Numismatic History of El Salvador in the Nineteenth Century Volume 1

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N um ism atic H istory of E l Salvador in the N ineteenth C entury Volume I: From Colonial T imes to the E nd of the C entral American Federation

By : J. Roberto Jovel San Salvador, E l Salvador 1999

Published by Numismatics International Dallas, T exas

Copyright 2000 By Numismatics International ISBN 1-889172-22-7

cr TABLE OF CONTENTS FOREWORD

iii

I. COINAGE USED IN PRE-COLUMBIAN TIMES ......................................................

1

II. COINAGE UNDER THE SPANISH COLONY 1. The economic and Political S e ttin g .......................................................... 2. The Types o f Spanish colonial Coins........................................................ 3. The Design of Colonial C o in s .................................................................... a. Cob C o in s ........................................................................................... b. The macacos of G u a tem a la ............................................................ c. Milled Colonial C o in s ...................................................................... d. Introduction of 'A Real Guatem ala Milled C o in s ....................... 4. Wars between Spain and England: Their Effects on C o in a g e .............. 5. Medallic Issues Minted for San Salvador.................................................

3 5 6 7 7 9 11 13 14

III. COINS USED IMM EDIATELY AFTER INDEPENDENCE (1821- 1824 1. Independence from S p a in ........................................................................... 2. Annexation of Central Am erica to Iturbide’s Mexico E m p ir e ............ 3. “The Tegucigalpas” ......................................................................................

17 17 18

IV. THE COINS OF THE CENTRAL AM ERICAN FEDERATION (1824 TO 1835) 1. The Political-Econom ic P o s itio n .............................................................. 2. The Finances of the F ed e ra tio n ............................................................... 3. The Coins issued by the F ed era tio n ........................................................ a. Legal Fram ework for Striking o f the C o in s ................................. b. Description o f the Coins Struck by the F e d e ra tio n .................. c. The Mints of the F ed era tio n .........................................................

23 25 28 28 29 30

V. THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR (1828 TO 1835) 1. In tro d u ctio n .................................................................................................. a. The Political S e ttin g ......................................................................... b. Production A c tiv itie s ...................................................................... c. The Fiscal P o s itio n .......................................................................... d. Scarcity of Circulating C u rre n c y .................................................. 2. The Provisional Coins issued by Mariano Prado in 1828 ..................... a. B a ck g rou n d ......................................................................................... b. Characteristic of the “Prado” C o in s ............................................. c. The War c o n tin u e s ........................................................................... 3. The Countermarks and Provisional Coinage of Jose M aria Cornejo a. B a ck g rou n d ......................................................................................... b. The Possible Minting of Provisional Coins in 1829.................... c. The Counterm ark of 1830............................................................... d. Characteristics o f the Provisional Coins o f 1832 ..................... e. Continuing Fiscal P ro b lem s ...........................................................

i

33 33 34 36 36 39 39 42 46 47 49 51 55 57

4. The Provisional coins o f Joaquin de San Martin a. B a ck g rou n d ......................................................................................... b. Characteristics of the Provisional coins struck in 1833 and 1834...................................................................................................... 5. The Countermarks of Jose M aria S ilv a ................................................... a. The Counterfeiting of the Provisional C o in s .............................. b. The Zig Zag cou n term ark ................................................................ 6. The Last Provisional Issues of 1835 ...................................................... a. Attempts to Establish a Federal Mint at San Salvador.............. b. The Provisional coins of 1835 ........................................................

61 64 65 66 69 69 71

VI. REJECTION AND DEMONETIZING OF THE PROVISIONAL COINS (1829 TO 1836) 1. G e n e ra l............................................................................................................ 2. Rejection in Neighboring S ta te s .............................................................. 3. Further Counterfeiting of the Provisional C o in a g e .............................. 4. Rejection and Prohibition of the San Martin Provisional Coins........ 5. Demonetization of the Remaining Provisional c o in s .......................... 6. Re-strikes of the Provisional C o in s .........................................................

73 73 74 76 79 83

VII. REJECTION OF DEBASED FOREIGN COINAGE AT THE END OF THE CENTRAL AM ERICA FEDERATION (1839 - 1841) 1. B ack grou n d ..................................................................................................... 2. Debased coinage from the Peru-Bolivian C on fed eration ........................

89 90

B IB LIO G R APH Y..............................................................................................................

97

ii

59

FOREWORD The history of El Salvador numismatics during the Nineteenth Century can be briefly described as one of scarcity and counterfeiting of coins. Lacking a Central Bank that may ensure the availability of coinage, and in the absence of sufficient production of metals to strike coins at a local mint, it is the balance of trade that governs the availability of coinage in a State. When exports abroad exceed imports, the surplus is returned to the State in the form of coins. During Spanish Colonial times, the Province of San Salvador was part of the General Captaincy of Guatemala. Its main economic activity was the production and export of indigo. The balance of trade was very positive, as international prices of indigo were very favorable and local production costs were low. Coins from the main Spanish American mints - most notable Mexico and Guatemala flowed abundantly to San Salvador. After gaining Independence from Spain in 1821, the State of El Salvador became part of the Central American Federation. Frequent internal wars occurred within the Federation as the States tried to impose their differing political views. El Salvador was the center of these clashes, as its ruling Liberal elite fought to have less dominance by the Federation. During the resulting armed conflicts, which coincided with the occurrence of several natural disasters that affected the Capital City of San Salvador and its surroundings, the balance of trade went into deficits. Agricultural production and exports diminished. Available coins were used to pay for essential imports. No fresh coins arrived from abroad. Coin shortages and counterfeiting became common. El Salvador became an independent Republic in 1841, after the Federation disintegrated. The national economy began to recover through the introduction of coffee production and export, which progressively displaced indigo as the main activity in the middle of the Century. Gold and Silver was produced in local mines. However, internal uprisings and clashes with neighboring States prevented the establishment of a local mint. El Salvador continued to rely on coins minted at Guatemala as well as on those that were brought by its trade with Europe, the United States of America, and other Latin American States. Nevertheless, temporary shortages and counterfeiting of coins continued. It was only in 1892 that the Central American Mint was established in San Salvador. It produced Gold, Silver and Copper coins in sufficient quantities to meet the country's demands. Very little is known up to now in regard to the numismatic history of El Salvador in the Nineteenth Century. Existing literature provided only limited, incomplete and sometimes inaccurate information. Numismatic researchers have had to face extreme difficulties to obtain basic information, referred specially to the first iii

half the Century. This was due in part to the unfortunate fire that destroyed part of the General Archives in 1889. After retiring from a long career with the United Nations, and returning to my home country in early 1997, I decided to tackle that problem. I devoted 18 months to researching all existing primary sources to obtain relevant information. This included the National Archive and National Library of El Salvador, the Guatemala-based General Archives of Central America, as well as several private libraries in both El Salvador and Guatemala. The end result is a mountain of information that I never thought existed and that provides the basis to establish the numismatic history of El Salvador in the Nineteenth Century. The publication of this information, and its numismatic interpretation, would require a book of too many pages. Instead, I have decided to divide its presentation in stages. This first volume presents all historic and numismatic events from Spanish Colonial times to the end of the Central American Federation circa 1840. While it covers Spanish Colonial and Central American Federation coinage, its main focus is on the Provisional coins issued by El Salvador during its wars with the Federation in the period 1828 to 1835, a subject on which very little had been written in the past. Included here is documentary proof that these Provisional issues were minted in San Salvador, as well as a description of the reasons behind each of the strikings. I consider this to be the main contribution of this book to El Salvador's numismatic history. A second volume will follow describing the numismatic history of the Republic, from 1841 to the end of the Nineteenth Century. The basic historic and numismatic research for this has already been completed. I wish to acknowledge the initial encouragement I received from the Chilean Numismatic Association (ANUCH) to undertake this work. Also, the cooperation and assistance that I have received from many individuals. In addition, I wish to express my gratitude to the understanding and support provided by my wife and sons during these past months. My son Ricardo's assistance in scanning and reproducing the many coin images included herewith is specially acknowledged.

Roberto Jovel San Salvador, 1999.

C O IN A G E U S E D IN P R E -C O LU M B IA N T IM E S

I. COINAGE USED IN PRE-COLUMBIAN TIMES Commercial exchanges among the Indians during pre-Columbian times - which ended in 1524 when the Spanish armies under the command of Pedro de Alvarado reached and conquered Central American territory - were undertaken through bartering. When Indians became more developed, they adopted another means for their exchange: Gold powder or nuggets, the feathers of special birds such as the Quetzal and, finally, the seeds of cocoa [Theobroma Cacad). The latter was chosen as a monetary unit in view of its relative scarcity or because a drink was prepared from it that was deemed by the aristocracy to be worthy of the Gods. Gold and Silver, due to their relative abundance, had been set aside as media for trade. There does not exist any documentary evidence in this respect for preColumbian times. However, some records exist concerning the means of trade used by the Indians during early Colonial times. They provide useful insights on the moneys used at that time by the inhabitants of what is now El Salvador. The Royal Observer at the Guatemala Audience, don Diego García de Palacio, in a letter to the King of Spain, dated 8 March 1576, stated that the Izalco Indians used cocoa seeds for trade in units of xontles, xiquipiles and cargas. Their equivalence was as follows:

Number of Carga X iquipil Xontle cocoa seeds 400 1 8,000 1 20 24,000 1 3 60

In the same letter an attempt was made by the Royal Observer to compare the Xontle to the Spanish currency of the time. It is stated in his letter that 200 cocoa seeds had an approximate value of one Real. This results in an equivalence of one Xontle for 2 Reales.1 If the calculation made by the Royal Observer is correct, the larger units of Xiquipil and Carga were equivalent to 2.5 and 7.5 Gold Escudos, respectively.

1 Quoted by Rochac, Alfonso, La Moneda, los Bancos y el Crédito en E l Salvador, Banco Central de Reserva, San Salvador, 1984.

1

C O IN A G E U N D E R THE S P A N IS H C O LO N Y

II. COINAGE UNDER THE SPANISH COLONY 1. The Economic and Political Setting In order to fully comprehend all issues concerning the coinage used during Spanish Colonial times, it is essential to grasp the economic and political setting under which the Central Americans in general -and the Salvadorians in particular- lived at the time. The countries that presently comprise Central America were then part of the Captaincy General of Guatemala. The geographical borders of the Captaincy General, however, did not coincide with those of present times. As examples, Chiapas and Soconusco -now parts of Mexico- belonged to the Province of Guatemala; Sonsonate also belonged to the latter and, after Independence from Spain, became part of San Salvador. The main economic activity during Colonial times, since the Sixteenth Century, was that of indigo or jiquilite. It constituted the main export product to Spain, and provided high incomes to two different groups. First of all, to the very producers of the crop, who were mostly Salvadorians. Second, to a group of merchants of Spanish origin that had settled in Guatemala at the beginning of the Eighteenth Century. The Salvadorian indigo growers produced nearly eighty per cent of the total Central American indigo crop at the beginning of the Nineteenth Century. Specifically, in 1807, they exported to Spain a total volume of 487,000 pounds of indigo valued at 670,000 pesos, which represented at the time exactly 78 per cent of the total Central American output for the crop.1 The powerful economic and political group of the Guatemalan merchants controlled the markets of Central America at that time. The group provided funding and credit, in cash and in kind, to the indigo growers. Using their relatives in Spain, these merchants transported and marketed the whole indigo production as well as other produces. Indigo was the engine behind the market. Its impact on the economy went beyond the single stages of production and processing. Proceeds from indigo sales provided the funds required to finance imports of European goods that Central America needed, and domestic trade in general required the income from indigo for its functioning. It can thus be visualized that the economic position of 1 See Gutiérrez y Ulloa, Antonio, Estado General de la Provincia de San Salvador, Reyno de Guatemala, Ministry o f Education, San Salvador, 1962, and Rubio-Sánchez, Manuel, Historia del añilo xiquilite en Centro América, Ministry of Education, San Salvador, 1976. 3

C O IN A G E U N D E R THE S P A N IS H C O LO N Y the province of San Salvador defined the well being of the whole Captaincy General, since indigo revenues were essential to finance the rest of the economy.2 However, the Salvadorian indigo producers were at a considerable disadvantage with respect to the Guatemalan merchants, due to their dependency on the latter to provide credit, establish prices, and market the product. For this reason, they made efforts to illegally export their products through Belize, where English merchants also acquired indigo at better prices. However, this matter proved to be impractical due to the absence of credit for production, which the Guatemalan merchants readily provided and the English could not. Colonial authorities tried to intervene in this matter, both to diminish the influence of the Guatemalan merchants and to try and assist the producers. In 1892 they established the Montepío de Cosecheros de A ñ il (Indigo Growers Association), and moved the venue for the sale of the indigo crop from Guatemala to the annual fair at San Vicente in the Province of San Salvador. This fact assisted the indigo producers in obtaining slightly better prices. However, since the new Association had only limited resources, it was unable to replace the Guatemala merchant group as the main credit source for indigo production. Not only San Salvador depended on Guatemala and its powerful group of Spanish merchants. The Province of Honduras was forced by decree to sell its Gold and Silver mines production to Guatemala, for use by the Royal Mint in producing coins. The Province of Nicaragua produced livestock, which was required both for meat consumption and to produce the seroons needed to pack and transport indigo to Spain. The Province of Costa Rica, due to its far away geographical position, was less dependent from Guatemala. Widespread resentment against Guatemala thus prevailed in the Provinces. It can easily be understood that, once Independence from Spain was achieved in 1821, the underlying Provinces’ fears of dominance by Guatemala would arise, as will be described later on. A progressive elimination of cocoa as currency for trade that the Indians had, began as soon as the Spanish Conquerors established the Captaincy General of Guatemala. Starting in 1747, the tax that Indians paid to the Spanish Crown had to be made using legal tender instead of cocoa beans.3

2 See Lindo-Fuentes, Hector, Weak Foundations, The Economy o f E l Salvador in the Nineteenth Century, 1821-1898, page 10, University of California Press, Berkeley, 1982. 3 See Wortman, Miles, Government and Society in Central America, 1680-1840, page 174, Columbia University Press, New York, 1982.

C O IN A G E U N D E R TH E S P A N IS H C O LO N Y

Initially, the Spanish Conquerors brought to America coins struck at Spanish Mints. In 1536, the first American mint was established in Mexico, and the first coins produced by it began to arrive and circulate in the Captaincy General. Much later, it was decided to establish a Royal Mint in Guatemala, which started operations in 1733. The Royal Guatemala Mint was entrusted to produce the currency required by the Provinces that composed the Captaincy General. Coins from other Spanish American mints -such as Lima, Potosí, Santiago, Nueva Granada, etc.- circulated in the area as well. Coat of Arms of the Royal Guatemala Mint in the 18 th Century

At that time, Gold and Silver were used to strike the coins, metals that were accepted by the whole world. The value of the coins was that of the metal they contained.

2. The Types of Spanish Colonial Coins Spanish-American mints produced cob (macuquind\ and milled (acordonada:) coins. Cob coins were rather primitive and irregular in shape, and were produced at all Spanish-American mints between 1580 and 1732. The term cob, in 12th to 15th Century English, means “a small mass” of something, or something lumpy, such as a cob of coal.4 Numismatically speaking, the term cob refers to the crude coins issued by Spanish American mints in the previously mentioned period. In Spanish America, cobs were called macuquinas. Cobs were made by slicing planchets from the end of bars of refined Gold or Silver bullion. Afterwards, the planchets were clipped to the weight required by Spanish laws, heated and hand hammered between crudely engraved dies. Due to the irregular and rough surface of the planchet, strong impressions were produced at the high surface points of the coins and weak or no impressions showed at lower relief sections. Cobs were easy to counterfeit due to their crude design. In addition, unscrupulous persons usually clipped off small sections at the edges, thus affecting trade and causing rejection of the cobs by merchants and the public at large. 4 See Sedwick, Daniel and Sedwick, Frank, The Practical Book o f Cobs, page 6, Winter Park, Florida, 1995. 5

C O IN A G E U N D E R THE S P A N IS H C O LO N Y

Using special machinery, milled coins began to be minted in 1732. These coins were perfectly round in shape, had a much better design, and were protected against counterfeiting and clipping by means of a reeded edge applied through a screw press. In Spanish America, milled coins were called moneda acordonada. Milled coins were minted in Silver with denominations of %, V2 , 1, 2, 4 and 8 Reales; and in Gold, with denominations of 1, 2, 4 and 8 Escudos.

3. The Design of Colonial Coins The design of Colonial coins was different for each of the Spanish Monarchs. To facilitate the identification of coins belonging to each of the Monarchs, the following table shows their ruling periods:56 Monarch Charles and Joanna Philip II Philip III Philip IV Charles II Philip V Louis I Ferdinand VI Charles III Charles IV Ferdinand VII

Reigning Period 1516-1556 1556-1598 1598-1621 1621-1665 1665-1700 1700-17466 1724-1725 1746-1759 1759-1788 1788-1808 1808-1833

Cob coins -whose production was officially terminated in all Spanish American mints in 1732, with a single exception (Guatemala) to be described later onwere struck during the kingdoms of Charles and Joanna through Philip V, inclusive. The use of milled coinage was introduced during the middle of the latter’s ruling.

5 See Blánquez-Fraile, Agustín, Historia de España, Tables 8 to 11, Second Edition, Barcelona, Spain, 1933. 6 Philip V was king during two periods, with an interruption during the brief kingdom of Louis I. The first such period was from 1700 to 1724, and the second one, from 1725 to 1746.

C O IN A G E U N D E R THE S P A N IS H C O LO N Y

a. Cob coins Cobs struck at Mexico and other Spanish American mints show, in their obverse, the respective coat of arms of the ruling Monarch, surrounded by a legend with his name in Latin and the year of minting. Cobs minted under Charles and Joanna and Philip II do not show the year, however. In their obverse, cobs show a cross with lions and castles in each quadrant, with the legend “HISPANIARVM: ET: INDIARVM: REX” -King of Spain and of Indiesusually in abbreviated form. The following figure shows some cobs -some of them counterfeit- produced at Spanish American mints, which circulated in the Province of San Salvador.

Figure 2-1. Legitimate and Counterfeit Cobs, Struck at Spanish American Mints, that circulated in San Salvador

b. The macacos of Guatemala The Guatemala Royal Mint was established in 1733 with old machinery from the Mexico Mint.7 This mint struck cobs for 20 years, until 1753; that is, during the kingdoms of Philip V and Ferdinand VI. The cobs minted at the Guatemala Mint are a very special rarity in numismatics. First of all because their production occurred in a period (1733 to 1753) when all other Spanish American mints were already striking round milled coins, in response to an order issued by Philip V. Second, because their design is different to the one used by all other Spanish American mints. Third, because the Guatemala Mint struck cobs under the reign of Ferdinand VI, which no other

7 See Prober, Kurt, Historia Numismática de Guatemala, pages 31 and 32, Guatemala, 1973. 7

C O IN A G E U N D E R THE S P A N IS H C O LO N Y Spanish American mint did. Finally, because no Gold cobs were produced at Guatemala.8 With regard to their different design, the Guatemalan cobs were struck using special dies made with the design of the milled coins from Mexico, which included the two worlds with the columns of Hercules at their sides. There were differences in regard to denominations as well. Silver coins of V2 , 1, 2, 4 and 8 Reales were struck, but no lA Real pieces (cuartillo5 ) were minted. In addition, no significant production of Gold cobs was effected. The weight of these cobs was defined by the Spanish Crown standards of the time. Their form was as irregular as those of cobs minted at Mexico or other Spanish American mints. The public at large accepted cobs for commerce and called them macacos. This term can be either interpreted as slightly demeaning or as deriving from the Arab term mahquq, which means “something whose value has been assured or demonstrated to be true” .9 The macacos circulated freely and extensively in Guatemala, San Salvador, and the other Provinces of the Captaincy General. They even reached the Caribbean islands and South America.10 The fact that macaco cobs showing the coat of arms of Ferdinand VI must not be understated. Cob production discontinuation had been ordered by his predecessor Philip V. One could imagine the unease felt by Ferdinand VI when seeing the Guatemalan macacos, since they represented a setback to the numismatic past of less advanced technology, which he had ordered discontinued. As was true of cobs minted elsewhere, due to the irregular shape of the dies, Guatemalan macacos were very vulnerable to counterfeiting and clipping. Filing or clipping at their edges to steal part of their Silver was veiy common. The public was very conscious of this fraud and special care was exercised to ensure that the weight of these cobs was correct, or their value was correspondingly reduced. 8 While the previous statement is essentially correct, there seems to exist a handful of Guatemalan Gold cobs in the denomination of 8 Escudos. See again Sedwick, Daniel, and Sedwick, Frank, The Practical Book o f Cobs, page 61, Op. Cit. 9 See again Sedwick, Daniel, and Sedwick, Frank, The Practical Book o f Cobs, page 7, Op. Cit. 10 See Burzio, Humberto, Diccionario de la Moneda Hispanoamericana, Volume II, pages 9 and 10, Buenos Aires and Santiago, 1958; and Medina, José Toribio, Las Monedas Obsidionales Hispanoamericanas, pages 85 to 88, San Juan, 1919. However, both Burzio and Medina erroneously attributed to the Guatemala Mint some cobs struck at other Spanish American mints, and also classified as macacos some cobs that had been struck by other mints and had been countermarked in Guatemala in the Nineteenth Century. This miss-attribution points out to the limited information on macacos which was available to these distinguished Authors at the time when they published their works in that region of the Continent.

C O IN A G E U N D E R THE S P A N IS H C O LO N Y

Many years later, in the late Nineteenth Century, the Governments of Guatemala and El Salvador would jointly try to demonetize the macacos. The latter State permitted cobs in general to serve as circulating currency until 1881. The Salvadorian Government in 1869, using its coat of arms countermarked Guatemalan macacos and other cobs, in order to guarantee their circulation and legitimacy. The following figure shows some Guatemalan macacos, with a view to illustrate their different design vis a vis the cobs produced by other Spanish American mints.

Figure 2-2. Macacos o í Vi, 1, 2, 4 and 8 Reales Denomination, Minted at Guatemala between 1733 and 1753.

c. Milled Colonial Coins When round, milled Colonial coins were introduced in 1732 under the reign of Philip V, the design used to strike the cob coins was modified substantially. The obverse of the milled coins shows the coat of arms of each Monarch, surrounded by a legend in Latin with his name and “D.G. HISPAN. ET IND. REX.” The initial of the assayer is shown on the left side of the coat of arms; the denomination of the coin is shown on the right. The reverse shows two crowned hemispheres, and two crowned columns of Hercules, on top of a semi-circular portion of the ocean that separates Europe and America, surrounded by the inscription “VTRQUE VNUM”, the initial of the Mint and the year. These coins are known as Pillars, and were struck during the reigns of Philip V, Ferdinand VI and Charles III. The milled coins produced under these kings are shown in the following figure. Slight differences in design among the three types can be noticed.

9

C O IN A G E U N D E R TH E S P A N IS H C O LO N Y

Figure 2-3. Obverse and Reverse of the Three Types of 8-Real Pillar Coins Minted at Mexico and Guatemala during the Spanish Colonial Period

Under Charles III and since 1772, a modification to the coin design was introduced to show the portrait of the ruling Monarch instead. The portrait was surrounded by a legend in Latin with the name of the Monarch and the words “DEI GRATIA”; the year of minting was shown at the bottom. The reverse shows the coat of arms with the columns of Hercules, the inscription in Latin “HISPAN. ET IND. REX.”, the initial of the mint, the denomination, and the initial of the assayer. This new design of the milled coins resulted in the terming of the coins as “Portrait coiné'. It was used under kings Charles III, Charles IV and Ferdinand VII. The design of these portrait coins, for each one of these Monarchs, is shown in the following figure.

