Proposal preview

International credit and institutional transfers in the long 19th century

Our aim in this session is to analyse in a comparative way the transfer of economic and political institutions in the context of international credit relations in the 19th century. By ʻtransferʼ we do not only mean the export of “ready-made” institutions, but the process whereby institutions were reinterpreted, appropriated and negotiated. Our premise is that the strong links established around credit relations often brought about institutional transformations in debtor and creditor countries at diverse levels, beyond the organisation of public debt itself.
Acces to international credit and debt managemente often entailed reshaping the main framework of whole economies, especially through commercial and corporate law, bank regulation, industrial regulation, tariffs and customs, market (and especially financial market) organization, and taxation. Therefore the transfer of capital involved transfers of economic and legal institutions that were deeply political, affecting understandings of political economy, the position of political and economic elites, and popular conceptions of wealth, work, risk, production, etc. In that sense, credit relations contributed to shape political and economic representations, discourses and concepts, and were shaped by them in return.

Organizer(s)

  • Juan Pan-Montojo Universidad Autónoma de Madrid juanluis.pan@uam.es
  • Nicolas Delalande Institut d'Études Politiques, Paris nicolas.delalande@sciencespo.fr
  • Nicolas Barreyre EHESS/CENA, Paris nicolas.barreyre@ehess.fr

Session members

  • Darina Martykánová, Universidad Autónoma de Madrid
  • Juan Luis Simal Durán, Universidad Autónoma de Madrid
  • Maria Christina Chatnziioannou, National Hellenic Research Foundation
  • Andrés María Vicent Fanconi, Universidad Autónoma de Madrid
  • Carmen García García, Universidad Autónoma de Madrid
  • Magdalena Pinheiro, CIES-Instituto Universitário de Lisboa
  • Leigh Gardner, London School of Economics and Political Sciences
  • Malak Labib, American University of Cairo
  • Blaise Truong-Loï , École Normale Supérieure
  • Stephan Link, Darmouth College

Discussant(s)

  • Marc Flandreau The Graduate Institute of International and Development Studies, Geneva marc.flandreau@graduateinstitute.ch

Papers

Panel abstract

If international credit as such is often present in the transnational narratives that are renewing historiography, its impact beyond the flows of capital between creditor and debtor countries has not been really addressed. We have now a dense cartography of credit flows and a good account of debt crises. The papers in this session analyse how credit relations often brought about institutional transformations in debtor countries throughout the world between the 1820s and the 1930s at diverse levels, beyond the organisation of public debt itself. They often entailed reshaping the main framework of whole economies, especially through commercial and corporate law, bank regulation, industrial regulation, tariffs and customs, market (and especially financial market) organization, and taxation. But they involved other political and social institutions.

1st half

Foreign debt and central banking in Spain: a case of institutional transfer and state building, 1820-1830

Simal Durán, Juan Luis

In 1829, the Spanish monarchy founded the Banco de San Fernando, replacing the Banco de San Carlos. The initiative came from Finance minister Ballesteros, committed to a program of modernization within an illiberal regime. The bank contacted a British banker, Campbell, to act as a consultant. Campbell was one of the financial agents based in London that had negotiated the Cortes loans, issued by the constitutional regime in 1820-23, and repudiated after the restoration of absolutism in 1823. Although the repayment of the Cortes loans was a disputed issue in the London Stock Market, Campbell remained in contact with Spanish agents. When he was asked in 1829 to collaborate with the new bank, he acted as an advisor in matters of money supply, and advised that the institution should follow the English model. This paper wants to interrogate to which extent his recommendations were followed by the Spanish institution.

In 1829, the Spanish monarchy founded the Banco de San Fernando, replacing the Banco de San Carlos. The initiative came from Finance minister Ballesteros, committed to a program of modernization within an illiberal regime. The bank contacted a British banker, Campbell, to act as a consultant. Campbell was one of the financial agents based in London that had negotiated the Cortes loans, issued by the constitutional regime in 1820-23, and repudiated after the restoration of absolutism in 1823. Although the repayment of the Cortes loans was a disputed issue in the London Stock Market, Campbell remained in contact with Spanish agents. When he was asked in 1829 to collaborate with the new bank, he acted as an advisor in matters of money supply, and advised that the institution should follow the English model. This paper wants to interrogate to which extent his recommendations were followed by the Spanish institution.

