The First Global Currency

Simon Rostron

By Simon Rostron
LBMA Consultant


Do you remember that scene in the 1977 movie when Butch Cassidy and the Sundance Kid, as usual on the run, drop in to see their old friend Sheriff Bledsoe, who turns out not to be as welcoming as they’d hoped?

Sheriff Ray Bledsoe: [to Butch and Sundance] “You should have let yourself get killed a long time ago when you had the chance. See, you may be the biggest thing that ever hit this area, but you’re still two-bit outlaws. I never met a soul more affable than you, Butch, or faster than the Kid, but you’re still nothing but two-bit outlaws on the dodge. It’s over, don’t you get that? Your time is over and you’re gonna die bloody, and all you can do is choose where.”

Leaving aside where Butch and Sundance died ‘bloody’ (in a shootout in San Vincente, Bolivia, so it is said), another question arising from Bledsoe’s prediction is what exactly is meant by ‘two-bit’, a term that also turns up in the well-known phrase “shave and a haircut, two-bits”, dating back to at least 1899 when it formed the basis of a song called At a Darktown Cakewalk by Charles Hale.

The dictionary definition is ‘cheap, worthless, of little value’, but the formal meaning is more interesting (and it’s not modern-day trader talk). Two-bits is slang for a quarter, or 25 cents, which in turn means that ‘one bit’ is 12½ cents, not a known value among the nickels and dimes of American coinage, or at least it hasn’t been since the US Coinage Act of 1857, which (quoting Wikipedia) “repealed prior legal tender laws concerning foreign specie”. But what ‘foreign specie’?


Pieces of Eight

In his spare time, when he was not persecuting priests (for which he was excommunicated) or, as one of his biographers put it, “loving women greatly”, the mid-14th century Pedro the Cruel of Castile introduced the silver real into the Spanish currency. (Real means ‘royal’, the same derivation as real-estate).

Pedro’s real was small: formally 1/66 of a Castilian silver mark (230.0465g), so not quite 3.5g and was 134/144 parts fine. It circulated among a series of other coins (gold, silver and copper) and this state of affairs maintained until 1497, five years after “Columbus sailed the ocean blue ...”, when during the reign of Ferdinand and
Isabella, a major monetary reform was undertaken, outlawing all other coins except reals (and the later gold escudo) and, importantly, creating the silver real de un ocho, or eight reales piece.

At the same time, the currency was fractionally devalued (a continuing theme), so the real was 1/67 of a Castilian silver mark, although the fineness of the silver remained the same. While Spanish silver reals were minted in various denominations: ½, 1, 2, 4 – it was the highest value, the eight reales, that became the formal Spanish trading unit and, ultimately, the first recognised global currency for over 300 years, becoming known to British merchants and pirates alike as ‘Pieces of Eight’.

Moreover, eight reales pieces, because of their trusted purity (27.47g/0.822 fine – less than the original minting) and because their milled edges discouraged trimming, also became the foundation of a range of national monetary systems, and not just in Latin America where the silver – much of it from the vast Potosi deposits in Bolivia, which the Spanish conquistadors found in 1545 – was mined.

Indeed, it was not until 1869, when Spain adopted the peseta and joined the Latin Monetary Union that the long history of Pieces of Eight began, slowly, to draw to a close. For example, the Japanese yen is said to derive from these coins, and it is certain they were actively employed in China from where 19th-century Mexican examples are known to have been additionally stamped with ‘chop marks’ to prove their authenticity. Much later, in Mexico itself, the last silver pesos, descended from silver reales, were minted in 1977 (in the form of a 100-peso coin).

More importantly, in the context of today’s global currency, it is certain that Spanish eight reales pieces are the linear ancestor of the US dollar, but to discover how and why we need to turn our attention to a small European community in the early part of the 16th century.

Pedro the Cruel of Castile (1334-1369). Known, among other things for (reluctantly) giving Edward the Black Prince the ruby (actually a spinel), which is now the centrepiece of the British Imperial State Crown and set above the Cullinan diamond.

Joachimsthalers and Reichsthalers

The present-day town of Jáchymov rests in a valley on the Czech side of that country’s northwest border with Germany. However, in 1512, when silver was discovered in the appropriately named Ore Mountains, the resulting settlement founded by Stephan Schlick (or Šlik) was originally named ‘Tal des heiligen Joachims’ or ‘Valley of the Holy Joachim’, which was quickly shortened to Joachimsthal, and was part of Bohemia, which itself was a part of the Holy Roman Empire stretching across western, central and southern Europe.

It took four years for Stephan and his brother Hieronymus to organise and open silver mines in the area, and the first coins began to be minted in Joachimsthal in 1518, although it was not until the 1530s that the name ‘taler’ (German: ‘of the valley’) was recorded.


This quickly evolved into ‘thaler’, which is to be found in a wide range of Germanic silver coins of appropriate weight. Wikipedia, for example, lists Reichsthaler (1566), Silverthaler, Albertusthaler (1612) and Laubthaler (1726), among many others.

The exact composition varied but Reichsthalers – the standard thaler silver coin in the Holy Roman Empire for some 300 years from 1566 – contained 25g-26g pure silver and, importantly, was similar in weight (and silver content) to Pieces of Eight.

Unsurprisingly, the Schlick family (Stephan himself died in 1526), became wealthy but not for long. In 1528, Ferdinand I, King of Bohemia, Hungary and Croatia, commandeered the right to mint silver coins, which explains ‘Royal’ in the name of the Jáchymov Mint. A century later, presumably after an extended court case, the rights were returned to the founding family, but they didn’t have much longer to enjoy the rewards from the mines, which were, by then, almost played out, closing finally in 1671.

