| Book Review | The American Historical Review, 111.4

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| Book Review | The American Historical Review, 111.4 | The History Cooperative

Book Review

Caribbean and Latin America

Anne G. Hanley. Native Capital: Financial Institutions and Economic Development in São Paulo, Brazil, 1850–1920. (Social Science History.) Stanford, Calif.: Stanford University Press. 2005. Pp. xviii, 286. $55.00.
This book by Anne G. Hanley is an important contribution to our understanding of the institutional mechanism that helped the state of São Paulo emerge as the economic powerhouse of Brazil in the late nineteenth and early twentieth century.	1
Hanley is the first scholar to examine closely the means through which the financial sector transferred agricultural wealth to the growing urban-industrial sector in the 1850–1920 period. She convincingly refutes the long-held view that the modernizing elements in late nineteenth-century Brazil were foreign owned or foreign controlled and shows that the dynamism of São Paulo's economy stemmed instead from domestic institutions. In the 1880s most banks serving the São Paulo economy were increasingly dominated by coffee planters, who had a substantial equity stake in them. Under their influence these banks shifted away from merchant-inspired banking practices to loans that were secured by collateral placed with the banks. Thus the "shift from discounting paper with two well-known signatures to lines of credit secured by collateral represented an important diversification away from formalized versions of traditional, personal arrangements" (p. 51). Hanley also notes increased investment by banking institutions in the shares of joint-stock companies after 1885 and that some banks, encouraged by the provincial government through profit guarantees, provided longer-term credits to the rapidly expanding agricultural sector.	. . .

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