Why was there no new Peso until 1910?

by Allan Schein (with Pablo Luna Herrera)

Pablo Luna and I met formally when he introduced himself at Kent Ponterio’s party for the 12th USMexNA 2024 convention in Scottsdale, Arizona. We spent a little time getting to know each other and Pablo asked me a question he said some of his comrades had been contemplating. Basically, why did it take until 1910 for the Caballito peso to be issued, when it was authorized for production by the Monetary Reform Act of 1905? However, although the Act envisioned a new Peso coin, it did not describe the design or engraving.

My first response was that the Monetary Act of 1905 did not specify a time span in which the Peso must be produced. With that in mind, there are numerous other factors that influenced the Caballito Pesos delayed production until 1910.

I. Economic factors, and the introduction of the new 50 centavos coin.

Ever since the 1870s the value of silver had been in decline and by the early 1900s had lost more than half its value. In 1903, with Mexico having problems regarding the international decrease of the value of silver in world markets, the government created the “Comisión Monetaria” (Monetary Commission). The commission’s duty was to propose to the government solutions to combat the Peso’s depreciation in value internationally, as compared to the value of silver in a minted peso. In its bill, the Commission proposed a new peso, with a specified silver content, weight and diameter, but with a different design and engravings (Torres Gaytán, 1982, p. 86). Part of this recommendation was taken to build the famous Monetary Act of 1905. Mexico was on a silver standard until 1905 when it went on the gold standard. Until, and even after 1905, Mexico had paid much of its international monetary commitments in silver, making it nearly unique among trading nations. Having been the world’s largest producer of silver for centuries, (and still the largest today) this originally made sense. The Peso’s value dropped dramatically at this time due to silver value falling 50%. With Limantour’s influence through the Act of 1905, Mexico went on the gold standard and over the next half decade the Peso stabilized and once again rose in value and regained international acceptance.

An excellent explanation of how this happened is given by Thomas P. Passananti, in The Politics of Silver & Gold In An Age of Globalization: The Origins of Mexico’s Monetary Reform of 1905^{Passananti, Thomas P., “The Politics of Silver & Gold In An Age of Globalization: The Origins of Mexicos Monetary Reform of 1905”, in América Latina en la Historia Económica. Revista de Investigación, núm. 30, julio- diciembre, 2008, pp. 67-95, Instituto de Investigaciones, Dr. José María Luis Mora, México, D. F.}

In 1905, reversing centuries of the circulation of silver as the coin of the realm, Mexico instituted a monetary reform that placed the country on a gold-exchange standard. The purpose of the new standard was to stabilize the value of the Mexican peso relative to the world’s major currencies. Prior to the 1905 gold reform, the Mexican peso lacked a fixed value; technically, it held no fiduciary value. The peso’s international worth was determined solely by its silver content, so the peso’s value fluctuated with every rise and fall in the world price of silver bullion. Beginning in the 1870s, silver bullion suffered a secular decline so that by the early 1900s the value of an ounce of silver had diminished by more than fifty percent. During the same period, the peso paralleled silver’s path, also losing over half of its international value. The 1905 Reform stabilized Mexico’s exchange rate by decoupling the peso’s value from its silver content. Under the gold-exchange standard, a silver peso continued to circulate as coin, but its value was enhanced because the Mexican government limited its supply to the nation’s gold reserves.

Another interesting fact to consider is that once the Coinage Act was ratified, no pesos were struck in 1906 and 1907. It was not until 1908 when the production resumed, but with one of the lowest annual mintage quantities for the peso series.

One of the main tasks of the Government in 1906 and 1907 (and also for the mint) was to collect the older circulating coinage. Although the number of pesos in circulation can only be estimated, there were large quantities of new silver 50 centavos minted in these years, both in Mexico and in the USA for Mexico. Being a newly re-issued denomination, the 50 centavos coins were a priority because these had not been minted in any notable quantity since 1888. This is one of the factors that explains why no pesos were minted in 1906 and 1907, and few after the Act was passed. There had been a 15 or more-year drought of 50 centavos coins, with few left in circulation. This new 50 centavos had become a coin of great priority to produce. Fifty million were minted in 1906 and 1907 to replenish the monetary pipeline. It is important to note that although the 50c was the focus these two years, there was apparently a sufficient number of pesos available from the sizeable mintages of 1901-1904, temporarily eliminating the need for more in 1906 and 1907.

