To build, to brew and to bury: The credit market in Stockholm and the lending business of the Bank of the Estates of the Realm

Early modern European credit markets are often described as based on personal trust and on private, or informal, credit. They are contrasted with modern markets, which are based on trust in institutions and on formal credit relations. The prevalent narrative of the Swedish credit market, as well as of many other credit markets in Europe, claims that it developed in a linear manner from personal to institutional credit during the long nineteenth century.

This article aims to qualify this narrative by studying the transformations of the credit market in seventeenth-century Stockholm. In this period, an institutional actor, The Bank of the Estates of the Realm, founded 1668 in Stockholm, started to play a significant role both as a lender and as receiver of deposits. Previous research has mainly studied the exchanges of the nobility and the iron industry with the bank. This study takes a broader approach and looks at the bank’s total lending business with a special focus on smaller loans and the credit market in Stockholm.

The bank extended small loans against both real property and chattels quite extensively. In probate inventories from Stockholm nearly one fifth of the households were debtors to the bank in the 1690s. Loans were taken by the members of the urban community to invest in real property – to buy or improve houses and plots – and by craftsmen to buy raw materials, but also to a lesser extent to finance life-cycle ceremonies such as weddings and funerals. In terms of the number of loans, rather than the sums extended, lending against movables, mainly objects of silver, was an important branch of the bank’s business. More people had access to pawnable movables than to real property and in a society with a very rudimentary juridical framework around mortgage lending the bank often preferred movables.

The activities of the Bank of the Estates of the Realm show how institutions of various kind both pooled and lent money, activities commonly associated with banks, long before the nineteenth century and that the importance of institutional credit varied with time and place in early modern Europe.