During February 1916, the rate for bankers' 90 days' sight drafts on Lon don varied from 11 7/16d. to 11 15/16d., the closing rate on 29 Feb. 1916 being 11hd., as compared with 'wad. on 31 January. The rate for 90 days' sight commercial bills was mid. on 24 April 1916.
By executive decree, promulgated 23 Dec. 1916, the exchange of the notes of the Caixa de Conversio (Conversion Office) for gold was to continue suspended until 31 Dec. 1917, ex ception being made in favor of the exchange of notes by order of the government to attend only to the service of the external debt of the Union.
The aggregate cash balances of the princi pal banks in Rio de Janeiro at the end of Feb ruary 1916 showed a decrease of about $1,325, 000 as compared with those at the end of Jan uary. Discounts during February in the same year showed an increase of $265,000, approxi mately. The rate obtainable for first class paper was about 7% per cent. The Federal Treasury 6 per cent (paper) bills commonly called esabinas? issued in 1915, commenced to fall due. The government availed itself of its option of renewing the bills for one year, paying interest in cash. Custom House re ceipts, both at Rio and at Santos, showed an increase for the first two months of 1916 as compared with the same period in 1915. The commercial situation in Sio Paulo, 15 March 1916, was reported to be very sound. The large commercial houses in England and the United States who sent out agents discovered that the was rather in the execution than in the obtaining of orders. Credits of three or four months were given, whereas, a year before, practically all business was done on a cash basis. The question of tonnage continued to absorb attention, freights remain ing very high. The greater part of the ship ments went to the United States. Cotton mills reported progress, several companies showing comparatively prosperous situations.