Making the Math Work: International Credit and Debt since the 19th Century

AHA Session 55
Saturday, January 4, 2020: 8:30 AM-10:00 AM
Riverside Suite (Sheraton New York, Third Floor)
William Deringer, Massachusetts Institute of Technology
Jonathan Levy, University of Chicago

Session Abstract

This panel explores the history of international credit and debt relations in the nineteenth and twentieth centuries. How did European and American capitalists assess the risks involved in investing in foreign debt? What strategies did private and institutional creditors develop to “make the math work” once they had acquired stakes in the performance of national economies often far from the centers of their own lives? How did understandings and imaginings of the future shape bondholders’ and shareholders’ investment rationality? The papers in this panel will tackle these questions by paying close attention to local moral economies, to the language and metaphors of credit and debt employed by specific historical actors, and to the social-institutional milieus in which interdependent relationships between creditors and debtors emerged. Decidedly historical in our approach, we explore the logic of “investment” on its own terms rather than apply theoretical frameworks like empire or the market upon the past.

The American Historical Association provides an ideal forum for our panel. In our view, the history of international credit and debt—like other histories with global dimensions—lacks an obvious home in any one historical subfield. We therefore bring together scholars from disparate corners of our discipline to provide a nuanced and localized perspective on a topic often discussed in highly stylized and theoretical terms.

We see our individual contributions as chapters in one and the same story—a story based on the fundamental assumption that financial markets, like all markets, are human creations. Our papers probe this assumption on three levels. First, we are interested in how investment decisions are made and justified using a rationality that can, and often does, evolve over time. We ask how creditors and debtors develop stakes in their relationships over time and then protect these stakes with shifting narratives about rationality. Second, we ask what sorts of privileges and responsibilities are assigned to creditors and debtors depending on local (and often competing) moral economies. In this context, we pay close attention to language. Finally, we historicize the concept of financial regulation from a transnational perspective. The constitution of regulatory bodies in different historical contexts has to be understood as a struggle for the lucrative role of market maker. Important aspect of this struggle are informational asymmetries, power, and the relationship between the two. Ultimately, the question of who had the power to determine the rules governing international relations of credit and debt was a question that challenged a core principle of the modern system of nation-states: sovereignty.

Our papers explore these themes in different institutional, political and cultural contexts: the rise of the United States as a preferred destination for central European capital in the last third of the nineteenth century; the emergence of New York as the primary international capital market in the first decades of the twentieth century; and the integration of socialist Poland into the global financial architecture in the long 1970s.

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