Portugal’s Debt Repudiation in 1837

19 September 2017 by Eric Toussaint

Queen Maria and Dom Miguel (Wikimedia)

After an armed struggle for succession that lasted from 1831 to 1834, Queen Maria of Portugal repudiated a loan issued in 1833 by the self-proclaimed king, Dom Miguel. She justified the repudiation by saying that bankers should not have lent money to a usurper. The loan had been issued in Paris in 1833 through the bankers Outrequin and Jauche for a sum of 40 million francs to be repaid over 32 years at 5 % interest. The bankers had not hesitated to take risks, organizing the launch of the bond issue even as the two armies in Portugal confronted each other over the succession to the throne.

As on previous occasions, the bankers had retained from the amount raised for Dom Miquel on behalf of Portugal the equivalent of eighteen months interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. and paid it out to the bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. -holders. Once Dom Miguel was overthrown in 1834 his repayments naturally ceased. Queen Maria suspended repayment in 1835-36 before proceeding to an outright repudiation of the debt in 1837.

Bond-holders set up a repayment committee that over 54 years initiated numerous actions to try to obtain repayment [1]. In 1891, one of Maria’s successors finally agreed to pay a paltry amount equivalent to 2.5 million francs. (We recall that the initial loan was for 40 million). 2.5 million was the amount Queen Maria had managed to recover from the treasury of Dom Miguel.

It is worthy of note that despite the suspension and repudiation of the debt and the ensuing protests, Portugal was able to raise fresh loans in Paris and London as of 1836-37. Although Portugal rapidly defaulted on these loans, between 1856 and 1884, fourteen further loans were issued to the tune of 58.4 million pounds sterling.

Translated by CADTM


[1Furthermore, the bond-holders lost their first court-case, brought in France against Portugal in 1879. See William Wynne, State Insolvency and Foreign Bondholders. Selected Case Histories of Governmental Foreign Bond Defaults and Debt Readjustments, vol. 2, New Haven, Yale University Press, 1951, pp. 361-386. All the information given here on Portugal’s debt repudiation come from this book.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.



35 rue Fabry
4000 - Liège- Belgique

00324 226 62 85