International organizations like the United Nations, and the League of Nations before it, have been referred to as ‘trustees for peace’, an appropriate title addressing some part of their role in the world. The premise is that these organizations can take charge of resolving an international problem where mutual suspicions or inadequate capacity or…
Governments support industries by use of all sort of subsidies, including favorable financing. Shipbuilding is an industry that receives government support in many of the countries home to large shipyards and even in countries not known for shipbuilding. To support American shipyards, which have shrunk to a small fraction of their historical output and…
When Ireland took on a renewed struggle for independence around 1920, it came with a need to raise money. So, the rebel government set up a loan drive and built a system of distribution that bore some resemblance to the war loans raised by governments elsewhere just a few years earlier during the First…
At various points in the 19th century, American state governments defaulted on, and later rejected the binding effect of, various debts they had incurred. It is notoriously difficult to demand full payment from a sovereign country unwilling or unable to pay its debts. Would an American state government be any different? The question hinges…
Even before the existence of the International Monetary Fund, when states became bankrupt, they were not left to their own devices even if they wished they were. States in bankruptcy or on the verge of it attracted the attention of others, good or bad. In the late 19th century, both Greece and the Ottoman…
Under a gold standard regime, exchange rates were understood to be self-regulating courtesy of the ‘price–specie flow’ mechanism. Expansions or contractions in the money supply from trade surpluses or deficits would bring about stability in exchange rates without threats to the gold standard and with minimal or no need for changes in interest rates.…
Exactly how much of a fiscal burden governments can bare is the subject of frequent debate. Some believe any debt is problematic and others believe that, at least for some countries, there is no limit to the fiscal headroom available. Historically, it is in times of war that governments push themselves to the very…
When governments restructured their debts after the Napoleonic Wars and returned to the market to raise fresh funds they often did so in London, and later in Paris as well. These were the principal markets specializing in international finance in the 19th century. However, they were not the centers for sovereign lending in the…
As leading commercial cities developed more active and sophisticated financial markets, some cities became centers for global finance. London and Paris became such cities in the 19th century, serving the financial needs not only of their own countries but even those of the continent and the world. Governments of other countries turned to these cities,…
Taxation is a complicated procedure and it takes a reasonably sophisticated government to tax a population by whatever means it pleases. Even modern governments, those of middle-income or wealthy countries included, often struggle to collect certain taxes effectively. In the case of an income tax, an income needs to be validated some way, and this…
