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Monetary Problems in Spain and Spanish America 1731–1800

Published online by Cambridge University Press:  03 February 2011

Earl J. Hamilton
Earl J. Hamilton
Affiliation:
Duke University
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Extract

The sixteenth-century Price Revolution in Spain induced by the gigantic stream of Mexican and Peruvian silver was followed by a century of alternate inflation and deflation resulting from wars and weak governments. But in spite of frequent, long, and unsuccessful wars, monetary stability characterized the first half of the eighteenth century. Then a sharp rise in the output of the precious metals, particularly of Mexican silver, increased the Spanish monetary stock and forced prices upward by almost one third in the next three decades of comparative peace. To finance a bitter conflict with England in 1779–83, Spain was compelled to resort to her first issues of paper money. The paper currency depreciated rapidly during the war but rose to par after the conclusion of peace and remained there throughout the Nootka Sound controversy.

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Articles
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The Journal of Economic History , Volume 4 , Issue 1 , May 1944 , pp. 21 - 48
Copyright
Copyright © The Economic History Association 1944

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References

1 Hamilton, Earl J., “Monetary Disorder and Economic Decadence in Spain, 1631–1700,” The Journal of Political Economy, LI (1943), 477–93CrossRefGoogle Scholar.

2 Hamilton, Earl J., “Money and Economic Recovery in Spain under the First Bourbon, 1701–1746,” The Journal of Modern History, XV (1943), 192–206CrossRefGoogle Scholar.

3 Commonly called doubloons (doblones) because of the prevalence of the multiple units, or “doubles.”

4 Archivo Histórico National, Madrid—hereafter cited as AHN, Clero: León, Benitos de Sahagún, Leg. 379.

5 Or “twenty,” a coin equivalent to 20 vellon reals.

6 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1331e, fols. 584–585; Archivo del Ayuntamiento, Santander, Leg. 17, No. 17. Rühe, Fritz, Das Geldwesen Spaniens sett dem John 17.72 (Strassburg, 1912), p. 25Google Scholar, n. 1, argues that for the first time genuine fractional money was established in Spain but the legal-tender limit remained high enough to allow wide scope for the unitary employment of vellon.

7 Pesos of 15 reals 2 maravedis, reals of 34 maravedis, and maravedis. A pragmatic of May 29, 1772, prohibited contracts payable in gold that did not reduce the sums involved to vellon reals. AHN, Sala de Alcaldes de Casa y Corte, Lib. 1360e, fol. 291.

8 AHN, Sala de Alcaldes de Gasa y Corte, Lib. 1335e, fols. 36–38.

9 Archivo del Ayuntamiento, Cádiz, Cabildos del Ano de 1748, No. 104; Archivo del Ayuntamiento, Santander, Leg. 17, No. 8; Archivo Regional, Valencia, Real Acuerdo, fols.

10 Archivo General de la Nación, Mexico—hereafter cited as AGN, Reales Cédulas, Tomo XCI, No. 113, fols. 216–218.

11 AGN, Reales Cédulas, Tomo LXX, No. 20 bis, pp. 3–6.

12 Gold imports were not prevented entirely, as economic theory would lead one to expect. Undervaluation has seldom prevented all importation or coinage of the undervalued metal under bimetallism. For example, H. Gordon Hayes has shown in a note, “Bimetallism Before and After 1834,” The American Economic Review, XXIII (1933)., 677–79Google Scholar, that, notwithstanding the frequent assertions to the contrary by leading economists and public officials, surprisingly significant quantities of gold were imported and coined in the United States before 1834, when it was undervalued at the mints, and that silver loomed very large in our imports and coinage after 1834, when it was undervalued.

13 Archivo General de Simancas—hereafter cited as AS, Secretaria de Hacienda, Leg. 838; Archivo Histórico Nacional, Bogotá, Reales Cédulas y Órdenes, Tomo XVII, fols. 512–514.

