Intermediation in Mortgage-Backed Securities: The Plantation Business of F.W. Hudig, 1759-1797

41 Pages Posted: 19 Jun 2020

See all articles by Abe de Jong

Abe de Jong

Rotterdam School of Management, Erasmus University; Monash University; European Corporate Governance Institute (ECGI)

Tim Kooijmans

RMIT University

Peter Koudijs

Stanford GSB; National Bureau of Economic Research (NBER)

Date Written: May 25, 2020

Abstract

Dutch-Caribbean plantations attracted substantial outside funding in the 1760s. This came to an abrupt end after the 1773 credit crisis. We use one banker’s detailed archives to analyze how bankers and investors were initially able to overcome asymmetric information problems, and why the system eventually broke down. Bankers oversaw plantations’ cash flows and placed debt with investors in the form of mortgage-backed securities. Strong growth led to lax screening and an oversupply of credit. After a fall in commodity prices, plantation debts were unsustainable. Restructurings were incomplete and debt overhang led to underinvestment and a drop in economic activity.

Keywords: Caribbean plantations, mortgage-backed securities, 18th century colonial investment, financial intermediation, negotiaties

JEL Classification: N23, N56, N83

Suggested Citation

de Jong, Abe and Kooijmans, Tim and Koudijs, Peter, Intermediation in Mortgage-Backed Securities: The Plantation Business of F.W. Hudig, 1759-1797 (May 25, 2020). Available at SSRN: https://ssrn.com/abstract=3610648 or http://dx.doi.org/10.2139/ssrn.3610648

Abe De Jong (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-25
Rotterdam, 3000 DR
Netherlands
+31 10 408 1022 (Phone)

HOME PAGE: http://https://www.rsm.nl/people/abe-de-jong/

Monash University ( email )

900 Dandenong Rd
Room H3-56
Caulfield East, Victoria 3145
Australia

HOME PAGE: http://https://research.monash.edu/en/persons/abe-de-jong

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tim Kooijmans

RMIT University ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria
Australia

Peter Koudijs

Stanford GSB ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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