Empire with no silver, silver without empire: the crisis of the spanish monetary system (1788-1823)

di Dionisio de Haro Romero

Abstract english

This paper aims at deepening in the process of transformation of the Spanish monetary system from the Ancient Regime crisis till the moment when the basis of the modern monetary system are established. Considering as a critical point the Trienio Liberal (1820-1823), its relative failure is analyzed as well as the way in which the system prevents its whole reform, in spite of growing tensions between monetary supply and demand, until the first half of the nineteenth century with the Beltrán de Lis Reform of 1848.


This work is born with the goal of answering some of the questions produced by a number of studies about the Spanish monetary policy during the first half of the nineteenth century: What are the basis and the economic logics of the system and the traditional monetary policy?, How does the system manage to avoid its collapse after the loss of the Americas’ flows?, and What were the goals of the first monetary liberal reform of the nineteenth century?

The answer to these and other questions on the monetary policy of that period can be achieved by the study of the positions expressed in the monetary debates about the reform projects, and in the study of the monetary history itself and the difficulties found by the Spanish monetary system along the final crisis period of the Ancient Regime.

The present paper is developed in four chapters with a final conclusions paragraph. The first chapter analyzes the traditional monetary system of a bimetallic basis as well as the monetary policy of tax character that comes along with the former. The economic logics and the methodological basis on which the traditional monetary policy is founded are also analyzed. Finally, the growing cash difficulties faced by the system, once the metallic basis of the Americas’ remittances is lost, are exposed. The second chapter explains how the monetary system prevents its collapse, not through the reform, but by means of a progressive subordination to France. The third chapter focuses in the monetary reform of the Trienio Constitucional. The projects are analyzed emphasizing on the virtues and limits of a reform that for the first time intended to make a wide change to the traditional monetary system. Finally, the conclusions show the factors that explain the delay in the monetary transition process of Spain in the first half of the nineteenth century, as well as the real range of the monetary reform from the Trienio, evidencing the endogenous factors and difficulties of the general frame in which they develop and facilitate the limits of the monetary reform proposed in the second decade of that century.

The old monetary habits: an absurd monetary policy?

Spain became from the beginning of the sixteenth century the main supplier of precious metals to European markets (Tepaske 1986-1988; Hamilton 2000). Nonetheless, this does not mean that Spain has a modern monetary system or some developed financial institutions that allow the irruption of the capitalist system in the Spanish economy, but quite the opposite. During the sixteenth century and although the expansion of the trading between the Península and the Americas, Spain displays a distinctly feudal conquest model (Vilar 1976). The strong impulse that commerce experiences with the Americas in the eighteenth century, through the production of silver and the commercial liberalization of 1765 (Pérez Herrero 1992), has just a limited effect for the Peninsular economy, without a single modification of its traditional structure. The cycle of wars that begins with the Seven-Year war and finishes with the Independence war, means the ending of the colonial Spanish system and its displacement by the French and British capitals. Thus, the facts reveal that the Spanish economy scarcely manages to retain a significant amount from the enormous richness transfer from the Americas to Europe that occurs in the Modern Era (Espina Montero 2001). On the contrary, the Americas’ remittances flow continually through the European monetary institutions to the trading places of the continent, with no influence whatsoever in the potential modernization process of the national monetary system, inserting themselves in the process of European capital formation (Kriedte 1994).

The traditional system is established on a bimetallic basis, or double standard of gold and silver, in which both metals are coined freely in the Mints under rates of trade set by monetary authorities. It is a bimetallic system based on silver. The monetary policy is defined through the setting of a system of weighs and measures with which trades are made, the definition of the purchase rates of the precious metals, and the establishment of exchange rates with other foreign currencies and the tuning and contrast exams. All of them, roles played by the monetary institution directly under the Crown, the Royal Board of Trade, Currency and Mines, that centralizes the direction and execution of the monetary policy. The two-areas system is characterized by the high dependence of the Peninsular region upon the Americas. Not just the Mints dedicated to the coinage of gold and silver, those of Madrid and Sevilla, but also those from the Americas, produce a coin of high intrinsic value and apply high retention rates, though in the latter the coinage in cospeles have a more rustic finish, despite the positive effects derived in the eighteenth century from the substitution of the old hornazas by the modern fielato offices. The strong coin (Cipolla 1999) takes the path of exports or is retired from circulation and ends taking part of private treasures (Vadillo 1846), becoming prey of an intense process of hoarding (Marx 1976). In this sense, the Peninsular monetary supply of gold and silver is scarcely altered or affected by the production fever. On the opposite, an excessive coinage of copper coin or low-quality alloy is manifest, along with the circulation of fake money and gives entry into the internal monetary circuit of foreign or badly damaged coins.

