The Failure of the Foreign Bondholders Protective Council Experiment, 1934–1940
This article explores the contentious U.S. State Department–Foreign Bondholders Protective Council relationship in the context of interwar foreign economic policy and bureaucratic competition. U.S. officials created the council in 1933 to represent the interests of U.S. investors in the settlement of the numerous dollar bond issues that had gone into default. The article shows why the council failed to perform as U.S. officials expected and outlines the process by which they increasingly interposed themselves in debt negotiations. In doing so, it considers the limitations of using private organizations to accomplish the objectives of public policy.
The Booms and Busts of the Sovereign Rating Activity
In previous centuries, sovereigns often went bankrupt. For example, Spain defaulted three times during the Golden Century; it defaulted seven more times in the seventeenth, eighteenth, and nineteenth centuries. France defaulted eight times between 1500 and 1800. In the nineteenth century, Austria-Hungary and Prussia defaulted five times. These defaults, which involved both colonial and continental powers, show how difficult it has been to assess sovereign creditworthiness (see Reinhart and Rogoff 2009; Suter and Stamm 1992; Winkler 1933; Wynne 1951 for an exhaustive view of sovereign defaults occurred before the twentieth century).
Economic Survey, 1919-39
1. IntroductionPart 1 2. 1918 3. 1925 4. 1929 Part 2 5. The United Kingdom6. Germany7. France8. The United States of America9. Japan10. The USSRPart 3 11. The Inter-War Perspective12. International Trade: Obstacles13. International Trade: Trends14. Conclusion