Monetary Reforms of 1931 and 1932 in México: Criticism and lack of understanding

Abstract

For a long time there was no interest among researchers on the topic of the monetary reforms Mexico enacted in 1931 and 1932. Recently the interest on that topic has reborn, but the papers written are even faultier. The main although not the only shortcoming in that literature, is the lack of understanding on how a monetary standard should work and, in general, about monetary theory. Two were the problems that lead to the monetary reform of 1931: a) depreciation of the silver coins in relation to gold coins, and b) devaluation of gold coins in relation to US dollar. The solution to the depreciation of silver coins was simple: demonetization of gold. However, the solution attempted in regards devaluation of the Mexican currency with respect US dollar resulted in failure. After reappointment in the Finance Ministry, Alberto Pani offered the final solution to the problem created.