14 AGN, Reales Cédulas, Tomo LXXII, No. 54, fols. 135–138.

15 AGN, Reales Cédulas, Tomo LXXII, No. 54, fols. 139–140.

16 AGN, Reales Cédulas, Tomo LXXII, No. 54, fols. 141–142; No. 5,5, fol. 144.

17 Ibid., Tomo LXXV, No. 33, fol. 81.

18 Ibid., Tomo LXXVI, No. 86, fol. 204.

19 Or provincial 2-real pieces debarred from circulation in America.

20 AGN, Reales Cédulas, Tomo LXXIV, No. 29, fol. 103.

21 Ibid., Tomo LXXV, No. 1, fol. 1.

22 Ibid., Tomo LXXV, No. 62, fol. 174; Tomo CCLXXIV, No. 74, fol. 121.

23 Ibid., Tomo LXXV, No. 65, fol. 177.

24 AGN, Reales Cédulas, Tomo LXXV, No. 75, fol. 213.

25 AS, Secretaria de Hacienda, Leg. 835.

26 AGN, Reales Cédulas, Tomo LXXVIII, No. 130, no fol.

27 For example, on September 3, 1754, the Count of Valparaiso sent the Council on Commerce and Money (Junta de Comercio y Moneda) sixty-five samples of money recently coined in the Indies “for a thorough examination of the design, weight, and fineness.” AS, Secretaria de Hacienda, Leg. 835.

28 It is interesting to note that on November 9, 1766, the ministry of finance told the superintendent of the Mexican mint to take full advantage of the limit of tolerance on weight but warned him against coining 4-escudo pieces slightly below the standard fineness. AS, Secretaria de Hacienda, Leg. 835.

29 AS, Secretaria de Hacienda, Leg. 835.

30 See below, pp. 32–4.

31 AGN, Reales Cédulas, Tomo XCI, No. 113, fols. 216–218; Larruga, Eugenio, Memorias Politicos y Económicas sobre los Frutos, Comercio, F'bricas y Minas de España, XI (Madrid, 1791), 213Google Scholar.

32 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1360c fob. 269–270; Larruga, XI, 214–20.

33 AS, Secretaria de Hadenda, Leg. 815; AHN, Sala de Alcaldes de Casa y Corte, Lib. 1360e, fols. 266–268; Nueva Recopilación de las Leyes de España (Madrid, 1775)Google Scholar, Lib. V, Tit. XXI, Ley XII; Rull, Juan Surrá y, Breve Reseña Histórico-Critica de la Moneda Española (Madrid, 1862), pp. 65–6Google Scholar.

34 The possible use of the retired vellon as alloy in coining silver in order to take advantage of the small proportion of silver in some of the oldest issues was studied. After long deliberation the investigating committee advised that the silver obtainable would be too small to justify the trouble and expense of salvaging it. Hence the old vellon was used in coining the new. AS, Secretaria de Hacienda, Leg. 814.

35 AS, Secretaria de Hacienda, Leg. 815; Larruga, XI, 227.

36 AS, Secretaria de Hacienda, Legs. 814, 815, and 839.

37 AS, Secretaria de Hacienda, Leg. 814.

38 Ibid., Legs. 815 and 838.

39 González, Tomás, Censo de la Población de las Provincias y Partidos de la Corona Castilla (Madrid, 1829), pp. 389–92Google Scholar.

40 To the extent that the legislation was enforced, the field for the new issue was enlarged and its value sustained by the withdrawal of Valencian vellon from circulation in Murcia and Cartagena in 1772, the extinction of foreign and indigenous vellon from the Canaries in 1776, and the exclusion of Valencian vellon from circulation outside of Valencia in 1777. Novísima Recopilación de las Leyes de España (Madrid, 1805 ed.)Google Scholar, Lib. IX, Tit. XVII, Leyes XVXVII. But the effect could not have been great.

41 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1360c, fols. 266–267; Nueva Recopilación, Lib. V, Tit. XXI, Ley XIII.

42 Archivo del Hospital de la Venerable Ordcn Tercera, Madrid, Libros de Gastos, No. 1–38–1, fol. 129; No. 1–40–4, fol. 125; AHN, Clero: Segovia, Mercenarios Calzados, Leg. 286, fol. 224.

43 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1360e, fol. 292.

44 Following a long-standing precedent among Spanish monarchs, Charles extended the period of grace at least twice. AHN, Sala de Alcaldes de Casa y Corte, Lib. 1361e, fols. 848–851; Lib. 1364e, fols. 508–511.

45 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1360e, fols. 286–292; Nueva Recopilación, Lib. V, Tit. XXI, Ley XXVI.

46 AS, Secretaría de Hacienda, Legs. 817, 824, 838, and 839; Surrá y Rull, pp. 66–7; Altés, F., Traité Comparatif des Monnaies, Poids et Mesures (Marseille, 1832), pp. 144–46Google Scholar.

