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"Impending ruin" or "remarkable wealth"? The role of private credit markets in a settler colony


  • Christie Swanepoel and Johan Fourie


Credit markets develop hand in hand with a market economy. Pre-industrial credit markets, like credit (and capital) markets today, developed in order to smooth consumption, ease trade, and enable long-term investment. Yet in the eighteenth century Cape Colony, a Dutch settlement at the southern tip of Africa, commentators of the day were skeptical about what an active credit market could contribute to the economy: for them, borrowing was a sure sign of poverty. Historians have expressed the same view. We present a different picture of the Cape Colony. We use 4,160 probate inventories, listing 12,637 credit transactions and 12,580 debt transactions, to show that the main reason for borrowing was long-term capital investment in property through bonds, and that a particular driver of the Colony's extensive use of credit was slave ownership. We also show that those who benefited from the Colony's thriving credit market were rich, not poor.

Suggested Citation

  • Christie Swanepoel and Johan Fourie, 2015. ""Impending ruin" or "remarkable wealth"? The role of private credit markets in a settler colony," Working Papers 517, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:517

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    Cited by:

    1. Jeanne Cilliers & Johan Fourie, 2017. "Social mobility during South Africa’s industrial take-off," Working Papers 04/2017, Stellenbosch University, Department of Economics.
    2. Martins, Igor, 2019. "An Act for the Abolition of the Slave Trade: The Effects of an Import Ban on Cape Colony Slaveholders," African Economic History Working Paper 43/2019, African Economic History Network.
    3. Johan Fourie, 2018. "Cliometrics in South Africa," Working Papers 14/2018, Stellenbosch University, Department of Economics.

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