Quis custodiet quem? Sovereign Debt and Bondholders Protection Before

The half-century before World War I has been characterized as the first age of financial glob-alization. This paper focuses on the role and significance of the bondholders ’ organizations for the governance of this market. I argue that the outcome of these institutions depended on two dimensions: the institutional variation that characterized these organizations and their strategic interaction. These aspects are addressed using a model of sovereign debt with constant renegoti-ation. An original data set with information on the settlement of defaulted debts in the period 1870-1913 is used to test the implications of the model. Empirical results support the premise that the quality of bondholders ’ representation matters for the terms of settlement and the costs of renegotiation. Renegotiation-friendly but not debtor-friendly organizations yielded the best ex post results for their members. The representation of bondholders ’ interests by the issue banks, on the other hand, produced inferior outcomes. I am indebted to Barry Eichengreen for guidance, encouragement, and careful reading of previous versions o