Patrik Winton, History, Uppsala University

2010-2014

During the second half of the eighteenth century the Swedish government negotiated loans in Amsterdam, Antwerp, Genoa and Hamburg in order to obtain resources for essential needs. The period of extensive foreign loans ended with the loan in Leipzig in 1802. The borrowing activities led to the establishment of economic and political ties between Swedish society and the leading European capital markets and that Sweden was integrated even more in a credit system with global connections. This development came to an end during the 1810s when the Swedish government decided to default on parts of the external debt.
The research project has focused on examining what this globalization and then de-globalization of the Swedish government finances meant for Swedish society. A global history perspective has been utilized. Key questions that have guided the project is how Sweden could establish more formal and long-term relationships with foreign creditors during the second half of the eighteenth century and why investors chose to invest some of their resources in Swedish debt instruments. Another important aspect that has been explored is the importance of global capital for the Swedish government. In other words, how the resources that flowed into Sweden was used. Furthermore, the project has investigated why Swedish politicians chose to phase out foreign loans and what impact this decision had for the Swedish government and Swedish society.
During the course of working with the project it has become clear that a limited comparison with the situation in Denmark would be fruitful since the two states began to borrow in Amsterdam and Genoa around the same time. It has also been fruitful to compare the handling of the debt after the Napoleonic war. Unlike the Swedish state the Danish government retained its foreign loans after the war ended in 1815 and it even negotiated new loans during the 1820s. Thus, the comparison has facilitated the analysis of the consequences of the Swedish government's decision to abolish the foreign debt.
The project's results revolve around the establishment of ties between the international credit markets and the Swedish government during the 1760s and the elimination of debt during the 1810s and 1820s. I have been able to clarify what the economic and political forces were that led to the Swedish government's decision to enter the international credit market and how negotiations between state representatives and the bankers who arranged the loans proceeded, the problems that arose and how the Swedish government tried to adapt to the demands made by investors. It was important for the Swedish officials to explain the Swedish political system and clarify the state's capacity to pay interests. I have also been able to show the conditions that affected the credit situation. The providing of loans was part of a greater exchange between Sweden and Genoa, where both parties had an interest: many Genoese desired closer economic and political ties with the Baltic region, while many Swedish merchants wished to expand its operations in the Mediterranean. In a similar way, one can see the negotiations with Henning Frederik Bargum as an example of how trade in the Atlantic affected the provisions of credit to the Swedish state. Bargum was the director of the Danish Guinea trading company, which administered the Fort Christiansborg and Fredensborg at the Gold Coast in exchange for the right to transport and sell slaves to the Danish Caribbean islands. The company also transported sugar from the Caribbean to Copenhagen. Bargum was dependent on his contacts in the Dutch Republic and Britain in order to arrange resources to the Swedish government, but also for his own trading activities. Moreover, I have been able to show how the money from the first loans was used by the Swedish government. They were necessary to restore the state's legitimacy and authority in Swedish Pomerania after the Seven Years War, but also in efforts to stabilize the monetary situation after the war. Without international resources the crisis during the 1760s would have become much deeper and would have required more drastic changes. At the same time the loans that the Swedish state had received required the allocation of internationally viable resources in order to maintain creditworthiness. The results mean that current interpretations of the economic and political situation during the 1760s and 1770s must be revised, especially regarding the fiscal capacity of the Swedish state and the impact global capital had on domestic policies. The comparison with Denmark has clarified the driving forces behind the loan negotiations. It was crucial for both states to receive external funds in order to stabilize the economic and political situation after the Seven Years War. Concurrently, there was an interest in Genoa and the Dutch Republic to lend resources to states that could offer higher interest rates.
Regarding the policy after 1810, when the Swedish government decided to unilaterally write off and partially repay the portion of the government debt which was located abroad, I have been able to show the reasons behind this policy, but also the political conflicts that existed in Sweden when the decisions were taken. Furthermore, I have studied the reactions to these decisions from the bankers who administered the loans and from the thousands of investors who owned Swedish bonds. I have mainly analyzed the investors who bought shares in the Swedish loan in Leipzig in 1802. The investigation has shown that the investors were spread over quite a large geographical area in which different political loyalties existed. Many of the investors were Saxon officers, traders and craftsmen, but there were also investors from smaller German duchies. Investors organized themselves and tried in various ways to persuade the Swedish government to improve conditions in connection with the liquidation of the bonds. The conflict between the investors and the Swedish government led to the involvement of the Saxon and Prussian states. Consequently, the cancellation of the debt affected relations with several German states in a way that the Swedish government had not imagined. Moreover, it appears that the Swedish measures hampered the Swedish attempts to borrow in Hamburg in the early 1830s. At the same time the Swedish policy of default contributed to Amsterdam's and Genoa's fall as leading financial centers. London took over that role during the 1820s.
The comparison with Denmark has shown that the Danish government prioritized its relations with the international credit markets after the war and that they used trade revenues and subsidies to manage the debt. In Denmark, the regime survived the war and they could determine the allocation of available resources on their own without the interference of any parliament, while the Swedish process was influenced by the relationship between the monarchy and the elite. As a consequence, the available resources went to other purposes than maintaining the debt in Sweden. The crown prince Charles John's position was strengthened while the government had to utilize its tax revenues and not loans to cope with the necessary expenditure. In Denmark the availability of credit was upheld with new loans. Available figures indicate that the Danish policy contributed to faster economic growth in Denmark than in Sweden during the period 1820-1865. Consequently, there is little evidence that the debt management in Denmark crowded out other players from the credit market or that it hindered economic development.
Although the results suggest that the Danish government's debt policy was more successful (in economic terms) than the Swedish policy during the first half of the nineteenth century, there is a need for more research. Not least, it would be interesting to study the role of government borrowing in economic modernization processes. One hypothesis would be that the late Swedish industrialization process can partly be explained by the de-globalization of the Swedish credit market during the first half of the century.
During the project there has been an ongoing dialogue with other researchers both in Sweden and abroad. Preliminary results have been presented at 11 international conferences in Britain, Finland, France, Norway, Sweden and the USA. In addition, a working paper was presented at a seminar at the University of Utrecht. Besides getting important comments on the ongoing work, discussions have also resulted in new partnerships and project ideas. In particular, contacts with Joel Felix in Reading, Nicolas Barreyre and Nicolas Delalande in Paris and Christiaan van Bochove in Nijmegen have opened new perspectives on public finances.
The project's two main publications are: "The Political Economy of Government Borrowing in Scandinavia, 1760-1776" and "The Political Economy of Default: Sweden and the International Capital Markets, 1810-1830". These summarize the project's principal results for the international research community. Some of the results have already been published, while others will be issued during 2015 and 2016. The strategy has been to publish articles in leading journals in Scandinavia and internationally in order for the results to be broadly distributed. Since researchers who are involved in the field of public finance primarily publish in journals, it has been natural to do the same. Some of the results are also presented in two anthologies. Open access has been secured by uploading either the finished articles or early versions of them at Uppsala University's DiVA-portal. Finally, an article summarizing my findings to a wider audience will be published in a magazine such as Populär historia or Axess.

