Informing the Future: Financial Journalism, Economic Forecasting, and Indicators, 1890–1914

Over the course of the nineteenth century, merchant bankers’ reputation served as proxies vis-à-vis the investing community for sovereign credibility at international capital markets. In the absence of multilateral institutions capable of mediating conflicts between borrowing governments and foreign creditors, investors had limited means to seek redress against defaulting countries. Investors’ expectations about countries’ capacity and willingness to repay debts were directly tied to the confidence placed on the house that issued bonds on behalf of foreign countries. Investors also expected merchant bankers intervene on their behalf in the event of a conflict with borrowing countries to preserve their market reputation. The collapse of one of the most important London houses in 1890, however, shook investors’ confidence in the ability of bankers to accurately assess sovereign risk. Meanwhile, government officials, scholars, and financial actors started to develop new ways to measure national wealth and project economic growth. How did expectations about the future shape capitalists’ investment decisions following the Baring crisis? This paper examines the sources of information on sovereign debtors available to capitalists in London and New York at the turn of the century. It analyzes what kind of intelligence (including gossip and rumors) on borrowing countries investors had access to, how this information was conveyed, and who could claim expertise as producers of financial intelligence by looking at work produced by statisticians, government departments and agencies, journalists, stock brokers and organizations such as the Corporation of Foreign Bondholders, the London Stock Exchange and the New York Stock Exchange. Finally, it examines what types of expectations about the future (such as projections about the performance of capital markets and national economies) were built into the languages of financial information, while also assessing whether the emergence of New York challenged European regimes of financial intelligence.