Interestingly, the end of silver production was not the end of the town’s mineralogical history. In 1898, Marie and Pierre Curie identified radium (and polonium) from pitchblende mined in Joachimsthal, which went on to become the major global source of these elements for many years.

The reverse (left) and obverse of a Charles V eight reales coin or Piece of Eight. Source: Wikipedia.

The Spanish Empire - Both In One

In 1549, the Hapsburg Charles V (King of Spain among many other titles) introduced the so-called ‘Pragmatic Sanction’ which unified the seventeen provinces of the Low Countries, today covering the Netherlands, Belgium, Luxembourg and parts of northern France, into a coherent unit.

While this move was unpopular among the inhabitants of these provinces, who had hitherto enjoyed a level of independence under Charles’ father, Philip the Good of Burgundy, it did give the Dutch mercantile class cogent access to the riches and trading opportunities within the Spanish Empire, which reached its apogee under Charles and his son, and included all of South and Central America (with the exception of Brazil) and much of what is now the southern and western United States.

The reverse of Pieces of Eight, which were principally minted in Spain and Mexico, reflected this supremacy (see photo) with two hemispheres representing the Old and the New World, supported by two columns (the ‘Pillars of Hercules’) carrying the Hapsburg motto Plus Ultra (Farther Beyond) and surrounded by the Latin phrase Utraque in Unum (Both in One).

At the same time as the Spanish, now under Charles V’s son, Philip II (he of the 1588 Armada), were ruling most of the known world, their subjects, the Dutch, were also beginning to trade internationally using, as they did so, their version of Holy Roman Empire Reichsthalers mixed with Spanish eight reales.

With the growing popularity of the German reichsthaler, however, the Netherlands had to follow up with their own Dutch rijksdaalder in 1583, of weight 29.03 g and 0.885 fineness, and featuring an armoured half bust of William the Silent (the principal leader of a large Dutch revolt against the Spanish from the 1560s).

With this combination of events, it wasn’t long before ‘thalers’ and ‘daalders’ evolved, for English speakers into ‘dollars’, with the eight reales coin becoming the ‘Spanish dollar’.

The New Currency

In the immediate aftermath of the 1775-83 War of Independence, the newly formed United States of America lacked many of the attributes of a sovereign nation. Not least among these was coinage.

Until the discovery of gold in California in 1848, and the huge silver deposits of the Comstock Lode, in Nevada in 1859 (see Alchemist 107), the country was relatively short of domestically mined precious metal and, moreover, it took some time to build enough mints to satisfy the demands of the rapidly growing, and increasingly wealthy, population. Indeed, much of the early work of the first mint (in Philadelphia) was converting foreign coins into US equivalents.

That’s not to say that the formal establishment of the US dollar was long in coming. On 6 July 1785, the Continental Congress of the United States authorised the issuance of a new currency, the US dollar, but authorisation was one thing and production was another.

As Wikipedia explains… “The United States Mint commenced production of the United States dollar in 1792 as a local version of the popular Spanish dollar or piece of eight produced in Spanish America... Made with similar silver content to its counterparts minted in Mexico and Peru, the Spanish, U.S. and Mexican silver dollars all circulated side by side in the United States, and the Spanish dollar and Mexican peso remained legal tender until the Coinage Act of 1857 [referred to above].”

For these reasons, through the first half of the 19th century, a lot of American retail trade depended on the circulation of foreign coins which were legal tender until the US Coinage Act of 1857 referred to earlier. Indeed, it has been calculated that through the 1830s and 1840s, as much as 30% of ‘American’ money was of foreign manufacture.

Even after the passage of the 1857 Act, Spanish silver was still useful. For example, through the 1861-65 Civil War, much of the economy of the Confederacy depended on foreign, usually Spanish/Mexican, coinage.

The linkage between US dollars and Spanish dollars goes further, it is argued, than just coins. Consider this Spanish pictogram explaining how the dollar symbol originated from the obverse of the eight reales coin.


E Pluribus Unum

All of which takes us back to ‘two-bits’.

The traditional motto of the United States, E Pluribus Unum, which appeared on a number of US coins, including the Morgan Silver Dollar minted between 1878 and 1904, is usually translated as, ‘Out of Many, One’. While this formally refers to the ideal of creating one nation, it could, at a stretch, also apply to the Spanish dollar.

Even though there were various denominations of silver reales, the only coin that, as this article attempts to explain, garnered an international following was the eight reales piece, and to create smaller units, this coin was regularly and legally split into halves, quarters or eighths, with the smallest division becoming known, in English, as a ‘bit’. Hence, when US and Spanish dollars were circulating pari passu in the first half of the 19th century, a US quarter was equally ‘two-bits’. As simple as that.

Despite their long and influential history, Spanish dollars have now largely passed into history, relegating the use of the phrase ‘Pieces of Eight’ to the exclusive property of pirates such as Captain Flint or his namesake, Long John Silver’s talkative parrot, in Robert Louis Stevenson’s Treasure Island, who has the book’s last words:

“The bar silver and the arms still lie, for all that I know, where Flint buried them; and certainly they shall lie there for me. Oxen and wain-ropes would not bring me back again to that accursed island; and the worst dreams that ever I have are when I hear the surf booming about its coasts or start upright in bed with the sharp voice of Captain Flint still ringing in my ears: “Pieces of eight! Pieces of eight!”

Morgan Silver Dollar – The image of Liberty Surrounded by the phrase E Pluribus Unum.

Simon Rostron

By Simon Rostron
LBMA Consultant

Simon Rostron has been Managing Director of Rostron Parry Ltd - media relations consultancy since 1991 and PR and media consultant to LBMA since 2014. In his earlier career he was a Stockjobber, London Stock Exchange and remains a legend in his own lunchtime.