Doing Monetary Economics in the South: Subercaseaux on Paper Money

Abstract

In 1912 Guillermo Subercaseaux (1872-1959), a professor of economics at the University of Chile, published El Papel Moneda, translated into French in 1920 as Le Papier-Monnaie. Subercaseaux’s book was reviewed in North-American and European economic journals, and was regarded by Knut Wicksell and other influential economists at the beginning of the 20th century as the most comprehensive investigation in the history and theory of paper-money. The readership commanded by his book would grant Subercaseaux an invitation to contribute the entry on 'paper-money' to the Encyclopaedia of Social Sciences, edited by E.R. Seligman in the early 1930s. Moreover, he published a number of articles on the topic in international journals. Our paper provides a full treatment of Subercaseaux’s interpretation of the working of paper-money economies, including his approach to the determination of the exchange rate of depreciated currencies and his views about the problem posed by the existence of a positive value of inconvertible paper-money. We investigate how his framework was related to classic contributions by Adolph Wagner (1868), Carlo Ferraris (1879) and Wesley C. Mitchell (1903, 1908) on Russian, Austrian/Italian and North-American paper-money experiences respectively. Subercaseaux’s interest on the topic was not purely theoretical. He acted as minister of finance and president of the Central Bank of Chile on different occasions. In this regard, we also deal with the background formed by the South-American debates between 'papeleros' and 'oreros' (paper-money and gold-standard supporters, respectively) at the time. From a broad perspective, our paper offers an investigation of an aspect of the international transmission of economic ideas, this time from the periphery to the centre.