The Dutch Republic had the most developed financial system in Europe in the 17th and 18th centuries, a system which deployed huge surpluses earned in trade. However, there were limited investment opportunities in Holland so this system also helped develop Dutch colonies as investors in Holland invested their surpluses abroad. In Suriname, Dutch savings…
Over the course of the 19th century, the world economy was shaped by an increasing dose of globalization. This was not a new trend. However, for the first time, the world economy was also subject to simultaneous liberalization. International trade had been very restricted up until the early 19th century, the preserve of state-backed official…
In June 1974, Herstatt Bank, a relatively small German bank, was closed by regulators on account of large losses in the foreign exchange market and murky accounting statements. The potential knock-on effects seemed small. The bank was one that few outside the vicinity of Köln would have heard of. However, because of the manner in…
In 1879, the French Compagnie Universelle du Canal Interoceanique de Panama embarked on the project of cutting a canal through Panama to connect the Atlantic and Pacific oceans. This was a bold project but large canals had been built before and one crossing Egypt at Suez had already transformed the world a few years earlier.…
The most significant political and diplomatic crises often have financial repercussions. In the case of the ‘July Crisis’, the series of events which tragically cascaded into the First World War, the financial effects were overshadowed by the more terrible prospect of war itself. Still, the financial events of the summer of 1914 were historically significant…
This post is a continuation of The Gold Standard Between the Wars (Part I). In that post, the international gold standard was rebuilt as countries fixed their exchange rates, whether at pre-war rates or newer sharply reduced valuations. As was recounted, the speed with which countries restored their currencies’ link to gold masked the difficulty…
Throughout the 19th century, steadily more countries joined the international gold standard led by Britain and the Bank of England. During the First World War, this system was suspended virtually everywhere and currencies were allowed to float freely for the first time. The 20th century would see several changes in the global monetary order, in…
In the history of finance, many diverse objects have become the center of speculative attention, even perishable items. Agricultural commodities have caused investment crazes that boom and bust as dramatically as any. These are not always the major ‘cash crops’ that are obviously commercially important. Included are even novel crops or livestock that, at least…
During the Financial Revolution that got underway in the 1690s, England and Scotland were linked by an integrated financial and mercantile community and a free flow of ideas. This helps explain how it was that the Bank of England and the Bank of Scotland could be formed almost simultaneously. Also, Scots in London, including one…
Around 1970, a Switzerland-based asset management firm, Investors Overseas Services, had grown into one of the largest in the world in the span of just a few years, this despite a small initial target market of American soldiers deployed in Europe. Of course, the company had grown far beyond this limited market in the years…
The Titanic tested the insurance industry. Ships of its luxury and scale were novel, bringing into question the correct pricing for insurance coverage on such a ship. In the end, it seemed that underwriters underpriced the risk, since when the Titanic’s sister ship Olympic secured coverage for its next transatlantic crossing after Titanic’s sinking, the…
What do matches and money have in common? Not much perhaps, except that one man seemed an especially powerful supplier of each. Ivar Kreuger is possibly the person whose fame has diminished the most in the last century of financial history. During the 1920s, he was one of the largest creditors, and borrowers, in the…
