COLLECTION MONETA • 191

DOCUMENTS AND STUDIES ON 19th c. MONETARY HISTORY

Mints, Technology and Coin Production Proceedings of the Round Table of the

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Copenhagen May 28-29, 2015

Georges Depeyrot, Michael Marcher editors

Nationalmuseet @ National Museum of Denmark

MONETA, WETTEREN 2015

COLLECTION MONETA • 191

DOCUMENTS AND STUDIES ON 19thc. MONETARY HISTORY

Georges Depeyrot, Michael Marcher editors

Mints, Technology and Coin Production Proceedings of the Round Table of the

"Silver Monetary Depreciation and International Relations" program (ANR DAMIN, Lab Ex TransferS),

Copenhagen May 28-29, 2015

L labex TransferS

Nationalmuseet @ National Museum of Denmark

MONETA, WETTEREN 2015

II

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Minting Techniques and the Quality of Coins Produced at the Lisbon Mint (18-19th century)

Rita Martins de Sousa1

In this paper, we describe the evolution of minting techniques at the Lisbon Mint from the late 17th to the late 19th century. New techniques had begun to be used after 1678 and these innovations increased the quality of the coins produced. The high quality of Portuguese coins can be demonstrated by calculating the spread between the effective weight of the coins and the legal tolerances in force. These coins were also accepted in other countries, at least in Europe, as well as circulating in England.

After the introduction of the steam engine in 1835, more problems arose in the minting of coins. During this period, discussion centred on the relationship between the technological changes taking place and the monetary regimes. The end of bimetallism and the transition to the gold standard demanded a higher quality of small gold coins. Portugal was one of the cases where this did not occur. The transition to the gold standard happened in 1854, at a time when minting difficulties called into question the link between technological innovations and a change in monetary regime.

This paper provides a general overview of the situation at that time, discussing the relationship between technological changes, the quality of coins and the monetary regimes adopted in Portugal over a period of two centuries.

1. Introduction

In Portugal, the production of coins was always an exclusively royal prerogative, with this right having been established in 1446, in the Ordenar;oes Afonsinas (Sousa, 2003). This also explains why the Mints were royal property, and only in two brief periods in the 17th century (1679 and 1684) were contracts entered into for the production of coins by private entities2•

The Lisbon Mint and the Porto Mint were always the main mints in the kingdom of Portugal, although in Porto minting was not a continuous activity, as the mint was closed and then reopened on various occasions, ending up by finally ceasing its activity in 1714 (Sousa, 2006: 29-33). This means that, from this date onwards, Lisbon became the only mint operating in PortugaP. On the other hand, the greater importance of the Lisbon Mint also resulted from the centralisation of the influxes of gold. The fleets arriving from various ports in Brazil delivered gold to the Lisbon Mint both for private clients and for the State, which could then be collected on payment of a 1% ad valorem tax (Costa, Rocha, Sousa, 20 13).

The centralisation of currency issues in Lisbon justifies our confining our analysis here solely to the mint of this city. During the 18th and 19th centuries, major technological changes took place in the manufacture of coins, passing from hammer striking to the screw press technique in the late 17th century and to the use of the steam engine in the production of metallic currency in the 19th century. The fight against counterfeiting and clipping, together with the increase in the quality of coins and the pace at which they were minted, was justified at a time

11SEG- Lisbon School of Economics and Management, University of Lisbon 1These contracts were valid for a period of four years, although the premises and the material remained the king's

property. The second of these contracts (1684) was suspended in that same year, when one of the contractors was accused of clipping coins.

3During the 18th century, there were other mints in operation, but these were to be found outside Portugal proper, namely in Brazil and Goa.

255

when the monetisation of Europe was increasing. Therefore, this improvement in coin quality helped to reduce domestic and international transaction costs.

These technological changes took place in periods with different monetary regimes: while, in the late 17th century, Portugal had a system that was based on bimetallism, in the mid-19th century gold monometallism called into question the link between technological innovations and monetary regimes.

After this introduction, this text is divided into two parts. In the first part, the technological changes that took place in the last quarter of the 17th century are related to the increased quality of minted coins. This quality is demonstrated through the study of the spreads between the face value and the intrinsic value of certain coins. In the second part, technological innovations are discussed in relation to the adoption of the gold standard. It is concluded that the quality of the coins minted in Lisbon did not develop in a linear fashion. While those minted in the 18th century were of proven quality, the introduction of steam-powered industrial technology brought problems that led to a slower rate and reduced quality in the production of coins. Consequently, the adoption of gold monometallism in Portugal does not appear to have been linked to the technological conditions existing for the production of metal currency, because English coins (sovereigns) were considered as legal tender and were allowed to circulate without reminting. This conclusion does not, however, invalidate the importance of technological innovations at a time when the formation of territorial currencies was becoming consolidated throughout Europe (Helleiner, 2003).

2. Technological changes at the Lisbon Mint and the quality of Portuguese coins

In 1678, hammer-striking was replaced by the use of the screw press and gold and silver coins were given beaded rims in order to prevent clipping. As Redish explains clipping was "a source of coin undervaluation, and consequently depreciation ( ... )" (Redish, 2000). Clipping implied circulation of coins undervalued and to sell as bullion the collection of clippings.

This new minting technique made it possible to obtain more perfectly made coins, but the machines that were used had benefited from the innovations introduced by the actual officers of the Lisbon Mint. In 1726, these changes made it possible to increase the rate of minting, as well as the quality ofthe coins produced. The number ofmintings increased fivefold for gold coins, which, in view of the remittances of Brazilian gold, were the ones that were minted in greatest quantities at that time. According to estimates from the time, the rate of minting increased from 300 coins/hour to 1500 coins/hour (Bastien, 1991 : 49). These innovations were duly noted in Spain, with the king placing an order through his ambassador in Lisbon for a model identical to the one used in Lisbon, which was sent to Madrid in 1729 (Aragao, 1874-1877, volume I: 65). However, this production was much lower than that ofthe Royal Mint, where 161,090,000 coins were produced between 1750 and 1799 (Challis, 1992: 439), whilst at the Lisbon Mint only 39,120,430 gold and silver coins were produced between 1688 and 1797 for circulation in Portugal (Sousa, 2006: 134 and 138). Although this figure is lower than the real total since it does not include either copper coins or the so-called provincial currency (coins for Brazil, Angola and Mozambique), there is no doubt that coin production in Lisbon was below the estimated targets (1196 coins/day) and much lower than that of the Royal Mint (10958 coins/day4

).

These technological innovations also made it possible to increase the quality of the coins in circulation: "( ... ) the greater precision of the striking ( .. . ) made counterfeiting more difficult" (Bastien, 1991: 49). It was against the background of this increased quality that other measures were adopted, namely: the introduction of beaded rims, using a machine specifically created for this purpose in 1686, and the ban on the circulation of clipped coins. Such a ban implied the reminting of coins, since a third of the silver coins in circulation in the late 17th

4 For the purposes of these calculations, a year was considered to consist of3 00 working days.

256

century were clipped (Aragao, 1874-1877, volume II: 335-343). Finally, the introduction of scalloped edges, made with the use of special punches, also made counterfeiting more difficult, for the disks began to acquire a more regular shape (Bastien, 1991: 49-50).

The technological evolution that led to the increased quality of the Portuguese coins in circulation was further supplemented by other forms of control. In 1686, new rules were introduced at the Lisbon Mint in which the testing of the quality of coins was one of the topics included. This control was carried out by the Juizes da Balam;a, who were responsible for weighing the coins, and the Ensaiadores (Assayers), who supervised all the smelting activities. According to the rules, gold coins were supposed to leave the Mint with a fineness of 22 carats and silver coins with a fineness of 11 deniers. The aim was to prevent coins from entering into circulation with a lower level of purity. However, legally the weight of coins was permitted to record a small variation, being slightly heavier or slightly lighter. The legal limits for these tolerances were one grain for gold coins, whatever their face value, and two vintens per mark for thick silver coins (cruzado, two tostoes and six vintens) and three vintens per mark for silver coins with a lower face value (tostfio, meio tostfio, three vintens and vintem)5• Ifthese tolerances were exceeded, the coin would have to be remelted. Thus, the difference between the effective price of the minted metal and the legal price of the metal in bullion form is explained by the seigniorage tax and the legal tolerance allowed in the weight of coins. This difference in weight was referred to asfebres or fortes, depending on whether the weight of the coins was lower or higher, respectively, than the legal limits.

