Panama Currency History
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For nearly 300 years, the stone paved, Camino
Real, connect Panama on
the Pacific coast to Porto
Bello, on the Caribbean was the highway,
over which most of Spain's commerce passed. At one time, Porto Bello
was the most important commercial city for the Spanish New World.
Traders came from Spain with all good from all over Europe, to trade
with the American merchants from Peru, Chile, Bolivia, Mexico,
Guatemala and Nicaragua. When the Treasure Fleet arrived in Porto
Bello, there was a fair, that would last up to 40 days, as the traders
went about there business. The population of Porto Bello would swell,
as thousand converged in the city. While slaves unloaded the
merchandize brought from Europe, others were loading the native
products; gold, silver, cotton, tobacco, cocoa, etc., into the Royal
Treasury Building. The gold and silver ingot were stacked in large
piles, like firewood. Just before the Fleet arrived in Porto Bello, the
government would start moving all of the goods stored in Panama, by
mule train across the isthmus. Besides all of the merchants, the town
will fill with the hundreds of mule skinners, slaves, etc, that was
used to transport the treasures to Porto Bello. When all the trading
and negotiations were completed, the goods were loaded on the ships,
for transport back to Spain.
Porto Bello, remained the center of commerce until, the 18th century. During this time, the flow of silver and gold from Peru started to subside. Another important series of events that helped the demise of Porto Bello, was the interest taken by the English, French and Dutch, to developed a source of treasures in the New World. Since Spain, controlled the New World, and its treasures, they resorted to taking it from the Spanish. The buccaneers attached and ravished Porto Bello and Panama, in their quest for gold and silver. Spain lost control of the commerce with the Americas, as the colonies started trading between themselves, and with other countries. As the traffic stopped, Porto Bello, lost here luster, and poverty became the name of the game. The population, which was always very transient, dropped to where it supported less than one hundred individuals. As Spanish Colonial Power in Panama ceased to exist, it signaled the end of Spain's Golden Age. From the time of Panama's discovery by Rodrigo de Bastidas in 1501, to 1904, when Panama minted its own currency, the coins of many countries flowed freely in Panama, at one time or another. During the colonization of Panama, the money that was used in Panama, was that of Spain. Beginning in the 17th century, mill-edged Spanish coins, minted in Spain, supplemented the crude coins, minted by the Spanish Colonial Mints, in the Americas. These crude, hand made coins were called "cruz" (for the cross that was stamped into each coin), "pieces of eight" (the coins were 8 Reales in denomination), "8 Reales", "Cobs", etc. Eventually, the Colonies produced their own, machined coins, just like the ones produced in Spain. These Spanish coins circulated until the early 19th century. By 1821, Colombian currency was introduced and circulated until Panama became independent from Colombia, and started minting its own, in 1904. Starting in 1849, with the large influx of the 49er's, crossing the isthmus to get to the gold fields in California, US currency was introduced into Panama, and was also used as legal tender. When the French started building the Panama Canal, in 1880, French currency started appearing in Panama, and was used while the French were in Panama. In 1903, the most common coin found in Panama, was the Colombian fifty centavos piece, half of a peso, also known as 5 Reales. Colombian silver currency circulated all over, at an official rate of exchange of 2 pesos and thirty centavos per United States dollar. In Latin America, one Peso generally refers to a silver coin over 36 mm in diameter, sometimes referred to as a Crown. Panama issued their first coins in 1904, after Panama separated from Colombia on November 3, 1903. On June 28, 1904, Law number 84, was passed, creating a coin system, based on the decimal system. It also named the monetary unit in honor of Vasco Nuñez de Balboa and authorized the minting of three million Balboas. This law was passed after an agreement between the United States and Panama. In this agreement, William Taft, Secretary of War, represented the US and Ricardo Arias and Eusebio A. Morales, represented Panama. The United States was interested that Panama have a stable, currency, in sufficient quantities, and that it was interchangeable with the US coins. The 1904 Balboa was made equivalent to a gold coin of 1.672 grams (0.900 Fine). The law provided for both, gold and silver coins; but, the gold coins were never issued. The law specified that all silver coins, be 0.900 Fine; but failed to standardize with the US silver coins with respect to size and silver content. This omission would come back to haunt Panama's currency, until the oversight was corrected, in 1930. The law did not provide for the issuance of paper currency. Since then, US paper currency has circulated freely in Panama and the Canal Zone, and is still the only paper money available in Panama. This omission, lead to some discontent, that exploded in 1941, when Arnulfo Arias, circumvented the law, and issued the first paper currency, although short lived.
The people turned in 4,215,577 Colombian pesos for redemption,. Of this, 1,611,594 was sent to New York, and another 1,591,387 went to London, and it was all melted. This cause a problem for Colombia, since this represented more than half of all of the coins minted in Colombia since 1863 Article 8 of the law, provided that all coins would be sculptured and struck by the United States Mint, in Philadelphia. Because of President Theodore Roosevelt, was given the first set of coins issued for the Republic of Panama.
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During the first issuance of these coins, there was no 1 Balboa
coin. The 1 Balboa coin, did not show up until 1947. The 50 centesimos
coin, was of Crown size. The 50 centesimos also referred to as ½ Peso,
had the greatest silver content of any coin issued in South or Central
America, equivalent to a peso. The 2½ centesimos coin, is the smallest
silver portrait coin in the world. This coin is often referred to as
the "Pill" or "Pearl" because it is about the size
of an aspirin pill.
The 1904 coins, worked well in Panama, until the First World War, broke out in Europe. During the war, the price of silver went up, and the Panamanian coins suffered, due to their higher silver content then most other currencies. Panama's coins soon started to disappear, as people started to use their silver, as a hedge against inflation, and some were melted for the silver. By 1921, there was less than 125,000 Balboas in circulation, from the high of over 3,000,000 Balboas produced. Fortunately, since US currency (gold, paper and silver) was being circulated along with Panamanian currency, the supply of coins, never ran out. Early on, Panama realized that they had a problem with their coins. It was impractical to have coins, that were unlike the US coins that were circulating in the Canal Zone, and in the Republic. The coins were different in size, appearance, and silver content. It was impractical to have silver coins, who's silver value as bullion was greater that its value as currency. An example of this problem, is that Panama's 25 centesimos coin, was the same size as a US 50 cents coin, and they both contained the same amount of silver, you needed 2 - 25 centesimos coins, to make one US 50 cents coin, twice the silver. The same was true for all of the coins. The work on a new design for their coins started in 1917 and was finalized by Law Number 51, dated April 11, 1930. This law insured that the Panamanian coins would now be of the same size, weight, silver content and denomination as the US coin, in circulation. The new coins would also have a new design. The obverse of the revised coins was sculptured by an American, William Clark Noble. The reverse was done by Roberto Lewis, a Panamanian artist. The Philadelphia Mint, considered these coins, to be the most beautiful they had ever minted. The mint used 217,012 ounces of pure silver, to produce the 1930 issue of coins, at the price of 33.95 cents per ounce of silver. Noble designed Balboa bust such that Balboa had a much younger, rounded face, he had Marion helmet (the type of helmet used by Spanish foot soldiers, visor less, high crested, with the edge turned up). The armor worn by Balboa was also changed to a corselet breast armor.'
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Bruce C. Ruiz
October 23, 2001