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PALGRAVE STUDIES IN
THE HISTORY OF FINANCE

A World of
Public Debts
A Political History

edited by
Nicolas Barreyre
Nicolas Delalande
 Palgrave Studies in the History of Finance

Series Editors
D’Maris Coffman
Bartlett Faculty of Built Environment
University College London
London, UK

Tony K. Moore
ICMA Centre, Henley Business School
University of Reading
Reading, UK

Martin Allen
Department of Coins and Medals, Fitzwilliam Museum
University of Cambridge
Cambridge, UK

Sophus Reinert
Harvard Business School
Cambridge, MA, USA
The study of the history of financial institutions, markets, instruments and
concepts is vital if we are to understand the role played by finance today.
At the same time, the methodologies developed by finance academics can
provide a new perspective for historical studies. Palgrave Studies in the
History of Finance is a multi-disciplinary effort to emphasise the role
played by finance in the past, and what lessons historical experiences have
for us. It presents original research, in both authored monographs and
edited collections, from historians, finance academics and economists, as
well as financial practitioners.

More information about this series at

http://www.palgrave.com/gp/series/14583
Nicolas Barreyre • Nicolas Delalande
Editors

A World of Public
Debts
A Political History
Editors
Nicolas Barreyre Nicolas Delalande
Mondes Américains/CENA Centre d’Histoire
EHESS Sciences Po
Paris, France Paris, France

ISSN 2662-5164     ISSN 2662-5172 (electronic)

Palgrave Studies in the History of Finance
ISBN 978-3-030-48793-5    ISBN 978-3-030-48794-2 (eBook)
https://doi.org/10.1007/978-3-030-48794-2

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 Introduction

“I try and talk economics in the Eurogroup, which nobody does,” Yanis Varoufakis
recounted after his brief tenure as finance minister of Greece in 2014–2015. “It’s
not that it didn’t go down well—it’s that there was point blank refusal to engage
in economic arguments. Point blank.”1 This confessed culture shock by an aca-
demic suddenly thrown into the midst of professional politicians at the height of
an unprecedented crisis within the European Union unveils, perhaps, a certain
political naiveté as much as it reveals the diplomatic disadvantage at which Greece,
which he represented, then stood. Yet it also highlights that the sovereign debt
crisis within the Eurozone was not only, or even mainly, about the economy: it was
about politics, institutions, and solidarity. If anything, it put the lie to the usual
mantra that managing a public debt, and public finances more generally, is a matter
of technical expertise best left to those who know the laws of economics. Experts,
it appeared, made decisions which were no less political than that of others.
This is not to say that the problem was to let politics enter the management of
an economic problem, somehow distorting the “pure” economics of a solution.
This is not to say, either, that public debt is only politics, and that its economic
parameters could only yield to political will. It is to say, however, that public debts
are inherently political objects as much as they are economic. The Greek crisis did
not inject politics into an economic domain that gently hums in the background
in fair weather. It unveiled how political public debt always is, even when it is not
the focus of political debate. For public debt raises issues about the distribution of
power and resources within and across societies, revealing as well as enhancing
transfers of liabilities between social groups and generations.

v
vi Introduction

This book sets out to explore exactly this political nature of public debt, both
domestically and internationally. While public debt is a financial transaction—cre-
ating a relation between (mostly) private investors and a sovereign body (the for-
mer lending money to the latter, who pledges to repay the principal plus interests
in a more or less distant future)—it is also, and inseparably, an instrument of power,
a social relationship, and a political arena in which interests and values collide.2
Public debt binds together major political issues, such as the power of the state to
tax and spend, its legitimate role to regulate markets, and the social distribution of
collective resources between bondholders and taxpayers. Drawing inspiration from
the “new fiscal sociology” and the renewed interest of political historians in eco-
nomic matters, this book aims to grasp public debt issues in all their dimensions,
be they economic or political, legal, intellectual, social, or moral.3 For we need this
kind of “total history” to understand why our present is so deeply framed and
impacted by public indebtedness.

The Politics of Public Debts in the Long Run

Public debt is hardly a new subject, and considering its importance both
in the economic life of nations and in the political turmoil of our time, it
is not surprising. Why, thus, a new volume? We contend that a historical
perspective in the long run, from the eighteenth century to today, with a
detailed attention to diverse cases as well as the circulation of ideas, sys-
tems and capital, can significantly revise our understanding of modern
public debt.
There has been abundant historically oriented scholarship on public
debt, contributed by economic historians, political scientists, legal schol-
ars, and international relations specialists. Although it is a rich and varie-
gated scholarship, we think it fair, for the sake of clarity, to distinguish
three main lines of questioning that have dominated the research and
debates of the last thirty years.
A first powerful line of enquiry has explored the historical and theoreti-
cal relationships between political institutions and the development of
financial markets. In a 1989 seminal article, neo-institutionalist econo-
mists Douglass North and Barry Weingast argued that, in England, the
political and institutional reforms brought by the Glorious Revolution of
1688 created a “financial revolution.” The rise of Parliament and the limi-
tations imposed on the king’s power played a crucial role in securing prop-
erty rights, thus reassuring lenders that the Crown would honor its
obligations and abstain from defaulting on its outstanding debts (a com-
mon practice in early-modern Europe). Simultaneously, the creation of
 Introduction  vii

the Bank of England in 1694 helped channel private capital towards public
bonds, and made the British consols one of the most attractive long-term
assets for two centuries. North and Weingast thus concluded that, by cre-
ating “good institutions”—limited executive power, parliamentary over-
sight, and secured property rights—England showed “credible
commitment” to investors who flocked to its bonds, making its state into
a financial powerhouse.4
This article was influential in erecting the British historical experience
into a sort of universal model, with which all the other national trajectories
had to be compared and assessed. However, this “credible commitment”
hypothesis has been qualified on many grounds since then. British histori-
ans have shown that public borrowing had started to improve well before
the late seventeenth century, that “limited government” was only part of
the story of the rise of the fiscal-military state, and was also based on cen-
tralized fiscal power and aggressive imperial expansion.5 Political scientists
and economic sociologists have insisted on the social interpenetration
between bondholders and elite politicians to make sense of the British
parliament’s continuous commitment to repay debts.6 Scholars of other
countries have contested the idea that there was one single path to politi-
cal and financial modernity, showing that other experiences could be
equally sustainable.7 Finally, a blindspot in this model is how historically
specific it was: though it might be useful to analyze the eighteenth and
nineteenth centuries,8 it is far less efficient to account for twentieth cen-
tury history, marked by a massive increase in executive power, state inter-
vention, and market regulation.
The long-term approach we adopt in this book is meant to avoid such
pitfalls. Widely extending the chronological and spatial scope of our
enquiry, and considering other historical experiences, allow us to show
how historically grounded the institutions in charge of public debt were,
how context made them evolve, and also how their workings depended on
specific political situations and debates. Against the view that there is one
set of good “liberal democratic institutions,”9 our research shows how
public debt and the efficacy of institutions underpinning it vary histori-
cally, as their political legitimacy was never assured.
This issue of legitimacy is at the core of a second line of scholarly
enquiry that has powerfully shaped the historiography on public debt,
especially among legal scholars, political scientists, and international rela-
tions specialists. This body of literature focuses on “sovereign debt,” that
viii Introduction

