At the beginning of the 16th century, a mining prospector by the name of Stefan Schlick found silver in the Ore mountains of Bohemia, not far from what today is the border between Germany and the Czech Republic.
As is the way with mining discoveries, many soon moved to the area in search of opportunity. The mining camp became a village which became a town – the town of Joachimsthal – literally Joachim’s Dale or, better, Joaquin’s Valley. Stefan Schlick’s family fortune was made for generations. We now know him as Count Schlick, and his descendants would be known for their military endeavours and for their amours, as well as for their silver.
Schlick started minting coins with his newly mined silver, similar in size and weight to the Guldengroschen (shortened to Guldener), which were just gaining popularity at the time – each 1⁄8th of a Cologne Mark of silver. Schlick called his coins, which weighed roughly an ounce and were an inch and a half (4cm) across “Joachimsthalers”. German speakers to the north and west shortened this to “thaler”, while Czech and Slavic speakers to the south and east called them “tolars”.
On one side the coin was Joachim, father of the Virgin Mary, and on the other the Bohemian lion.
The Holy Roman Empire adopted the denomination, and the Reichstaler, 401 grains of silver (a little bit less than an ounce) became the standard coin of the Holy Roman Empire from 1566 to 1750.
Large silver coins were becoming ubiquitous in the period; the corresponding English coin would have been the crown. The French had their ecu, the Spanish their peso, the Dutch their daalder, the Scandinavians their daler and the Swiss the thaler.
But with the large quantities of silver discovered by the Conquistadors in Mexico, Peru and Bolivia in the 16th century, it was the Spanish peso that would become the most widespread, a coin of worldwide importance, essential to trade between Europe, America and even Asia. It was more commonly known as the Spanish dollar, and many historians see the Spanish dollar as the first international currency, although Alexander the Great might have something to say about that.
It was a truly international coin though, as it made its way across the high seas through Spanish trading networks, which, thanks to the voyages of Vasco de Gama, now extended to South-East Asia as well the Americas. The Spanish dollar became the basis for national currencies from as far as Japan and the Philippines to China and India and all the way to Canada, not to mention the Spanish speaking nations of South and Central America somewhere in between. Over the course of several centuries, millions of Spanish dollars were minted, made possible by the extraordinary silver discoveries in the New World, especially at Potosi, Lima and Mexico City.
Why did every pirate’s parrot worth his salt greedily cry “pieces of eight”? The reason was the Spanish dollar. One Spanish dollar was eight reales. It was, literally, a piece of eight. It even had an 8 stamped on it. No wonder pirates craved it. From the 16th to the 19th century, the Spanish dollar was probably the most stable and least debased silver coin in the Western world.
In the 17th and 18th centuries it became the most widely circulating coin in North America too. Spanish dollars made their way into North American colonies via trade with the West Indies.
There was a shortage of British coins in North America thanks to Britain’s typically short-sighted policies towards its colony. British authorities refused to allow the colonists to mint their own money. Worried about shortages at home, they also limited the export of gold and silver coins. Settlers, who were not usually rich in gold and silver anyway, often ran out of hard money, and, early on, found themselves adopting the wampum shells favoured by the Native Americans as currency. In 1637 Massachusetts even declared them legal tender.
Settlers also used commodities such as cod, corn, beaver skins, nails and tobacco as money, such was the shortage of coin. This led to all sorts of problems. Tobacco crops, in particular, deteriorated quickly and so lost value. Nails led to people burning down barns to get at the “money” that held them together.
Colonial governments also issued paper money to facilitate economic activities, but, despite the British Parliament passing several currency acts to regulate colonial paper money, it kept losing its value, even between states.
No wonder Spanish dollars proved so useful and became so widespread. Colonists wanted them for the same reasons as their pirate cousins.
With the cries “no taxation without representation” the colonists rose up against their British overlords in 1776, finally winning their independence in 1783. To fund their war effort, the colonists began issuing their own paper money – the Continental. But it quickly lost its value, mainly through overprinting to meet the cost of war. British counterfeiters did their bit for the war effort too, duplicating the notes to devalue them.
First issued in 1776, by 1778 the notes had lost 80% of their value. By 1780, the notes were worth 1⁄40th of their face value. By 1781, they had become so worthless they ceased to circulate as money. Hence the expression, “not worth a Continental.”
The runaway inflation and the collapse of the Continental is what prompted the Founding Fathers to include in their Constitution that often quoted phrase: “No State shall … coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.” The US authorities broke that contract, of course, in 1971.
After the Revolution, Alexander Hamilton, Secretary to the Treasury, had the task of forming a currency for this fledgling nation. He had a random selection of Spanish dollars weighed, and based on the findings, specified in the Coinage Act of 1792 that the U.S. dollar would contain 371.25 grains (24 g) pure or 416 grains (27 g) standard silver, so that it would have “the value of a Spanish milled dollar as the same is now current”. The dollar, the basic unit of account for the United States, was modelled on the Spanish dollar. Even the “$” symbol was based on the inscription on one side of the Spanish dollar – the old pˢ (for peso) looking, to our modern eyes, like an S.
Spanish coinage remained legal tender in the United States until 1857. The pricing of equities on U.S. stock exchanges in 1⁄8-dollar denominations persisted until 1997.
The global reserve currency of the world – built on a Bohemian name, a Spanish network and solid south and central American silver.
And all a dollar means is, “from the dale”.
*Dominic Frisby is the author of Daylight Robbery – How Tax Shaped The Past And Will Change The Future, out now at Amazon and all good bookstores with the audiobook, read by Dominic, on Audible and elsewhere.
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