First National Coin: the Centavo
On November 16, 1878, the government of Don Pedro Joaquin
Chamorro decreed the issue of the first national coin: the centravo,
although before this one was a copper cent of the Leon Market
(Mercado de Leon) issued in 1859, but it was of a local nature. The
1878 centavo was made up of three-fourth part copper and one-fourth
part nickel. Its mintage was entrusted to Sr. Alejandro Cotheal,
Nicarguan Counsel New York. On the reverse side was noted the same
characteristics of the American cent.
Regarding important coins issued previous to the 1878 issue,
it is worthwhile to mention the 5, 10, and 20 cent silver coins
minted in 1880 with one cannon underneath the coat of arms. The 1887
issue had two cannons under the same coat of
arms.
The First National Banknotes
On April 2, 1879, an Executive Decree was issued that marked a
new period in the history of the finances and numismatics of our
country: the decreeing of the issue of the first national banknotes
with the name of BANKNOTES OF THE TREASURY (Billetes del Tesoro), a
deed that occurred through the decree of President General Joaquin
Zavala. A year later the first lithographed banknotes
appeared.
1888: The First Two Banks Open Their
Doors
On February 23, 1888, the first commercial bank of the
country, known as the Bank of Nicaragua, opened its doors. In
November of the same year the Mercantile Agarian Bank in Leon was
founded. This second bank operated in Nicaragua with private capital
and went bankrupt a year later due to the lack of payment by its
debtors.
When the Mercantile Agrarian Bank went bankrupt, an average
amount of new, uncirculated banknotes remained. The Government Junta
seized them when revolution broke out in Leon on February 24, 1896,
against the government of General Jose Santos Zalaya. These were the
first banknotes held under siege -- "siege money" -- in Nicaragua.
At the same time Zelaya's government disclaimed those banknotes
nicknamed "chancheros" or "guacamoles" by Executive Decree dated
march 26, 1896.
The following political events originated by the Revolution,
which broke out on October 11, 1909, forced General Zelaya to turn
over presidential power to Dr. Jose Madriz whose government
recognized the "chancheros" banknotes. "Chancheros" was a nickname
that the popular ingenuity of the day designated as banknotes with
little buying power.
The "Countersigned" or Private Coins
An interesting and exceedingly revealing piece of information
is that apart from the coins that circulated in Nicaragua at the end
of the 19th and the beginning of the 20th centuries was that there
also circulated in our country "countersigned" coins which were no
more than private coins that the landowners minted with the purpose
of paying their day laborers. The workers at that time could not use
these coins outside of the limites of their farm (hacienda). At the
Numismatic Collection of the Central Bank of Nicaragua, one can
appreciate the different "countersigned" coins of different
denominations.
The Monetary Conversion of 1912, The "Cordoba" is Born
On March 20, 1912, with Adolfo Diaz as President, the Monetary
Conversion that adopted as an exchange unit the "Cordoba" was
operating. The Law of Conversion was now put into force; the
banknotes of the Treasury were changed gradually to the money that
was on an equal par with the American Dollar.
The Cordoba was named thus in memory of the second surname of
the Spanish conqueror, native to Cordoba, Captain Francisco
Hernandez de Cordoba, founder of the cities of Santiago de Granada
and santiago de Leon de los Caballeros, capital of the nascent
Province of Nicaragua. This decree dated March 20, 1912, stipulated
that ten Cordoba coins that would contain 25 grams of silver would
be issued.
The gold Cordoba coin was not minted because the observation
was made that it would be to costly to the Nicaraguan treasury. Its
circulation would be reduced because the people preferred to use
them in the form of jewelry or to hoard them without any economic
investment. The silver-based, 25 gram one Cordoba coin was minted.
With the gold Cordoba coin not being issued, the system was reduced
to the silver single metal standard, but with the ability to
converting it to "gold" by means of an already pre-established
system.
On February 28, 1913, the issue of banknotes of several
denominations was agreed to. The figures of Manuel Antonio de la
Cerda, Miguel Larreynaga, General Fernando Chamorro, General Tomas
Martinez, and General Jose Dolores Estrada were featured among
others. At this date the National Bank was now the National Bank of
Nic., Incorp. which occurred in 1911.
On June 21, 1926, the President of the Republic, Emiliano
Chamorro, decreed that the word "peso," which was used to designate
the basic monetary unit of the Republic, had as its equivalent term
the Cordoba.
From 1912 to 1931 the Cordoba maintained parity with the
American Dollar with the exception of certain periods of relatively
short fluctuation. From 1931 to 1935 the exchange rate of the
Cordoba rose with a gradual rise accelerated during 1936. The
national currency in fact had been demerited even in spite of the
Monetary Law of 1912 that established the parity of the Cordoba with
the American Dollar; this Monetary Law had not been
modified.
The Monetary Reform of 1940
On October 26, 1940, with the President of Nicaragua being
Anastasio Somoza Garcia, another monetary reform was agreed to that
repealed the 1912 law. The Cordoba left its parity with the Dollar
in order to have an exchange relationship with physical gold and
with its relationship to the American Dollar. Likewise, the state of
the backed paper money was also taken into account. Beside the
banknotes, nickel and copper-based coins were minted with the bust
of Francisco Hernandez de Cordoba on the front side, and on the
backside appeared the coat of arms of the old Federation with the
sentence "En Dios Confiamos" (In God we Trust).
By means of the Decree of May 8, 1946, a 500 Cordoba banknote
with the figure of our own famous poet Ruben Dario was placed into
circulation.
In January 1961, the Central Bank of Nicaragua opened its
doors. This bank assumed the functions of an issuing bank from the
National Bank of Nicaragua. In April 1962, the Central Bank
authorized the first printing of banknotes by the American Bank Note
Company.
Monetary Conversion Law of 1988
From 1979 when the F.S.L.N. arrived in power, the Cordoba
began to suffer a gradual and sustained deterioration. The history
of modern inflation reached world records, and the Cordoba came to
be the model par excellence of how a currency surpasses the record
of international inflation. In April 1979, the first official
devaluation, after a long period of stability and free exchange,
took place.
The Beginnings of the 90's: The Gold-based Cordoba
Nicaragua opened the decade of the 90's under the Presidential
Administration of Dona Violeta Barrios de Chamorra. The Governmental
Plan of National Salvation in the stabilization and structural
reconsiliation included the issue of the gold-based Cordoba
beginning August 13, 1990. It began to be converted into a new
circulating medium, expressed by the same Cordoba currency with
equal parity with the American Dollar. Its appearance in the
national scene continues to give continuity to the intense and, in
many aspects, exceptional history of Nicaraguan
Numismatics.
Bibliography
Cuadra Cea, Luis. Aspectos historicos de la moneda en
Nicaragua. Managua, Banco Central de Nicaragua, 2v., empastados en
un solo tomo, ilus.
Palma Martinex, Ildefonso, Moneda y Bancos en Nicaragua.
Managua, Imprenta Nacional, 1975, 84p.
Racha, Guillermo de la. Breve ensayo sobre la Numismatica.
Nicaragua (En Cuadernos Universitarios, Segunda Serie, No. 18,
Septiembre de 1976, p. 93-117).
Source: Website of
Banco Central
de Nicaragua
Translated from Spanish by
James S. Cameron
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