The Untold Story of the Mexican Peso

For centuries, silver Mexican coins were used as currency in many countries throughout the world, including the US.

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Episode Transcript

Speaker 1 (00:34):
Welcome to Mexico Unexplained, where we will explore the magic,
the mysteries, and the miracles of Mexico. This series presents
information based partly on theory and conjecture. The podcaster's purpose
is to suggest some possible explanation, but not necessarily the
only ones to the subjects we will examine. Here is
your host, Robert T. Vitto.

Speaker 2 (00:56):
Welcome, and we've been beneath those to episode number ninety
of Mexicoon Explained, where we examined the magic, the mysteries,
and the miracles of Mexico. I'm your host, Robert Biddo.
The date was February twenty first, eighteen fifty seven. New
Hampshire born Franklin Pierce signed into law one of the
last pieces of legislation in his term as the fourteenth

(01:20):
President of the United States. Pierce, who served as a
brigadier general in the U. S Army during the Mexican War,
was ironically signing a piece of legislation ending a certain
type of Mexican influence in the United States, almost ten
years after he rode triumphantly into Mexico City carrying the

(01:41):
Stars and Stripes. In addition to ending the US MINTZ
production of the half cent coin and redesigning the scent
to a much smaller size familiar to everyone today. The
legislation passed on that cold February day in eighteen fifty
seven made the circulation of Mexican money in the US

(02:03):
illegal and recalled all Mexican coins then being used in
the United States in its territories. Section one of the
Act states quote be it enacted by the Senate and
House of Representatives of the United States of America in
Congress assembled that the pieces commonly known as the quarter, eighth,

(02:25):
and sixteenth of the Spanish pillar dollar and of the
Mexican dollar shall be receivable at the Treasury of the
United States at its several offices, and at the several
post offices and land offices, at the rates of valuation following,
that is to say, the fourth of a dollar or
piece of two rayals at twenty cents, the eighth of

(02:49):
a dollar or piece of one rail at ten cents,
and the sixteenth of a dollar or half rail at
five cents. End quote. Section two of the Act stated
that all Mexican coins turned into the government agencies mentioned
in the first section would be melted down and refashioned
into American coins. Silver coins in circulation at the time

(03:14):
minted by the US government included half dollars, quarters dimes,
and half dimes. The act caused outrage among merchants and
ordinary citizens throughout the young United States and its western territories.
Most Americans today do not realize that for nearly a
century of their country's history, and even farther back into

(03:35):
colonial times, the money minted south of the border in
Mexico was regarded as more valuable and was more desired
than coins issued by the U. S Mint or other authorities.
The currency, known today as the Mexican peso, now the
butt of jokes north of the border for its instability
and perpetually declining value, was once the monetary unit that

(04:00):
inspired the most confidence among Americans, and was once one
of the premier currencies in the world, used as a
medium of exchange on every continent. Today, Mexico is the
largest silver producing nation on earth. When the Spanish first
arrived in Central Mexico, Conquista ernand Cortes was received as

(04:22):
a guest at the Aztec capital of tenoch Titlan by
the emperor Montezuma. Montezuma gave Cortes two discs, one made
of gold to represent the sun and one of silver
to represent the moon. While not as important to the
Aztecs as gold, silver was still regarded as precious and

(04:44):
used primarily by other groups to pay tribute to the Empire.
During the conquest of Mexico, the Spanish took over all
of the silver mines first developed by the Aztecs and
their tribute states, notably those in the modern days areas
of the Mexican state of Sacatecas and the town of Toshco.

(05:05):
During the early Spanish times, the older mines of the
indigenous peoples were expanded and new silver deposits were found
and exploited. With an overabundance of high quality silver on
their hands, the Spanish began minting coins in Mexico City.
The main silver coin minted in colonial Mexico City was

(05:27):
known as the ocho reales or in English eight royals,
better known to the English speaking world as a Spanish
dollar and often referred to piece of eight, coming from
the Spanish phrase pesodeocho or weight of eight. The eight
raals coin measured thirty eight millimeters in diameter about an

(05:49):
inch and a half across and contained three hundred ninety
four grains of pure silver. The coin was first issued
in Spain in fourteen ninety seven as part part of
a monetary reform. A century later, the eighth rials coin
was being minted in Mexico City with a slightly different design.

