An Unexpected Discovery:
The Proposed Designs for a Bidenominational Coin for Puerto Rico The Exchange of the Puerto Rican Peso 1898 –1900 By Angel O. Navarro-Zayas Abstract The numismatic history of Puerto Rico has not been studied thoroughly by historians in the Island as well as in the mainland. In this article we describe how the exchange of the Puerto Rican provincial “peso” for the United States dollar took place shortly after the Spanish American War. Puerto Rican coinage was shortly after devaluated and taken from circulation after the war. The newly discovered drawings presented here demonstrate that US authorities did indeed thought of minting a special coinage for Puerto Rico apparently to make it easier on the transition from the Puerto Rican provincial peso to the United States currency.
Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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Puerto Rico was obtained by the United States after the Spanish-American War of 1898. At the time of the invasion of Puerto Rico the main currency circulating in the Island was the Puerto Rican provincial peso and its fractional coins of 1895-1896 (the 40, 20, 10 and 5 centavos pieces). These provincial coinage had the bust of the king of Spain Alfonso XIII on the obverse and on the reverse the spanish Coat of Arms. The coinage was similar to the one that circulated at the time in Spain, with the main difference been the addition of the legend “ISLA DE PUERTO RICO� on each denomination.
Fig. 1: The Puerto Rican Peso issued in 1895
During the transition from Spanish government to U.S. Military government, payment of debts and loans was accepted until 1900 with the Puerto Rican peso. The imposition of the US monetary system on the island had an adverse effect on the local economy. The change of the financial and monetary system of Puerto Rico, for that of the United States, was detrimental over the puerto ricans. In 1898, people in the island were worried on how the coin exchange was going to take place without harming them. Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
The US dollar was based over the gold mobile (787) 299-4818 home phone (787) 840-6298 ANA member
standard. The values in Puerto Rico exchange was done over silver. In Puerto Rico and world markets silver was depreciated. In 1898, Trumbull White wrote: “The people understand quite well that with the intimate commercial relations rapidly forming between the island and their new mother country, they cannot be left to do business with a depreciated currency, and the change to the American standard must come soon. They understand equally well that the silver coins at present in circulation, with the portrait of Alfonso, the Spanish arms and the mark of the Madrid mint cannot be left in use, but must be withdrawn by the United States and a substitute provided.”1 The statement on the second sentence on the effect that the peso must be withdrawn by the US and a substitute provided calls our attention. Could it be here that probably was first thought of a new special coinage for Puerto Rico, issued by the United States Government?
Unique Designs Uncovered In December 18, 2006, Coin World Magazine published a pencil drawing by the US Mint Chief Engraver, Charles E. Barber, of a coin that was probably considered for minting for Puerto Rico, most likely for this coin exchange. Quoting from the Coin World article: “Barber’s unique pencil drawing in 1899 for a proposed peso coin for Puerto Rico borrows Barber’s obverse design of Christopher Columbus that appears on the 1892 World’s Columbian Exposition half dollar.”