Constitutional change and foreign credit during the First Carlist War and its aftermath 1833-1845

Vicent Fanconi, Andrés María

In 1837, during the Carlist War, a new liberal constitution was approved in Spain. Article 75 stated that national debt was «under the sauvegarde» of the Nation. If foreign debt had been since the 1820s a big problem, the need of foreign funds and the inability to pay their expenses was aggravated during the war. However, many liberals refused to recognise absolutist debt, in the same way absolutists had refused to recognise the liberal one. The continuity of State obligations were not accepted. Pocock has explained that public debt was a founding ‘Institution of Leviathanʾ. The constitutional change of 1837 pertaining debt was, hence, at the same time an instrumental decision oriented to international credit markets and a decisive step in the Spanish State-building process. In my paper, I shall address the debates that surrounded this constitutional change and its relevance in the making of the ʿbonne-foiʾ a State principle.

In 1837, during the Carlist War, a new liberal constitution was approved in Spain. Article 75 stated that national debt was «under the sauvegarde» of the Nation. If foreign debt had been since the 1820s a big problem, the need of foreign funds and the inability to pay their expenses was aggravated during the war. However, many liberals refused to recognise absolutist debt, in the same way absolutists had refused to recognise the liberal one. The continuity of State obligations were not accepted. Pocock has explained that public debt was a founding ‘Institution of Leviathanʾ. The constitutional change of 1837 pertaining debt was, hence, at the same time an instrumental decision oriented to international credit markets and a decisive step in the Spanish State-building process. In my paper, I shall address the debates that surrounded this constitutional change and its relevance in the making of the ʿbonne-foiʾ a State principle.

Foreign debt and railway construction in Portugal: a close relationship

Pinheiro, Magda

In the middle of the nineteenth century, Portugal did not have a network of modern roads and canals as more developed countries. The national market was not yet industrially developed, and agriculture remained backward. Connecting Portuguese port cities to the European railway network was believed to improve Portuguese international position. Lisbon could recover its old position as an important port for ships travelling to Africa and America. Portuguese elites not only believed that the railway construction was the best way to promote economic growth but also that state´s investments in transport would contribute to achieve financial equilibrium. In this paper, we present the difficulties met by Portuguese state to finance railways construction during the second half of nineteen century (from 1852 public debt conversion until the crisis of 1890-92) and its consequences on Portuguese institutions.

In the middle of the nineteenth century, Portugal did not have a network of modern roads and canals as more developed countries. The national market was not yet industrially developed, and agriculture remained backward. Connecting Portuguese port cities to the European railway network was believed to improve Portuguese international position. Lisbon could recover its old position as an important port for ships travelling to Africa and America. Portuguese elites not only believed that the railway construction was the best way to promote economic growth but also that state´s investments in transport would contribute to achieve financial equilibrium. In this paper, we present the difficulties met by Portuguese state to finance railways construction during the second half of nineteen century (from 1852 public debt conversion until the crisis of 1890-92) and its consequences on Portuguese institutions.

Railways, debt and French investments in Spain (1848-1873)

García García, Carmen

The legislation passed by the most advanced faction of Spanish liberalism during the years 1855 - 1856 made possible the massive entry of foreign capital, mainly French, and led to the start of an expansive phase in the construction of railways. The French investments were linked from the first moment to the public debt, because they were accompanied by a series of credits to the Spanish treasure. Hence, a first aspect to be discussed are the commitments and obligations linked to these credits to determine to what extent French investors influenced the design of rail legislation. On the other hand, the links between railway financing and debt, both public and private, will be examined. Finally, special attention will be devoted to the study of the relationship of some of these French groups with the difficulties of the Treasury.

The legislation passed by the most advanced faction of Spanish liberalism during the years 1855 - 1856 made possible the massive entry of foreign capital, mainly French, and led to the start of an expansive phase in the construction of railways. The French investments were linked from the first moment to the public debt, because they were accompanied by a series of credits to the Spanish treasure. Hence, a first aspect to be discussed are the commitments and obligations linked to these credits to determine to what extent French investors influenced the design of rail legislation. On the other hand, the links between railway financing and debt, both public and private, will be examined. Finally, special attention will be devoted to the study of the relationship of some of these French groups with the difficulties of the Treasury.