The Crown, main actor in this drainage, leads the Americas’ profits to the maintenance of the expensive military policy and European diplomacy (Sardà 1998), thus condemning the Peninsular economy to a continuing shortage of precious metals and to an impoverished circulation of gold and silver coins, progressively aggravated by the persistent chronic deficit in the Spanish trade balance.

The monetary authorities, with the apparent goal of facing the capital flight without any remuneration, are bent on a defensive policy of prohibitions to the money exports with scant results (AGS, bundles 4880-4942). The continuous dispositions on permits, rights and circulation rates are exposed as inefficient measures at inhibiting the massive exports of capital. The contradiction lies in the fact that the export of metals is founded on the own traditional monetary policy consisting of low rates of the Mints, high rates for the right of coinage, and equivalences gold/silver of around 1/16,5, significantly decoupled in relation to Europe, with silver under valuated, and hence, in defense of gold stocks in the country, even if this policy forces silver to be exported in a large-scale basis. The traditional monetary policy does not obey to modern economic and monetary principles, but rather to reasons of tax and defense of traditional savings, considering the issue of coinage as another instrument of their policy of tax revenue. Definitely, the purpose is not to achieve a monetary policy that cares about price control and economic growth of the country. On the contrary, a feudal economic behavior is maintained whose logic consists in maximizing the collection of rents, and it is not conceived the monetary system as a key element in the developing market economy. That is, a monetary system is preserved unable of boosting the Peninsular economic growth by means of a money supply that provides sufficient liquidity to cover the traffic and to guarantee the investments.

In an effort to avoid falling into anachronisms, it is needed to say that the traditional monetary policy, though considered an absurd and anti-economic policy (Rojo 1998), keeps responding to the requirements and needs of the traditional economy. Throughout the first half of the nineteenth century, and probably until the monetary reform of Figuerola of 1868, the Spanish monetary system can be characterized, according to Keynes, as the result of the incapacity of central State to respond properly to money demand that, naturally, arises from the process of economic transformation. In the preindustrial economies, currency, even if it exists in greater or lesser extent, does not have a central role in the economy. Also, in these traditional economies the conventional roles of money are noticeably altered by the high levels of hoarding, and a large amount of transactions are done without any money involved. Thus, the traditional metallic system becomes compatible with a traditional and poorly monetized economy (Chick 1990), away from the monetary framework typical of the modern economies after the industrialization processes of the nineteenth century (Kindleberger 1988).

In Spain in the beginnings of the nineteenth century dominates the subsistence economy that restricts the trade environment to certain goods that can not be obtained directly and must be paid in coin. Consumption is barely merchandised and incomes and taxes are mostly handled in kind or labor, and even when the monetization begins, it is still very slow and poorly implemented. In the Spanish case are absent the conditions to generalize the use of money in trade. This process is related, first, directly to the dynamics of separation between producers and means of production and the diffusion of wage labor as a natural way to organize the production. The role of money in this context is central. The need of money as a means of forced articulation between private work carried out in the production and social needs, that is between supply and demand, assigns money a central role in the capitalist economy. The market, the exchange sphere, is the place where appears the contrast between the offered product resulting from private work, and the structure of demand resulting from the social division of labor. This process of contrast comes along with unavoidable mismatches derived precisely from the lack of a direct relation between production and social needs, that require the presence of money, and money prices that enable the joint, even when this is a turbulent joint. Spain in the early nineteenth century is located outside this economic dynamics of transformation, but just partially. The development of waged labor and the consequent merchandisation of economic life start being important in some specific geographic areas where industrial and commercial activities of some importance appeared, as is the case of Cataluña (Maluquer de Motes 1994), Valencia, Málaga or “el Marco del Jerez” in Cádiz (Maldonado 2000). The Spanish economy of the early nineteenth century, in a scenario of low global transformation, begins some changes that, though isolated and in an unconnected way, lead it to what can be called a modern economy, with wars playing a dynamic role in the transformation.

