2. Credit relationships in socio-economic family and kinship contexts

Recent literature on credit acknowledges not only the ubiquity of debt but also the occurrence of borrowing from kin and the resulting intra-familial credit relations.Footnote ⁸ However, Elise Dermineur notes that written records show a low rate of borrowing between family members, one reason for which, she suggests, is that families had the option to draw on intergenerational transfers and donations.Footnote ⁹ These could include unpaid inheritance shares from siblings, dowries or marriage portions, or sums of money borrowed between spouses or family members. However, outstanding intergenerational transfers were treated and recorded as debts, and their securitization served important purposes. Compensating yielding heirs with financial shares secured on the property could avoid the division of landholdings and ensure entitlements for the heirs in the form of financial instruments or annuities.Footnote ¹⁰ In Tyrol and on the Italian peninsula, marriage portions and dowries were also mortgaged on the husbands’ property and were to be returned upon their death.Footnote ¹¹ Retirement or inter vivos transfer contracts were also secured on the property as mortgages.Footnote ¹² Examples of this can be found in the ‘mortgage books’ analysed by Donabaum and the probate inventories discussed by Lanzinger and Maegraith in this special issue. Such a securitization of intra-familial debts raises the question of how such family debts were passed on and transferred, who was liable for them, how they were administered and repaid, and how they were treated in relation to commercial debts. This is an important question, given that the market value of numerous landed properties could potentially be impacted by liabilities stemming from inheritance, retirement and marital property issues. By recognizing intergenerational transfers as securitized debts, we also need to discuss the gendered effects of familial debt, for example on the distribution of female and male debtors and creditors, and on inter-spousal relations.Footnote ¹³ Considering intra-familial loans and mortgages alongside commercial ones thus widens the circle of credit relations – by including heirs, orphaned children, spouses and relatives of both sexes.Footnote ¹⁴

The capital needed to satisfy loans granted in commercial contexts could be sought from the family or social networks, or from institutions – as demonstrated by the Lower Austrian orphan funds. With his analysis of the credit practices of orphans’ courts in Lower Austria, Matthias Donabaum sheds light on the intersection between family funds and institutions: orphans’ assets stemming from inheritance shares were a significant source of credit in both urban and rural areas. This approach comprises credit relations between kin members, and Donabaum proposes a broad definition of credit that includes money loans and all claims and liabilities that could also stem from kin, for example inheritance shares. He therefore argues that, in order to understand the credit practices in Lower Austria, it is necessary to consider the legal contexts in relation to institutions such as orphan funds, especially with regard to the specifics of intergenerational property transfer. He shows that, since financial institutions such as savings banks, which were established in Central Europe only in the early nineteenth century, were largely unavailable for the wider rural population, orphans who had inherited assets offered an important source of credit alongside other groups, among them kin and local institutions.Footnote ¹⁵ The personal networks of the wards’ guardians, who acted as intermediaries, were crucial in allocating capital, and orphans with larger assets could lend to a great number of people. Donabaum’s data show that especially the securitization of inheritance shares and other claims was an important reason for borrowing, even if such debts were more social than economic. Yet, inheritance debts could severely impact the ability to invest in landed property. Donabaum asserts that local debt relations and credit markets were intertwined with intergenerational property transfers, thus strengthening the claim of David Sabean, Giovanni Levi and others, who have argued that there was no dichotomy between the family and the market.Footnote ¹⁶ This literature and research in early modern Tyrol also shows that cyclical indebtedness following succession or mortgaged marriage portions in turn opened up credit options for the lending party.Footnote ¹⁷