It seems apparent that the majority of changes on denominations modified by the Act of 1905 were instituted sometime during that year. Most every denomination of Mexican coinage was still being produced with the 1905 date and REPUBLICA MEXICANA early this year, although many with small mintages. Once the motto ESTADOS UNIDOS MEXICANOS was implemented, all denominations previously produced changed to the new dies. There were several exceptions, most notably the Cap and Rays silver peso which continued to use REPUBLICA MEXICANA through 1909.
Article 5 and 7 of the Monetary Act specifies the production of a new silver Peso:

II. The involvement of foreign mints, and selection of the denominations to produce first

These many changes were a massive undertaking, and numerous coins were made at various USA mints, as well as the British mints in Heaton and Birmingham to avoid shortages in the monetary system. In the following charts, the reader must recognize the relevance of the 50 centavos coins related to their large quantities of production abroad, in contrast to small peso production.

The following coins were made in the United States of America for Mexico.

A broader perspective (Torres Gaytán, 1982, p. 91) shows the total mintages outsourced for production at foreign mints. Records for foreign production of Mexican coinage show more than 130 million coins were produced by mints contracted by the Mexican Government from 1905 through 1910.

III. Technological adjustments and the coin design that delayed the new Peso.

It was during this time that the United States of America made dramatic changes in their own coin designs at the urging of President Theodore Roosevelt. There were also new technologies such as the Janvier Lathe, a modern pantograph that allowed for more precise die cutting from models. First patented by Victor Janvier, a French engraver, in 1899, it allowed for faster, more precise transfer of images into master dies. The first Janvier Pantograph was imported into the United States in 1902 for what was to become the Medallic Art Company. The Philadelphia Mint purchased their first Janvier in 1906. The U.S. mints attempt to produce the Saint Gaudens $20 high relief designs in 1907, however, were minimally successful and abandoned after only 12,367 coins were struck. The high relief dies required considerably more pressure and multiple strikes to completely set the design, resulting in cracked and shattered dies; in some cases after only 30-40 coins were struck. It is likely the 50 centavo Caballito patterns created by Pillet at the Paris mint utilized this newest die engraving technology.

Janvier Reducing Lathe, also known as the Janvier Pantograph (photos http:// www.1881o.com/reduction.html, https://en.wikipedia.org/wiki/Reducing_Machine)

1907 $20 High Relief designed by Augustus Saint Gaudens (Photo courtesy of Heritage Auctions)

The Cap and Rays peso continued to be struck until 1909, and with the apparent abundance of new production required to mint all the other denominations, the expression “if it ain’t broke, don’t fix it” appears to have been the peso strategy for that moment, disregarding the new authorization.

1909 Un Peso, Mo-G.V. NGC MS-66 (photo courtesy of Heritage Auctions)

The mint could not adjust every denomination at once and still keep up with production. Mexico contracted other mints for help. Many nations do this because keeping the wheels of commerce turning is economically important to them all. The government determined that a 50c silver coin was most needed. The majority of the population use minor or fractional coinage, not pesos, for daily transactions. The 50c was a workhorse denomination and so large production was required to refill the monetary pipeline due to their years of absent production. Also, paper money was being increasingly used for major transactions. It must also be factored in that, per Passananti in The Origins of Mexico’s Monetary Reform that the Mexican government limited its supply to the nation’s gold reserves. This meant balancing silver coinage production to its physical gold backed reserves.

Worldwide, there was a renaissance in coin design during the first decade of the 20th century. The Casa de Moneda was fully aware of this. The head of the coining department for Mexico City, Francisco Valdez, spent six months at the Denver and Philadelphia mints. The influence of Charles Barber, head engraver for the U.S. Mint, provided the Casa de Moneda the experience needed to avoid similar coinage difficulties.

IV. The Caballito Design.

The Caballito design was first presented by Charles Pillet of the Paris Mint to the Mexican Government for consideration in 1907 as a higher relief silver 50 centavos piece. Pillet was specifically requested to create a design because of how much Porfirio Díaz liked Pillet’s portrait of him on the 1907 Medal for the Canal Porfirio Diaz.

1907 medal Inauguration of the Canal Porfirio Díaz, Charles Pillet, designer/engraver (photo courtesy of Allan Schein)

However, the 1907 50 centavo was never produced for circulation as intended. Dr. Alberto Francisco Pradeau wrote that “For some unaccountable reason the Mexican government never used these dies, and the design was not authorized for coins of this value”. (“History of the coinage issued to commemorate the centenary of independence” in Plus Ultra, Vol 3, Number 26, November 26, 1965). Peso patterns were presented in an adjusted lower relief in 1908 and 1909 with the first coins for commerce struck with the 1910 date. It is possible that Mexico, like the USA and other nations, wanted to contemporize their coinage. It is also very likely that having such a dramatic and symbolic design, considered to be Mexico’s first commemorative coin, was ultimately planned for issue on the 100th year anniversary of the War for Independence.

