Anglo-Dutch financial connections and contrasts in the late 18th Century: The Amsterdam phase of the 1772-3 credit crisis

Stein Berre, Paul Kosmetatos*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

We examine the Amsterdam phase of the 1772-3 financial crisis using the British experience in the same episode as comparative context. We conclude that, notwithstanding some direct exposures by Amsterdam institutions to the principals of the London crisis, the main linkage between the two outbreaks was the requirement for cash margin on loans backed by British East India Company shares. No significant contagion via the bills of exchange network spread from London to Amsterdam in the period separating the two outbreaks, but some feeding back of distress back to London is noticeable after the Dutch outbreak. The crisis was rooted in credit expansion, a deterioration in asset risk profiles, and speculation in West Indian mortgage securities and British equity markets. Speculators were enabled by information inefficiencies in the specialised and layered Amsterdam markets, and by the absence of a gatekeeper who could have regulated the provision of credit to them. To contain the outbreak, the Dutch drew on the cohesion of an informal club of insiders who led business and civic affairs. Though the credit markets resumed normal operations relatively quickly, the incurred losses were transformative for their long term prospects by devastating some of their most important firms.
Original languageEnglish
JournalThe Economic History Review
Early online date3 Apr 2024
DOIs
Publication statusE-pub ahead of print - 3 Apr 2024

Keywords / Materials (for Non-textual outputs)

  • financial crises
  • central banking
  • 18th century
  • early modern finance
  • Netherlands
  • Great Britain

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