- -. 1944c. New monetary and banking measures in Paraguay. Federal Reserve Bulletin (January):1-11.
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- -. 1945.Monetary developments in Latin America. FederalReserve Bulletin (June): 1-14.
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- -. 1950. Monetary problems of an export economy: The Cuban experience,1914-1947. Cambridge: Harvard University Press.
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- -. 1976. America Latina: Relaciondeprecios del intercambio.Santiago de Chile: United Nations.
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- . 1943. Anuario geogrdfico Argentino, Suplemento 1942. Buenos Aires.
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- . 1944a. Fiscal policy and the budget. In Economic problems of Latin America, edited by Seymour E. Harris. New York: McGrawHill. -. 19446. Cuba: Sugar and currency. In Economic problems of Latin America, edited by Seymour E. Harris. New York: McGrawHill.
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- . 1964. El financiamento externo de America Latina. New York: United Nations.
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- . 1971.Investmentsof United States capital in Latin America. Port Washington, New York: Kennikat Press.
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- . 1978. Brazilian public foreign debt policy, 1931-1943.Brazilian Economic Studies4:105-141.
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- . 1978. Serieshistoricasdel crecimientode America Latina. Santiago de Chile: United Nations.
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- . 1980. O Brasil e a economia mundial, 1929-1949. Rio de Janeiro. Mimeo.
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- . 1980a. A America Latina em depressao, 1929-1939. Pesquisa e Planejamento Economico 10:351-382. 19806. Exchange rates and terms of trade in the Argentine Republic, 1913-1976. Yale Economic Growth Center Discussion Paper no. 341.
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- As the author recalls, two major blows were received from abroad by the Latin American economies during the 1930s. On the one hand, there was the decline in demand for their exports due to both recession and protectionist policies at the center, and on the other, there was the great increase in the burden of servicing the foreign debt, due as much to the rise in the real rate of interest in certain years, as to the fact that it was virtually impossible to negotiate new loans with which to make the usual rollover. One of the most interesting results derived from the drop in Latin American exports was that the countries which the author calls "active" abandoned the system of fixed exchange rates.
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Bacha, Edmar L., and Carlos F. Diaz Alejandro. 1981. Financial markets: A view from the semi-periphery. Yale Economic Growth Center Discussion Paper no. 367. Paper presented at the CIEPLAN seminar on External Financial Relations and Their Impact on the Latin American Economies, March 1981.
- Banco Central de la Republica Argentina. 1972. La creation del banco centraly laexperiencia monetaria Argentinaentre losanos1935-1943.2 vols. Buenos Aires.
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- Banco de la Republica. 1971. Informe anual delgerentea lajuntadirectiva, 1970-1971. Bogota.
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- Bolton, Sir George. 1972. Where critics are as wrong as Keynes was. The Banker 122:1385-1388.
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- But perhaps even a greater one was the collapse of internationalfinancial markets. In this respect, it should be remembered that highly indebted countries resemble banks, in the sense that they can only pay important Stories of the 1930s for the 1980s percentages of their international obligations on time if those that they settle can be replaced by others. If the possibility of rollover is closed to them, so is the possibility to pay on time. This should be kept in mind by those who take out credit, but even more so by those who offer it. Lenders actually have a two-fold responsibility: to maintain the possibility of rollover and, at the same time, not to induce prospective debtors— as lenders paradoxically often do—to take more credit than can realistically be paid or replaced at maturity.
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- But, apart from the peculiarities of each country, the general economic framework of the 1980s is radically different from the 1930s. This is true inside as well as outside Latin America. Take, for example, the case of international credit. Financial markets, especially the Euromarket, are extremely active and liquid nowadays. The majority of Latin American countries have been able to increase the amount of their foreign debt or, at least, to maintain it. It would be hard to find cases of countries that have to make net payments on foreign credit. Besides, interest on foreign debt, taken in real terms, has tended to be low during the last years and, at times, has turned out negative. Only during short periods, like some recent ones, has it been necessary to pay high real interest rates.
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- Cardoso, Eliana A. 1979. Inflation, growth and the real exchange rate: Essays on economic history in Brazil. Ph.D. diss., Massachusetts Institute of Technology.
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- CEPAL. 1956. Document E/CN.12/429/Add.4. Santiago de Chile.
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- Comite Nacional de Geografia. 1941. Anuario geogrdfico Argentino. Buenos Aires.
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- Cumberland, W. W. 1932. Investments and national policy of the United States in Latin America. American Economic Review 22:152-173.
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- Deaver, John V. 1970. The Chilean inflation and the demand for money.
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- Diaz Alejandro, Carlos F. 1970. Essays on the economic history of the Argentine Republic. New Haven: Yale University Press.
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- Direction General de Estadistica. Ministerio de Hacienda. 1959. Resumenes estadisticos seleccionados. Havana.
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- Diz, Adolfo Cesar. 1970. Money and prices in Argentina, 1935-1962. In Varietiesof monetary experience,edited by D. Meiselman. Chicago: University of Chicago Press.
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- Eaton, Jonathan, and Mark Gersovitz. 1980. Poor country borrowing in Carlos F. Diaz Alejandro private financial markets and the repudiation issue. Princeton Research Program in Development Studies Discussion Paper 94.
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- European Cement Association. 1967. The world cement market in figures. Paris.
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Finch, David. 1951-1952. Investment service of underdeveloped countries. InternationalMonetary Fund Staff Papers2:60-86.
- Fishlow, Albert. 1972. Origins and consequences of import substitution in Brazil. In Internationaleconomicsand development, edited by Luis de Marco. New York: Academic Press.
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- Friedman, Milton, and Anna J. Schwartz. 1963.A monetaryhistoryofthe United States, 1867-1960. Princeton: Princeton University Press.
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- Haberler, Gottfried. 1976. The world economy, money, and the Great Depression, 1919-1939. Washington, D.C.: American Enterprise Institute for Public Policy Research.
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- Haddad, Claudio L. S. 1978. Crescimentodo producto real no Brasil, 1900-1947. Rio de Janeiro: Editora da Fundacao Getulio Vargas.
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- How does the fiscal and monetary picture of the 1980s compare to the 1930s? A half century ago it made sense to battle recessionary forces of external origin with policies of a Keynesian cut. Today, the situation is entirely different in most countries. There is demand-pulled inflation stemming from substantial fiscal deficits financed with net credit from the central bank and with resources from abroad.
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- In connection with the Latin American foreign debt in the 1930s, it is possible to say—as does the author—that the problem stemmed much more from the external situation than from domestic difficulties. The rise in the real burden of servicing the debt was doubtless a serious matter.
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- In discussing the exchange measures taken in the 1930s by active countries, a distinction should be made between the effects of outright devaluation and of establishing exchange controls, with or without devaluation.
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- In his final reflections, Diaz Alejandro states, with good reason, that the policies that made sense in the 1930s were no longer desirable after World War II.
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- In some cases, such deficits began precisely at the wrong time, during years in which international markets were booming and the demand for exports was enormous. It is hard to explain how this could happen. But, whatever the reason was, the outcome has been unfortunate. Inflation, which at the start was only demand-pulled, built itself into the economy and became cost-pushed as well—an element that did not exist in the 1930s and which makes the return to stability much more difficult.
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In Varieties of monetaryexperience, edited by D. Meiselman. Chicago: University of Chicago Press, de Paiva Abreu, Marcelo. 1974.A Missao Niemeyer. RevistadeAdministracdode Empresas 14:7-28.
- Inter-American Development Bank. 1980. Economic andsocialprogress in Latin America: 1979report. Washington, D.C. International Monetary Fund. 1980a. Balance of payments yearbook.
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International Monetary Fund Document RD-707. Washington, D.C. Stories of the 1930s for the 1980s . 1953. An international economicsystem. Chicago: University of Chicago Press.
- It is likely that the system of fixed exchange rates ceased to be the rule in the 1930s not so much because many were convinced of the comparative advantages of a more flexible system, but because it was practically unfeasible to maintain the previous parities with respect to gold. Some monetary authorities probably hoped to attain a new stability in exchange rates, if only at a different level than before and not necessarily in terms of gold, but in terms of a new standard that, in practice, became the U.S. dollar. Whatever the reasons or aspirations were when the currencies of active countries declined in value, something very important was expediently achieved to bring about a profound structural change in the economies of these countries. In so doing, the crisis, as Diaz Alejandro says, was absorbed with less negative impacts on both employment and growth.
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- It was not until the last years of the 1930s and the early 1940s when macroeconomic policies moved from compensatory to expansionary. The new theories of Keynes began to permeate Latin America and were cited as an endorsement for incurring fiscal deficits of a magnitude that would hardly have been approved by such an intelligent economist.
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- Lippmann, Walter. 1927. Vested rights and nationalism in Latin America. ForeignAffairs 5:353-364.
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- Millot, Julio, Carlos Silva, andLindor Silva. 1972.Eldesarrollo industrial del Uruguay. Montevideo: Universidad de la Republica.
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- Nacional Financiera. 1977. Statisticson the Mexican economy. Mexico D.F. Neuhaus, Paulo. 1975. Historiamonetariado Brasil,1900-1954. Rio de Janeiro: IBMEC.
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- Ocampo, Jose Antonio. Comentarios. 1980. Ensayossobrehistoria economica Colombiana. Bogota: FEDESARROLLO.
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- One might ask whether the lessons of the 1930s are appropriate for the 1980s. The answer surely is in the affirmative, but only in the general context that all experiences leave usable lessons for the future. The 1980s, however, find countries within Latin America in a wide variety of circumstances.
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- One more word about the then heterodox devaluations of the 1930s. Besides being responsible for a profound and desirable structural change in the economies of the active countries, the devaluations served as an antirecessionary element. By partially or totally offsetting the decline in domestic prices brought about by the drop in exports, devaluations caused real interest rates not to rise as much as they would have in certain years had such policies not been implemented.
