Bonds and Brands: Foundations of Sovereign Debt Markets, 1820-1830

Abstract

and the Bank of France is gratefully acknowledged. This article developed over a number of years and places. The authors are grateful to archivists from ING-Baring, Guildhall Library, Rothschild London, and Euronext (Paris Bourse) for their kind cooperation. We especially thank James Khedari for excellent research assistance. Larry Neal helped locate early editions of Wetenhall's Course of Exchange, and in many other ways, providing feedback, insights, and more. Lars Frederik Oksendal kindly provided data for Danish bonds quotes in Hamburg. We are grateful to European Historical Economics Society Lund Conference participants (June 2007

Eurobonds Past and Present: A Comparative Review on Debt Mutualization in Europe

“…The emergence of an international bond market and the boom in foreign securities during the 1820s marked an important milestone in the evolution of sovereign bond contracts to reduce the risk of default. This was also the case after the sovereign debt crises of the 1870s, which led to new ways of dealing with defaults Suter, 1992;Neal, 1998;Neal and Davis, 2006;Flandreau and Flores, 2009;Tuncer, 2015). One common way of ensuring repayment of government bonds was to link each issue to a form of security.…”

Review of periodical literature published in 2009

“…Perhaps unsurprisingly, his findings show that centralized and limited regimes were able to raise significantly higher revenues than fragmented and absolutist ones. Flandreau and Flores consider how sovereign debt becomes sustainable in an environment where information asymmetries exist and when intermediaries have incentives to cheat their investors and countries have reasons to renege on their commitments. Their work represents a significant departure from the recent focus on the institutions that facilitate good governance and allow states to manage their relationships with their creditors effectively.…”

“…Other checks and balances were available to investors. As Flandreau and Flores note, the ‘somewhat frightening conclusion’ (p. 679) to their investigations is that the ‘democratic advantage’ view of sovereign borrowing emphasized by neo‐institutionalists is seriously undermined.…”

External debt and commitment mechanisms:Danish borrowing inHolland, 1763–1825

“…Cf. Flandreau and Flores, ‘Bonds and brands’; Flandreau, Flores, Gaillard, and Nieto‐Parra, ‘End of gatekeeping’.…”

“…Flandreau and Flores, ‘Bonds and brands’; Flandreau et al, ‘End of gatekeeping’. Scattered evidence suggests that Dutch issuing houses maintained a secondary market and sometimes made interest payments out of their own pockets.…”