This book provides a comprehensive view of notarized—that is, peer-to-peer—credit in France from the mid-eighteenth to the early twentieth century. In it, the authors provide historical insight into current economic debates such as the link between banking and credit development and the role of interest rates in the clearing of the mortgage credit market.

The main message of the book is that mortgage credit in France did not depend on banks until World War I. The related loans were provided by notaries—brokers who arranged credit contracts between lenders and borrowers. Because notaries had privileged information on borrowers’ collateral, their function was mainly to solve information asymmetries—all the more salient since an operational lien registry was not set up before the last third of the nineteenth century. In addition, the use of a referral system among notaries helped to establish a network of knowledge that facilitated the matching of lenders and borrowers at a large scale, far beyond local markets. This system was so efficient that banks were not able to enter the market, at least until the creation of a government-based mortgage bank: the Crédit Foncier.

The book's inquiry relies on a fantastic data set on peer-to-peer credit for six reference years (1740, 1780, 1807, 1840, 1865, and 1899) based on a sample of ninety-nine markets, which allowed the authors to compare credit market conditions across cities and over time and to test the set of hypotheses used to explain the notarized credit functioning, its development, and the information problem it solved.

The book contains eight chapters, and all are worth reading. Chapter 1 develops the principles of the peer-to-peer credit system and describes the functioning of this market in 1740. The authors show that the allocation of credit depended on quality instead of price—what proves to be a key feature of this market until the last third of the nineteenth century. Chapter 2 jumps to 1780 and discusses the lack of centralization of the market. We learn that notarized credit in small places, though not as big as in the largest French cities, was very vivacious. In fact, insofar as the evaluation of borrowers’ collateral was the raison d’être of notarized intermediation, borrowers’ illiteracy was an important source of the demand for notaries’ services. This led to the development of small-size loans in the countryside, where illiteracy was high. Chapter 3 deals with the effects of the French Revolution. Along with the incidental drop in total credit, the design of new legal institutions favoring the development of obligation contracts at the expense of perpetual annuities was one of the main consequences of the Revolution. Chapter 4 provides theory and evidence of a notaries’ information network. The persistence of this network is explained by a game theory model in which “each notary had a limited number of correspondents who trusted him to send good referrals. He could not abuse their trust, for they could stop doing business with him in the future should he misbehave” (p. 120). Chapter 5 discusses the flexibility of French civil law through the development of an institutional innovation occurring in the South of France in the first half of the nineteenth century: the notarized letter of exchange. Chapters 6 and 7 explain how notarized credit managed to keep growing despite the development of banking activities from the second half of the 1800s. Peer-to-peer credit was barely affected by this development, because banks and notaries were more complements to each other than substitutes for each other. In fact, banks were not able to deal with information about real estate quality and thereby specialized in liquidity provision through the discount of short-term commercial papers. If one had to fear competition, it was banks more than notaries—and it was only through a change of law that notaries were crowded out of the deposit market. Chapter 8 examines the increasing role played by interest rates in the adjustment of the mortgage credit market in the last third of the nineteenth century. The development of a lien registry and the entering of a new government-based bank (the Crédit Foncier de France) reduced market segmentation and raised competition for mortgage credit provision. The priceless equilibrium vanished along with the notaries’ information advantage.

Despite such a comprehensive analysis, the main limit of the book is perhaps its lack of international comparisons. With the exception of chapter 7, which compares French and English banking systems, the book is based primarily on the French experience. This prevents the reader from generalizing from the conclusions, especially those about priceless equilibrium, the notaries’ network, and the limited role played by banks. Are the results specific to France? Are there historical contingencies or path dependencies? Of course, the book is very well documented and does not aim to address those questions directly; however, broader discussions on the role played by nonbank financial intermediaries outside France might have been highly valuable. This could be the object of another (perhaps collective) book.

Finally, what are the lessons of this book? First, economic theory is necessary to interpret historical facts. This does not mean that the economic analysis should be removed from the historical context; rather, the art of economic history is precisely to make both ends meet. Second, throughout the book we see how valuable the use of quantitative information is for historical analysis. Indeed, its quantitative investigation was essential to explain the raison d’être and functioning of the French mortgage credit market of the time. For that reason, producing quantitative data in order to enlighten the past should be one of the main tasks of the economist-historian. Third, history helps to enlighten economic theory. In fact, the development of peer-to-peer credit in France offers a reappraisal of the role of price in market clearing or the role of banks in credit development. For all of these reasons, this is a must-read for anyone interested in economic and business history, financial economics, economic development, and social science more broadly.