is, the problem of the uneven power relationship between a sovereign bor-
rower and individual lenders. This raises complex political and legal issues
about a state’s commitment to repay its debts, given that there is no inter-
national legal order that may force a sovereign state to comply with its
obligations towards foreign bondholders. Why does global public indebt-
edness keep growing while there is so little guarantee given to lenders that
they will get their investment back in the event of default or systemic
crisis?10
To answer this conundrum, the literature has taken three main direc-
tions. The first underlines the role of extra-contractual sanctions (what
some call “supersanctions”), mainly the use of military force, trade retali-
ation or the imposition of international financial controls.11 A second type
of explanation focuses on reputation as a key factor, given that defaulting
states run the risk of losing access to financial markets or of suffering from
high premiums in future borrowing attempts.12 Empirical research has
demonstrated, however, that it was not always the case, since many states
which had suspended their payments could later go back to the markets
without being subjected to harsher conditions than “virtuous” ones.13
That’s why a third stream of studies has started to historicize and politicize
debt repudiation, investigating the intellectual, political, and economic
conditions on which a state could default without many adverse conse-
quences. While today’s “common sense” is that states should always repay
their debts, historically there were times when states could suspend or
cancel their obligations without much retaliation on the international
scene. Different notions of sovereignty could serve to justify debt write-­
offs, and political legitimacy (and not only market discipline or legal con-
tracts) was held to be crucial to decide whether a debt had to be honored
or not. This was especially the case when a successor state inherited finan-
cial obligations from a previous overthrown regime, for example, in
instances of decolonization.
Although it is in dialogue with the first two lines of scholarship, our
approach is more aligned with the third one, which insists that “the debt
continuity norm is intrinsically political and historically variable.”14
Sanctions, reputation and (il)legitimate repudiation were all key dimen-
sions of public borrowing and debt repayment through the last three cen-
turies. But our long-term perspective and attention to local, as well as
international political conditions allows us to revise the collective conclu-
sions of this body of literature. If, indeed, sovereign debt involves obliga-
tions both towards a state’s own citizens as well as its domestic and foreign
 Introduction  ix

lenders, it follows that its repayment is as much an issue of political legiti-

macy sustained over time as of financial creditworthiness. The empirical
studies assembled here show that, in the longer term, what supports legiti-
macy changes over time, depending on the mutations of the global politi-
cal economy as well as local situations. But they also complicate our
understanding of sovereign debt, for there were periods when most public
debt was contracted by public entities that were not nation-states.
The third debate that has recently structured the literature on public
debt, especially in sociology and political science, has revolved around the
issue of the compatibility between public debt, capitalism, and democracy.
Although this is not a new question—liberal thinkers in the eighteenth
century already warned against the antidemocratic nature of public
debts15—it has been revived with new urgency since the crisis of 2008, as
Wolfgang Streeck’s hotly debated book Buying Time exemplifies.16 In the
wake of the “credible commitment” hypothesis, some scholars tried to
defend the opposite argument, to show that only liberal democracies were
able to sustain large and stable public debts, while authoritarian regimes,
because of their excessive power, would fail to attract investors because of
a loss of confidence.17 However, this so-called democratic advantage thesis
has not been supported by empirical research.18 On the contrary, public
choice economists and international lending actors over the last thirty
years have insisted on the necessity to constrain democratic practices rather
than expand them for a country to build “credible commitment” mecha-
nisms. Hence the move towards independent central banks, the adoption
of constitutional rules on budgetary issues, or the refusal to align eco-
nomic policies with the wishes expressed by the people at the polls (as was
the case after the Greek referendum of June 2015).19 For some of its most
vehement critics, public debt is nothing but than an infernal tool used by
capitalism to stifle democratic debate and accelerate a massive transfer of
wealth from the public to the private sector, thereby increasing economic
and social inequality to an unprecedented scale.20
There is, of course, much insight in this debate, but it is singularly
focused on the very recent period. Our volume, on the contrary, takes a
longer-term and wider comparative perspective. This allows us to depart
in three significant ways from the existing literature. First, a historical and
non-teleological perspective, open to a variety of political historical experi-
ences across the globe (empires, nation-states, regional federations,
municipalities), helps relativize the expansion of the peculiar British his-
torical case as a primary yardstick for studying public debt. Second, we
x Introduction

disconnect the issue of political legitimacy from the nature of political

regimes: as we show, public debts can be sustained by democracies, but
also by imperial bodies, authoritarian or oligarchic regimes, which may
rely on different debt management techniques or have them in common.
Third, we study the historical transformation of the state/market relation
in the long run, which helps avoid the pitfalls of a short-sighted narrative
that opposes the current “tyranny” of markets with the supposed “golden
age” of state power and market embeddedness in the twentieth century.
This is why this book starts in the eighteenth century, when an under-
standing of public debt emerged in Europe that still informs ours today.
Publicists and philosophers started crafting arguments to make sense of
the “public” side of a debt contracted not by an identifiable sovereign but
by more abstract “states.” What that “public” meant, and whether it made
for a different kind of debt from those contracted between individuals,
were questions at the core of debates that arose then, and whose answers
still resonate surprisingly cogently today, even though the economic and
accounting realities of public debts have shifted far from what they were
then. It was also in the late eighteenth century that public debt started
feeding the intertwined emergence of a more globalized capitalism and
the violent formation of imperial nation-states.21
It led us to bring together cases that, historically, have been studied
separately because of strong differences in institutions or cultures, as if
trust and credibility had always been the monopoly of liberal parliamen-
tary regimes. Comparing vast empires (the Spanish Empire, Qing China,
British colonial Africa) with smaller nation-states allows the reconsidera-
tion of historical experiences that have often been overlooked by the lit-
erature on the eighteenth and nineteenth centuries. In the twentieth
century, bringing together the cases of liberal democracies (France, United
Kingdom, United States) with authoritarian or totalitarian regimes (Nazi
Germany, Soviet Russia) sheds light on common patterns underlying jar-
ringly different political experiences, especially during the age of the
“Great Compression,” from the 1930s to the 1960s, when new instru-
ments of market regulation were invented on a national and international
scale. To understand the reordering of global capitalism in this period and
the advent of the Bretton Woods system (1944), one cannot simply look
at Western democracies and how they coped with economic collapse,
unemployment, mounting debts, and monetary instability. What we need
is a global analysis of the structural changes in the relations between states,
markets, and societies, which occurred at the same time (though in
 Introduction  xi

different forms and degrees) in the American New Deal, in Nazi Germany’s
authoritarian economy, or in the Soviet planned economy.22 Later in the
century, observing the turn to financial markets for public debt in Italy, in
France and in India from the 1970s to the 1990s changes the familiar
story about the rise of neoliberalism, which rarely goes back farther than
World War II.23 Differences in political institutions and cultures should
not obscure the common features and transformations affecting various
countries in a given context, when economic ideas, capital flows, and
political power are widely reconfigured.
This book thus defends an approach to global history that does not
make a claim for exhaustivity, but that carefully selects and studies contex-
tualized cases in connection to one another to reveal broader patterns and,
simultaneously, local variations. It has two benefits: it makes possible an
attention to multiple scales (including national debts, of course, but also
imperial and local debts, which were often neglected or thought of sepa-
rately)24 and to the way sovereign bodies were transformed and hybridized
across time (the “sovereign” in “sovereign debt” is not a given, and can-
not be solely equated with the nation-state); and it allows for an integra-
tion of multiple historiographies, rather than the mostly English-language
(more homogenized) historiography that single-authored global histories
tend to rely on. Instead of the all-encompassing master narrative or the
macro-economic perspective, this book offers a contextualized, fine-­
grained approach that draws strong linkages between illuminating histori-
cal cases. The international collaborative network we built for writing this
book aims to avoid the pitfalls of a purely Western-centered perspective,
by comparing cases taken across four continents, from China to North
America, from British colonial Africa to Latin America and Europe.25

