Coffee expansion and mortgage financing: Southwestern Minas Gerais and Northeastern São Paulo in the First Republic

Abstract

The objective is to understand, comparatively, the mortgage credit, conditioned by the production, productivity and agrarian structure between 1890 and 1929 of two coffee regions, border and dynamic: Southwest of Minas Gerais and Northeast Paulista. Based on data from mortgages and the 1920 census, we verified financial loans in expressive amounts for both regions. The economic growth of the Southwest of Minas Gerais relative to the Northeast of São Paulo occurred with the least need or possibility of financing. When testing the difference between the two regions with respect to the variables real value, terms and interest on mortgages, we found for the first two that credit was different. The arbitrage of the two mortgage markets did not allow for differences between regions for the variable interest rates, revealing regional financial integration. Thus, we demonstrate the differences between the two spaces, highlighting the need to understand the regional issue in studies about credit.

Keywords:
coffee; coffee farming; mortgage credit; region