47 See for example, AHN, Consejos, Leg. 10, 293.

48 Bonneville, Pierre-Frédéric, Traité des Monnaies d'Or et d'Argent qui Circulent chez les Différens Peuples (Paris, 1806), pp. 37–8, 40Google Scholar. Assays made by Bonneville show that from 1772 to 1786 the 8-escudo pieces, which comprised a large part of the gold coinage, ranged from 21 karats 2¼ grains (89.8 per cent) to 21 karats 1¾ grains (89.3 per cent) fine. The average was 21 karats 2 grains. Smaller units contained a lower percentage of gold. For example, the doubloon, or 2-escudo piece, averaged only 21 karats 1½ grains (89.1 per cent). The proper fineness for all denominations was 21 karats 2½ grains. With 21 karats 1 grain (88.5 per cent) of fine gold, veintenes were only ½ of a grain, or 0.52 per cent, deficient. More than a fourth of the gold received at the Seville mint in 1774–75, for example, went into this coin; and in certain years a great deal more than a fourth of the gold by weight was used for this purpose. AS, Secretaria de Hacienda, Legs. 819, 821. Yet F. Rühe (Das Geldwesen Spaniens, p. 22) tells us that, because small gold pieces were difficult to coin, easy to lose, and inconvenient to handle, only a few were struck. This is an example of the error into which economists sometimes fall because they state as facts what accepted theory leads one to expect without bothering to ascertain what actually occurred. The 4- and 8-real pieces minted at Mexico City and Seville in 1772 were 10 dineros 18 grains (89.6 per cent) fine; and the pieces of ½ 1, and 2 reals were only 10 dineros 17 grains (89.2 per cent). The regulations required 10 dineros 20 grains (90.3 per cent). The 2-real pieces of provincial silver coined at Seville were of standard fineness, but the reals were 1.04 per cent short.

49 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1360e, fol. 290.

50 Shaw, W. A., The History of Currency (London, 1896), p. 171Google Scholar.

51 Soetbeer, Adolf, Edelmetall-Produktion und Werthverhältniss zwischen Gold und Silber (Gotha, 1879), p. 129Google Scholar.

52 AGN, Reales Cédulas, Tomo CXVII, No. 53, fols. 90–93; AHN, Sala de Alcaldes de Casa y Corte, Lib. 1367c, fols. 555–557.

53 Soetbeer, pp. 129–30.

54 AS, Secretaria de Hacienda, Leg. 821.

55 Gazeta de Madrid, 31 de Marzo, 1786, pp. 218–19; AHN, Sala de Alcaldes de Casa y Corte, Lib. 1375e, fols. 490–493; Surrá y Rull, p. 70; Planiol, Adolfo, Casa de Moneda de Madrid (Madrid, 1917), p. 46Google Scholar; Novisima Recopilación, Lib. IX, Tit. XVII, Ley XVIII.

56 AS, Secretaría de Hacienda, Leg. 820; Surrá y Rull, pp. 70–1.

57 Bonneville held that counterfeiting which had been so cleverly executed as not to be detectable was responsible for some of the worst samples. Assays of escudos minted at Madrid, Seville, and Mexico City by the Council on Money and Commerce in September, 1787, showed that none was below the limit of tolerance (20 karats 3¾ grains); but the number of samples tested was glaringly inadequate (AS, Secretaria de Hacienda, Leg. 820), and they may not have been chosen at random.

58 AS, Secretaría de Hacienda, Leg. 820.

59 Ibid. Leg. 819; Bonneville, pp. 38, 40–1, 235; F. Altés, pp. 146–47.

60 Soetbeer, p. 130.

61 AS, Secretaria de Hacienda, Legs. 820 to 824, and 839.

62 Plañiol, pp. 55–65, 69–71, 73. Fritz Rühe's assertion that no silver was coined in the Spanish mints after 1786 (Das Geldwesen Spaniens, p. 30) was based upon a priori reasoning without knowledge of the facts.

63 In 1796 silver constituted 95 per cent of the money coined at Mexico City (AGN, Ramo de Bandos, Tomo XVIII, No. 106), and in 1733–1826 gold averaged 95.44 per cent (Archivo Histórico de Hacienda, Mexico, Leg. 117, fols. 135–137).

64 AS, Secretaría de Hacienda, Leg. 820. On March 22, 1788, the Seville mint dispatched 1, 607, 175 reals in veintenes and pesetas to Extremadura to relieve the shortage. Ibid., Leg. 821. To curb the loss of silver to Portugal, the price paid for Portuguese gold coins by the Spanish mints was reduced on February 18, 1788. Ibid., Leg. 841.

