If the 1970s are remembered in international finance as the halcyon days of international lending, the 1980s and 1990s will be recalled as the turbulent years of international debt rescheduling. From the Philippines to Brazil to the Ivory Coast, the rescheduling of sovereign loans has become the major occupation – and preoccupation – of international bankers. But this pattern of boom and bust in lending is not unique to this epoch; borrowing cycles have occurred in both the nineteenth and twentieth centuries.

The financial crises that the world faced in the 1820s and 1830s, for example, resemble the entanglements of today in many respects. After the French successfully floated indemnity loans in 1817 and 1818, other countries rushed into the borrowing market. Brokers for these loans earned huge profits, which immediately made lending exceptionally attractive. As lenders scrambled to offer funds, many countries in the Americas and Europe leapt to secure loans. In the ensuing melee, countries often misrepresented the intended use of their newly acquired monies. For example, the Greek government easily secured loans by claiming that they would be used to bolster military defenses and keep the country free from Turkish rule. Yet only a portion of the proceeds were used for this claimed purpose: