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At the lack of Pesos, Cachuca Coins: The Particular Case of Chiapas.

by Pablo Luna Herrerabased on his website (in Spanish) eldatonumismatico

The history of coinage in Mexico has a common factor - the lack of low denomination currency. During Spanish rule the smallest working denomination was 1/2 Real, (equivalent to 6¼ centavos) and its mintage was minuscule compared to large values, such as 8 Reales.

Moreover, even this denomination was too onerous and of too great a value. Although in the period mentioned above they occasionally minted 1/4 Real and 1/8 Real coin they were badly received and unpopular. It would be until the nineteenth century that states, with the multiplicity of mints in the Republic, produced 1/4, 1/8 and even 1/16 Real coins (decrees of the time permitted 1/32 Real coins but these were never minted). You might think that this money (mainly of copper and brass) was the solution, but quite the opposite: it turned out to be a calamity, because of the large amount of counterfeit, abundant and even clandestine currency, coined outside the limits of the law, for a population not yet accustomed to fiduciary systems based on silver coinage.

The arrival of the decimal system and its implementation in the second half of the nineteenth century partially solved the lack of small currency, with copper 1 centavo and silver 5 and 10 centavos coins. However, the use of Mexican currency throughout the national territory was not achieved until well into the twentieth century with the creation of the Bank of Mexico in 1925. There were parts of the country where the Mexican coinage was unknown, so they used various methods for everyday commerce.

It should also be added that the absence of means of payment results in the use of unofficial currencies, which is caused by multiple factors such as (i) the disappearance of currency in circulation, (ii) an inadequate or insufficient supply, (iii) the loss of value, and (iv) poor distribution, related to political instability, poor roads, and/or geographical isolation Díaz Negrete, Juan Cristóbal, "Cuando falta el dinero: La Moneda de Necesidad en México", in La Moneda Independencia y Revolución, 2009, Banco de México.).

The hardest-hit areas were the south of the country, especially Chiapas, although barter or swap was an age-old tradition. It is well known that in some situations, tokens (fichas, tarjetas, planchuelas) or other generally metallic objects of a local/ particular nature were used, such as hacienda or municipal tokens. However, from the last quarter of the nineteenth century to the first of the twentieth century the daily currency of Chiapas was the “cachuco”.

However, we can find backgrounds to this situation since the middle of the nineteenth century. Pradeau Pradeau, Alberto Francisco, Historia Numismática de México Tomo I. 1957, Sociedad Numismática de México, México D.F. relates:

On October 22, 1869, and then on December 27 of the same year, a bill was submitted to the National Congress proposing that the currency (moneda recortada) cease to circulate in the State of Chiapas, and for it to be amortized by federal offices within two years. Mr. J. Cristóbal Salas, author of that project, noted that most of the currency came from Guatemala and showed a collection of pieces that he had brought for this purpose to the Session Hall of the Chamber of Deputies.

This is reaffirmed by Díaz NegreteDíaz Negrete, op. cit., recounting that since the nineteenth century Chiapas was characterized by the use of tokens from coffee plantations.

cachuca image 1The “cachuca” coinage (from “cacho”, fraction or piece) was one made up of a diversity of issues such as Chilean pesos, Peruvian soles, Colombian pesos, and fractional currency of Guatemala, although the aforementioned coins were already demonetized (for the most part) in their country of origin and only circulated exclusively as a “legal” medium in Chiapas. The cachuco had a value of approximately 80-85 Mexican centavos. The Memoria de la Secretaría de Hacienda 1908-1909 mentions that most of the pieces were from Guatemala.

Several reasons supported this anomaly: (i) the scarcity of circulating currency in the state, (ii) the remoteness from the Mexican mint, (iii) the lack of means of communication, (iv) a premium of up to 35% over its face value was charged when obtaining Mexican currency, and (v) the correlative tradition and rooting in trade with the Guatemalan people.

Both nations had problems in common that allowed the use of the “cachuco”, Mexico had a fragile financial system, which had not manifested itself or reached the Chiapaneco territory despite the formation of the Banco de Chiapas in 1901, while Guatemala had problems with its paper currency, which was not properly backed in cash.

The cachuca currency was introduced to Chiapas by businesses through the payment of imports. It was initially received as merchandise (with pieces valued for their weight in silver), although later it was legitimized and even legalized. The Memoria de la Secretaría de Hacienda 1908-1909 gives the following background:

We refer to the circulation in the Departments of the State of Chiapas bordering the neighboring Republic of Guatemala of the currency called “cachuca”, which comprises all kinds of small silver coins, minted by the Central and South American Republics. Whether because of the frequent commercial relations that the peoples of that Mexican border maintain with those of Guatemala, where it is said that a lot of coin is minted in the other Central and South American Republics; lack of communications and traffic with the rest of the Mexican Republic and even with the other departments of Chiapas; or for both reasons together and perhaps also because of the local circumstances that are unknown to the Comisión [de Cambios y Moneda], the fact is that the currency in circulation throughout that border territory has become the “cachuca” currency, to the extent that in times not long ago the peso and other Mexican currencies were almost unknown to a good part of the proletarian population. In virtue of this and through necessity, local authorities came to sanction provisions under which the “cachuca” currency was commonly admitted to local public offices of certain Departments, at a certain discount in relation to the national currency; and for this reason, as it could not help but strengthen the custom of using “cachuca” currency, it gave room for particular speculations, almost always advantageous to those who undertake them, making them interested, for the same reason, in the continuation of this abnormal state of things, which have not been enough to make stop the repeated orders and provisions issued for some time to this area by the federal power and aimed at the offices that depend on it not to admit in any case , or for any value, the aforementioned foreign currency.

Having considered the above, the Comisión de Cambios y Moneda took several actions to overcome the problem, such as the purchase of the “cachuco” (starting November 1907) as silver for its subsequent melting and the shipment of fractional currency to the area. That same year it is pointed out that $736,257.74 of foreign currency was purchased at its metallic value: with Chiapas having a population in 1910 of 438,843 inhabitants, this draws attention to the abundance of this coin. It appears that the solution of such a situation would soon no longer be so resolved as the fluctuation in the price of silver in 1907 and 1908 stopped the acquisition of the “cachuca” currency.

In the Memoria de la Secretaría de Hacienda 1908-1909(footnote}Secretaría de Hacienda y Crédito Público, Memoria de la Secretaría de Hacienda, Ejercicios fiscales: 1908-1909 y 1909 – 1910, Tipografía de la Oficina Impresora de Estampillas, Palacio Nacional. México D.F.{/footnote under the heading “Joint results of operations from 1 May 1905 to 30 June 1909”, the Comisión reports withdrawing “in Central and South American pesos circulating in the State of Chiapas” $333,571,00, and “in Central and South American fractional currency that also circulated in Chiapas” $533,452.05. That is, in just over four years it withdrew from circulation $863,023.05 (value in Mexican pesos).

In the Memoria de la Secretaría de Hacienda 1909-1910 “Mexican and Cachuca silver currency received from the Directorate” gives a monthly analysis from July 1908 to June 1909 of the foreign currency destined for smelting in the Mexican Mint, the most notable month being October 1908 with 99,055 coins for its face value, being in kilograms 2,122,400, the lowest month, June 1909 with 9,000 in face value and 193,127 kilos. The total between the period referred to is 482,440 in nominal value of the coins or 10,364,099 kilograms.

Having said that, the Government continued to report the illegality of trade in this type of coinage to the local authority. Even, it was asserted that the foreign money was used as legal tender to pay national taxes. In the same Memoria it reports:

It is obviously desirable to end the circulation of the “cachuca” currency in the State of Chiapas, and since the importation of silver coin from Central and South American wedges is not strictly prohibited, in order to melt it and turn it into bars, at the introducer’s cost, it is clearly indicated that the federal and local authorities of that State (the latter, above all), should be reminded of the prohibition on receiving taxes and other cash benefits other than in national currency, and especially individuals, under article 26 of the monetary law, to use in payment any object other than legal currency, under the penalty of a fine of the second class. At the same time, the Comisión will take measures to increase stocks of fractional currency there and simply buy “cachuca” as silver, so as not to harm its good faith holders, and by these concurrent means it is believed that this anomaly to our unique monetary circulation in the Republic will soon be extinguished. ‘

Although the problem existed throughout the Chiapaneco territory there were areas where both Mexican (in smaller quantity) and cachuca currency coexisted and in other areas only the second. All the west of the state starting from San Cristóbal de las Casas. adjoining Guatemala, was “cachuco” territory, while in the east Mexican currency achieved greater penetration.

cachuca map

It should be added that Guatemalan exports to Chiapas were made in Guatemalan currency, and no exchange was made so the merchants of Chiapas worked with this foreign currency on a daily basis. When the value of the peso rose as a result of the 1905 Monetary Reform, the difference between the peso and the cachuco increased, intensifying the exploitation of workers, who had to work harder to get the same amount of salary.

Concerned about the situation in these early years of the twentieth century, the Comisión de Cambios y Moneda sent large remittances of metal currency to the bank branches in Tuxtla Gutiérrez and Tapachula in addition to collecting and melting the silver cachucos to get them out of circulation.

In the face of currency problems, President Venustiano Carranza, on 14 May 1918, repealed article 22 of the Monetary Law of 1905 which prohibited the circulation of foreign currency. This gave legal status to foreign currency for a limited time , including the “cachuca”.

However, when Carranza created the Comisión Monetaria on 3 April 1916, among its objectives was to ensure internal circulation and serve as a conduit for the Federal Government to launch and withdraw currency issues. By 1925 it had 17 branches and 333 correspondents. Its structure was inherited by the Bank of Mexico years later. Another relevant factor for the penetration of southeastern Mexico came during the government of Plutarco Elías Calles, who provided a strong stimulus to the construction of infrastructure to expand national and international communication with roads, railways, airports, telephony and telegraphy.

When the Bank of Mexico was established in 1925 it had 24 branches located in different points of the national territory though only five of these original branches by the 1930s. The main functions of these branches were, in general terms, to distribute and collect cash, serve as a clearing house and make payments on behalf of the Government. By the third decade of the twentieth century the use of the “cachuca” coin was minimal.