292 Ferguson and Schularick The subtitle of the 1898 edition of Fenn's Compendium,the self- proclaimed "doyen of all financial books of reference,"neatly summa- rizes what economic indicators the City of London had access to:it was "a handbook of public debts containing details and histories of debts, budgets and foreign trade of all nations,together with statistics elucidat- ing the financial and economic progress and position of various coun- tries."37 In many respects,the main problem for contemporaries was not so much the raw data in the numerator-whether public debts,debt ser- vice charges,or exports-but the denominator.In the absence of a di- rect measure of a nation's output such as gross national product,a con- cept then its infancy,it was far from easy to compare the fundamental resources of different countries.Population was generally acknowl- edged to be an unreliable choice,though it had the advantage of being readily available,thanks to fairly regular and accurate censuses,and was often used to denominate export capacity.However,in more so- phisticated analyses of fiscal sustainability,the debt burden tended to be related to public revenues or to export earnings.3 The same was true of budget and trade balances. Drawing on the records of the Service d'Etudes Financieres of the Credit Lyonnais,Flandreau and Zumer have suggested that debt service to revenue was the contemporary indicator that best measured the cred- itworthiness of borrowers.39 However,for a number of reasons we chose to stick to the more traditional debt to revenue ratio.First,in con- temporary statistical publications,the overall debt burden was far more frequently given,and was also,it seems,less frequently subject to revi- sions.Secondly,as the debt service itself is determined by the interest rate,it is questionable whether it should be used as an independent vari- able to estimate the interest rate.Nevertheless,we can also work with debt service data for a far larger number of countries than previous stud- ies and will show that our key findings do not depend on the choice of a particular fiscal measure. Another indicator watched by contemporaries was the budget deficit to revenue ratio.As Cain and Hopkins have argued,the principles of "Gladstonian finance"-which aimed at budget surpluses during peace- sources tell is that of a market driven not so much by short-term economic information,but by knowledge of long-term structural trends supplemented by short-term political news from which npt e tor coyindicator Be- vised editions of Fenn's Compendium were published in 1883,1889,1893,and 1898.Unfortu- nately,the series was then discontinued,apparently because the main contributor,Robert Nash, emigrated to Australia. For a further discussion of contemporary risk analysis see Flandreau and Zumer,Making of Global Finance. 3 Flandreau and Zumer,Making of Global Finance,p.31.292 Ferguson and Schularick The subtitle of the 1898 edition of Fenn’s Compendium, the self￾proclaimed “doyen of all financial books of reference,” neatly summa￾rizes what economic indicators the City of London had access to: it was “a handbook of public debts containing details and histories of debts, budgets and foreign trade of all nations, together with statistics elucidat￾ing the financial and economic progress and position of various coun￾tries.”37 In many respects, the main problem for contemporaries was not so much the raw data in the numerator—whether public debts, debt ser￾vice charges, or exports—but the denominator. In the absence of a di￾rect measure of a nation’s output such as gross national product, a con￾cept then its infancy, it was far from easy to compare the fundamental resources of different countries. Population was generally acknowl￾edged to be an unreliable choice, though it had the advantage of being readily available, thanks to fairly regular and accurate censuses, and was often used to denominate export capacity. However, in more so￾phisticated analyses of fiscal sustainability, the debt burden tended to be related to public revenues or to export earnings.38 The same was true of budget and trade balances. Drawing on the records of the Service d’Études Financières of the Crédit Lyonnais, Flandreau and Zumer have suggested that debt service to revenue was the contemporary indicator that best measured the cred￾itworthiness of borrowers.39 However, for a number of reasons we chose to stick to the more traditional debt to revenue ratio. First, in con￾temporary statistical publications, the overall debt burden was far more frequently given, and was also, it seems, less frequently subject to revi￾sions. Secondly, as the debt service itself is determined by the interest rate, it is questionable whether it should be used as an independent vari￾able to estimate the interest rate. Nevertheless, we can also work with debt service data for a far larger number of countries than previous stud￾ies and will show that our key findings do not depend on the choice of a particular fiscal measure. Another indicator watched by contemporaries was the budget deficit to revenue ratio. As Cain and Hopkins have argued, the principles of “Gladstonian finance”—which aimed at budget surpluses during peace- sources tell is that of a market driven not so much by short-term economic information, but by knowledge of long-term structural trends supplemented by short-term political news from which investors apparently inferred fiscal and monetary policy changes. 37 Fenn’s Compendium is probably the best overall source for country-risk indicators. Re￾vised editions of Fenn’s Compendium were published in 1883, 1889, 1893, and 1898. Unfortu￾nately, the series was then discontinued, apparently because the main contributor, Robert Nash, emigrated to Australia. 38 For a further discussion of contemporary risk analysis see Flandreau and Zumer, Making of Global Finance. 39 Flandreau and Zumer, Making of Global Finance, p. 31