Let’s start off the first article of this website with a question: What is money?
Money means many things to many people, across cultures and in different periods of history. However, the most universally accepted definition is that money is something that stores value. Hmm… it leaves a lot to be explained, but to really understand it, let’s take a look back in time and see how people fared with the concept of money and in particular, let’s relate it with our own history as a nation.
Money Before Time
Even before this country became known as the Philippines, our people have already been trading wares with each other and with people from different countries and cultures. The practice has been known as the Barter System and it’s hard to trace where and when it begun exactly. In a barter trade, anything of value (products or services) can be exchanged by consenting parties who believe the transaction to be beneficial to each other. Juan can trade his cow with Jose’s knife (or sometimes even wife). Or, a bag of rice can be exchanged for a piece of hammer. In the case of service barter, Joe can cook your favourite food one fine afternoon and you agree to compensate him for his efforts with a fine piece of Persian rug.
Even today, the spirit of barter trade is still alive and practiced in some situations. You can exchange your iPad with your friend’s netbook. Or, his sunglasses with your gold necklace.
As easy as it is, the barter system is also a cumbersome transaction. Throughout time, man has devised other facilities to easy and the exchange, which will eventually become the inspiration of modern money system. They’ve used such things as the following to act as medium of exchange:
- Cattle 9000 – 6000 BC (cows, sheeps, camels, etc)
- Cowries Shells 12000 BC — The cowrie is the most widely and longest used currency in history.
- 1000 B.C.: First Metal Money and Coins
- 118 B.C.: Leather Money
- 806 : Paper Currency
Finally, We Have A Name!
During the early part of the year 1521, the country was ruled by Spain and remained so for roughly 300 years. This is the time in history when we also got the name Philippines.
Records from the BSP has this to say:
“Three hundred years of Spanish rule left many indelible imprints on Philippine numismatics. At the end of the Spanish regime, Philippine money was a multiplicity of currencies that included Mexican pesos, Alfonsino pesos and copper coins of other currencies.
“Coins from other Spanish colonies also reached the Philippines and were counterstamped. Gold coins with the portrait of Queen Isabela were minted in Manila. Silver pesos with the profile of young Alfonso XIII were the last coins minted in Spain. The pesos fuertes, issued by the country’s first bank, the El Banco Espanol Filipino de Isabel II, were the first paper money circulated in the country.”
The Revolutionary Period 1898-1899
When the Philippines gained its independence from Spain in 1898, the government begun to issue and use our very first currency in the form of coins and papers backed, not by gold, but by the country’s natural resources.
In our almighty One Peso note was printed, “Republika Filipina Papel Moneda de Un Peso.” The other paper money is the Five Peso note, which bore “Cinco Pesos” in its print. Copper-based coins of lower denomination were also in circulation.
Here Comes Uncle Sam
Long story short: The Spanish government sold the Philippines to the USA. The Americans have occupied the Philippines for the period covering the years 1900 through 1941. But we also retained the use of our local currency, the Philippine Peso, which was backed by gold – a practice from which the name “Gold Standard” was derived. The Americans also pegged the exchange rate of the Philippine Peso against the US Dollar at 2:1.
The Japs Are Coming…
This is the advent of the Second World War. The Americans made way to the Japanese Forces. The War not only devastated Manila and other parts of the country, but is also “caused serious disturbances in the Philippine monetary system.”
The BSP has this to say about this turmoil:
“Two kinds of notes circulated in the country during this period. The Japanese Occupation Forces issued war notes in big denominations. Provinces and municipalities, on the other hand, issued their own guerrilla notes or resistance currencies, most of which were sanctioned by the Philippine government in-exile, and partially redeemed after the war.”
The Philippine Republic
At the end of the World War II, we also gained independence from the Americans. By then we made use “as currency old treasury certificates overprinted with the word ‘Victory’“.
And finally in 1949, the country established the Central Bank of the Philippines, an agency which eventually sets the policies and standards of our modern monetary system.