Sugar And Metals As Commodity Money In Colonial Brazil

Sugar and metals as commodity money in colonial Brazil

Fernando C. G. C. Lima

Abstract
It has often been suggested that sugar was adopted as commodity money in colonial Brazil because of thelimited circulation of metallic currency. This suggestion is correct in the sense that sugar might be considered commodity money insofar as its price was officially set and that it was made legaltender by the colonial authorities. So, sugar became “the objective standard that must correspond to the money of account”, fitting the definition of commodity money given by Keynes. The suggestion isalso correct in the sense that shortages of cash occurred, particularly in the second half of the 17th century, not only in Brazil but also in Portugal.
However, I believe that is not correct to saythat sugar played the role of means of payment in colonial Brazil because of the shortage of coins. Contemporary documents revealing complaints from colonists about the shortage of hard currency mayhave led most historians to establish a direct link between the lack of coins and the adoption of sugar as means of payment. Instead, I argue that the monetary use of sugar should be understood mainly asa political artifice available to the colonial authorities for the purpose of mediating conflicts between, on the one hand, the owners of the sugar mills and sugarcane planters and, on the otherhand, the metropolitan merchants and their agents.
The paper begins with a brief description of the means of payment available in the 16th and 17th centuries in Brazil, followed by a review of theliterature on possible reasons for the lack of hard currency in that period. Subsequently it presents a chronological account of Brazil’s monetary situation during the 17th century, while discussing themotivations of the colonial authorities in regard to the adoption of sugar as a means of payment. I emphasize three particular instances throughout the period: the mid-1610s, when sugar, possibly for...