This special issue therefore focuses especially on family debt – often ‘hidden’ in the sources, resulting in its size being underestimated in historiography. While bankruptcy research tends to centre on merchants, companies and banks, over-indebtedness and insolvency affected all other social groups – from peddlers, peasants and the middling sorts to noble families.Footnote ¹⁸ Regarding the latter, where debt was also a widespread problem, there is still a great deal of research to be done. Thus, R. W. Hoyle has examined family businesses in early modern England based on detailed case studies of shopkeepers, farmers and clothiers, addressing the relationships between their ‘individualistic’ character and the involvement and (absence of) liabilities of the family members – particularly when businesses ended due to death or bankruptcy.Footnote ¹⁹ With this, he significantly contributes to our knowledge of family and kin involvement in this context. In his article in this special issue, James Shaw argues that bankruptcy is a key moment for families when kinship and debt are negotiated in nineteenth-century England. The downside of social networks becomes clearly visible here. While these networks had many benefits, they also created expectations and obligations of support in difficult situations.Footnote ²⁰ In his analysis of the fortunes of the Sheffield firm Read & Co, a smelting company founded by John Read in the late eighteenth century, Shaw raises the question of the extent of the ‘implicit contract’ and where it ended. In contrast to studies of business failure, he focuses on the family rather than the company, using correspondence to examine the consequences of bankruptcy from a family perspective. In the broader context of the period under study, corporate bankruptcies were not uncommon, especially among companies with a global presence. As was common at the time and in this social milieu, marriages – in this case, that of one of the founder’s two sons – created a network of financially successful individuals working in other companies. John Read, one of the two brothers who took over the business in 1803, became increasingly involved in finance and investment rather than industrial management. He left in 1831 to become a director of the Sheffield Banking Company. This precarious situation was followed by further difficulties, including John Read lending money to his brother, reluctantly returning to run the company and subsequent disputes over its management, which was struggling with unsecured debts. In 1845, the management was handed over to external administrators, as happened in the Lamberg-Sprinzenstein insolvency case in Lower Austria 120 years earlier, analysed by Florian Andretsch in this special issue. The husband of one of the nieces finally bought the company, which led to further disputes. Shaw’s article illustrates very clearly the difficulty of balancing one’s obligations to family and company with one’s own interests in situations of crisis. The fragility of succession situations and the emotional involvement in decision-making further complicated the relationship between family, company and debts in this case.Footnote ²¹

3. Visible or hidden debts, opaque lending and borrowing processes and decisions

Inventories are frequently used as a source for studying credit and household debts.Footnote ²² Yet, inventories provide only a snapshot of debts and liabilities, albeit a valuable one, usually at the time of death. Depending on the legal context and the density of the documentation, however, other sources are also available. In his study of a noble insolvency in eighteenth-century Lower Austria, Florian Andretsch analyses the ‘specification of all liabilities’, while Matthias Donabaum in his article uses the ‘mortgage book’ or the Satzbuch – both documents intended to record loans. The Venetian litigation records studied by Matteo Pompermaier are complemented by a reconstruction of the borrower’s options in order to approach the possible rationale behind their credit choices, which is not mentioned in the sources. Despite the excellent documentation of the financial dealings of the nobility in Florian Andretsch’s case, the exact origins and the amounts of the debts are sometimes unclear, due to the opacity of the processes or the structure of the archives. In some cases, it is necessary to reconstruct a network of transactions that are not contained within a single contract or document, and which span a longer period of time, in order to understand loans and, ideally, how they came about and how they were used.

This type of investigative work is illustrated in the case study of Christina Neuhauserin, as described by Margareth Lanzinger and Janine Maegraith in their article, which links an existing probate inventory with additional sources. Geographically, their study is situated in the county of Tyrol, located between the Venetian state and Lower Austria. By juxtaposing two seemingly distant rural cases from the sixteenth and eighteenth centuries, the authors aim to reveal the economic activities behind the credits and debts registered in two individuals’ probate inventories. The central question of this article is what scope for action emerges when one attempts to trace how money has been handled. In the first case, the agricultural business of a widow is reconstructed based on several court records, ranging from inheritance proceedings and obligations to her will and probate inventory. She had obtained lifelong usufruct from her late husband and managed to make a profit from this and her lending activities. Yet, as she did not possess the land, she could not take out mortgages herself, meaning that the documents do not contain any outgoing debts. However, her will and her credit practices suggest an awareness of social debts, with further ‘repayments’ scheduled after her death. Although based on a specific legal framework, the results elucidate why there is less evidence of women’s debts in areas with low female landownership.

