ABSTRACT
A debt settlement implied a formal renegotiation of the contract between the debtor country and its bondholders. Such arrangements, however, were rather difficult to realize since the negotiation process was complicated by the dispersion of creditors over a large mass of small bondholders. The comparatively high degree of debt release during the default-settlement period 1871-1925 has to be attributed partly to debt liquidations that were granted by the creditors in return for political and economic control. The terms of debt settlements were comparatively unfavorable for debtor countries, but there were only few attempts of creditors to control debtor countries politically and economically. The political and social implications of the austerity policies are the occurrence of massive and unprecedented protests by social movements in debtor countries. The efficacy of a debt-crisis management strategy is measured by the duration of defaults, i.e. the time span between the outbreak of debt-service incapacities and the final conclusion of the debt-settlement arrangement.