2
This
drawing is now part of the National Collection of Numismatics at the National Museum of American History of the Smithsonian Institution, in Washington. But still, another surprise awaited us. When asked for information on this subject, Dr. Richard Doty, Senior Curator of Numismatics, from the Smithsonian Institution, kindly wrote to us: 1
White, Trumbull. (1898). Our New Possesions. Chap. XXX. Pags. 426-427
2
“Smithsonian to mount exhibit of Charles E. Barber patterns, Exhibit to make debut at January FUN show.” Coin World Magazine (December 18, 2006.), p.1
Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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“As it happens we have TWO, the first one by Charles E. Barber, the second probably by George T. Morgan (the obverse) and definitely Barber (the reverse). They're both dates 1899, the precise time when a coinage for the island (to replace that struck a few years earlier by Spain) would have been in discussion. One thing that strikes me as interesting is that the drawings are bidenominational - one peso/sixty cents. I think this was carried over from the Free Silver controversy of 1896: if you'll recall, a silver dollar contained about sixty cents' worth of silver, measured against gold.”3 In 1898, President William Mckinley passed a decree which fixed the value of spanish coins in Cuba and Puerto Rico, which stated the following: “WASHINGTON, D.C., Dec. 28, 1898.-It is hereby ordered that on and after Jan. 1, 1899, and until otherwise provided, all customs, taxes, public and postal dues in the island of Cuba shall be paid in the United States money or in foreign gold coin, such as the Spanish alfonsinos (centen) and the French Louis, will be accepted in payment of such customs, taxes, public and postal dues, at the following rates: Alfonsinos (25 peseta pieces), $4.82; Louis (20 franc piece), $3.86. “That all existing contracts for the payment of money shall be payable in the money denominated in such contracts, and where French and Spanish gold shall be the stipulated money of payment they shall be received in their present decreed inflated values, i.e., alfonsinos (25 peseta piece), $5.30; Louis (20 franc piece), $4.20; or in United States money at the relative value set forth in the above table, namely, $4.82 for alfonsinos (25 peseta piece), and $3.86 for Louis (20 franc piece.) “It is further ordered that on and after Jan. 1, 1899, and until further provided, the following Spanish silver coins now in circulation in the island of Cuba shall be received for customs, taxes, public and postal dues at the following fixed rates in American money: The peso, 60 cents: the medio peso, 30 cents; the peseta, 12 cents; the real, 6 cents: the medio real, 3 cents. Bronze and copper coins now current in the island of Cuba will be received at their face value for fractional parts of $1, in a single payment to an amount not exceeding 12 (1 peseta).” 4
3
Emails Dr. Richard Doty and Angel O. Navarro. January 25, 2007. The Numismatist. January, 1899. Value of the Spanish Coins in Cuba and Puerto Rico. Vol. XII. No. 1. p. 20. Angel O. Navarro-Zayas mobile (787) 299-4818 Home address: Anaida C-29 4th St. home phone (787) 840-6298 Ponce, Puerto Rico 00716 ANA member angelnavarro2000@gmail.com 4
Fig. 2: Charles E. Barber design for the proposed Puerto Rican coinage. Note the bilingual and bidenominational legend in the reverse (Courtesy of National Museum of American History, Smithsonian Institution).
Fig. 3: George T. Morgan design for the proposed Puerto Rican coinage. According to Richard Doty the reverse design is from Barber (Courtesy of National Museum of American History, Smithsonian Institution). Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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It is very interesting to see that this law fixed the value of the peso at 60 cents and corresponds to the bidenominational legend in the drawings made by the chief engravers.
In this sense, this bidenominational legend in the reverse of the
proposed designs may not reflect the “free silver controversy of 1896” as stated by Dr. Doty, but more simply it was just a straight public statement of the oficial exchange rate of 60 cents for each peso, as already approved for the new possesion.5 Regarding this decree, Dr. Henry Carroll in his famous report after his visit to Puerto Rico stated the following: “The action of the President in fixing the value of the peso in United States money was as just a solution of the problem as could have been reached. It only remains to complete the process by retiring the native currency when it can be done without injury to the interests of the island, and allowing the money of the United States to be the circulating medium of the island. The depreciated silver of the Spanish régime is a source of confusion in commercial transactions. Silver dollars and half dollarsAmerican- of practically the same weight and fineness pass for dollars and half dollars, while the Peso and 40-centavo piece are received at a little more than 60 cents and 24 cents, respectively. The time for the change will come when cabotage, or free commerce, is established between ports of monetary system which will harmonize with those of other countries.” 6 Over the scarcity of money and the emission of paper money to face the situation, Carroll stated that: “The currency in circulation is so limited in amount and the banking facilities so meager that borrowing has been attended with difficulties and great expense. There is only one bank of issue-the Spanish Bank of Porto Rico, in San Juan which had in circulation usually from $2,500,000 to $3,000,000 of paper money. These notes were accepted in some parts of the island, but they were not a legal tender, and did not circulate extensively outside of San Juan.” 7
5
This comment is from the editor, with permission from the author.
