(England, George III, guinea, 1775
The guinea was named after the area of Africa where the gold used for its production was first mined. The royal titles on the reverse are among the most lengthy on any British coin. Rendered in Latin, they read (George III by the grace of God) King of Great Britain, France and Ireland, Defender of the Faith, Duke of Brunswick and Luneburg, High Treasurer and Elector of the Holy Roman Empire.)
Until the middle of the nineteenth century, each British colony in North America regulated the use of currency in its own jurisdiction. Although pounds, shillings, and pence (the currency system used in Great Britain) were used for bookkeeping (i.e., as the unit of account), each colony decided for itself the value, or "rating,” of a wide variety of coins used in transactions or to settle debts. These included not only English and French coins, but also coins from Portugal, Spain, and the Spanish colonies in Latin America—notably Mexico, Peru, and Colombia. Once rated, coins became legal tender.
(Spain, 8 reals, 1779
This large silver coin, bearing a bust of King Charles III, was a Spanish colonial coin struck in Mexico. It was typical of the "silver dollars” that circulated in Canada and the United States.)
Ratings were based on the amount of gold or silver contained in the coins and varied widely from colony to colony but were always higher than the rating used in Great Britain. For example, in the mid-eighteenth century, a Spanish silver dollar, "the principal measure of exchange and the basis of pecuniary contracts” in North America, was appraised at 4 shillings and 6 pence in London, 5 shillings in Halifax, 6 shillings in New England, 7 shillings and 6 pence in Pennsylvania, and 8 shillings in New York. The higher colonial ratings reflected efforts to attract and retain specie (gold and silver) in the colonies to mitigate an apparent shortage of specie in circulation.
(Great Britain, 1 shilling, 1825
The British shilling was widely used across British North America. As with other silver and gold coins of this period, its value was officially inflated to keep it from being sent out of the country.)
At times, colonial authorities also deliberately overrated (i.e., overvalued) or underrated (undervalued) certain coins relative to others in order to encourage or discourage their circulation. Ratings were also revised in response to other factors, including the decline in the value of silver relative to gold throughout the eighteenth and nineteenth centuries and the gradual wearing of coins, which lowered their weight and reduced their intrinsic value.
The reasons for a shortage of coin in the colonies are unclear. One view maintains that it reflected the perils of sea travel, as well as persistent trade imbalances with Britain. Another view arguesthat the shortage of money was more apparent than real, since trade was not the only source of specie, and paper alternatives were not considered. Moreover, colonial currency legislation encouraged the circulation of poor-quality coins. Overrated coins drove out underrated coins, which were
hoarded, leaving light and poor-quality coins in circulation. Consequently, silver and gold coins of full weight could be obtained only at a premium, giving the impression of scarcity.
(Spain, 2 reals, 1760
Called the pistareen, this coin was widely used in British North America during the early nineteenth century because it was officially overvalued compared with similar-sized coins that had a higher silver content.)
Not surprisingly, the wide variety of ratings among the British colonies in North America caused confusion and complicated trade. As a result, efforts were made to standardize ratings in order to facilitate commerce among the colonies and with Great Britain. As early as June 1704, Queen Anne issued a royal proclamation to remedy "the inconveniences which had arisen from the different rates at which the same species of foreign silver coins did pass in her Majesty’s several colonies andplantations in America.” Under this proclamation, colonies were forbidden to rate a Spanish dollar any higher than 6 shillings. Because the proclamation was ignored, the British Government converted it into legislation in 1707 with stiff penalties for those who did not comply. However, British colonies in North America and the Caribbean continued to ignore or evade the law, and business went on as usual.