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How Original Sin Was Overcome

How Original Sin Was Overcome

The Evolution of External Debt Denominated in Domestic Currencies in the United States and the British Dominions, 1800–2000

(p.122) 5 How Original Sin Was Overcome
Other People's Money
Michael D. Bordo, Christopher M. Meissner, Angela Redish
University of Chicago Press

This chapter presents an historical case study for a group of countries that successfully entered the club and had largely overcome the problem of original sin by the third quarter of the twentieth century. The group consists of several former colonies of Great Britain: the United States, Canada, Australia, New Zealand, and South Africa. The chapter traces out their debt history, relating the currency to the place of issue, exploring the residency of those holding local- and foreign-currency debt, and looking at the maturity of domestic debt in the nineteenth and twentieth centuries. U.S. sovereign debt had implicit or explicit gold clauses until 1933. States and corporations borrowed completely in dollars only by the late nineteenth century and always did so with gold clauses until the gold standard was finally abandoned.

Keywords:   original sin, Great Britain, United States, Canada, Australia, New Zealand, South Africa, domestic debt, currency, gold clauses

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