The fate of Mexican colonial coinage

by Brian R. Stickney

The Mexico City mint produced some 68,778,441 pesos worth of gold coin during the colonial period according to official statistics. The amount of silver was much higher, tallying 2,082,269,657 pesos. These figures are subdivided below into three chronological groups based on major design changes and associated alterations in the quality and/ or quantity of metal being used.

Coinage Production, Mexico City Mint By Year Group, Alloy Quality, Design Style (in pesos; one peso = eight reales)

(Source: Meek^{Meek, Wilbur T., The Exchange Media of Colonial Mexico, Colombia Univ., NY, 1948.} p. 51 as derived from Mexican mint reports (1935))

The decree establishing the mint in Mexico City and its operation (11 May 1535) provided for five denominations of silver coinage to include the one-quarter, one-half, one-, two-, and three-real coins. The crown directed that the silver alloy be eleven dineros, four grains (0.930 fine) with 67 reales being struck from each marco (eight ounces, 230 grams) of silver; essentially that used in Peninsular mints. Thus, a one real coin at full weight was 3.43 grams, gross, or 3.19 grams of pure silver. There was no provision for the striking of gold coins. By popular demand, the three-real denomination was quickly abandoned with the four- and eight-reales added.

Gold coinage was not authorized to be minted in the New World until issuance of a decree on 25 February 1675^{[text needed]} under the reign of Charles II. The law directed that gold coined in the Western Hemisphere mirror that of Spain, i.e. being 22 carats fine (0.916) with 68 escudos being struck from one marco of gold.

In Spain, the Austrian dynasty ended with Charles II, replaced by the house of Bourbon after the War of Spanish Succession. Many policy changes were instituted under the new reign to include a desire to harmonize coinage used throughout the empire and to align it closer to that found in Europe. To that end, a decree was issued on 9 June 1728^{[text needed]} directing that the silver alloy be reduced to eleven dineros (0.916). The weight would be slightly decreased with 68 reales to be cut from a silver marco, essentially matching the specifications used for gold and more neatly establishing a gold-to-silver ratio of 1-to-16. The one-real coin, under the new arrangement, weighed 3.38 grams, gross, or 3.10 grams of pure silver. The law further provided that silver coins of lower denominations contain the same quality of silver and be of proportional weight to the eight-real. The 1728 decree prepared the way for the introduction of new technology, namely the introduction of round planchets allowing for the introduction of uniform, proportional weights for all denominations.

In New Spain, orders were issued to retrieve the older silver coinage, beginning January 1752, the same year the crown also directed that port customs authorities begin registering the import and export of coin. Withdrawal of the older coins of higher purity was haphazard and delayed, given the overall demand for coinage in circulation throughout the New World.

A few years later, the first of several decrees appeared which effected even a more significant change in coinage throughout the New World. By official letter dated 19 September 1759, the crown directed that all mints in the New World begin preparing for the production of coins that would bear the bust or portrait of the king.

Under the rubric of effecting the portrait design change throughout the colonies, Spain again reduced the quality of its coinage, but this time, quietly. Authorities issued a decree dated 18 March 1771^{[text needed]} which was not widely published, altering the purity of silver, changing it from 11 dineros (0.916 fine) to 10 dineros and 20 grains, effectively 0.903. Weight remained about the same. Gold coins also were reduced from 22 carats (0.916 fine) to 21 carats, 2.5 grains (0.901 fine). A public declaration issued about a year later on 8 April 1772 to announce the new coinage to the public indicated only that the weight and fineness of the new bust coinage was to conform to established standards (i.e. the new standards, not widely publicized before). In reality, the newly developed specie contained silver that was four grains less than coins produced the previous 40 years and eight grains less in fineness than those coins struck prior to 1728.

