No More Papers. We Need Sound Institutions! Monetary Debates in Colombia Before the Central Bank

This paper examines the theoretical arguments behind the debates about the architecture of the monetary system in Colombia between 1885 and 1922. After the turmoil of the cruelest civil war of Colombia’s history (1899–1902), the economy and, in particular, the monetary system was devastated. Since 1886 conservative governments have actively used and abused of paper-money issuing. The economic stabilization required a new monetary order, and any form of National Bank and non-metallic money was perceived as evil. Through the archives of the parliamentary debates (more than 25 proposals) and intellectual and political press, we reconstruct different positions and their theoretical arguments. We conclude Kemmerer’s definitive influence on the emergence of Colombia’s modern central bank helped solve a political economy problem. This allows us to say Kemmerer’s Mission has not definitive intellectual influence on monetary ideas but allowed for a political equilibrium of the political forces involved.