ABSTRACT
Currency: As during the colonial era, the basis of the currency in Buenos Aires was the peso of 8 reales de plata or of 100 centavos respectively in international trade and exchange operations from the mid-19th century. Within this system the Spanish and Patriot peso fuerte or hard peso (at 24.43 grammes of fine silver) has to be distinguished from the underweighted peso corriente, peso sencillo or peso macuquina, which were also in circulation. However, the paper money, the peso papel or moneda corriente, became the most important money in circulation from the 1820s. As early as 1826 the lack of precious metals and the extensive issue of paper money, both starting in 1817, led to the abolition of the need to convert banknotes into metallic currency. During the following decades there were several waves of inflation, which resulted from the immense issues of paper money of the province of Buenos Aires, intended to finance the crisis in foreign affairs (War of Independence against Spain, war with Brazil concerning the province of Montevideo from 1826 to 1828; trade blockades of the French fleet from 1837/38 to 1840 and from 1845 to 1848 as well as of the British fleet from 1845 to 1847) and in home affairs (breakdown of the Unitarian republic from 1827; fight against the Argentine confederacy from 1853 to 1861), and the budget deficits (above all in the years between 1835 and 1852). These waves of depreciation of the moneda corriente can be seen not only from the perspective of the exchange rate quotation on London as the determining barometer of the external value of the peso, but also from the quotation of the money rates of the most important circulating coins, the Spanish and Patriot onza de oro (doubloon of 23.4219 grammes of fine gold) and peso fuerte (dollar) (see Table 1). For many decades the attempts to stabilize the paper currency had not been effective in the longer term; only after the political stabilization of the 1860s could a successful reform be carried out. In 1863 the onza de oro was replaced by the peso fuerte as the basis of the peso moneda corriente. In 1864 the parity of the onza de oro in the province of Buenos Aires was fixed on the basis of the gold-silver relation of 1:16, having already been introduced in 1857 at 400 pesos moneda corriente, and that of the peso fuerte at 25 pesos moneda corriente. On this basis, the free convertibility was restored in the province of Buenos Aires in 1867 (valid until 1876) after the paper money had partly been destroyed and, as a consequence, the rate of the peso fuerte had even fallen under the parity mentioned above. Generous grants of credits by the Banco Nacional and the repeated issue of banknotes not covered by precious metal as a result of the economic upturn in the 1860s and the early 1870s once more initiated a wave of inflation (1876-1881), which coincided with the economic crisis in Europe. Even the introduction of the (at first limping) gold standard on November 5th
1881 could only stabilize the currency conditions for a few years in this period of renewed convertibility. Now the peso gold (1.4516 grammes of fine gold) of 100 centavos became the basis of the currency, and the exchange rates were both fixed in pesos (de) oro (or en oro effectivo) and pesos moneda nacional (de curso legal). After a further phase of inconvertibility and inflation from 1885 (see Table 2) the agreement of 1891 with the London creditors (especially Baring Brothers & Co.) on
version, the replacing of the public finances on an even keel by introducing internal taxes, the improvement in balance of payments from 1896 as a result of the worldwide economic upturn and the renewal of the circulation of banknotes in 1894 and 1897 with the returns on investments of the 1880s helped to effect a change to the gold standard on November 4th 1899 on the basis of a new parity of 100 pesos gold = 227.27 pesos moneda nacional or 44 centavos gold = 1 peso moneda nacional respectively (Conversion Law). The rate of the peso moneda nacional, decisive for payment transactions, levelled off in October 1902 on the legal parity, which did not change until the outbreak of World War I. Therefore Argentina actually had paper currency (SWOBODA [1913], p. 746).
