ABSTRACT
Free trade was under siege, and William Huskisson’s liberalizations were thought to have damaged the economy. In London debt securities were issued by all the independent states that had arisen in Latin America from the ashes of the Spanish Empire (Chile, Guatemala, Colombia, Argentina, Peru, Mexico). These new states, often at war with each other and destined to endure perpetual political turmoil of the kind that Joseph Conrad later immortalized in his novel Nostromo, desperately needed to finance themselves. Psychological factors always play a role in financial crises, but they are not necessarily at the center of economists’ attention. It is thus particularly noteworthy that Hodgskin was concerned with the effect of expectations on markets. Thomas Hodgskin thought that knowledge could not be easily “centralized” in the hands of rulers: this was the gist of those “natural laws” that economics discovered, contra the pretensions of lawmakers.