It is possible to assess the quality of the coins minted in Lisbon during the period between 1688 and 1797. This calculation was made in an earlier study of ours (Sousa, 2006). The period in question runs from the effects of the new regulations adopted by the Mint as a result of the technological changes (1688) and the entry into circulation of paper money (1797). Let us then analyse the quality of the metal coinage produced.

If we consider Vi to be the value of the coins minted in year i and Qi to be the quantity of coins minted in year i, then:

Vi Qi = Ep

with Ep being the effective price of each minted coin. Thus, due to the existence of febres or fortes, this effective price (Ep) is different from the legal price (Lp), with:

Ep > Lp withfebres and Ep < Lp withfortes The effective deviation rate (Ei) of the price of the metal compared to the legal price of

the minted metal will be:

Ep -Lp ---x 100 = Ei

Lp

Considering that the gold coins could legally have one more grain of weight, and in view of the composition of the coins in circulation between 1688 and 1797, it is concluded that the legal band of fluctuation for the weight of gold coins was [ +0.17%; 5.6%] (Table 1).

Chart 1 compares the effective price of the minted gold with the legal deviation. It can be concluded that in only three years did the price of gold exceed the legal limits: 1719, 1737 and 1778, with the year of 1737 being considered to have arisen from an error in the source of data. Ifwe compare the total ofjortes andfebres, only in seven years did the coins have weights that exceeded the legal values, for in the other years, their weight in metal was lower than the

5 Between 1688 and 1797 the silver coins in circulation in Portugal were: Cruzado with the face value of 480 n!is; Twelve vintens with the face value of 240 n!is; Six Vintens with the face value of 120 n!is; Tostao with the face value of 100 reis; Meio Tostao with the face value of 50 reis; Three Vintens with the face value of 60 n!is; Vintem with the face value of 20 reis . The "Real" (plural reis) was the unit of account of Portugal between 1435 and 1911.

257

legally established limit. It is therefore concluded that the weight of gold coins did not deviate significantly from the legally established weight, since the gold coins minted in Lisbon were good quality coins. We can therefore understand why these coins circulated and were generally accepted in England, especially in Cornwall, between 1700 and 17706• Due to the deficits in the Anglo-Portuguese Balance of Trade, this was a period when large quantities of gold coins was exported, which were accepted by the English banks, except for the Bank of England, where all foreign coins were sent to the Royal Mint for reminting (Fisher, 1971: 153-154). These gold coins were also accepted by the Bank of Amsterdam and in 1775 had the same price of Guineas - 300 guilder per mark (Smith, 1981: 798).

Legal tolerances were also established for the weight of silver coins, but these were not based on the face value of each coin. The tolerance was two vintens for silver coins with higher face value and three vintens for silver coins with lower face value. Table 2 organises these tolerances according to absolute value and percentage, considering the composition of the coinage. It is concluded that silver coins of a higher value had a tolerance of [ +0.534%; 0.629%], while for coins of a lower value the tolerance varied between [0.8%; 0.943%]. Although the legal tolerance remained the same in terms of absolute value, the increase in the price of coined silver in 1734 and 1747 explains the percentage decrease in the legal tolerance.

Chart 2 allows us to observe the behaviour of the effective deviation rate compared to the behaviour of the legal deviation rate. Except for three years, 1731, 1747, 1748, the effective deviation rate was always lower than the legal deviation rate, taking into account the composition of the coinage. No reasons can be found to explain why such deviations were recorded for these years in particular, but it is important to point out that 1747 and 1748 were years when there was a change in the price of silver. This result shows how, when leaving the Lisbon Mint, gold coins generally respected the legal deviations.