65 AGN, Reales Cédulas, Tomo CXLVIII, No. 6, fol. 8.

65a AGN, Cedulario de Puga, fols. 74–75, 360–365; de Terreros, Manuel Romero, Los Tlacos Coloniales (Mexico City, 1935), pp. 3–4Google Scholar.

66 AGN, Historia, Tomo XLIV, No. 7, fol. 1; Reales Cédulas, Tomo XCI, No. 113, fols. 214–216; No. 122, fol. 235; Mena, Raul Ortiz, La Moneda Mexicana (Mexico City, 1942), pp. 28–9Google Scholar.

67 AGN, Historia, Tomo XLIV, No. 7, fols. 1–5; Manuel Romero de Terreros, p. 12.

68 AS, Secretaría de Hacienda, Leg. 835.

69 AGN, Reales Cédulas, Tomo CII, No. 8, fol. 9.

70 Ibid., Tomo LXXV, No. 74, fol. 215.

71 Ibid., Tomo LXXV, No. 73, fol. 213.

72 Ibid., Tomo CXXXIV, No. 46, fol. 84; Reales Ordenes, Tomo III, no fols.; AS, Secretaria de Hacienda, Leg. 841.

73 AGN, Reales Cédulas, Tomo CXLII, No. 56, fol. 69.

74 The Count of Revillagigedo was familiar with Corona's memorial of 1767 and was strongly influenced by it. Archive Historico de Hacienda, Mexico, Leg. 641, No. 10.

75 AGN, Historia, Tomo XLIV, No. 7, fols. 1–10; Corrcspondencia de Virreyes: Revillagigedo, Tomo XXII, No. 75. fols. 418–441.

76 AGN, Reales Cedulas, Tomo CLIV, No. 119, fol. 152.

77 Archivo Histórico de Hacienda, Mexico, Leg. 117, fols. 135–137; Manuel Romero de Terreros, pp. 15–8; AGN, Bandos, Tomo XXVII, No. 183, fol. 236; Real Hacienda, Tomo CCXXXVIII, fols. 20–23.

78 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1361e, fols. 848–451; Lib. 1364e, fols. 508–511.

79 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1378e, fols. 726–728; Lib. 1381e, fols. 807–809; Lib. 1382e, fols. 1330–1332; Lib. 1386e, fols. 1136–1137; Lib. 1388e, fols. 928–929. In 1787 the royal chancellory and the superintendent of church buildings at Granada informed the Crown that over 300,000 veintenes had been refused and the holders told to send them to the mint at Seville as bullion. Instead of being complimented, the officials were reprimanded and told to accept veintenes in the future. AS, Secretaria de Hacienda, Leg. 820.

80 Gazeta de Madrid, 22 de Octubre, 1790, p. 704; 11 de Mayo, 1792, p. 312; 2 de Junio, 1792, p. 360; 26 de Diciembre, 1794, p. 1510.

81 AGN, Reales Cédulas, Tomo XCIX, No. 177, fol. 286; Tomo CI, No. 115, fols. 429–430; No. 150, fol. 500; Tomo CII, No. 154, fol. 274.

82 AS, Secretaría de Hacienda, Leg. 835. This was approximately one eighth of the total amount of gold and silver coined in the mint at Mexico City, in 1796 for example. AGN, Ramo de Bandos, Tomo XVIII, No. 106.

83 The losses on pesos and half-pesos were negligible. The loss on lower denominations sold to the mint was estimated at from 6 to 8 per cent; but in the concrete examples given the losses, when computed, actually ranged from 1.34 to 2.26 per cent.

84 Archivo del Ayuntamiento, Mexico City, Monedas de Cobre: 1769 a 1848, No. 3284, Exp. 3. The original period allowed by the President of the Audiencia of Guatemala, who estimated that two million pesos were in circulation in his territory, was only one year. AS, Secretaria de Hacienda, Leg. 835.

85 AGN, Ramo de Bandos, Tomo XX.

86 A ring of clever counterfeiters at Birmingham, England, proved particularly troublesome in 1796. Archivo Histórico Nacional, Bogotá, Virreyes, Tomo XVI, fols. 259, 307. On June 17, 1796, the Mexican Viceroy was warned that 8-real pieces counterfeited at Birmingham with great dexterity were circulating in the United States. AGN, Reales Cedulas, Tomo CLXIV, No. 131, fol. 236.