The Construction and Demise of Successive Public

Debt Regimes
The longer view we take in this book allows us to show that, even as his-
tory does not repeat itself, relevant historical parallels illuminate our pres-
ent moment in much more interesting ways. This approach makes it
possible to break both with the teleology of models and with the more
traditional chronology. As we show, the world has gone through succes-
sive public debt regimes since the eighteenth century. By public debt
regime, we mean a stable, dominant configuration defined by a specific
xii Introduction

articulation between the distribution of capital and markets (or the “struc-
tural power of finance” in political science terms), the nature of state
power (what tools and expertise it can use), and the shape of the political
arena (where political legitimacy comes from; how different social groups
mobilize to defend their views and interests).26 Our hypothesis is that
there is much interdependence between the domestic side of public debt
and the structure of the international political economy (shaped by its
monetary regime, the geography of capital flows, or global inequalities
of power).
These regimes can be hegemonic but never without contemporary
alternatives; and they are not eternal. It is precisely when debt crises occur
that these regimes are challenged and redefined, through multiple nego-
tiations, conflicts, and reordering. With this definition in mind, we can
understand why global public debt crises (in the 1820s, 1880s, 1930s,
1980s, and 2010s)27 were critical junctures during which the organization
of, and boundaries between, markets, states, and citizenries were displaced
and rearranged, both from a material and an intellectual point of view.28
This notion can help us think about moments of stability and crisis
together, as well as the interaction between political orders and economic
systems. Our redrawing of the usual chronology and its meaning allows us
to identify periods when a particular political-economic configuration of
public debt became dominant, or even hegemonic, such as the era from
the mid-nineteenth century to the 1910s (known to economic historians
as the “First Globalization”29), and periods when the plurality of practices
and trajectories was more pronounced (the “long revolutionary” period
from the 1770s to the 1820s; or the interwar years in the twentieth cen-
tury). Studying how particular regimes became dominant and shaped
other configurations, we show how public debts in the modern era did not
follow invariant “models.” We propose an understanding of political econ-
omy that avoids teleology and can explain variations as something that
goes far beyond the reconstruction of long-term statistics and the isolation
of repeated patterns, or the identification of an anthropological moral
invariant of debt.30
So, what debt regimes can we collectively identify from our historical
cases? We start our investigation in the revolutionary age of the late eigh-
teenth century, when early modern debt regimes were challenged and
redefined by new political principles and aspirations. “Part I: Political
Crises and the Legitimacy of Public Debts” shows that sustainable public
debt had little to do with market mechanisms, or even “credible
 Introduction  xiii

commitment,” but was rather anchored in the capacity of a political regime

to support its legitimacy. In a bold reinterpretation, Regina Grafe uncov-
ers in the Spanish American Empire a strong decentralized network of
public credit and merchant capital that moved money across space when
needed, while unburdening the Crown with accumulated debt. Based on
the political and religious legitimacies of the Monarchy and the Church, it
sustained the largest empire of the time. Only the political shock of
European wars and American independences upended it. The English-
liberal model with which the new fledgling nations replaced it, however,
proved unsuitable and failed to bolster their legitimacy. This liberal vision
of public debt was also, as Rebecca Spang tells us in Chap. 2, part of what
went wrong with the French Revolution. The French Monarchy’s debt
was not economically unsustainable, but it became politically so in the
1780s. This is why the first revolutionaries, far from proclaiming a clear
break with the past, immediately declared their commitment to the public
debt. In doing so, they created growing political instability. The
Revolution’s radicalization was the product less of extreme ideology than
of the contradictions between existing property relations and new models
of citizenship and participation. Maybe the French should have looked at
Sweden, a peripheral country whose case is particularly illuminating. Since
the mid-­eighteenth century, as Patrik Winton writes in Chap. 3, public
debt had been at the center of several shifts of political power within the
realm, sometimes bolstering the parliamentary system, at other times help-
ing the king confiscate more power. That story ended when the new king,
Bernadotte, built his own political legitimacy by defaulting on two-thirds
of the existing public debt and tying the new credit to his own person. The
period from the mid-eighteenth to the mid-nineteenth century was thus a
moment of political transformation when public debt became closely tied
to political regimes’ legitimacy. After the Revolution, the French indeed
managed to create a public debt system that would sustain its new political
regimes through public participation. In Chap. 4, David Todd and Alexia
Yates weave together this story of intellectual reconceptualization and
material popular involvement in public subscriptions. This provided the
French state with renewed political legitimacy, and made Paris into one of
the main capital export markets in the world, barely a few years after the
infamous “banqueroute des deux tiers” (1797).
Thus, by the mid-nineteenth century, a liberal debt regime, especially as
promoted by the British, had become dominant in Europe, marginalizing
the different varieties of public debts that had characterized the eighteenth
xiv Introduction

century. It is that regime, although there were important variations within

it, that the Europeans globalized in the second half of the nineteenth cen-
tury through capital flows, imperial conquests, and other forms of coer-
cion. Yet even if pressures for increased standardization were powerful at
that time, as with the global expansion of the gold standard for instance,
the political conditions were diverse, leading to differing historical experi-
ences. “Part II: Global Capital, Imperial Expansions, and Changing
Sovereignties” addresses the contested diffusion of public debts across the
world and how they reconfigured the distribution of wealth, fed growing
inequalities, and transformed global politics. Newly independent Latin
American countries were the first to import liberal understandings of pub-
lic debt from Europe, but throughout the century, they mostly evaded
“supersanctions” in spite of defaults. As Juan Flores argues in Chap. 5, this
had mostly to do with strong citizenries with competing interests that
made European military intervention or trade sanctions difficult to work
out unilaterally. Similarly, the Ottoman case examined by Coşkun Tunçer
in Chap. 6 complicates the usual view that public debt imperialism was a
simple game of nation versus nation. The Porte was able to leverage its
public debt and financial control negotiated with Western powers to push
internal institutional reforms while evading much of its political cost. Not
all countries could pull off that game, though. Egypt might be the proto-
typical case of imperialism through public debt. But to understand those
evolutions, as Malak Labib shows in Chap. 7, we need to follow compet-
ing groups of experts, local and international, in defining concepts and
assembling financial knowledge. While their circulation would help build
international norms, their work had more to do with their entanglement
in power relations than expertise. Thus, access to European capital was
never a pure market transaction, as Leigh Gardner also demonstrates in
Chap. 8 with the comparative West African cases of independent Liberia
and the colonial Gold Coast, Nigeria and Sierra Leone. In Britain, it
involved public and private interests enmeshed in the hybrid institutions
of Empire, which mediated lending through actors who were both private
financiers and agents of the British state. Such blurring between European
lenders and their governments was, indeed, a feature of the “liberal debt
regime” that became prominent in those years. In Late Qing China, on
the contrary, foreign capital enabled the more commercial regions to
increase commerce and develop infrastructure, at the expense of a moral
political economy that emphasized the Emperor’s benevolence through
regional redistribution. As Dong Yan recounts in Chap. 9, European-style
 Introduction  xv

