Banks

The following mainland credit institutions have agencies in Madeira: the Banco de Portugal, the Banco Nacional Ultramarino and the Companhia Geral de Crédito Predial Português. No bank currently has its head office in Madeira, but besides these agencies there are several houses in Funchal that carry out, on a larger or smaller scale, the operations proper to banking establishments.

The agency of the Banco de Portugal already existed in 1876, when it was in the charge of the merchant João José Rodrigues Leitão, who had come to Madeira in 1853. However, as this merchant went bankrupt in 1878, the agency was handed over to Tomás António Gomes, who took up the post on 15 July of that year.

Because of the bankruptcy of João José Rodrigues Leitão, the Director of the Banco de Portugal, Henrique de Barros Gomes, came to Madeira and secured an agreement between the bankrupt merchant and his creditors that was highly favourable to that credit institution. Under this agreement all the bankrupt merchant’s property was mortgaged to the Bank, which in turn guaranteed the other creditors repayment of 50 per cent of their claims, paid in three instalments. Before the bankruptcy, the Bank’s security consisted chiefly of wines, which had been valued at 102,464,408 réis (old Portuguese money of account; 1$000 = 1,000 réis, 1:000$000 = one conto = 1,000,000 réis).

Since the beginning of 1888 the agency of the Banco de Portugal on this island has acted as treasury cashier for transactions with the State, in accordance with the provisions of the contract of 10 December 1887. In the early period, that is, before the agency was definitively constituted with the powers given to it by that contract, the former paying treasurer Raimundo Sieuve de Meneses served as the Bank’s provisional agent on this island.

From 1904 to the present the following officials have served as agents of the Banco de Portugal on this island: Commander Luís de Freitas Branco, Henrique Augusto Vieira de Castro, Eduardo Martins da Silveira, Fernando Ferro, Councillor (conselheiro, honorary title of the royal council) Henrique de Sá Nogueira, Francisco Camilo Meira, Raul Rodrigues Cohen and António Noronha de Barros. For many years the Bank has kept two of its agents in charge of the business of its Madeira agency.

Besides acting as the Government’s cashier, the agency of the Banco de Portugal in Funchal makes loans on securities, buys and sells foreign exchange, draws and discounts bills, issues letters of credit, etc. It also accepts deposits, but pays no interest on them.

The branch of the Banco Nacional Ultramarino was opened on 10 February 1919. It carries out the same banking operations as the agency of the Banco de Portugal, the only difference being that it pays a certain interest on the time and demand deposits it receives. At both these agencies the rate of interest is 6 per cent.

The Banco Comercial de Lisboa was formerly represented on this island by the trading firm Freitas & Macedo, which went bankrupt in 1881, and the first agent of the Companhia Geral de Crédito Predial Português was the aforementioned João José Rodrigues Leitão. The Banco Nacional Ultramarino had a representative in Madeira before the creation of the branch mentioned above; the first to hold this post here was the late merchant Luís Gomes da Conceição.

According to the same statutes, the share capital was 1,200 contos, divided into shares of 100,000 réis (old Portuguese money of account; 1$000 = 1,000 réis, 1:000$000 = one conto = 1,000,000 réis). The capital was to be issued in two series of 600 contos each, the first series, already issued on 24 April 1875, forming the initial fund for the bank’s operations. Most of the shares had been taken up in the city of Porto.

The bank’s first board of directors consisted of João de Sales Caldeira, Carlos Bianchi and José Paulo dos Santos, and its first board of inspectors of William Hinton, Manuel Inisio da Costa Lira, Roberto Wilkinson, António Caetano Aragão and Manuel Figueira de Chaves. The first chairman of the general meeting was Severiano Alberto de Freitas Ferraz.

The reports we have before us on the management of the Banco Commercial da Madeira show that the assets and liabilities of this institution in the years listed below were as follows:

Year	Assets and liabilities (réis)
1877	1,273,156,226
1879	1,195,087,258
1884	1,170,142,412
1885	1,167,733,507
1886	1,194,311,844

The bank made profits of 39,942,732 réis in 1877 and 32,851,757 réis in 1879, distributing 36,000,000 réis to the shareholders in the first of these years and 28,125,000 réis in the second. In 1884, 1885 and 1886 the bank no longer paid a dividend; in the second of these years 6,000 shares had been issued, 3,197 registered and 2,803 to bearer.

