Finanzintermediation durch die Schlesische Land-schaft: Eine Analyse institutioneller Defizite

Not only in time of its foundation but also in the historic retrospection are the Landschaften, especially the Silesian Landschaft, attributed with considerable success in the allocation of agricultural real-estate loans. This attribution results mainly from the enormous credit volumes that were raised by the owners of manors since the establishment of this financial intermediary at the end of the 18th century in Prussia. Despite, this paper shows that the institutional design proved ineffective in providing comprehensive protection to the creditors. By no means was it possible to assume the enforceability of the general guarantee of the Stände nor an sufficient thoroughly rating of the loaned assets during periods of recession. In turn these misleading ratings resulted in poor sequestrations and public auctions, which were hardly able to extract the interest due and the claims of the bond holders. On this account it would have been a matter of time before these institutional deficits would result in existential difficulties. The historical developments coincide with these findings.