BRAZIL: Milreis to Cruzeiro

In Brazil this week an event took place which to students of finance had the same rare value as an eclipse of the sun has to astronomers. By decree the country changed its monetary system from the complicated, 1,000-unit milreis to the streamlined, decimal-pointed cruzeiro (cross)—worth the same amount. Idea was to straighten out a currency system grown so complicated as to baffle even Brazilians. Examples:

> Coins ranging from a hundred reis (smallest unit recently made, worth half a U.S. cent) to five milreis (25¢) come in 25 different sizes. At times some have been worth more as metal than as money; always they have caused innumerable difficulties with such things as pay telephones, slot machines, etc.

> Paper money, ranging from the one milreis "rag" to the 500-milreis sheet comes in 64 types, of all sizes, sorts and color schemes.

There was no doubt that Brazil needed new money. In recent weeks a currency shortage has been general, as well as a distortion of the ratio of money minted to money in circulation. The result of hoarding, inflation, illegal withdrawing of "frozen" Axis funds and the sinking recently of an American vessel loaded with new currency made up in the U.S., these conditions had already forced an eight-day bank holiday (TIME, Oct. 12). The time was ripe for a complete overhaul. The Government grabbed the opportunity.

That the new cruzeiro system would bring immediate relief seemed dubious. In effect, Brazil would get not only new money, but more money. Only gradually will the new 10, 20 and 50 centavo pieces, the new, uniform-size cruzeiro bills supplant the timeworn milreis. The new coins, copper, aluminum and zinc, minted since Oct. 12 are being released immediately, but surcharged milreis bills will for a time serve as cruzeiro bills.

Brazilians looking forward to a period of years before full substitution is completed, foresaw some head-scratching in that time. But in the end everyone is expected to be happier.