Replacing the traditional monetary system becomes a necessary condition for the very modernization of the general economy. In this context, with a mainly agrarian economy but with growing financing needs, the Spanish economy faces the monetary change in an attempt to step forward, or at least not to be an obstacle, to full transformation. Definitely, the old monetary habits, under the logic of a precommercial economic system, act as a drag for the incipient capitalist experiences (Prieto, De Haro 2004). That is to say, the economic impulse went ahead of that institutional, in such a way that the State was not able to satisfy the requirements of the market economy in those fields where modernization signs had appeared. It happened in Barcelona in the 30s and 40s when, as Paradaltas describes (Pascual 2004), the involved sectors mobilized and, with their deputies forward, opted against Madrid, to address the existing money demand through the articulation of an efficient monetary policy, in which were correctly combined a rising of rates of the Mint of Barcelona with the metallic devaluation of the new coined money in order to increase liquidity and to prevent sacas and circulation of foreign money, though the process was not free of problems arising from an excessive coinage of copper coin. This is the most important conclusion derived from the analysis of the monetary policy practiced throughout the first half of the nineteenth century. It is so because, even if it could be proved that things started changing from the Beltrán de Lis Act of 1848 (Tedde 2002), the delay caused by the stagnation of the first decades of the century and, particularly, the incapacity of the first liberal governments at applying the reform to monetary affairs, had effects very difficult to recover.

While the colonial empire survived, the Spanish monetary model of the Ancient Regime had in it its persistent appeal as a source of silver supplies, but its failure meant the end of the traditional monetary model, without being immediately replaced by another one more adequate to new circumstances. Numerous historians share the opinion rooted in the antibullonists of the seventeenth century that the gold made us poor. For example, Bartolomé Bennassar (1983) holds the thesis that precious metals enclose the keys of Spanish decline and Henry Kamen (1984) shares a similar opinion when relates the scarce industrial initiative with the Americas’ flows. Perry Anderson (1979), however, based on the detailed studies of Domínguez Ortiz about the society and Spanish institutions of the eighteenth century, highlights, just as P. Vilar had already done, the lack of a social and productive structure able to transform the currency in capital. From a closer perspective, when the loss of the colonies in the early nineteenth century is studied as well as its effects in the overseas monetary flows –secular suppliers of precious metals that guaranteed liquidity to the Ancient Regime– some approaches are revealed with ambivalent estimations about the consequences of the ending of those flows. Although what is interesting here is specifically the effects that ending had on the system and the traditional monetary policy at disappearing the basis over which they rest, the most relevant thing to know is, ultimately, how those effects influenced the modernization attempts and economic growth. On the one hand, Pascual and Sudrià (1992) think that the short – and medium – term effects supposed a fall in the national income and a deterioration in the commercial and capital balance, deriving in the long-term in a depression that explains, partially, the delay in the industrialization process of the country. On the other hand, Leandro Prados (1991) tends to a more ambivalent position emphasizing the positive long-term effects involved in the loss of the overseas territories for the complex modernization process.

There is no doubt that, in fact, the interruption in the monetary overseas flows lead the Spanish economy to a situation of chronic deflation that would last until the monetary reforms of years 50s and 60s, even if the roots of the problem do not circumscribe just to the former. It was also decisive in this deflationary orientation the own restrictive policy of monetary supply that prevailed for more than half the century. It should be noted as well that, beyond the concrete analysis of the effects that the colonial collapse had on the prices, it was necessary for the Ancient Regime to lose its economic foundations in order to make the modernization a reality, beyond the liberal constitutions and laws. If the revolutions never are made with laws, the political revolutions, when the social and economic structures remain, are not able to consolidate the profound transformations till much later. From this fact will derive a number of the problems that disturb the Trienio Liberal (1820-1823) during its existence. The perception that the colonial bankruptcy radically modified the conditions for the development of the Spanish economy was not immediate. Fernando VII would maintain the vain will to recompose the empire, with the corresponding metallic flow, in order to perpetuate the Ancient Regime. Throughout the first third of the nineteenth century the traditional productive and social structures remain almost intact, without a continuity solution between the feudal imperialism and the modern capitalism.

In a different order of ideas, the strong-coin monetary policy is also determined by the own weakness of the Spanish economy and the absolute lack of confidence from the economic agents toward the monetary authorities and to whom they represented. The money degradation processes executed abusively by the Crown during all the seventeenth century, the successive bankruptcies of the minor Austrias, the failed vales reales operations of the late eighteenth century, the bulky emissions of copper coin and the absence of modern banking and financial institutions in the country hinder the possible development of a modern monetary system and the implementation of reference – or mark money in the economy, whose consolidation is only guaranteed by the general consent of the public and a certain level of reserves.

In short, traditional monetary policy, far from promoting the modernization of the country (Prieto, De Haro 2012), would become a serious obstacle while maintaining a very restrictive monetary supply. To that policy has to be added the poor implementation of banking and financial institutions, in their number and variety, and this deficiency represented an obstacle to the growth and development of the mainland economy (Cameron 1974). This monetary policy is maintained by the continuous arrival of huge Americas’ flows that, throughout the eighteenth century, alleviate the evil effects on the monetary supply caused by that old policy. Nevertheless, the independences of overseas territories, along with the consequent collapse of capitals imports, as well as the crisis of absolutist monarchy, open the debate about the necessary transition and reform of the monetary system.

