With regard to silver coinage, Mexico has
followed the model established by the Roman Empire 2,000 years ago.
The Roman emperors did not have enough cash to pay
for the expenses of the Empire. They had to pay the bureaucracy, they had to
pay for "bread and circuses" for the rowdy Roman population and
importantly, they had to pay the armies that kept the barbarian invaders at
bay. Taxes brought in insufficient revenue and there was only one thing they
could do - reduce the silver content of the coinage. During the late Roman Empire bronze coins were ingeniously
silver-plated to resemble silver coins; a little rubbing revealed the bronze.
Mexican monetary history contains some interesting
parallels to Roman history.
Up to and during the time of Porfirio
Díaz, who ruled Mexico as virtual Dictator
between 1876 and 1911, our peso had not changed at all for several
centuries. The silver contained in the peso coined by Díaz
was 24.44 grams,
the same weight contained by the "Pieces of Eight" minted during
the centuries when Mexico
was ruled by Spain.
As a result of the Revolution of 1910, Mexico began
to apply Roman monetary technique.
In 1918 Mexican President Carranza issued a new peso
that contained only 14.5
grams of silver - not at all surprising; he was after
all a revolutionary and revolutions traditionally depreciate the currency in
order to pay expenses.
However, it seems that coinage of pesos with so much
silver produced fewer pesos with which to pay expenses, so the content was
reduced in 1920 to 12
grams, in a coin which was 72% pure silver: our
"0.720 Peso" which we used for 25 years.
Mexico again applied
Roman monetary technique in the following decades.
By 1945 we were well into the Age of Paper. So much
paper money had been issued - both in Mexico and in the whole world as
a result of World War II - that by 1945 the silver in the "0.720
Peso" was worth more than one peso, and it was no longer possible to
mint this coin.
In order to continue using silver pesos, a new peso
was issued in 1947 and following the Roman style, it contained less silver;
this new peso had only 7
grams of pure silver. However, this peso lasted only
three years; it had to be discontinued for the same reason as the previous
peso: due to monetary inflation, the 7 grams of silver in the peso rose in value
to more than one peso.
In 1950 the silver content of the peso was again
reduced, to 4 grams,
and the same thing happened once again - the 4 grams of silver rose in
value to more than one peso; this coin was in circulation only four years, up
In 1957 we had a new peso with silver, all 1.6 grams of it. A
little crumb of silver in the peso! This peso coin circulated for 10 years,
until at last the combination of our own inflation (printing of money and
expanding bank accounts) and world inflation made even this tiny crumb of
silver worth more than one peso and coinage ceased. Such has been the history
of the Mexican silver peso.
While all this was going on, in 1949 we had begun to
mint a coin containing one ounce (31.1 grams) of silver; it has with no nominal
value, and is known as the "Scales Ounce".
In 1979, the excellent political intuition of our
President at that time, Don José López
Portillo (1976-1982), led him to obtain legislation with a view to turning
the "Scales Ounce" into money; the legislation ordered the Central
Bank to quote the daily value of the ounce in pesos. This quote, it was
supposed, would serve to give the coin its value as money.
Portillo's admirable vision ended in failure, because the quoted value of the
ounce fluctuated every day, and this fluctuation produced losses for those
who were using the coins as money. Since the fluctuating value of the coin
caused this problem, the aim of using the "Scales Ounce" as money
had to be given up in 1981: up to this day, it remains a valuable commodity,
but it is not money.
The failure of López
Portillo's legislation was due to a serious flaw: the legislation omitted the
key measure for turning the "Scales Ounce" into money. This measure
determines that the last quote of the Banco de
Mexico (the Central Bank) shall not be reduced by any further quote.
If this measure had been included in Lopez
Portillo's legislation, we should today have in circulation as money, in
parallel with the paper peso, the famous "Scales Ounce". It is sad
to think how close we came to reaching that happy situation for the savers of
the country, who have suffered so much due to the devaluations that came our
In 1982, Mexico began to mint the one
ounce pure silver "Libertad" coin which has taken the place of the
"Scales Ounce". Minting continues to this day.
Don José López
Portillo ended his term sadly; he was completely destroyed by the cruel anger
of public opinion, outraged by the mistakes he made during his term. However,
thanks to him, we have the "Libertad" silver ounce and we are
striving to fulfill his desire and vision -
absolutely patriotic and Mexican - the renewed use of silver as money.
The defense of our
nationality in the coming hard times demands that Congress and our
President-elect approve very simple legislation in order to fulfill López Portillo's
vision of permanent silver money for Mexico: such legislation will
determine that a quoted value of the "Libertad" ounce by the
Central Bank, shall not be reduced once it is
That's all we have to do, to recover silver as money
and keep it forever. Silver, our money for almost five centuries!
(The attachment illustrates the Roman system of
reducing the silver content of the Mexico peso.)
Hugo Salinas Price
President, Mexican Civic Association