Carlos Marichal's Superb Essay

One cannot speak highly enough of Carlos Marichal's opening chapter, "The Spanish-American Silver Peso: Export Commodity and Global Money of the Ancien Regime, 1550-1800," in the book which he co-edited, From Silver to Cocaine.  

Marichal's superb analysis has, no doubt, to do with the subject discussed, the commodity par excellence, money, which, in this case, is the Spanish-American  peso

which became the Western world's universal currency between the sixteenth and eighteenth centuries.

Money is the most important commodity for without it any type of society above barter could simply not exist.  Without money, the division of labor and specialization to any degree cannot take place, leaving mankind in primitive hand-to-mouth existence.  And, as Marichal so incisively points out, the sounder that money is (as was the peso for so long) the more prosperous and culturally advanced a society will become.  Without the Spanish-American peso and its high quality, the tremendous economic advancement in the West could have never been achieved.  It is also of no coincidence that when money becomes corrupted (debased) a society will degenerate both economically and culturally.   

Marichal rightly acknowledges Spain's role in the peso becoming a world currency:

     

      One of the most striking features of the Spanish imperial monetary 

      regime was the extraordinary stability of the standards and units of

      account of the metallic monetary system over a period of three 

      centuries. . . . it was the high quality of the silver coins of the 

      Spanish Empire that generated an intense and constant international 

      demand for them. . . . This impressive continuity helps explain the 

      wide acceptance of the silver peso.  p. 30 

A potential area of further research, which Marichal only briefly discussed, was the peso's decline in the latter half of the nineteenth century due, in part, to the Western world and the new fledgling Latin American states' gradual abandonment of metallic systems of money for that of paper.  Although he does not mention it, the huge inflations and currency crackups which became endemic throughout Latin America was a direct consequence of the adoption of irredeemable paper money.  The abandonment of commodity money also affected Europe and North America as they suffered through reoccurring cycles of booms and busts and eventually a "Great Depression." 

As the monetary induced financial crisis continues to grip the West and as Latin American states routinely debase their currencies, policy makers should consult Carlos Marichal's essay on the magnificent history of the Spanish-American peso for potential remedies to their economic woes.