10

C O IN A G E U N D E R THE S P A N IS H C O LO N Y

Figure 2-4. Obverse and Reverse of the Three Types of 8-Real Portrait Coins Minted at Mexico and Guatemala during the Spanish Colonial Period

Differences in milled coins -of either p illa r or portrait types- struck at the Mexico and Guatemala mints are minimal. They refer to the mint’s initials; that is M0 for Mexico and G or NG for Guatemala.11 There also exist minor differences in the design of the portraits and of the coat of arms. To illustrate these differences, coins from both Mexico and Guatemala have been included in the previous figure. It should be pointed out that the milled coins, produced in Mexico and Guatemala, which circulated in El Salvador, were in the Gold and Silver denominations indicated before.

d. Introduction of V4 Real Guatemala Milled Coins

11 An earthquake destroyed the premises of the Guatemala Mint in 1733. When minting operations were restarted at Nueva Guatemala, the Mint used the initials of NG to identify its coins.

11

C O IN A G E U N D E R TH E S P A N IS H C O LO N Y When the new Gold and Silver milled coins, minted at Guatemala, were first introduced in the Province of San Salvador around 1796, official news were posted in all towns in order to facilitate their acceptance by the public at large. To facilitate trade, the new series of coins included the denomination of lA Real that did not exist in previous Guatemalan strikings. Such coin was called cuartillo and, despite its potential usefulness, created some problems due its novelty and different design with respect to the other coins in the 1796 series. The milled cuartillos, due to their small size, did not include the portrait of Charles IV in its obverse nor the coat of arms in the reverse. Instead, the cuartillos depicted a castle in the obverse, the year at the bottom, and the initial of the Mint and the denomination of % on the sides. In the reverse was a rampant lion. See the following figure.

Figure 2-5. Enlarged (300%) image of the Obverse and Reverse of the First X U Real Milled coins that circulated in San Salvador

Due to these differences and to the untrusting nature of the local merchants, the new milled cuartillos were rejected at San Salvador. The local authorities immediately informed the matter to the Superintendent of the Royal Mint at Guatemala, who promptly submitted the issue to the Governor of the Kingdom, Don José Domás y Valle. On 29 May 1797, the Governor addressed a letter to the appropriate San Salvador authorities, which read:12 “Having to rem edy the situation imposed by the rejection of lA Real coins in your Province, you are hereby ordered to issue the required official news and to order the Ministers o f the Royal Treasury in your city (where I assume there exist m any of these coins) that they should, while supplies last, include them in the paym ent of salaries. It is expected that, through this procedure, the ignorant opposition to the coin w ill recede. You are requested to report to me the results o f these two actions, so that more drastic measures can be adopted should these fail to accom plish their intended objectives” .

12 See File 10516, Legajo 509, Signature A 3.17, Archivo General de Centro América, Guatemala City.

C O IN A G E U N D E R THE S P A N IS H C O LO N Y

After implementing the official news and continuing to include these coins in the salaries of local government employees, the resistance of local merchants to the cuartillos was slowly overcome and the coins circulated freely in the markets of San Salvador.

4. Wars between Spain and England: Their Effects on Coinage In addition to taxing all regular productive activities, the Spanish Crown imposed additional surcharges on its Colonies during times of emergencies or economic crisis. In 1807 Spain declared war on England. Requiring funds for its war efforts, the Consolidation o f Church Debts was decreed. The Consolidation required the Catholic Church to immediately call all outstanding loans from private citizens, and to deposit the proceeds in special Consolidation Fund Offices (Cajas de Consolidación) where these funds would be placed at the disposal of the Crown. The Catholic Church and its related institutions were at the time one of the most important credit lenders to many productive activities in the Colonies.13 The importance of this action by the Crown on the currency situation in the Captaincy General can not be underestimated. The Consolidation involved the collection of nearly 1.25 million pesos, roughly equivalent to total indigo exports in a given year. In view of its economic relevance, the portion of said amount that the Province of San Salvador contributed was very high. In fact, in 1807, a year before completion of the Consolidation process, the San Salvador Consolidation Fund Office had accumulated a total of 590,376 pesos.14 As a result, many Salvadorian indigo producers lost the lands they had under mortgage. Currency became scarcer, since the Guatemala Royal Mint was unable to replace the coins that had been sent to Spain, and sometimes commerce had to resort to bartering.

13 See again Lindo-Fuentes, Héctor, Weak Foundations, The Economy o f E l Salvador in the Nineteenth Century, 1821-1898, page 18, Op. Cit. 14 See again Gutiérrez y Ulloa, Antonio, Estado General de la Provincia de San Salvador, Rey no de Guatemala, page 146, Op. Cit. 13

C O IN A G E U N D E R THE S P A N IS H C O LO N Y

5. Medallic Issues Minted for San Salvador At least two types of medallic issues were struck for the Province of San Salvador, during Colonial times. Their description is essential in order to present a complete numismatic history of the country. The first case occurred in 1789, when a Silver medal was struck to commemorate the crowning of Charles IV.15 It weighed 3 grams and had a diameter of 21 millimeters, which would make the medal equivalent to one real. The laureate portrait of Charles IV, facing to the right, and surrounded by the inscription “CARL IV REI DE ESP. EMP. DE LAS IND. 1789” was shown in the obverse. A volcano, with the inscription at the bottom “SALVADOR EN IND” and the surrounding legend “AVGVSTA PROCLAMACION DE LA I. CIUD. DE S.” was shown on the reverse. (See the following figure).

Figure 2-6. Enlarged image (200%) of the first Proclamation Medal struck for San Salvador in 1789

It has not been possible to determine under whose initiative this proclamation medal was issued. However, because of its likeness to the one to be described next, it seems feasible that it was struck as an initiative of the Royal Academy of Guatemala. The second proclamation issue was made after the French attempt to dominate Spain through the imposition of Napoleon the 1st. On 20 October 1808, the Rector of the Royal University of Guatemala - Mariano Angel de Toledo - wrote to the President of Guatemala requesting authorization to strike medals proclaiming fidelity to Ferdinand VII. The President endorsed such request and, on 21 October, referred it to the Royal Audiencia. The latter received the request and approved it on a provisional basis, until it would receive final approval by

15 See Almanzar, Alcedo, and Stickney, Brian, The Coins and Paper Money o f E l Salvador, page 7 San Antonio, Texas, 1973.

C O IN A G E U N D E R THE S P A N IS H C O LO N Y His Majesty. Ferdinand VII granted his approval through Royal Decree dated 2 September 1809.16 The medals thus approved were to be worn in a collar around the chest, by all doctors of the Royal University faculty. They had an oval shape; in their obverse they showed the portrait of Ferdinand VII and the University coat of arms in the reverse. However, round medals were also minted, having the equivalent value due to their size and weight - to 1 and 2 Reales, respectively. These medals were produced for the cities of Chiapas, Guatemala, Quetzaltenango, San Salvador, Santa Ana, Trujillo, Olancho and León.17 The following is an illustration of the medal for the City of San Salvador enlarged to show its details - minted in 1808 at Guatemala, for which denominations of 1 and 2 Reales are known to exist.

Figure 2-7. Enlarged image (200%) of the 1 Real Proclamation Medal struck for San Salvador in 1808.

The 1 Real medals were struck in Silver, with the usual fineness of the times. They weigh 3.2 grams and have a diameter of 20.5 millimeters. The laureate portrait of Ferdinand VII, surrounded by the inscription “FERNANDO. VIL REY. DE. ESP. E. INDIAS”, is shown in the obverse. A volcano, the date of 1808 at its bottom, and a circle of denticles, are surrounded by the legend “PROCLAMADO. EN. S. SALVADOR. DE G.”, in the reverse.18 The design for the 2 Real medal is quite similar to the above, and is shown in the following figure.

16 More information in this regard may be obtained in Prober, Kurt, Historia Numismática de Guatemala, pages 156 to 160, Op. Cit. 17 See Siliézar-Ramos, Felipe, Catálogo de Monedas y Medallas de Proclama de Centroamérica y Panamá, 1733 a 1976, pages 391 to 407, Guatemala, 1977. 18The full legend would read “Proclamado en San Salvador de Guatemala” 15

C O IN A G E U N D E R TH E S P A N IS H C O LO N Y

Figure 2-8. Enlarged image of the 2-Real Proclamation Medal Issued for San Salvador for the crowning of Ferdinand VII

The 1 Real issue for Santa Ana is shown below:19

Figure 2-9. Enlarged image of the 1-Real Proclamation Medal Issued for Santa Ana for the crowning of Ferdinand VII

It is to be noted that the obverse of this issue is practically identical to the one for San Salvador. The reverse, however, reads in the center “POR SU LEAL AYUNTAMIENTO” and “ 1 R.”, and the surrounding legend reads “SANTA ANA GRANDE EN G.” Variations of the legends in these medals exist, due to the crude manner in which the Guatemala Mint operated at the time.20

19 Images for the last two pieces were graciously provided by Carlos Quintanilla who has them in his collection. 20 The photograph hereby reproduced belongs to the plate medal used for the first time in the 1999 issue of the Krause catalog, which -before said issue - only included the medal for the City of Santa Ana.

C O IN S U S E D IM M ED IA T ELY A F T E R IN D E P E N D E N C E

III. COINS USED IMMEDIATELY AFTER INDEPENDENCE (1821 TO 1824)

1. Independence from Spain In Spanish Colonial times, the Province of San Salvador formed part of the Captaincy General of Guatemala. The five Provinces - including also Guatemala, Honduras, Nicaragua and Costa Rica - gained independence from Spain on 15 September 1821, without an armed struggle. Through Independence from the Colonial power, these Provinces sought to eliminate existing regulations and restrictions to trade, the high taxes of the Crown, and the problem posed by belonging to an empire that was frequently at war with other powerful kingdoms.1 Inexperience of the government immediately following Independence caused many problems to the emerging new nation. First, high severance payments were paid to the Crown officials that were terminated. Second, when these Colonial employees left, no experienced officers remained to effectively collect taxes in order to fill the new Nation’s Treasury. Third, many wealthy Spaniard citizens returned to the mother country, taking their capital with them. These problems, added to the drainage of currency caused by the Consolidation described in the preceding chapter, resulted in an acute shortage of currency to the point where no funds were available to pay the salaries of public officials.2

2. Annexation of Central America to Iturbide’s Mexico Empire A power vacuum resulted from the absence of the Spaniards. The Provinces of Honduras, Nicaragua and Costa Rica - which wanted not only Independence from Spain but wished the predominance of Guatemala to end as well - saw annexation to the Mexican Empire of Agustin de Iturbide as a way out of the existing situation. The merchants and aristocracy of Guatemala were having difficulties in keep in check the Provinces’ wish to self-governing, and decided to 1 Lindo-Fuentes, Héctor, Century, 1821-1898, page 2 Lindo-Fuentes, Héctor, Century, 1821-1898, page

Weak Foundations, The Economy o f E l Salvador in the Nineteenth 35, Op. Cit. Weak Foundations, The Economy o f E l Salvador in the Nineteenth 37, Op. Cit.

C O IN S U S E D IM M E D IA T E LY A F T E R IN D E P E N D E N C E support annexation as a way out as well. The Province of San Salvador, whose economy and production-generating elite were the most interested in achieving full independence, did not support the annexation to Mexico. The Guatemalan army made efforts to force the Salvadorians to accept such annexation, but was defeated by the Salvadorians in August of 1822. Mexican troops, under the command of Brigadier Vicente Filisola, invaded and occupied San Salvador.3 However, Iturbide fell in Mexico in 1823 and the Mexican troops left Salvadorian territory. The double invasion campaign to San Salvador resulted in a serious economic setback to both Provinces of Guatemala and San Salvador. In Guatemala, use was made of the Acquisition Fund of the Mint - which amounted to 400,000 pesos - to finance the expenses of war, especially those of the Mexican army.4 The Guatemala Mint, which used to strike between 500,000 and 700,000 pesos per year under Spanish Colonial times, was rendered unable to produce the currency required by the new nation.

3. “The Tegucigalyas ” The impossibility for the Guatemala Mint to provide the currency required by the Provinces, as well as an expression of sovereignty by the Province of Honduras, resulted in the striking and circulation of a provisional type of coins that caused problems in San Salvador and Guatemala. The Honduran delegates to the Mexican Congress convened by Iturbide succeeded in convincing the latter to approve the establishment of a Mint in their Province. Thus, in October 1822, Juan Lindo seems to have brought some old dies to Honduras to start minting operations.5 During 1823 and 1824 copper coins of y2, 1, 2 and 4 Reales denomination were minted at Tegucigalpa. These coins were of the cob type and circulated in San Salvador and Guatemala Provinces as well, as a result of intra-Province trade.

3 Just before the Mexican invasion, the Salvadorian Congress made a proposal - which never even reached its destination - for annexation to the United States of America. 4 Exposición que al comenzar la actual legislatura ordinaria hizo al Congreso Federal de esta República el Secretario de Estado y del Despacho de Hacienda, Mariano Galvez, Guatemala, Imprenta Nueva, 1830. 5 The distinguished Honduran numismatist Arturo Castillo-Flores, however, states that here is no documentation to establish that Mr. Lindo brought the dies from Mexico. See Historia de la Moneda de Honduras, page 36, Banco Central de Honduras, Tegucigalpa, 1974.

C O IN S U S E D IM M ED IA T ELY A F T E R IN D E P E N D E N C E The dies used in the Tegucigalpa Mint, with the approval of the Guatemalan Government, were of the same type as that of the Colonial currency. Due to their tendency to break, in view of the weak material used to make them, the resulting coins were not uniform in design. Their obverse shows castles and lions between the arms of the cross, surrounded by four sets of semicircles, the initials “MP” (for provisional money), and the denomination in Reales. The reverse has the columns of Hercules, divided by two horizontal lines and the inscription “PLVS ULTRA”, the initial “T” for the Tegucigalpa Mint, and the year. Nearly all these coins had the legend “TEGVCIGALPA” and the initials “LA” belonging to the assayer.6 In San Salvador and Guatemala, these coins were known as “ Tegucigalpa^’. The following figure shows the obverse and reverse - enlarged to 200% in order to better describe details - of the obverse and reverse of a variety of the “ Tegucigalpa§’.

Figure 3-1. Enlarged obverse and reverse of the “ Tegucigalpas’

Due to their simple design and crude appearance, these coins - together with other Colonial cobs - were very easy to counterfeit. Concurrently, with the appearance of the Tegucigalpas, there existed in San Salvador and neighboring Provinces many unscrupulous individuals that counterfeited coins. Their activities were so widespread that, on 17 September 1824, the Salvadorian authorities were forced to issue an Order to combat this malady; it read as follows:7 “Article 1. The laws that deal with counterfeit coins and counterfeiters are to be followed strictly, and the appropriate lawsuits and penalties are to be imposed without exception.

6 Carrillo-Flores, Arturo, Historia de la Moneda de Honduras, Op. Cit. 7 Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Law 15, Title 3, Book Three, Volume 1, Guatemala, 1855. 19

C O IN S U S E D IM M E D IA T E LY A F T E R IN D E P E N D E N C E Article 2. Judges are not to issue any absolving sentences, even supported by counselor’s allegations, before obtaining first a decision of the Higher Court. Article 3. A n y and all persons are authorized to apprehend and hand over to the authorities any counterfeiter or persons having false coins in their possession, no m atter their amount. Article 4. Judges are to collect and retain all counterfeit coins, and to inform the Government accordingly on a m onthly basis. Article 5. Judges are required to proceed - without leniency - to embargo the assets of the persons accused or convicted of said crime. Article 6. The Political Chiefs and other authorities are to exercise seal to ensure that these matters are closely adhered to.”

On the other hand, the Salvadorians’ displeasure with the Tegucigalpa coins was widespread, since they were used to coins made of Gold and Silver only, and the Tegucigalpas were made of Copper instead. Treasury Offices filled up with these coins, and the State had to bear the corresponding loss. Furthermore, the counterfeiting of the Tegucigalpas continued unabated. As will be seen in Chapter IV, the Central American Federation had issued standards for its official coins that were entirely different to those of the Honduran coins. For that reason, on 29 October 1824, the San Salvador State Assembly issued the following decree to “prohibit circulation of the coins of Tegucigalpa” :8 “Article 1. The circulation of the coins known as “ Tegucigalpa^ is hereby prohibited. Article 2. Those persons bearing moneys in the prohibited currency are free to have them restruck, either on their own or through the Intendencia, at the Guatemala Mint. In the latter case, the Intendencia will ensure that all amounts received for this purpose are duly recorded, issuing appropriate receipts to the interested parties. Article 3. Any individuals trading with these coins for the first time will suffer the penalty of losing them; if using them for the second time, they w ill be fined twice their nominal value. Article 4. Penalties established by law against counterfeiters will be fully enforced and Judges will be held especially accountable for the smallest omission in their enforcem ent” .

8 Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Law 4, Title 3, Book Three, Volume 1, Op. Cit. 20

C O IN S U S E D IM M ED IA T ELY A F T E R IN D E P E N D E N C E This decree served its intended purpose in the State of San Salvador. In Honduras, the Tegucigalpas circulated at least until 1830 when the local Mint began striking coins for the Federation. Circulation of the Tegucigalpas in the State of Guatemala generated problems similar to those in San Salvador. The Federal Government whose seat was in Guatemala City issued a public edict on 6 May 1824 to prohibit circulation of any coin not produced by the Guatemala Mint. However, the Tegucigalpas continued to circulate.9 While both the Federal Government and that of the State of Guatemala recognized the urgency to demonetize the Tegucigalpas and that their holders including the Treasury - bear the cost, they never took a decision for the fear of causing a greater influx of these coins from neighboring States and having the Treasury absorb these increased costs. However, two years later, in April 1826 and contrary to Gresham’s law - the Tegucigalpas had vanished from the Guatemalan markets due to the rejection by the merchants.10

9 Solis, Ignacio, Memorias de la Casa de Moneda de Guatemala y del desarrollo económico del país, Volume III-A, pages 644 and 645, Ministry of Finance, Guatemala, 1979. 10 Solis, Ignacio, Memorias de la Casa de Moneda de Guatemala y del desarrollo económico del país, Volume III-A, page 645, Op. Cit. 21

C O IN S O F TH E C EN T R A L A M E R IC A N F E D E R A T IO N

IV. THE COINS OF THE CENTRAL AMERICAN FEDERATION (1824 TO 1835) 1. The Political-Economic Position After the temporary annexation to the Mexican Empire - in 1822 and 1823 - a Constitutional Assembly was convened. On 1 July 1823, this Assembly decided that the five Provinces, which originally formed the previous Captaincy General of Guatemala during Colonial times, would be called the “United Provinces of Central America” .1 At that time the Central Americans wished to create a new State that would be duly recognized by all nations of the world. However, there were opposing conceptions about the institutions to be adopted in that respect. On one side, the Guatemalans preferred to have a central government to control the previous Provinces; on the other, the Provinces wished to have a reasonable degree of independence with respect of the previous Captaincy General. During the annexation to Mexico two important parts of the territory of the Captaincy General were lost: the Province of Chiapas, and Belize. Chiapas had strong ties with Mexico, and Belize had close relations to the English. Later on, internal border accommodations occurred: Sonsonate, which initially belonged to Guatemala, was annexed to San Salvador. The ruling Liberal Party - which was predominant at that time - imposed a reform project to the new Central American nation. The project included, inter alia, freedom of the press, respect for human rights, abolishment of slavery, prohibition to use nobility titles, etc. Initially, the Liberals approved an institutional basis of the Federal type, based on the laws and decrees approved by the Constitutional Assembly in 1823, from which the name “Central American Federation” was derived. Later on -as a reaction to the opposition of Guatemalan Conservatives that wished a centralized type of government for the new nation Coat of Arms and after their military defeat by General Francisco Morazán of the in 1829- the Liberals embarked on a wide program of reforms. Federation These included colonization of idle lands, construction of port facilities, building an Inter-Oceanic canal in Nicaragua, and the introduction of the Lancaster education system.2

1 Decree o f Independence by the National Constitutional Assembly, dated 1 July 1823, in: Menéndez, Isidro, Recopilación de Leyes del Salvador, Guatemala, 1855. 2 Pinto-Soria, Julio César, La Independencia y la Federación, 1810-1840, page 103, in PérezBrignoli, Hector, Historia General de Centroamérica, De la Ilustración al Liberalismo, Volume III, Facultad Latinoamericana de Ciencias Sociales (FLACSO), San José, 1994. 23

C O IN S O F THE C E N T R A L A M E R IC A N FE D E R A T IO N

When Independence was won in 1823, the Liberals hoped that existing natural resources of the new nation, managed by the market and without intervention of the Colonial power, would permit them to achieve great riches. To do so, capital was required; they proposed to obtain it by selling bonds in the markets of England. They hoped to repay these bonds using the proceeds from the elimination of Spanish restrictions and taxes, which would allow increased production and trade. Between 1823 and 1826, these free-trade policies allowed the economy of the Federation to grow. Trade doubled its volume between 1821 and 1825. Annual indigo sales recovered to levels achieved at the end of the Eighteenth Century, or 2 million pesos per year. Prices of imported manufactured goods fell and their volume increased. Exports rose from 81,900 pesos in 1823 to 1,050,000 pesos in 1826. Since imports grew faster than exports, a net loss of circulating currency occurred, which fact aggravated the scarcity of coinage described in the preceding chapter. In addition, due to the inefficiency of public administration, the contraband of goods increased and the collection of taxes diminished.3 Under this free-trade environment, in addition to the relative laxity of the federal Government and the political instability that prevailed, the economy of the Federation underwent many important changes. The relative economic integration that prevailed at the end of the Colonial period became weakened. Except in the case of El Salvador, the relative weight of indigo in the economy decreased. When cochineal production began in earnest in Guatemala, the previous division of labor -under which the Provinces took care of production activities and the Capital handled product marketing- was broken. In the absence of the Spaniards, Belize became the main Central American port in the Atlantic coast, and English merchants played a more predominant role in trade. As regards to the Pacific coast, in 1824 English merchants based in Chile and Peru began to frequently visit the Salvadorian port of Acajutla, trading gold, silver, wine, flour and European manufactured goods. During the war of 1826-1829 between the fractions that supported Federalism and Centralism -as will be seen in the following chapter- nearly one-third of the indigo crop was exported through the ports in the Pacific coast. When peace returned, however, Belize was again used to export to Europe.

