The BNDES is a paradigmatic development bank. The trajectory of the BNDES involves a sequence of policies and business practices that have shaped Brazilian development. During the 1950s, the BNDE supplied directed credit for transportation, electric energy, infrastructure and steel production. During the 1960s, the bank diversified under financial reforms. During the 1970s, the BNDE helped complete state-led import substitution industrialization by channelling foreign finance and forced savings into capital goods, project lending and regional development programmes. During the 1980s, the bank shifted away from public investment because of fiscal crisis and foreign debt. During the 1990s, the BNDES became agent for privatization of state owned enterprises. The bank remained virtually the only domestic source of long-term finance during a decade of financial crises in emerging markets (1994–2003).

This book contains a selection of essays that derive from papers presented at the session ‘Insurance in History’, held at the XVth World Economic History Congress in Utrecht in 2009, and at a related pre-conference meeting held in Zurich. The theme of both meetings was deliberately left general with the object of casting the net as widely as possible. One aim of the organizers was to find out what historical research on the insurance industry was currently being carried out around the world and who was involved. The call for papers produced a result that surprised even the optimists among us. Altogether 18 papers from 22 authors were presented at the Utrecht and Zurich meetings. The authors came from Italy, Spain, Switzerland, the Netherlands, Sweden, France, Germany, the USA, Argentina, Chile, Brazil, Japan, Australia and South Africa. There were further offers of papers from researchers in the USA, Canada, Japan, France, the UK, Singapore, Hungary, Morocco and Nigeria that could not be included in either meeting or that were withdrawn, often for funding reasons. One outcome was that the existing pockets of insurance historians, hitherto working in a fairly small and specialized field of business and financial history, were now connected to a truly global network of researchers.

This is the latest stage in a process that has been gathering pace over several years.

Making a Life

Late in the afternoon of Sunday 22 April 1832 John Shaw, a hardware merchant, sat down at his home in Wolverhampton, in the English midlands, gathering his thoughts and feelings so as to write to his beloved wife Elizabeth, ‘My dear Liz,’ then visiting her family in Colne, some 113 miles to north in the heart of industrial Lancashire. The day found him in a reflective, perhaps even pensive mood; his fleeting emotions ranging back and forth across past, present and future:

The nineteenth-century businessman of popular culture and myth is a gritty, bluff, no-nonsense character. Resourceful rather than romantic. The entrepreneur of academic writing – and he is another decidedly gendered figure – is variously a decisive, risk-taking, and, increasingly, creative agent. We are rarely asked to imagine that either character has much of a personal life, let alone an interior life.

Introduction

IMF and Group of Ten studies were announced by US Treasury Secretary Douglas Dillon at the IMF Annual Meeting in September 1963 (the same time a commitment to pursue a similar study was made by Machlup, Triffin and Fellner, who were attending the same meeting). The Group of Ten study was undertaken in the period 1963–4 by the deputies of the Group of Ten. Machlup had scheduled the publication of the Bellagio Group's final report for June 1964, preceding by two months the official publication of the IMF staff and Group of Ten reports. The Bellagio Group's report, International Monetary Arrangements: The Problem of Choice (1964), was shared with the IMF and deputies of the Group of Ten and attracted significant attention, especially from the chairman of the deputies of the Group of Ten, Otmar Emminger, and the chairman of the OECD's Working Party 3, Emile van Lennep. Their interest in the Bellagio Group coincides with the rising importance of the Group of Ten countries and the assignment of major IMF projects to the deputies of the Group of Ten. Chapter 8 first explores the historical context of the rising importance of the Group of Ten.

In the late fourteenth century, a French royal adviser cited the ducat of Venice as a worthy example for his young king to emulate: ‘the fine gold ducat of 24 carats that has not changed its standards for nine centuries’. In fact, the ducat at that point was barely a century old, but it had already impressed itself on the minds of contemporaries as an unchanging standard of immemorial presence. By the time it saw its last issue on the eve of the birth of the euro in 2001, it had indeed survived as the main gold denomination of Europe for the better part of nine centuries.