(06:09):
Those Spanish dollars struck in the New World had what
was called the pillars of Hercules on the reverse side
and were sometimes called by English speakers and referenced by
the Act of Congress previously mentioned Spanish pillar dollars. The
coins were so numerous and were recognizable by almost everyone

(06:31):
engaging in trade around the world. Some monetary historians believed
that the Mexican peso deocho was the very first international currency.
In the Thirteen Colonies and in the British possessions of
the Caribbean, the Spanish dollar was widely accepted as the
primary medium of exchange, as British coins were used to

(06:54):
pay British merchants for finished goods coming into the colonies.
The Mexican made silver pieces filled the void for every
day circulating coinage in those British colonies. In addition to
the large sized eight ral Spanish dollar, smaller coins were
also minted, which allowed for easier exchange, and in the

(07:16):
British colonies in America, one eighth of the eighth Raal's
coin was known as a bit. The nickname of two
bits for an American coin known as a quarter, is
still in use in the United States to this day.
The high regard that the Mexican peso had internationally in
its heyday cannot be under emphasized. As Spanish galleons plied

(07:40):
the Pacific Ocean and the Spanish Empire's trade with the
Orient increased through the Spanish Philippines. Mexican made coins found
great acceptance throughout Asia, especially in China and India, where
they were often given special marks or stamps to guarantee
silver weight and authenticity. Even the remote British penal colony

(08:03):
of New South Wales, which would later grow into the
proud nation of Australia, made use of the Mexican money.
As with colonial America, The fledgling Australian colony faced a
currency crisis soon after its founding in seventeen eighty eight,
as British money was used to pay British merchants calling

(08:24):
in at Sydney harbor. The net loss of currency to
the British ships left very little circulating coins in Australia,
which led to drastic measures by British Governor Lachlan Macquarie.
In eighteen thirteen, he ordered ten thousand pounds sterling of
Mexican pesos to be sent from Acopulco to Sydney. To

(08:47):
make it difficult for those coins to leave the colony,
Governor Macquarie decided to alter the Mexican coins. The centers
of the Spanish dollars were punched out. The center, called
the dump, was valued at fifteen pence, and the remaining
outer rim, called the Holy Dollar, was valued at five shillings.

(09:09):
These two new coins were counter stamped with the name
of the colony, New South Wales and the value. The
use of Mexican coins in Australia, while effective and practical,
was short lived. In eighteen twenty five, the British Parliament
passed the Sterling Silver Money Act, which declared British coins

(09:29):
the only legal tender in the Australian colonies and ended
the use of the Holy Dollar. Although technically illegal, the
use of the altered Mexican coins continued in Australia for
a few years after the Act in London was passed.
In the young United States, the Coinage Act, passed by

(09:49):
Congress on April second, seventeen ninety two, not only established
to the U s Mint, but sought to regulate the
coins used in the United States. One of the key
elements of the Act was to establish the silver dollar,
which was based on the popular Mexican made Spanish dollar.
The first Secretary of the Treasury of the United States,

(10:12):
Alexander Hamilton, was said to have gathered dozens of worn
down Mexican eight rayals coins to get an average weight
on which to base the US dollar. Thus, the Coinage
Act specified the new US dollar to be twenty four
point one grams pure and twenty seven grams standard silver,

(10:33):
or about ninety three percent fine. It also guaranteed Mexican
coins the status of legal tender throughout the United States
and its territories for three more years, until the American
Mint was able to produce its own coins to replace
the popular eight rayl coins and their smaller denominations. In

(10:54):
three years time, the US Mint was not producing enough
coins to meet the domestick demand, and, as Congress usually does,
it kicked the can down the road, and the legality
of the Mexican coins used in the US was allowed
as per acts of Congress passed in eighteen oh six,

(11:15):
eighteen sixteen, eighteen nineteen, eighteen twenty three, eighteen twenty seven,
and eighteen thirty four. Even as late as the eighteen forties,
one in every four coins circulating in the United States
employed in everyday transactions was minted in Mexico City. It
wasn't until the law passed during the Franklin Pierce administration

(11:38):
in eighteen fifty seven that the Mexican peso became illegal
to use as legal tender in the United States. As
Spanish power waned throughout the world and was supplanted by
the British, French, and Dutch empires, the use of Mexican
made silver pieces throughout the world declined. By the middle

(11:58):
of the eighteen hundreds, the Mexican eighth rayals coin was
still seen as a major world currency, especially in Asia,
where it never really lost its popularity and was considered
the most stable currency in Latin America in eighteen sixty nine.
The coin known by many names previously discussed the Spanish dollar,