87 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1361e, fols. 536–541.

88 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1359e, fols. 324–327; Lib. 1360e, fols. 906–908; Lib. 1366e, fols. 29–32; Lib. 1381e, fols. 311–315; AGN, Reales Cédulas, Tomo C, No. 178, fol. 465. In 1786, soldiers who had crudely counterfeited more than 8,000 pesos of lead in 2- and 4-real pieces and passed them at night were apprehended. AHN, Sala de Alcaldes de Casa y Corte, Lib. 1375e, fol. 575.

89 Apéndice a la Educatión Popular (Madrid, 1775), II, xxxviiGoogle Scholar.

90 AGN, Reales Cédulas, Tomo CLXXIX, No. 86, fol. 118.

91 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1368e, fols. 386–391.

92 Archivo del Ministerio de Hacienda—hereafter cited as AMH, Negociado 130, Leg. 2, Atado 2, No. 30.

93 A vellon peso was an accounting unit of 15 reals 2 maravedis.

94 Of 1 real a day, which was easy to calculate and amounted to almost precisely 4 per cent.

95 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1368e, fols. 386–393.

96 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1369e, fols. 342–344; Gazeta de Madrid, 1 de Julio, 1785, pp. 415–16; Canga Argüelles, José, Diccionario de Hacienda, V (London, 1827), 228Google Scholar.

97 AS, Secretaria de Hacienda, Leg. 359. The four hundred merchants and financiers of the City of London who agreed at the end of February, 1797, to receive the inconvertible pound at par and to endeavor to make all payments in pounds at par were actuated purely by patriotism when invasion seemed imminent. They neither demanded nor received compensation.

98 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1370e, fols. 479–483; AMH, Negociado 130, Leg. 1, Atado 2; Gazeta de Madrid, 2 de Julio, 1782, p. 536.

90 AMH, Negociado 130, Leg. 1, Atado 2; Gazeta de Madrid, 1 de Julio, 1785, pp. 415–16; 23 de Mayo, 1786, pp. 314–42; AS, Secretaria de Hacienda, Legs. 817 to 824; Plañiol, pp. 55–7, 62, 65, 71.

100 AS, Secretaría de Hacienda, Leg. 359.

101 AMH, Negociado 130, Leg. 1, Atado 1, No. 10.

102 AHN, Estado, Leg. 3196, fol. 2; AS, Secretaría de Hacienda, Legs. 358 and 359; AMH, Negociado 130, Leg. 1, Atado 2; AGN, Reales Cédillas, Tomo CXXXIII, No. 240, fol. 426; Joseph Alonso Ortiz, Ensayo Económico sobre el Sistema de la Moneda-Papel (Madrid, 1796), pp. 173–75; Comte de Mirabeau, La Banque d'Espagne (No place, 1785), pp. 12–3, 26.

103 AHN, Sala de Alcaldes de Casa y Corte, Lib. 1384e, fols. 436–441.

104 Ibid., fols. 503–511; AMH, Negociado 130, Leg. 1, Atado 3.

105 Gazeta de Madrid, 10 de Marzo, 1795, pp. 270–71; Canga Argüelles, V, 229–30.

106 AMH, Negodado 130, Leg. 2, Atado 4; Gazeta de Madrid, 30 de Abril, 1799, pp. 339–42.

107 AMH, Negociado 130, Leg. 1; Leg. 2, Atado 3; Gazeta de Madrid, 2 de Septiembre, 1794, pp. 1050–55; 19 de Diciembre, 1794, PP. 1484–88; 17 de Abril, 1798, pp. 240–45; Canga Argüelles, I, 29; AHN, Sala de Alcaldes de Casa y Corte, Lib. 1382e, fols. 1365–1371; Lib. 1384e, fols. 436–442, 503–511; Lib. 1385e, fols. 692–695; National Archives, Washington, Diplomatic Dispatches, Spain, I: W. Short to the Secretary of State, Madrid, July 1, 1793.

108 AMH, Negociado 130, Leg. 2, Atado 3; Gazeta de Madrid, 23 de Julio, 1799, p. 663; 8 de Noviembre, 1799, p. 968; AHN, Sala de Alcaldes de Casa y Corte, Lib. 1387c, fols. 1011–1013; Lib. 1388e, fols. 936–942. 969–971; Lib. 1389e, fols. 380–383, 385–386, 404–436; Lib. 1390e fols. 664–667, 1649–1653, 1703–1704.