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I can't speak for the other Scandinavian countries, but for Sweden credit played a huge role in the industrialisation, especially from 1890's and forward. Before that local businessmen and local banks were more or less the same thing and had large amounts of co-ownership and insider loans. Due to the social conventions of the time (even after the limited liability corporation was introduced in the 1840's), this was no problem as default was the same thing as social suicide, a horrible almost sinful thing.

But as the 19th century drew to a close, the face of Swedish industry started changing, away from things like textile mills and basic manufacturing. Instead the Swedish economy turned into a raw material play: iron and timber, and then these thing were refined, into steel, pulp and matches. This meant immense capital intensity and start-up costs, which just couldn't be borne by local businessmen/bankers, nor could it be financed with cashflow from existsing companies.

So yes, Sweden was certainly a credit economy already a 100 years ago.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun Dec 26th, 2010 at 01:44:34 PM EST
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It is more accurate to say that Sweden (like Denmark) became a credit economy 100 years ago, as part of the process of industrialising. Moreover, most households did not have mortgages on purely residential property even by the end of the period.

If they had started out as a credit economy, in which every business and almost all households had non-negligible liabilities, the deflationary bias inherent in the gold standard would have been a much greater drag on the industrialisation process.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Dec 26th, 2010 at 02:09:29 PM EST
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