Most of us remember that the pesetas was replaced by the euro on January 1, 1999, but further back in history, Spanish currencies have played an important and exciting role in world history. Spanish currency once played a role comparable to that of the US dollar and the euro in world trade today. The story of Spanish money is a story with many ingredients, including piracy, colonization and power struggles between some of the world’s most powerful nations. Did you know that the Spanish silver coin “eight real” long dominated trade between Europe and America and became a forerunner of today’s dollar?
The time when Spain is once again united into one empire under Christian rulers is a period when the great European powers are seriously beginning to explore the rest of the world. A veritable race for land and resources is developing. He who subjugates the largest territories with the richest natural resources can become the most powerful in Europe and perhaps in the whole world.
Spain is ready to enter the competition. The Reconquista, the Christian reconquest of the Iberian Peninsula, has admittedly taken time: from 722 until it was completed in 1492 under King Ferdinand and Queen Isabella. The early kingdoms of Castile and Aragón, are allied through marriage and have finally subjugated the entire Spanish territory, after conquering the last Muslim outpost in Granada.
Spain could now begin to look beyond its own borders and throw itself into the battle to become a real superpower. On behalf of Ferdinand and Isabella, Columbus set out with his ships as early as 1492, to find a shorter sea route to India. As is well known, he ended up on the American continent instead – and it offered opportunities: New plants, products and resources of various kinds – not least silver and gold reserves – that surpassed what Columbus and his men could have dreamed of. And the Spaniards knew how to make use of it.
The exploration and development of the American continent did wonders for the Spanish economy, influence, and military strength. The trade in goods controlled by the Spaniards went so fast. The goods were traded in Spanish currency, which at that time was the silver coin real. In South America, the Spaniards found such large deposits of silver that they did not even bother to transport the metal back to Spain, but to a large extent minted coins on the spot. Spanish currency poured into the market. The trade had soon grown so much that the need for a larger currency than the real one arose.
At this time, the value of money was directly related to the value of the metal the coins were minted in. The purity and weight of the metal determined the value. Exchange rates were set based on the value of the metal, and thus one could effectively trade with countries and areas with a different currency. Access to metals for making coins was of course important – and here the Spaniards were at the forefront, especially with their conquests in South America.
Of course, other countries also produced coins. And Spain was inspired, among other things, by Bohemia, a territory that is now part of the Czech Republic, but which at the time was part of the superpower The Holy Roman Empire, also called the German-Roman Empire, a state formation that lasted from 843 until 1806 , that is, for nearly a thousand years. Silver from Bohemia’s mines produced a coin called the Joachimsthaler because the metal was extracted from the valley of the same name, the Joachim Valley.
Then as now, well-functioning trade depended on trust. Could one trust that the metal used in the coins was actually worth what was written on it? The Thaler was widely used in Europe, the Holy Roman Empire guaranteed the weight and purity of the metal. It is from the Bohemian Thaler that the Scandinavian languages have the word for valleys, daler. The Spaniards called their new and larger currency tálero. It is easy to see that the word is related to English “dollars”, but more on that a bit later.
In 1497, not many years after the Spaniards began their conquests in South America, Spain introduced an 8-real coin. The coin was minted to match the value of its main competitor: the Bohemian thaler. The eight-real was first known as “peso de ocho”, translated “eight parts”, but eventually went under the name dollar or Spanish dollar. And the Spanish dollar was to become a legendary currency. If you have read Robert Louis Stevenson’s “The Treasure of Pirate Island” or seen the movies “Pirates of the Caribbean”, then you may have noticed the expression which in English sounds “pieces of eight” or eighths? What is referred to then are Spanish dollars or eight-real coins that were attractive also to pirates precisely because one could trust the value of the metal these coins were made of.
The great European voyages of discovery were, as mentioned, a time of greatness for Spain. The economy and trade flourished – it was a prosperous time. In 1537, the country introduced the escudo, which in modern times became the name of the Portuguese currency. In the 16th century, escudo was the name of a Spanish gold coin worth 16 reals. As is well known, the Spaniards had gained access to abundant silver and gold resources in South America, and the minting of coins did not stop with the escudo.
The next coin out for the Spaniards was the doubloon (of doblón meaning “double”) worth a staggering 32 reals (or two escudos). The doubloon, which is also made of gold, has become the dream coin for the treasure hunters. It is not without reason that it is known from countless legends and stories of pirates, shipwrecks and hidden treasures. Finding doubloons is the ultimate for any treasure hunter.
Skilled craftsmen made standardized coins in the various values that were added as the Spanish economy grew. And the influence and size of the Spanish Empire made their coins a viable currency in many parts of the world. Several countries actually used the Spanish currency as their own, and Spanish coins became the first real world currency we know of. Spanish currency became a standard in world trade, much like the US dollar and euro are today.
America round trip
When the Dutch revolted against the European powers of the time in the late 16th century, Spain and the Holy Roman Empire, they began to produce their own currency, which they called the leeuwendaalderen or lion dollar. Money is power, and a separate currency offers many benefits. The lion dollar was a slightly cheaper unit than the Spanish dollar because it contained less silver. The Dutch took it with them to the new colonies and used it for trade there. In the struggle for colonies in the New World, the Dutch had made a name for themselves both on the Caribbean islands and on the east coast of what would later become the United States. New Amsterdam is known to be the first name the Dutch gave to New York.
From there, the coin spread to other colonies on the continent, and the lion dollar and the Spanish tálero, for a time became the most popular and viable coins on the American continent. We know that English-speaking settlers referred to “pieces of eight” as Spanish dollars as early as 1581. Spanish dollars were still widely used in the British colonies of North America during the American Revolution (1765-1783). Later, the dollar was used as the name of the US currency, and the US dollar was given the same value as the Spanish dollar.
Some have suggested that the famous dollar symbol $ comes from the columns and stripes embossed on one side of the Spanish dollar. Whether that is true, we do not know. It is certain that the Spanish dollar was still a common currency in the United States until 1857 when the country switched to its own currency. It is part of history that although the United States, through a law of 1792, created the United States Mint to mint its own national currency, the Spanish dollar long remained a more popular currency with most people than the US dollar because it was heavier and contained silver of better quality.
Many other countries’ legal tenders are also based on Spain’s currency – that says something about the status of the Spanish coinage internationally. Most countries in South America have used the peso, from “peso de ocho”, but the Spanish standard has also been the basis for legal tenders in countries in North America and Asia.
The term “peso de ocho” or in English “pieces of eight” has been popularized and appears in books and movies to this day, for example in the series Pirates of the Caribbean. There are good reasons why Spanish currency and pirates like to be associated with each other. Spanish currency was for a long time used in large parts of world trade – it was accepted and recognized, one could trust the value of the metal it was made of – and consequently Spanish coins also became particularly attractive to pirates. Such coins were a viable currency wherever they had to set sail.
Millions of Spanish dollars were minted over hundreds of years and used in trade all over the world. Spain itself introduced the peseta as its currency in 1869.
Harry B., Find Your Spain!
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