To Helleiner (2003) in the regions where state had an important role in legislation the money was rarely homogeneous. It was not the Portuguese case. Most likely, Portugal can be compare with the Mughal Empire's "where the consistency of the purity and standard ( ... ) was very high" (Helleiner, 2003 : 27). The centralization of monetary emissions in the kingdom can be an explanation for this quality. In spite of this, the circulation until 1785 of clipping Spanish silver coins it was a possibility.

In 1835, the steam engine was introduced at the Lisbon Mint, with the new minting technique beginning two years later. This 16-horsepower engine originated from the factory of Boulton Watt & Co., in Birmingham, and changed the way in which coins were minted, just as had happened at other mints, namely, Birmingham, Moscow, Paris and London (Bastien, 1991: 55; Challis, 1992: 458-468). As Helleiner states, "Between 1787 and 1797, Boulton perfected a new way of producing coins with steam-powered industrial technology that revolutionized the nature of coins and their place in the monetary system." (Helleiner, 2003: 47). However, while the technique was revolutionary, various problems arose at the Lisbon Mint in adapting to this new technology, as reflected in the pace and quality of the minting of metal coins. These difficulties arose precisely in the period when the monetary regime in Portugal was changing, since in 1854 this was changed to the gold standard.

3. Monetary regimes and the technological thesis

According to Angela Redish, the technological development in the minting of small value coins for everyday transactions is the explanation for each country's adoption of the gold standard (Redish, 1990, 1995, 2000).

The introduction of the steam engine at the Lisbon Mint took place some years before Portugal adopted the gold standard, and, as Redish suggests, this may mean that it was only possible to implement this regime after changes had been introduced in the minting of metal

6 The arrival of gold at Falmouth explains the greater circulation of Portuguese gold coins in South-West England.

258

riate were :ally 1 the was e all 50ld 1eas

not ~her 1ese the

4%; %]. the

1ce. d to tive the

rere rere the

the L be ,vas can tish

:mg r of t as 91: ted zed rer, mg ese ng,

1all old

. ore nly •tal

nd.

coins. However, reports existing at the Lisbon Mint describe a series of technical problems that occurred with the introduction of the new machinery, namely frequent interruptions in minting and the production of coins without the due weight and fineness.

In May 1854, when the Portuguese parliament was discussing the Act that would give rise to the new monetary system, the Director of the Lisbon Mint requested that "some objects should be brought from England that are indispensable for the minting machine, so that it will be possible to undertake promptly and with regularity all of the works necessary for the reminting of the different coins that are to be received at the Mint as a result of the new monetary law" (Lisbon Mint Archive, Correspondencia Expedida, May 1854). Two years later, the problems in the minting of coins continued. At the beginning of 1856, the Director of the Mint informed the Minister of Finance not only of the "irregular service" of the minting machine, which made it "impracticable to be able to satisfy the important works that are still to take place, by virtue of the Legal Charter of 29 July 1854", but also of the problem of the "rolling mills existing in the machinery ( ... )not being able to completely perform the work of minting gold currency of small value" (Lisbon Mint Archive, Correspondencia Expedida, January and March 1856). Only at the end of the 1860s did the State purchase a new set of machines, namely a second steam engine (this time with a 30 horsepower), three rolling mills purchased from the German Krupp factory and three minting presses manufactured by the equally German Uhlhorn company. Yet, still in the 1880s, there were considered to be technical inadequacies both in terms of the equipment that was needed to maintain a good rate of minting and in terms of specialised staff. This was the justification for the purchase in 1883 of Thonellier minting presses that were faster than those acquired from the Uhlhorn company (Bastien, 1991 : 57-58).