Similarly, the probate records of an eighteenth-century Tyrolean innkeeper analysed in the same article serve to reconstruct his economic activities and sources of income. As a member of the local elite, he left behind a considerable estate. The extensive list of his credits and debts reveals the significance of familial and kin-related debts, such as his wife’s marriage portion, which was mortgaged on his real estate – equivalent to a loan. In the context of the division of marital property, these assets were administered by the husband during the marriage, but they remained her property, to which she was entitled as a widow. However, the list also shows the complexity of an innkeeper’s entrepreneurship on the transalpine transit route, as he was involved in various activities, such as transport, wine trade, agriculture and providing accommodation for travellers. In an area where the legal framework remained largely unchanged between the sixteenth and the eighteenth centuries, the juxtaposition of seemingly different cases sheds light on common aspects of how analysis and cross-document analysis can reveal underlying economic activities and credit relations, as well as the relationship between landownership, gender and access to borrowing, which is otherwise obscured in the documents.

Nevertheless, the question remains as to what was recorded in writing and which documents have not been preserved. Occasional references in documents such as probate inventories show that sums were sometimes written on small pieces of paper and kept in a drawer or document box, or that repayment terms were agreed verbally.Footnote ²³ For this reason, the process of determining outstanding debts is of great importance, for example when drawing up a probate inventory, which included family and business debts, and which can provide new insights into the economic dimensions of the deceased’s household or business – as shown by the case of the innkeeper.

At the same time, we must deal with uncertainty, as we do not necessarily know the history of credit processes, which relates back to Levi’s study. The process of lending and borrowing is often opaque or non-transparent. Matteo Pompermaier sheds more light on the obscured aspects of borrowers’ decision-making by presenting the available data and research on the credit options and their conditions, and by considering the actors’ specific contexts. In this special issue, he explores the under-researched relationship between the supply and the demand for credit, using the eighteenth-century Venetian credit market as a case study. Apart from reconstructing the opportunities available to borrowers for consumption credit and their economic and social costs, he discusses the modalities and reasons for seeking credit, asking how could consumption credit be obtained, and which institutions offered it on what terms? How did borrowers decide between the different options and what was the rationale behind their choices? The author illustrates this change of perspective by taking a court case – a wife from the upper class trying to reclaim her movable collateral – as a starting point to trace the choices available and those that might have been made and indeed were made. Although he can identify a multitude of lenders operating in the credit market, the limited availability of sources that describe the needs of borrowers meant that he had to adapt his approach. He therefore juxtaposes different possible outcomes of the same borrowing activity with the various responses to the need for credit. This kind of historical analysis expands our understanding of the complexity of pre-bank credit markets and offers a fruitful approach to studying household finances. This also furthers our knowledge about economic agency – in this case of female actors in the credit markets.

4. Good or bad debts?

Credit and debts were omnipresent. Credit has many facets and is a double-edged instrument, in the past and today. When used for purchases, acquisitions, investments and bridging finance, it can increase the scope for action and thus improve the economic capabilities of households or businesses, men and women, make new endeavours possible and even lead to social advancement.Footnote ²⁴ Yet, taking on debt can also set in motion a downward spiral and bring already precarious household economies into even greater dependency and power relations, for example when loans mainly result from payment deferrals and over-indebtedness becomes structural.Footnote ²⁵ Bankruptcy can result in seizure or foreclosure, which can lead to social ostracism, imprisonment or at least the loss of public office for those affected, especially if the bankruptcy was fraudulent or negligent.Footnote ²⁶ Credit was thus always both potentially enabling and dangerous. Different contexts need to be considered here, especially the legal situation. However, the regulatory framework of institutions could also have a significant impact on how debt was managed, depending on whether they allowed no flexibility or tended to be solution-oriented. In Switzerland, for example, there was a legal mechanism for officially clarifying financial circumstances and satisfying creditors, if possible, including by auctioning off possessions. This was made possible by the Bernese Geltstag – literally ‘debt day’ – which could be invoked whenever the financial situation became unclear. This possibility existed throughout the early modern period until the end of the nineteenth century. The fact that economic failure can be seen as part of everyday life in this specific context was also due to debtors – both men and women – being treated with respect and solidarity.Footnote ²⁷ In the Tyrolean case examined by Lanzinger and Maegraith, the courts consistently demonstrated a commitment to finding financially viable solutions for families in critical situations, with the aim of preventing complete over-indebtedness. However, economic failure also depended on who the creditors were – neighbours, colleagues, friends, relatives or ‘foreign’ investors from the next town – and who had access to credit. In early modern France, for example, (re-)negotiations, often taking place outside the courts, were favoured as a means of finding solutions that would mitigate the consequences.Footnote ²⁸

