1st Edition

Money, Debt and Politics The Bank of Lisbon and the Portuguese Liberal Revolution of 1820

By José Luís Cardoso Copyright 2023
    120 Pages 1 B/W Illustrations
    by Routledge

    This book presents an innovative history of the first Portuguese public bank, by exploring the relationship between banking activities and the political context. It provides an overview of the origins of the banking system in Portugal, and also in Brazil, and explores new archive materials related to the first years of activity of the Bank of Lisbon and to the public debates on monetary and public finance topics.

    It discusses the main features of the Bank of Lisbon: a private bank with a mandate to issue banknotes for the purposes of regulating monetary circulation, and with the function of financing the State for current payments, as well as for the amortisation of public debt and the creation of new debt. The aim of contributing to the re-establishment of public trust and credit conferred upon the Bank of Lisbon the status of a quasi-central bank with the obligations of lending and issuing money.

    This historical case study offers new insights for a better understanding of the role of banks on the regulation of monetary circulation and on the management of sovereign debt. By stressing the relevance of the political context, it also illustrates the key issues of trust, independence and rules associated to decision-making processes in the study of European banking history.

    The main focus is the link between banking practices and the political environment. However, the reader will also engage in discussions on theoretical and economic policy issues on the main economic topics under survey: money, paper money, public debt and credit system.


    1. Introduction

    2. Origins and antecedents of the banking system in Portugal

    2.1. From banking practices to bank projects

    2.2. In search of a theoretical framework

    2.3. The Bank of Brazil (1808)

    3. The Portuguese liberal revolution of 1820: historical meanings

    3.1. Economic motivations and background

    3.2. On the eve of the revolution

    3.3. The Portuguese case in an international context

    4. The political context of 1820 and the urgent need to create a bank

    4.1. Paper money and public debt: debates in the public sphere

    4.2. Budget and deficit: constitutional and political framework

    4.3. The Public Finance Committee and the solution of a public bank

    4.4. A divergent proposal

    4.5. Final details in the proposal for a public bank

    4.6. Parliamentary debates and the creation of the Bank of Lisbon

    5. The foundation and activity of the Bank of Lisbon

    5.1. Statutory attributes and mode of governance

    5.2. Shareholders and directors

    5.3. Indicators of banking vitality (1822-1827)

    5.4. Signs of crisis

    5.5. Theoretical framework of the banking crisis

    6. Concluding remarks

    Appendix: Legal charter for the creation of the Bank of Lisbon, 1821



    José Luís Cardoso is Research Professor at the Institute of Social Sciences of the University of Lisbon, Portugal.

    Using a wide range of fascinating archival sources, José Luís Cardoso, in the History of the Bank of Lisbon, has opened up new vistas on the early development of central banking in Portugal showing the importance of the institutional and political contexts in the management of the public debt and monetary circulation.

    Antoin E. Murphy, Trinity College Dublin

    Financing the reconstruction of war-torn Europe after the end of the Napoleonic Wars required each surviving state to develop new modes of finance and governance.  Professor Cardoso demonstrates that Portugal’s postwar government faced unique problems that delayed its "Liberal Revolution" until 1820 and then the creation of its Bank of Lisbon in 1821.  Only then could Portugal begin the painful adjustment to the loss of Brazil as a colony and the continued dominance of the British economy.

    Larry D. Neal, University of Illinois