SOVEREIGN AND QUASI-SOVEREIGN STATES: THEIR DEBTS TO FOREIGN COUNTRIES. BY HYDE CLARKE, V.P.S.S. BIDLIVIHER Reprinted from the JOURNAL OF THE STATISTICAL LONDON: EFFINGHAM WILSON, ROYAL EXCHANGE. 1878. 232. e. 525 On the DEBTS of SOVEREIGN and QUASI-SOVEREIGN STATES, OWING by FOREIGN COUNTRIES. By HYDE CLARKE, V.P.S.S. [Read before the Statistical Society, 16th April, 1878.] It is amidst the growth of many States, and the wonderful development of the world, in America, on the Pacific, in Africa, and in Australia, that a vast extension of commerce has been seen. Among other things, large loan operations have been engaged in with various Governments, in which all the saving classes of England, France, Holland and Germany, have taken part. Means have thus been found for the construction of railways and public works, in the United States, Mexico, Cuba, Peru, Chile, the Argentine States, Russia, Roumania, Turkey, Egypt, Java, China, and Japan. The permanent advancement of prosperity throughout the world has been promoted, accompanied by an enormous increase of production, and the opening of many markets for the consumption of manufactures. At the early period after the formation of the European States, loans were made to kings and princes by the Jews, on a system of copartnership lately termed syndicate. At a later period, these loans were made by the Lombard and Italian money-dealers, and the descendant of a Florentine banker, Peruzzi, still claims a principal sum, repudiated by one of the Edwards, and the compound interest upon it. B Among other operations, the Greshams, under the title of the king's exchanger, appear to have been engaged in raising temporary loans at Antwerp, and its allied bourses. As late as 1800 United States dividends were paid at Antwerp, and there is still a small foreign bourse, but supplanted by Brussels. The merchants of the Hanse Towns and Low Countries had already been engaged in these operations in succession to the Italians, when the independance of Holland concentrated them in that country, which likewise became a refuge for the Jews driven out of Spain. The accession of William of Orange to the throne of England, by putting a stop to the naval rivalry, brought England again into its old and close relation with Holland, and on the establishment of the funding system here, the Hollanders took a large part in our consolidated debt, bank stock, and in India stocks. All through the last century, Holland was the great centre for the trade in foreign loans, one means by which that country was much enriched. In 1778, Holland was reputed to hold 62,000,000l. in the stocks of France, England, &c., but this is doubtful. McCulloch in his "Taxation," p. 412, is wrong in his deductions from this as to the position of Holland, for the people of Holland continued to accumulate capital down to the French Revolution, but other countries grew more rapidly in population and production. The French Revolution, attended by wide repudiation, to a great degree destroyed this branch of accumulated capital, and the yoke of the Empire still further impoverished Holland. At the Great Peace, Holland was restored, but it was no longer in the same relative position, England in particular having largely grown. One class of operations of which we have an account, is for the then new United States, for which Holland was for some time the money market, and where United States railway bonds are still placed in conjunction with Frankfort. During the war the United States borrowed in Holland at 4 per cent., under the guarantee of the French court, 400,000l. This serves to show how moderate the rate of interest then was, and how the credit of France stood. Besides this loan before 1790 the United States had borrowed in Holland :— It will be seen that the United States also had a good credit, and they upheld their engagements in Holland, although their finances were much embarrassed. In 1800 the foreign debt of the United States of which the dividends were payable at Amsterdam and Antwerp, was $10,000,000 (2,000,000l.) The last United States instalment on the Dutch debt was due in 1809. It may here be well to state that the Hollanders maintained their own integrity. While under the yoke of the French King, Louis Bonaparte, he reduced the debt of Holland to one third. On the Prince of Orange becoming king in 1814, one of the first acts was to restore the debt to its integral amount, although the Hollanders were not in a state to meet the whole interest. Holland still took part after the peace in foreign loans, particularly under the auspices of the Hopes, and the thrift and enterprise of its men and women, have furnished large means for such investments to the present day, but it has been in subordination to England. One cause has been, that the individual loans have been beyond the compass of the market of Holland; and another, that the business of Frankfort and Hamburgh was carried on directly with London or Paris. Paris too became a rival in this branch of enterprise to Holland. After the revolution of July, Paris became a resort for the wealthy, not only as a city of pleasure, but as a refuge from the revolutions of Europe and the Spanish-American continent. It has been at times a capital of the Spanish-American race beyond Madrid. Habits of speculation, accompanying those of work, led the French middle class to afford means for such operations, and the more so as the solid advance of France reduced the home returns on money. Thus small loans could be placed on easier terms in Paris than in London, and Paris was always available to take a portion of a large loan. Paris too became the first stage in the advance of the German-Jewish money operators, who in time competed with the old financial houses, and launched schemes of a character most disastrous to the victims. In this again they were assisted by the formation of large institutions in France, nominally for banking, but in reality engaged in gigantic speculations in association with their directors. It may not be out of place to say some words as to the Paris market. Under the first Napoleon it supplied large funds for the Empire. An operation recorded of that time, is that in 1811, the King of Saxony negociated there a loan of 12,000,000 frs. (480,000l.) on account of the Grand Duchy of Warsaw, on the security of the salt mines of Wolisla. He appears to have placed about 280,000l. On the restoration, the Paris market became quite prostrate, and could not find money for local purposes. On the 18th February, 1817, a contract was concluded by the B 2 |