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- Perez Lopez, Jorge F. 1977. An index of Cuban industrial output, 19301958. In QuantitativeLatin American studies:Methods and findings, edited by J. W. Wilkie and K. Ruddle. Los Angeles: UCLA Latin American Center Publications.
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- Polak, J. J. 1948. Depreciation to meet a situation of overinvestment.
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- Potash, Robert A. 1969. The army andpolitics inArgentina, 1928-1945. Stanford: Stanford University Press.
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- Salera, Virgil. 1941. Exchange control and the Argentine market. New York: Columbia University Press.
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- Silber, Simao. 1977. Analise da politica economica e do comportamento da economia Brasileira durante o periodo 1929-1939. In Formacdo economicado Brasil: A experiencia da industrializacdo, edited by F. R.
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- Some Latin American countries, especially the non-oil-producing ones, have received blows from abroad that are somehow equivalent to those of the 1930s;the difference being that, generally, the new problems are due much more to the rise in the price of oil imports than to the decline in the value of exports. Needless to say, for those Latin American countries that are oil producers, the present situation differs tremendously from that of a half century ago.
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- Stories of the 1930s for the 1980s Banco Central del Uruguay, n.d. Series estadisticas monetariasybancarias. Montevideo.
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- Suarez, Eduardo. 1977. Comentariosy recuerdos(1926-1946). Mexico D.F.: Editorial Porrua, S.A. Triffin, Robert. 1944a. Money and banking in Colombia. Washington, D.C.: Board of Governors of the Federal Reserve System. . 19446. Central banking and monetary management in Latin America. In Economicproblems of Latin America, edited by Seymour E. Harris. New York: McGraw-Hill.
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- The monetary and fiscal management of the 1930s is the object of a stimulating analysis on the part of Diaz Alejandro. The author points to the successes of the compensatory measures of active countries. One of the reasons for the success of these measures was that they were applied without excess, at least in the beginning. The annual increases in public spending and the money supply were within a range that today would correspond to rather conservative programs in most of Latin America.
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- The relative ease with which many Latin American countries have been able to increase their foreign debt during the last ten of fifteen years has determined that, contrary to the 1930s, international financial transactions, taken by themselves, now constitute a very important inflationary element.
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- The virtues of devaluation in the 1930s have already been discussed. Exchange controls are sometimes established to avoid capital flight. Naturally, for such controls to be effective, the monetary authority must succeed in making residents surrender all foreign exchange they receive for whatever reason. This assumes the existence of an extensive and costly administrative apparatus not only in the central bank, but also in commercial banks and in customs. Such an apparatus requires numerous and highly qualified personnel. They should be uncorruptible and always up-to-date on the prices of a wide variety of goods that are imported and exported. They must be familiar with the mechanisms for transferring funds and with the usual payment terms in foreign trade operations, as well as with the nature and conditions of international financial transactions.
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- There are also sharp differences with regard to the openness of the economy. Beginning in the 1930s, an increasingly protectionist trend has been observed in many Latin American countries, although there have Carlos F. Diaz Alejandro been signs of change in recent years. But in spite of these signs, the levels of protection prevailing in many countries would have been inconceivable a half century ago. This excessive protection has curbed the development of existing or potential export industries whose inputs of domestic origin are frequently very costly according to international standards. In this context, there seems to be a case for applying policies inverse to those of the 1930s, namely, less and not more protection.
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- U.S. Bureau of the Census. 1960. Historical statistics of the United States. Washington, D.C.: Government Printing Office.
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- Urquhart, M. C , and K. A. H. Buckley, eds. 1965.Historicalstatistics of Canada. Cambridge: Cambridge University Press.
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- Versiani and J. R. M. de Barros. Sao Paulo: Saraiva S.A. Solis, Leopoldo. 1970. La realidadeconomica Mexicana:Retrovision y perspectivas. Mexico D.F.: Siglo Veintiuno Editores.
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- Wallich, Henry C. 1943. The future of Latin American dollar bonds. American Economic Review 33:321-335.
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- Washington, D.C. . 19806. Internationalfinancialstatistics.Washington, D.C. Kemmerer, E. W. 1927. Economic advisory work for governments. American Economic Review 17:1-13.
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- Winkler, Max. 1932.Investments and national policy of the United States in Latin America. American Economic Review 22:144-152.
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- World Bank. 1980. World debt tables. Washington, D.C. Carlos F. Diaz Alejandro Comment Miguel Mancera The title of the document presented by Diaz Alejandro, "Stories of the 1930s for the 1980s," is in itself very appealing. Economic policies for the future are always based to a large extent on the experience of the past. In this sense, the review the author makes not only of the 1930s, but of the end of the 1920s and the beginning of the 1940s—along with occasional observations of other periods—proves most useful. The review of these conjunctures has the additional interest of referring to a time not experienced by the majority of today's population, including those who are now economists. However, it was a time which should be better known since the then prevailing circumstances spurred a significant advance in the science of economics and also, as Diaz Alejandro points out, a profound change in the economies of some Latin American countries.
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