Exhaustion and subordination to France

In the early nineteenth century, the monetary system is a true reflection of the monetary framework imposed by the Borbones from the first third of the eighteenth century. Since the arrival of Borbón dynasty, a vast project is undertaken of centralization and reorganization of the monetary and coinage system (García de Paso 2000), designed with the purpose to restore the traditional monetary policy. In that direction are driven the surreptitious devaluations and the emission of vales reales (Herr 1977), that, far from being considered as examples of modernization of the monetary framework, they fit better as fruitless efforts by the Crown to achieve bigger incomes in a monetary context with growing tax-collection problems (Barbier, Klein 1985). In addition, the vales reales operation would have pernicious effects, similar to the French case of the asignats, for the settling in Spain of a fiduciary monetary system. In the course of the century the reformist impulse is gradually exhausting, and from 1789 a castling in the most absolutist positions is present, losing any hint of reformist sensitization, even within the traditional framework, as had been the case in the reign of Carlos III.

This monetary weakness becomes a key element in the process of progressive subordination towards the French monetary policy. During most of the first half of the nineteenth century, the Spanish currency is heavily influenced by the monetary developments in the neighboring country. The process of subordination and monetary dependence is due fundamentally to two causes. First, a reason that can be considered as endogenous is derived from the impotence of national monetary system to ensure minimal internal liquidity. Although domestic demand, taken in aggregate, was still very low in the early nineteenth century, the commercial places and the first manufacturers centers originate a growing strain on the narrow monetary supply. Thus, the French currency becomes a resource to relieve, though only partially, the severe problem of lack of liquidity. Another plea can be added, that may be seen as exogenous: the interest from France (Francisco Olmos 2000) that the Spanish monetary system assume part of the cost of its own monetary reform, undertaken by the Revolution of 1789. That is, that Spain, legalizing the domestic circulation of French currency would absorb a significant part of the prerevolutionary coin, thus helping the French monetary system to avoid the costs derived from its removal and recasting (Artola 1991). The best thing to do seems to be weighing properly, on one side, the Spanish responsibility in sustaining this monetary policy, as a main component; and, on the other side, playing a complementary role, the pressure that France presumably exerted in order to keep the former. This phenomenon of subordination and monetary dependence is of central importance in the transition of the Spanish monetary system, given that it would become a present issue throughout the first half of the nineteenth century, and that would eventually be resolved until the Monetary Law of 1848.

From a historic perspective, the process of subordination to France would have a decisive impulse with the Independence War. The armed conflicts, that traditionally had been developed outside the borders, are displaced entirely into the Península. The war shows the crisis of the regime and the country organizes partially in a novel way through the so called Juntas as political instruments to fulfill the absence of a central power (Amat 1813). On the one side, the new government seeks to address the situation by stimulating the coinage through the proliferation of monetary workshops. The coinage of patriotic money, albeit limited, irregular and very restricted because of the blockade, significantly stimulate the national money supply. And, on the other side, the presence of foreign armies promotes the circulation of foreign money in the Peninsular monetary system. Usually the armies take with them the necessary cash to make the regular provisioning and payment of the levy. On the French side, besides stimulating the own coinage of Joseph I, the authorities undertake a significant monetary reform that would survive the regime itself in a very close connection with the endogenous factor, setting the real fleece as a unit of value and imposing the circulation of French money with official equivalences (Prieto, De Haro 2010). This equivalence represents an unfavorable exchange rate for the Spanish currency, since the latter held, in relation to the face value attributed, a higher metal content per unit. In the following table the intrinsic values of French currency and the official exchange rates established can be observed:

Official exchange table of french currency and exchange market rates

French money Official exchange rate Market Equivalence
¼ franc 30 mvs. 24 mrvs.
½ franc 1 rs. and 28 mvs. 1 rs. and 24 mvs.
1 franc 3 rs. and 24 mvs. 3 rs. and 14 mvs.
2 francs 7 rs. and 16 mvs. 6 rs. and 28 mvs.
5 francs (Napoleon) 18 rs. and 24 mvs. 17 rs. and 2 mvs.
20 francs 75 rs. 74 rs. and 6 mvs.
40 francs 150 rs. 148 rs. and 12 mvs.
1 pound and 10 salaries 5 rs. and 18 mvs. 4 rs. and 32 mvs.
½ silver luis 11 rs. and 2 mvs. 9 rs. 30 mvs.
1 silver luis 22 rs. and 6 mvs. 19 rs. and 26 mvs.
1 gold luis of 24 pounds 88 rs. and 30 mvs. 87 rs. 5 mvs.
1 gold luis of 48 pounds 177 rs. and 28 mvs. 174 rs. and 10 mvs.

