External debt problems, like wars, are common occurrences in a broader historical perspective. They occur every thirty or fifty years, much in the same circumstances. And when they do occur they put at odds the bond holder and the debtor and leave fundamental imprints on history. Hitler's Germany or Latin America's import substitution policy were the outgrowth of the last world debt crisis. Today Latin America is once again in a debt crisis and the debate confronts those who call for dramatic action, including even repudiation, and others who suggest the problem is minor and can be solved by time, adjustment and some tying-over finance-the 'muddling through' strategy. In fact not much has changed from the debt crisis of the 1930s: today, the International Monetary Fund [IMF] plays the role of the League of Nations Financial Committee, the Bank Steering Committee replaces the Foreign Bank Holders Protective Council, and Bill Rhodes plays the role of Sir Otto Niemeyer. Surprisingly, there was very little memory of debt history when the lending splurge of the 1970s got underway. Few remembered the terrible reputation of the US in European credit markets following the defaults of the early 1840s which history relates as follows: 'The vitriolic London Times indiscriminately denounced all Americans; and prophesied that the American name would not recover for half-acentury from the slur which had been cast upon it by the temporary or complete failure of some of the states to pay their debts.'1 But closer to our topic virtually all Latin American states defaulted on their external debt in the 1920s and 1930s. Looking back over Latin credit history, Winkler wrote in 1933: 'The fiscal history in Latin America, that stretch of territory lying south of the Rio Grande and housing about 110,000,000 inhabitants of various races and origins, is replete with instances of government defaults. Borrowing and default follow each other with almost perfect regularity. When payment is resumed, the past is easily forgotten and a new borrowing orgy ensues. This process started at the beginning of the past century and has continued down to the present day. It has taught us nothing.' 2