Sovereign debt and European interventions in nineteenth century Latin America

During the nineteenth century, sovereign debt defaults led to active intervention by governments from creditor countries to defend the claims of their bondholders. In certain cases, these interventions triggered the imposition of foreign control through commissions formed by States' and bondholders' representatives. This chapter investigates why foreign control episodes were mostly absent in Latin America despite its recurrent debt crises. We focus on two case studies from the mid-nineteen century, Mexico and Peru, and analyze how public and private control was pursued to secure debt repayment and the development of international trade. Even though the British government was reluctant to intervene, major merchant banks could heavily influence the fiscal and commercial policies of countries with European commercial relations. However, the resumption of debt service in the aftermath of a default depended upon a complex set of political and economic factors.