3 Lindo-Fuentes, Hector, Weak Foundations: The Economy o f E l Salvador in the Nineteenth Century, 1821-1898, pages 40 to 42, Op. Cit. 24

C O IN S OF T H E C EN T R A L A M E R IC A N FE D E R A T IO N Since 1834 the English merchants became more involved in the Central American markets and increasingly displaced the Guatemalan merchants in their function as credit providers and in fixing the prices for indigo.4 The constitutional period of office for the Federal authorities was to end in December 1838. However, the growing civil unrest in some States5 and the accelerated weakening of the Federal government, prevented the holding of new elections. A last effort to convene a Constitutional Assembly to try and strengthen the Federal Pact through the introduction of some reforms was unsuccessfully attempted. Some States were already in a state of war, with the specific aim to break the Federal Pact.6 On 30 May 1838 the Federal Congress -with the aim of strengthening the Federation- issued a decree which enabled each State to adopt the internal organization that best suited its interests, with the provision that they maintain the Federal form of government.7 However, this decree opened the doors to the secession that some States were searching for. At the end of 1838 the States of Honduras, Nicaragua and Costa Rica openly revolted against the Federal Government, and took possession of all Federal revenues. The first two sent their armies against the State of El Salvador, which remained true to the Federation, as will be seen later on. Guatemala would secede from the Federation in the following year.

2. The Finances of the Federation A first look into the finances of the Federal Government is in order to determine its ability to issue circulating currency. In 1826 the budget of expenditures of the Federation amounted to 804,889 Pesos. It was funded from imports/exports taxes -collected by the States- (60% of total revenues), tobacco sales (37%), powder manufacturing and postal services. However, when war began on said year between the Federation and some States, the finances of the Federation were in a difficult position. This was

4 Lindo-Fuentes, Hector, Weak Foundations: The Economy o f E l Salvador in the Nineteenth Century, 1821-1898, pages 44 and 45, Op. Cit. 5 This was especially true in Guatemala where in 1837 there had occurred a peasant uprising which led to the deposing of the Chief of State and to the designation of a new government led by the Conservative Party. 6 Pinto-Soria, Julio César, La Independencia y la Federación, 1810-1840\pages 127 and 128, Op. Cit. 7 Decreto Federal de fecha 30 de mayo de 1838, in UNESCO Microfilm MN-3, Archivo General de la Nación, San Salvador.

C O IN S OF TH E C E N T R A L A M E R IC A N FE D E R A T IO N due to the fact that the States did not always pay their dues, and also to management deficiencies that had resulted in some irregularities. The Federation was forced to increase its expenditures to pay troop salaries and related war expenditures, and to reduce its civilian expenditures. In order to face this situation, salaries of the civil administration, including the salaries of ports’ employees, were reduced by half.8 This measure was insufficient, however, and the Federation was forced to utilize part of the proceeds from the sales of bonds in England, to the amount of 200,000 pesos.9 During the war, the States took possession of a sizable fraction of the revenues that were due to the Federation, especially taxes on import/export and on tobacco sales. Through this, they financed their war expenditures with funding from the very Federation. The exception was Guatemala, which not only maintained its regular payments to the Federation but made extraordinary contributions as well. When war ended in 1829 with the occupation of the Federal Capital of Guatemala, by the A llied Army to Defend the Law, which was commanded by General Francisco Morazán, the new Federal Government made representations with the States in order to recover the revenues that had been retained. Some contributions were slowly re-established; especially those taxes collected at ports on imports and exports, but they never reached their pre-war levels. Thus, in 1830, with military spending reduced to the very minimum, it became possible for the Federation to raise civilian salaries to 75% in its administration. However, on said year regular revenues only amounted to 390,987 Pesos and expenditures were 481,742, which resulted in a deficit of 90,755.10 In 1831, the Federal budget was 815,000 Pesos. Its execution fell short due to diminished income from the States, but was met through reductions in expenses, and increases in ports’ revenues from import and export taxes, and the re-establishing of tobacco taxes.11 The Federation confronted serious political problems at the end of that year in Soconusco, Omoa and in the State of El Salvador. The Federal Congress authorized its Executive Branch to, first, 8 Decreto de la Presidencia de la República rebajando temporalmente el sueldo a los empleados federales, septiembre 11 de 1829, page 50, File 92809, Legajo 4126, Signatura B 5.7, Archivo General de Centro América, Guatemala City. 9 See Exposición que a l comenzar la actual legislatura ordinaria hizo al Congreso Federal de esta República el Secretario de Estado y del Despacho de Hacienda, Mariano Galvez, Guatemala, Imprenta Nueva, 1830. 10 See Memoria que presentó al Congreso Federal de Centro América el Secretario de Estado y del Despacho de Hacienda del Supremo Gobierno de la República e l 26 de marzo de 1831 en la Legislatura ordinaria del mismo año, don Pedro Jose Valenzuela, Guatemala, Imprenta Nueva, 1831. 11 Decreto Federal del 3 de agosto de 1831, Page 4. File 92811, Legajo 4126, Signatura B 5.7, Archivo General de Centro América, Guatemala City.

C O IN S O F TH E C EN T R A L A M E R IC A N FE D E R A T IO N negotiate and obtain domestic and foreign loans up to an amount of 200,000 pesos, which would be paid from revenues arising from the collection of import/export taxes; and, second, to impose mandatory loans to the States.12 In 1832 Federal revenues did not increase. Military spending increased, due to the need to force the establishing of the Federal Capital in the State of El Salvador, whose government resisted such move and even threatened to secede from the Federation. Thus, the Federal Congress decreed in March that the Federal deficit was to be apportioned to the States according to their representation in that Legislative body.13 Furthermore, in June, it issued an additional decree instructing the Executive Office to impose a forced loan on the States for 50,000 pesos, to be apportioned among them.14 Upon concluding the military campaign against El Salvador, for which troops from Honduras and Nicaragua were utilized, General Morazán imposed a forced loan of 100,000 pesos on the inhabitants of El Salvador. These funds were required in order to “reorganize the State” and to finance the campaign in the northern ports of Omoa and Trujillo.15 In view of the Federal Treasury’s position, it can not be discarded that these funds may have been used by the Federation to replenish its coffers after the El Salvador campaign. The Federal deficit continued to grow, despite the sale of Federal properties. When the seat of the Federal Government was moved to San Salvador in 1834, its financial position improved. Reforms were introduced to tax laws in 1836, which included modifications to import and export duties. As a result, at the beginning of 1837, the President of the Federation expressed his optimism with regard to the position of the Treasury: “The deficit of the Public Treasury has diminished considerably. Tax revenues in the previous year have yielded sufficiently (...) to enable the payment of back salaries to our employees”. He further stated that “This year’s revenues will permit to pay all outstanding debts and to finance all expenses of the Administration”.16 12 Decreto Federal del 12 de diciembre de 1831, Page 20, File 92811, Legajo 4126, Signatura B 5.7, Archivo General de Centro América, Guatemala City. 13 Decreto Federal del 9 de marzo de 1832, Page 36, File 92812, Legajo 4126, Signature B 5.7, Archivo General de Centro América, Guatemala City. 14 Decreto Federal del 2 de junio de 1832, Page 15, File 92812, Legajo 4126, Signature B 5.7, Archivo General de Centro América, Guatemala City. 15 Decreto levantando un empréstito de 100,000pesos en todo el Estado, 17 de abril de 1832, in Decretos y Ordenes de la Asamblea y Gobierno del Estado del Salvador, 1831-1834, San Salvador, Imprenta del Estado, Victor Jerez Collection, Florentino Idoate Library, Jose Simeon Cañas Central American University, San Salvador. 16 Informe al Congreso Federal sobre e l estado de la administración pública al abrir las sesiones de 1837, in UNESCO Microfilm MN-3, Archivo General de la Nación, San Salvador. 27

C O IN S O F TH E C E N T R A L A M E R IC A N FE D E R A T IO N

Had the on-going fiscal program continued, the finances of the Federation may have become sound. However, the political circumstances that occurred at the end of 1837 and in 1838, briefly described in the preceding section, prevented the success of the Federal plan.

3. The Coins issued by the Federation

a. Legal Framework for the Striking of the Coins The Federation was required by law to control the striking of coins. In fact, a law approved on 19 March 1824 by the Constitutional Assembly reaffirmed independence from Spain, prohibited the striking of coins bearing the Spanish Arms, and defined the characteristics of the coins to be struck by the Central American Federal Republic. This law expressly stated:17 “ 1st. The striking of any coins bearing the bust, coat of arms or other emblems of the Spanish Crown is prohibited. 2nd. Any gold or silver coin to be struck by the States will have the precise weight and fineness previously set forth by the Spanish Government. 3rd. The obverse of the new silver coins will bear a five-volcano range with a rising sun on their right. A legend that reads República del Centro de América and the year of coining in Arabic numbers will surround this. 4th. The reverse will show a tree, as a representation of freedom. On its sides will be the numbers denoting each coin’s denomination. The surrounding inscription will read Libre, Cresca, Fecundo, the initials of the assayers, the initials of the Mint, and the numbers indicating the fineness of the silver or gold. 5th. Pieces of less than 1 Real in denomination will only have three volcanoes on their obverse. The rest of their design will be as set forth in previous articles. 6th. The cuartillos will have no inscription at all. Their obverse will be as stated in the preceding article; the reverse will only show the tree, the Mint initials, and the numbers indicating its denomination. 17 Taken from Prober, Kurt, Historia Numismática de Guatemala, pages 161 and 162, Guatemala, 1973.

C O IN S O F T H E C EN T R A L A M E R IC A N FE D E R A T IO N

7 th. Gold coins w ill only differ by the edge and by the rising sun in the obverse which is to be located at the center. 8th. W hile the Penal Code is approved, all existing laws and orders against counterfeiters remain in force.”

The coins thus defined circulated throughout the Republic of Central America, including -obviously- the State of El Salvador. Due to the limited amounts struck, however, they did not fully meet the demands for currency.

b. Description of the Coins Struck by the Federation The characteristics of the coins, in full compliance with the Spanish Crown standards as decided through the previously described law, were the following: Metal Gold

Silver

Denomination Vi Escudo 1 Escudo 2 Escudos 4 Escudos 8 Escudos % Real y2 Real 1 Real 2 Reales 8 Reales

Diameter, Millimeters 14 18 23 30 36 12 16 19 to 23 25 39

Weight, Grams 1.7 3.3 6.75 13.5 27.0 0.85 1.69 3.38 6.77 27.07

Composition ,875Au;.125Cu

,903Ag;.097Cu

It is to be noted that, while the Spanish Crown system included a denomination of 4 Reales in its silver coins, The Central American Federation did not. The following is an illustration of the obverse and reverse of the Central American Federation coins:

29

C O IN S OF THE C E N T R A L A M E R IC A N FE D E R A T IO N

Figure 4-1. Obverse and reverse of the 8-Reales Silver Coins of the Central American Federation (Enlarged 20%)

The lA Real or cuartillo coin had a special design due to its small size, in a fashion similar to the cuartillos of the milled Colonial type. The obverse has three volcanoes with a rising sun on the left side, instead of the five volcanoes shown in the higher denominations, and the year at the bottom. The reverse shows a Ceiba tree with the Mint’s initial and the Vi denomination on its sides. No legends were included on either side of these small coins. See the following figure.

Figure 4-2. Obverse and reverse of the V^-Real Silver Coins of the Central American Federation (Enlarged three times)

c. The Mints of the Federation Coins of the Federation were struck in Guatemala, Tegucigalpa (Honduras) and San Jose (Costa Rica). The only differences among the coins struck in these mints were the initials of the Mint and of the assayers. Initials NG denoted the Guatemala Mint, while only a G was used in the % Real coins due to their small size; T was used at the Tegucigalpa Mint; and CR denoted the San Jose Mint at Costa Rica. The main mint was that of Guatemala -having been established by the Spanish Crown as the Royal Mint of the Captaincy General of Guatemala -

C O IN S OF TH E C EN T R A L A M E R IC A N F E D E R A T IO N and it made most of the striking. The Mint at Costa Rica was the second in importance, while the Tegucigalpa Mint was a distant third. After the Federal Capital was transferred to San Salvador in 1834, and as part of the process of demonetizing the Salvadorian Provisional coins, the Federation tried -unsuccessfully- to establish a Federal Mint at San Salvador. This subject will be described in the following chapter. Gold coins were struck during many years, which undoubtedly facilitated wholesale commerce. With the exception of the 8 Reales that were struck during the entire period, Silver coins were struck only in selected years. The latter fact surely affected retail trade negatively, especially in the States -such as El Salvador- that did not have their own minting facilities. The following table shows the years in which coins were struck at the different Federal Mints. It is to be noted that the Central American Federation lasted from its inception in 1823 through 1840; however, for reasons of practicality and the possibility of reunification, coins continued to be struck with the same design until 1851. It should be noted that, between the years 1846 and 1849, the San Jose Mint struck Silver coins of Vi, 1 and 2 Reales with a fineness of only 0.750, which did not meet the standards set by the Federation. G o l d 1/2 1824 NG 1825 NG 1826 NG 1827 1828 CR 1829 1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841 1842 1843 CR, NG 1844

E s c u d o 1 2 NG NG NG NG NG CR CR, NG

s 4 NG NG NG

8 NG NG

CR

CR

S i l v e r 1/4 1/2 G NG G G

G CR

CR NG CR, NG NG CR, NG

NG

CR

NG CR NG

T CR, T

G NG NG NG NG NG NG NG NG NG

CR CR

CR

R e a l e s 2 8 1 NG NG, T T NG T NG NG NG NG NG NG T T CR, NG CR, T T

G G G G G G G

31

CR

C O IN S OF TH E C E N T R A L A M E R IC A N FE D E R A T IO N 1845 1846 1847 1848 1849 1850 1851

CR CR CR CR

CR CR CR CR CR

CR, G G G G

NG NG CR CR

CR

CR CR CR CR CR

NG NG CR CR

CR (?) CR

G G

An analysis of the previous table reveals two important issues. First, before the breaking up of the Federation in 1839-1840, all three Mints were in operation. However, the Tegucigalpa Mint had a relatively small participation in the minting, since it only struck V2, 1 and 2 Reales Silver coins between 1824 and 1830. The Guatemala Mint produced fractional Silver coins in only a few years, but struck Gold coins throughout the whole period. In San Jose Va and 1 Real Silver coins were minted in 1831 only; and Gold coins were produced since 1829 (using 1828-dated dies). Second, after the breaking up of the Federal Pact, coins with the Federal design continued to be struck in Guatemala and San Jose, due to practical and cost saving considerations and to the possibility of reunification, that continued to be discussed and negotiated by the States. Honduras, however, adopted its own design and standards.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

V. THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR (1828 TO 1835) 1. Introduction Between 1828 and 1835 the State of El Salvador, while being part of the Central American Federation, was forced to strike provisional coins which did not comply with the standards set forth by the Federation. This chapter describes the reasons for such provisional minting, and the characteristics of the coins issued. In order to describe the different series of provisional coins, it is essential to know the historic and political setting that prevailed in both the Federation and in the State of El Salvador, their productive and trade activities, and the government’s fiscal position. It is also essential to clarify the reasons for the shortage of currency that was typical of the time period under reference.

a. The Political setting The Constitutional Assembly of 1824 elected to have a Federal type of government for the Central American Republic. This was the preference of the then dominating Liberal Party. With the exception of Guatemala, where the Conservative Party prevailed and which wished to have a centralized control over the whole Republic, all other States wanted to have a Federal Government. The Federal Republic’s Capital was established in Guatemala City. Conservative Guatemalan politicians were opposed to the functioning of the Federal Government. The remaining States mistrusted the Federal Government due to its alleged closeness to the powerful Guatemalan economic groups. Furthermore, the States still recalled the Colonial past of Guatemala and the role it had played in the unwanted annexation to the Mexican Empire. Between 1826 and 1829 the Guatemalan oligarchy again tried to impose a centralized government in Central America.1 The other States, led by the Salvadorians, were opposed to this initiative. An internal war between the Federation and El Salvador, that lasted several years, ensued. Liberals led by General Francisco Morazán won the war.

1 Pinto-Soria, Julio César, La Independencia y la Federación (1810-1840), in Perez-Brignoli, Hector, Historia General de Centroamérica, Volume III, page 105, Op. Cit. 33

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

Francisco Morazán A great politician of the Liberal Party and supporter of Central American unification. He was born in Tegucigalpa, Honduras, in 1792. He was shot to death by a firing squad in Costa Rica in 1842. In 1828 he was Chief of the State of Honduras, and came to the assistance of the Salvadorian Government that was surrounded by Federal and Guatemalan armies; he subsequently defeated these invading armies. In 1829 he commanded the Allied Army to Defend the Law, composed of Salvadorian and Honduran soldiers, that invaded Guatemala and captured the Federal Capital. He was subsequently elected to the Presidency of the Federation, serving two successive terms in 1830-1834 and 1835-1838. During those administrations he pushed for important Liberal reforms of the Federation, including lay education, freedom of religion, agricultural production for export, etc. While in office as President of the Federation, he invaded El Salvador on several occasions to depose the Salvadorian leaders and impose the Federation’s points of view. He was elected Supreme Chief of the State of El Salvador in July 1839. He resigned in March 1840 after his defeat in the City of Guatemala in an unsuccessful attempt to restore the Federation. He went to South America into self-exile, and later on returned to Costa Rica where he took over the government by force with support from some Salvadorian military officers and politicians. He was subsequently defeated, incarcerated and executed in 1842.

While in 1829 El Salvador headed the Liberal’s victory that ensured continuity to Federalism in Central America, it later on became involved in bloody civil wars that caused internal divisions, severely affected its territory, and caused negative effects on production and trade.2 Particulars of the war against the Federation and of the internal revolutions that had an important role in the issuing of the Salvadorian Provisional coins will be described in the following sections.

b. Production Activities At the end of the 1820s, the State of El Salvador had an estimated population of 250,000 inhabitants, 60 per cent of which were Ladinos, and the rest were Indians and white, in nearly equal proportion.3 In 1807, however, total population had been 165,278; of which 54 per cent were Ladinos, 43 per cent

2 Pinto-Soria, Julio César, La Lndependencia y la Federación (1810-1840), in Perez-Brignoli, Hector, Historia General de Centroamérica, Volume III, page 118, Op. Cit. 3 Barón-Castro, Rodolfo, La población de E l Salvador, page 453, Consejo Superior de Investigaciones Científicas, Madrid, Spain, 1942.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR were Indians, and only 3 per cent were white.4 It is evident that in twenty years there had occurred a significant population growth, and that the ethnic structure of the population had changed considerably. It should also be noted that between same years there had occurred the annexation of the Sonsonate District to the Salvadorian State, which fact partially explains the above mentioned population growth. Productive activities in the State of El Salvador were chiefly agriculture and livestock raising. Agricultural production was oriented towards both domestic consumption and export abroad. Most of the population was engaged in subsistence agriculture, while only a small population group was involved in export activities. The production of indigo or jiqu ilite was the most important agricultural activity. Indigo production required a large number of laborers. It was the main export product and it generated income for the government’s functioning. Due to its characteristics, indigo was produced in both small and large scale operations; it required labor during part of the year only, which ended with the collection and processing of its leaves in the month of October. Very limited technology was required for its farming and processing; the only important requirement was capital. Indigo producers normally obtained credit from the Guatemalan merchants and from the Indigo Growers Society [Montepío de Cosecheros de Añil) at the end of the Colonial period, as was described in the preceding chapter. Tobacco was the second most important crop in the Salvadorian economy, for export abroad and for domestic consumption as well. Its production required limited capital investment, except to finance seeding and collection operations. Tobacco growers received funding from the State for their activities; their product was turned in to the government for sale. There also existed a limited production of cotton clothing and accessories, as well as of hammocks, which filled domestic demands and still provided for some exports. Livestock raising had the double objective of providing meat for human consumption and to make the seroons from the hides that were used to pack and transport indigo. In the Northeastern section of the State, there existed a limited mining industry. A gold and silver mine was operated in that area by Mr. Marcial Bennett, an Englishman entrepreneur that also conducted other business enterprises. 4 Gutiérrez y Ulloa, Antonio, Estado general de la Provincia de San Salvador; Rey no de Guatemala (año de 1807), page 146, Op. Cit. 35

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

Trade was done through a series of special fairs held in several cities of the State. The main ones were held in the towns of Chalatenango, San Vicente and San Miguel. They attracted traders from all over Central America as well as merchant ships which brought European goods; many large-scale sales and small-sized credit and trade transactions were made there.5 These fairs were held between the months of October and February of each year, which period coincided with the production of indigo. The large fairs were supplemented by others of lesser size that supplied specific products to more-limited regional markets, held in towns such as Apastepeque, Suchitoto and Sensuntepeque. By 1827 exports and imports - which in Colonial times were almost exclusively made through the Atlantic ports of Omoa, Trujillo and Belize - were beginning to be made through the Salvadorian Pacific ports of La Union and Acajutla. This was due to the arrival of English merchants from either Europe or Chile and Peru. During the 1826-1829 war with the Federation, nearly one third of indigo exports were made through the latter ports. Such fact enabled the Salvadorian producers to lessen their dependency from the Guatemalan merchants that exported goods to Spain using ports in the Atlantic coast.

c. The Fiscal Position During the period discussed under this chapter, the regular expenditure budget for the State of El Salvador was in the order of 100,000 pesos per year. Its financing was derived from taxes on the sale of liquor, sales taxes on internal trade, some additional taxes on intra-Federation trade, and other less important sources. It is to be remembered that taxes on import and export of goods collected in ports, tobacco and powder sales, as well as mail revenues, were earmarked to finance the normal operating activities of the Federation. Whenever a war developed, that required increasing the size of the army and related expenditures, the Salvadorian government would resort to impose mandatory loans to wealthy citizens. Repayment was guaranteed with future tax revenues. When these loans became insufficient to sustain war efforts, revenues due to the Federation - especially those from import and export duties - would be retained by the Salvadorian government. In latter years, the government imposed direct taxes on the population; a generalized rejection ensued and the direct taxation was rescinded promptly. The fiscal position of the State was indeed very precarious and vulnerable to the occurrence of unforeseen situations such as war or natural disasters. 5 Lindo-Fuentes, Hector, Economía y Sociedad (1810-1870), pages 193 and 194, in Perez-Brignoli, Hector, Historia General de Centroamérica, De la Ilustración al Liberalismo, Volume III, Op. Cit.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

d. Scarcity of Circulating Currency The availability of currency in any given territory is governed by the balance that may exist between production, the export of goods and services, the import of those that are not produced locally, and the existence of a minting facility that may produce the required coinage. It is essential to analyze these variables to understand the Salvadorian case during the period under reference. One of the duties of the Federation was to control the minting of coins. Through a decree approved on 19 March 1824 the fineness, weight, and type of the coins was defined, as previously indicated. The main minting facility of the Federation was in Guatemala, which had been established since Spanish Colonial times. Mints at Costa Rica and Tegucigalpa produced coins to fill the internal needs of those two States, and were periodically supervised by the Federation’s Executive Branch. The Guatemala City Mint was in a precarious position, however. Before Independence from Spain, it had struck coins in amounts from 500,000 to 700,000 Pesos per year. The Mint had a revolving fund of 400,000 Pesos to acquire the metals required to strike the coins. During the annexation to Mexico, as previously stated, this fund was used to finance the expenses of the army sent by Iturbide to ensure the submission of El Salvador.6 Later on, during its war with El Salvador, the Federation was forced to tap into the already limited funds of the Mint to partially finance its war expenditures.7 The Mint already had a sizable operational deficit, and its production had fallen significantly to the following levels:8