(12:20):
the Mexican dollar the piece of eight the peso'oucho. The
eight rayals coin was officially rebranded as the peso and redesigned.
Chinese merchants immediately rejected the coin and accepted it at
a five percent discount from the previous incarnation in use
for centuries. Seeing the lack of international acceptance of the

(12:43):
new peso coins, the Mexican government returned to the old
eight rayals coin four years later in eighteen seventy three,
but by that time silver prices were beginning to fall
and gold became more of a desirable medium of exchange
throughout the world. The last eight rayals coin was produced

(13:04):
during the dictatorship of Portfyrial Dias in eighteen ninety seven.
By nineteen hundred, the Mexican dollar, once preferred over the
US dollar even within the borders of the United States,
was now worth only fifty cents US. At the beginning
of the twentieth century, the Mexican peso had become quite

(13:25):
ordinary and was on the road to becoming a fiat currency,
or a faith based currency with little intrinsic monetary value.
The silver content of the peso dropped to eighty percent
fine silver in nineteen eighteen. Another debasement happened two years
later in nineteen twenty, when the Mexican peso coin was

(13:47):
minted with seventy two percent fine silver. In nineteen forty seven,
the peso contained only fifty percent silver. By the late
nineteen fifties, the once proud Mexican peso, featuring the likeness
of revolutionary hero Jose Maria Morellos on its front side
and the emblematic Mexican eagle on its reverse side, was

(14:09):
only ten percent silver. By nineteen sixty eight, the Mexican
peso coin contained no silver at all. Base metal coins
have been used since the nineteen eighties saw rampant inflation
in the Mexican currency, and at the height of the
currency crisis, the peso was traded at well over three

(14:31):
thousand Mexican pesos to the dollar. Under the administration of
Mexican President Carlos Salinas de Cortari in nineteen ninety three,
the nuevo peso was introduced, effectively lopping off three zeros
of the old peso in a sort of monetary reset.
The Mexican people had a three year window to exchange

(14:54):
old banknotes for new ones. Silver returned to certain denomination
nations of coins struck by the Mexican Mint for general
circulation in nineteen ninety three, while the one, two, and
five nuevos pesos coins contained aluminum bronze centers in stainless
steel rings, and the ten twenty fifty nuevos pesos had

(15:18):
ninety two point five per cent silver centers and aluminum
bronze rings, in nineteen ninety seven, the word nuevo was
dropped on all forms of Mexican currency, and the silver
in the centers of the ten peso coins was replaced
with base metal. Although rarely seen in circulation, the twenty

(15:39):
fifty and one hundred peso coins are the only circulating
coins in the world today containing actual silver. As a
PostScript to the story of the Mexican peso, we can
return to the young United States and the piece of
legislation in eighteen fifty seven effectively outlawing the us of

(16:00):
Mexican coins as legal tender in the US. As most
laws imposed from on high go, the eighteen fifty seven
law was unpopular, especially among merchants who were forced to
change their accepted way of doing business. As with most
unpopular laws, This act of Cougre's generated great resistance at first,

(16:23):
as people were reluctant to cash in their Mexican coins
in exchange for new US coins, especially the new small scent,
which was unfamiliar and cheap looking. Although Mexican coins disappeared
from most cities throughout the United States by eighteen fifty eight,
rural areas, especially in the west and Southwest, still saw

(16:47):
the old Mexican coins in circulation. The last known widespread
use of the Mexican pesa in the United States for
commercial purposes, curiously enough, occurred not in the western part
of the country or near the US Mexico border, but
on the border of Pennsylvania and New York. A newspaper

(17:07):
reported in eighteen eighty three that local miners and factory
workers were still being paid in the Old Mexico city
minted Spanish dollars, and local merchants were accepting them as
legal tender, but at a discount of eighty five cents
on the dollar. This local circulation of the once esteemed

(17:28):
Mexican coins ended soon after the eighteen eighty three article appeared,
and as dollars replaced pesos in the New York Pennsylvania borderlands.
The dollar would soon replace the Mexican peso as the
world's most respected currency. Thank you once again for listening
to another episode of Mexican Explained. Remember to like and

(17:50):
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(18:14):
Once again, until next time, Thank you, Anne Gracias.

Speaker 1 (18:19):
Thank you for listening to another episode of Mexico Unexplained
with host Robert Bito. For show summary, relevant links, and commentary,
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