Spanish dollar
The Spanish dollar, originally known as the piece of eight, and much later also dólar, is a silver coin of approximately diameter worth eight Spanish reales. It was minted in the Spanish Empire, following a monetary reform in 1497, with content fine silver. It was widely used as the first international currency because of its uniformity in standard and milling characteristics. Some countries countermarked the Spanish dollar so it could be used as their local currency.
Because the Spanish dollar was widely used in Europe, the Americas, and the Far East, it became the first world currency by the 16th century.
The Spanish dollar was the coin upon which the original United States dollar was based, at, and it remained legal tender in the United States until the Coinage Act of 1857. Many other currencies around the world, such as the Japanese yen and the Chinese yuan, were initially based on the Spanish dollar and other eight-real coins. Most theories trace the origin of the "$" symbol, which originally had two vertical bars, to the Pillars of Hercules wrapped in ribbons that appear on the reverse side of the Spanish dollar.
The term peso was used in Spanish to refer to this denomination, and it became the basis for many of the currencies in the former Spanish viceroyalties, including the Argentine, Bolivian, Chilean, Colombian, Costa Rican, Cuban, Dominican, Ecuadorian, Guatemalan, Honduran, Mexican, Nicaraguan, Paraguayan, Philippine, Puerto Rican, Peruvian, Salvadoran, Uruguayan, and Venezuelan pesos. Of these, peso remains the name of the official currency in the Philippines, Mexico, Cuba, the Dominican Republic, Colombia, Chile, Argentina, and Uruguay.
History
Etymology
In the 16th century, Count Hieronymus Schlick of Bohemia began minting a silver coin known as a Joachimsthaler, or simply thaler, named after Jáchymov, the valley in the Ore Mountains where the silver was mined. The word thaler was borrowed into English as dollar and came to be used for a number of European coins, including the Spanish peso, or piece of eight."Peso de a Ocho" truly translates as "weight of eight", meaning that it is valued at eight royals, but English speakers heard "peso", and translated that as "piece". The word "weight" or "peso" is related to money due to the fact that when coin was made out of silver or gold, weighing it was often used to verify value.
Europe and colonial North America
The Joachimsthaler consisted of of silver. This coin's success led to similar thalers being minted in Burgundy and France and their ultimate succession by the long-lived Reichsthaler of the Holy Roman Empire, used from the 16th to 19th centuries, of pure silver.The Netherlands also introduced its own dollars in the 16th century: the Burgundian Cross Thaler, the German-inspired, and the Dutch lion dollar. The latter coin was used for Dutch trade in the Middle East, in the Dutch East Indies and West Indies, and in the Thirteen Colonies of North America.
For the English North American colonists, however, the Spanish peso or "piece of eight" has always held first place, and this coin was also called the "dollar" as early as 1581. After the Declaration of American Independence, the United States dollar was introduced in 1792 at par with this coin at 371.25 grains = 0.7735 troy ounces = 24.0566 g. Alexander Hamilton arrived at these numbers based on a treasury assay of the average fine silver content of a selection of worn Spanish dollars.
The term cob was used in Ireland and the British colonies to mean a piece of eight or a Spanish-American dollar, because Spanish gold and silver coins were irregularly shaped and crudely struck before the machine-milled dollar was introduced in 1732.
Spain
After the introduction of the Guldengroschen in Austria in 1486, the concept of a large silver coin with high purity eventually spread throughout the rest of Europe. Monetary reform in Spain brought about the introduction of an eight-real coin in 1497, minted to the following standards:- In 1497: dollars to a Castilian mark of silver, or 0.9306 fine
- In 1728: $8.50 to a mark, or 0.9167 fine
- In 1772: $8.50 to a mark, or 0.9028 fine ; but true fineness 1772–1821 believed to be only 0.89.
From the 15th to the 19th centuries the coin was minted with several different designs at various mints in Spain and the New World, having gained wide acceptance beyond Spain's borders. Thanks to the vast silver deposits that were found mainly in Potosí, in modern-day Bolivia, and to a lesser extent in Mexico, and to silver from Spain's possessions throughout the Americas, mints in Mexico and Peru also began to strike the coin. The main New World mints for Spanish dollars were at Potosí, Lima, and Mexico City, and silver dollars from these mints could be distinguished from those minted in Spain by the Pillars of Hercules design on the reverse.