Incorporating economic information about public loans in the nineteenth century and the formation of public opinion in Greece

Chatziioannou, Maria Christina

Historical investigation on the formation of public opinion in nineteenth-century Greece confronts different issues and suggests a sequence of stages, related to the establishment of newspapers and journalism as an institution in the last quarter of the nineteenth century. Public loans were then at the peak of their presence in political, and economic life, and they both (re)formed networks of power and (in)formed public opinion. Press articles on public loans blended news from state documents, from the European press and from private opinions. This paper will examine, (drawing on private correspondence, official dispatches and newspapers) the sequence of stages of appropriation of information about the loans. It starts at the beginning of the state-building process in the 1820s with the loans of Greek independence, then passing from philhellenism to speculation on to the 1890s.

Historical investigation on the formation of public opinion in nineteenth-century Greece confronts different issues and suggests a sequence of stages, related to the establishment of newspapers and journalism as an institution in the last quarter of the nineteenth century. Public loans were then at the peak of their presence in political, and economic life, and they both (re)formed networks of power and (in)formed public opinion. Press articles on public loans blended news from state documents, from the European press and from private opinions. This paper will examine, (drawing on private correspondence, official dispatches and newspapers) the sequence of stages of appropriation of information about the loans. It starts at the beginning of the state-building process in the 1820s with the loans of Greek independence, then passing from philhellenism to speculation on to the 1890s.

2nd half

Public debt, international control, and statistical expertise in Egypt: knowledge as imperialism?

Labib,Malak

This paper examines the relationship between public debt and the development of new instruments for collecting and managing statistical and accounting information in nineteenth-century Egypt. The establishment and growth of a large public debt in Egypt, starting from the 1860s, was accompanied by the increasing European interference in the country’s affairs, ultimately leading to the British occupation in 1882. While Egypt’s foreign creditors sought to develop specific statistical and accounting tools to manage public debt, this process cannot be simply analysed in terms of a transfer of technical expertise from Europe to the “periphery”. Rather, this paper analyses the complex ways in which statistical and accounting instruments circulated, and the ways in which they were appropriated, in the local context.

This paper examines the relationship between public debt and the development of new instruments for collecting and managing statistical and accounting information in nineteenth-century Egypt. The establishment and growth of a large public debt in Egypt, starting from the 1860s, was accompanied by the increasing European interference in the country’s affairs, ultimately leading to the British occupation in 1882. While Egypt’s foreign creditors sought to develop specific statistical and accounting tools to manage public debt, this process cannot be simply analysed in terms of a transfer of technical expertise from Europe to the “periphery”. Rather, this paper analyses the complex ways in which statistical and accounting instruments circulated, and the ways in which they were appropriated, in the local context.

Foreign experts in the Ottoman Public Debt Administration (Düyûn-i Umûmiye Idaresi): knowledge transfer or knowledge production?

Martykánová, Darina

When European creditors of the Ottoman Public Debt lost faith in the willingness and capacity of the Ottoman government to pay off its debt, they profited from the semi-colonial position. They managed to impose on the Ottoman authorities an independent organisation called Ottoman Public Debt Administration (1881) that was in charge of collecting taxes from the most profitable sectors of the Ottoman economy and of transferring them to European creditors. This organisation was staffed by foreigners and Ottomans. The OPDA did not limit itself to tax collection, though. It soon took an active role, managing the money of European investors who wished to do business in the Ottoman domains. Analysing the work of foreign experts employed by the OPDA, I discuss the ways in which the OPDA was a lieu of new knowledge production, besides channelling transfer of knowledge and skills.

When European creditors of the Ottoman Public Debt lost faith in the willingness and capacity of the Ottoman government to pay off its debt, they profited from the semi-colonial position. They managed to impose on the Ottoman authorities an independent organisation called Ottoman Public Debt Administration (1881) that was in charge of collecting taxes from the most profitable sectors of the Ottoman economy and of transferring them to European creditors. This organisation was staffed by foreigners and Ottomans. The OPDA did not limit itself to tax collection, though. It soon took an active role, managing the money of European investors who wished to do business in the Ottoman domains. Analysing the work of foreign experts employed by the OPDA, I discuss the ways in which the OPDA was a lieu of new knowledge production, besides channelling transfer of knowledge and skills.

