ABSTRACT
This chapter reviews the main theories advanced in the literature explaining the fall of sovereign defaults in the late nineteenth century. It argues that most of the theories have severe limitations to account for the post 1890s period. The chapter demonstrates that the management of the 1890s defaults has only one innovative feature, the major involvement of financial intermediaries, although their final record is not entirely positive. From their annual reports, we do observe that their activities multiplied their statistics and information-gathering work increased and they systemised their communication channels, mainly with the London Stock Exchange. A particular novelty about the way Argentina's default was managed and that has not been mentioned before in the literature is the market-based nature of the 1890 resolution. The chapter demonstrates that the major shift taking place in the first years of the twentieth century was one where the macroeconomic environment favoured capital flows and debt service.