The dollar or peso was divided into eight reales in Spanish Latin America until the 19th century, when the peso was divided into 100 centavos. However, monetary turbulence in Spain, beginning under the reign of King Philip II, resulted in the dollar being subdivided as follows in Spain only:
- Until 1642: $1 = 8 reales, subsequently called reales nacionales
- From 1642: $1 = 10 reales provinciales
- From 1687: $1 = reales de vellón
- From 1737: $1 = 20 reales de vellón
- In 1864: $1 = 2 silver escudos
- And finally, in 1869: $1 = 5 Spanish pesetas, the latter at par with the French franc in the Latin Monetary Union.
In the 1990s, commemorative 2,000-peseta coins were minted, similar in size and weight to the dollar.
Mexico
Following independence in 1821, Mexican coinage of silver reales and gold escudos followed that of Spanish lines until decimalization and the introduction of the peso, worth eight reales, or 100 centavos. It continued to be minted to Spanish standards throughout the 19th century, with the peso at of 0.9028 fine silver, and the escudo at of 0.875 fine gold. The Mexican peso, or eight-real coin, continued to be a popular international trading coin throughout the 19th century.After 1918, the peso was reduced in size and fineness, with further reductions in the 1940s and 1950s. Coins of two-, five-, and ten-peso denominations were also minted during the same period, with sizes and fineness similar to the old peso.
Australia
After the colony of New South Wales was founded in Australia in 1788, it ran into the problem of a lack of coinage, particularly since trading vessels took coins out of the colony in exchange for their cargo. In 1813, Governor Lachlan Macquarie made creative use of £10,000 in Spanish dollars sent by the British government. To make it difficult to take the coins out of the colony, and to double their number, the centres of the coins were punched out. The punched centre, known as the "dump", was valued at 15 pence, and the outer rim, known as the "holey dollar", was worth five shillings. This was indicated by overstamping the two new coins. The obverse of the holey dollar was stamped the words "New South Wales" and the date, 1813, and the reverse with the words "five shillings". The obverse of the dump was stamped with a crown, the words "New South Wales" and the date, 1813, and the reverse with the words "fifteen pence". The mutilated coins became the first official currency produced specifically for circulation in Australia. The expedient was relatively short-lived. The British Parliament passed the Sterling Silver Money Act in 1825, which made British coins the only recognised form of currency and ended any legitimate use of the holey dollar and dump in the Australian colonies.United States
The Coinage Act of 1792 created the United States Mint and initially defined the United States dollar at par with the Spanish dollar due to its international reputation:
By far the leading specie coin circulating in America was the Spanish silver dollar, defined as consisting of 387 grains of pure silver. The dollar was divided into "pieces of eight," or "bits," each consisting of one-eighth of a dollar. Spanish dollars came into the North American colonies through lucrative trade with the West Indies. The Spanish silver dollar had been the world's outstanding coin since the early 16th century, and was spread partially by dint of the vast silver output of the Spanish colonies in Latin America. More important, however, was that the Spanish dollar, from the 16th to the 19th century, was relatively the most stable and least debased coin in the Western world.
The Coinage Act of 1792 specified that the U.S. dollar would contain 371.25 grains pure or 416 grains standard silver. This specification was based on the average weight of a random selection of worn Spanish dollars which Alexander Hamilton ordered to be weighed at the Treasury. Initially this dollar was comparable to the 371–373 grains found in circulating Spanish dollars and aided in its exportation overseas. The restoration of the old 0.9028 fineness in the Mexican peso after 1821, however, increased the latter's silver content to 24.44 g and reduced the export demand for U.S. dollars.
Before the American Revolution, owing to British mercantilist policies, there was a chronic shortage of British currency in Britain's colonies. Trade was often conducted with Spanish dollars that had been obtained through illicit trade with the West Indies. Spanish coinage was legal tender in the United States until the Coinage Act of 1857 discontinued the practice. The pricing of equities on U.S. stock exchanges in -dollar denominations persisted until the New York Stock Exchange converted first to pricing in sixteenths of a dollar on 24 June 1997, and then in 2001 to decimal pricing.