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Financing Long-Distance Trade: The Joint Liability Rule and Bills of Exchange in Eighteenth-Century France

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  • Santarosa, Veronica Aoki

Abstract

Over time, international trade expanded beyond the reach of an individual's personal networks. How was long-distance trade among strangers financed without using banks? I argue that the joint liability rule enabled the medieval bill of exchange to become a major form of payment and credit in the early modern period which in turn supported an unparalleled expansion of trade. This article empirically examines the role that joint liability played in ameliorating fundamental information problems in long-distance trade finance.

Suggested Citation

  • Santarosa, Veronica Aoki, 2015. "Financing Long-Distance Trade: The Joint Liability Rule and Bills of Exchange in Eighteenth-Century France," The Journal of Economic History, Cambridge University Press, vol. 75(3), pages 690-719, September.
    • Handle: RePEc:cup:jechis:v:75:y:2015:i:03:p:690-719_00
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    Citations

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    Cited by:

    1. Fabien Eloire & Claire Lemercier & Veronica Aoki Santarosa, 2016. "What can we learn about the embeddedness of commercial relationships from the study of powers of attorney?: (France, 18th-19th centuries)," Sciences Po publications info:hdl:2441/1qj79hnvh79, Sciences Po.
    2. Gary B. Gorton, 2020. "Private Money Production without Banks," NBER Working Papers 26663, National Bureau of Economic Research, Inc.
    3. Fabien Eloire & Claire Lemercier & Veronica Aoki Santarosa, 2019. "Beyond the personal-anonymous divide. Agency relations in powers of attorney in France in the eighteenth and nineteenth centuries," Post-Print hal-01358365, HAL.
    4. repec:hal:spmain:info:hdl:2441/1qj79hnvh79ggpmoddpe0p1im2 is not listed on IDEAS
    5. Fabien Eloire & Claire Lemercier & Veronica Aoki Santarosa, 2016. "What can we learn about the embeddedness of commercial relationships from the study of powers of attorney?," SciencePo Working papers Main hal-01358364, HAL.
    6. Olivier Accominotti & Delio Lucena‐Piquero & Stefano Ugolini, 2021. "The origination and distribution of money market instruments: sterling bills of exchange during the first globalization," Economic History Review, Economic History Society, vol. 74(4), pages 892-921, November.
    7. Fabien Eloire & Claire Lemercier & Veronica Aoki Santarosa, 2016. "Beyond the personal-anonymous divide: Agency relations in powers of attorney in France, 18th–19th centuries," Working Papers hal-01358365, HAL.
    8. Fabien Eloire & Claire Lemercier & Veronica Aoki Santarosa, 2019. "Beyond the personal-anonymous divide. Agency relations in powers of attorney in France in the eighteenth and nineteenth centuries," SciencePo Working papers Main hal-01358365, HAL.
    9. Agostino, Mariarosaria & Errico, Lucia & Rondinella, Sandro & Trivieri, Francesco, 2022. "On the response to the financial crisis of 1914: The Bank of England's discount policy," Research in Economics, Elsevier, vol. 76(4), pages 290-307.
    10. Nogues-Marco, Pilar, 2017. "Money Markets and Exchange Rates in Pre-Industrial Europe," Working Papers unige:100808, University of Geneva, Paul Bairoch Institute of Economic History.
    11. Nogues-Marco, Pilar & Esteves, Rui, 2019. "Monetary Systems and the Global Balance-of-Payments Adjustment in the Pre-Gold Standard Period, 1700-1870," CEPR Discussion Papers 13652, C.E.P.R. Discussion Papers.
    12. Kilian Rieder & Michael Anson & David Bholat & Miao Kang & Ryland Thomas, 2018. "Frosted glass or raised eyebrow? Testing the Bank of England’s discount window policies during the crisis of 1847," Working Papers 18020, Economic History Society.
    13. V. Bignon & C. Jobst, 2017. "Economic Crises and the Eligibility for the Lender of Last Resort: Evidence from 19th century France," Working papers 618, Banque de France.
    14. Mike Anson & David Bholat & Miao Kang & Ryland Thomas, 2017. "The Bank of England as Lender of Last Resort: New historical evidence from daily transactional data," Working Papers 0117, European Historical Economics Society (EHES).
    15. Claudio Borio, 2019. "On money, debt, trust and central banking," BIS Working Papers 763, Bank for International Settlements.
    16. Accominotti, Olivier & Ugolini, Stefano, 2019. "International Trade Finance From the Origins to the Present: Market Structures, Regulation, and Governance," CEPR Discussion Papers 13661, C.E.P.R. Discussion Papers.
    17. Fabien Eloire & Claire Lemercier & Veronica Aoki Santarosa, 2016. "What can we learn about the embeddedness of commercial relationships from the study of powers of attorney?," Working Papers hal-01358364, HAL.
    18. Anson, Mike & Bholat, David & Kang, Miao & Rieder, Kilian & Thomas, Ryland, 2019. "The Bank of England and central bank credit rationing during the crisis of 1847: frosted glass or raised eyebrows?," Bank of England working papers 794, Bank of England.
    19. Gary B. Gorton, 2016. "The History and Economics of Safe Assets," NBER Working Papers 22210, National Bureau of Economic Research, Inc.
    20. Fabien Eloire & Claire Lemercier & Veronica Aoki Santarosa, 2019. "Beyond the personal–anonymous divide: agency relations in powers of attorney in France in the eighteenth and nineteenth centuries," Sciences Po publications info:hdl:2441/3v5ra0iula8, Sciences Po.
    21. repec:hal:spmain:info:hdl:2441/3v5ra0iula8h5a94g2b8a43cvb is not listed on IDEAS
    22. Carolyn Sissoko, 2022. "Becoming a central bank: The development of the Bank of England's private sector lending policies during the Restriction," Economic History Review, Economic History Society, vol. 75(2), pages 601-632, May.

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