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This paper studies interwar experience with external debt and default. It begins with a description of the contours of international borrowing and lending in the 1920s. We then use some empirical models from recent literature on the 1970s to describe the interwar data. Macroeconomic variables for over 20 countries are related to cross-section variations in borrowing and debt during the period from the end of the 1920s to 1938. The paper then considers the incidence and correlates of sovereign default for 1934–1938, using regression to determine the association between standard measures of economic structure and performance and subsequent interruptions to debt service. Such variables as the magnitude of the debt burden, the deterioration of the terms of trade during the Great Depression, and the stance of monetary and fiscal policies provide a remarkably accurate explanation of the incidence of default. We …