Chapter 5 focuses on the enforcement of credit contractual agreements and questions the meaning of trust in credit networks. Despite the norms of solidarity, cooperation, and fairness that characterized pre-industrial society, breach of agreement did occur. When lenders and debtors had exhausted all the possibilities available to settle their disagreement, taking the matter to court was often the last resort. The aim was to recover the money owed, but often the emotional and social implications of a lawsuit went beyond the simple economic dimension. Throughout the period, the burden of debt increased rapidly, as well as the number of discontented creditors. The apparent dichotomy is intriguing: on the one hand, financial arrangements were flexible and renegotiable, but on the other, contract enforcement at court was sought after. These lawsuits are rich sources of information for the historian. They highlight the shortcomings and failures of debtors, and the (im)patience of creditors. But above all, they display the dynamics of complex and multiple layers of social and economic relationships. Overall, this chapter reconstructs both transactional and dispute resolution practices in

Capital/assets ratios in banking declined substantially during the two world wars. Three drivers severely impacted the capitalisation of banks. Banks invested heavily in government debt, which led to an expansion of balance sheets. High inflation ratios devalued the paid-up capital of banks. Moreover, formal and informal constraints restricted banks from issuing capital in wartime. The Second World War, in particular, had long-lasting effects on the evolution bank capital. The United Kingdom controlled capital issuances after 1939 and reinforced the financial repression of banks. The Swiss Banks operated in a regulated but much more liberal framework. In the United States, the belief in informal capital requirement guidelines was very pronounced. By the mid-1930s, the United States had already three federal bank supervisory agencies, which all had developed opinions on how capital adequacy was assessed. However, the rapidly growing government debt in banks’ balance sheets overturned these conventions, leading to the first risk-adjusted measurements for capital and triggering the development of new measurement approaches that became the forerunner of the Basel I guidelines.

Chapter 2 focuses on the non-intermediated market and its actors from c. 1650 to 1790. These credit markets functioned as peer-to-peer or interpersonal lending, exchanges that featured either a private written agreement or a verbal promise. Often considered merely as simple daily transactions made to alleviate a lack of cash in circulation and to smooth consumption, they are often eclipsed by notarial credit. In this chapter, the probate inventories of seigneuries in the south of Alsace highlight the various features of these peer-to-peer exchanges and give particular attention to the profiles of lenders and borrowers, the purpose of the loans, and the networks of exchange at work. This chapter shows that these exchanges were in fact of significance. The volume of exchange competed well with notarized loan contracts, which prompts questioning the nature and function of non-intermediated credit.

This chapter contrasts with the introduction by focusing on an event that an intersection of different sources (Ottoman, Arabic, English and French sources) document in an exceptional way: the attack of a big caravan on its road from Damascus to Baghdad in 1857. Its aims at plunging readers into the life, business and management of caravans in the mid-nineteenth century – a period that is introduced here as a turning point for life and business in the steppe in the Ottoman realms. Built as an enquiry into the attack and into what the historiography has considered a handicap of overland trade (insecurity) unlike oceanic trade, this chapter illuminates the regional system institutionalised by Bedouin/State/Traders to deal efficiently with insecurity and hazards of caravan trade over long distances.

This chapter engages with social sciences theories about ‘institutions’. It illuminates not only the resilience but also the intensification of overland caravan trade thanks to an efficient organised system involving traders, Bedouin and Ottoman officials. The chapter tries to rely as much as possible on the viewpoint of caravan traders. It offers insights on historiographical debates about the changing roles of state institutions in the Late Ottoman Empire, the State’s legitimisation and its echoes among urban and nonurban caravan practitioners, and the economic and political competition by political entities that are built on the monopolisation of trading routes. The aim is to introduce a new panorama of the political economy of the Middle East that does not focus on the coastal and urban societies but on the hinterlands and steppes and considers theses spaces as elements of a region, that is, the intermediary space connecting the local and the world, on the one hand and connecting cultural affiliation with economic exchange on the other.

This chapter covers the period starting with the first emergence of commercial banking in the United Kingdom, the United States, and Switzerland leading up to the First World War. The chapter emphasises the role of nineteenth-century banking literature in shaping the ideas of what adequate capital meant in numbers. Moreover, the chapter looks at individual banks in all three countries and how they determined the size of their capital. In Switzerland, simple rules of thumb, such as the 1:3 capital/deposits ratio, were surprisingly persistent, while the English banks abandoned such strict guidelines very early on. In the United States, capital ratios were important from the beginning of banking. The chapter argues that the decentral or central organisation of the banknote issuance was a crucial determinant for the relevance of capital in the respective countries.

Banks play a vital role in economic development by providing credit to businesses and private households. Their lending and investment activities on the asset side are financed by debt or equity capital. Proportionally to the total assets, equity capital has experienced a major change since the nineteenth century. By 1850, for example, the balance sheets of banks in the United States consisted of about 40% equity capital. The figure dropped to 7% in 2000. The decrease of equity capital in proportion to the total assets is a remarkable change in how banks have funded their activities since the emergence of modern banking in the nineteenth century. However, a certain level of capital is essential for individual banks and the whole financial system. It serves as an absorber of losses and can affect a bank’s default probability. Moreover, a sufficient amount of capital induces trust for creditors. Consequently, adequate capital is – among other factors – important for financial market stability.

The epilogue covers the development from Basel I to III and reflections on the evolution of capital regulation in the long run. Particular emphasis is given to the divergence of risk-weighted and risk-unweighted capital ratios among large, global banks – most of which have their roots in the nineteenth century. The chapter calls for a fundamental reassessment of banking regulation. From a historical perspective, regulatory frameworks are highly path dependent and seldom fundamentally reconsidered, aiming to increase financial stability. Moreover, once we accept a certain degree of banking instability in modern banking, the focus should be on who covers losses and how significant such losses can potentially be without the involvement of the public.

The conclusion sums up the main arguments of the book on the formative albeit discreet role of caravan trade in the political economy of the Middle East both during and after the Ottoman period. It draws on this history to challenge recent directions in the history of the Middle East by advocating for inner perspectives on connections thanks to the crossing of endogenous documentation (in Arabic and in Ottoman) with foreign sources, more attention for legacy, resilience and slowness in a period of rapid technological and political transformation. The history of caravan supports a new way of considering the Middle East from inside. It also offers insights on the background of debates over past carbonisation and present decarbonisation.

Chapter 6 focuses specifically on the last two decades of the Ancien Régime. The traditional local credit market featured norms of solidarity, fairness, and cooperation and allowed its agents considerable input regarding the terms of their agreement either before contracting and/or afterwards. But structural changes in the 1770s, such as an increase in credit activities, drawing on the power and profitability of such exchanges, and especially the appearance of new investors, affected the social and legal norms and nature of these markets. The gradual and massive resort to external parties to handle and manage financial transactions remodelled these institutions into specialized and incontrovertible experts. Embedded in society, the local court system traditionally responded to the demands of its users and their input shaped the form of the institution. When a new category of investors emerged, their requests, in turn, tended to shape the judicial institution, serving their interests first and above those of other users, allowing the evolution of the judicial institution into a more specialized one. These institutions became more efficient in debt conflict resolution.