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The First Global Currency

If you’re a student of money – or perhaps if you just like money generally – you should visit the outstanding “Casa de Moneda”, or Royal Mint, in Potosi, Bolivia.  It is the birthplace, HQ, and corner-office of the world’s first global currency: the silver Spanish peso.  From this place, silver pesos were printed for nearly four-hundred years, and distributed throughout the world.  The tragic history and human story behind the first global currency make it even more compelling.  Last week we visited the Casa de Moneda and took the 90-minute guided tour.  It was the highlight of our trip to Potosi!

 

Here’s the entrance to the Casa de Moneda.  How’d you like that creepy face staring down at you as you go to work?

Casa de Moneda, Royal Mint

Entrance to the Casa de Moneda, the Spanish Royal Mint.

 

The First Global Currency

Here’s a close up of the original silver Spanish pesos, the first global currency.  These were hand-stamped coins – one ounce of pure silver – made here from the 1500s through the late 1700s.  As you can see, the Spanish weren’t too concerned about the shape or size of the coin – only the weight mattered.  “Peso” means “weight” in Spanish.

Hand-stamped silver Spanish pesos – the first global currency

Pure silver is not only very valuable, it’s also a rather soft metal.  When these coins were in circulation, people would cut little pieces of silver off the coins to keep for themselves.  If you’re selling something in exchange for some pesos, you’d better make sure you weight them first!

 

Here’s a re-creation of how they were made by hand:

Stamping coins by hand

The silver peso was the first global currency because they were Spanish coins, and Spain was the first global empire.  From the Royal Mint, silver pesos were distributed by throughout the Spanish Empire in North and South America, the Philippines, and Spain, and they were even used beyond the Empire, in China, the British colonies, and most of Europe.  These coins facilitated the first global trade system.

The World’s End

But what’s more impressive than their global reach is that they were produced at what can only be described as the World’s End.

 

At over 13,000 feet above sea level, Potosi is the highest city in the world of it’s size.   It’s location high in the Andes mountains means it was a very isolated place – especially back in the 1700s and 1800s when the Royal Mint was going strong.  The city is so high that you cannot grow food here.  You cannot even raise animals (with a few exceptions).   Everything required to run the Mint needed to be carried in over the mountains – food, people, animals, and building materials.  Everything was carried in hundreds of miles at enormous cost!

 

The Royal Mint was, in all practicality, on the Moon.

 

The Spanish chose this place to make their coins for only one reason, this:

Cerro Rico, Potosi

That mountain was the richest deposit of silver ever discovered.  It single-handedly funded the Spanish Empire, supported the first global trade system, and allowed production of the first global currency.

 

Legend has it that so much silver was taken from the mountain that they could have built a bridge of pure silver all the way across the Atlantic to Spain itself, and still had enough silver left over to carry across the bridge.  More precisely, there were about 60,000 tonnes of silver mined in Potosi.  That’s a lot!

 

Tragic History

That mountain also must be the deadliest ever known.  Eight million enslaved miners lost their lives in the silver mines over the course of four-hundred years.  That comes out to be about 20,000 lives per year, on average!  After the first hundred years, the local native population was decimated, so they started bringing in Africans up into these mountains.  The history and the superlatives of this place are just unbelievable!

 

The Machine

By the late 1700s, the Spanish decided to ramp up production at the Mint.  What you see below is the first modern mint machine.  It was designed and built in Austria, and had to be carried up into the Andes, like everything else.  Thank’s to Potosi’s cold, dry climate, it is still in remarkably good condition today:

The Minting Machine

The Minting Machine

This machine took silver ingots, and stretched them into thin plates, which were later punched into coins.  It was a modern wonder for its time, and it ran by donkey power – twelve donkeys to be precise.  But the donkeys only survived about 2-3 months at this altitude, so they needed a constant fresh supply of new donkeys brought up into the mountains too.

 

With the new machine, the quality of coins minted here improved a lot.  These more modern pesos were in circulation from the late 1700s until the 1820s:

Silver Spanish peso, circa 1800

The silver peso was also America’s first currency.   When the United States declared independence from the British, the dollar didn’t exist yet.  So silver Spanish peso were widely used in the United States for about 15 years, until it was replaced by the U.S. dollar in 1792.

 

Origin of The Dollar Sign

While nobody is quite sure where the dollar sign itself ($) originated, it seems likely to have come from the silver Spanish pesos printed at Potosi.  The coins printed here had an origin mark to show they were from Potosi.  The mark was the super-imposed letters P,T,S, and I, (an abbreviation of “Potosi”)  like this:

Origin of Dollar Sign PTSI

If you look carefully, you can see this sign in the left side of the coin pictured above.

 

If you take away the “P” and “T”, the mark looks like this:

Origin of Dollar Sign SI

See the dollar sign yet?

 

Or, Alternatively:

Perhaps a more popular explanation is that the dollar sign ($) comes from a combination of the letters “P” and “S”, which was commonly written to refer to the Spanish Peso.  For example, if you have 10 pesos, you might write “10 Ps”.  Eventually, the P and S got combined like this:

Origin of Dollar Sign PS

Whichever explanation is true, it seems the dollar sign was inherited from the world’s first global currency, the silver Spanish peso.

 

Potosi’s Royal Mint

There’s a lot more to see at the Royal Mint that I didn’t cover, such as colonial artwork, and displays about mining and smelting the silver.  Our kids loved the tour – especially my son.  I personally love history like this.  It is a place that had enormous impact on shaping the world, but today has largely been forgotten.   The world really is a fascinating place if you get out and explore it.

 

Cheers,

Jojo Bobo

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