Now You See It, Now You Don't!

TellZall's object for July is Spanish Money.

FINANCING THE NEW WORLD
Five hundred years ago, the nations of Europe set out on a era of discovery and came to what they called the New World. These countries believed in an economic theory called mercantilism, which measured a nation's power and prestige by the amount of gold and silver held in the national treasury. The Old World's great colonial powers - Spain, France, Portugal, the Netherlands, and Great Britain - viewed their New World possessions as commodities to be exploited: they were both sources of cheap raw materials and markets for expensive finished goods. But most of all, the imperial monarchs of Europe looked to the Americas for instant wealth-envisioning cities of gold inhabited by exotic natives and streams where nuggets lay waiting.

The gold and silver of the New World transformed the economy of Europe and drove its nations to finance even broader exploration. The Spanish were, in the mercantile sense, the most successful. King Ferdinand and Queen Isabella sponsored the voyages of Christopher Columbus hoping for a large return on their investment. They were not disappointed. While Columbus did not find a shorter route to Asia, he and his successors uncovered vast quantities of gold and silver. The Spanish Conquistadors had little difficulty in subduing native populations - the Aztecs of Mexico, the Incas of Peru - and they systematically stripped the Indians of their gold and silver ornaments and then put them to work in the mines and refineries. By 1600 the mines around Potosi, Bolivia, were the world's greatest single source of silver; in Mexico, Peru, Colombia, Bolivia, Chile, and other Spanish possessions, more rich reserves of the precious metals were exploited.

To process their gold and silver, the Spanish established mints throughout the New World: at Mexico City in 1536; at Lima, Peru, in 1565; and at Potosi, Bolivia, in 1575. Here, they refined the silver and gold and minted much of the metal into coins. One-fifth of all of it was ordered back home as tax revenue, and much of the remainder also found its way to Spain, in keeping with mercantile practice. Periodically, fleets of galleons were loaded with treasure and sent forth to run the gauntlet of ocean storms and marauding pirates; many never escaped American waters. In 1622, for instance, Nuestra Seņora de Atocha sank in a hurricane after leaving Havana, Cuba, carrying with it more than 7,000 ounces of gold, 47 tons of silver, 15 tons of copper, 300 bales of indigo, and 500 bales of tobacco.

Throughout the western hemisphere, Spanish coins reigned. Even in the English colonies of North America, the Spanish eight-real coin - known variously as the dollar, piece of eight, or eight bits - was the standard unit. When the new United States established a monetary system, Congress made Spanish coinage legal tender, and thousands of local banks printed currency based upon the Hispanic standard. When the government established its own mint, the act stipulated that U.S. dollars were "each to be of the value of a Spanish milled dollar." Until 1857, in fact, Spanish coins remained legal tender. And at the U.S. mint, Spanish pieces of eight were melted down and made into U.S. currency: the bust of Spanish monarchs was replaced by that of Liberty, coats of arms melted before the American eagle, and LIBERTY was emblazoned where once monarchy had been proclaimed.

SPANISH COINAGE
Beginning in 1536, Spain minted gold and silver coins throughout its New World empire. One of the more common, the eight-real coin - also called a dollar, piece of eight, or eight bits - contained about 412 grains of nearly pure silver. Since neither the French nor the English had much luck finding gold and silver in their New World colonies, Spanish coins became the principal form of hard money in the colonies and then in the new United States. European coinage was scarce and tended to stay in Europe, so when the United States mint began to issue its own silver coinage, the familiar Spanish dollar served as the standard.

The Spanish found gold as well as silver in the New World, and their colonial mints produced gold coins such as this eight-escudo piece, which was struck at Santiago, Chile, in the same year that Ohio achieved statehood. Also called gold doubloons, an eight-escudo was worth approximately $15 in 1803.

In 1772 the Spanish had changed the design of their colonial coinage, discarding the pillars of Hercules in favor of a bust of the king. The coin still proclaimed that the monarch reigned over Spain and the Indies, and the reverse continued to feature his coat of arms and information on the location of the mint and the initials (here FJ) of the mint's assayer.

The earliest Spanish coins, called cobs, were irregular slabs of silver struck with crude dies. Then, in 1732, a new design was introduced featuring the Pillars of Hercules and the twin globes of the Old and New Worlds united under the crown Of Spain. The reverse incorporated the monarch's coat of arms, name, and the proclamation: King of Spain and the Indies. The milled edge of the 1.5-inch coin provided an easy means of detection should someone scrape some metal from its surface. This 1739 "pillar" dollar, minted at Mexico City during the reign of Philip V, is an especially fine example of what many consider one of the world's beautiful coins.