public debt sapped the political legitimacy of the regime, fostering nation-
alist unrest and wars. Across Europe and North America too, public debt
allowed for massive investment in infrastructure but also contested redis-
tribution of wealth and political power. As Noam Maggor and Stephen
Sawyer show for France and the United States in Chap. 10, most of this
happened at the municipal level—thus redrawing their political geography
as surely as it did in China. As Part II concludes, the height of the financial
globalization of the gold standard era was never the liberal world that
some look back to with nostalgia. Public debts were always embedded in
power relations that had little to do with market relations, but in that
period they fed growing inequalities and imperial designs that made the
world increasingly unstable.
This first global age of public debts exploded in World War I, and
“Part III: The Great Transformation of Public Debts” explores the chal-
lenge for states to rebuild their political legitimacy, with their capacity to
borrow and tax at stake, and shows the progressive and chaotic advent of
a new “dirigiste debt regime,” with variations across political systems.
World War I put tremendous stress on even the most solid states that had
spent more than a century building confidence in their public debts. As
Nicolas Delalande analyzes for France and Britain in Chap. 11, the need
to borrow massively to wage total war was foremost a democratic chal-
lenge involving nationalism, regime legitimacy, and international stand-
ing. It led to unprecedented state reach deep into civil society, and postwar
disillusionment (fueled by hyperinflation and monetary volatility) that
bred political instability and social upheaval. Victors and vanquished coun-
tries all scrambled in search of a new debt regime, prodded by the urgent
need of both political legitimacy and financial stability. Stefanie Middendorf
recounts in Chap. 12 how, in Germany, political turmoil and the fragility
of the Weimar Republic helped the emergence of a new, technical, “depo-
liticized” financial regime that tapped savings into a closed circuit that
would serve radically different regimes, from the troubled republic of the
1920s to the Nazi state of the 1930s and the reformed postwar Federal
republic. Yet it never meant that public debt could actually escape politics.
In Germany, “financial repression” was intimately, and necessarily, linked
to mass propaganda. So was it in the USSR. In Chap. 13, Kristy Ironside
and Étienne Forestier-Peyrat take us on a fascinating tour of Soviet public
borrowing. The denunciation of the prewar “liberal” regime had included
repudiating the Czars’ debts. Mobilization of resources meant finding
ways to tap private funds where only public ownership of means of
xvi Introduction

production was tolerated, leading to a mix of old-fashioned devices and

institutional inventions. The heightened importance of state control of
borrowing and public debt was acute throughout those decades in old
European countries, new communist countries, and maybe even more in
newly decolonized countries after World War II. In the Middle East, as
Matthieu Rey explores in Chap. 14, public debt had been a tool of colo-
nial domination, but after independence it became a political touchstone
to build the new regimes, in a bargain where public debt both signified
sovereignty and allowed to avoid taxing the population. This new “diri-
giste debt regime” was less globalized than the previous one, but every-
where it helped build states, and bolster political regimes, with market
operations under severe controls—in this dominant regime, only a few
public debts were at the mercy of markets.
The rupture introduced in the 1970s is the subject of “Part IV: The
Political Roads to Financial Markets and Global Debt Crisis.” The turn to
a “financialized debt regime” was not so much the result of a retreat of the
state as a choice made by many political and economic actors to reorganize
the relations between states and markets, at a time when inflation ceased
to be a legitimate tool of regulation, and social spending put increasing
pressure on public finances. As Anush Kapadia and Benjamin Lemoine
show in their comparative take on France and India (Chap. 15), financial
deregulation was conceived as a way to bypass the political and social con-
flicts that “embedded liberalism” could no longer cope with. The com-
plete change in public debt management led to a shift of power, from state
treasuries to central banks and international financial markets—as the
Italian example studied by Alexander Nützenadel in Chap. 16 illumi-
nates—through a mix of half-improvised solutions to short-term crises
and willful restraints put on state intervention in the economy. States
remained crucial actors, as their reaction after the 2008 crisis demon-
strated (through bailout plans). They still have the capacity to sustain high
debts, but at a political cost that weakens democratic institutions. The
international relations of public debts highlight this marginalization of
polities, Jérôme Sgard shows us in Chap. 17, as the diplomatic setting of
debt settlement experimented by the IMF in the 1980s, however decried
at the time, gave way to adjudication before national courts in a handful
of jurisdictions (with large financial markets), emphasizing the loss of sov-
ereignty of many nations and a form of legal imperialism. In the triangular
relation between states, markets, and polities, the latter feel more and
more excluded. The discrepancy between the financial networks of
 Introduction  xvii

globalization and its political regime has never been so wide, and that
explains many of the political developments and crises that have occurred
in the 2010s. In Chap. 18, Adam Tooze chronicles those shifts through a
focus on the men who styled themselves “bond vigilantes,” and their role
in working this new financialized debt regime to its limits. In doing so, he
highlights the close connection between the new forms of high public
indebtedness, the growing economic inequalities, and the widespread dis-
satisfaction with democratic institutions that feed the dangerous political
reactions that have swept across a large part of the world in recent years.
In a concluding section, entitled “On the Historical Uses of Numbers
and Words,” two chapters decisively show that the meaning and under-
standing of “public debt” has never been stable, even among professional
economists and financiers. Éric Monnet and Blaise Truong-Loï uncover
how public debt accounting has actually evaded experts, civil servants, and
financiers alike, for two centuries, even after massive international norma-
tive projects in the wake of World War II. Building on the detailed cases of
Germany, France, and China, they show that every accounting decision
(especially for comparative purposes) has been rife with political implica-
tions in the balance of power between states, creditors, and polities. Their
work is a clear warning that we should be cautious about any economic
study that uses long-term statistics of public debt without anchoring them
in their specific intellectual and political contexts. Also taking the long
view, Nicolas Barreyre and Nicolas Delalande retrace how seemingly
unchanging arguments over public debt varied widely over more than two
centuries. They study how political actors fighting over public debts used
a shared repertoire of arguments that started building in the eighteenth
century but was repeatedly transformed. Contexts changed and re-sorted
those ready-made ideas. This is a call for a political history that highlights
the circulation of ideas while understanding that their meaning is always
locally contested. It makes all the more urgent the kind of political history
proposed in the chapters of this book.
This narrative of successive dominant debt regimes should not be con-
fused with a typology: we did not uncover different competing models of
“doing” public debt, but rather teased from our historical cases different
dominant organizations of public borrowing and management that were
particular to historical moments. What we take from this first exploration,
which we hope will inspire others, are three main points. The first one is
that public debt has never obeyed timeless laws, as there is no impersonal
mechanics attached to it. It is an inherently political object whose
xviii Introduction

workings are deeply tied to modes of political legitimacy. Second, there is

thus no universal “good institution” to build public debt on, and thus no
inevitability to the legal rules and institutional makeup that would be
“necessary” for borrowing states to establish. Finally, political legitimacy is
a key feature of public debt, as well as of creditors’ claims. We believe that
such conclusions are important when we observe the shape of contempo-
rary debates over national indebtedness in the new global capitalist order
now in crisis, reaching unprecedented proportions with the deep impact
of the COVID-19 pandemic.

