Hostname: page-component-76fb5796d-5g6vh Total loading time: 0 Render date: 2024-04-25T18:08:42.758Z Has data issue: false hasContentIssue false
  • English
  • Français

War and Foreign Debt Settlement in Early Republican Spanish America*

Published online by Cambridge University Press:  13 January 2010

Richard Sicotte  and
Catalina Vizcarra
Richard Sicotte
Affiliation:
University of Vermonta
Catalina Vizcarra
Affiliation:
University of Vermonta
Get access Rights & Permissions [Opens in a new window]

Abstract

Upon gaining independence, most Spanish American countries had accumulated a substantial external debt, and by 1829 each defaulted. It took decades for these countries to settle their debts and even longer for them to access new loans. We argue that a major factor influencing the pattern of debt service was the incidence of war. War created incentives for governments to channel scarce resources to «emergency» spending and domestic debt service, rather than to the repayment of the foreign debt. Interestingly, we detect an asymmetry between countries long in good standing with creditors and those that had only recently settled. Countries that had established a longer record of continuous debt service were far less likely to default in times of war. We also find that international wars were responsible for the largest effects.

Resumen

En este artículo sugerimos que un factor que determinò en buena medida la trayectoria del pago de la deuda externa de los países hispanoamericanos en las primeras décadas de su vida independiente, fue la enorme incidencia de conflictos armados en la región. Las frecuentes guerras crearon incentives para que éstos dirigieran sus escasos recursos a gastos militares y al servicio de la deuda interna en vez de a la deuda exterior. Un resultado interesante es la asimetría que se registra entre los países que llegaron a renegociar su deuda exitosamente y mantuvieron su servicio por largos períodos de tiempo, y la de aquellos que no tuvieron mayor éxito en sus renegociaciones. En el caso de estos Ultimos, las guerras registraron efectos negativos mayores. También demostramos que las guerras internacionales tuvieron los efectos más dramáticos.

Keywords

Spanish Americasovereign debtdefaultwarhispanoaméricadeuda externadeuda impagadaguerra
Type
Articles/Artículos
Information
Revista de Historia Economica - Journal of Iberian and Latin American Economic History , Volume 27 , Issue 2 , Otoño 2009 , pp. 247 - 289
Copyright
Copyright © Instituto Figuerola de Historia y Ciencias Sociales, Universidad Carlos III de Madrid 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

