TWO-BITS, FOUR-BITS, SIX-BITS, EIGHT...
by Leon F McClellan
Have you ever wondered why a United
States quarter-dollar is called "two-bits"? Or, a
half-dollar "four-bits"? Do you know why we call
our basic monetary unit "dollar" instead of
Two-bits, four-bits, six-bits and
eight-bits make reference to the eight-reales silver coin of
New Spain and Mexico. It is also called piece of eight and
circulated in the English Colonies and freely in the USA
following the Revolutionary War. As a matter of fact, the
eight-reales coin was legal tender in the United States
until 1857 and was the world's most used coin at one time.
It is the renowned piece of eight that became part of the
Spanish Main pirate lore.
The coins minted until 1734 technically,
are called a cob coins, because they were originally made by
hand stamping "tail ends of bars" or "cabos
de barra", which were sliced as planchets from rudely
cast, more or less round, bullion bars which were assayed
and carefully weighed. "Cabo" might well have
given us the name of cob, although it does mean a lump or
small mass (as of coal). The second definition comes from
the Dutch "kubb".
Cob coinage was made at the first mint in
the Americas in Mexico City, established in 1535. Hern n
Cort‚s was authorized by a Spanish Royal Decree dated 14
September 1519 to melt, cast, mark and put aside the
royal-fifth of the gold and silver being collected from the
Aztecs in Mexico City (Tenochtitlan). He used the palace of
Axay catl (father of Moctezuma II) for the task. This
may be considered the first foundry of New Spain and of all
When Cortes moved into a home in 1521 in
what is today the Mexico City suburb of Coyoac n, he
established the second foundry in order to meet the demand
for currency and produced "more than 130,000
castellanos", according to information in documents
collected by Francisco Antonio de Lorenzana. "Castellano"
(Castilian) was the current coin of the time. These were the
first cobs of the New World. The royal fifth was faithfully
sent to Spain in the Spanish galleons.
When the Viceroyalty of New Spain was
established by Spanish Royal Decree signed by the Queen of
Spain the 11th of May of 1535, the Casa de Moneda (house of
coin or mint) was formally established. Beginning sometime
in April of 1536, according to the best estimates, the first
mint of the Americas started coining operations.
Cobs did not start pouring-out into world
marketplaces until the reign of Phillip II, after 1556.
These crudely minted reales (literally, royals) of silver
were undated until 1580 when some were and others were not
marked with the year of coinage. The first pieces of eight
were struck in Spain, as early as 1497, although it was not
until after 1572 that the Casa de Moneda in Mexico City
struck them. Before that time, only denominations smaller
than eight-reales were struck in Mexico.
These were fine quality silver, assayed
at .931 or .916. This is finer and almost as fine as the
standard for sterling silver, which is .925, or 92.5% pure.
Later, milled coins, contained .9027 silver which is
normally rounded off as .903 in print. Many of the coins of
New Spain were handsome, especially the specimens referred
to as "royal strikes" which were made with round
planchets and the later milled coins. The silver content of
20th Century Mexican coins dropped as low as .100 and was
eventually eliminated from coins. Silver USA dollars and
lesser value coins also disappeared from circulation.
In 1732, the Mexico City mint started
producing milled coins. They are called "milled"
because the planchets were cut from rolled (or milled)
silver. The planchets were round and flat as opposed to the
cob planchets. These were stamped with hand cranked screw
presses like the one illustrated on the KM# M49a troy ounce
silver coins. One hundred and fifty years later, in January
of 1882, the Casa de Moneda began stamping coins with
a steam press purchased from Morgan, Orr & Co. of
Philadelphia. In the early 1900's Mexico installed its first
hydraulic press, also bought in the USA.
The silver piece of eight evolved into
the silver peso of Mexico and the silver dollar of the USA,
which, for all practical purposes was identical in content
and value through the early 1900's. "Peso" means
weight in Spanish. The dollar gets its name from the German
"thaler" or "taler".
