Credit, trust and financial networks in 18th and 19th century Stockholm

Klas Nyberg (Uppsala Universitet / Sweden)

In the mid 19th century, the Swedish credit market was still dominated by private financial networks and by a private supply of capital. Banks, discounts and other public financial institutions played a minor role as financers of trade and industry. In spite of these circumstances private financial networks were embedded in public financial institutions and legislation. Swedish financial legislation had been improved since the early 18th century and especially the Bankruptcy institute became more efficient in the late 18th century. These legal reforms diminished risks and losses for merchants and private bankers during bankruptcies. The reform of the Bankruptcy institute played a crucial role in the development of the financial market and in the increase of supply of capital during the period of early industrialisation in the early 19th century. Previous research suggests that public financial institutions, such as the notary institution in southern Europe, supported private financial networks and reduced risk during the transition from early modern to modern time. The aim of the project is to examine the role of lawyers and notaries during the legal change of the bankruptcy institution in Sweden, c. 1734-1862. Preliminary results indicate that civil servants such as prosecuting counsels from the Board of Commerce and lawyers from different courts in the city of Stockholm played a crucial role in the reconstruction of financial private networks when cases of bankruptcy were treated in the city council (Stockholm's Rådhusrätt) and higher courts. The method is based on careful investigation of a sample of different types of bankruptcies in Stockholm during three periods marked by changed bankruptcy legislation: 1734-1772, 1773-1830 and 1830-1862.