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Bankers and EmpireHow Wall Street Colonized the Caribbean$
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Peter James Hudson

Print publication date: 2017

Print ISBN-13: 9780226459110

Published to Chicago Scholarship Online: September 2017

DOI: 10.7208/chicago/9780226459257.001.0001

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Odious Debt

Odious Debt

(p.222) Seven Odious Debt
Bankers and Empire

Peter James Hudson

University of Chicago Press

The Chase National Bank of New York arrived late to imperial banking but quickly developed a strategy for foreign expansion that was aggressive and reckless. As this chapter describes, this strategy initially occurred through the organization of the American Foreign Banking Corporation, an entity that, like the Mercantile Bank of the Americas, was enabled by permissive banking legislation and marked by concentration, collusion, and corruption. It too,was short-lived. In the wake of its failure, the Chase turned to its securities affiliate, the Chase Securities Corporation, and increasingly, the issuance of sovereign debt became a staple of the Chase’s internationalization. Nowhere was this more apparent in Cuba, where the Chase aggressively sought to fund the government of Gerardo Machado y Morales through loans that were questionable for both their fiscal logic and their ethical character. By the end of the 1920s, as the Cuban economy stuttered, largely due to the low price of sugar, and the Machado regime became increasingly repressive, the Chase was called to account for its lending practices and increasingly, its Cuban debts were deemed “odious.” These debts reflected a crisis of sovereignty in Cuba, for the Chase, they promoted a crisis of imperial banking in the Caribbean.

Keywords:   odious debt, finance capitalism, securities affiliate, imperialism, soveriegnty, dictatorship, crisis, neo-colonialism, foreign banking

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