Years 1827 1828 1829 1830 18319 Totals

Gold Marks 86 49 — — —

135

Silver Marks 4,272 4,496 5,128 1,188 137 15,221

6 Exposición que al comenzar la actual legislatura ordinaria hizo a l Congreso Federal de esta República el Secretario de Estado y del Despacho de Hacienda, Mariano Galvez, Op. Cit. 7 Solis, Ignacio, Memorias de la Casa de Moneda de Guatemala y del desarrollo económico del país, Volume III-A, page 621, Ministry of Finance, Guatemala, 1979. 8 Informe del Fiel de la Casa de Moneda, don Benito Muñoz, Guatemala, 19 March 1831, quoted in Exposición que al comenzar la legislatura ordinaria hizo al Congreso Federal de esta República el Secretario de Estado y del Despacho de Hacienda, Mariano Galvez, Op. Cit. 9 It only includes coins minted during the first quarter of 1831. 37

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

The above figures indicate that, during the time period referred to, only about 120,000 Pesos of silver coins and about 1,000 gold Escudos had been produced by the Mint. This was only a small fraction of the average historical production of the Guatemala Mint. On the other hand, long discussions were held between the Federation authorities and the Government of the State of Guatemala over the ownership of the Mint. The latter had taken possession of the Mint during the last stages of the 1826-1829 war, based on a legislative order which assigned the management of the Mint to the State, and the assayers’ employ to the Federal Government. This discussion lasted through m id-1831, when a final transfer of ownership was agreed upon.10 It is then evident that the main mint of the Federation was unable to produce, at least during the years 1827 to 1831, sufficient coins to meet the demand of the Salvadorian and other nearby markets. As described in the preceding chapter, cobs and milled coins from Spanish American mints circulated in the State of El Salvador, with a predominance of coins minted at Guatemala and Mexico. El Salvador normally used milled coins from Colonial times or from the Federation’s mints to pay for its imports from abroad. In some cases, cobs were accepted to pay for goods imported from South America. Colonial cobs and milled coins were received in El Salvador from those countries with which it usually traded its products, especially indigo as previously mentioned. There did not exist, therefore, a balance between the coins that came from the Federation’s mints and from payment of Salvadorian exports, and those used to pay for imports from abroad. Since there was no central bank to issue currency, structural and seasonal shortages of coins occurred. The holding of trade fairs in different towns was a characteristic of production and trade in the State. Producers came to these fairs to sell their products; merchants came to acquire many articles that they would later resell in different towns. During and after these fairs, currency was abundant due to the influx of foreign capital to acquire Salvadorian exports. As agricultural activities were reinitiated for the production of the next crop, currency began to progressively vanish. The same seasonal alternation of shortage and abundance of currency was repeated every year. 10 Nota del Fiel de la Casa de Moneda de Guatemala al Intendente General de Hacienda del Estado, 14 July 1831, in File 32425, Legajo 1396, Signature B 94, General Archives of Central America, Guatemala City.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

The government played an attenuating function in such cycle. It employed a relatively large civilian and military labor force, and paid their salaries and wages drawing funds from its limited fiscal revenues. Whenever wars with neighboring states or internal revolts occurred, the currency shortage worsened. This was due to several reasons. First, because agricultural production -both for domestic consumption and for export- was affected by the sometimes lengthy occupation of land by the enemies; by fear or uncertainty on the side of the producers; or by lack of sufficient laborers that had been enlisted in the army or that were hiding in the mountains to avoid the draft. Domestic trade was also drastically affected due to the absence of sufficient goods and the lessened availability of cash in the hands of the buyers. External trade suffered as well due to the reduction in exportable goods, and it generated less currency. Second, the fiscal position of the government was negatively affected. An enlarged army and long war activities required unforeseen greater expenditures. Revenues were diminished as a result of lower tax revenues from diminished production and trade activities. The government resorted to imposing forced loans to wealthy landowners and merchants, using its future revenues -and even those of the Federation which were generated in El Salvador- as collateral. If the war was a long one, the fiscal effect would be very acute; if the war was held on foreign soil the fiscal deficit was even worse, since at least part of the soldiers’ salaries was spent in the neighboring states. Many wars of the period were fought against Guatemala, where most of the currency used in El Salvador for its functioning was produced. It can easily be understood that during such armed conflicts the State of Guatemala would not be willing to provide El Salvador the currency it required. The following section describes the striking of provisional coinage and the countermarking of foreign and domestic coins in El Salvador during the years 1828 to 1835, together with the different situations that caused each of these coin issues.

2. The Provisional Coins issued by Mariano Prado in 1828

a. Background The war between the Federation and the State of El Salvador occurred during the administration of Mariano Prado. The armed conflict began in March 1827

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR and ended two years later when the A llied Army to Defend the Law, composed of Salvadorian and Honduran soldiers led by General Francisco Morazán, took the Capital City of Guatemala.

Mariano Prado Bom in Leon, Nicaragua, Mariano Prado was either Deputy Chief or Supreme Chief of State in El Salvador in three different occasions: 1823-1824, 1826-1829 and 1832-1833. During his second administration, laws ensuring freedom of religion and private lay education were passed, a war was held against the Central American Federation over the issue of Centralism vis a vis Federalism, and the first series of Salvadorian Provisional coins was minted. From 1830 to 1832 he held the office of the Vice Presidency of the Central American Federation, which post he resigned to accept -for the third time- the highest office in the State of El Salvador. Due to the occurrence of bloody domestic uprisings -most notably the one led by the Indian Chieftain Anastacio Aquino- Prado resigned his high position in February 1833.

This war had very negative consequences on the finances of the State of El Salvador. In fact, in April 1827, due to the difficult financial position of the State’s Treasury, the Salvadorian Assembly authorized Prado to impose forced loans on wealthy citizens in order to fund the war.11 In July, another decree was approved to establish an additional 5 per cent tax to the religious Cofradías. In August, a law was approved for the government to collect all funds arising from wills that did not have mandatory inheritors.12 At the beginning of 1828 the fiscal position took a turn for the worse. Prado was forced to impose additional mandatory loans to wealthy people, to appropriate the tax revenues that were due to the Federation, and to sell tobacco at lower prices, in order to finance the conflict’s expenditures.13 11 Decreto del 18 de abril de 1827 autorizando al Gobierno para exigir empréstitos forzosos, in Decretos y órdenes de la Asamblea y Gobierno del Estado, febrero de 1827 a Enero de 1829, Imprenta Nacional, San Salvador. Florentino Idoate Library, Jose Simeon Cañas Central American University, San Salvador. 12 Decreto del 23 de Julio de 1827mandando exigir un 5p o r ciento mas a las Cofradías sobre el 15 p o r ciento que tenían, p o r una sola vez, and Decreto de 1 de Agosto del mismo año que mandaba enterar en Cajas los caudales de testamentarias en que no haya herederos forzosos, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, Febrero de 1827a Enero de 1829, Op. Cit. 13 Decreto de Gobierno del 16 de febrero de 1828 en que manda levantar un empréstito extraordinario de 18,000 pesos en el Estado, and Decreto de 28 de Febrero del mismo año mediante el que se faculta a l Poder Ejecutivo a vender tabaco a 4 Reales libra p o r e l término de 15

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

The Federal Army established a siege on San Salvador at the beginning of March. This siege lasted until September when the Federal Army’s Guatemalan commander surrendered after being defeated by the Salvadorians. In April, a new mandatory loan was imposed and the most important tax revenues of the State were offered by the Government as collateral.14 This loan was insufficient, however, to provide for the requirements of the city under siege and to fund the war in the rest of the State. In mid-May, the town of Sonsonate had fallen into the hands of the Federal Army, and the cities of San Miguel and Chalatenago were in similar danger; the Salvadorians were indeed in a very difficult position. Prado decided to request assistance from General Francisco Morazán, the Chief of the neighboring State of Honduras. On May 18, as a last recourse to obtain funds, and under the very clear danger that the enemy might take the Capital City, the General Assembly adopted the following decree:15 “ 1. The gold and silver jew elry o f the churches of the State w ill be taken as a loan, and their product will be used solely to pay the salaries o f soldiers and expenditures o f the A rm y to D efen d the Law. 2. Repaym ent of the jew els used to restore peace w ill have priority over the paym ent of other debts, for whose paym ent all general revenues are to be m ortgaged, issuing the necessary docum entation to churches and to other public establishments. 3. Should any religious community, Parish or other churches, have gold or silver jew els whose value exceeds the value o f the m etal they contain, they m ay retain such jew els. They shall, however, pay -in cash- their current value at the rate of one Peso per silver ounce or sixteen Pesos per ounce of gold. 4. The m etal contained in these jew els w ill be m elted so that provisional coins m ay be made and circulated. 5. As soon as the fiscal position of the State perm its it, the provisional coins will be collected and exchanged for regular coins at par value.

días, para hacer empréstitos y para que abone un 10 p o r ciento a los que anticipen enteros de los arrendamientos de ramos públicos, in: Decretos y Ordenes de la Asamblea y Gobierno del Estado, Febrero de 1827a Enero de 1829, Op. Cit. 14 Decreto del 23 de abril de 1828 en el que se manda levantar un empréstito forzoso de 10,000 pesos, in Decretos y Ordenes de la Asamblea y e l Gobierno del Estado, Febrero de 1827 a Enero de 1829, Op. Cit. 15 Decreto del 18 de Mayo de 1828 mediante el que se manda tomar en calidad de préstamo las alhajas de oro y plata del Estado, in Decretos y Ordenes de la Asamblea y e l Gobierno del Estado, Febrero de 1827a Enero de 1829, Op. Cit. 41

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR 6. The Archbishop w ill make the necessary arrangem ents so that these jew els are placed at the disposal o f the Government, leaving aside those that are of essential necessity to the sacred cult, to ensure that this Decree is promptly and duly executed. 7. The gold and silver thus collected to rem edy the public situation will be deposited in the State’s General Treasury. A certification o f their w eight and carats will be made, and duplicate receipts will be issued by the Director, one for the churches and one for the General Secretariat of the Government.”

The minting of the first Salvadorian provisional coins was approved through said decree. The public called these the “Prado coins”. Since they were minted in a city under siege, they should be classified as obsidional coins,15 which for the first and only time in history occurred in Central American territory.1 6 The Siege of San Salvador in 1828 The army of the Federal Republic of Central America, commanded by the Guatemalan General Manuel Arzú, invaded Salvadorian territory at the end of February 1828. After achieving several victories over the Salvadorian army in the Western part of the State, the Federal army reached the surroundings of the Capital City of San Salvador on 5 March. Many small towns located in the outskirts were taken, and a siege was imposed on San Salvador. General Arzú was confident that he would take San Salvador on that same day, and demanded its surrender. The Deputy Chief of State -Mariano Prado- was in command of the garrison at San Salvador, and immediately responded to Arzú’s demands: “This town will not surrender; it can only be taken by force”. The population gave its full support to Prado. Everyone took arms in all sections of the city. Trenches were dug and key sectors of the City were fortified, as directed by its Commander. Blacksmith shops were turned into armories; arms were manufactured to undertake all types of fights, and different kinds of obstacles were placed in the way of the invading army. The Salvadorian Army held its position drawing on the meager resources obtained through small mandatory loans as well as voluntary contributions from private citizens. Many far away towns sent essential supplies for the soldiers and the inhabitants of San Salvador. The difficulties caused by the siege grew day by day. The population suffered them with great resignation. Gold and silver jewels belonging to the Church were collected, and coins were struck from the metals thus obtained. They were called “Prado coins” and all San Salvadorians accepted them in good faith. Pipe organs from churches were dismantled in order to make bullets. Church bells were melted to manufacture artillery shots, and to fix rifles or guns. Mariano Prado requested assistance from the State of Honduras, which was presided over by General Francisco Morazán, the highest representative of Liberalism in Central America at the time. Morazán prepared his army to come to the aid of Prado, while appropriate agreements were drawn. While Morazán defeated the Federal armies at Gualcho, San Antonio and other battles in the Eastern part of El Salvador, the Salvadorians counter-attacked and finally succeeded in defeating Arzú's second in command in San Salvador at the end of September. The siege to the Capital City finally ended after seven months of continuous battles.

16 In his work entitled Las Monedas Obsidionales Hispano-Americanas, originally published in 1929, the distinguished Chilean historian Jose Toribio Medina expressed doubts that the 1828 Provisional coins were obsidional. However, at that time, Medina did not posses the information that the Author now presents in this respect. 42

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

b. Characteristics of the “Prado” Coins To describe the Prado coins, the side that shows the coat of arms of the State is considered as the obverse. The center of the obverse shows a volcano under eruption, which some people identify as the Izalco Volcano, over the waves of the Pacific Ocean. Around this coat of arms there is a legend saying “MONEDA PROVISIONAL” or “PROVISIONAL COINAGE”, the initials of the assayer, and the year of 1828. In the reverse, there appears a column of liberty, on top of the waves of the ocean, with a Phrygian cap at the top. On the sides of the column there appears the denomination of the coin (i.e. “2 R”). The legend “POR LA LIBERTAD SALV” surrounds the column, and the fineness of the coin “ 10 Ds 20 Gs” is at the bottom. The design of the edge of these coins is the same as the one used in the 8-Reales Colonial Portrait coins minted at Mexico through 1822 as well as in those minted under Iturbide in 1822-1823. That is, the edge design shows an alternation of squares and circles.17 See the following figures.18

Figure 5-1. Enlarged image of the obverse and reverse of the 2-Reales Provisional coins minted in 1828 at San Salvador

Figure 5-2. Enlarged image of the obverse and reverse of the Vi-Real 17 Hubbard, Clyde and O’Harrow, Davis, Hookneck, E l Aguila de Perfil, page 187, Portland, Oregon, 1997 18 Most of the images shown in this chapter were taken from pictures provided by the distinguished collector Dr. Richard Stuart, of California, United States of America. 43

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR Provisional coins minted in 1828 at San Salvador

Figure 5-3. Enlarged image of the edge used in the Provisional coins minted in 1828 at San Salvador

The 1828 Provisional coins were made in silver only, with fineness of 10 Dineros and 20 Grains (0.903), and in denominations of lA, 2 and 4 Reales, with the following physical characteristics: Index Number 1 2 3

Denomination % Real 2 Reales 4 Reales

Diameter, Millimeters 12.1 26.5 31.5

Weight, Grams 0.7 4.7 9.4

The diameter and weight figures indicated above have been obtained through direct measurements of many coins, and may be slightly underestimated due to the expected wear of the specimens. The Index Number included in the previous table is a proposal to classify the type of each coin which, as a result of the Author’s research, may be legitimately attributed to El Salvador. These Index Numbers will be used throughout this publication. The Government established a provisional mint in San Salvador in order to strike these provisional coins. Up to now, previous numismatic references indicated that the Prado coins - and all other Provisional coins as well - had been struck at the Guatemala Mint. It seemed very unlikely that a mint belonging to the country that was at war with El Salvador would strike coins for the enemy. In any case, the documentary evidence found by the Author proves otherwise; that is, that a Provisional Mint did exist in San Salvador at the time. The Provisional mint operated under severe limitations; its machinery and equipment were very rudimentary, and the state of siege prevailing in San Salvador made it nearly impossible to obtain good working materials. The machinery was operated manually; its capacity to strike large pieces was insufficient, which fact is evident from the very low relief of coins of the 4-Real denomination and the weak strikes of the 2-Real coins. The working dies were made using poor and weak metals that could be obtained at the time. They would break easily, and new dies had to be made very often. For this, use was made of punches that contained the main elements of the obverse and reverse of the coin design (emblems, letters, and numbers).

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR Although several working dies were probably made simultaneously, slight differences among them can be noticed. Punches broke often and new ones had to be made as well. The new punches were not exactly equal to the previous ones, which fact resulted in varieties of the coins thus produced, without however giving result to a different type of the coins. The main varieties that have been identified for these coins are due to minor differences. One variety is due to the existence or absence of an internal circle surrounding the coat of arms in the obverse, or the liberty column in the reverse. Another variety in the obverse is due to different shapes of clouds in the eruption of the volcano. In the reverse, there are varieties due to different shapes of the Phrygian cap, and slightly differing legends. There are additional varieties stemming from different assayer’s initials; either F or FP. There also exist differences in the obverse/reverse alignment, some coins having medal rotation. Finally, and very noticeable, the inscription of the denomination of the 4-Reales coin yields two varieties: in one case, it is shown as “4R”, while in another case it shows as “R 4” due to an error by the engraver. The varieties thus described may be identified using decimal numbers in the same type of coin, in combination with the Index Number shown in the previous table.19 Due to the weak relief of the Prado coinage and to the resulting wear due to their intensive use, most pieces that can be obtained at the present time have a relatively low grade that normally does not exceed Very Fine (VF). These coins are usually found with holes, since women wore them as jewelry, a very common practice in Central America. However, since the majority of these coins were recalled, demonetized and melted in 1836, collectors are prepared to pay relatively high prices for them. The fact that they have now been proven to be obsidional coins may bring about an increase in their numismatic value. In regard to rarity, the 2-Real piece is the easiest to find. An authority on the matter has only seen 7 or 8 pieces of the 4-Real denomination in the past twenty years,20 which fact makes it one of the rarest coins of Latin America. The Vi-Real or cuartillo coin is even scarcer still since, according to the Krause catalog,21 only three pieces are known. When discussing the demonetizing of these provisional coins in the following chapter, an estimate of the number of coins originally minted at the time will be presented.

19 In order to classify the varieties of the coins, it is suggested that a decimal number be used in conjunction with the Index Number that identifies each coin type; i.e. 2.1, 3.1, etc. 20 Personal communication from Mr. Freeman Craig to the Author, April 28, 1998. 21 Freeman Craig knows only one such piece, belonging to Dr. Richard Stuart. This piece is in excellent condition, as shown in Figure 5-2, courtesy of Dr. Stuart. 45

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR A comparison between the characteristics of the Prado Provisional coins and those of the Central American Federation, described in the previous chapter, reveals some differences. The cuartillo coins share the same diameter of 12 millimeters; however, the Salvadorian Provisional coin weighs only 0.7 grams, while the one of the Federation weighed 0.85 grams. The 2-Reales coins share the same diameter of 26 millimeters, but the Salvadorian Provisional piece weighed 4.7 grams while the one from the Federation weighed 6.7 grams. The 4Real Salvadorian Provisional pieces have no equivalent, since the Federation did not mint coins in such denomination. By combining the weight and silver fineness of each coin it can be stated that the Salvadorian Provisional coins contained only between 70 to 82 per cent of the total fine silver that the pieces of the Federation had. This fact partially explains the subsequent rejection of the Salvadorian Provisional coins by other States of the Federation. No identification of the assayers that worked at the Provisional Mint could be made, due to the dearth of official records. It can be confidently stated, however, that the assayers did not belong to the Guatemala Mint, as many believed in the past, since these were only two and their initials were well known and do not coincide with those shown in the Prado coins. In addition, it seems very unlikely that, during the siege of San Salvador, Guatemalan citizens may have cooperated by striking coins for the enemy. It seems more feasible that either the Salvadorian government, or the entrepreneurs that operated the Provisional mint, obtained the temporary services of assayers belonging to mints of nearby countries, or that unidentified local jewelers served as assayers. When following the first alternative and comparing the initials that appear in the Prado Provisional coins (F and FP), one is tempted to speculate that they may belong to assayer Francesco Parodi, who in 1828 worked at the Estado de Mexico Mint and who used the initials F and FP indistinctly.22 However, no confirmation that Mexican Mints may have loaned their assayers at that time has been obtained.23 Therefore, until evidence is found to the contrary, it must be assumed that the assayers’ initials belong to improvised local assayers.

c. The War Continues The siege of San Salvador ended in September 1828, when the army defending the Capital City counter-attacked and surrounded the Federal Army. This action 22 Another likely alternative was that of Felix Mora from the Costa Rica Mint who in 1828 was being trained as an assayer in the Guatemala Mint, and whose initial F appeared in the gold coins of Costa Rica since 1829; and that of Francisco Botelo, assayer at the Tegucigalpa Mint from 1831 onwards. 23 E-mail communication from Dr. Luis Gómez-Wulschner, Chairman of the Mexican Numismatics Association, to the Author, March 19, 1998.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR resulted in the capitulation of Colonel Manuel Montufar, who was second in command to General Arzu. In addition, General Morazán, who led a combined army of Honduran and Salvadorian soldiers to assist the Government of El Salvador, had defeated the Federal Army in several battles in eastern and central El Salvador. Finally, in October, the Federal Army capitulated before General Morazán, and he marched to San Salvador with his victorious army. In November Morazán and Prado sent an ultimatum to the Federal Government demanding that the Presidency of the latter be deposited in the hands of a Councilman, and that new elections of authorities be held. The ultimatum was rejected. As a result, an A llied Army to Protect the Law was formed with Salvadorian and Honduran soldiers. This army began its march towards Guatemala in December, under the general command of Morazan, and promptly captured the Department (Province) of Chiquimula.

3. The Countermarks and Provisional Coinage of Jose Maria Cornejo a. Background While in January 1829 General Morazán was invading the State of Guatemala to try to depose its Conservative government and to re-establish the Federal Constitution, the term of Mariano Prado as Deputy Chief of the State of El Salvador came to an end. Elections were held that resulted in the designation of Jose Maria Cornejo as Supreme Chief of the State and of Nicolas Espinoza as Deputy Chief.

Jose Maria Cornejo Cornejo was born in the City of San Vicente, El Salvador, in 1788. He was Supreme Chief of State between 1829 and 1832. His term was served under very difficult fiscal conditions stemming from the war against the Central American Federation. Convinced that the Federation was taking too large a share of the fiscal revenues produced in the State of El Salvador and that the remaining funds were insufficient to meet the minimum requirements for the latter’s functioning, Cornejo proposed a modification to the Federal Constitution in 1831. As a way to force such changes, he opposed the proposed transfer of the Federal Capital to San Salvador; and declared, in early 1832, that El Salvador was withdrawing from the Federation. As a result, the Federal Army invaded El Salvador, took the City of San Salvador by force, and made Cornejo a prisoner. He was sentenced to death, but the sentence was subsequently commuted.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR While the Allied Army advanced towards Guatemala City, taking Antigua Guatemala and other towns, the funds required for its operations were becoming exhausted. The Salvadorian Legislative Assembly decreed another mandatory loan in the amount of 18,000 pesos, whose payment was to be made using the revenues from the production and sale of liquor.24 General Morazan occupied Guatemala City in mid-April, achieving a great success for the Federal cause in Central America, and for himself as well. He started a process to renew all Federal and State of Guatemala authorities. He was forced, however, to continue operations of his army in order to completely defeat the remainders of the Guatemalan army in many distant locations of the State. The Guatemalan Treasury was forced to absorb part of these expenses. The Supreme Chief of El Salvador, bearing in mind the great success achieved and the need to continue at least partially funding the Allied Army, issued a decree at the end of April through which another mandatory loan of 10,000 pesos was imposed. Its re-payment was guaranteed with revenues from future tobacco sales.25 As can be inferred, the costs of the Salvadorian war against the Federation were very high in terms of destruction of capital assets and production, and of the occupation of labor in non-productive activities. 26 The capital that was used by landowners and merchants to finance production and trade, through forced loans imposed by the government, had been used to cover the expenses of war instead. In regard to physical infrastructure, invading armies destroyed 1,286 buildings, including 9 churches and 13 schools, clinics and other government facilities.27 Agricultural production virtually came to a halt due to the relatively long occupation of lands by enemy armies. Cattle stock, for meat and traction purposes, was decimated as both armies confiscated them. In addition, the war required that about 60,000 man-months be used in the army, reaching a peak of 3,000 men in 1829, and many men had gone into hiding to avoid the draft; insufficient labor was thus available for production and services activities.

