Gresham on horseback: the monetary roots of Spanish American political fragmentation in the nineteenth century

Abstract

The economics literature is full of studies of monetary or currency unions ranging from the sterling area before 1914, to the Bretton Woods system later and the euro zone within the European Monetary Union today. A quick search in Econ-Lit returned over 10,000 entries among abstracts and subjects, and a good one thousand titles. None was found for currency or monetary disunion, or fragmentation. Yet, the monetary disintegration that occurred in Spanish America over the period 1800-25, along with the fiscal and political fragmentation that followed the implosion of the Spanish Empire, is one of the most prominent examples of such an economic phenomenon. Moreover, the macroeconomic consequences in the long run for the performance of nineteenth century Latin American economies makes the fragmentation of such an extended monetary union a case well worthy of consideration