When authorized in 1284, the ducat standard was not an original invention of Venice; it was a conscious appropriation of the gold coins of identical standard introduced by Florence and Genoa, apparently simultaneously, in 1252. While the genovino had a restricted circulation and would not be copied by other issuers, the florin had great success throughout Europe, partly as a result of the influence of Florentine bankers in collecting papal revenues. Its image of St John (standing) on the obverse and the heraldic lily on the reverse served as the visual model for gold coins for centuries. However, its standard was not universally adopted along with the imagery, and even in Florence its weight was lowered before the end of the thirteenth century.

The Venetian ducat was introduced with an authorization that specifically recalled the standard of the Florentine florin. Like the florin, the ducat was intended to have a fineness as pure as medieval refining technology allowed, generally within a quarter of a carat or about two per cent of absolute purity. The florin was cut at the rate of eight coins to the Florentine ounce, resulting in a coin weight equivalent to about 3.53 grams Venice set the ducat at 67 coins to its marc, which resulted in a slightly heavier standard, about 3.545 g.

Introduction

Through 1967, the IMF and the Group of Ten continued publicly to insist that the prevailing system of fixed parities had worked well, and they showed no desire to consider greater exchange rate flexibility as a means to improve the international monetary system, having recently created special drawing rights (SDRs) on the IMF to address the liquidity problem. No success had yet been achieved in integrating the domestic monetary and fiscal policies of the members of the international monetary system, although currency convertibility at fixed exchange rates was expected. Nevertheless, behind the scenes and in academic circles, greater exchange rate flexibility had begun to gain traction.

Chapter 10 deals with the extension of the Bellagio Group model to a new audience. The focus of these meetings was the choice of exchange rate regime, particularly floating in a variety of guises. Like the first four Bellagio Group meetings, the Bürgenstock meetings were orchestrated by Machlup, using his tools for defining terms and sniffing out value judgements; the meetings also introduced the group to Machlup's variations on scenario analysis. Unlike the Joint Meetings of Officials and Academics, the agenda was firmly in his control. Like the first Joint Meetings around payments adjustment, the outcome of the Bürgenstock conferences was the publication of a book.

Across the city a green and red sign lit up the night sky. ‘Borgata’ it proclaimed, brightly launching the casino era in Atlantic City into a new phase. The gleaming gold Borgata opened in 2003 and quickly became the symbol of a region's hope for its soul and sustenance. Would it finally be the solution to the city's long inability to restore itself as a ‘destination resort’? Since the Resorts International casino opened in 1978, Atlantic City and its surrounding communities linked their fortunes, dreams and enduring vision of a bright future to casinos. As many have documented, that vision has been tested and, despite the money, often been viewed as bringing more problems to the people of the region than benefits. Yet, the story of Atlantic City in the casino era is a largely positive one, most clearly demonstrating an incredible faith in the power of energetic capitalism. The casino floor is a blur of market transactions, successes and failures. Money flies around in all directions, and always, the casino wins more than it loses due to the ironclad laws of probability. But money is just a means to an end. Money alone cannot bring happiness nor make a community whole. The story of Atlantic City in the casino era is therefore not just a story about making money. It is not a story about rich and poor, the community-haves and community-have-nots. Rather, the story of Atlantic City in the casino era is a story about people. It is a story about hopes and disappointment, opportunity and loss. It is a story about determination and desperation, strength and weakness. It is a story about brash, individualistic entrepreneurship and compassionate concern for others. It is an American story.

Before casino legalization in 1976, Atlantic City's economy was in shambles. Young people were leaving as soon as they left high school because there were simply no jobs to keep them around. The city had a three-month economy where residents tried to earn as much money as possible to get them through the long, cold winter, often relying on unemployment or public support to make it through each year.

Introduction

Specialist literature on the Latin American economies during the mature period of the first globalization (1890–1929) has to date not studied the characteristics of the process of capital formation in these countries. This study presents a global while also detailed quantification of their investment in equipment goods, which helps to better understand the growth dynamic of these economies during this historical period, which was of vital importance in the race for economic development.