BIBLIOGRAPHY

Amaral, S. (1995): «La deuda pública de Buenos Aires, 1800–1850», in Liehr, R., La deuda pública en América Latina en perspectiva histórica, Frankfurt: Iberoamericana.Google Scholar
Bates, R.; Coatsworth, J., and Williamson, J. (2007): «Lost Decades: Lessons from Post-Independence Latin America for Today's Africa». Journal of Economic History, 67 (4), pp. 917–43.CrossRefGoogle Scholar
Bazant, J. (1968): Historia de la deuda exterior de México, 1823–1946, México: El Colegio de México.CrossRefGoogle Scholar
Berglund, S. (1995): «The Public Debt of Venezuela: Causes and Effects, 1830–1870», in Liehr, R., La deuda pública en America Latina en perspectiva histórica, Frankfurt: Iberoamericana.Google Scholar
Bergquist, C. (1978): Coffee and Conflict in Colombia, 1886–1910, Durham, NC: Duke University Press.Google Scholar
Bethell, L. (ed.) (1987): Spanish America after Independence, 1820–1870, Cambridge: Cambridge University Press.Google Scholar
Borchard, E. (1951): State Insolvency and Foreign Bondholders. General Principles, vol. 1, New Haven: Yale University.Google Scholar
Bulow, J., and Rogoff, K. (1989): «Sovereign Debt: Is to Forgive to Forget?». American Economic Review, 79 (1), pp. 43–50.Google Scholar
Burgin, M. (1946): The Economic Aspects of Argentine Federalism, 1820–1852, Cambridge: Harvard University Press.CrossRefGoogle Scholar
Carmagnani, M. (1983): «Finanzas y Estado en México, 1820–1880». Ibero-amerikanisches Archiv, 9, pp. 279–314.Google Scholar
Centeno, M. A. (2002): Blood and Debt: War and the Nation-State in Latin America, University Park, PA: Pennsylvania State University Press.Google Scholar
Coatsworth, J. (2008): «Inequality, Institutions and Economic Growth in Latin America». Journal of Latin American Studies, 40, pp. 545–569.CrossRefGoogle Scholar
Coatsworth, J. (1866): Summary Review of the Proceedings of the Committee of Spanish American Bondholders from the Commencement, London: Richard Clay.Google Scholar
Cortés-Conde, R. (1989): Dinero, Deuda y Crisis: Evolución Fiscal y Monetaria en la Argentina, 1862–1890, Buenos Aires: Editorial Sudamericana.Google Scholar
Costeloe, M. (2003): Bonds and Bondholders: British Investors and Mexico's Foreign Debt, 1824–1888, Westport, CT: Praeger.Google Scholar
Dawson, F. (1990): The First Latin American Debt Crisis, New Haven: Yale University Press.CrossRefGoogle Scholar
Deas, M. (1982): «The Fiscal Problems of Nineteenth-Century Colombia». Journal of Latin American Studies, 14, pp. 287–328.CrossRefGoogle Scholar
Eaton, J., and Gersovitz, M. (1996): «Debt with Potential Repudiation: Theoretical and Empirical Analysis». Review of Economic Studies 48, pp. 239–309.Google Scholar
Eastwick, E. (1868): Venezuela: Sketches of Life in a South American Republic; with the History of the Loan of 1864, London: Chapman and Hall.Google Scholar
Fenn, C.: Compendium of the English and Foreign Funds, London: Effingham Wilson, various issues.Google Scholar
Flandreau, M., and Flores, J. (2007): «Bonds and Brands: Lessons from the 1820s». Unpublished manuscript.Google Scholar
Flandreau, M., and Zumer, F. (2004): The Making of Global Finance, 1880–1913, Paris: OECD.Google Scholar
Fowler, W. (2000): «Civil Conflict in Independent Mexico, 1821–1857: An Overview», in Earle, R. (ed.), Rumours of Wars: Civil Conflicts in Nineteenth-Century Latin America, London: University of London.Google Scholar
Gleditsch, K. (2004): «A Revised List of Wars Between and Within Independent States, 1816–2002». International Interactions, 30, pp. 231–262.CrossRefGoogle Scholar
Gootenberg, P. (1996): «Paying for Caudillos: The Politics of Emergency Finance in Peru, 1820–1845», in Peloso, V. and Tenenbaum, B. (eds.), Liberals, Politics and Power, Athens, GA: University of Georgia Press.Google Scholar
Great Britain (1847): Correspondence between Great Britain and Foreign Powers and Communications from the British Government to Claimants relating to Loans Made by British Subjects, 1823–1847, Sessional Papers, London.Google Scholar
Halperin, D. T. (1982): Guerra y finanzas en los orígenes del Estado argentino, Buenos Aires: Editorial de Belgrano.Google Scholar
Irigoin, M. A. (2000): Finance, Politics and Economics in Buenos Aires, 1820s to 1860s, Ph. D. thesis, University of London.Google Scholar
