Gran Colombia's Monetary System

The Gran Colombian monetary system fulfilled a vital political and economic need. Gran Colombia, made of formerly Spanish colonies, primarily used sovereign, or Spanish, coinage. Monetary systems are the generally accepted and sometimes federally enforced systems of value of any type of durable medium of trade. The Gran Colombian monetary system is particularly fascinating as it went through many changes.

While the Gran Colombian monetary system was far from unique, it had life saving effects. The Spanish system was the American system, it was the sole system in South America, even widely prevailing in the Portuguese colonies, including Brazil. Surprisingly, Spanish coins were legal tender in the United States of America. The Spanish system was a base 8 system, with the denominations coming up to 8, then moving to the next unit of measurement. A bit was slang for 1 reale, and 8 reales made a peso, and in the Colombian monetary system 2 pesos equal an escudo, the main gold coin. During the Peninsular Wars(1807-1813), trade was effectively stopped with Spain's colonies, and as the Spanish monarchy was overthrown. Because of this, the mints stopped producing and people started hoarding all the silver coins they could get; a national coin shortage developed throughout South America. Simon Bolivar commanded that national mints be established to fund military campaigns and establish confidence in the newly formed government. Over 10 years, ¼, ½, 1, 2, and 8 real coins were minted with the same general designs and legends. Coins that were not federally-issued, such as merchant tokens, had to be countermarked by the Bogota mint, although a wide array of merchant countermarked tokens and quasi-official coins circulated.

This system gave Gran Colombia the stability and confidence it needed to try to rebuild. The coins widely circulated in Gran Colombia, funded military and political campaigns, and brought a sense of monetary standardization to the economic shambles of South America. Although it may not have been the goal of Simon Bolivar, this coinage did not circulate the globe. When coins were first minted in 1813, with the worldwide standard of .900 fine silver, only the coins were just smaller than the Spanish coins of the same denomination. A few years later in 1820, the fineness was dropped to .666 fine, and the mints recalled all of the .900 fine coins, creating a glut of coinage. Some coins were melted down by individuals and shipped out of the continent, while those that did come back to the mints were slowly resmelted, debased, and reminted. These confusing changes led to the public accepting the new coins at a lower value, but the international merchants absolutely shunned the new coins, since the purity was lower than any other coins in importing countries.

These coins may have only had influence on the South American continent, but locally it established confidence in the government, stimulated the economy, and funded vital liberating campaigns.

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