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The Spanish dollar, originally known as the piece of eight (, peso duro, peso fuerte or peso), and much later also dólar, is a silver coin of approximately diameter worth eight . It was minted in the Spanish Empire, following a monetary reform in 1497, with content fine silver. It was widely used as the first world currency because of its uniformity in standard and milling characteristics. Some countries the Spanish dollar so it could be used as their local currency.
Because the Spanish dollar was widely used in Europe, the Americas, and the Far East, it became the first world currency by the 16th century.
The Spanish dollar was the coin upon which the original United States dollar was based, at , and it remained legal tender in the United States until the Coinage Act of 1857. Many other currencies around the world, such as the Japanese yen and the Chinese yuan, were initially based on the Spanish dollar and other eight-real coins. Most theories trace the origin of the Dollar sign, which originally had two vertical bars, to the Pillars of Hercules wrapped in ribbons that appear on the reverse side of the Spanish dollar.
The term peso was used in Spanish to refer to this denomination, and it became the basis for many of the currencies in the former Spanish viceroyalties, including the Argentine peso, Bolivian peso, Chilean peso, Colombian peso, Costa Rican, Cuban peso, Dominican peso, Ecuadorian peso, Guatemalan peso, Honduran peso, Mexican peso, Nicaraguan peso, Paraguayan peso, Philippine peso, Puerto Rican, Peruvian real, Salvadoran peso, Uruguayan peso, and Venezuelan peso pesos. Of these, peso remains the name of the official currency in the Philippines, Mexico, Cuba, the Dominican Republic, Colombia, Chile, Argentina, and Uruguay.
"Peso de a Ocho" truly translates as "weight of eight", meaning that it is valued at eight royals (ocho reales), but English speakers heard "peso", and translated that as "piece". The word "weight" or "peso" is related to money due to the fact that when coin was made out of silver or gold, weighing it was often used to verify value.
The Netherlands also introduced its own dollars in the 16th century: the Burgundian Cross Thaler (Bourgondrische Kruisdaalder), the German-inspired Rijksdaalder, and the Dutch lion dollar (leeuwendaalder). The latter coin was used for Dutch trade in the Middle East, in the Dutch East Indies and West Indies, and in the Thirteen Colonies of North America.
For the English North American colonists, however, the Spanish peso or "piece of eight" has always held first place, and this coin was also called the "dollar" as early as 1581. After the Declaration of American Independence, the United States dollar was introduced in 1792 at par with this coin at 371.25 grains = 0.7735 troy ounces = 24.0566 g. Alexander Hamilton arrived at these numbers based on a treasury assay of the average fine silver content of a selection of worn Spanish dollars. Oxford English Dictionary, entry on "dollar", definition 2 ("The English name for the peso or piece of eight (i.e. eight reales), formerly current in Spain and the Spanish American colonies").
The term cob was used in Ireland and the British colonies to mean a piece of eight or a Spanish-American dollar, because Spanish gold and silver coins were irregularly shaped and crudely struck before the machine-milled dollar was introduced in 1732.
This was supplemented in 1537 by the gold escudo, minted at 68 to a mark of gold 0.917 fine (fineness reduced to 0.906 in 1742 and 0.875 in 1786). It was valued at 15–16 reales or approximately two dollars. The famed Gold Doubloon was worth two escudos or approximately four dollars.
From the 15th to the 19th centuries the coin was minted with several different designs at various mints in Spain and the New World, having gained wide acceptance beyond Spain's borders. Thanks to the vast silver deposits that were found mainly in Potosí, in modern-day Bolivia, and to a lesser extent in Mexico (for example, at Taxco and Zacatecas), and to silver from Spain's possessions throughout the Americas, mints in Mexico and Peru also began to strike the coin. The main New World mints for Spanish dollars were at Potosí, Lima, and Mexican Mint (with minor mints at Bogotá, Popayán, Guatemala City, and Santiago), and silver dollars from these mints could be distinguished from those minted in Spain by the Pillars of Hercules design on the reverse.
The dollar or peso was divided into eight reales in Spanish Latin America until the 19th century, when the peso was divided into 100 centavos. However, monetary turbulence in Spain, beginning under the reign of King Philip II, resulted in the dollar being subdivided as follows in Spain only:
Spain's adoption of the Spanish peseta, in 1869, and its joining the Latin Monetary Union meant the effective end of the last vestiges of the Spanish dollar in Spain itself. However, the five-peseta coin (or duro) was slightly smaller and lighter but was also of high-purity (90%) silver.
In the 1990s, commemorative 2,000-peseta coins were minted, similar in size and weight to the dollar.
After 1918, the peso was reduced in size and fineness, with further reductions in the 1940s and 1950s. Coins of two- (1921), five- (1947), and ten-peso (1955) denominations were also minted during the same period, with sizes and fineness similar to the old peso.
By far the leading specie coin circulating in America was the Spanish silver dollar, defined as consisting of 387 grains of pure silver. The dollar was divided into "pieces of eight," or "bits," each consisting of one-eighth of a dollar. Spanish dollars came into the North American colonies through lucrative trade with the West Indies. The Spanish silver dollar had been the world's outstanding coin since the early 16th century, and was spread partially by dint of the vast silver output of the Spanish colonies in Latin America. More important, however, was that the Spanish dollar, from the 16th to the 19th century, was relatively the most stable and least debased coin in the Western world. Murray Rothbard, Commodity Money in Colonial America , LewRockwell.com
The Coinage Act of 1792 specified that the U.S. dollar would contain 371.25 grains (24.057 g) pure or 416 grains (26.96 g) standard silver. This specification was based on the average weight of a random selection of worn Spanish dollars which Alexander Hamilton ordered to be weighed at the Treasury. Initially this dollar was comparable to the 371–373 grains found in circulating Spanish dollars and aided in its exportation overseas. The restoration of the old 0.9028 fineness in the Mexican peso after 1821, however, increased the latter's silver content to 24.44 g and reduced the export demand for U.S. dollars.
Before the American Revolution, owing to British mercantilism policies, there was a chronic shortage of British currency in Britain's colonies. Trade was often conducted with Spanish dollars that had been obtained through illicit trade with the West Indies. Spanish coinage was legal tender in the United States until the Coinage Act of 1857 discontinued the practice. The pricing of equities on U.S. stock exchanges in -dollar denominations persisted until the New York Stock Exchange converted first to pricing in sixteenths of a dollar on 24 June 1997, and then in 2001 to decimal pricing.
The first Chinese yuan coins had the same specification as a Spanish dollar, leading to a continuing equivalence in some respects between the names "yuan" and "dollar" in the Chinese language. Other currencies also derived from the dollar include the Japanese yen, Korean won, Philippine peso, Malaysian ringgit, French Indochinese piastre, etc. since it was widely traded across the Far East in the East Indies and East Asia.
Contemporary names used for Spanish dollars in Qing dynasty China include běnyáng (本洋), shuāngzhù (雙柱), zhùyáng (柱洋), fóyáng (佛洋), fótóu (佛頭), fóyín (佛銀), and fótóuyín (佛頭銀). The "italics=no" element in those Chinese names referred to the King of Spain in those coins, as his face resembled that of images of the Buddha (佛 in Chinese); and the "italics=no" part of those names referred to the two pillars in the Spanish coat of arms.
=== Spanish dollars in other countries ===
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