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Why Not Default?$
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Jerome Roos

Print publication date: 2019

Print ISBN-13: 9780691180106

Published to Princeton Scholarship Online: May 2019

DOI: 10.23943/princeton/9780691180106.001.0001

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The Making of the Indebted State

The Making of the Indebted State

(p.84) Five The Making of the Indebted State
Why Not Default?

Jerome Roos

Princeton University Press

This chapter illustrates a number of basic points that will help contextualize the postwar decline in the incidence of sovereign default by setting this development against a broader historical canvas. It begins by locating the origins of financial power firmly within the state's structural dependence on credit, which has historically given rise to a powerful creditor class. Then, it shows how sovereign debt repayment has always been a highly contentious affair from the very beginning, regularly resulting in intense distributional conflicts between creditors and taxpayers, and protracted power struggles over fiscal policy and democratic representation. Finally, it draws on two early-modern examples—Genoese lending to King Philip II of Spain and the development of the Amsterdam capital market—to show how international lending was made possible in the early-modern period despite the regular recurrence of default and the contested nature of repayment.

Keywords:   sovereign debt repayment, default, credit class, King Philip II, Amsterdam capital market, international lending, sovereign default, credit repayment

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