Small money, big problems: how an investigation on small Latin American republics shaped the financial market for sovereign debt in the 19th century

Pequeno dinheiro, grandes problemas: como uma investigação sobre pequenas repúblicas latino-americanas moldou o mercado financeiro da dívida pública no século XIX

Pequeño dinero, grandes problemas: cómo una investigación sobre las pequeñas repúblicas latinoamericanas moldeó el mercado financiero de la deuda soberana en el siglo XIX

Abstract

In 1875 the British Parliament set up a Committee to investigate frauds on loans underwritten by British and French banks to the Republics of Honduras, Costa Rica, Santo Domingo and Paraguay, reaching an amount of £12 million. The reports of the Committee and the press coverage issue revealed financial malpractices by banks and diplomats in order to induce millionaire defaults at expense of the bondholders, whilst the loan agents were living in luxuriant mansions in southern France. After the investigation, these shoddy practices were exposed to the public, reshaping the loan business for the rest of the century.

Keywords:
Latin America; high finance; corruption