The fifth chapter of this book reviews the earliest banking crises experienced by different Latin American countries. The impact of the financial crisis of 1857 in Havana and Rio de Janeiro represents a clear case of transmission of a crisis from center to periphery, and allow us to speak of international financial contagion. On the other hand, the panic of 1864 in Rio de Janeiro was a notable example of financial imbalance with domestic roots. In the mid 1870s another cluster of financial crises ricocheted across Latin America. In those years, a series of bank panics occurred in Argentina, Brazil, Chile, Uruguay and Peru, accompanied by local stock market panics, currency crises and the abandonment of convertibility schemes. The most catastrophic financial debacle was that of Peru, where a dramatic debt default coincided with an exchange crisis and the collapse of the banking system in the years 1876–1879. The review of these early financial crises allows us to reflect on the diverse trajectories of Latin American banks and the possible causes of their relative fragility before the end of the century.

Debtors’ prisons played a vital – albeit seemingly paradoxical – role in early modern society. In many cases, those incarcerated could not or would not pay their debts. Instead, they languished in prison and racked up new debts to their gaolers. Chapter 2 addresses this seemingly self-contradictory system by showing that, even when it prevented the repayment of debts, imprisonment helped to protect wider social and economic interests, balancing those of landed wealth and emergent capital. It analyses the social, economic, legal and ideological shifts that underwrote this convoluted system, excavating emergent carceral ideologies. In turn, it considers the array of measures taken to alleviate the pressure that growing numbers of insolvent debtors placed on England’s prisons, mitigating the worst effects of the structural weakness of debt incarceration. These attempts to relieve an overburdened system – which ultimately stabilised the debtors’ prison into the eighteenth century – were essential because prisons had developed disciplinary purposes that proved vital to early modern social relations, even when its coercive functions failed.

Under the extremes of Indian socialism, the financial system was a handmaiden for state control of the economy, directing resources according to the wishes of the government. State control was achieved through government ownership. A great deal has changed, with a first (1947–1992) and second (1992–2016) phase of central planning where there were conflicting themes of liberalization and enhanced state control. In many areas, private financial firms are now important. The full ecosystem of modern finance, with information processing and risk taking by private persons, blossomed in the equity market. For two decades there was a remarkable policy process that yielded gains in fields such as the equity market, pension reforms, bankruptcy code and so on. But alongside this there was the expansion of the ‘administrative state’ in the form of financial regulators. Regulators engage in micro-management of products and processes. While there is isomorphic mimicry with many things that look like a financial system, officials retain substantial control over how finance works. In a functional perspective, Indian finance today resembles the environment of the 1980s more than meets the eye.

Soon after independence, the relationship between private enterprise and the state changed. The industrialization policy made certain sectors of high priority – machines, metallurgy or heavy chemicals – and made it easier for them to access scarce capital and foreign exchange. On the other hand, traditional businesses in textiles, plantations and commodity trades were deprived of access to capital and modernization opportunities, or even banned, along with moneylending. As some of the highly protected priority industries failed to become profitable, and bankruptcy accumulated in the low-priority sectors like textiles, the strategy became unsustainable. After a sharp break around the 1980s or 1990s, private enterprise faced a more liberal environment where it was easier to access capital and technology abroad and invest in offbeat fields. New patterns of inequality in the corporate sector developed again, now due to the challenges of operating in a globally connected and integrated world. The chapter presents this two-stage transition in a chronological narrative.

As a monetary capital provider, creditors play an important role in external governance with shareholders, although they have no legal voting right outside of the bankruptcy process. Chapter 8 will compare the legal institutions and practices regarding the roles of creditors in the three countries by dividing them into ex ante monitoring of solvent firms, renegotiation in financially distressed firms, legal bankruptcy, and debtor directors’ fiduciary duty during the zone of insolvency. In the United States, banks play an active role in the governance of the firm whose business stumbles, by using the loan agreements for the revolving credit facilities. In Japan, contingent governance by main banks as representative of monetary capital providers worked well during Japan’s rapid economic growth era, but was not able to monitor their client companies’ use of free cash flow after the economic growth stopped. Although China is a bank-centered economy and state banks keep a dominant position, Chinese banks play a limited role in monitoring borrowers, especially borrowers who are SOEs, which can be supported financially by the government with cheap credit.