A debt-collection agency for foreign bondholders”: how international credit relations reshaped the Chinese Maritime Customs Service

Truong-Loï, Blaise

This paper explores how the Chinese public debt was measured in the late 1800s. Standardized measurement techniques emerged in Europe to assess national debt burdens. These very techniques were notably applied to China. The information to do so was mainly collected by the Chinese Maritime Customs Service (CMCS). The role and functioning of this institution illustrates the complexity of institutional transfers, which arose. As the CMCS was headed by foreigners, it is often seen as a flagship of Western economic rationality in the Chinese administration, especially in terms of public accounting. But its methods of work owed much to the Chinese bureaucratic tradition, suggesting the sense of the transfer was also reverse. Furthermore, the entanglement of the CMCS in the Chinese public debt had ambiguous effects: it broadened its competences but it turned Chinese public opinion against the CMCS and eventually reduced its influence in China.

This paper explores how the Chinese public debt was measured in the late 1800s. Standardized measurement techniques emerged in Europe to assess national debt burdens. These very techniques were notably applied to China. The information to do so was mainly collected by the Chinese Maritime Customs Service (CMCS). The role and functioning of this institution illustrates the complexity of institutional transfers, which arose. As the CMCS was headed by foreigners, it is often seen as a flagship of Western economic rationality in the Chinese administration, especially in terms of public accounting. But its methods of work owed much to the Chinese bureaucratic tradition, suggesting the sense of the transfer was also reverse. Furthermore, the entanglement of the CMCS in the Chinese public debt had ambiguous effects: it broadened its competences but it turned Chinese public opinion against the CMCS and eventually reduced its influence in China.

Sinews of empire? The Crown Agents and African government debt under colonial rule

Gardner, Leigh

In 1924, John Maynard Keynes complained that Southern Rhodesia, ‘a place somewhere in the middle of Africa’, was able to raise loans on the London market on the same terms as a large English borough. Debates about the ‘empire effect’ have contended that investors did not discriminate between the bond issues of different colonies, either because they adopted similar economic and financial policies or because they were subsidiary governments to metropolitan states. However, archival records suggest that African bonds were particularly unpopular. Contemporaries stressed that keeping prices high, required considerable interventions by imperial institutions, particularly purchases by the Crown Agents using reserve funds they held on behalf of other colonies. This paper presents preliminary data on the financial connections this practice created, which it calls the ‘sinews’ of empire, and examines the implications for debates about imperialism and financial globalization in the late nineteenth and early twentieth centuries.

In 1924, John Maynard Keynes complained that Southern Rhodesia, ‘a place somewhere in the middle of Africa’, was able to raise loans on the London market on the same terms as a large English borough. Debates about the ‘empire effect’ have contended that investors did not discriminate between the bond issues of different colonies, either because they adopted similar economic and financial policies or because they were subsidiary governments to metropolitan states. However, archival records suggest that African bonds were particularly unpopular. Contemporaries stressed that keeping prices high, required considerable interventions by imperial institutions, particularly purchases by the Crown Agents using reserve funds they held on behalf of other colonies. This paper presents preliminary data on the financial connections this practice created, which it calls the ‘sinews’ of empire, and examines the implications for debates about imperialism and financial globalization in the late nineteenth and early twentieth centuries.

The Long 19th Century's Dénouement: Debt and the International Division of Labour at the World Economic Conference, London 1933.

Link, Stefan

The paper asks how the politics of debt shaped the 1933 World Economic Conference in London. The Conference is, of course, well known for its failure to bring about currency realignment and trade liberalization between the hegemonic powers (UK, France, and US), but the more pressing issue for the remaining 60 participant nations was debt relief. The Conference's failure to confront the debt issue, it could be argued, was much more consequential for the international economic order than other results. The refusal of Northern capital exporters to renegotiate debts fortified heterodox institutional revolts not only in the periphery but also in Central Europe. In this sense, the London Conference signalled the final demise of the global debt regime that characterized the 'Great Specialization' of the "long" 19th century. I am particularly interested in exploring to what extent these institutional transformations offered real political alternatives.

The paper asks how the politics of debt shaped the 1933 World Economic Conference in London. The Conference is, of course, well known for its failure to bring about currency realignment and trade liberalization between the hegemonic powers (UK, France, and US), but the more pressing issue for the remaining 60 participant nations was debt relief. The Conference's failure to confront the debt issue, it could be argued, was much more consequential for the international economic order than other results. The refusal of Northern capital exporters to renegotiate debts fortified heterodox institutional revolts not only in the periphery but also in Central Europe. In this sense, the London Conference signalled the final demise of the global debt regime that characterized the 'Great Specialization' of the "long" 19th century. I am particularly interested in exploring to what extent these institutional transformations offered real political alternatives.