The first contribution of this study is the homogeneous annual series for spending on different types of equipment goods for a wide and representative sample of Latin American countries. This essay does not shirk the discussion of methodological problems of calculation which severely limit the overall results obtained from the sources. If reservations about methodology invite caution when dealing with the data, the results obtained advocate a revision of historiography. The most important contribution of this quantitative elaboration is that the results support the traditional view on the characterization of the productive systems of the Latin American nations as primary export economies. This, then, refutes the revisionist thesis which proposes that some nations made significant industrial progress during this period. The investment structure did not undergo any relevant change. Investment efforts focused on goods typical of the agro export model: agricultural machinery and means of transport. The only element that apparently altered the investment model arose from the process of electrification.

This chapter assesses the abrupt privatization of subsoil property rights in 1891. Privatization offered a third strategy for mineral development, after earlier attempts that relied variously on state participation or the importation of foreign capital and technology, proved unsatisfactory. Legal change occurred at the same time that the interest in minerals shifted from deriving the immediate wealth of precious minerals to the utilitarian metals that provided inputs for an industrial economy. The chapter considers the patterns of mining regulation and the willingness to prospect and mine. It explores the subsequent renationalization of subsoil rights in 1934 in the context of the evolution of the goals for minerals. By examining the commonly accepted proposition that privatization was unsuccessful, the chapter presents the limitations on developing industrial-scale mining derived from a complex mixture of ancillary institutions. It also finds that the change in ambitions for the mining sector transformed institutional inconsistency from a problem for private actors into a national imperative.

The Constitution of 1891 implemented the first fundamental change in Brazilian mineral rights since early Portuguese rule in 1603. Property was redefined to attach the subsoil to the surface. This action privatized the subsoil by removing it from federal sovereign domain. With the intention of liberalizing both economic governance and access to resources, the framers of the Constitution hoped that the private ownership of assets would create an incentive for mineral extraction, although mining engineers were skeptical (see Chapter 2).

This chapter examines Falconbridge's managerial structure in the 1930s and the agency problems in the organization. As mentioned in the introductory chapter managers do not always act in ways consistent with the owner's maximization of profits. These problems were present not only between owners and managers but also between the mother company and the Norwegian affiliate. We will use one major issue to illustrate the transatlantic agency problems, namely the planning of a new nickel refinery in Canada. Such a move would block all expansion in Kristiansand and threaten the future of the Norwegian refinery. The plans were therefore vehemently opposed, in particular by Grønningsæter, but also by plant manager Steen. Both were staunch Norwegian patriots. They did not restrict themselves to arguments but also tried to create ‘facts on the ground', that is, they modernized the Kristiansand plant without being authorized to do so.

Several factors affected Falconbridge's decision about where to refine nickel: costs, technological considerations, market considerations and, not least, Ontario politics. We will look into these matters as they throw light upon the Kristiansand refinery's position within Falconbridge. But in order to understand Falconbridge's development and choice of path, we must first turn the attention to the inner life at the top level in the company.

Managing Falconbridge

The letters between Grønningsæter and Steen give a unique insight into how the management in a multinational company such as Falconbridge functioned, though viewed from only two people's point of view.

From the mid-1970s nickel consumption stagnated. There was an increasing mismatch between total production capacity and demand. For the first time in several decades, nickel prices became highly volatile, and there was a downward pressure on prices. This meant that the producers had to adapt to a new world. Falconbridge barely broke even in 1975 and experienced its first loss ever in 1977. It would take more almost twenty years before the company again experienced stable and high profits.

While Falconbridge was weakened, the Kristiansand staff managed to innovate and develop ‘their’ plant. This chapter will investigate head office – subsidiary relations in the 1970s, how the subsidiary developed new refining technology, how the research teams and managers in Kristiansand and Toronto competed for mandates within their organizations, as well as the refinery's changing relation relations with the Norwegian business system and with the wider civil society.

The End of Rapid Growth

In the late 1960s, the OECD expected that the average growth in nickel consumption of 7 per cent per year would continue. With such growth, nickel consumption would double every tenth year. Production was greatly expanded. Deposits were found and put into production in Australia, Greece, Rhodesia and the Philippines. In addition, nickel became an important by-product from the expanding platinum industry in South Africa.