Public Debt and Capitalism

By looking at past historical configurations, the book shows that global
public debt crises are related to deep transformations in the relation (and
boundaries) between states, markets, and polities, as well as shifting power
relations across the globe. Today’s tendency to consider public debt as a
source of fragility or economic inefficiency misses the fact that, since the
eighteenth century, public debts and capital markets have on many occa-
sions been used by states to enforce their sovereignty and build their insti-
tutions, especially (but far from only) in times of war. Considering that
access to capital is crucial to state-building, it should be no surprise that
states decided to bail out banks and insurance companies after 2008, or
that central banks intervened so massively to buy sovereign bonds and
keep interest rates at low levels. But it is striking to observe that certain
solutions that were used in the past to smooth out public debt crises (infla-
tion in the 1920s, default in the 1870–1880s or 1930s, or capital controls
after 1945) were left out of the political framing of the current crisis, thus
revealing how the balance of power between bondholders, taxpayers, pen-
sioners, and wage-earners has evolved over the past forty years.
Given the acuteness of the current debt crisis, we would like to spell out
how this volume could add to the historical understanding of capitalism
that has been, of late, a growing concern of scholarship.31 It aims at recap-
turing the relations between private capital and public authorities, looking
at the role of finance and credit in the shaping of state sovereignty, eco-
nomic inequalities, democratic institutions, or imperialist endeavors.32 By
reviving “political economy” as a key concept in the study of capitalism,
historians, sociologists, and political scientists insist on the deep interplay
between markets and politics, as soon as we accept that the “economy” is
a historical construct, embedded in social relations, moral values, and
 Introduction  xix

political conflicts, rather than a natural order whose laws apply at every
period and in every context.33 For all its exciting and fruitful develop-
ments, however, this “new history of capitalism” has mostly focused on
the American experience. Our global history of public debts sheds light on
the role played by capital flows and debt relations in the global expansion
of capitalism since the late eighteenth century, and in the process “de-­
americanizes” (and also “de-anglicizes”) the history of capitalism. Here,
we show that putting the political analysis at the center of our enquiry can
make sense of the history of capitalism in all its avatars through time, as
capitalism is constantly reshaped in localized, interconnected political
dynamics. Our contribution to this larger reflection takes four directions.
First, we argue that public debt has always been a powerful driver for
the expansion of capitalism. State borrowing went far beyond the mere
circulation of money and bonds. It spurred the construction of knowledge
(e.g. statistics and economic categories) and the diffusion of economic
ideas (classical liberalism, Keynesian macroeconomics, public choice eco-
nomics, ordoliberalism, and so on), shaped financial, political, and admin-
istrative institutions, and fed the competition between moral categories
and political visions.34 Beyond financial transfers, public debts imply many
circulations, of experts and scientists, of books and newspapers, of inter-
mediaries and merchants, of institutions and specific economic policies, as
shown in most chapters of this volume. When borrowing money, states
need to find lenders—and it often led them to adopt the words and cate-
gories of financiers when the latter had the upper hand, because they had
established themselves as the experts or when they had the power to decide
the success or failure of a loan. In the nineteenth century, as many national
and local governments strove to issue bonds in London, Paris, Amsterdam,
Vienna (or later New York) to modernize their institutions and promote
economic development (through railway construction, mining industries,
administrative reforms), they increasingly bought into a financial system
that sought to impose its own values and measurements on their institu-
tions. To understand how global capitalism was shaped, we need to pay
close attention to the many efforts (and disputes) to produce standardized
measures and concepts about public finances and financial markets, assets
and liabilities, debt ratio and so on. However this story has always been a
highly contested one, marked by the contradiction between two diverging
principles, the need for states to offer transparency about their public
accounts (to reassure foreign or national bondholders) and the kind of
opacity and secrecy that dominates many discussions between central
Another random document with
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 "I'm so glad. I will try harder."

"Don't go to the opposite extreme, my dear, of thinking

that you are to have no opinions at all, but must always
agree with everybody."

She laughed, and asked, "Am I in danger of that?"

"Not at present, I think. But it is a weakness of human

nature to be disposed to rebound from one extreme to
another. Truth lies more generally in the fair road between,
—though it does sometimes include a measure of one or
both extremes."

Thyrza looked up, and said, "I suppose any one living
here would describe the mountain as stern and frowning.
And we at Beckdale would describe it as all soft beauty,—
except just at The Scaur. And both would be true."

"Yes," I said; "but no man would have a fair conception

of the mountain as a whole, unless he had gained at least a
glimpse of both sides,—not to speak of other sides also
which we have not seen yet."

Then we rose and continued our walk. Thyrza seemed

thoughtful still. She observed, after a while, as if carrying
on our talk—

"Don't you think that sometimes people seem to see

only one side of—" she hesitated, lowering her voice
reverently,—"of Christ? I mean, even those who do really
love and obey Him?"

"My dear, ninety-nine hundredths of the errors into

which most of us fall, spring from one-sided views of Him,"
I said. "For He is THE TRUTH. One-sided views of Him are
one-sided views of Truth: and a one-sided view is always a
defective view."

"And isn't there any help—any cure?" she asked.

"Only in Him. He gives us clearer eyesight, and then He

shows Himself more clearly,—if we are willing," I said. "But
a great many people are so well content with what they
already see, as really to care little for seeing farther."

"Sir Keith often says that very much depends on our

willingness," Thyrza observed gravely.

I could not but remember the first time I had seen Sir
Keith. He had put the thought into my head.

We went on to the end of the Pass, the last part of our

way being a sharp descent, till we reached the pretty river
which begins as a streamlet on the central ridge or highest
point of the Pass. There for a while we rested, and there, to
Thyrza's joy, she discovered a fine plant of Parsley fern,
growing half under a sheltering rock. My "find" of last
summer died long ago, as Thyrza then predicted. "But I
shall keep this for my own," she said.

Plenty of time remained yet, when we had passed the

central ridge on our return. Thyrza seemed in no hurry to
reach home. She was in high spirits, no longer disposed to
sit still and meditate. She had repeatedly expressed a wish
to climb the steep hillside lying now to our left: and as we
advanced, the desire came over her more strongly.

"I really do think I must," she said at length. "It is quite

too tempting. And I am as fresh as a lark still. You shall just
sit here, and wait for me."

"Why should I not go too?" I asked.

 "Oh, because you are not so robust as I am: and there
is always the chance of your hurting your knee again. No:
you must sit perfectly still, and be lazy. I know you enjoy
being alone in such a place as this. I dare say I shall not be
long. When I come down, we'll finish off the cake, before
going on."

CHAPTER XXXV.
ENTIRELY VANISHED!

THE SAME—continued.

