A Brief Analysis on the Milled Coinage of the Spanish American Colonies

By Rick Engstrom

9/24/05

Design: 

Crowned Coat of Arms of Spain, superimposed by the three fleur-de-lis of the Bourbon Dynasty (center).

Obverse - 1742 Mexico 2 Reales

Design:

Representation of the Pillars of Hercules around the crowned globes, both representing the Old World and the New World.

Legend*:

(Main) VTRAQUE UNUM (Both Shall Be One)
(Pillars) PLUS ULTR (More Beyond)

Mintmark:

In this example, represented by a small o over large M (seven o'clock), designated for Mexico City

Assayer's Initials**:

Historical Overview

Milled coins first began production in the Spanish New World in 1732, in Mexico City.  By 1769, Spain had begun production of milled coinage in six additional locations  throughout South America:  Lima (1751), Santiago (1751), Guatemala (1754), Bogata (1759),  Potosi (1767), and Popayan (1769).  Popayan produced pillar coinage for only one year, of which remaining examples today are extremely scarce.  In 1772, by order of King Charles III, the pillar design was replaced by the bust design, which remained in place until the mid 1820's, when Spain began to lose its hold over the American colonies.

Denominations of the real coinage exist, in their original state of production, in five denominations (Eight, Four, Two, One, and One-Half, respectively), which matched the same denominations of the 'cob' coins they replaced.  Unlike the cob coins of earlier years, the milled dollar possessed a uniform shape and detailed edges intended to combat the practice of shaving silver from the coin - a serious problem that occurred in circulation.

During this time, the milled coinage of the Spanish New World became wildly popular throughout the world. As population grew, and colonies from Europe began to take hold across the globe, worldwide economic demand for specie coinage flourished.  Thus, pillar coinage gained its popularity due to two major factors:

     1.  The consistency and fineness of its silver content.  It has been noted that the fineness of the milled coinage was set at .916 pure, which was marginally lower than the cob coinage it replaced (which carried a fineness of .930), and may have resulted as an attempt to offset the higher cost of production.

     2.  Robust availability.  Although the colonies produced a large quantity of silver coinage, their local needs were relatively insignificant.  Even though a large balance of production was shipped back to the Spanish Crown (in the form of the 'royal fifth' and excessive taxes), still more was left over to meet the increasing demand for international trade and immerging local economies that lacked the ability or resources to produce enough of  their own.

Spanish American reales flowed through Asia, and the Middle East, where demand for silver coinage was high and traded at nearly twice its value in Europe.  Today, collectors can find many various examples of Spanish reales that have been clipped, counterstamped, chopped, and struck over as a testament to its global acceptance - many of which are quite rare and extremely valuable.  Montserrat, for example, used both counterstriking and clipping of various denominations of the Spanish real coinage to establish its own monetary unit of the dollar (equal to 8 bits, in various forms).  Great Britain used counterstamped eight reales as emergency coinage between 1797 and 1808.  Australia's first 'holey dollar' was punched on the milled dollar of the Spanish Colonies.  Thomas Jefferson, himself, proposed to congress that the US adopt the 'Pillar Dollar' as her monetary unit on Sept. 2, 1776.  

The Origin of 'Pieces of Eight'

The term 'pieces of eight' began through the practice of clipping eight reales into quarter sections - literally becoming just what the name implied:  pieces of eight reales.  Within the United States, one real was valued at 12 1/2 cents, which was commonly referred to as one 'bit', hence a quarter section of eight reales - which contained a market value of two reales - was commonly referred to as 'two bits', or a quarter dollar.

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