This introductory chapter provides an overview of Brazil's early experience with sovereign borrowing and its relation to financial underdevelopment. It summarizes four topics that intersect with Brazil's experience: how new states create and sustain sovereign borrowing; access to an ever-increasing amount of long-term domestic capital; the way in which Brazilian creditworthiness came undone sixty-five years after the first London loan in 1824; and the relationships between creditworthiness and capital markets. The focus is on Imperial Brazil (1822–89), as this book addresses how the government could successfully commit to borrow without default, yet fail to achieve financial development of the type that would support sustained economic growth. Despite its success in establishing sovereign creditworthiness, Imperial Brazil was a remarkable failure in achieving the broader financial development required for modern economic growth. No revolution in private finance transpired despite the government's faithful servicing of its debt obligations over the decades and the creation of a vibrant domestic market in government securities.
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