6
Carroll, Henry. (1899). Report of Henry Carroll. Pag. 52. 7 Ibid., p. 53 Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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Analizing the problem of the banking facilities and the monetary system in Puerto Rico and how the agricultural sector was affected by it, Carroll informed: “Our national banks could not meet the urgent demand of the agriculturists for long-time loans on mortgages on real estate, but they could issue notes and thus increase the circulating medium; they could lend on collaterals for short terms; they would bring banking facilities into every considerable community, and business transactions would be largely by check instead of by shipments of silver. The conditions of the agriculturists are peculiar, and they unite in saying that loans for periods of from twenty to thirty or forty years are absolutely necessary. The agricultural Bank met their needs in so far as it had ability, but its scale of business was far too limited, and but few could get accommodations from it. They suggest the establishment of similar banks in other cities, or, failing in that, a large increase in the capital of the existing bank, the guarantee of its securities by the Government, and their recognition in the stock markets of the United States.�8 On January 1899, the exchange rates for all coins in order to facilitate the commercial transactions were made official, but the multiple monetary system continued. The rate of 60 cents was the intermediate value fixed for the intrinsic value of the Puerto Rican Peso (its silver value content was between 40 to 42 cents at the time) and its value in commercial transactions was generally accepted at 66 2/3 cents. In the hearings before the approval of the Foraker Law, the indebted landlords had petitioned for an exchange rate up to 50 cents, in order to make it easier to eliminate their debts, meanwhile bankers had asked for a higher exchange rate (up to 75 cents) in order to avoid the negative effects of the devaluation. The Statutory Foraker Law of the April 12, 1900, (Chap. 191, 31 Stat.77) provided in its article 11. [Exchange of the Puerto Rican currency; legal course] the following:
8
Ibid. Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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“In order to gather the coined currency of Puerto Rico at the moment in circulation in the Island and to replace it with currency of the die of the United States, one hereby authorizes the Secretary of Property to exchange, to his presentation in Puerto Rico, all the currencies of silver of Puerto Rico known with the name weights and all the other local currencies of silver and copper, at the moment in circulation in Puerto Rico, not including the introduced ones in the country after the day first of February of thousands nine hundred, to the present type of change, that is sixty cents, coined currency of the United States, by weight of Puerto Rican die, being applied he himself type to the exchange of smaller or fractional pieces. The Puerto Rican currencies thus bought or redeemed will be minted on behalf of the United States, in currency of national die, under the direction of the Secretary of Property and according to it will arrange this one; and to the three months to be in vigor the present Law, no currency will be of legal course for the payment of debts by any sum later contracted in Puerto Rico, except those of the United States; and any amount that will be needed to compliment these dispositions and to cover the expenses with related them is hereby assigned, authorizing itself to the Treasurer so that it establishes the regulations and it designates the agencies that will be necessary to the object. Arranging, nevertheless, that all the pending debts when beginning to govern the present Law, they will be payable in the currency of Puerto Rico at the moment in circulation, or currency of the United States, to the type of change already mentioned.”9 On April 1900, the American Journal of Numismatics published an article over the peso of Puerto Rico, which stated the following: “The value of the Peso of Puerto Rico which was some months ago fixed at the equivalent of fifty cents in American money, as recommended by General Brooke, so far as used in the payment of custom dues, was concurred in by the Secretary of the Treasury at that time. In the absence of any authority of law to determine the value of the money of Puerto Rico, the order issued to General Brooke was not intended to fix the legal value of the coin. It was merely saying that it would be accepted by the military authorities in the island at the value named. If more could be obtained for it in trade, the Government would have no objection, but if it value fell below fifty cents, the military authorities stood ready to receive it at that price. The bullion value of the Peso is forty cents, and it contains approximately the same amount of silver as the French five-franc piece. Its value in gold 9
www.lexjuris.com/LEXLEX/lexotras/lexleyforaker.htm Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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exchange had ranged in late years from fifty-five to seventy cents, and it was the fluctuations in exchange value which caused a great deal of the uncertainty in business enterprise on the island. Between five and six millions of Pesos were in circulation there, and their ultimate disposition and value must be left to Congress, for there was no law bearing on the subject. It is understood that the Government proposes to retire these pieces as fast as received ,and to replace them with American coinage; the recent decision of the Courts, that Puerto Rico is under the Constitution of the United States, will in time at least, make the money of the island a numismatic rarity.”10 The exchange rate of 60 cents established by the Foraker law constituted a devaluation from the of 66 2/3 cents of a peso at the time. This had the effect of raising prices (some people have calculated up to 40%) because of both the conversion rate and scarcity by taking out of circulation the Puerto Rican peso. The Foraker Law ended the multiple monetary system and established the dominion in Puerto Rico of the US dollar and monetary decisions by the United States. The devaluation of the Puerto Rican peso made it possible for US Sugar Corporations to buy large amounts of land after the invasion. The old problem of scarce local credit had intensified with contraction of money in circulation, and loans were even harder to obtain and more expensive for small farmers. But banks in the US made loans only to “qualified” investors. The first US bank to operate in Puerto Rico was the American Colonial Bank, which by 1901 was the second largest bank in the Island and by 1910 was the largest in operation. The “qualified” investors came to be (the majority), US sugar companies that had collaterals to backup their loans requests, something that small puerto rican landlords could not afford unless they mortgaged their land, which quite often they lost to banks, or sell to the sugar corporations to pay loans. The latter contributed even more to the loss of land and rapidly gave way to its control by sugar corporations of the United States.
