Communist countries in Europe developed large planning bureaucracies and the infrastructure needed to confirm and force compliance with plans. Yet, bureaucracies are not entirely fungible. These systems proved unnecessary in the new capitalist economy. However, a capitalist economy does require one bureaucracy that is not needed, at least not in anything like its usual…
The early diplomatic history of the United States, before the War of Independence even came to a close, revolved around securing recognition from other countries and raising money from their governments, bankers, or investors. Of course, London’s financial markets were off limits until the peace treaty of 1783 and France, while the provider of…
Many expenses incurred in the American Revolution by the colonists were borne by colonial governments rather than the Continental Congress. These debts went unpaid for years and came to be worth little after the war. In the late 1780s though, a new Constitution was drafted that gave the central government new powers. At the same…
Syndication of large loan or share issuances became increasingly common in the 18th and 19th centuries. This model of raising money allowed for smaller investments to be pooled together to make a larger investment than any one participant could make on their own. It also allowed a secondary market, one formed for ownership of the…
In a 16th century war, Sweden lost control of a fortress at Älvsborg to the Danes and had to pay a ransom to recover it. Four decades later, it again lost the Älvsborg fortress and again had to pay a ransom to Denmark, this time a much larger one. Sweden was then a growing but…
More than a century ago, debt restructurings involving the interventions of foreign governments were arranged for countries like Greece and the Ottoman Empire. These sorts of arrangements were rare though. In the second half of the 20th century, the number of independent countries grew as did their access to foreign credit. The result was…
After wresting control of the gold and silver of the Americas, one would think that the 16th century would be prosperous for Spain and enriching for its monarch. It may very well have been but even this did not render the king’s creditworthiness invincible to all challenges. The century was one in which the…
Even during the Cold War, many Western European countries looked to markets in Eastern Europe as potential outlets for their industrial production, particularly in the varieties of consumer goods that were scarce in the Eastern Bloc. So, governments were happy to offer trade credit to the socialist countries to finance their purchases of Western…
Russia was industrializing at a rapid pace in the late 19th century. The capital being invested in infrastructure and industry greatly exceeded what could be accumulated naturally in Russia so much of it was raised abroad and often by the government. However, raising this money required some institutional changes and the leadership of someone…
During the 1920s stock market bubble, there were many listings of companies whose purpose was to profit from rising share prices. Some of the most notable of these were investment trusts raising money they could then leverage with debt or preferred stock to profit from rising prices for the securities they held. They were…