1907 50 centavo pattern, NGC SP62 (photos courtesy of Heritage Auctions)

1909 Caballito peso pattern, PCGS SP-66 (Photo courtesy of PCGS)

Mexico had limited production capabilities during this time of new and creative coinages. This, along with what I believe was probably an existing supply of undervalued pesos available for commerce, made the peso coin a lower priority to mint compared to the 50c coins in 1907. No 50 centavos were made for 15+ years until 1905. The chart below shows peso mintage from 1901 - 1914 in three groupings keeping in mind the Mexican government limited its silver coin supply to the nation’s gold reserves.

There were few 50 centavos minted at all from the years 1888 thru 1904.

Analyzing the limited numbers of peso and 50c production in the various periods or years, it seems apparent the numbers were carefully monitored in order to keep them in balance with, initially, their value in the marketplace as silver, later followed by balancing its backing in gold.
A peso was a large denomination for the time period and there were tens of millions of silver pesos in circulation. Nearly each individual year of peso production in the first period exceeded the next total five-year period production that followed. It more than doubled the entire five- year Caballito production annually and nearly triple the five years of Caballito production in 1903 alone.

The progressively reduced peso production along with large 50c production in 1906 and 1907 illustrates that supply, balanced by the peso’s lower value, was likely adequate those first years after the Act of 1905. Increased minting allowed time for a well-designed and planned Caballito debut without monetary supply interruption. Delays can also be attributed to an effort to balance supply with gold backing. The new peso could wait until 1910, being the right design at the right time to make its debut on the world stage. Additionally, paper money was being increasingly used by that time, reducing the need for silver pesos.

No doubt there is more to the story, and a review of correspondence between Valdez, Barber and Limantour might reveal new specifics. But for me, the available facts, cultural changes, new technologies, economics, and politics of the time, all in a new 20th century with progressively optimistic attitudes, when viewed contemporaneously, make these explanations probable.

The 1905 Monetary Act is still the cornerstone of the Mexican currency system. Much of its influence persisted in the monetary changes of 1931 and 1936, the current Monetary Law.

Conclusion

In conclusion, it seems the governments’ consideration of the Caballito design was likely first considered in 1907 for the return of the 50 centavos coin. Designs and denominations appear on coins by clear intention, and it is certain Mexico asked the Paris mint’s Pillet for a 50c design. However, by 1907 50c production was sufficient to reconsider a change, especially with the 100th anniversary of the War for Independence a few years away. It appears the plan for the 50c Caballito was set aside in favor of the peso. Patterns for the Un Peso Caballito were engraved, dated mainly 1909. 1910 saw the commercial introduction of what is considered one of the most beautiful and relevant coin designs ever created.

To conclude, in answer to Pablo’s original question, not only was there no time period specified for when the new peso must be produced, but, apparently, there was nothing addressing the design for a 50c except to add the new ESTADOS UNIDOS MEXICANOS motto.

Regarding Dr. Pradeau’s statement that “For some unaccountable reason the Mexican government never used these dies, and the design was not authorized for coins of this value”, I deduce that there was apparently nothing stipulated in the Act that required authorization of the new design. It was Mexico that asked for it to begin with, and it was the drought of 50c for so long that likely initiated the request. However, with 50c production reaching high quantities by 1907, the designs denomination and size was modified for the new Un Peso Caballito to technically became Mexico’s first commemorative coin.

© 2024 Allan Schein & Pablo Luna Herrera

Bibliography
García Lima, Salvador (2017) El Ingeniero Francisco Valdés y la planta de Apartado, Casa de Moneda de México. Available in the USMexNA digital library
Johnson, D. Wayte (2016) An Encyclopedia Of Coin And Medal Technology, For Artists, Makers, Collectors And Curators. Luna Herrera, Pablo Rodolfo, (web article) Moneda & Crisis Económicas. El Inicio del siglo XX en México (https:// eldatonumismatico.com/la-crisis-de-1907-1908-y-la-estrategia-del-gobierno-con-limantour/
Luna Herrera, Pablo Rodolfo, (2018), Las Pruebas De La Moneda Mexicana Del Siglo XX, Segunda Edición. Ciudad Victoria, Tamaulipas.
Torres Gaytán, Ricardo. (1982). Efectos De La Reforma Monetaria de 1905, Siglo Veintiuno Editores. México, D.F. Schein, Allan (2014) Mexican Beauty, Belleza Mexicana, Un Peso Caballito
Schein, Allan (2016) The $2.50 & $5.00 Gold Indians Of Bela Lyon Pratt
Pradeau, Alberto Francesco, Plus Ultra, Vol.3, Number 26, 26 November, 1965

Andrew, Piatt A, (1904) “The end of the Mexican dollar” in The Quartely Journal of Economics, May 1904, Vol. 18, No. 3 (May, 1904), pp. 321-356. Available in the USMexNA digital library and at https://www.jstor.org/stable/pdf/1884074.pdf