Archaic Lending or Precocious Financialization? Spanish American Finance to 1800

Economic Historians have long assumed that colonial Spanish American finance was poorly developed. 19th and 20th century fiscal and financial woes of Spanish American societies were read as part of a colonial legacy that weighed on former Spanish colonies from their moment of Independence (1808-20s). A sizeable theoretical literature has offered possible causal links between colonial rule and poorly developed financial intermediation pointing primarily to a lack of secure property rights. This paper seeks to propose an alternative explanatory path. It discusses the existence of a sui generis financial system that provided cheap and ubiquitous public and private credit. It analyses the subscriptions to one particularly large loan to the public purse in the 1770s to zoom in on the functioning of public credit, its link with private finance, the composition of the subscribers, and the role of the merchant corporation. The paper suggests that reading the evidence within a theoretical frame of financialisation may be more helpful than the traditional institutionalist political economy analysis. While the concept of financialisation is at present poorly theorised, it helps to ask important questions about the economic impact of easy credit in colonial Spanish America.