A Glimpse of the Past as well as the Future through Numismatics

After studying Philippine coins during US occupation, I realized that beginning in the year 1913 up to our independence, the economy may have been in deflation. I mean it makes sense since in the US, the great depression took place during the 1930s. 

My fascination with US-era coins began when I visited my hometown for a vacation. During that time, I decided to repatriate my coin collection, thinking that it was full of silver coins.

I started my coin collection when I was a child. Most are gifts from a family friend who used to be a seafarer and from my dad who accumulated them during his trips overseas. 

When I inventoried the collection however, I only found three coins that had silver content in them. The rest were already nickel and copper coins. Still more valuable than our coins today that are made of steel but nowhere near valuable if it were silver.

I decided to study and do more research on US-era coins.

The US-era coins can be divided into three parts: 1903 to 1906, 1907 to 1934, and the Commonwealth-era (1935 up to independence).

A classic money grab occured when they devalued the one peso coin from having 90% silver to only 80% in 1907. As of this writing, the pre 1907 one peso coin has a melt value of around 1600 pesos while the 1907 one peso coin has a melt value of only around 1100 pesos.

This kind of theft is actually more rampant nowadays through inflation which many people think is a natural phenomenon but back then the theft was more obvious. 

In the case of a cashless society, the theft would be easier but more obvious in the form of negative interest rates. Our money would no longer be losing purchasing power, it would be losing its actual principal value.

While studying the USPI coins, I realized that there were no more one peso coins issued after 1912. This implies that there was no more demand for it. I mean this makes sense since a special Christmas dinner in the 1920s was only 60 centavos.

This doesn't mean that the one peso coins issued earlier were no longer in circulation however, just that there was not a lot of demand for them. 

Today, if they removed the one thousand peso bill, it probably would mean that prices were falling since there is not a lot of demand for it.

However, I completely forgot that we were transitioning to paper money at this time. Paper money used to be certificates that proved a certain amount of gold or silver was deposited into the bank. In fact, paper money or certificates were used to redeem precious metals from the bank.

BY AUTHORITY OF AN ACT OF THE PHILIPPINE LEGISTATURE APPROVED BY THE PRESIDENT OF THE UNITED STATES JUNE 13, 1922

THIS CERTIFIES THAT THERE HAS BEEN DEPOSITED IN THE TREASURY OF THE

PHILIPPINE ISLANDS

ONE PESO

PAYABLE TO THE BEARER ON DEMAND

IN SILVER OR IN GOLD COIN

OF THE UNITED STATES

OR EQUIVALENT VALUE

TREASURY CERTIFICATE

In fact, it makes a lot of sense since today, we are also seeing some countries withdraw high-denomination bills from circulation (or stop making new ones) in favor of digital money.

After World War 2, paper money were no longer certificates of silver deposited into the treasury and coins (which used to be made from precious metals) became copper and nickel and today, STEEL.

I realized that studying about our old coins gives us a glimpse of currency transitions and one is again taking place as we speak. Back then, the transition was from coins made of precious metals to paper money (that were at first certificates, redeemable for precious metals) and today, we are seeing a transition from paper money into digital money.

Another thing I realized is that people do not have an accurate picture of gold and silver coins as currency. Whenever, people talk about precious metals as currency, I notice that they always use the word LUG. For example they might say that they don't see themselves lugging around gold coins. The message is that it is cumbersome to use gold and silver as currency.

If they truly knew the value of gold coins, they wouldn't be saying that. A 1/10 ounce gold coin contains 3.11 grams of gold which at today's prices is worth around twenty thousand pesos. How heavy is a 3 gram coin? The current one peso coin is more than 5 grams! And I don't know about you, but I certainly don't carry twenty thousand pesos whenever I go out of the house.The maximum that I would have in my wallet is probably five hundred to one thousand pesos at any given time.

In 1920s money, I would only be carrying perhaps two 50 centavo coins (valued at around 500 pesos each) weighing 10 grams each or perhaps 10 ten centavo coins (2 grams each).

If we take the 1920s special Christmas dinner as an example, I would be carrying in my wallet one 50 centavo coin (10 grams) and one 10 centavo coin (2 grams) to pay for my meal. Is carrying in your pocket 12 grams of coins to pay for a special Christmas dinner really that inconvenient?

Today, the one peso coin weighs more than 5 grams each. On any given day, we probably carry at least 50 grams of coins in our coin purses. So as you can see, there really is nothing inconvenient about using gold and silver as currency. The only difference is that you would be carrying a lot more value for every gram of coin in your purse if it contained some silver in it instead of being made from steel.

Our world is changing, no doubt about it. We need to be vigilant about the changes that happen during these currency transitions to make sure that our wealth does not get transferred into the hands of the few that run the world.