Source: This table has been done crossing data provided by Vadillo (1846, pp. 30-36), of the value in Reales of French pieces in circulation from 1808 to 1846.

The mechanisms established by Gresham’s Law are set in motion with these equivalences, and Spanish silver tends to be withdrawn from circulation by individuals and it is progressively substituted by French currency. The Cortes, in their first initiatives, try to remove French currency and to set up a dam against new monetary rules. Nonetheless, they eventually accept monetary duality with the final approval of the equivalences of Cadiz, coming to fix exchange rates even more flattering to French currency than those established at the time by the Order of Murat.

This anomalous monetary situation, repeated in many other European nations during the Napoleonic wars and that tends to subside when the conflict ends, in the Spanish case remains entrenched. The legal circulation of French currency with intrinsic value less than facial involves the substitution of Spanish currency, that massively returns when the divergence progressively increases. This currency is to cover an important part of the deficit of silver in circulation that Spanish economies carry for some time, following the traditional monetary policy. The end of war and the return of Fernando VII to the Spanish throne represent a firm commitment to this monetary policy, accepting the new framework of circulatory duality and recovering for the Crown a full monetary competence. Throughout the six-year period of Fernando VII old and worn French pieces, hard to recognize, would be legalized.

Definitely, the Spanish economy loses the opportunity to carry out the transformation of its own monetary system, while its traditional structure begins a decadence period after the collapse of overseas metallic flows and internal revenues drop. The Americas’ remittances (Fontana 1992; Marichal 1999), main element of stabilization for the traditional monetary system, are reduced to marginality in those years. The absence of an efficient response to the liquidity crisis precipitated the country on the path of deflation and stagnation, leaving the most active economic sectors to their fate, and avoiding monetary collapse through a gradual subordination to France, that pours its predecimal money into the Península.

The monetary reform of the Trienio Constitucional. From Borbón reformism to the liberal monetary policy

Monetary problems remain fairly current, and many of them have indeed become more severe in the beginnings of the 20s (Gil Novales 1980), although from a prices-point of view the country is still at the end of the last post-war rising phase. Monetary authorities, unable to ensure a stable and sufficient national currency, tighten their dependencies upon the French currency, keep a wide copper circulation, and have delayed the solution to the problem of vales reales, showing themselves incapable of generating minimum confidence, being the latter the basis of the modern monetary systems, along with availability of a certain level of reserves.

The Trienio Liberal displays the monetary initiative trying for the first time to achieve modern goals (De Haro 2006). It is a reform that pretends to leave the old habits that prevent the market system from developing properly, a system that, even in a very limited fashion, starts already to rise. The liberal regime addresses widely the monetary problem and that involves unifying and standardizing the Peninsular monetary system, setting the new establishment for the Mints, tackling the withdrawal of French currency in order to have an own monetary policy, and transforming the old monetary institutions into more suitable organisms for the new purposes. Definitely, setting a new monetary policy able to place in the very center of its action the stimulus over the monetary supply, displacing from its targets the fiscal concern. With the purpose of financing the reform and achieving a minimum level of liquidity, with the remittances from the Americas interrupted and the national credit exhausted, the negotiation of foreign loans (Del Moral 1975) is a recourse as a monetary shock to act as a catalyst.

Parliamentary debates on monetary issues develop, mainly, in four initiatives that would be approved along the legislatures of 1820, ordinary of 1821 and extraordinary of 1821: New constitutional currency; Reform of the mints for conversion in National Mint, including abolition of seigniorage –señoreaje–; Transformation of the Trade and Currency Board into the Currency Directive Board, and the National Recoinage Project. During parliamentary sessions it can be noticed the presence of three political groups within the Cortes (Gil Novales 1991): the loyal to absolutists thesis, known as serviles; those who decidedly withstand the government argumentations that form part of the different special parliamentary commissions dedicated to compose a variety of monetary decrees, placed in the most moderated wing of liberalism; and finally, the most committed with constitutionalism and reformism, known as hotheads liberals, who often maintain a critical attitude regarding the projects submitted.