Although productivity increased in comparison with the 18th century, it is still considered not to have been particularly high. According to information dated 1851 , it took three days to mint 100 gold marks, because each day it was only possible to cut half of the quantity of metal needed in bullion form, with the other halfbeing left in metal shreds that were then remelted. This allows us to conclude that the daily production of gold was 33.3 marks, or, in other words, roughly 1705 coins per day7. In the case of silver, in the eight months between 10 May and 30 December 1854, the minting of this metal amounted to 43168.375 marks, so that the daily production was roughly 216 marks, in other words, 3966 coins per day8• At the Royal Mint, in the 1870s, 75,000 coins were minted an hour, or 90 coins per minute, which highlights the significant differences in the productivity of these two mints (Challis, 1992: 527).

Reading the documentation9 shows a decline in the quality of the coins minted during the 191

h century. In the previous century, small coins with a face value of 480 reis were in circulation, together with silver coins worth between 20 reis and 100 reis, which belonged to the group of coins whose quality was assessed (see section 2). The small gold coins represented roughly 14% of the total of coins minted between 1718 and 1797, being the ones, among the lower value coins, that were produced in greatest quantity at the Lisbon Mint (3,233,082). As far as the silver coins with a low face value are concerned, these coins represented 28% of the total number of coins minted between 1721 and 1797. Besides this, Portugal joined the group of countries which, despite having adopted the gold standard, also afforded legal tender to foreign coins, in this case English sovereigns10• The acceptance of foreign coins also had its ups and downs, for, following the ban imposed in 1785 on the circulation of Spanish silver coins, from the Napoleonic invasions onwards, and during the first half of the 19th century, the

7 To make this calculation, the gold coin of 2500 reis with 90 grains of weight was considered. These coins were known as "half crowns" (Law of 15 February 1851) .

8 To make this calculation, the silver coin of 500 reis with 250.98 grains of weight was considered. These coins were known as ''five tostoes" (Law of29 July 1854).

9 It was not possible to develop the same analysis to the 191h century as we developed to the 181h century, because we do not have the same information about minting coins.

10 The same thing happened, for example, in Canada, which in 1871 afforded legal tender to British sovereigns and US "eagle" gold coins (Helleiner, 2003: 39).

259

legislation awarded and removed legal tender from foreign coins on a number of different occasions 11

•

In the case of Portugal, therefore, there was no really effective technological development prior to the switch to the gold standard, just as, long before the change to the mechanised minting of coins, small gold and silver coins were already being produced that did not cause any problems in terms of counterfeiting.

4. Conclusion

The technological conditions existing for the production of metallic money did not evolve in a linear fashion as far as their application at the Lisbon Mint is concerned. While, in the 18th century, the quality of its minted coins, especially gold coins, brought the mint international acceptance, the problems arising in the 19th century were quite different from those that had been encountered in the previous century. It was precisely in the period when gold monometallism was adopted that the difficulties began to appear regarding the pace and quality of the coins produced. This conclusion calls into question the general thesis of the importance of technological changes in explaining the change in monetary regimes.

Nonetheless, even with some time lags, from 1678 onwards, mechanical minting was introduced and innovations were implemented that placed the Lisbon Mint on an equal footing with its European counterparts.

11 For a systematization of this legislation on foreign coins, see Sousa (1991).

260

f different

bnological nge to the ~d that did

!Y did not . While, in t the mint ~rent from riod when ! pace and !sis of the

inting was 1al footing

Sources

Lisbon Mint Archive

- Correspondencia Expedida, 1850 to 1856.

- Livros de Registo Geral, 2 to 15.

References

Aragao, Teixeira de (1874-1877), Descrip9ao Geral e Hist6rica das moedas cunhadas em nome dos Reis, Regentes e Governadores de Portugal, 3 volumes, Lisboa.

Bastien, Carlos (l991) "Para a Hist6ria da Casa da Moeda de Lis boa - Aspectos Tecnicos e Organizativos da Produc;ao da Moeda Metalica", Estudos de Economia, vol XII, n°1: 43-78.