24 Decreto del 23 de enero de 1829 mediante e l que se levanta un empréstito de 18,000pesos en todo e l Estado, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, Febrero de 1827 a Enero de 1829, Op. Cit. 25 Decreto del Gobierno de 24 de abril de 1829 mandando colectar una contribución forzosa de 10,000pesos en todo e l Estado, in Decretos y Ordenes de la Asamblea y del Gobierno del Estado, 1829-1830, Imprenta Nacional, San Salvador. Victor Jerez Collection, Florentino Idoate Library, Jose Simeon Cañas Central American University, San Salvador. 26 Lindo-Fuentes, Hector, Weak Foundations: The Economy o f E l Salvador in the Nineteenth Century, 1821-1898, pages 49 to 61, Op. Cit. 27 Montufar, Lorenzo, Reseña Histórica de Centroamérica, pages 97 and 98, Guatemala, 1878. 48

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THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR Trade was also severely affected. Products to supply domestic demands were scarce. Foreign sales diminished due to the reduction in indigo production and export, which fact was compounded with a fall in the international price of this product. Due to the unfavorable balance of payments and diminished trade transactions, the destruction of means of production, and the uncertainties for private investment, currency became very scarce and the government was unable to immediately demonetize the provisional coins minted in 1828. The government made efforts to provide incentives to private entrepreneurs in order to re-establish production and rebuild the economy. In June, it eliminated the special taxes that had been imposed on indigo producers and provided longer terms for the payment of due taxes.28 The port of El Triunfo was opened to trade, charging no taxes for its use. The position of the public treasury was precarious; the government did not have funds to finance its current expenditures and investments. To alleviate such lack of liquidity, the government paid its debts as follows: 50 per cent in currency and an equal amount in promissory notes. To be able to finance the new tobacco crop, the government ordered a forced loan of 20,000 pesos on the house of the mining entrepreneur Mr. Marcial Bennett,29 and tried to obtain a foreign loan. Neither the foreign loan nor the Bennett arrangement could be finalized. Come August, the date for initiating the seeding of tobacco was fast approaching, and the government did not have the funds required for its financing. During the war against the Federation, the government was able to appropriate for itself the funds from import/export revenues that were earmarked for the Federation; during peace times, this was not an option. The government of Jose Maria Cornejo was then forced to impose a mandatory loan of 10,000 pesos on wealthy merchants; these funds were to be repaid in December using the revenues to be collected from the new tobacco crop sales.30

28 Decreto de 17 de Junio de 1829 mandando suprim irla ejecución del 15 p o r ciento de Capellanías contra los añileros and Decreto de 23 de Junio sobre cosecheros de añil que adeudan cantidades de cuentas de las decimas partes del Montepío, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, 1829-1830; Op. Cit. 29 Decreto de 20 de junio de 1829 mandando recibir en pago de las deudas activas de la hacienda publica una mitad en moneda y otra en vales jirados, and Decreto de 23 de junio de 1829 mandando levantar un empréstito de 20,000 pesos sobre la casa de Mr. Marcial Bennett, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, 1829-1830, Op.Cit. 30 Decreto de Gobierno de 1 de agosto de 1829 mandando levantar un empréstito de diez m ilpesos entre los comerciantes, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, 1829-1830, Op. Cit. 49

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR In September the Treasury’s problems had not diminished. A new decree was issued to impose a further mandatory loan of 2,000 pesos per month in the whole State.31 b. The Possible Minting of Provisional Coins in 1829 Given the Treasury problems that prevailed in 1829, it seems possible that the Government may have decided to strike more Provisional coins. Several coin catalogs - such as that of Krause, for instance - include some Salvadorian Provisional coins dated 1829, with the initials of RL for the assayer. The design of such coins is different from those of 1828, and equal to the one used in coins that were to be minted from 1832 onwards. The Author did not, in his research, find any documentation -legislative or government decrees- that may have approved such minting in 1829. In addition, an examination of photographs of these coins leads to believe that there might have been an alteration of the last two digits in their date. The Author is convinced that the coins allegedly belonging to a striking made in 1829 may be the result of a date alteration to try and deceive the public, made by contemporary local counterfeiters around 1833 and 1834. These alterations of dates may have been made at the time when the coins of said years denominated “San Martin”- were being demonetized. The Treasury problems and those of the State in general continued in 1830. To complicate matters, there occurred a revolt in eastern Honduras that General Morazan was forced to fight and suppress. To do that, he requested and obtained from the Salvadorians an army of 400 men and financial support. Given his success in this campaign, Morazan did not make use of the soldiers; the funds, however, were utilized. In February, nevertheless, the Legislative Assembly issued an order through which the decree approved in the previous September establishing a monthly mandatory loan was rescinded. In addition, the State Assembly decided that it would search for and find ways to “eliminate the fiscal deficit”.32 The Assembly did initiate a series of reforms towards that purpose. In March, it issued a decree through which all religious orders were extinguished and all their

31 Decreto de Gobierno de 30 de septiembre de 1829 mandando levantar un empréstito mensual de 2,000pesos en todo el Estado, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, 18291830, Op. Cit. 32 Orden Legislativa de 5 de febrero de 1830 mandando derogar e l empréstito mensual, in Decretos de la Asamblea Legislativa del Estado, 1830-1831, Victor Jerez Collection, Florentino Idoate Library, Jose Simeon Cañas Central American University, San Salvador

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR property and outstanding credits were transferred to the State.33 In addition, it authorized the Government to sell tobacco at the price of 4 Reales per pound in order to pay an outstanding debt to the producers.34 In June, the Federal Congress chose General Francisco Morazan as President of the Federation, and Mariano Prado as Vice President. Morazan took office in Guatemala City in mid-September. In the meantime, the Salvadorian Legislative Assembly continued its efforts to reduce the fiscal deficit. Contrary to the tradition of having the government finance the seeding of the tobacco crop, this time a charge of 20 per cent was established on all religious associations (Cofradías) for this purpose. Furthermore, a uniform salary scale was established for the military, through which significant savings were achieved.35 While the Legislative body was in the process of adopting these fund-saving measures, Spanish troops invaded the territory of Mexico to try and recover the former Colony. The Salvadorian Government, fearing a similar intent, was forced to increase the size of its army and decreed a mandatory loan of 6,000 Pesos on individuals, that would be repaid in a period of three months using revenues from the manufacturing of gunpowder and liquor.36 Fortunately, the Spanish invasion to El Salvador never occurred and there was no need to implement the forced loan. The Assembly continued its search for ways to assist the Administration in improving the Treasury’s finances, and in October abolished the decree approved on 6 June 1829 whereby payment facilities had been given to debtors of the public finances. The Assembly stated that “The product of the sale of FAiblic State property and the amounts paid in currency by debtors of the State (...) shall be used for the payment of all public debts”. Finally, it passed a law

33 Monterrey, Francisco, Historia de E l Salvador, Anotaciones Cronológicas 1810-1871, page 212, San Salvador, 1943. 34 Decreto legislativo de 17 de marzo de 1830 autorizando la venta de tabaco a 4 reales libra para pagar 30,000 pesos que se deben a los cosecheros, in Decretos de la Asamblea Legislativa del Estado 1830-1831, Op. Cit. 35 Decreto de 26 de septiembre de 1830 estableciendo un cobro del 20 p o r ciento sobre las cofradías para costear la cosecha de tabacos, and Decreto de 8 de octubre de 1830fijando los sueldos militares, in Decretos de la Asamblea Legislativa del Estado 1830-1831, g del Congreso Federal de la República 1831, Op. Cit. 36 Decreto gubernativo de 23 de septiembre de 1830 levantando un empréstito forzoso para la defensa contra una posible invasion española, in Decretos de la Asamblea Legislativa del Estado 1830-1831, y del Congreso Federal de la República 1831, Op. Cit. 51

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR governing the payment of the State’s passive debt under conditions that took into consideration the Treasury’s position at that time.37 c. The Countermark of 1830 . Despite the previously described measures, the shortage of currency in the local markets continued. The merchants and the public at large were very negatively affected as a result. In April of 1829 it was found that false coins of 4 Reales and 1 Peso denominations, both of the cob and milled type, were circulating in San Salvador. These denominations were used to pay salaries; a day’s wage was four Reales at that time. In order to protect the public from this problem, a legislative decree prohibited circulation of these coins.38 This undoubtedly further reduced the amount of circulating currency in the State. There existed, however, some legitimate coins of these denominations in the hands of the public. To facilitate trade transactions, the Government decided to countermark those coins that were legitimate. This task was accomplished using punches that bore the coat of arms of the State -composed by a volcano under eruption, as in the case of the Provisional coins of 1828-, the initials “S.S.” of San Salvador, and the year 1830. See the following figure.

Figure 5-4. Enlarged image of the 1830 countermark showing the coat of arms and the initials of the Provisional Mint of San Salvador.

37 Decreto legislativo de 2 7 de octubre de 1830 derogando el decreto de 6 de junio de 1829, and Ley de I o de noviembre de 1830para la liquidación de la deuda pasiva del Estado, in Decretos de la Asamblea Legislativa del Estado 1830-1831, y del Congreso Federal de la República 1831, Op. Cit. 38 Decreto legislativo de 22 de abril de 1829 que prohíbe la circulación de cuatros y pesos morlacos, macacos o cachurecos, quoted by Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Law 12, Title 3, Third Book, Volume 1, Guatemala, 1855.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR This countermark - a small rectangle measuring 6 by 8 millimeters on the sidesis the first of five that the Salvadorian Government used during the Nineteenth Century. It seems that this countermark was punched in currency that was circulating in San Salvador only, and not in the rest of the State, which fact accounts for the scarcity of coins thus marked. The following image shows a 4Real Mexican piece bearing this countermark, which belongs to Dr. Richard Stuart:

Figure 5-5. Enlarged image of a 4 Reales coin, minted in Mexico, that bears the 1830 San Salvador countermark.

Coins bearing this countermark should be identified as follows, using the Author’s proposed classification: Index Number CM-1

Denomination 4 Reales

Origin of the coin K VI number of host coin 97 Mexico

Other coins from different mints, whose denomination could not be easily recognized due to wear from continuous use and whose weight did not comply with prevailing Federation standards, were also circulating in the local markets. Many merchants and individuals refused to accept these coins, which fact aggravated the shortage of currency. In October of 1830 the Government issued an Executive Order indicating that all silver coins be accepted at their nominal value. It required the denomination to be still visible, even if the weight did not meet legal standards. This Executive Order read as follows:39 “ 1. All silver coins shall be accepted for their legitim ate value, despite their w ear or weight, provided that they show a legitim ate indication of their value. 2. Any person or persons that refuse to accept such coins shall pay a fine whose am ount will be equal to the value of the coin rejected; the fine will be doubled if the person makes a further rejection.

39 Decretos y Ordenes de la Asamblea y el Gobierno del Estado del Salvador, 1829-1830, Op. Cit. 53

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR 3. Should the person rejecting the coin be an Adm inistrator of public moneys, he shall pay a fine of ten Pesos in addition to the amount previously indicated. 4. The coins that do not have an indication of their value may be admitted by the Adm inistrators of public moneys, if they are legitim ate, at one half of their value, and will be retained to be m elted.”

In February 1831 strong earth tremors occurred that produced severe damages to buildings in San Salvador and neighboring towns. The State and individuals were forced to make unforeseen expenditures as a result of this disaster, and the fiscal budget went into deficit again. The Legislative Assembly issued a decree authorizing an increase in the selling price of tobacco in order to raise funds.40 This decision immediately produced a conflict with the Federation. The Federal Congress reaffirmed that the revenues of tobacco sales belonged to the Federal Government, and that those arising from the manufacturing of liquor and powder belonged to the States. Furthermore, the Federal Government forced the compliance of these laws as well as that of a law that assigned the revenues from the Indigo Growers Association taxes to the Federation as well. A collision course was thus set between the Federation and the State of El Salvador. In September, in view of threats of domestic revolts, the Assembly declared San Salvador to be under a state of siege. The Federad Congress issued a law voiding the Salvadorian decree. This - added to the matter described in the preceding paragraph - was considered by the Salvadorian Assembly as an intrusion into domestic affairs that voided the very issue of Federalism. The Assembly instructed the Executive Branch to promote a reform of the Federal Constitution on the argument that it left the States without sufficient revenues and that it contained some political loopholes.41 The President of the Federation, seeking to solve the conflict with the State of El Salvador and to locate the Federal Capital at equal distances from all member States, unilaterally decided in December to move it to San Salvador. The Salvadorian Chief of State, on the basis of special powers that the Legislative Assembly had vested on him before its year-end recess and fearing an imminent armed action by the Federal Government, decided to raise an army to defend the State’s territorial integrity. Since the regular budget did not enable him to meet such unforeseen expenditures, he decreed a mandatory loan of

40 Decreto legislativo del 6 de mayo de 1831 aprobando vender tabaco a 6 pesos la libra, in Decretos de la Asamblea Legislativa del Estado 1830-1831, y del Congreso Federal de la República 1831, Op. Cit. 41 Monterrey, Francisco, Historia de E l Salvador, Anotaciones Cronológicas, 1810-1871, page 216, Op. Cit.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR 20,000 pesos in the State, whose payment would be guaranteed by revenues arising from the sales of the tobacco crop that was about to be collected.42 In early January 1832, General Morazán -President of the Federation- left Guatemala for San Salvador with the alleged purpose of transferring the Federal Capital to the latter city. He occupied the Salvadorian City of Santa Ana and requested assistance from the neighboring States of Honduras and Nicaragua to fight against the Chief of State of El Salvador. Upon learning this, the Salvadorian Assembly issued a decree declaring that it was seceding from the Federation and that the State assumed full sovereignty. Foreseeing that war was imminent, and taking into consideration that insufficient funds were available to finance the expenditures that would be required, the Salvadorian Assembly decided to re-establish the Provisional Mint at San Salvador and to again strike Provisional coins. The relevant portions of the decree approved on 23 January are the following:43 “ 1. The Provisional Mint that was established in San Salvador in 828 is reopened, and the Governm ent shall undertake the necessary expenses to that effect. 2. The coins to be struck shall be of Provisional character and no more than ten pesos are to be obtained from each Mark, and their w eight will be adapted correspondingly. 3. The silver to be coined will be used only by the State; however, private individuals wishing to have silver coined for their use w ill receive seven and a half for each Mark. 4. To acquire the required silver, revenues arising from the sales of liquor in this City are to be assigned, as well as those of one half o f the revenues arising from the use o f the port of Conchagua in San M iguel.”

This decree authorized the reopening of the Provisional Mint established in 1828 at San Salvador. It also approved the issuing of the second series of Provisional coins that would later on be known as “Cornejo” coins, following the name of the Chief of State at the time of imminent war with the Federation. In February, the Federal Army -with reinforcements from Honduras and Nicaragua and under the personal command of General Morazan- invaded El Salvador. It took the Capital City of San Salvador in March. Morazán temporarily 42 Decreto gubernativo de 30 de diciembre de 1831 estableciendo un empréstito forzoso de 20,000 pesos en el Estado, in Decretos de la Asamblea Legislativa del Estado 1830-1831, y del Congreso Federal de la República 1831, Op. Cit. 43 In Libro de Decretos de 1832 y 1833, UNESCO Microfilm Roll MI-3, Archivo General de la Nación, San Salvador. 55

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR assumed the functions of Chief of State, and called for general elections. These elections resulted in the designation of Mariano Prado, who had held the same office before, as Supreme Chief of State and of Joaquin de San Martin as Deputy Chief of State.

d. Characteristics of the Provisional Coins of 1832 The Provisional coins that were struck in San Salvador during the brief war in early 1832 are different than those of the series of 1828, although they have some common features. The coins minted by Cornejo were not of the obsidional type, since the war and the siege of San Salvador were very brief. They are undoubtedly, however, necessity coins. In the obverse the coins have the coat of arms of the State. In this case, however, the volcano has a star at its top instead of the eruption clouds. There exist varieties with different types of ocean waves at the bottom of the volcano. Surrounding the coat of arms is the legend “POR LA LIBERTAD DEL SALV” (FOR THE LIBERTY OF EL SALV), even though there are slightly differing legends that may read “POR LA LIBERTAD DEL SALVADO” or “POR LA LIBERTAD SALVADORE”. The volcano shows the initials “S.S.” of the Provisional mint on the sides; in other varieties, the coins’ denomination may be shown (such as “2 R”) instead. The reverse shows again a column that holds a Phrygian cap at its top. A legend reading “MONEDA PROVISIONAL” (PROVISIONAL COINAGE), the year 1832, and the initials RL of the assayer, surround the column. The coin’s denomination is shown in the sides of the column. Some varieties show the initials “S.S.” of the Provisional mint instead. The column may or may not be surrounded by a wreath having different shape and size. These coins do not show an indication of their silver fineness. The edge of the coins has the same design as that of the 1828 issue; that is, the Colonial design of the last coins struck in Mexico.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

Figure 5-6. Enlarged image of the obverse and reverse of the “Cornejo” coins struck at the San Salvador Provisional Mint in 1832.

The Cornejo Provisional coins were minted with a silver fineness of 0.750 and only in the denomination of 2 Reales. They had the following physical characteristics:

Index Number 4

Denomination 2 Reales

Diameter, Millimeters 26.5 to 27.0

Weight, Grams 5.6 to 6.3

As in the case of the 1828 series of Provisional coins, use was made of several working dies to strike the series of 1832. This fact explains the different varieties that may be found. However, they all fall within the same Index Number (N° 4) and may be identified using decimal numbers. Coins dated 1832 are easier to find and in better condition, than those of the first series dated 1828. When calculating the fine silver content of these coins it can be determined that they did not comply with the standards set by the Federation either. While the 1832 2-Reales coin was heavier than the equivalent one for 1828, it contained less that three fourths of the Federal silver standard since it had a fineness of only 0.750. Again, this explains the subsequent rejection of these coins by the other States of the Federation. With respect to the identity of the assayer(s) of these coins (initials RL or L alone), it can be stated that they do not belong to officials of the mints owned by the Federation (Guatemala, Tegucigalpa or Costa Rica), since they had different initials. The initials of an unknown assayer (RL), who operated in the Durango Mint in Mexico during the years 1825 to 1832, come to mind, however. But no confirmation that such assayer may have been loaned to the San Salvador Mint

57

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR has been obtained. Thus, it must be again assumed that an unknown local person acted as assayer for the 1832 series of Provisional coins. e. Continuing Fiscal Problems General Morazan felt that the Federal Army was required to ensure order in San Salvador until elections were held and new authorities were designated. In addition, he was to undertake a campaign to crush a revolt in the Atlantic Ports of Omoa and Trujillo in Honduras. To finance that, he issued a decree imposing the collection of a mandatory loan of 100,000 Pesos in the State of El Salvador.44 Such decree severely affected the finances of wealthy landowners and merchants, further depressed the economy, and undoubtedly increased the scarcity of coinage in the State. In June, a decree was issued by the Assembly abolishing the payment facilities for overdue taxes that had been granted by the previous government in 1831. Mariano Prado took office as Chief of State in July of 1832 and immediately started to adopt measures to alleviate the problems. First, he set forth guidelines to pay back salaries of civil and military employees, and he cut all government salaries by 15 per cent to reduce expenditures.454 6 Second, in order to obtain resources for the Treasury he sold properties that had been under litigation for more than eight years, and sold some public properties to pay for the State’s debt.45 In October, the Legislative Assembly approved a set of rules for the Political Representatives and other State authorities which, in Article 17, specified that they should “Watch over (...) that the coinage be those duly recognized by the Republic and the Provisional coins issued by the State, pursuing all counterfeiters”.47 These rules in fact provided legitimacy to the coins struck in 1828 and 1832.

44 Decretos y Ordenes de la Asamblea y el Gobierno del Estado, 1831-1834, Víctor Jerez Collection, Florentino Idoate Library, Jose Simeon Cañas Central American University, San Salvador. 45 Decreto de 20 de agosto de 1832fijando reglas para e lpago de los empleados and Decreto de 15 de diciembre de 1832 reduciendo el sueldo de los empleados, in Decretos y Ordenes de la Asamblea y el Gobierno del Estado, 1831-1834, Op. Cit. 46 Decreto de 23 de ju lio de 1832 mandando vender los bienes concursados cuyos juicios tengan interrupción de ocho años, and Decreto de 13 de agosto de 1832 autorizando al gobierno para la venta de los bienes destinados a la amortización de la deuda del Estado, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, Op. Cit. 47 Reglamento de Jefes Políticos, Municipalidades y Alcaldes, adoptado e l 4 de octubre de 1832, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, 1831-1834, Op. Cit. 58

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR To obtain more revenues for the Treasury Prado urged the Assembly to establish a direct and personal tax on all individuals.48 Many citizens refused to pay the new direct tax. The government confiscated their properties as a result. Such strong measures gave rise to popular insurrections in the cities of San Salvador, Zacatecoluca and San Miguel, which forced the government to suspend the effects of the direct tax decree. Since during the period in which the decree was in effect no import/export and production taxes had been collected, it became necessary to issue a governmental decree to reinitiate their collection.49 The above incidents made the Prado administration very unpopular. At the beginning of 1833 a peasant uprising, led by the Indian Chieftain Anastasio Aquino, occurred. It was crushed only after many bloody battles. Prado decided to resign and the Deputy Chief, Jose Maria San Martin, held office from February until June 1834.

48 Decreto de I o de septiembre de 1832 estableciendo la contribución directa, in Decretos y Ordenes de la Asamblea y el gobierno del Estado, 1831-1834, Op. Cit. 49 Decreto de Gobierno de I o de diciembre de 1832 suspendiendo los efectos de la ley sobre contribución directa and Decreto de gobierno de 17 de diciembre de 1832 mandando que se cobre la alcabala y e l diezmo de uno y otro ramo, in Decretos y Ordenes de la Asamblea y Gobierno del Estado, Op. Cit. 59

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR 4. The Provisional Coins of Joaquin de San Martin a. Background

Joaquín de San Martín Born in Comayagua, Honduras, in 1770. As Deputy Chief, he headed the State of El Salvador from February 1833 to June 1834, after Mariano Prado resigned from office. The Federation did not recognize his legitimacy as head of State at first, and the Federal Army invaded El Salvador to depose him. However, subsequent elections confirmed him as Chief of State. In 1834 the Federation’s Capital was transferred to San Salvador; San Martin opposed such move and his army was defeated by Morazán’s troops. He was sent into exile for two years and his properties were confiscated. He returned from exile, continued to be active in politics, and was elected as Deputy President of the State Constitutional Assembly, a position he held during the years 1840 and 1841.

Just before San Martin assumed office, the Legislative Assembly -taking into consideration the prevailing situation of the Treasury- issued a decree re­ establishing the Provisional Mint at San Salvador, provided that it would ensure revenues to the government. The decree, in its relevant part, read as follows:50 “Article 6. Re-establish the Provisional Mint, provided that it generates income to the Treasury” .

