Capital Fictions: The Literature of Latin America's Export Age

Chapter 4: Money II: Bankruptcy and Decadence

Ericka Beckman Capital Fictions Final proofs for press December 6, 2012, Page 121121 121 Chapter 4 MONEY II Bankruptcy and Decadence Without exception, international debts and loans have summoned the specter of bankruptcy across the continent. —César Zumeta, El continente enfermo A Tale of a Ghost Bank I begin this chapter by telling the story of a ghost that ran across the Colombian nation at the end of nineteenth century: the ghost of Colombia’s First National Bank, el Banco Nacional. By 1894, this National Bank had become virtually insolvent, emitting far more paper currency than it could secure in metal reserves. When the National Bank’s untenable financial situation became known, the country’s small business elite demanded its liquidation. And so, in 1894, a law was passed to liquidate the bank. But it kept operating , and another law was passed to liquidate it. Finally, on January 1, 1896, the Banco Nacional officially ceased to exist. But then, and this is where the ghost story begins, the bank continued to print and circulate money. As related by economic historians Alejandro López Mejía and Adolfo Meisel Roca, in the years following the bank’s liquidation , the institution printed an additional 2,999,000 pesos in bank notes, “in spite of the fact that it no longer existed” (1990, 75). The prospect of a bank that doesn’t exist printing millions of pesos in paper notes opens up a host of ontological questions: How can a financial institution continue to operate “in spite of the fact that it no longer existed”? Alternately, how can an institution that prints a precise quantity of banknotes, $2,999,000 to beckman.indd 121 12/6/2012 8:54:37 PM Ericka Beckman Capital Fictions Final proofs for press December 6, 2012, Page 122 Money II 122 Eric Cap Fina Dec be exact, be said not to exist? But the story doesn’t end here. The printing went on well beyond the $2,999,000 to reach many more millions in pesos, in what became the worst crisis of hyperinflation in Colombian history. While remaining in a state of nonexistence, the undead bank printed and printed paper notes until it ran out of paper. And so at one point, in 1899, during the infamous War of the Thousand Days, the bank began to print peso notes on paper that had been designated for chocolate wrappers: one side of the note read “República de Colombia,” with the denomination in pesos, and on the other, “Chaves Chocolates” (Bergquist 1986, 200). (The reader might refer to chapter 1 to see an 1880s advertisement for Chaves Chocolates.) It is not difficult to grasp the problems this banknote causes: hyperinflated to the point of worthlessness, and with the unwilling endorsement by the chocolate company, it cannot be taken seriously, not even by itself. But this financial situation was no laughing matter, as runaway inflation, coupled with the destruction of civil war and crippling foreign debt, left Colombia in total financial ruin at the beginning of the twentieth century. The Conservatives who won the War of the Thousand Days decided to put an end to this money madness once and for all. Not by liquidating the bank: this had been done before, and not made any difference. Instead, the new government ordered the destruction of the printing presses at the national mint. The money monster, frequently referred to as la bestia negra (the black beast) in anti–paper-money tracts of the era, was finally dead.1 Or so it seemed. Because everyone knows you can’t burn a ghost. Money is at bottom a system of representation built on belief and trust. But in the financial anecdote I’ve been recounting, these representational qualities are stretched to an extreme, to the point where the banknote itself becomes unbelievable, and hence unviable as an instrument of exchange. As indicated in the ghost tale of the undead bank and its hyperinflated paper children, belief comes under such strain that it is difficult, if not impossible to repair. Elements of this breakdown in belief are already present in the chocolate wrapper cum banknote. As far as I have been able to gather, no beckman.indd 122 12/6/2012 8:54:37 PM Ericka Beckman Capital Fictions Final proofs for press December 6, 2012, Page 123 Money II 123 specimen of this note remains; it is just...