The Banco Commercial da Madeira was dissolved in 1887, with losses to the shareholders, a result to which the poor security of much of its capital contributed considerably. The fall in property values caused by the disease that devastated the cane fields made the bank’s position considerably worse. As the report presented to the general meeting of 29 January 1880 shows, that position was already not very prosperous in 1879, owing to the withdrawal of capital brought about by the law unifying the currency. As early as 1878 the extraordinary rise in exchange rates had prevented the transfer of funds, an operation that had previously brought the bank excellent returns.

In 1800 the government in Lisbon, in instructions addressed to the governor and captain-general Dom José Manuel da Câmara, recommended the creation of a credit fund in Madeira. On 1 July 1824 the governor and captain-general Dom Manuel de Portugal e Castro sent a petition to the central government asking for a bank to be founded in Funchal. Neither establishment was ever created, and the same happened with other institutions of the same kind that people later sought to found in this city. Issue no. 169 of the Imparcial, of 1843, published in full a draft set of regulations for the creation of a bank in Madeira, and issue no. 145 and following of the newspaper A Ordem (‘Order’), of 1854, contain the project submitted to the government for the creation of a commercial and agricultural bank on the island.

In 1873 the Administrative Committee (Comissão Administrativa) of the Holy House (Santa Casa, the Misericórdia) of the Misericórdia resolved, in accordance with the law of 22 June 1867, to found in this city a bank of agricultural and industrial credit with the sum of its loaned capital, admitting shareholders so as to increase the bank’s capital with the proceeds of the shares. A meeting was held for this purpose in the Palácio de São Lourenço (‘St Lawrence’) on 10 July of the same year, at which it was agreed that the shares should be of 20,000 réis (old Portuguese money of account; 1$000 = 1,000 réis, 1:000$000 = one conto = 1,000,000 réis) each and that subscription should open immediately. Nevertheless, the institution never became a reality, for reasons wholly unknown to us.

In 1886 the late Count of Canavial advised the creation of an industrial bank in Madeira to lend money at moderate interest to industry and agriculture. This idea, which the same nobleman had already put forward in 1879, was not taken up, and our island suffered greatly as a result. Money was then very scarce here, owing to the bankruptcy of five of the most important commercial houses, with losses of about 1,600 contos, and to the agricultural crisis caused by the disappearance of sugar cane.

There was a time when the Holy House of the Misericórdia and the Orphans’ Fund (Caixa dos Orfãos) lent money at 5 per cent interest. The sums these institutions had at their disposal were so small, however, that very few people managed to obtain capital for their business on such favourable terms. Private lenders almost always demanded 12 and 15 per cent, and there was no shortage of people who borrowed money at vintém por pataca (one vintém per pataca a month, i.e. about 24% a year) a month, a rate equivalent to 24 per cent a year.

Forty years ago the banks lent money at 8 per cent, having previously lent it at 12 per cent. Loans and discounts on the first of these terms are still frequent today, even though the agencies of the Banco de Portugal and the Banco Nacional Ultramarino long ago set a rate of 6 per cent for their transactions. Certain formalities required by the agencies of these banks, together with other circumstances, mean that not everyone can take advantage of what they offer. The lack of cheap capital is one of the reasons why our industry and agriculture sometimes struggle with serious difficulties, and why certain useful initiatives that appear from time to time are not always crowned with success.

The banking houses now established in Funchal are Blandy Brothers & C., Henrique Figueira da Silva, Reid Castro & C.a, Rocha Machado & Ca and Sardinha & C.a. These houses, which carry out the banking operations required by the commerce of Funchal, and others besides, are all in a very prosperous state, thanks to their excellent management and the confidence they enjoy in the market (1922).

We can say nothing definite about how, in former times, funds were transferred or money borrowed to meet commercial obligations. It is reasonable to suppose, however, that the Flemish were the first to engage in banking operations here, followed by the English, who, as is well known, acquired great predominance in the island’s business from the middle of the 17th century onwards.

The various attempts made between 1800 and 1873 to found credit institutions in Madeira show that there was a desire to provide Madeiran commerce, industry and agriculture with advantages they did not enjoy. It is indeed strange that none of these attempts succeeded, given that the moneylenders who then abounded on the island rarely lent money at less than 10, 12 and 15 per cent interest, an exploitation that ought to have been ended.

On 23 June 1920 the Banco da Madeira opened, provisionally housed on the ground floor of a building in Rua do Comércio. Its capital, initially 1,000,000 escudos (the Portuguese currency from 1911: 1 escudo = 100 centavos = 1,000 réis), was later raised to 2,000,000 escudos and finally to 4,000,000 escudos. The decree authorising the definitive constitution of the bank is dated 7 January 1921.