This chapter examines the development of an ideology of middle-class behaviour based on the ability to save and to maintain enough capital to prevent a cash flow crisis that would result in being arrested or imprisoned. This led to a new type of class-based thinking about society that was closely linked to the security that new forms of capital provided to successful savers. Such individuals were those who were able to accumulate large amounts of capital through entrepreneurship or inheritance, and not dissipate it though overspending. This was a small elite group who gradually came to be termed the middle class, to differentiate themselves from the middling sort of smaller traders. They also increasingly thought of their capital as a form of property created out of righteousness, and that the role of the law was to protect it from those who were less able.

Seventeenth-century Amsterdam was a city of innovations. Explosive economic growth and the expansion of overseas trade went hand in hand with a high level of religious tolerance. In this world of increasing complexity, legal and governmental innovations were essential in order to adapt the urban institutional landscape to the challenges posed by these great social, economic, and cultural changes. The topic of insolvency legislation, as a crucial junction of the fundamental contextuality of commercial law, is most suitable to shed new light on the precise circumstances under which the most striking and seminal developments in the rise of a modern commercial order took place. This introductory chapter explains how new empirical evidence from Amsterdam's legal archives can help understand how innovative governance and legal practices interacted with moral thought in order to produce a liberal, open-access insolvency regime.

Genevieve Lakier (University of Chicago Law) examines Upsolve v. James, where a district court enjoined the application of New York state’s unauthorized practice of law statutes to the Justice Advocates that the nonprofit organization, Upsolve, planned to train, to assist low-income New Yorkers file for bankruptcy. The opinion represents a clear victory for the access-to-justice movement. But it also represents a potentially significant change in how courts understand the First Amendment to apply in unauthorized-practice-of-law cases. Although the decision may be overturned on appeal, the logic of the opinion thus makes clear the promise that what critics have sometimes described as a “Lochnerized” First Amendment holds out to access-to-justice advocates, as well as some of its perils. In this chapter, Lakier explains why the decision is significant, embeds it within a broader story of doctrinal transformation, and spells out some of the benefits and costs of using a Lochner-like First Amendment to promote access to justice.

Chapter 5 focuses on the enforcement of credit contractual agreements and questions the meaning of trust in credit networks. Despite the norms of solidarity, cooperation, and fairness that characterized pre-industrial society, breach of agreement did occur. When lenders and debtors had exhausted all the possibilities available to settle their disagreement, taking the matter to court was often the last resort. The aim was to recover the money owed, but often the emotional and social implications of a lawsuit went beyond the simple economic dimension. Throughout the period, the burden of debt increased rapidly, as well as the number of discontented creditors. The apparent dichotomy is intriguing: on the one hand, financial arrangements were flexible and renegotiable, but on the other, contract enforcement at court was sought after. These lawsuits are rich sources of information for the historian. They highlight the shortcomings and failures of debtors, and the (im)patience of creditors. But above all, they display the dynamics of complex and multiple layers of social and economic relationships. Overall, this chapter reconstructs both transactional and dispute resolution practices in

This chapter introduces the concept of insurance as a product and explores why people want to purchase insurance in general (and health insurance in particular). The main discussion centers around explaining that health insurance (and all insurance) is primarily financial protection: health insurance does not protect your health but instead protects your wealth from health-related risk. The chapter then moves on to discuss the operations of an insurance company: how premiums are set, the difference between correlated and uncorrelated risk, group insurance, and experience rating. The chapter ends by discussion moral hazard in the context of an individual with insurance coverage. The end of chapter supplement provides a mathematical example of why someone who is risk averse would want to purchase insurance.

This essay explores the relationship of literature and perversity in Roberto’s Bolaño’s short fictions “The Secret of Evil,” “The Insufferable Gaucho,” and Distant Star. While literature within the history of Latin American letters often provides a critique of or antidote to political and economic atrocities, in Bolaño’s texts literature is complicit in the very horrors it depicts. In Bolaño’s view, any effort to pit fiction and social actuality against each other in the interest of rescuing either represents a means to avoid the disturbance that, for Bolaño, defines contemporary existence.