Haircut is a relatively recent term, considering that Romans began to cut the hair about A.U.C. 454, when Ticinius Maenas introduced Barbers from Sicily: (Etymonline)
- also hair-cut, 1887, "act of cutting the hair," from hair (n.) + cut (n.). As "style of wearing the hair," by 1890. (Ngram haircut)
The term haircut is also used in finance with the following meaning:
- In debt restructuring agreements, a haircut is a percentage reduction of the amount that will be repaid to creditors. For example, when Argentina defaulted on its bonds in 2001 it agreed restructuring terms with over 90 per cent of its creditors which involved haircuts of between 45 per cent and 75 per cent. (lexicon.ft.com)
According to Wikipedia:
- Haircuts have been used for almost 200 years in American commercial finance.
- But this seems to refer to the practice and not to the term of which, as Ngram shows, there is no evidence before 1880.
The expression is unfortunately becoming more and more common given the precarious financial conditions of a number of states around the world, among which Greece, probably, stands out:
- Greek Debt Deal Will Force Bondholders To Take 'Voluntary' 70% Haircut.
1) What's the origin of the term? Why is the cut of hair used as a metaphor of a debt reduction?
2) When was the term first used metaphorically with reference to debts?