The Making of Latin-American Neo-Metalista Monetary Policy in the Twenties: The Case of the Andean Countries Visited by E. W. Kemmerer

We analyze the link between Kemmerer’s reforms as Money Doctor and the orientation of monetary policy in Latin America during the ninety twenties. Until the creation of central banks the debates on monetary policy in Latin America turned around the opposition between metalistas and papelistas. While the former defended anti-devaluating policies and advocated for the adoption of the Gold Standard, the latter were inclined to use fiat money and often took pro-inflation policies. These positions reflect the interests of different groups of the ruling classes, in a context of uneven development of monetary production economies. After the First World War, Kemmerer’s reforms took place in an environment characterized by a broader improvement of monetary production economies. Along with his complicity with the interests of dominant groups and foreign capitalists in these primary-export economies, monetary policies proposed by Kemmerer assumed the fundamental role of credit circulation and central banking regulation. We show that Kemmerer’s experiences illustrate what we called the neo-metalista monetary policy, which dominated Latin America in the ninety twenties. We privilege the case of Andean countries (Bolivia, Chile, Colombia, Ecuador, and Peru), whose monetary history was marked by the Kemmerer reforms during the establishment of the first central banks of the whole region.