Bartolome Mitre's presidential inauguration in 1862, under the 1853/60 constitution, marked the beginning of a new era in Argentina. During the three following constitutional periods (1862-1880), under the presidencies of Mitre, Domingo F. Sarmiento, and Nicolas Avellaneda, a rm process of creating institutions paved the way for the economic success of the subsequent 60 years. In these years the country's fundamental legal and public institutions were established. And, an astonishing rate of growth, with an annual average of at least 5 per cent, made Argentina one of the richest nations in the world by the beginning of the twentieth century.
A substantial share of the economic expansion of these years came from foreign investment. Foreign capitals, especially British, responded to Argentina's stimuli.10 Interestingly, a large amount of these British funds came from small individual investors who bought Argentine bonds even when they had little knowledge about the country. Compared to the financial scenario of the previous years, this acute change in the willingness of the lenders to supply funds to Argentina seems to reflect a substantial increase in the perceived commitment by the government to honor its agreements.In 1857 the government of the province of Buenos Aires decided to commence the repayment on the defaulted loan of 1824. Repaying this English loan was an important measure to removed one of the major obstacles to new investments.In October 1862, the federal government undertook the debts of the Confederation. These were bonds issued in 1850 and 1860, when the country was not yet reunited. A year later, in November 1863, a general law governing the public debt was passed. A Caja de Amortizacion was set up, and all debts were declared to be a charge on all revenues of the state.in early 1889, the Argentine government decided to pay o in paper money part of the internal debt denominated in gold. … this decision was tantamount to a partial default," and both foreign and domestic investors became reluctant to absorb more Argentine government debt…In fact, by 1891 almost all municipal and provincial foreign debts were technically in default … Nonetheless, the administation of Carlos Pellegrini avoided an across-the-board default on the national government's foreign debt by receiving a loan from the Bank of England in January of 1891.
Following the Baring crisis (los Baring no consiguieron en Londres arreglar un préstamo para financiar el agua corriente en Buenos Aires), the government adopted a rigid commitment device; namely,a “hard" gold standard rule: The law No. 3871 of 1899, established that the nation should convert the whole of the then existing duciary issue of $ 293,018,258.44 legal tender into national gold currency at the fixed rate of one legal tender peso for 44 cents gold. This institutional mechanism proved to be very successful; convertibility, which lasted from 1899 until the outbreak of the First World War, ushered an era of rapid economic growth for the country, with large inflows of capital and labor from overseas