Who created the Mexican silver peso known as the "0.720 Peso"?
President of Mexico Venustiano Carranza.
When did minting of this coin begin? In 1920.
Why was it known as the "0.720 Peso"? Because its silver content
was 72% of its weight.
What was the silver content of the "0.720 Peso"? The pure silver
content of the "0.720 Peso" was 12 grams.
What was the value of the silver in the "0.720 Peso" in 1920? In
1920, 12 grams of silver were worth 52 Mexican cents.
For how many years was the "0.720 Peso" in circulation? It
circulated for 25 years, until 1945.
During those 25 years, was the silver in the "0.720 Peso" ever
worth less than 52 centavos? Yes; in 1931, 12 grams of silver were worth only
31 centavos, but the public using the coin took no notice of this fact.
Why did the "0.720 Peso" go out of circulation in 1945? It went
out of circulation because after World War II, the international price of
silver rose and thus the silver in the "0.720 Peso" was worth more
than one Peso. Minting more silver Pesos became a loss-making business for
the Mexican Mint, so minting ceased.
What became of the "0.720 Peso" coins when they went out of
circulation? Most of the coins were sent to a refinery so that their silver
could be sold at a profit on the international markets, as happened to the US
silver coinage in the 1960's, but some were saved by Mexican savers, and can
still be purchased in downtown Mexico City.
Were other silver Peso coins minted, after the "0.720 Peso" went
out of circulation? Yes, three different silver one-Peso coins were offered
to the public after 1945: In 1947-1949, a silver one-Peso coin was minted with
7 grams of silver; in 1950-1954, a silver one-Peso coin was minted with 4
grams of silver; in 1957-1967, the last one-Peso coin with silver was minted,
and it contained only 1.6 grams of silver.
What happened to all these coins? They all suffered the same fate as the
"0.720 Peso": they were sent to the refinery, because the value of
the silver they contained became worth more than one Peso.
What took the place of the "0.720 Peso" when it went out of
circulation? It was replaced with a paper "One Peso" note, whose
cost of production was next to nothing. As inflation of the stock of money in
circulation advanced, coins of One Peso became quite unimportant, in spite of
the inclusion of some silver in the Peso coins of the Fifties and Sixties.
Paper money record: In 1925, $2.03 Mexican Pesos bought $1.00 Dollar. In
2017, it costs $17,600 Pesos to purchase $1.00 Dollar. (Three zeros were
wiped off the Peso in 1993, in a cosmetic measure to make it look better;
thus the "Official Exchange Rate" is $17.60 "new" Pesos
to $1.00 Dollar at this writing.)
This does not take into account the depreciation of the US Dollar itself,
which is now worth something like 3cents of its value in 1920.
CONCLUSIONS
1.- It is impossible to mint silver coins for stable
popular savings, if they bear a stamped monetary value, because the value of
silver fluctuates with a tendency to rise, and thus any stamped value on a
silver coin will always be surpassed by the rising value of the silver in the
coin.
2.- Mexico can recover silver coinage as a vehicle for
popular savings, if the silver coin does not have a stamped value, but
rather an official quoted value which can be raised as rises in the
value of silver take place.
3.- The "Libertad" pure silver one-ounce coin
is already Legal Tender in Mexico. Its value fluctuates with a tendency to
rise with the silver market. If it were given an official monetary quote, it
would turn into an ideal vehicle for popular savings and would never go out
of circulation. (More that 60% of the Mexican population have no savings for
their retirement.)
4.- A silver coin with a quoted official monetary value
would be a great vehicle for popular savings, but due to the fact that its
monetary value would always be for a larger amount of Pesos, and never for a
lesser amount, the "Libertad" pure silver one-ounce coin would
never be able to substitute the present monetary system of Mexico, which will
endure such as it is today.