Said decree again authorized the striking of Provisional coinage. In this case, the decree itself provided the justification to increase the debasing of the coins. The striking did not happen immediately thereafter; it would occur in subsequent months. General Morazán did not feel that the change in authorities in the State of El Salvador -even though legally valid- should take place before the authorities of the Prado government were put into jail. He issued a communiqué informing that he was intervening into the affairs of the State and again invaded El Salvador. The government of San Martin was forced to raise an army to defend the State’s sovereignty and stop the invasion. Before entering into battle, but with the Federal Army already within Salvadorian territory, conversations were held between both parties and an agreement to hold elections was reached.

50 Decreto de I o de Enero de 1833 que restablece e l cuño provisional de San Salvador, in Libro de Decretos de 1832 y 1833, UNESCO Microfilm Roll MI-3, Archivo General de la Nación, San Salvador. 60

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR Elections were held in June. They resulted in the designation of San Martin as Supreme Chief of the State and of Lorenzo Gonzalez as Deputy Chief. When the Federal Congress heard the news, it declared that the calling for elections was unconstitutional. However, on 1 July, the Salvadorian General Assembly declared San Martin and Gonzalez duly elected. A few days later, Morazan issued a public manifest against San Martin. The latter refuted Morazan’s allegations, pointed out his personal ambitions, and indicated that there was a generalized unrest in the Federation due to such intents for political predominance.51 The political environment turned sour after these exchanges. The Salvadorian legislative body, in a decree issued in August, had very negative expressions against the Federation’s President and in general over the financing of the Federation’s budget:52 “Considering that the Federal Executive has not rendered accounts of the funds under his administration, as required by law; That in 1832 the State of El Salvador was forced to pay 100,000 Pesos as a im posed loan not recognized to date as such by the Federation, which loan cost im posed by a victorious army am ounted to 500,000 Pesos to the landowners. That if funds are given to the Federal Governm ent they do not provide for the benefit of the peoples, but rather they are used against the States, to finance subversive papers to underm ine the States.”

The Federal Congress -through a decree issued in October- urged the States to return the federal revenues that they had illegally retained. At the end of that year and at the beginning of 1834 there occurred internal uprisings against San Martin. They were crushed, but San Martin was left in a very weakened political position. Treasury funds were exhausted. At the same time, the Federal Congress decided to designate the Salvadorian City of Sonsonate as the new seat for the Federal government. This decision was seen by the Salvadorians as an excuse to depose the government of San Martin, Nevertheless, the Federal Government was installed at Sonsonate in February 1834. A few days later, General Morazan proposed that the Federal District should be relocated to the Capital City of San Salvador, where it would have all the necessary facilities for its functioning. Taking into consideration the political 51 Monterrey, Francisco Historia de E l Salvador, Anotaciones Cronológicas, 1810-1870, pages 239 and 240, Op. Cit. 52 Decreto de 23 de agosto de 1833 rechazando admitir vales para el pago de la renta marítima, in Decretos y Ordenes de la Asamblea y el Gobierno del Estado, 1831-1834, Op. Cit. 61

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR weakness of San Martin, the Salvadorian Assembly accepted this proposal. The Federal authorities moved to San Salvador in June of said year. Morazan and San Martin met and signed an agreement through which all hostilities among them would cease. However, San Martin was not happy about the presence of the Federal Government in San Salvador and formed an army to attack Morazan. During the battle that ensued, Morazan defeated, captured and sent San Martin into exile.53

b. Characteristics of the Provisional Coins Struck in 1833 and 1834 Three different series of Provisional coins were struck under the San Martin administration, using the January 1833 decree as their legal basis. While they were struck during a period of war, their true origin was the poor financial and economic position of the Treasury. Thus these strikings are classified as necessity coins. The first series was struck during Morazan’s invasion in the first half of 1833. These coins have a different design when compared to previous series. For the first and only time in the whole Provisional series of 1828-1835, the name of the State is included in the coins. The obverse shows the coat of arms of the State that is the volcano over the Pacific Ocean, and a radiating star on its topsurrounded by a wreath, and the legend “ESTADO DEL SALVADOR” (STATE OF EL SALVADOR). The reverse shows a column with a radiating star enclosed within a circle at its top, with the coin’s denomination, surrounded by a wreath, with the legend “MONEDA PROVISIONAL IND” and the date of 1833. The edge is also of the Colonial type, as in previous series, and there is no indication of either the assayer’s initials or of the San Salvador Mint. See the following figure.

Figure 5-7. Enlarged image of the obverse and reverse of the first series of Provisional Coins struck by San Martin in 1833

53 Vidal, Manuel, Nociones de Historia de Centro America, page 206, Op. Cit. 62

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR These coins were struck in silver with a fineness of 0.633, to comply with the January 1833 decree that required that minting operations result in earnings for the government. The coins had the following physical characteristics:

Index Number 5

Denomination 1 Real

Diameter, Millimeters 21

Weight, Grams 2.7

Only coins of 1-Real denomination were struck under this series. They are relatively difficult to obtain, when compared to those coins included in the subsequent series of 1833 and 1834. The fine silver weight of these coins is 1.7 grams, which represents only 55 per cent of the standard content set forth by the Federation. The second series of coins seems to have been struck at the end of 1833, when the first internal uprisings against San Martin occurred and currency was needed to pay the soldiers. Their design is different than the previous one. The obverse includes a different coat of arms, surrounded by a wreath and the legend “POR LA LIBERTAD DEL SALVADOR”. The reverse has a nearly identical design to that of the first series; that is, a column with a radiating star enclosed within a circle at its top, with the coin’s denomination, surrounded by a wreath, with the legend “MONEDA PROVISIONAL IND” and the date of 1833. The edge design is very weak. No initials of the assayers or of the San Salvador Mint are shown. There exist minor differences in design in the case of the lower denomination, caused by the small size and lack of sufficient space to include full legends. In its obverse, the legend is abbreviated and reads “POR LA LIBERTAD SAL” and it is very difficult to see the ocean below the volcano. In the reverse, the legend only reads “MONEDA PROVISIONAL”, and there is no denomination. In any case, it is the same design, slightly modified to take into account the smaller size of the coins. See the following figure.

63

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

Figure 5-8. Enlarged image of the obverse and reverse of Provisional coins of the second series struck by San Martin in 1833.

Silver having a fineness of 0.633 was again used in this series. The physical characteristics of these coins are as follows:

Index Number 6 7

Denomination y2 Real 1 Real

Diameter, Millimeters 16 21

Weight, Grams 1.5 3.4

Coins of Vo. and 1 Real were minted under this series. They are relatively easy to find. Some may be holed for which they lose appeal and commercial value. The total fine silver content of these coins ranges between 67 and 80 per cent of the standard established by the Federation. The third series of coins under the San Martin administration was struck at the end of 1833 and beginning of 1834, at the time when Morazan was making preparations for the invasion and during the invasion itself. These coins have a slightly different design that their predecessors. The obverse shows the coat of arms of the State -the volcano over the Pacific Ocean, with a radiating star on top- and the initials “S.S.” denoting the San Salvador Mint, within a circle. The legend reads “POR LA LIBERTAD DEL SALV”. The reverse shows a column with a Phrygian cap on its top, the denomination on its sides, and a wreath at the bottom that covers about one third of the coin. The legend reads “MONEDA PROVISIONAL”, the assayer’s initial, and the year. The coins have a very weak edge design. There exist numerous varieties dated 1833 and 1834. In the obverse, differing legends read “POR LA LIBERTAD DEL SALV.”, “POR LA LIBERTAD DEL SALVA.”, “POR LA LIBERTAD DEL SALVAD.”, and “POR LA LIBERTAD SALVO DOREÑO”. Minor differences may be observed in the volcano, the star, the ocean

64

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR and the Mint’s initials. There are cases when the ocean below the volcano is not clearly seen; rather, small wreaths may be seen at the base of the volcano. In the reverse, there may occur differences in the height and width of the column, the Phrygian cap and the wreath. In other cases, a separate wreath may surround the Phrygian cap. In addition, some letters in the legends may be reversed. Lastly, some coins show the initials L or RL; others do not have any assayer’s initials. It is evident that weak materials were again used to manufacture the punches and working dies, which would often break. When making new punches or dies, the resulting design would vary from the original and result in the many existing varieties.

Figura 5-9. Enlarged image of the obverse and reverse of the third series of Provisional coins struck by San Martin in 1833 and 1834.

These coins were struck using silver with a fineness of 0.633; their physical characteristics are as follows: Index Number 8 9

Denomination 1 Real 2 Reales

Diameter, Millimeters 19-21 25-26

Weight, Grams 2.7 5.4

Coins in denominations of 1 and 2 Reales were struck under the third series of San Martin, the latter being more common. Many of these coins are holed and many also show the zigzag countermark, which was applied at a later date as will be seen in the following section. The combination of weight and fineness of these Provisional coins of the third series indicates that they only had about 56 per cent of the total fine silver required by the Federation. 5. The Countermarks of Jose Maria Silva

65

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR After Morazan deposed San Martin, between June and September 1834, Carlos Salazar, Gregorio Salazar and Joaquin Escolan y Balibrera acted as Interim Chiefs of State. During these interim administrations, the new Salvadorian Assembly passed a decree suspending the payment facilities that had been accorded to citizens that owed money to the Treasury and requesting payment in cash, so that some degree of liquidity could be achieved. Through a second decree, all laws, decrees and orders issued by the previous government were abolished. A third decree re­ established the centralized tobacco production scheme.54 In addition, the Assembly chose the city of San Vicente as the seat for the authorities of the State of El Salvador, since San Salvador was by then the Federal District. New elections resulted in the designation of Dionisio Herrera and Jose Maria Silva as Supreme Chief of State and Deputy Chief of State, respectively. Herrera, however, did not accept the nomination and Silva took office as Deputy Chief on 14 October.

Jose Maria Silva Born in 1804 and died in 1876, in the City of San Miguel, El Salvador. A lawyer by profession, his long political life was initially tied to that of General Francisco Morazán. During 1828 and 1829 he was elected as a Deputy and appointed as Secretary of the Salvadorian Legislative Assembly. In 1834 he was again elected as a Deputy and subsequently chosen to be President of the Assembly. Immediately thereafter, he was elected as Deputy Chief of State and acted as Chief of State in 1834 and 1835. He was appointed as President of the Constitutional Assembly in 1839. He was again elected as Deputy Chief of State in 1840 and acted as Chief of State while General Morazán invaded Guatemala. When Morazán returned in defeat, Silva resigned his post and accompanied him into voluntary exile. He returned to El Salvador in 1842 after Morazan’s death in Costa Rica, and returned to his lawyer’s profession. During the 1850s and 1860s he was elected as Senator, and he was President Designate of the Republic of El Salvador in 1854.

a. The Counterfeiting of the Provisional Coins

54 Decreto de 4 de agosto de 1834 mandando hacer efectivos los pagos de los deudores de la hacienda pública, Decreto de 21 de octubre de 1834 desconociendo las leyes, órdenes y resoluciones emanadas desde el 9 de febrero de 1833 al 23 deju n io próximo anterior, and Decreto de 22 de octubre de 1834 estableciendo en e l Estado e l estanco del tabaco, in Victor Jerez Collection, Florentino Idoate Library, Jose Simeón Cañas Central American University, San Salvador. 66

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR The fact that the Provisional coins had been counterfeited surfaced while the above-mentioned events were taking place. Unscrupulous persons were taking advantage of the fact that the Provisional coins were of very simple design, and made many counterfeits. As soon as it became known that there were false coins in circulation, a scandal ensued and merchants refused to accept all Provisional coins. They requested payment in coins of different type and origin instead, but these were not available in sufficient quantities. Market transactions were slowing to a halt and the unrest of the population began to grow. Under such circumstances, the State Assembly issued -on 23 October 1834- a Legislative Order to prosecute the counterfeiters with the full force of the law. Its text read as follows:55 “Taking note of the fact that the Provisional Coins of the State have been counterfeited and that this false currency has been introduced in the local markets, causing serious negative effects to com merce and other sectors, and having analyzed the report of the appropriate Com mission on 3 October, it is hereby decided: To instruct the Executive Office to make use of all m easures required to stop this serious abuse, and to impose all penalties provided for in the existing law against currency counterfeiters and to the persons introducing the false coins” .

b. The Zig Zag Counterm ark In order to restore trust, to avoid negative consequences to commercial transactions, and to comply with the Assembly’s mandate, the administration of Jose Maria Silva immediately took appropriate action. It reaffirmed that the legitimate Provisional coins should circulate in the State and that no one was empowered to reject them. A procedure to examine all Provisional coins and to determine their legitimacy was devised, and penalties to those that counterfeited or did not accept the coins were set forth. On 18 December 1834, Silva issued the following governmental decree:56 “Article 1. The silver coins bearing the seal of the State Provisional Mint shall circulate freely in the whole State. 55 In Colección de decretos y órdenes del Cuerpo Legislativo y del Supremo Gobierno, de los años 1833 a 1835, Op. Cit., and in Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Law 16, Title 3, Book Three, Volume 1, Guatemala, 1855. 56 Colección de decretos y órdenes del Cuerpo Legislativo y del Supremo Gobierno, de los años 1833 a 1835, Op. Cit., and in Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Law 6, Title 3, Book Three, Volume 1, Guatemala, 1855. 67

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR Article 2. All citizens of the State are forced to receive the coins; those that reject them shall pay a fine of twice the amount of money rejected. Article 3. The circulation of currency made from copper, brass, tin, steel, or any other m etal other than gold or silver is prohibited. Article 4. All coins found to be false when making payments to Offices o f the Treasury shall be cut in half, and the parts will be returned to the owner. If a silver coin is m istakenly cut, the Treasury shall reimburse its owner. Article 5. All false coins received at the First-Instance Courts located in District towns shall also be cut in half, and the halves will be returned to the holder. Article 6. To ensure that the dispositions o f the previous Article are followed correctly, a well-reputed jew eler shall be appointed at all First-Instance Courts to examine all coins under the presence of the Judges; those coins that are found to be false by both the jew eler and the Judges shall be cut in half by the jew eler in the Court. Article 7. The Political Chiefs in all Districts shall appoint the aforementioned jew elers, with an appropriate m onthly salary not exceeding twenty Pesos. Article 9. All citizens of the State shall be able to submit any false coins to the Judges to be disposed of. Article 10. The Political Chiefs, the First-Instance Judges, and the majors of the cities are to prosecute, with the full w eight of the law, any and all persons that may counterfeit currency or introduce false coins. Should any of these high officials protect the persons m anufacturing false currency, or fail to prosecute them in accordance to the law, they shall incur in a fine to be defined by the Governm ent that will not be less than 10 Pesos or more than 200. Article 11. Any person that denounces the people that counterfeit or introduce false currency shall receive from the Treasury an am ount of one hundred Pesos, im m ediately after he produces a certificate signed by the Judge that is looking into the case and indicating the matter to be true.”57

The above-described procedure to determine the authenticity of the Provisional coins proved to be of great importance to restore public trust. Each Political Chief of District appointed an official jeweler that, under the scrutiny of the Judges, would make a special incision in the coins to ascertain whether its core was made of silver or another metal. This incision was called the ZigZag Countermark, and special jeweler’s tools were required for their application. 57 Article 8 was excluded from the final version of the decree; its contents were directly included in the Criminal Code of 1834, as will be seen later on. 68

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

If the coin was found to contain silver at its core, it was returned to its owner or holder. The countermark attested to its legality. Many Provisional coins were thus countermarked at the end of 1834 and beginnings of 1835. They are easily found and recognized. See the following figure and Figure 5-9 as well.

Figure 5-10. The “ZigZag Countermarl? punched in 1834-1835 over Salvadorian Provisional coins

Some South American coins that were circulating in the local markets, and whose authenticity was in doubt, were also tested.58 The Krause catalog includes two such coins. The first one is a 2-Reales host coin minted at Lima which is identified as KM 141.1; the second one is a similar coin that was also countermarked in Guatemala, in 1839-1840, with a punch that shows three volcanoes and a rising sun. Coins that were found to be false through the Z ig Zag countermark exercise were cut in two by the officially-appointed jewelers, under the supervision of the Judges, and were returned to their owners or holders. The general public was duly informed about this and was able to identify the good coins from the bad ones. This enabled the merchants to continue their activities without mistrust, even though -as will be seen later on- the ZigZag test was not infallible. The following figure, presented in color to better illustrate the facts, shows a counterfeited coin that had been detected as such through the Zig Zag countermark test, and cut in half. The color of the core is undoubtedly that of copper.

58 It should be evident that only host coins bearing a date of 1834 or 1835 at the latest can be considered authentic examples of this countermark. 69

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR

Figure 5-11. Enlarged image of a 2-Real Provisional coin found to be false through the ZigZag countermark test.

Under the classification proposed by the Author, coins having the ZigZag countermark would fall under Index Number CM-2 . The different countermarked pieces may be assigned decimal numbers for their classification (i.e. CM-2.1, CM-2.2, etc.). 6. The Last Provisional Issues of 1835

a. Attempts to Establish a Federal Mint at San Salvador At the beginning of 1835 there occurred a scarcity of small fractional coins in the whole State of El Salvador. The government headed by Jose Maria Silva made representations to the Federal Government in San Salvador, so that the latter requested the Government of Guatemala to make dies with the denominations of X A, V2 and 1 Real for use in San Salvador. The Federal Ministry of Finance addressed an official communication to the General Government Minister of Guatemala, requesting that dies be made to strike those coins in San Salvador.59 At a later date, this request was expanded to include both the dies and the machinery required to strike the coins, together with an assayer. Despite a negative report by the Director [Fiel] of the Guatemala Mint, which stated that there was no spare machinery available to send to San Salvador, and that no

59 See this official letter, dated 8 January 1835, in File 84530, Legajo 3617, Signature B 94.1, Archivo General de Centro America, Guatemala City.

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR assayer was available for this purpose, the Guatemalan government accepted the request of the Federal and Salvadorian governments.60 The Government of El Salvador appointed a special envoy -Dr. Rafael Reyes- to travel to Guatemala and to supervise the manufacturing of the dies, identify the machinery needed and to ensure the availability of an assayer. After intense negotiations, in March assayer Manuel Muñoz accepted to be temporarily assigned to San Salvador, provided that the Guatemalan government granted him a leave of absence and that his record of service not be interrupted. At the end of said month difficulties arose as no equipment was available to allow the work of the assayer and since no machinery was available to strike the coins. In addition, the assayer indicated that he was about to initiate the assaying of a large amount of coins for the Federation, which would prevent him from traveling to San Salvador on assignment. He stated, furthermore, that the Guatemalan government was not agreeable to maintain his service conditions and record while he went to San Salvador. In mid-May, the Federal Government offered to pay Mr. Muñoz twice the amount of salary that he was drawing at the Guatemala Mint to ensure his availability in San Salvador. The Government of Guatemala reiterated its commitment to the previous agreement.61 During the month of May, the Federal Congress discussed several coin-related issues. In a session held on 11 May, the Finance Commission proposed to “strike provisional coins while a Federal Mint is established in the Federal District, for which a private contract might be entered into...” . On 26 May, it approved a request made by the Chiefs of the States of Honduras and El Salvador so that “provisional coins may be accepted as partial payment for the purchase of tobacco”. The possibility of establishing its own mint in San Salvador in order to strike the fractional coins that were badly needed was also discussed. It also examined “a proposal by citizen Oreja so that Congress may re-examine and reform the law and rules of the Federal District in the sections related to the issuing of Provisional coinage”.62 Despite the above, on 1 July, the Federal Minister of Foreign Affairs addressed the Guatemalan Government, expressing the gratitude of the Federal government for the support to establish a Federal Mint in San Salvador. He also indicated that President Morazan now requested that all work be suspended

60 Informe de 20 de enero de 1835 del F iel de la Casa de Moneda de Guatemala, and Comunicación de 7 de febrero de 1835 del Secretario General de Gobierno del Estado de Guatemala a l Ministro General de Gobierno del Estado del Salvador, in File 32459, Legajo 1397, Signature B 94.1, Archivo General de Centro America, Guatemala. 61 See again the documentation included in File 32459, Legajo 1397, SignatureB 94.1, Op. Cit. 62 Actas del Congreso Nacional de 1835, in UNESCO Microfilm R oll BN-2, Archivo General de la Nación, San Salvador. 71

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR “since the main parts to establish a coining machine are not available and cannot be properly and economically manufactured in the country” .53 The idea of establishing a Federal mint at San Salvador was thus abandoned on that occasion. b. The Provisional Coins of 1835 Since the scarcity of fractional coins continued, the government of El Salvador now under the administration of Nicolas Espinoza- ordered that Provisional coins be minted, in order to supply the needs of the domestic market, and re­ established the San Salvador Provisional mint.

Nicolás Espinoza (1795-1845) He governed the State of El Salvador between April and November 1835. During this brief period, he made important changes in the structure of government, and established the Jury system to examine criminal causes. He reorganized the District of San Salvador and changed its name to “Cuscatlán”. In addition, he separated the command of the army from the political hierarchy. General Morazán deposed him in November 1835.

This was the last series of Provisional coins that the State of El Salvador issued. In the obverse there appears the usual coat of arms - a volcano lying on top of the waves of the Pacific Ocean, with a radiating star on its top - and the initials “S.S.” on its sides, surrounded by the legend “POR LA LIBERTAD DEL SAL:” . The reverse shows a column with the ocean below and a Phrygian cap on its top, and the denomination on the sides. The surrounding legend reads “MONEDA PROVISIONAL 1835”. The coins have no milled edge. There are varieties of these coins, due again to the fact that the working dies used to strike them broke often and, when the punches were used to make new ones, the new dies did not coincide exactly with the original ones. In respect to the obverse, there exist different legends, such as “POR LA LIBERTAD DEL SA.”, “POR LA LIBERTAD DEL SALV.”, “POR LA LIBERTAD DEL SALVA.”, and also in the number of dots at the end of the legend. In addition, the shape of the volcano and its radiating star may be slightly different. In some cases, a circle of beads may surround the coat of arms instead of a solid line. In the reverse, 63 Comunicación de I o de Julio de 1835 in File 3423, Legajo 164, Signatura B 10.2, Archivo General de Centro America, Guatemala City. 72

THE PROVISIONAL COINS OF THE STATE OF EL SALVADOR differences in the type of lettering, the column and the Phrygian cap, may exist. In addition, some pieces have the initials of NA and ND, but the majority of these coins do not have any indication of an assayer.

Figure 5-12. Enlarged image of the obverse and reverse of the Provisional coins minted by Nicolas Espinoza in 1835.

Silver of 0.700 fineness was used to strike these Provisional coins. Their physical characteristics are as follows: Index Number 10 11

Denomination y2 Real 1 Real

Diameter, Millimeters 15 18

Weight, Grams 1.2 2.4

Only coins of Vá and 1 Real denomination were struck under this last series of Provisional coins, despite the fact that the original request by the Salvadorian Government had indicated that % Real coins were also needed. The coins of this series are relatively easy to find in better condition, since they were less circulated than their predecessors were; they can also be found pierced. The fine silver content of this series, estimated by combining the fineness and the weight of the coins, is of only 55 per cent when compared to the Federation’s standards.

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VI. REJECTION AND DEMONETIZING OF THE PROVISIONAL COINS (1829 TO 1836)

1. General The Provisional coins issued by the State of El Salvador were originally intended to temporarily solve the currency needs under situations of war and scarcity, as described in the preceding chapter. In any event, they were intended for domestic circulation only. However, for different reasons, these coins reached the neighboring States of Guatemala and Honduras where they were rejected by the respective governments, and the public-at-large. In addition, due to the simple design of these coins, counterfeiters had been able to make dies to produce false pieces. These were usually made of Copper, with Silver or Tin plating, to try and deceive the merchants and public at large. Once the wars were over and a period of peace prevailed beginning in 1835, the Salvadorian Government began the task of demonetizing the Provisional coins.