10
American Journal of Numismatics. The Peso of Puerto Rico. April, 1900. Volume XXXIV. No. 4. Page. 114.
Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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Fig. 4: Comparison of Charles Barber’s design for the obverse of the Puerto Rican coin (right) with the obverse designed by him for the commemorative half-dollar coin for the fourth centennial of the discovery of America (1892).
Fig. 5: Comparison of George Morgan’s obverse design for the Puerto Rican coin (right) and the obverse of his famous Morgan dollar. As it shows, contrary to Barber, Morgan made substantial modifications to its original design. Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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Conclusion Puerto Rican coinage minted during the Spanish Colonial period was shortly devaluated and taken from circulation after the Spanish American War. The drawings recently discovered in the Smthsonian Institution and presented in this article demonstrate and prove that US authorities did indeed thought of minting a special coinage for Puerto Rico apparently to make it easier on the exchange from the Puerto Rican provincial peso to the United States dollar. The proposed designs were developed by two of the most important and prestigious engravers in US numismatic history: Charles E. Barber and George T. Morgan. Pattern coins from these drawings have not been reported in any literature on Puerto Rican numismatics.
Charles E. Barber (left) and George T. Morgan (right), chief engravers of the US Mint. Both artists prepared special designs for a proposed coin for Puerto Rico in 1899 (Courtesy of the Smithsonian Institution). Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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It is rather curious that after 109 years of Puerto Rico being an unincorporated territory of the United States, still up to this very day, Puerto Ricans commonly refer to the dollar as “peso”. Also the US quarter is commonly refered to as peseta (although the spanish peseta was 20 centavos of a peso), and the US cent is commonly refered to as chavo, all denominations used during the Spanish Colonial period. A clear signal of our strong hispanic heritage.
Acknowledgements I would like to thank Dr. Richard Doty of the Smithsonian Institution, for his insight and expertise in helping me locate information on these unique drawings. Also a special aknowledgement to the distinguished Puerto Rican collector, Efraín Archilla-Diez, for his guidance and support throughout this research.
References Books Carroll, H.K. Report of Puerto Rico. Washington: Government Printing Office., 1899. Dietz, J.L. Historia Económica de Puerto Rico. Río Piedras, PR: Ediciones Huracán., 1997. White, T. Our New Possesions. Cincinnati, OH: The Jones Brothers Publishing Co., 1898. Journals Mckinley, W. “Value of the Spanish Coins in Cuba and Puerto Rico.” The Numismatist, Vol XII, No. 1 (January, 1899), p. 20. The Peso of Puerto Rico. American Journal of Numismatics, Vol. XXXIV., No. 4. (April, 1900), p. 114. Newspapers Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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“Smithsonian to mount exhibit of Charles E. Barber patterns, Exhibit to make debut at January FUN show.� Coin World Magazine (December 18, 2006.), p.1 Internet www.lexjuris.com/LEXLEX/lexotras/lexleyforaker.htm Other Sources Email between Dr. Richard Doty and Angel O. Navarro-Zayas. January 25, 2007.
Angel O. Navarro-Zayas Home address: Anaida C-29 4th St. Ponce, Puerto Rico 00716 angelnavarro2000@gmail.com
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