The currencies of Puerto Rico closely follow the historic development of the territory. As a Province of Spain (Autonomous Community) and a territory of the United States, Puerto Rico was granted the use of both foreign and provincial currencies. Following the Spanish colonization in 1508, Puerto Rico became an important port, with its own supply of gold. However, as the mineral reserves ran empty within the century, the archipelago's economy suffered. The Spanish Crown issued the Situado Mexicano, which meant that a semi-regular shipment of gold from the Viceroyalty of New Spain would be sent to the island, as a way to provide economic support. Between 1636 and 1637, Philip IV of Spain imposed a tax which had to be paid using a revenue stamp. Inspired by this, Puerto Rico began producing banknotes in 1766, becoming the first Overseas Province to print 8-real banknotes in the Spanish Empire and which in the Spanish government's approval of subsequent issues.
The situado was discontinued during the 19th century, creating an economic crisis, as a result of Mexico gaining its independence from Spain. Salvador Meléndez Bruna, the colonial governor in office, ordered the issue of provincial banknotes, creating the Puerto Rican peso. However, printing of these banknotes ceased after 1815. During the following decades, foreign coins became the widespread currency. In the 1860s and 1870s, banknotes reemerged. On February 1, 1890, the Banco Español de Puerto Rico was inaugurated and began issuing banknotes. The bank designed four series and placed three in circulation under Spanish rule. In 1895, a Royal Decree ordered the production of provincial peso coins.
On August 13, 1898, the Spanish–American War ended with Spain ceding Puerto Rico to the United States. The Banco Español de Puerto Rico was renamed Bank of Puerto Rico and issued bills equivalent to the United States dollar, creating the Puerto Rican dollar. In 1902, the First National Bank of Puerto Rico issued banknotes in a parallel manner. Two more series were issued until 1913. After Puerto Rico's economy and monetary system were fully integrated into the United States' economic and monetary system, the Puerto Rican dollars were redeemed for those issued by the United States Treasury. The peso and dollar have been followed by other contemporary issues, including commemorative banknotes, private currency, and a quarter coin designed with Fort San Felipe del Morro in the face.
Early licenses issued by the Spanish Crown After Juan Ponce de León began the colonization process of Puerto Rico, the archipelago became a strategic military location, used by Spain to protect its colonies and possessions in America.Costa, Rodríguez-Vázquez et al., p. 26 Vessels used it as the main point for resupplying before attempting long voyages and trading became a key part of the economy. However, when the mines and rivers in the main island of Puerto Rico, then known as San Juan Bautista, were depleted Puerto Rico began suffering from a shortage of gold and its income was reduced drastically, precipitating a recession. Beginning in the 16th century, the Spanish Crown was forced to issue a monetary support decree to the archipelago known as situado, which was supplied by the Royal banks in Central America, particularly Mexico.Costa, Rodríguez-Vázquez et al., p. 28 However, this aid failed to arrive often due to piracy and shipwrecks, contributing to the economical instability and an increase of contraband in Puerto Rico. This was exacerbated by other factors, including the costs of running an efficient military and a lack of commercial prosperity. Natural conditions and disasters also contributed, multiplying the costs of maintaining fortresses while hurricanes damaged haciendas, destroying crops and shortening the amount of laborers. Most of the coins available were silver reales, colloquially known as "pieces of eight".
Municipalities suffered most, being forced to implement taxes, including the alcaba del viento (lit. "wind tax"), which was imposed on foreign suppliers. However, these taxes barely helped, this was because each one had to receive a Royal certification, a bureaucratic procedure which usually lasted several years. Once they reached an established deadline, the process would have to be repeated, taking an extended amount of time. From January 1, 1636, to December 15, 1637, Philip IV of Spain imposed an obligatory payment to the treasuries in Puerto Rico. The debt was to be paid with currency symbolized by legalized papers bearing a Royal seal.Costa, Rodríguez-Vázquez et al., p. 29 Researchers believe that the use of these documents had an impact in the production of banknotes in Puerto Rico. In due time, these documents would be short in supply upon their arrival, in such cases the government officials would stamp the current date into old papers.