Mexican, or to be more exact, coins from
New Spain (the official name at the time), were made
primarily because it was the most convenient means of
exporting and transporting the huge quantities of silver
being mined. Gold coins called "escudos" (shields)
or doubloons were also produced. The silver pieces of eight
began their travels from the New World to Spain and then on
to Asia and Africa. A great convenience of coins is that
they are readily exchanged for goods and services.
The English colonies of America were
prohibited by royal law from coining, minting, or even so
much as using coins. The colonists were supposed to ship any
and all coins to Mother England in payment for manufactured
goods. This, of course, precluded any foolhardy colonist
from starting a mint. Besides, there is little silver or
gold to be had in New England and eastern Canada to this
day. So, the English Colonies decided to use paper money
which served them well until they attempted to finance the
USA Revolutionary War with it. By 1780, this form of
currency became useless and worthless and the money called
Continental Currency collapsed.
Immediately, part of the vacuum was
filled by the milled Spanish-American silver issues based on
the real system in denominations of 1/8R through
eight-reales. The most widely circulated of these was the
piece of eight, which, when supplies of smaller denomination
coins dwindled were chopped or cut into smaller pieces to
make change. Thus, one eighth of eight-reales became one
bit, one quarter two-bits--the equivalent of our present day
quarter-dollar. One-half is four-bits and three quarters are
six-bits. Many believe these expressions to be slang, yet,
history suggests they are perfectly good nomenclature.
When making plans for a monetary system,
the United States considered using one similar to the real
system. This was because it was the most common system used
in the USA at the time, and was familiar to most citizens. A
system based on the piece of eight was agreed to and renamed
"dollar" in the 1780's. To this day, in the USA we
see the use of dollar or crown instead of "real"
or "peso" even for modern Mexican coins.
It was not until 1792 that the system
became law in the USA, which coincided with the
establishment of a new coinage system in the world. The
introduction of the decimal system divided the piece of
eight into one hundred parts or cents and became the
standard for coinage throughout the world. The US Mint Act
of 1792 provided for the first United States Mint, which was
set-up in Philadelphia.
By comparison, Mexico, which rebelled
against Spain in 1810, did not adopt decimal coinage until
1857 and started striking decimals in 1863, after the
downfall of the second Mexican empire, of Maximilian I. In
1869 Mexico discontinued the piece of eight and replaced it
with the peso, which was identical in silver content and
weight, but two millimeters smaller. This proved to be
unfortunate, because the eight-reales coin was used more
than 200 years as THE trade coin, and was the most important
coin in use in Mexico, the Philippines, Central America,
China, India, Indo-China, Africa and the Near East.
Its value was seldom questioned, although
it competed with other so called "trade dollars",
such as the Maria Teresa thaler. The Maria Teresa thaler was
first struck in 1790 and is still being coined and to this
day is used in many countries. The eight-reales coin became
the most widely used silver piece in the world until late in
the 1800's. Asian merchants counter stamped the pieces of
eight to certify them as authentic. These stamps are called
"chop marks" and can be seen on some coins being
sold to collectors today.
At its height of acceptance, until 1869,
the eight reales coin of Mexico was the "non plus
ultra" of silver coins. Nevertheless, the new Mexican
peso was exported, with the same intrinsic value as the
piece of eight it replaced. The differences were in design
and markings. The peso is two millimeters smaller in
diameter. It was not very well accepted. In China, for
example, when it was accepted, it was at a discount of up to
four percent. The eight-reales coin is 39mm in diameter and
contains 20g of pure silver. The ill-fated peso that tried
to replace it is 37mm in diameter and also contains 20g of
Since Mexico greatly depended on its
exports of silver coins and the peso was not well accepted,
it reissued the eight-reales coin. In the meantime, the peso
was discontinued until 1898, and when it reappeared it was
with a design very similar to the piece of eight. The last
eight-reales coins were minted in 1897. Today, only the
Maria Teresa thaler is being struck, albeit with an old
The saying "A dollar does not go
very far these days" is no longer a saying. It is a
fact! One dollar and one peso coins no longer contain much
if any silver. . .
* * *
Many thanks to Mr. McClellan for this
excellent article. This article only may be reproduced
without additional permission. Please give proper