The first initiative that is undertaken, although not a monetary policy proposal itself but yet a fundamental one for the general purposes of modernization, consists of the recovery of what the Constitution of Cadiz establishes, to promulgate next the new constitutional money. In chapter VII of the Constitution, in its 131st article are described the functions that the Cortes should have, in which is included in its paragraphs 13, 19 and 20 respectively: to establish annually the contributions and taxes; to determine the value, weight, fineness, type and denomination of the coin; and to adopt the more adequate and fair measures and weighs system. Thus the traditional patrimonial concept (Valdeón 1972) of money is relegated by the Crown, proceeding to the separation between the latter and the monetary policy, that starts being a responsibility of the Cortes. The new constitutional currency (AHC: Daily Record, Legislature of 1820, Volume I-II) should be useful as a tool for national interest, and not as a source of profit incomes, as had been traditionally considered. This is a key element of great significance since the separation of the domestic currency of the tax realm from the Royal Treasury permits to act over the currency without the pressures that patrimonial sense exerted on any reformist option. The new constitutional currency is thus born deprived of the strong ties of the Ancient Regime, as the new currency symbol of the Nation, though the changes proposed in the troqueles end being eventually discreet and moderate. The decree of may 1st, 1821, while on the one hand includes the term Constitución and Spanish is used, on the other the Fleece – Toisón –, the abbreviated stem and the major weapons still appear in the symbolism, as does the expression Por la gracia de Dios, By the grace of God. The moderation of liberal victory is registered on both the face and back of the new constitutional coin. A path of moderation that can be explained by the political bet of the Crown’s agreement and the fears at substantial changes in the coin’s appearance that could affect its foreign commercial value.

The second monetary-nature measure has to do with the New settlement of the Mints (AHC: Daily Record, Legislature of 1821, Volume I-II-III), debate known at the time as Arreglo de las Casas de Moneda – Mints Arrangement –. The goal of the project, as stated in the preparatory proceedings, focuses on creating the necessary conditions in order for the facilities of the nation to contest with their foreign counterparts in the coinage tasks. To achieve that it is mandatory to unlock the barriers that prevent the taking of pasta to the Mints and to set the necessary standards to narrow, by means of productive reinvestment, the gap of technological development with respect to the main European centers that generate a noticeable negative unbalance relative to the costes de braceaje and their consequent effect in the rates of purchase. The urgency of the measure is motivated by the ruinous accounting, physical and technological situation of those establishments, as is well summarized in the statement by the Accountant of the National Mint to the General Superintendent. This is why the decree undertakes the reform in the following terms: to consider the Mints as coinage facilities under government surveillance, to reduce the retention rights to producing costs, to set new buying rates in which the suppression of right to seigniorage is compressed, and to establish a distribution system, at equal parts, of potential savings to the promotion of factories and better remuneration to the employees.

These goals pretend to transform the old renting houses into modern coinage facilities, and to stimulate the sluggish money supply. The bet’s model has as its reference the French experience of withholding imposed as production costs only, rejecting the English alternative in which no charge is done due to the narrowness of public resources. Nevertheless, it is worth mentioning the concern by the speakers about the Spanish currency recovering its role in the international commerce, now being progressively supplanted by British and French currency. That is, the Peninsular money supply problem becomes a problem of competitiveness of the Spanish money in the international markets, specially Asia. This priority gets the controversy out of the debate about the narrow monetary supply, displacing the discussion to the future national resealing project and thus losing the opportunity to keep in inner circulation a large part of the monetary shock derived from the concretion of the first foreign loans.

There are essentially two aspects that the decree does not address that are basic for the survival of traditional monetary policy. A first aspect is the equivalence ratio gold/silver, and second, that concerning the fineness of the coin. With respect to the new official equivalence, the metal buy rates establish a bimetallic ratio of 1/16’7, therefore, slightly higher than that established in the Law of 1786. This way, the national silver keeps very undervalued when compared to the different equivalences that prevail in the neighbor European countries, specially France, that after the 1803 reform, had established a bimetallic ratio of 1/15,5.

With regard to the fineness of the coin, there is no evidence that any decrease in its fineness or its weight could have occurred. The intrinsic value of the new constitutional money is unchanged with the monetary reform. Rising rates of purchase do not occur at the expense of the coin’s fineness or weight, but by funds released once abolished the right of seigniorage and applied the reduction of other deductions. In addition, there is a very narrow margin in the own precious metals reserves in pasta that the Mints keep in their funds (AHN: FCC. Hacienda, Legajo 7681, expediente 4). The rising in the rates of purchase would not have meant presumably a significant break in the metal exports since, despite the better reward of pasta, the high fineness content in the coins kept being a powerful reason to keep doing the sacas over a non devalued currency (Paradaltas 1847).