To deal with this situation, a Royal Decree was approved on August 22, 1766, authorizing the first issue of paper notes in the American colonies. Pedro Tomás de Cordova and Humberto Burzio claim in their research that Puerto Rico was the first place in America to print 8-real, achieving it during that year.Costa, Rodríguez-Vázquez et al., p. 31 Thus, putting Puerto Rico ahead by two decades before Cuba (1781), Hispaniola (1782) and even Spain (1783). Both researchers divided the first two types of banknotes issued, the two varieties were classified as "issued" and "printed". Although both were manufactured using the same method, those referred to as "printed" bore stamps listing numbers and letters. In 1767, the Spanish Crown approved subsequent issues, conditioning that they should be collected once situado shipped. When this was lacking, paper money was used in a widespread manner throughout the main island. These requirements were met when possible, an example of this was in 1769, when 88,000 banknotes were reclaimed by the authorities.Costa, Rodríguez-Vázquez et al., p. 32
However, a new issue of 4-pesos, 1-peso, 2-reales and 1-real bills followed and by November 1770 at least 88,014 were in circulation. The involvement of Spain in the American Revolutionary War caused the printing of more bills between 1779 and 1780. In 1783, notes (valued 1, 2 and 4 reales, 1 and 4 pesos) valued at 664,325 were produced, which was followed by another printing of 2-reales and 4-peso notes to reach at least 695,500 pesos. When the situado arrived, 400,000 pesos were used to withdraw the notes from circulation. In 1787 another issue was allowed. On February 9, 1797, yet another issue was ordered.
Birth of the Puerto Rican peso
In the 19th century, the issuing of situado concluded, with two last deliveries of 500,000 and 100,000 between 1809 and 1810.Costa, Rodríguez-Vázquez et al., p. 33 This brought forth a critical economical crisis to Puerto Rico. Besides aiding the fleeing Spanish refugees, the local government was also forced to payroll military interventions in Santo Domingo and Venezuela, aggravating the issue. At the moment, Salvador Meléndez Bruna, the colonial governor in office, ordered the production of provincial paper money. The decree was officially enacted on August 31, 1812. This was done at behest of treasurer Juan Patiño, who faced opposition by a group of functionaries and merchantmen that lobbied to reduce the amount of existing coins. The intent was to cover the budget for some months. These banknotes used the designation of peso as equivalent to Spanish reales.
Produced by hand, these banknotes featured quantities in the thousands, with 1 peso being worth 8 reales. The initial run reached 80,000 pesos (in denominations of 1 and 2 reales and 4 pesos). In practice these bills were valued at half a real, 1 real, 2 reales, 8 reales and 4 pesos. Those ranging from 4 reales to 4 pesos, featured the Coat of arms of Castile and León with quantity being written manually with seals and a specific registry number certifying its authenticity. These codes were recorded and locked away in a chest requiring three keys to open, in an attempt to prevent fraud. The bills worth 1 and 2 reales featured a seal, but less safety measures were taken with them.
Mechanical printing had arrived to Puerto Rico years earlier, but up until 1813, part of the issued notes were being produced by hand and stamped. Between 1812 and 1813, the tradition of collecting paper money continued, which reduced the amount of surviving banknotes drastically. The other notes printed between 1813 and 1814, featured a combination of printed types and stamps. The printing was done by Puerto Rico's National Printing Office and featured patterns to prevent the production of counterfeits.Costa, Rodríguez-Vázquez et al., p. 34 Those featuring denominations in reales, were adorned by Spain's Royal Seal, with the color varying depending on the date of issue and the 1813 8-real banknotes featured a lamb on the obverse. However, these security measures were ineffective against counterfeiting, eventually copies of several denominations were circulating in a widespread manner, forcing cities outside of San Juan, Arecibo and Loíza to discontinue their use. Meléndez Bruna decided that the only way to prevent forgery was by asking Spain to produce sealed paper for the printing of the banknotes. The first issue bore the signatures of treasurers or accountants, but this was dropped the subsequent year.Costa, Rodríguez-Vázquez et al., p. 35
On November 20, 1812, another emission of 85,000 pesos was produced. However, during this time depreciation reached 12.5%. The third began on January 28, 1813, and was worth 85,000 pesos. This was affected by a depreciation of 30-50%. Before this one was done, two more began, one worth 50,000 pesos and another 25,000 pesos. These were, however, affected by the preceding rate of devaluation and reached 80% depreciation, a rate that would extend for the following months. The sixth overlapped with the later phase of the previous two, beginning on June 15, 1813, and being worth some 40,000 pesos. The week after this was done, the seventh was printed for 50,000 pesos.
Expectations that money was incoming lowered depreciation to 50%, rebounding it to 100% when these coins failed to arrive. The final printing began on August 25, 1813, for 85,000 pesos. In the end, 208,000 pesos were printed on 4-peso notes, 233,500 on 8-reales notes, 28,000 on 4-reales notes, 20,502 on 2-reales notes, 7,998 on 1-real notes and 2,000 pesos on half a real notes. By 1814, notes had depreciated to 300%. Pedro Tomás de Córdova claims that the following year, this had duplicated to 600%. The cost of merchandise was exorbitant, leading to arrangements to separate the offices of governor and intendent being accomplished by Ramón Power y Giralt.
End of the Cádiz Constitution