Publications

"Denmark and Sweden in the European Great Power System, 1720-1765", Revue d'histoire nordique, nr. 14 (2012).

"Det kapitalrika rummet. Sverige och de tyska kreditmarknaderna 1799-1832", i Mats Hallenberg & Magnus Linnarsson (red.), "Politiska rum. Kontroll, konflikt och rörelse i det förmoderna Sverige 1300-1850", Lund 2014.

"Sweden 1750–1780: parliamentary control, public discussions and royal autonomy". Inskickad till tidskriften Histoire & mesure. Kommer att ges ut under 2015.

"The Political Economy of Default: Sweden and the International Capital Markets, 1810–1830". Kommer att skickas in till Economic History Review.

"The Political Economy of Government Borrowing in Scandinavia, 1760–1776" kommer att ges ut i en kommande antologi med den preliminära titeln "A political history of public debts". Projektet leds av Nicolas Barreyre och Nicolas Delalande i Paris.

"Den globaliserande svenska staten. Lån, kursoperationer och internationella handelsnätverk omkring år 1770". Kommer att skickas in till antingen tidskriften Scandia eller årsboken Sjuttonhundratal.

"Den skuldfria staten. Statsformering och ekonomisk utveckling i Danmark och Sverige 1810–1850". Kommer att skickas in till tidskriften Historisk tidskrift.

"Internationella lån och krediter i Sverige 1760-1830". En populärhistorisk sammanfattande artikel som kommer att skickas in till en tidskrift som till exempel Axess.