The third monetary initiative seeks the creation of the Directive Board of Currency (AHC: Daily Record, extraordinary Legislature of 1821, Volume I), that came to replace the traditional Royal Board of Trade, Currency & Mines, out of function since the arrival of the liberal system. This measure aims to provide the government with a technical institution able to assist and supervise the different reform projects leading to modernize the monetary system. The purpose was to give the country a new monetary institution able to manage objectively and rigorously the monetary system reforms. Also, for the first time is considered the possibility of coordinating the Peninsular and Americas’ monetary affairs in a new global and unitary conception of the national monetary system. In conclusion, the Directive Board of Currency becomes a center of observation and coordination of all the branches concerning the coinage, uniting the operational and administrative parts.

The fourth and probably the most controversial and complex-to-perform measure was the one dedicated to the withdrawal and resealing of French currency circulating in Spain (AHC: Daily Record, extraordinary Legislature of 1821, Volumes I-II ). It is the project that foresees the Peninsular monetary unification through debugging of French currency and the suppression of the previous rates that allowed its legal circulation. Resealing is the main monetary policy adopted in the Trienio Liberal. In the preamble are described the following goals of the law: to propose the means to prevent the course of the defective (French currency), which, flooded the whole nation, deprives it of its own –sought world wide, object of foreign speculations– fomenting self-frauds, and causing eventually incalculable harm in Spain’s changes and a not minor discredit (AHC: Daily Record, extraordinary Legislature of 1821, Volume I, p. 703). The problem, located around the falsification and circulation of defective money and the sacas, focus this time on domestic monetary supply. Through the debates at the Cortes it is possible to reconstruct approximately the amount of M1, and the proportion of French currency in circulation over the total in millions of reales:

Conde de Toreno calculates the quantity of money circulating through a comparison with France and England. He considers that France could have as circulating mass an approximate quantity close to 2.250 millions of francs, while England would have a much greater, though not so much with respect to its wealth due to its higher credit and financial development. The figure correspondent to Spain can be deduced from fitting the circulating currency to the income level of the country in the same proportion as in France, which yields a result of 600 millions of francs. With regard to the calculations by Alamán, he builds on figures provided by Jerónimo de Uztariz, from the early eighteenth century, and by Jean-François de Bourgoing, by the end of the century, based in turn on data from the Ministry of Finance. After cleansing and adjustment applicable to the changes suffered in the Americas’ metallic flows over the last 11 years, and taking into account an annual deficit in the money circulating in Europe of about 10 millions of duros, he ends up concluding that the Peninsular currency can not be less than 1.600 millions of reales. The data are added to numerous files sent from diverse consulates that evidence the shortage of currency in the whole Península. However, even accepting the controversy about the domestic monetary supply, the main line of the project focuses on acting exclusively on the French currency that, though being relevant its circulation in diverse commercial places, represents just a small part out of the total bid. Already from the preamble it is stated as a main purpose to break the falsification-sacas dynamics, focusing the reformist action on the monetary supply. This can be considered as a means to explaining the distortions in the money supply, rather than unintended effect of traditional monetary policy of strong money, which would have force the reformist initiative to be headed towards the national currency.

The project eliminates the system of foreign exchange rates, releasing the money incomes and outcomes without fixing the prices of foreign currency, which from then would have been received in the Mints as pasta, according to their fineness and weight. This approach necessarily meant the abolition of the law of November 10, 1818, decree under which an intense monetary flow had occurred in favor of the French currency and at the expense of the national currency at legalizing defective medio-luis coins, difficult to recognize and easy to fake, with a weight up to 30% less than the one legally established in its origin. From a technical perspective, the resealing formula is privileged against the recasting because of cost, technical and timing reasons. According to the record of November 9 by Félix Sagaut, general engraver, estimating 150 millions of reales in circulation after 15 days of monitoring the Mints and counting with the necessary troqueles, the resealing operation could end in less than 5 months, resealing 100.000 pieces daily. In order to do that it would be necessary, in addition to the Mints of Madrid, Sevilla, Segovia and Jubia, duly reinforced technologically, to make operate new temporary centers of cold coinage in Barcelona, Bilbao and a second one in Sevilla to strengthen the potential demand of Cadiz. With the purpose of stimulating the participation of holders in the collection operation, they are guaranteed to have the right of receiving the same amount of resealed money at a rate of 167 ½ rs to the framework and the nominal increase over their effective value in bills against the Treasury. This way, the Directive Board and territorial commissions issue, on the one hand, the competent guards payable to bearer at the Mints in order of presentation and, on the other hand, the bills from the general Treasury. The emission of certain paper money, even limited to 15 millions of reales, lit up fierce interventions at the Cortes.

The results of the project are scarce because it ultimately ends up reinforcing the foundations of traditional policy, that is the main cause of the extraction of silver. With no variation in the bimetallic ratio, and without changes in the fineness and weight of the new constitutional currency, the national resealing project paradoxically acts in favor of the traditional strong-money policy, since it does not involve any metallic alteration in the national currency, but instead a nominal devaluation of French currency before the entry into force of the law. Nevertheless, it was expected the Trienio, once granted certain basis of modernization, to rectify progressively the policy.

