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Staying AfloatRisk and Uncertainty in Spanish Atlantic World Trade, 1760-1820$
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Jeremy Baskes

Print publication date: 2013

Print ISBN-13: 9780804785426

Published to Stanford Scholarship Online: January 2014

DOI: 10.11126/stanford/9780804785426.001.0001

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The Rising Demand for Credit and the Escalation of Risk in the Post-1778 Era

The Rising Demand for Credit and the Escalation of Risk in the Post-1778 Era

Chapter:
(p.110) Chapter 5 The Rising Demand for Credit and the Escalation of Risk in the Post-1778 Era
Source:
Staying Afloat
Author(s):

Jeremy Baskes

Publisher:
Stanford University Press
DOI:10.11126/stanford/9780804785426.003.0005

Credit was instrumental to the functioning of long-distance trade as oceanic merchants were both providers and consumers of commercial credit. Indeed, a significant portion of a typical merchant's assets consisted of accounts receivable. The commercial legislation of 1778, however, led to a dangerous expansion of credit due to the oversupply of colonial markets. To sell their imported wares, commercial agents in America were forced to extend greater quantities of credit to increasingly less creditworthy consumers, resulting in the growth of uncollectible debts and commercial instability. This chapter explores the provision of credit and the expansion of debt in the post-1778 era.

Keywords:   credit, debt, reputation, creditworthiness, default

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