I WATCHED Thyrza, as she crossed actively the broken

but on the whole level space, between the road and the
steep mountain-sides: and I saw her begin to climb with
easy speed.

It was a temptation to me to join her, even then. I am a

good climber by nature: and an ascent has always a
fascination for me. But I knew that without any such
additional exertion, I should have taxed my powers pretty
severely by the time we reached home. So I followed
Thyrza's advice, and remained quiet, seated on a rock by
the roadside, with my face toward the flowing green slopes.

The deep stillness of the scene impressed me again,

more forcibly than ever. For now I had not a companion. I
was entirely alone. Not even the trickling of water was to be
heard. One solitary dream-like "ba-a-a" sounded, to be
answered by a second. Then silence again. No human being
was in sight, except the figure of Thyrza, growing
momentarily smaller, as she went upward.

Her ascent seemed very slow, as I gazed. I began to

realise how much steeper and loftier those heights were
than we two had imagined.

But Thyrza went on, sometimes pausing, sometimes

turning to right or left, as if choosing her steps. At present
she showed no inclination to come back.

I observed her movements steadily, wondering how

much farther she would go. Her last words had been
—"Perhaps I shall have had enough of it half-way up." She
appeared now to be more than half-way up, but there were
no signs that she had had enough of it. Hardly probable
that she should. If the enthusiasm of climbing had
possession of her, she would scarcely rest content short of
the summit.

The little black figure still rose,—more and more like a

big ant clinging to the wall of a house; or I thought so.

All at once she came to a pause. I judged that she had

mounted somewhere about three-quarters of the height
from my level: but it is very difficult to judge truly, looking
upward. For some minutes she remained perfectly still. I
supposed her to be resting: yet it seemed a curious spot to
choose for a rest.

I was growing rather nervous at her prolonged fixity in

one position, when I distinctly saw her move. She seemed
to crawl a few paces to the right, and there to pause afresh.
At all events, she could start again, when she chose. That
set my mind at ease. It seemed likely that she saw the last
piece to be too much for her powers: and that after a brief
repose she would come down.

"Time enough too," I said aloud; and my voice sounded

strange in the solitude. "This takes longer than I calculated
on. We ought to be getting homeward."

Then, curiously, it flashed into my mind that I had an

unread letter with me. Why not wile away some minutes by
reading it, as I sat there?

I pulled out the black-edged envelope, which was a

good deal crumpled; and noticed the London postmark.
"Not Bath!" I said, with momentary surprise. And one look
at the agitated uneven handwriting showed me that it was
not Ellen Smyth's,—but—Miss Millington's! Strange that I
had not recognised it at first sight; only hers, as I had
known it previously, was neither agitated nor uneven, but
neat and precise to a fault.

Within were two sheets, blotted, blurred, and closely

filled.

Then that which I expected had come at last!—And I

knew it!

I am ashamed to say that I forgot all about Thyrza. I

think I even forgot where I was. Noises were sounding in
my ears, like the distant roar of a great city; and a dread of
what I might find in that letter had possession of me.

For I could see it to be some manner of outpouring; and

I could conjecture what the outpouring might include. I
quailed before the prospect. Suspicion was one thing;
certainty would be another. I believed that I had fully
forgiven Miss Millington. Would the battle have now to be
fought all over again?

With a voiceless prayer, and with a resolute effort, I

took up the sheets, not reading yet, but glancing rapidly at
a sentence here or there. When I reached the end thus, one
short assertion only remained on my mind—

"I was not really sure."

I must have sunk into a dream upon those five words,

and their possible meaning. Then I woke up to the fact that
the letter contained much besides, especially the sad news
of Mrs. Millington's death.

I began again at the beginning, and read the whole

through carefully. It was a sorrowful composition,—bitter,
self-reproachful, miserable in tone. I cannot copy the whole,
and I will not keep the original. A few sentences will be
enough.

"I don't know what kept me from speaking,

that day," she wrote. "For I did really want to
tell you I was sorry; only I could not. I suppose
it was pride. I know I am proud. I did so hate to
take the money; and yet somehow I could not
say no, for I thought it might save my Mother's
life. And it has not. That is the worst of all. I
have gone through that horrible humiliation for
nothing. Mother did seem better for a time, and
of course it was a real comfort to her to be out
of debt, but she failed at last quite suddenly,
and nothing more could be done.

"It was only yesterday that she died.

 "I am writing to you now, because I must. I
dare not put off. I have such a dreadful feeling
that perhaps, if I had spoken out sooner, God
would not have taken my Mother. I dare say
some people would say I am foolish to think
this, but I know better. All these months I have
known I ought to speak, and I have been
struggling against it; and now she is gone, and
I have nobody left except Jeannie. And perhaps
if I do not speak out, she will be taken too. I
don't think I could bear that. She looks ill, and
it terrifies me. I dare say I deserve that, or
anything,—but at all events, I am telling you
the truth now. I wish I had before . . .

"You told me you had forgiven me: but I

never could feel that was real, because if you
had known all, you would not have said so . . .

"I don't know what made me hate you as I

did! I suppose it was partly your being Mrs.
Romilly's friend. And I always thought you could
not endure me: and when you seemed kind, I
felt sure you had an object. I can't make up my
mind how much you really know of things, or
how much I ought to tell you—" and then
followed melancholy particulars, written as it
seemed to me in a half-broken half-bitter spirit,
more because she dreaded not to tell from a
haunting fear of punishment, than because her
will was bowed to do God's will.

No need to copy out these details. Only—I have not

judged her falsely.
 For the Gurglepool trick was hers: and she did set
herself to oppose my authority in every possible way. She
endeavoured systematically to turn the girls against me.
She used the opportunity to look into my private journal,
and she employed afterwards the information so gained,
making it a subject of jesting with the girls, and untruthfully
professing to have learnt it through a friend of hers who
lives in Bath.

Worse even than all this,—not morally worse, for that

could hardly be, but worse in its actual results upon my
happiness,—when Arthur came to Beckdale, to learn if he
had any hope of winning me; which she seems to have
divined as his object; she set herself deliberately, falsely, to
quash his hopes. In a certain brief interview, she gave him
to understand, not by assertion, but by insinuation no whit
less untrue, that I had shown a marked dislike to him.

More still,—when she received her dismissal from Mrs.

Romilly, she took a further step. She sent a brief note to
Arthur to reach him at The Park, briefly warning him as a
friend—a friend!!—that if he wished to consult his own
interests and peace of mind, he would keep out of my way.

"I don't know what he thought of me. I think

I must have been mad,—such a wild thing to
do," she wrote. "He never answered my note or
took any notice of it. But it took effect: and that
was all I cared for. I had my revenge,—and I
wanted nothing else.

"It is of no use to ask if you can possibly ever

forget all this; for I know you can't. I could not
in your place. I will never never be untruthful
again,—but that can't alter what I have done to
 you. It is impossible that you should get over
it."

And at the moment my heart cried out assent to the

impossibility.

For he had come indeed to seek me once: and a second

time we might have met; and twice she had driven him
away.

Then at length I reached the mention of her more

recent letter to Maggie, in which was contained the news of
his engagement.