The 1772 proclamation called for quick recall of the non-portrait coinage for purposes of re-coining, an understandable position, given the crown’s ability to generate a profit from each peso (eight-reales) restruck^{From 1536-1729, a full-weight 8 real contained 25.54 grams of pure silver; 1729-1772, 24.78 grams; and from 1773, 24.43 grams. Thus, the realm theoretically could gain 1.11 grams of silver by collecting early pesos (0.930) and replacing them with those issued after 1773, a profit of some 4.45 percent. See Lazo Garcia, Carlos, Economía Colonial y Regimen Monetario Perú: Siglos XVI-XIX, Banco Central de Reserva del Perú,Lima, 1992 v. II, tables 35-37; Burzio, Humberto F., Diccionario de la Moneda Hispanoamericano, Santiago, 1958, Vol. II, p.171.}. To that end, the older currency was to be collected within two years of the publication of the proclamation that also called for an expansion of production capacity in the colonial mints to carry out monetary reform.

Per Meek, mint officials estimated the amount of older coin in circulation in New Spain prior to 1752 to be about 12,000,000 pesos. That figure was added to some 239,921,673 pesos produced in the viceroyalty from 1752 through 1771, for a total of about 252 million pesos. Most of these were pillar style coins, 0.916 fine, per changes effected by the 1728 decree. Customs officials at the port of Acapulco reported that some 18,100,346 pesos of coinage had been exported to Asia since 1752. Authorities in Vera Cruz calculated east-bound shipments, mostly to Europe and to a lesser extent the Caribbean, of a staggering 206,877,303 pesos. Total coinage exports to Europe and Asia, then, amounted to nearly 225 million pesos. The size of the cob-style and/or pillar money supply in New Spain in 1772, then, was determined to be 26,944,024 pesos. Of that amount, some 2,842,079 pesos already had been turned over to the mint for re-coinage as of 23 June 1772, the date that said calculation had been completed. Net, non-portrait, 0.930 and 0.916 fine coinage remaining in circulation in New Spain by mid-1772 was, thus, calculated to have been some 24 million pesos, in silver currency. Using a similar methodology, the amount of older gold coinage in circulation by late June 1772 was calculated to be 7,577,501 pesos^{Meek, op. cit. pp. 58-63}. Because coinage remained in short supply, especially for smaller denominations, the viceroy periodically extended the timeframe allowing the older coins to continue circulating as legal tender. The last recorded extension for New Spain was published in Mexico on 8 and 12 February 1800.

Meek’s observations of Spanish calculations are revealing. While it was obviously of interest to colonial authorities to melt and re-coin issues struck prior to 1773, the amount of coin then recalled and re-struck was probably relatively limited. Of greater interest is how little of the “pre-1733” coinage was believed to still be in circulation, i.e. only about 12 million pesos as of 1752. Most was probably pillar coinage. Even if all of it had been“cob” style coinage, it would amount to only about 1.6 percent of all the silver coinage produced in New Spain prior to 1733. It is impossible to determine the ultimate disposition of all that coinage. The vast majority likely ended up in Spain and other parts of Europe in the form of remittances, taxes and fees. As the data above demonstrates, the equivalent of nearly 90 percent of the coinage produced from 1752 to 1771 in New Spain was exported. Undoubtedly, most of that ending up in Europe and Asia was eventually melted, once it became more common knowledge that the earlier issues contained a higher silver content.

The pillar dollar and its subdivisions, of course, were destined to become“coins of the realm”circulating widely throughout the world, to include the United States. The coinage act of 9 February 1793 authorized the use of the Spanish milled dollar as legal tender in the United States on a par with the US dollar for an indefinite period of time^{US Treasury, Coinage Laws of the United States 1792-1894, Washington; 1894}. The same act allowed other foreign currencies to circulate as well, including gold coins of England, France and Portugal along with “crowns” of France….but only for three years. The continued use of Spanish silver in the United States was reinforced on 3 March 1843 when the Congress passed another act continuing the use of “Spanish pillar dollars” as money within the United States to which were added dollars of Mexico, Peru and Bolivia, not less than 0.897 fine. By the coinage act of 21 February 1857, the Spanish milled dollar and its subdivisions finally were demonetized in the United States. Even then, they were allowed to circulate until such time as they fell into the coffers of the post office, customs collection points, or banks which were responsible for forwarding them to the US mint which was instructed to melt and re-coin them. Even then, the Spanish coins represented a profit to government authorities since the US dollar contained 0.773 ounces of silver; the Spanish milled dollar 0.798 ounces, 3.2 percent more the US crown.