It is paradoxical that while recent public interest in Latin American debt problems ominously is waning, historians are producing pathbreaking contributions to the understanding of these important though insufficiently studied issues. Thomas Millington’s book joins just a handful of serious works that analyze the complex and often baffling measures of public domestic debt funding in nineteenth-century Latin America. He achieves this difficult task with clear exposition and relevant research. He correctly points out that internal debt policies lie at the root of post-independence political conflicts as well as economic, social, and national formation. Moreover, foreign debt arrangements and defaults cannot be fully understood without being linked to internal debt issues.
Millington’s initial contribution is to place the debt-funding problems of Bolivia after 1825 in theoretical and historical perspective. He provides an adequate, relevant overview of debates about public debt repercussions in late colonial Spanish America, Spain, and rural societies, such as Bolivia. At the outset, Millington establishes the distinction between the principles of floating (short-term) public debt and consolidated debt. He argues that the latter is a more efficient mechanism to create domestic long-term financial resources for the state, as well as to provide a more democratic and participatory leverage to the general citizenry.
This valid explanatory framework is used to survey how different governments and political leaders in Bolivia, especially between 1825 and 1828, aligned themselves with either a floating debt policy or a consolidated debt policy. Thus Antonio José de Sucre and Facundo Infante favored floating loans and landowning interests, while minister Juan Bernabé de Madero devised a sinking fund system to promote local private savings. To extrapolate this debt policy scheme beyond the early national period, however, seems perilous. To consider that vales de consolidatión were a type of commercial (that is, transferable) paper, and therefore a version of short-term or floating public debt instruments, is to underestimate the gradual sophistication of long- and medium-term internal debt mechanisms in countries like Peru by the 1850s.
Perpetual annuities, like those issued by the Bank of England, rested on the hard-won acceptance of various short-term as well as long-term public instruments among the citizenry. It is a Latin American tragedy that domestic public short- and long-term debt instruments both gained only limited confidence from the public. The conversion of these domestic claims to foreign debt claims, along with corruption, was the main obstacle to improved domestic public funding. And this obstacle lies at the root of the continuing preference among Latin American states for foreign-held debt.
Scholars of Latin America doing research on its early nineteenth-century political, economic, social, and financial aspects will profit handsomely from Millington’s useful contributions to the understanding of murky public debt enigmas. Also, students interested in understanding nineteenth-century Latin American history beyond clichés and overly theoretical approaches would gain useful knowledge by reading this book.