Challis, C. E. (1992), A New History of the Royal Mint, Cambridge University Press. Costa, Leonor; Rocha, Maria Manuela; Sousa, Rita Martins de (2013), 0 ouro do Brasil,

Lisboa,Imprensa Nacional-Casa da Moeda. Domenech, Pere Pascual (2004) "Moneda e industria. La reforma de 1824 y la acufiaci6n de

moneda en Barcelona (1836-1848) ", Revista de Historia Industrial, 26: 57-99. Fisher, H.E.S. (1971), De Methuen a Pombal- o comercio anglo-portugues de 1700 a 1770,

Lis boa. Helleiner, Eric (2003), The Making of National Money- Territorial Currencies in Historical

Perspective, Cornell university Press, Ithaca and London. Redish, Angela (1990) "The Evolution of the Gold Standard in England", Journal of Economic

History, volume L, n° 4: 789-806. Redish, Angela (1995) "The Persistence of Bimetallism in Nineteenth-Century France", The

Economic History Review, 48(4): 717-36. Redish, Angela (2000) Bimetallism: An Economic and Historical Analysis, Cambridge,

Cambridge University Press. Smith, Adam (1981), Riqueza das Na9oes (The Wealth of Nations), Lisboa, Fundaryao Calouste

Gulbenkian. Sousa, Rita Martins de (1991 ), "Money Supply in Portugal, 1834-1891" in Estudos de

Economia, vol. XII, n°1: 19-32. Sousa, Rita Martins de (2003), "Moeda e Estado: politicas monetarias e determinantes da

procura (1688-1797)", Amilise Social, Vol. XXXVIII (168): 771-792. Sousa, Rita Martins de (2006), Maeda e Metais Preciosos no Portugal Setecentista (1688-

1797), Lisboa, Imprensa Nacional-Casa da Moeda.

261

Appendix

Table 1 -Legal deviation permitted in the weight of gold coins according to their face value

(1688-1797) Face value (nhs) Legal deviation(%)

12 800 0.17 12 000 0.19 6400 0.35 4 800 0.5 3 200 0.7 2 400 0.9 1 600 1.4 1 200 1.9 800 2.8 480 4.6 400 5.6

Table 2 -Legal deviation permitted in the weight of silver coins according to their face value

(1688-1797)

Face value (reis) Legal deviation

Legal deviation (%) (reis/mark)

0.629 480 40 0.571

0.534 0.629

240 40 0.571 0.534 0.629

120 40 0.571 0.534 0.943

100 60 0.857 0.8

0.943 50 60 0.857

0.8 0.943

60 60 0.857 0.8

0.943 20 60 0.857

0.8

Notes:

1 L 1 D · t" (O/ ) Legal deviation (value) - ega evta ton / o = Silver coined price

2 -The three values for the legal deviation (%) are explained by the changes in silver prices (1688, 1734, 1747).

262

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--Lower limit - • ·Uppe-r limit

1733 1738 1743 1748

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Notes:

1 -The Legal Deviation (LD) is the percentage of the tolerance permitted in the weight of coins, considering the annual composition of the coinage. Thus, the following formula was used for the annual calculation:

n=l where:

qaX vaX t) Vi

qa = quantity of coins with a particular face value Va =face value t =legal tolerance V; = annual coinage in terms of value 2- The Lower Limit (LL) represents the legal deviation that would be obtained if only coins with a

higher face value were minted each year (vh). Thus, changes in the values of the band are justified by the alteration in the composition of the coins minted. The following formula was used for the annual calculation:

1 LLi =­

vh 3 -The Upper Limit (UL) represents the legal deviation that would be obtained if only coins with a

lower face value were minted each year (vj). Thus, changes in the values of the band are justified by the alteration in the composition of the coins minted. The following formula was used for the annual calculation:

264

1 ULi =­

vj

1 2

as

s

Notes:

Chart 2 -Deviations in the price of silver coined at the Lisbon Mint

(as a percentage)

) I

',1 ',,! :'/

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I: ',,: I I

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1 - For an explanation of the calculations, see Chart 1. 2 - The chart begins in 1 721, since this is the date after which the composition of the coinage was

known, even though silver coins were not minted every year.

265