Besides these main measures, the Trienio examines the issue of circulating copper through the precautionary closure of the Mints of Jubia; it also progresses in the reorganization of debt pending on vales reales, transforming them into consolidated debt with interest, or into debt without interest able to be repaid through future confiscations. The Trienio opens the debate about the reform of the system of weights and measures, and approves a law of mines in order to stimulate the Peninsular production trying to compensate the loss of overseas flows.

The return of Ferdinand absolutism in 1823 concludes abruptly the reformist monetary experience and the monetary policy goes back to the traditional system. The result of reformist failure is manifest in a long-term depressive and deflationist wave, a crisis in the coinage system in which the hoarding and export of domestic capital are offset just partially through the subscription of new foreign loans, the continued massive entry of French currency and the progressive legalization of Portuguese, English and Mexican currency in the internal circulation with new rates. Nonetheless, the reformist impulse of the Trienio will be present in every project of monetary reform produced in Spain in the first half of the nineteenth century, but it will still take twenty-five years for the monetary reform of Beltrán de Lis to eventually lead the monetary policy in the direction of the system’s modernization, in line with the main stream, driven by the international monetary events, fluctuations in the prices of gold and silver, and the financial crisis in France.


The crisis of the Ancient Regime economically concludes with the sinking of internal revenues and the collapse of the overseas flows. In monetary terms, the crisis is evident when the traditional bimetallic system loses its stabilizing basis, the Americas’ flows, giving as a result an increasing difficulty in applying a monetary praxis based on strong money. It was this juncture of double crisis, economic and monetary, of the first third of the nineteenth century the timing of having carried out the dismantling of traditional monetary policy, replacing it by a modern policy to favor the incipient impulses of Spanish capitalism and providing a monetary system more congruent with the international trends. However, the crisis of the Ancient Regime was not accompanied by the necessary monetary transition, which instead got behind due to the intervention of a number of factors.

In the first place, needless to remind is that the traditional system, even when it had lost its supply basis, would prevent its collapse through the process of subordination and monetary dependence upon France. The French currency compensates, though in a limited way, the monetary demand of the Peninsular spaces with greater industrial and commercial dynamism. In fact, the monetary reform of the Spanish system would begin decisive steps as a consequence of the French monetary and financial crisis of 1847, that would motivate the closure of the input routes of French currency to the Península.

In the second place, the Trienio Consitucional policy represents a very important change with respect to the old monetary conceptions. The goal is not more profitist, but to ensure enough monetary liquidity based on national silver to keep away the ghost of deflation from the Spanish economy. With the new monetary policy, articulated around the diminishing of the coinage rights and the modernization of monetary institutions, the reformists pursue the emergence of treassured metal, curb capital flight without any security, and finish the monetary dependence upon France. However, the necessary metallic devaluation is missing in this wide reform, as is an adjustment in the bimetallic relation that would have definitely dissipated the perturbing effects that the exports of capitals exerted over the traditional monetary system and the Spanish economy. The liberal monetary policy, yet despite its limitations, has the virtue of opening the path to the monetary transition, introducing a modernizing shift in the monetary policy. The abrupt return of absolutism, with the French invasion of 1823, would nevertheless suspend the incipient process of monetary transition with high costs in terms of economic growth for Spain in the first half of the nineteenth century.

Per citare questo testo attenersi alle seguenti indicazioni: Dionisio De Haro Romero, Empire with no silver, silver without empire: the crisis of the spanish monetary system (1788-1823), In Storia e Futuro, Rubriche: Agenda, n. 30, novembre 2012.


PhD in Economical and Business Sciences from the Universidad Rey Juan Carlos. Professor in that university and member of the research project of the National Basic Research Program of the Ministry of Education and Science (reference HAR2011-23225) entitled “The last viceroyalty. Spain and the Independence of Peru”. His research has focused on the monetary history of contemporary Spain, and monetary, banking and finance history of Independences of Latin America. His publications include: The monetary reforms in the first half of the nineteenth century. An approach to the monetary history of Spain from the Trienio Constitucional to the monetary law of 1848, 2004; The monetary reform of the Trienio Constitucional. From illustrated monetary policy to liberal reformism, 2006; “War and currency throughout the Independence of Peru, 1820-1824”, in “Jahrbuch für Geschichte Lateinamerikas”, n. 48, 2011; and The monetary policy of San Martin in Peru: paper for an absent silver in “Revista de Indias”, vol. LXXI, 2011.





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