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by Michael E. Marotta, 16 Jun 1994
When the British colonies declared their independence in 1776, the Spanish 8-reales piece was the standard trade coin of the Atlantic region. Under the new Constitution of 1789, the federal government defined its silver dollar to be equal to the Spanish 8 reales.
In the United States, until 1857, the coins of Spain, Mexico, Columbia, Bolivia, Central America, Peru, Portugal and Brazil circulated in the USA as legal tender. This meant that if you sold a horse and the buyer paid you in Mexican silver, you had to accept it at value. And most people were very happy to get paid in any kind of silver. Bankers and merchants relied on booklets that showed pictures of legal foreign silver and gold coins. These booklets also gave the market values of the coins. Banks in Virginia, Tennessee, New Jersey, Illinois and Ohio issued paper notes that could be redeemed in Spanish reales. These banknotes even had pictures of the reales coins, so you would know what was promised if you couldn't read.
The legal tender law of 1857 removed the status of foreign coins. However, Mexican silver 8 reales were generally accepted throughout the western US until the 1920s. For one thing, the US Civil War created a currency crisis. Lincoln's paper dollars drove precious metals from circulation. The need for copper and bronze for cannons even made small change hard to come by. Once the war ended, the West opened up. Nominally part of the United States since 1848, the West has always been culturally Latin. After independence from Spain, the coins of Mexico and the United States were of about the same weight and fineness. However, Mexican silver was slightly purer than Norte coins. This allowed them to circulate freely on both sides of the border until about 1920.
Michael E. Marotta
[This article was edited to include corrections from Juan Jimenez. --Numismatica]
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