Florian Andretsch’s contribution in this special issue focuses on aristocratic debtors and addresses several of these aspects of economic failure. Despite their expenses often exceeding their income from rents and offices, aristocratic families had the power to access (or demand) credit. Taking on and fulfilling prestigious offices, as well as representative tasks and obligations, required them to seek lenders from a broad social spectrum, including outside aristocratic or noble circles. At the same time, aristocratic families such as the Counts of Lamberg-Sprinzenstein – one of the largest landowning families in Central Europe in the eighteenth century – increasingly tended to freeze their property in fideicommissa. By law, land that was part of such fideicommissa could not be used as collateral. This could become a structural problem. However, Andretsch’s analysis shows that there was room for negotiation with the higher authorities in order to minimize damage by balancing the personal dignity of the noble debtors with the financial security of creditors wherever possible. Karl Joseph of Lamberg-Sprinzenstein’s assets were placed under judicial administration in the mid-1730s to stabilize the noble economy. The family’s possessions remained under the control of the authorities for three decades. Nevertheless, they were granted some concession when dealing with debtors, in that they were permitted to submit plans for settling their debts to avoid the sale of allodial property. Ultimately, fideicommissa were also involved in necessary loan collateralization with the approval of the sovereign, despite this contradicting their intended function. This demonstrates that fideicommissa could be used more liberally than is often assumed.Footnote ²⁹ Andretsch shows that debts of different origins accumulated because of the constant need for new loans and transactions, and that the exact tipping point between enabling and ruinous loans is difficult to identify.

5. Practices of credit and debt

The contributions to this special issue show the actors’ economic embeddedness within family finances and social relations. Their findings complement scholarship on the social history of credit and debt in many ways: they point to commonalities and similar practices across a long time period and different European legal spaces, for example interest rate practices or enforcement of repayments. But there were also decisive differences, which highlights the need for and the fruitfulness of further comparative studies. The articles show the parallel existence of numerous different horizontal credit worlds, the plurality of lenders and possibilities to obtain credit, and the various modes of credit – notarial, institutional, formalized and non-formalized – and the ways in which they were secured. They also discuss different social groups, including nobles, merchants, local elites, townspeople and villagers. While aristocratic circles could rely on state-backed solutions in times of financial crisis, businesses in cities drew on credit from their family members and banks, if possible, or faced bankruptcy.Footnote ³⁰ The inheritance shares of orphans, administered by guardians or orphan funds, could be used to offer credit to townspeople while earning interest for the orphans. Although there were more credit options in large city-states such as Venice, they were subject to different conditions and did not always meet the specific needs of those seeking credit. In peasant households, credit and debt centred on the landed holdings and their yields, but property was often mortgaged alongside inheritance shares and marriage portions, which could affect their post-mortal administration, for example granting a wealthy widow a usufruct right. Rural elites, such as innkeepers, faced a similar situation, but they could augment their financial options by participating in long-distance trade. The articles thus raise questions regarding the interactions and power relations between different social actors in various social contexts, including both men and women. But they also complement existing literature by addressing the question of why fewer female borrowers are documented and exploring the crucial link with landownership.