2. Rejection in Neighboring States There are at least two documented cases of initial acceptance - either voluntarily or forcefully - and subsequent rejection and demonetizing of the El Salvador Provisional coins in neighboring States. The first case occurred in the State of Guatemala when, at the beginning of 1829, Salvadorian troops belonging to the A llied Arm y to Protect the Law, commanded by General Juan Prem, occupied parts of the territory before reaching the Capital of the Federation located at that time in Guatemala City. Mariano Trabanino, Superintendent of the Guatemalan District of Chiquimula located adjacent to Salvadorian territory - was forced by the occupying army to issue a public edict ordering the acceptance of the Salvadorian Provisional coins. When peace was restored, the population began to reject the Salvadorian coins. On 25 May, he wrote to the State’s Secretary General requesting appropriate

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instructions.1 In response, on 6 July, an order was issued to the Guatemala Mint to accept and restrike the coins collected at Chiquimula, which amounted to two hundred and eight Pesos and six Reales.2 On 14 August, the official entrusted with the collection of import taxes at Antigua Guatemala reported to his superiors that he had in his possession a considerable amount of Salvadorian Provisional coins. Furthermore, that he had accepted them on the basis of a public edict issued during the occupation of the city by Salvadorian troops.3 There were other towns where a similar situation prevailed due to their past occupation by Salvadorian forces. In view of this, the Government of the State of Guatemala issued a Circular to the Superintendents of the Districts of Totonicapán, Sololá, Quezaltenango, Suchitepequez and Verapaz, ordering them to send the Salvadorian Provisional coins to the Guatemala Mint for restriking and reiterating that their circulation was prohibited.4 The second case occurred in the State of Honduras, where the Prado Provisional coins of 1828 had been initially accepted in view of the local scarcity of currency and while the Tegucigalpa Mint was being established. However, on 16 July 1829, the Extraordinary State Assembly, bearing in mind “the poor quality of the Provisional coinage issued by the State of El Salvador, the problems suffered by the merchants in Honduras due to its acceptance, and having ceased the reasons under which the government had accepted such coins, decreed that it is absolutely prohibited to introduce and circulate such coins in this State”.5

3. Further Counterfeiting of the Provisional Coinage As discussed in the preceding chapter, there occurred many cases of counterfeiting of the Provisional coins in the State of El Salvador in 1834. The Chief of State issued appropriate orders - through a decree dated 18 October of same year - to avoid the problems that the false coins were causing in the local markets, and establishing the Zig Zag test and countermark.

1 File 51079, Legajo 2432, Signature B 118.9, Archivo General de Centro America, Guatemala City. 2 File 51419, Legajo 2432, Signature B 118.9, Archivo General de Centro America, Guatemala City. 3 Official communication through which the Sacatepequez Superintendent submitted the report of the Tax Collector to the General Government Minister of the State of Guatemala, in File 29129, Legajo 1193, Signature B 87.2, Archivo General de Centro America, Guatemala City. 4 Circular issued on 20 August 1829 by the General Government Minister of the State of Guatemala, in File 29129, Legajo 1193, Signature B 87.2, Op. Cit. 5 Castillo-Flores, Arturo, Historia de la Moneda de Honduras, page 54, Op. Cit.

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In addition, in the same year, the Salvadorian Legislative Assembly approved the first Penal Code of the State. Its text, in its relevant section, read as follows:6 “Title 5. On offenses to public faith. Chapter 1, On counterfeiting and alteration of coinage. Article 375. Any individual that m ay produce, or order the production of, counterfeit coins that imitate the Gold and Silver pieces that legally circulate in the Nation, either using other or the same metals for their production but with a lower fineness or lower weight; any individual that m ay clip legal Gold and Silver coins thus dim inishing their legal value; and any individual that may provide a better appearance to coins made of an inferior metal, shall be penalized with perpetual forced labor. Article 376. Any individual that m ay counterfeit or clip, or order same to others, Gold and Silver coins that are not legally allowed to circulate in the State, shall be penalized with fourteen to twenty years of forced labor in public works. Article 377. Any individual that, either privately or w ithout authorization, may strike or cast any type of the coins that legally circulate in the State, even if they are of the same metal, fineness and weight as the legal currency, shall pay a fine of one to four hundred Pesos, and shall serve a term of six m onths to two years in prison. Any individual that may do likewise with foreign coins having no legal authorization to circulate in the State, shall pay a fine o f thirty to one hundred Pesos and will serve a ja il term of three months to one year. Article 378. Any individual who - under any of the cases described in Articles 375, 376 and 377 - m ay cooperate in the dissem ination or introduction to the territory of the State or Nation, of the counterfeited, clipped or illegally m inted coins, having full knowledge of said defects, and having been part of the act, or having agreed to with the counterfeiters to com mit the offense, shall suffer the same punishm ent as the main convicts. The same punishm ent will be applied to those individuals that m ay have provided or built the dies, m achinery or other m eans to counterfeit or clip the coins, when being aware of their intended use. Article 379. Individuals that m ay cooperate in the dissem ination or introduction of said coins to the State or the Nation, being aware of their condition, but without previous agreem ent with the counterfeiters and having had no participation in the counterfeiting, will be punished as cooperators and participators of the main offense. Article 380. The punishm ent imposed to those that cooperate in the introduction to the State or Nation and in the dissem ination of counterfeit or 6 Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Title 16, Book 14, Volume I, Op. Cit.

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clipped coins, or o f those illegally minted, will not apply to those individuals that, having taken them in good faith, recirculate the coins. Those individuals, not being aware that the coins are defective, w ill not be punished; but anyone who, after becom ing aware that the coins are defective and tries to use them, shall be fined an am ount equal to three times the value of the coins, and shall serve a ja il term of eight days to two months. Article 381. Those individuals that, without an official order, m ay construct, sell or otherwise provide or keep in their possession any dies or other instrum ents that may be used to counterfeit coins, even if they are not aware that they are to be used illegally and even if they are not used illegally at all, shall serve a ja il term of two months to one year and pay a fine of fifteen to fifty Pesos” .7

The approval of such harsh and straightforward penalties is a clear evidence of the widespread activities of counterfeiting or clipping of coins that prevailed at that time.

4. Rejection and Prohibition of the San Martin Provisional Coins The above described issue of the counterfeiting of the Provisional coins and the political discredit of the recently deposed government of José de San Martín, made the public at large aware of the fact that the Provisional coins minted in 1833 and 1834 had a lower fineness than their predecessors. The Z ig Zag test did not enable the detection of debasing of the Silver used in the coins; it only permitted to detect when the core of the coin was made of a different metal and had been subjected to Silver or Tin plating. In fact, many of the coins used to illustrate the Zig Zag test and countermark, and that had been proven to be legal, belong precisely to the debased pieces minted by the San Martin Government. Figures 5-9 and 5-10 in the preceding chapter and the photos of some Provisional coins with the ZigZag countermark included in the Krause Catalog, are clear examples of this. When the public became aware of the debasement of the San Martin coins, a generalized rejection of all Provisional coins ensued, including those pertaining to the 1828 series that had the proper fineness. Many merchants took advantage of the prevailing uncertainty and were paying less than the nominal value for the Provisional coins.

7 The Penal Code included all articles of the decree dated 18 October 1834, previously quoted, immediately after Article 381.

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U n d er su ch th re a te n in g situ a tio n to th e local m ark ets, in a d d itio n to p olitica l rea son s, th e S ta te A s s e m b ly is s u e d a d ecree on 14 F e b ru a ry 1835 to p ro h ib it th e a c c e p ta n c e o f th e S a n M a rtin P ro v isio n a l coin s m in te d in 1833 a n d 1834. Its te x t rea d as fo llo w s :8 “Article 1. No person or Public Treasury Office shall be forced to accept the coins minted in 1833 and 1834, known as San Martin coins. Article 2. To dem onetize these pieces, the Governm ent shall accept them in the sales of State property and in the consolidation of capitals indicated in its decree of 19 January, excepting the property listed in Article No. 6. M erchants and other individuals may accumulate them for restriking, and shall lose only the difference in fineness; the Treasury w ill bear the cost of restriking and transport. Article 3. Upon publication of this decree, the Governm ent shall have audits made at all Tax Revenue offices in order to determine all am ounts collected thereby. Payments for land leases using these coins w ill only be accepted through such a date. Article 4. All individuals refusing to accept the Provisional currency minted between 1828 and 1832, known as Prado and Cornejo coins, as well as other Silver coins that circulate in the markets of the Republic, shall be put in prison for four days and will be evicted from the markets, and shall be prevented from selling anything even from his home until a period o f thirty days has elapsed and the authority has reissued the appropriate permit, under the penalty of losing all proceeds towards the construction and m aintenance of prisons. Article 5. Any individual trading with legal coins, and acquiring them at less than their nom inal value, shall be imposed a fine of fifty to one hundred Pesos, or serve a prison term of twenty to thirty days. Under this case, and that of Article 4, the Governm ent shall sum marily impose the penalties to any subordinate public employee. Should the transgressor be a high government official, he shall be fined one half of the am ount in the case of rejection o f legal coins and, in the case of trafficking which is prohibited under this article, he shall be given the full sentence. Article 6. The same penalties shall be applied to any individual that may modify the price of property or goods as a result of the use of different types of currencies. Article 7. Constitutionally elected Mayors and Political Officials that do not, for the first time, com ply with this decree’s dispositions shall serve a prison term of four days; w hen not com plying for the second time, the prison term 8 In Colección de decretos y órdenes del Cuerpo Legislativo y del Supremo Gobierno, de los años 1833 a 1835, Serie IMPRESOS, Volume II, Document No. 110, page 117, Archivo General de la Nación, San Salvador; and in Menéndez, Isidro, Recopilación de Leyes de E l Salvador.; Law 7, Title 3, Book III, Volume I, Guatemala, 1855.

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w ill be raised to eight days, and the third time, to fifteen days. Politically Appointed Officials are authorized to impose these penalties to the Mayors; the G overnm ent shall im pose penalties to the Officials. Article 8. Counterfeiters and collaborators shall be tried by a martial court as public order crim inals” .

This legislative decree was designed to repudiate all Provisional coins issued by San Martin, and to force the new government to absorb the loss of demonetization. These losses would be effected not only during the audit of all Treasury offices but also when private individuals acquired State property using these coins. Either the amount of potential losses involved were higher than initially estimated at the time the decree was issued, or the Fiscal position was weaker than originally assumed by the Assembly, and the government was unable to absorb them. Thus, on 9 June of same year, the new Chief of the State - Nicolás Espinoza - issued the following decree:9 “Article 1. The Treasury offices shall not accept the Provisional currency of 1833 and 1834, known as San Martin coins, to pay for the sale o f State properties. Article 2. Upon receipt of this decree, the General Superintendent's and any subordinate offices will im m ediately conduct an audit to ascertain the existence o f said currency, collect it at the Treasury and conclude its dem onetization” .

Currency counterfeiters took advantage of the demonetized Provisional coins and altered them, superimposing dates of coins minted in previous years. See the following figure where the lower section of a provisional coin shows the alteration of the original date of 1833 for one of 1828. This alteration of dates can be identified easily through use of a magnifying glass. In addition, the assayer’s initials (RL) do not belong to the issue of 1828; they appear in coins dated 1832 and later. These date alterations were easy to detect, and people who were already on guard due to their past experiences - were not deceived.

9 In Colección de decretos y órdenes del Cuerpo Legislativo y del Supremo Gobierno, de los años 1833 a l 1835, Serie IMPRESOS, Volume II, Document No. 92, page 177, Archivo General de la Nación, San Salvador; and in Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Law 8, Title 3, Book III, Volume I, Guatemala, 1855.

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Figure 6-1. Enlarged image of a Provisional coin whose original date has been altered (1828/1833)

The Author believes that some Provisional coins bearing a date of 1829 may be the result of similar date alterations. Such assertion stems from the fact that, first, the last two digits of the date in such coins are placed at a higher level than the first two. Second, the initials “RL” of the assayer, shown in some of the 1829 coins, belong to the issues dated 1832 and later. Finally, because no documentary evidence has been found proving that such issue may have been authorized.

5. Demonetization of the Remaining Provisional Coins Before the previously mentioned decree and Penal Code were issued, the Federal Congress of the Central American Republic - which was already seated in San Salvador - had been debating the matter of the generalized counterfeiting of the Provisional coins. In his deliberations, the Federal Congress had taken into consideration that a clandestine mint had been established in 1833 at Punta Arenas, Costa Rica, where false Spanish Pesos Fuertes and Costa Rican Gold Escudos were being manufactured.10 The Federal Congress realized that the Provisional coins issued by the States of El Salvador and Honduras bore such a primitive design that made them very easy to counterfeit, and decided that their continued circulation was an open invitation to the work of counterfeiters. As a result, the Federal Congress approved two decrees. The first one, dated 17 May 1835, authorized the Executive Branch to reach an agreement with the authorities of the State of El Salvador towards the “prompt demonetization of the Provisional coins”.11 The second one, dated 30 June 1835, stated that by minting Provisional coins, the States of Honduras and El Salvador had infringed Article 69 of the Federal Constitution, since such coins did not have the legal 10 Circular del Supremo Poder del Estado de Guatemala, 9 December 1833, in the official newspaper Boletín Oficial, December 22, 1833, Guatemala City. 11 Page 6, File 92814, Legajo 4126, Signature B 5.7, Archivo General de Centro America, Guatemala City.

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Silver fineness, weight and type; and that their circulation had caused problems in other States. The decree also set forth some guidelines for their demonetization. The relevant parts of said decree are as follows:12 “ 1. No State shall be allowed to m int Provisional coinage, even under the Republic’s denominations. 2. The Executive Branch shall undertake to establish a m inting facility in the Federal District. 3. The Executive Branch is also authorized to enter into contracts with State Governm ents or with private individuals in order to obtain the necessary funding to im plem ent the previous article’s decision, subm itting proposals to the Congress in order to secure their approval. 4. The same Executive Branch shall inform the State Governm ents of El Salvador and Honduras that they should im m ediately cease to issue Provisional currency, and destroy the dies and m achinery used to that effect. 5. The States of Honduras and El Salvador provisional currency within a period of one year” .

shall

dem onetize

their

Facing such mandate and peremptory terms, the Government of El Salvador had no choice but demonetize the remaining Provisional coins. Since the Salvadorian Government did not have by itself the financial capacity to undertake the demonetization, the Federation - on the basis of the 27 June Federal decree apparently concluded a contract with Cruz Lozano to obtain the funding required.13 This individual contractor would charge 20 per cent of the total amount involved in the demonetization process. In November 1835, once the Federation had concluded the financial arrangement with Lozano, the Salvadorian State Government issued the following decree to set forth procedures for the demonetization process:14 “Article 1. No one shall be forced hereinafter to accept the Provisional currency m inted from 1828 to the present.

12 Page 12, File 92814, Legajo 4126, Signature B 5.7, Archivo General de Centro America, Guatemala City. 13 Cruz Lozano was an in-law and commercial partner of the Federal President, Francisco Morazán, and would play different roles in connection with the subject of coinage in the States of El Salvador and Honduras in the future. 14 In Colección de decretos y órdenes del Cuerpo Lejislatiuo y del Supremo Gobierno, de los años 1833 hasta 1835, Serie IMPRESOS, Volume II, Document No. 7, pages 56 and 57, Archivo General de la Nación, San Salvador.

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Article 2. Any individual holding such coins and wishing to have them demonetized may bring them to the public store that will be established for this purpose at all District cities. Article 3. The dem onetization shall be carried out in two stages. The first stage shall last fifteen days and will be devoted to all individuals holding small quantities of up to fifty Pesos. During the second stage, all individuals shall be dealt with no matter how much m oney they bring. It is understood that the coins belonging to the years 1833 and 1834 shall not be received. Article 4. The Superintendent’s Office shall undertake an audit of the Treasury and other related offices in the Capital City on the very day that this decree is made public. Sub-Intendents shall do likewise in the Districts. First-Level Judges shall undertake similar audits in all adm inistrations located elsewhere. Article 5. No payments shall be accepted heretofore in any and all Treasury and related adm inistrative offices using currency other than the legal coins of the (Federal) Republic. Article 6. All existing and collected amounts of Provisional coins are to be forwarded to the General Treasury in order to be restruck, in whole or in fractions, using the legitim ate Silver w eight and fineness, at the National Mint. Article 7. The Superintendent shall ensure that the Treasury m aintains a detailed record of the amounts delivered to all Districts; in agreem ent with the Governm ent shall appoint the persons to be entrusted with their disbursem ent and w ill report their salary and honoraria; and shall ensure that they provide their accounts opportunely.”

The Federal Government adopted similar measures to be carried out in the Federal District of San Salvador. The appropriate decree stated:15 “ 1st. No right exists to force the inhabitants of the Federal District to accept the Provisional coins that circulate in it at the present time. 2nd. Any persons wishing to redeem these coins, m ust bring them to the special public storehouse that will be established at the Federal Treasury building. 3rd. The dem onetization shall be carried out during the first fifteen days after publication o f this decree, for individuals bringing forth am ounts from one cuartillo to twenty Pesos; during the following thirty days, which will be the last period for the amortization, any and all amounts shall be exchanged in the understanding that no coins dated 1833 and 1834 shall be accepted.

15 Decreto Federal del 15 de Diciembre de 1835, in Leyes Federales de 1835, Microfilm No. 8 (16mm), Archivo General de la Nación, San Salvador.

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4th. No Public Adm inistration, Treasury or Customs offices shall accept, from the time of publication o f this decree, any am ount o f provisional coinage. 5th. Im m ediately after publication of this decree, the General Treasury shall begin to make an audit of all public offices where public funds are collected and disbursed, and shall submit to the Governm ent a copy of said audit three hours upon its completion. 6th. All am ounts collected at offices of the Treasury, in addition to those that are to be collected by the special Com m issioner appointed for the amortization, are to be rem itted to the General District where a special ledger book shall be opened that will show the type and quality of coins received. 7th. The General Superintendent, upon issuing this decree, shall appoint a special Com m issioner to be entrusted with the task of am ortization o f the coins and with the opening o f the aforem entioned public storehouse, within fours hours o f his appointment. 8th. The aforem entioned Com m issioner m ust provide legal guarantees at a level com mensurate with the amounts he is expected to handle, and he shall receive a 3 per cent fee for his work, which is to be supervised by the District Attorney. 9th. The aforem entioned com m issioner shall keep a book where, every day and upon closing of the storehouse, he shall record the am ounts o f coins am ortized of which he will inform the General Superintendent. 10th. Upon collection o f all provisional coins to be amortized, the General Superintendent shall duly inform the National Governm ent so as to rem it them to Guatem ala City where they are to be m elted and re-struck under the appropriate type, weight and design.”

The process of collection and exchange of the Provisional coins was carried out, in the State of El Salvador and in the Federal District of San Salvador, from December 1835 to mid-January 1836. Shortly thereafter, in his address to the Central American Federal Congress dated 21 March 1836, President Morazan reported:16 “The am ortization of the Provisional coins that circulated in this territory, and which made commerce difficult, has been effected in a m anner com patible with the financial limitations of the National Treasury and the interests o f the holders, and has produced no ills to the peoples. This m easure, however, has not fully restored public confidence since a 16 Mensaje del Presidente de la República, leído en la apertura de las sesiones del Congreso Federal del año de 1836, quoted by the newspaper La Nación, 1 August 1879, San Salvador, and also by Castillo-Flores, Arturo, Historia de la Moneda de Honduras, pages 80 and 81, Op. Cit.

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considerable amount of counterfeit coins made locally and abroad still exists, which is to be eliminated in order to re-establish the Nation’s creditworthiness. This is not an easy task to accomplish. The counterfeiters are as able to hide their crimes as they were in producing the coins. Since the counterfeited coins can easily be mistaken for good ones, it is difficult to identify the corpus delicti, and the perpetrators remain unpunished taking advantage of the Nation’s and the public’s good faith. Prompt and efficient actions are required to put an end to this abuse. The present legal system does not include the necessary laws in this respect, and the laws of the Spanish Crown that imposed strict punishment to counterfeiters no longer apply in the Republic.” The demonetization of the Salvadorian Provisional coinage was undertaken to avoid counterfeiting and because of their non-compliance with the Central American Federation’s coin standards. However, the counterfeiting of coins in the Federation was not limited to the States of El Salvador and Honduras; it was a very widespread phenomenon. Federal and State Governments were in a difficult position to effectively deal with the counterfeiters, since no laws to deal with the matter were available at that time.

6. Re-striking of the Provisional Coins Once the Provisional coins had been collected, it was necessary to re-strike them in order to conclude the demonetization process. Federal President Morazan had obtained the oral approval of the Chief of the Guatemalan State, Mariano Galvez, to re-strike the coins at the Guatemala Mint charging only the more direct costs. To make the necessary Minister, Miguel Alvarez, as well, sent an official Such official letter, dated

arrangements for this task, the Federation’s Foreign who was temporarily in charge of the Federal Treasury communication to the Guatemala State government. 15 January 1836, read as follows:17

“Due to the urgency with which the Government requires moneys to meet its needs, we are making arrangements for the Provisional coins to be immediately sent to Guatemala City and placed at the disposal of the Treasury Minister, Mr. Antonio Rivera, for its urgent re-striking. Since you generously promised our President to restrike the coins charging only the salaries of the Mint operators, I have instructed the aforementioned Minister to enter into the necessary agreements with your administration. Two thirds of the coins are to be struck in Vis-Real coins and the remaining third in 1Real coins, since we need small denominations.”

17 The appropriate official communication is recorded under File 32460, Legajo 1397, Signature B 94.1, Archivo General de Centroamérica, Guatemala City.

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The Federal Treasure Minister was in Guatemala on other official business at that time, and was entrusted with handling the restriking process in view of the importance and urgency of the matter. It can be noticed in the Federal Foreign Minister’s letter that small-denomination coins were required to meet the local market needs. In a communication to the Guatemalan Mint Master, Benito Muñoz, dated 14 January 1836, Federal Foreign Minister Alvarez stated: “On this date, orders have been issued to the General Superintendent to place at your disposal all Provisional coins that have been collected at the Federal District, together with a list showing the exact amount and net weight of each type of coin. By order of the Federal President, I am entrusting you with the task of restriking these coins promptly and with the greatest possible care. In this regard, I am attaching the results of assays, previously undertaken at your Mint, of some of the Provisional coins minted in this State. In order to expeditiously conclude this matter — in a fashion that meets the needs of this Federal District for small denomination of coins — you are requested to consult with the Chief of the Guatemalan State so that, as he so generously offered, only the salaries of the Mint operators are charged for the restriking operation. It is the President's wish that twothirds of the coins be restruck into 14-Real coins and one third in 1-Real coins, despite the fact that Vi-Real coins might have been better except for the public’s present distrust of these smaller coins.” The above communication discloses the fact that assays of the Provisional coins had been undertaken at the Guatemala Mint. It also provides further confirmation that the Provisional coins had been minted in the State of El Salvador. It is also interesting to note that even though the small, Vi-Real coins were required for the local markets, they were not easily accepted because of their frequent counterfeiting. A few days later, again on behalf of the Federal President, Foreign Minister Alvarez wrote to the Guatemalan Chief of State to inform him of an acute shortage of fractional coins in the Federal District. He also requested his intervention to obtain a loan “of three or four thousand pesos of fractional coins” from private Guatemalan individuals, to be repaid with the first pieces restruck from the Provisional coins.” 18 The shortage was so acute, however, that the Federal Government was forced to take direct action in the matter and entered into an agreement with two local merchants in San Salvador - Messrs. Matheu and Murphy - to obtain at least part of the coins that were needed. As a result, on 28 January, Foreign Minister Alvarez wrote to the Guatemalan Chief of State

18 This official communication, dated 19 January 1836, is included in File 32460, Legajo 1397, Signature B 94.1, Archivo General de Centroamérica, Guatemala City.