Jaramillo, J.; Maisel, A., and Urrutia, M. (2001): «Continuities and Discontinuities in the Fiscal and Monetary Institutions of New Granada, 1783–1850», in Bordo, M. and Cortés-Conde, R. (eds.), Transferring Wealth and Power from the Old to the New World, Cambridge: Cambridge University Press.Google Scholar
Liehr, R. (1989): «La deuda exterior de la Gran Colombia frente a Gran Bretaña, 1820–1860», in Liehr, R. (ed.), América Latina en la época de Simón Bolívar, Berlin: Colloquium Verlag.Google Scholar
Mamalakis, M. (1978): Historical Statistics of Chile, Westport, CT: Greenwood Press.Google Scholar
Marichal, C. (1989): A Century of Debt Crises in Latin America, Princeton: Princeton University Press.Google Scholar
Marichal, C., and Carmagnani, M. (2001): «Mexico: From Colonial Fiscal Regime to Liberal Financial Order», in Bordo, M. and Cortés-Conde, R. (eds.), Transferring Wealth and Power from the Old to the New World, Cambridge: Cambridge University Press.Google Scholar
Mitchener, K., and Weidenmier, M. (2005): «Supersanctions and Sovereign Debt Repayment». NBER Working Paper 11472.CrossRefGoogle Scholar
Neal, L. (1998): «The Financial Crisis of 1825 and the Restructuring of the British Financial System», St. Louis: Federal Reserve Bank of St. Louis Review.CrossRefGoogle Scholar
North, D., and Weingast, B. (1989): «Constitutions and Commitment». Journal of Economic History, 49, pp. 803–832.CrossRefGoogle Scholar
North, D.; Summerhill, W., and Weingast, B. (2000): «Order, Disorder and Economic Change: Latin America versus North America», in de Mesquita, B. B. and Root, H. (eds.), Governing for Prosperity, New Haven: Yale University Press.Google Scholar
Platt, D. C. M. (1968): Finance, Trade and Politics in British Foreign Policy, 1815–1914, Oxford: Clarendon Press.Google Scholar
Platt, D. C. M. (1983): «Foreign Finance in Argentina for the First Half-Century of Independence». Journal of Latin American Studies, 15, pp. 23–47.CrossRefGoogle Scholar
Quiroz, A. (1995): «Public Debt and the Domestic Financial Structure in Peru, 1850–1914», in Liehr, R. (ed.), La deuda pública en América Latina en perspectiva histórica, Frankfurt: Iberoamericana.Google Scholar
Quiroz, A. (1987): La deuda defraudada. Consolidación de 1850 y dominio económico en el Perú, Lima: Instituto Nacional de Cultura.Google Scholar
Rippy, J. F. (1959): British Investments in Latin America, 1822–1949, Minneapolis: University of Minnesota Press.CrossRefGoogle Scholar
Rodríguez, L. (1985): The Search for Public Policy: Regional Politics and Government Finances in Ecuador, 1830–1940, Berkeley: University of California Press.Google Scholar
Safford, F. (1992): «The Problem of Political Order in Early Republican Spanish America». Journal of Latin American Studies, 24, pp. 83–97.CrossRefGoogle Scholar
Safford, F. (2000): «Reflections on the Internal Wars in Nineteenth-Century Latin America», in Earle, R. (ed.), Rumours of Wars: Civil Conflicts in Nineteenth-Century Latin America, London: University of London.Google Scholar
Scheina, R. (2003): Latin America's Wars: The Age of the Caudillo, 1791–1899, Dulles, VA: Brassey's.Google Scholar
Singer, J. D., and Small, M. (1995): Correlates of War Project: International and Civil War Data, 1816–1992, Ann Arbor: ICPSR.Google Scholar
Stevens, D. (1991): Origins of Instability in Early Republican Mexico, Durham: Duke University Press.Google Scholar
Summerhill, W. (2008): «Sovereign Borrowing in Imperial Brazil». Unpublished Manuscript.Google Scholar
Tantalean Arbulu, J. (1983): Política económico-financiera y la formación del Estado, Lima: CEDEP.Google Scholar
Tenenbaum, B. (1995): «Mexico's Money Market and the Internal Debt, 1821–1855», in Liehr, R. (ed.), La deuda pública en América Latina en perspectiva histórica, Frankfurt: Iberoamericana.Google Scholar
Tenenbaum, B. (1986): The Politics of Penury: Debts and Taxes in Mexico, 1821–1856, Alburquerque: University of New Mexico Press.Google Scholar
Teran, E. (1896): Informe al Jefe Supremo General Eloy Alfaro sobre la deuda anglo-ecuatoriana, Quito: Imprenta Nacional.Google Scholar
Tomz, M. (2007): Reputation and International Cooperation. Sovereign Debt across Three Centuries, Princeton: Princeton University Press.Google Scholar
Vizcarra, C. (2009): «Guano, Credible Commitments, and Sovereign Debt Repayment in Nineteenth-Century Peru», The Journal of Economic History, 69 (2), pp. 358–387.CrossRefGoogle Scholar