All contributions show the necessity of examining legal contexts in order to understand how credit markets and networks functioned. This includes government edicts for institutions in eighteenth-century Venice; legal provisions for the investment of orphans’ assets by guardians in Lower Austria; the law and practice of intergenerational transfers, testamentary bequests and marital property laws in the Habsburg lands; and new credit regulations in England. Many credit situations were prone to conflict and litigation, for example in Venice. The law also sought to prevent conflict between step-families in Lower Austria, and indebtedness strained family relations such as in Sheffield and among the nobility. Adopting a micro perspective sheds light on social relations and the ways in which solutions were sought. The study on Venice enhances our understanding of decision-making; the Sheffield case study highlights the interdependence of business and family, as well as the dangers of straining social relations. Meanwhile, aristocratic circles had the power to amend highly regulated legal instruments, such as fideicommissa, to meet their own needs. Particularly useful for comparative studies are the proposed definitions of broader and more inclusive concepts, for example wealth, credit and ‘rationality’, which allow kinship and family dynamics, as well as credit originating from property transfer and lending between family members, to be specifically included. However, these are often visible only through document interlinkage, which calls for the tried-and-tested methodology that draws on cross-document analysis and contextual material to fill in the ‘holes’ left due to recording practices, the limitations of unrelated documents and specific perspectives, similar to Giovanni Levi’s study. This may reveal, for example, credit that was not based on an intentional lending relationship but rather was the result of marriage and inheritance transfers. By taking this approach and using a wide range of sources, the authors enable a deeper understanding of the underlying economic processes at a micro level.

Scholarship also emphasizes the embeddedness of economic practices in social relations.Footnote ³¹ We build on this research conceptually while also extending it. First, we propose a broad definition of wealth that includes credit, creditworthiness and credit relations as fundamental elements, in addition to rights and claims derived from real estate, transferred or awarded money and material objects. Analysing these components of wealth alongside local credit relations can add another layer of complexity to the analysis of socio-economic practices and socio-economic order in society. It can also complement the interplay between kinship networks and entitlements with credit relations. This broadened perspective makes it possible to relate debts arising from family, kinship or marital relations to extra-familial debts or, conversely, to deepen our understanding of social relations through the lens of credit.

The study of inheritance practices and marital property regimes based on contracts, wills and probate proceedings shows that, in many areas, property was burdened with debts resulting from inheritance practices and marital property regimes.Footnote ³² Inheritance compensation payments were often deferred and marriage portions were secured on the husband’s property. This could lead to an accumulation of encumbrances on landed property, which could curb investments in improvements, influence decisions on succession and inheritance share negotiations for yielding heirs, and determine the future provision for widows. A marriage portion could place a significant financial burden on credit relations. In Tyrol, for example, a widow’s entitlements took precedence over those of other creditors. In early modern England, however, although the widow was the executor of the estate and in charge of administering all incoming and outgoing debts in 90 per cent of the probate accounts analysed by Craig Muldrew, as a femme covert she was not legally the estate’s creditor or debtor – although in practice she acted as one.Footnote ³³ This perspective on the social and economic context of credit relations highlights intra-familial credit and credit administration and, together with the involvement of women and their funds and entitlements, can reveal the repercussions that intra-familial credit regulations could have had on the credit relations and financial affairs with actors outside the family. The challenge lies in studying the fabric of interrelationships, starting with the socio-economic practices that emerged around debt and credit as a common link in familial, commercial, institutional and gender relations. In addition, debts must be considered in all their complexity, ranging from beneficial – such as investments – to problematic or even damaging, to ‘hidden’. Not least, the backdrop of specific situations must be reconstructed in order to understand the complexity of all the players – women, men and institutions. We believe that this special issue can contribute substantially to the understudied question of the interrelationship between credit, marriage, family and kinship.Footnote ³⁴ And we hope that the articles will encourage future research into the ‘hidden’ processes of credit and debt, and inspire researchers to look beyond the obvious information in available documents.