"I was so glad to have it to tell," she wrote,

"that I would not ask any particulars,—I
wouldn't even try to find out if it was true. I
was not really sure. It was just told as a piece
of gossip, and I knew there might be some
mistake. I was not really sure. But I wrote to
Maggie directly, and I have never heard any
more. I do not even know where Captain Lenox
is now. I think I should have heard if it were not
true, and I am afraid it is. So I can do nothing
at all to undo the past: and that makes me sure
that I must not expect you ever to be friends
with me again. Only for the sake of Jeannie,
and because of my feeling that she will die, if I
do not—I must tell you all."

I had not noticed before those words following the

others,—fearing it was, after all, true.
 It did seem to me too much—too great a wrong! I must
have sat long, half unconscious of my own position, clasping
the letter tightly between both hands. For a while I could
not think,—I could only feel. The knowledge that a year ago
he had still cared, touched me very keenly, with a mingling,
of sweet and bitter. But the "might have been," and the
"was not,"—and the sense of the great life-loss, the
loneliness, the sadness to come,—all through her! How
could I forgive?

The stony hardness broke up at last, and tears fell in a

shower. I have not wept so freely for years, I think. And
when that came to an end, the bitterness seemed gone. I
could once more say,—"His will—not mine."

* * * * * * *

But Thyrza!

It came over me in a flash, vivid as lightning, how long

I had been there. Thyrza ought by this time, surely, to have
reached the lower slopes.

I looked up, running my eyes swiftly over the broad

mountain face, searching from below to above, from right to
left. In vain. No Thyrza was to be seen. I scanned the
frowning beauty of the level summit, and travelled
downward again to the spot where I had noted her last. But
Thyrza had vanished.

CHAPTER XXXVI.
 AND HE—!

THE SAME—continued.

I HAD not looked at my watch when Thyrza left me. A

glance at it now showed the afternoon to be far advanced;
indeed, this I already knew from the slant of the sun's rays.

Blaming myself much for the absorption in my own

affairs, to which I had weakly yielded, I stood up and again
eagerly scanned the green slopes; without result.

Had Thyrza reached the top, and there been taken ill
from over-exertion? Such a thing might happen. Or had she
lost her footing, and rolled downward?

If the latter, I should find her without difficulty lying

below, hidden from where I stood, but not far off. The very
idea brought a cold shiver. That I disregarded, however.
Action of some kind was necessary. Feeling had to wait.

It was not, of course, impossible that Thyrza should

have reached the summit, tempted onward by the
excitement of climbing, and there should have vanished for
a short time before descending. But the fact which startled
me was the length of the time she had been absent. A brief
disappearance would not have been surprising. I could not
understand her remaining away. Thyrza is so thoughtful;
unlike Maggie and Nona; and especially thoughtful about
me. I had said to her laughingly before she went, "Mind, if
anything goes wrong, I shall come after you." She would
remember this; and I knew she did not wish me to attempt
the ascent.
 The search below was soon over. I explored every spot
where she might lie hidden, had she slipped and fallen. She
was not there; neither was she on the slopes. I could see
the broad green expanse, as I stood beneath looking
upwards,—in parts frightfully near the perpendicular. I
began to think I had done foolishly in consenting to let her
go up.

If she did not very soon appear, nothing remained for

me but to follow in her wake. I determined to wait a quarter
of an hour; then, if she had not appeared, to start without
more delay.

The fifteen minutes dragged past slowly. I had made my

way to a low wall, and there I sat, waiting, watch in hand,
in the soundless solitude. Nobody passed along the road. No
human being was visible on the heights. It seemed to me
that they grew steeper and loftier the longer I gazed.

"Time up! I must go!" I said aloud.

I suppose I moved too hastily, stepping down from my

seat on the wall. I had gone there for a clear view. The wall
was formed of large jagged stones, piled loosely together.
One of these stones gave way under my foot, and I came to
the ground with a sharp jar,—standing, but a good deal
shaken,—and when I took a step away from the spot, I was
instantly conscious of a crick in my weaker knee,—it might
be a strain or twist.

For a minute I kept perfectly still, hoping that it would

prove to be nothing. But the first movement showed me
conclusively that my climb was at an end. I might as well
have tried to reach the moon as the summit of the
mountain.
 It was a severe disappointment. If Thyrza had hurt
herself, and were ill or disabled above, she would be
needing me sorely.

Still, it was out of the question that I should go: and the
thought now occurred that I ought at once to return to my
seat on the road. If the dog-cart came to meet us, as it
might do later, I had no business to be out of its direct path.
Besides, Thyrza would know where to find me, or to send a
messenger, if she had found it needful to go round some
other way, rather than attempt the descent.

So very cautiously, and not without a good deal of pain

in the knee, I limped back to my old position.

The hour following seemed very long, very dreary. I do

not know that I have ever felt more weighed down and
altogether sorrowful. I was anxious about Thyrza: and my
own future seemed so grey and wearisome. The letter from
Miss Millington pressed upon me like lead. Could I in heart
and soul forgive her the wrong she had wilfully done to me?

At the end of an hour, or something like an hour, I

looked up,—I had been gazing on the ground,—and the
sunbeams were shining like reddish gold all along the broad
mountain brow, with wonderful beauty. It seemed to me the
gleam of a smile from heaven. The mountain's frown was
lost in that smile.

"I shall find brightness enough in another world, if not

in this," I found myself saying aloud. "One only has to wait
a little while."

The deadly stillness of the Pass was so strange: no

answer coming. And then a soft voice seemed to say, "Miss
Millington?"—as if asking a question.
 "Yes!" I said; and there was a sudden radiance of joy in
my heart, resembling the outside glow. "Yes, I do forgive! I
will write and tell her so."

The shining radiance deepened, without and within. I

had an extraordinary sense of rest,—of willingness to
receive whatever might be sent me. No thought of fear
mingled with the willingness, though I whispered
instinctively, "Does this mean some fresh great trouble?" If
it did, I was willing still. The Presence of my Master would
make all things light.

I almost expected another utterance of the soft voice,

speaking to my heart from without or within—which, I do
not know. I waited—listening.

And no voice spoke. But my eyes fell upon a figure,

descending the great green slope, exactly in front.

"Thyrza!" I cried.

It was not Thyrza. It was a man. I saw him distinctly in

the full sunlight. Had he come to tell me ill news of Thyrza?

I cannot think now why I was not more afraid. I did not
feel afraid, sitting there with clasped hands, gazing upward.
I could follow every movement of the descending figure. He
seemed to be a good climber. That was speedily apparent.
Down and down he came, steadily. Once he leaped a wall,
perhaps to find an easier slope on the other side.

When more than half-way down, he stood still, and

seemed to be looking at something or for somebody. I
waved my handkerchief, and he at once waved his. So I
knew he was coming to me,—though I did not know yet the
full meaning of "he!" Joys, like sorrows, often dawn upon us
step by step.
 The lower portion of the slope was very rapidly got
over; so rapidly that I was afraid he would slip. He took it at
a run, and I saw him spring over some obstacle at the
bottom. After which he marched straightly and swiftly
towards where I sat.

Till then no thought of the truth had come into my

mind. But something in the upright bearing, the slender
frame, the soldierly walk, brought recollections thronging
and made my heart beat fast.

"Absurd," I murmured. "Ridiculous of me to think—But

it is like! I suppose he must be in the army too, whoever he
is."