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to inform him that the loan requested in his previous letter was no longer required.19 The Guatemala Mint received the consignment of the Salvadorian Provisional coins, as announced by the Federal Foreign Minister, and conducted the reduction operation. On 16 September, the Mint Master submitted a report to the Guatemalan Director General of Revenue describing the results of such work. The report stated:20 “Guatemala Mint, September 16, 1836. I. Supreme Federal Government The following is a detail of the weight, fineness and value of the Provisional coins submitted for reduction by the Federal Government and restriking at current standards, as well as of the payments made on his behalf:

First processing Second processing Third processing Total

Weight 589.5.4 125.7.1 501.2.7 1,216.7.4

Silver fineness 9 D 2 Gs 8 D % Gs 7 D 14 Gs

Value

7,401.5 ‘A

The resulting total weight of silver is one thousand two hundred and sixteen marks, seven ounces and four eighths. The reduction process to a fineness of eleven dineros produced nine hundred and twenty four marks, two ounces and seven eighths. At a rate of eight pesos and two m aravedíes per mark, this results in a value of seven thousand four hundred and one pesos, five Reales and one cuartillo. II. Government of the State of El Salvador The following is a detail of the weight, fineness and value of the provisional coins submitted for reduction by the State Government of El Salvador and restriking at current standards, as well as of the payments made on his behalf: Weight First processing Second processing

592.1.3 445.4.0

Silver fineness 10 D 18 Gs 9D Vh Gs

Value

19 The letter sent by the Foreign Minister and a copy of the note of guarantee signed on 1 February 1836 by President Francisco Morazan to Messrs. Matheu and Murphy are also included in File 32460, Legajo 1397, Signature B 94.1, Archivo General de Centroamerica, Guatemala City. 20 The report by Benito Muñoz and the official communication through which it was submitted by the Guatemalan authorities to the Federal Government are included in File 44049, Legajo 1922, Signature B 108.5, Archivo General de Centroamerica, Guatemala City.

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Third processing Fourth processing Fifth processing Sixth processing Seventh processing Total

400.0.0 208.4.0 776.0.0 944.1.0 121.2.5 3,487.5.0

8 8 8 8

D 19 Gs D 11V* Gs D 9 Gs D 8 V2 Gs 7 D 14 Gs 22,979.3%

The total w eight of this silver was three thousand four hundred and eighty seven marks, and five ounces. The reduction process to a fineness of eleven dineros produced two thousand eight hundred seventy nine marks, six ounces and three eighths. At the prevailing rate of eight pesos and two maravedies per mark, this resulted in a value o f twenty two thousand nine hundred and seventy nine pesos, three Reales and three cuartillos.

The following is a list of payments made on the Salvadorian Governm ent's behalf: To Mr. Cruz Lozano, at a rate of 20% of the total delivery of 598 Marks three ounces and six eighths of “Copella” silver, as contracted for with the Federation 5,834.7 To the Officer that delivered the first lot of provisional coins 500.0 To Mr. Jose Maria Cobos 9,000.0 To Brigadier Isidoro Saget 400.0 To Mr. Domingo Angulo, for his delivery of silver to the State Government 600.0 To Mr. Benito Perez, as ordered by the Federal President 120.0 To Mr. Mariano Prado, through Mr. Andres Dardon 200.0 To Mr. Siriaco Villacorta 100.0 To Mr. Nicolas Angulo 500.0 To Mr. Pedro Barrios, endorsed to Messrs. Matheu and Murphy 500.0 To Mr. Jose Maria Yudice 300.0 To Mr. Francisco Gomez, endorsed to Mr. Jorge Ponce 416.6 % To the General Minister of the Guatemala State Government, Mr. Carlos Salazar 300.0 To Mr. Luis Ayala, endorsed to the President 100.0 To Mr. Agustín Rivas 160.6 % To Mr. Francisco Padilla 500.0 To Mr. Faustino Vasconcelos, endorsed to Mr. Hoyos 194. % To Mr. Mariano Villacorta, endorsed to same Mr. Hoyos 172.4 To Mr. Dolores Molina, endorsed to Priest J.M. Castilla 50.0 To Mr. Francisco Torres, endorsed to Francisco Angulo 150.0 To Mr. Diego Vijil, endorsed to Mr. Pedro Valenzuela 368.0 To Mr. Francisco Marquez, endorsed to Mr. Cruz Lozano 500.0 To the President of the Republic 1,000.0 To Mr. Atanasio Flores, endorsed to Mr. Jose Maria Yudice 122. % To Brigadier Isidoro Saget 131.6% To Mr. Santiago Mendez 80.0 To Mr. Manuel Rodriguez 174.2 To Mr. Agustín Saenz 200.0 To Mr. Juan H. Cisneros 171.7 % Total amount 22,979.3 %

86

REJECTIO N AN D D EM O NETIZIN G OF THE PRO VISIO N A L C O IN S

On the basis of the above rendering, the total value of the silver received amounted to twenty two thousand nine hundred and seventy nine Pesos, three Reales and three Cuartillos. An equal am ount has been already disbursed so that the account has been settled in full.”

Cruz Lozano received his payment of 20 per cent of the total proceeds of the Provisional coins for his participation in the demonetization process. According to the Mint, the direct costs of the restriking operation amounted to one thousand and five Pesos and two Reales. The Mint had issued a payment note for a very similar amount to Juan Antonio Baily of San Salvador, who had not collected as yet. Arrangements were made subsequently to have the Federation pay Baily directly in San Salvador so that the debt for the restriking was settled in full. A rough estimation of the combined value of the Provisional coins issued by the State of El Salvador can be made using the figures included in the report by the Guatemala Mint Master. By combining the weight and fineness of the coins that were reduced, and the value paid for the obtained silver, it is possible to arrive at a gross estimate of 45,000 Pesos worth of Provincial coins. In his 1836 State of the Federation address, President Morazan indicated that:21 "Coins are no longer a matter for export in the Federation. Our exports now balance our imports from abroad. In the past year we have imported enough coins so that it has counterbalanced the tem porary shortage that resulted from the am ortization of the Provisional coins from the State of El Salvador and from the discredit of the ones belonging to the State of Honduras. This fact is the best apology for free trade. It is the best reply that can be given to those that m easure the wealth of a country by the amounts of coinage accum ulated through restrictive legislation."

Despite such optimistic words by President Morazan, the problems that ensued in the following years due to the breaking up of the Federation would again cause significant shortages of coins.

21 Informe al Congreso Federal sobre e l estado de la administración pública al abrir las sesiones de 1837, Op. Cit.

87

R EJEC T IO N OF D E B A S E D FO R EIG N C O IN A G E

VII. REJECTION OF DEBASED FOREIGN COINAGE AT THE END OF THE CENTRAL AMERICAN FEDERATION (1839-1841) 1. Background The Central American Federation began its disintegration in 1838. Not all member States were in agreement with the contents and scope of the Federal Constitution, or having Francisco Morazan occupy the Presidency for a third consecutive period. Several events led to the end of the Federation. One of the more active supporters of Federalism, the Chief of State in Guatemala, Mariano Galvez, was deposed by his Conservative foes in February 1838. The Nicaraguan Congress declared that the State of Nicaragua was seceding from the Federation in April. In a futile effort to strengthen the Federation, the Federal Congress decreed in May that the States were free to adopt their own internal political organization, provided they maintained popular representation and the existing internal separation between the different branches of power. Honduras followed Nicaragua's lead and seceded from the Federation in October. Costa Rica followed suit in November. Guatemala would do likewise in April 1839. The State of El Salvador maintained its commitment to the Federal Pact. The initial acceptance and subsequent rejection of foreign debased coins occurred within the context of domestic and external armed conflicts and a natural disaster that occurred in El Salvador, between 1839 and 1841. The State of El Salvador was suffering an extremely acute period of turmoil. A combined army from the neighboring States of Honduras and Nicaragua, which had strong backing from Guatemala, invaded Salvadorian territory in February 1839 to try and eliminate El Salvador’s commitment to Central American union. This war lasted until January 1840. A powerful earthquake destroyed the Capital City of San Salvador on 1 October 1839. An internal revolt to depose the Salvadorian Chief of State, backed by Guatemala, was crushed by the Salvadorian army in September. General Francisco Morazán was Chief of the State of El Salvador at the time, after having served two terms as President of the Central American Federation. A Liberal politician, Morazán had made powerful enemies in both the Catholic Church and in the wealthy landowners of Guatemala, Conservative political groups that were against Central American unification. While the Federation was in fact disintegrating, Morazán was making efforts to rebuild it.

89

R EJEC T IO N O F D E B A S E D FO R E IG N C O IN A G E Agricultural production was lacking due both to the occupation by foreign armies of large areas of the State’s territory and to the absence of laborers, which were either in the army, or hiding in the mountains to avoid the draft. It had lead to large imports of foodstuffs and other essential goods. Payment of these imports had to be made in cash at that time, and had nearly exhausted the limited supply of circulating coins. In addition, the government was in a difficult fiscal situation. It was unable to collect taxes on production and trade due to the reduced overall economic activity, and was forced to make large, unexpected expenditures to finance an army to face the external war and the internal revolt, as well as to attend the post-earthquake rehabilitation and reconstruction. Furthermore, at the end of 1839, officials of the State of Guatemala were clearly intruding into internal Salvadorian affairs to the point of demanding the resignation of Morazán. War with Guatemala was deemed imminent. Due to the shortfall in agricultural production foodstuffs had to be imported which resulted in a negative balance of payments, and the resulting export of coins to pay for the imports left the State with a shortage of liquidity. It is very likely that the prices of foodstuffs went up and, with the lower supply of money, the effective demand for other items of consumption fell. The Salvadorians must have complained bitterly about the high prices of food, the shortages of imported consumer goods, and the depression of local industries and handicrafts.

2. Debased coinage from the Peru-Bolivian Confederation

Precisely under this setting, in m id-1839, there occurred the arrival of the PeruBolivian Confederation coins into the Salvadorian markets. Yanuario Blanco, a local producer of indigo for export -- who often advanced funds to the Salvadorian Government to bridge temporary fiscal gaps and who would later become a prominent political figure as Senator and President of the Legislative Assembly — received a sizable amount of Peru-Bolivian Confederation coins. An English merchant who had frequent dealings in Peru and Chile had paid Blanco for one of his indigo exports from San Salvador using these coins. 1

1 It must be noted that in 1839 nearly 28 per cent of the indigo production was regularly exported to Europe via Chile and Peru. See Lindo-Fuentes, Hector, Weak Foundations: The Economy o f E l Salvador in the Nineteenth Century, 1821-1898, pages 44 and 45, Op. Cit. 90

R EJEC T IO N OF D E B A S E D FO R EIG N C O IN A G E

The Peru-Bolivian Confederation (1835-1839) At the beginning of 1835 Peru was in a state of internal turmoil; domestic uprising had occurred in several areas of the country. The Constitutional Chief of State, General Jose Luis Orbegoso, entered into a pact with his Bolivian colleague, General Andres de Santa Cruz, to crush the insurrectionists. The latter were commanded by General Agustin Gamarra in the South, and by General Felipe Salaveriy in the North. At the end of same year, Santa Cruz invaded Peruvian territory and defeated the armies of Gamarra and Salaverry. On 28 October, the Peru-Bolivian Confederation - that included Bolivia, the South Peru and North Peru States - was established. The Confederation was relatively shortlived. In January 1839, General Gamarra, with the support of Chilean troops, defeated Santa Cruz and his allies. He was subsequently designated as President of "liberated" Peru.

The coins were introduced into the local markets and they started to ease the acute shortage of cash described before. However, through a still unexplained reason, the Government discovered that the coins were “false”, ordered them to be demonetized and set a date for their collection and redemption. Specifically, a decree dated 13 October was signed by Chief of State Morazán, which read: 2 “Article 1. Anyone possessing coins minted at the Republic of South Peru bearing either the seal of the sun on one side and the denomination on the other, or with the figure of Liberty on the obverse and the coat of arms on the reverse - must submit them to the Political head of his Department (Province) within fifteen days from the date of publication of this decree. The latter, after having them examined by experts will return to their owners those found to be legitimate, and will force Yanuario Blanco to exchange those found to be false, issuing payment orders to the owners and remitting the false coins to the Government for their destruction. Article 2. The National Government will be requested to inform all administrators of the ports at La Libertad, Acajutla and La Union, so that they may examine all moneys coming from the Republics of the South, retaining all those that are found to be false. Article 3. The Supreme Government of Nicaragua will be requested to establish similar measures in the ports of said State.” While the Salvadorian Government was referring to the debased coins as being “false”, what it really meant was that the coins did not comply with the stillprevailing standards of silver fineness in the Central American Federation. 2 See the official newspaper E l Tiempo, Issue No. 53, Guatemala, 30 November 1839.

R EJEC T IO N OF D E B A S E D FO R E IG N C O IN A G E However, it cannot be ruled out that the shipment received by Blanco did not include coins made at illegal mints operated in both Bolivia and Peru at the time. Morazán did not end his actions against the debased coinage with said decree. On the one hand, he immediately informed the new authorities of the neighboring State of Nicaragua, as set forth in the third article of his decree. On the other, and perhaps more importantly, he instructed his Government’s C hef de Cabinet, Felipe Molina, to have the coins assayed at the Guatemala Mint. Thus, on 29 November 1839, despite the tense situation between the two neighboring States, Molina addressed an official communication to the Guatemalan Secretary of Foreign Affairs. He reported the matter of the debased coins and its potential negative impact on internal and external markets. He requested that the Guatemalan Casa de Moneda make the necessary assays and report its findings. The pertinent text of said communication read as follows: 3 “Having false coinage, one of the worst calamities that a State m ay suffer, and which El Salvador is presently undergoing, m ay also happen to Guatemala, paralyzing its trade and closing all its wealth sources and offering immense gains to foreigners. Such considerations force my Government, Your Excellency, to request the Governm ent of Guatem ala to appoint the M int’s Assayer, assisted by another reputed scientist, to assay the enclosed coins that are presently circulating in our markets, to ascertain the amount of silver and other metals they contain, in each of their denominations, in order to reduce their value to that which corresponds to our national coinage. Attachment: List of coins to be assayed. South Peruvian coins, Sun design, in Pesos Fuertes dated 1838, minted at Cusco in 4 Reales, same date and mint in 2 Reales, dated 37 and 38,same m int

2 2 2

Bolivian coins, Portrait of the Liberator of the South, in Pesos Fuertes dated 37 and 38 2 in 4 Reales, dated 1830 3 in 2 Reales, idem 2 Peruvian Republic coins, Liberty design, in Pesos Fuertes, dated 36 and 39 in 4 Reales dated 836 in 2 Reales dated 26, 27, 28, 35, 36; h alf reales dated 27, 28, 33, 34, 35, 36 and 37

3 E l Tiempo, Issue No. 59, Guatemala, 19 December 1839. 92

2 2 3.”

R EJEC T IO N OF D E B A S E D FO R E IG N C O IN A G E The Guatemalan Government did realize the negative impact that the debased coinage may have on its markets, in view of the ample trade it had with El Salvador and with the South American States. Setting aside existing differences with the State of El Salvador, orders were immediately issued to the Casa de Moneda to conduct the assays. And on an official response to the Salvadorian Chief de Cabinet, dated 13 December 1839, the following report of the Assayers at the Guatemala Mint, Messrs. Benito Muñoz and Apolinario España, was attached: 4 “ Results o f the assay of coins submitted by the Governm ent of the State of El Salvador: Lack T y p e s o f c o in s

of

w e ig h t, in g r a in s

F in e n e s s in D in e r o s and

V a lu e F in e n e s s , in per

of

O u n ce, R e a le s

1 in

cen t

G r a in s S e t n u m b e r 1. O n e P e s o , P e r u v ia n R e p ., 1 8 3 7 O n e 4 - R e a le s , A r e q u ip a M in t, 1 8 3 8 O n e 2 -R e a le s , 1 8 2 8 O n e V i-R ea l, 1 8 3 7

27 6 15

1 0 .1 9 8 .0 3 7 .2 2

N il 64 68

5 */4 5 %

8

7 .1 9

72

5 %

N il

S e t n u m b e r 2. N il

1 0 .2 0

O n e 4 - R e a le s , 1 8 3 0

6

8.01

66

O n e 1 -R e a l, 1 8 3 0

2

7 .1 6 5

6 4 .5

N il 14

1 0.21 7 .0 0

N il

N il

7 .1 6 5

O n e P e s o , B o liv ia n R e p ., 1 8 3 7

5 % 5 >/2

S e t n u m b e r 3. O n e P e s o , C u s c o M in t, 1 8 3 8 O n e 4 - R e a le s , R e p . P e r u a n a , 1 8 3 8 O n e 2 -R e a le s , C u s c o M in t, 1 8 3 8

91 7 4 .5

5 Vi 5 Vi

From the above data the following results are evident: the Pesos Fuertes are legitimate; the one in the first set contains 27 grains less in weight but such lack is compensated with an excess of one grain in fineness in the one included in the second set and two grains in the Peso included in the third set. The rem aining fractional coins are absolutely false; they are m ixed with brass and zinc to diminish their yellow coloring. The value of their silver content is indicated in the last colum n.”

The above report enables the identification of two different groups of coins. One that included all Pesos Fuertes struck by the three mints in question, which had the appropriate fineness and weight. And another one that included coins of 1, 2 and 4 Reales minted at Cuzco, Arequipa and Potosí (Bolivia) that had a combination of low weight and silver fineness. The Salvadorian Government — trying to facilitate trade matters and to ease the acute shortage of cash in its markets — acted promptly upon receiving the Guatemala Mint's report. On 13 January 1840 it issued the following decree to

4 E l Tiempo, Issue No. 59, Op. Cit.

R EJEC T IO N O F D E B A S E D F O R E IG N C O IN A G E set a rate at which the debased coins in question were to be accepted in the State: 5 “Article 1. The coins of Arequipa, in the denomination of 4 Reales, minted in 1838, those of two reales dated 1828, and those of one half reales dated 1837, will circulate in the State at three fourths of their nominal value. That is, the 4-Reales coin will be worth three reales, the 2-Reales coin will be worth one and one half reales, and the half real will be worth in the same proportion. The same will hold true for the 4-Reales and 1-Real coins minted in Bolivia in 1830, and the 4-Reales of Peru and the 2-Reales minted at Cuzco in 1838. Article 2. In consequence, all tax collection offices will accept and pay those coins at the values set forth in the previous article. The local authorities defined by numeral 8, article 367 of the State’s Penal Code will comply with said numeral, and order the acceptance of said coins in all contracts under the values specified herewith.” Under said decree, coins included in the second group previously described were in fact slightly overvalued, although not as much as if accepted at their nominal value. Since some Peruvian fractional coins that did comply with the legal weight and silver content standards were circulating in El Salvador, the Morazán government decided to counterstamp them so that the public at large would identify and accept them at their nominal value. The countermark used showed a volcano, with the date of 1839 at its base. (See figure below). While the counterstamping was actually made in January 1840, right after the issuance of the decree previously quoted, the punch had been prepared at the end of the previous month and it bore the year of 1839.

Figure 6-1. Enlarged image of the El Salvador countermark of 1839

5 Decretos de la Asamblea Constituyente y del Jefe del Estado del Salvador, 1840, in Victor Jerez Collection, Florentino Idoate Library, Universidad Centroamericana Jose Simeon Cañas, San Salvador, and also Menéndez, Isidro, Recopilación de Leyes de E l Salvador, Law 9, Title 3, Book Three, Volume 1, Op. Cit. 94

R EJEC T IO N OF D E B A S E D FO R EIG N C O IN A G E

Two-Real coins minted at Lima from 1825 to 1836, (KM 141.1) having a fineness of 0.903, were thus counterstamped. These countermarked coins are very scarce nowadays. Some debased 2-Reales coins from Cuzco and Arequipa (KM 169.1) were countermarked by mistake, which coins are even rarer to find. Finally, a few V2-Real coins minted at Santiago de Chile (KM 90), whose legality was never in question since they have a fineness of 0.903, were also counter-stamped; the latter coins are also very rare to find. These coins should be classified as CM-3, under the system proposed by the Author. The following is an image of a coin counterstamped with the aforementioned countermark.

Figure 6-2. Enlarged image of Two-Reales coin, minted at Lima, that bears the El Salvador countermark of 1839.

A second episode of great coin scarcity occurred in early 1840, despite the countermarking scheme decided upon by means of the January 13 decree. After successfully concluding the war with Honduras and Nicaragua, Chief of State Morazan invaded Guatemala to reinstate the Head of State that had been deposed by Conservative political groups that opposed the Central American union. After successful initial victories and briefly occupying the Capital City, Morazán was defeated by the Guatemalans and returned to San Salvador. He resigned his high office and went into voluntary exile. Expenditures incurred in Guatemala by the invading Salvadorian army further depleted the local markets of fractional currency required for trade. Pesos Fuertes from Chile, Peru and Bolivia were common in the Salvadorian markets since exports to those countries were regularly paid in said currencies. However, the distrust of the public for all coins from the Peru-Bolivian Confederation made their circulation difficult. The Pesos Fuertes had been found in the assay made at the Guatemala Mint to be in full compliance with the standards of the Central American Federation, which were still in force at the time. However, this fact had not been specifically mentioned in the January 13 95

R EJEC T IO N OF D E B A S E D FO R E IG N C O IN A G E decree. Thus, to ease the scarcity of cash, the new Government of El Salvador now headed by Chief of State Norberto Ramirez - issued the following decree on 7 October 1840: 6 “Article 1. All Tax collection offices shall accept the Pesos Fuertes from Peru, Bolivia and all Republics of the South. The General Treasury of the State shall do likewise. Article 2. All inhabitants of the State are forced to accept them, under the penalties set forth. Article 3. Any authority that witnesses the refusal to receive the coins under reference shall impose to the refusing party a fine o f from one to five Pesos or five to ten days of prison. This penalty shall be imposed ipso fa c to and without further proof than the mere refusal to accept the coins. Article 4. This decree is given subject to its confirm ation Constitutional Assem bly during its forthcoming session” .

by

the

With said decree, the Salvadorian Government expected to solve the shortage of circulating coins in its markets, and to have dealt with the matter of the debased coins from the Peru-Bolivian Confederation.

6 Document No. 20 in: IMPRESOS Series, Book XIV, Archivo General de la Nación, San Salvador. Also quoted by E l Tiempo, Issue No. 140, Guatemala, October 24, 1840. 96

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