I do not know how long I fought against the reality,—

how soon I dared to let myself believe it. I only know that I
stood up slowly, and that he came nearer and nearer,—
came fast, with his face turned fixedly towards mine. And
the sunshine outside seemed to be filling my heart again;
only this time it was a more earthly tremulous sunshine,
flickering with every stride he took.

And I forgot all about Miss Millington, all about the news
of Arthur's engagement.

For he was standing close in front of me, his hand

clasping mine, and I was looking up into his face with a
smile of welcome, such as I had not dared to give him that
other time when we met. The lonely Pass seemed all at
once full of life; and every touch of greyness had gone out
of my future.

For the moment that our eyes met, I think each

understood the other; though I only said, "Where is
Thyrza?"
 "Gone home with Sir Keith," he answered.

"Then you have seen her?" I asked.

"Yes," he said, and he explained briefly. Thyrza had

climbed two-thirds of the height; then, pausing to look
below, she had been seized with terror and giddiness, for
the first time in her life, and had very nearly fallen down the
mountain side. By dint of remaining still, and looking
resolutely upward, she had so far recovered herself as to
continue the ascent, reaching the top with great difficulty.

To descend again, however, had proved out of the

question. Every time she approached the edge, dizziness
and dread overpowered her anew. She had waved her
handkerchief and made various signs to me, hoping that I
should understand. Being short-sighted, she could not know
whether I responded, which of course I did not, as I was
then wrapped up in my letter.

Thereafter Thyrza had started off to find another way

round. Her first intention was to go to The Scaur, and to
descend the narrow path which runs down beside the bare
rock: but happily she hit upon a shorter cut to the road by
which we had approached the Pass.

Thyrza knew that Sir Keith had gone to Beckbergh to

meet Arthur: and she knew that the two might possibly
drive to meet us, if our return were at all delayed. I believe
she had rather liked the prospect, and had been not
indisposed to bring it about by delay: though later, when
hurrying alone down the hills, she little expected to be so
fortunate as to meet them at the moment she reached the
road.

However, this really occurred. They pulled up and

sprang down, astonished to see her alone. Thyrza must
have been a good deal shaken by her touch of "vertigo," for
she burst into tears when trying to explain matters,—a
most astonishing event. Thyrza never cries in public, under
any consideration, as a rule. Sir Keith was much troubled,
and very sympathising; and Arthur promptly proposed to go
in search of me, while Sir Keith drove Thyrza home.

Thyrza at first resisted, but she had to yield to Sir

Keith's determination. The general impression was that I
should certainly endeavour to climb the height in search of
Thyrza, when she failed to return,—a well-founded theory,
as proved by circumstances. Arthur resolved, therefore, to
go by the same way that Thyrza had come. He had already
explored these mountains, when staying last year at the
Farm: besides, he is one of those men who are never at a
loss in the wildest country.

So Sir Keith drove off with Thyrza, promising to bring or

send the dog-cart with all speed to meet Arthur and me:
and he made good use of his opportunity, following the
advice I had given.

Arthur meanwhile found his way with all speed to the

brow of the mountain, walking along it till he saw a little
figure seated far below in the road. And as he came down,
he stopped now and again to wave his handkerchief. Twice
in vain: the third time I saw him, and waved mine.

Some of this Arthur told me briefly; much more I have

heard since.

Then, to his concern, he learnt that I had hurt my knee:

and he said how foolish he had been to let the dog-cart go
home first, instead of driving straight to the Pass. And I said
—"Oh no,—I am so glad you did!" For how could I wish
anything to be different? How could I mind waiting?
 Then he said something, speaking a little brokenly,
about having almost made up his mind to leave England for
ever. He had thought of it for months. And he had been to
Glynde again for a night,—he hardly knew why. He had seen
Mrs. Hepburn and Gladys. And something—something
Gladys said or did not say,—something in her look of
reproach, when she spoke of me,—had made him resolve to
try once more.

And in a husky altered voice, he asked—

"Constance, is it true?—Have I been under a great

mistake? Could you be mine now,—after all?"

I have no idea what I said in answer. It matters little

what words one uses at such a moment, or whether one
uses any words at all. He understood me, and I understood
him. It was such wonderful unexpected happiness. All
clouds seemed to have been suddenly swept away from my
whole horizon, leaving only sunshine and a blue sky.

But I think my first impulse was to look up,—to feel that

this joy was indeed my Father's gift to me, and to Arthur.

Life was so changed to both of us, in that one short

hour. Changed, and yet the same. For the same Presence is
with us still, the same Will directing us, the same Love
surrounding us, the same Light beckoning us onward.

Only now we hope to live a life of service to Christ

together,—not apart. And that means earthly as well as
Heavenly sunshine.

When we reached home, we found that Sir Keith and

Thyrza were engaged, to the great satisfaction of
everybody. Thyrza appeared to have quite recovered from
her severe climb. And I wrote at once a few lines of comfort
to Miss Millington, telling her of my new happiness, and of
the Help which might be hers, if only she herself were
willing.

GLADYS HEPBURN'S DIARY.

July 27. Tuesday.—Good news! Good news!

I was dreadfully afraid last week that I might have

blundered. It is so fearfully difficult to know always what is
just the wisest thing to say and do.

Major Lenox made his appearance suddenly. He was

spending a night at the Inn, and he asked if he might come
in to afternoon tea. And when he was here, instead of
keeping off from the subject of Miss Con, he seemed to do
nothing but bring her name up.

Well,—I really thought I ought to say something. I could

not ask Mother's advice; because, of course, I have never
felt free to tell her or any one about Miss Con's distress that
day. It would be a betrayal of confidence.

An opportunity came up in the garden, when nobody

was near for a minute or two. He said something about
Yorkshire, and I spoke of the Romillys; and he answered
me; and I asked him if he knew Miss Millington. He said
"Hardly," in a considering tone; and I said, "Oh, she wrote
us word of your engagement."

I was afraid he would think me blunt and interfering,

but I really did it only for dear Miss Con's sake. He turned
sharp round, and said, "How could she have heard that
ridiculous tale?"

I believe I said, "Was it a tale?"

"Certainly," he said. "No foundation whatever!" And he

looked quite fierce, and tugged at his moustaches.

And I said—not knowing what meant to come next—

"One never can depend on anything from Miss

Millington. She told Maggie—and Maggie told me—and Miss
Conway."

"Miss Conway heard it?" Major Lenox asked.

I said, "Yes!" and I looked straight at him for a moment.

I did not dare to say any more, but I know what I wanted to
say. And somehow it almost seemed to me that he read my
thoughts. Such a curious softened expression came into his
eyes: and his manner was different after that moment.

Nothing more was said by either of us: only next

morning he walked in to say good-bye, and in a casual sort
of way he spoke about "going north."

The very next thing we heard was that he had seen Miss
Con, and that they are engaged. And he has given up all
idea of exchanging into a regiment abroad. Oh it is so good!

Thyrza is engaged too,—actually on the same day, and

to Sir Keith, of all people.

Mother seems not at all surprised, but it is a great

surprise to me. I like Thyrza much better than I used:
because she is more affectionate and less stiff; but I should
not count her the kind of girl to be fallen in love with easily.