From piloncitos to bitcoin – how money reflects values of cultures

By Dr. Rebekka Volmer

Unique for the Philippines are the piloncitos. They are the first money of the Philippines and are round pure gold “grains” of less than 3 grams. Archaeologists and historians discovered them during excavations in Mandaluyong, Bataan, the banks of the Pasig River, Batangas, Marinduque, Samar, Leyte, and Mindanao. Typically the tiny nuggets, are stamped “Ma” which is either Bay, Laguna on the shores of Laguna de Bay, or a site on the island of Mindoro.

Alternatively, Ma could also stand for “massa” the name in Indonesia – the second region where piloncitos can be found. However, the cubed gold coins made in Java between the 9th and 10th century were stamped instead with the character ta the abbreviation of tahil.The stamp “Ma” can only be found on silver coins, supporting the Philippine origin of Piloncitos.

The main reason why Java is thought to be the origin for Piloncitos, it was one of the most complex economies in Southeast Asia during the 10th-century. The major part of their success was the sea trade in Asia between the 10th and 13th centuries. This was only possible because Java has developed a convenient currency by the 8th century – the Nusantara coins.

These were made of gold, but also very typically were the sandalwood flower coins with the four-petaled flower (quatrefoil) found on the reverse. These were called Sandalwood flower coins and used during the early 9th until the 14th century – they are also stamped with the Nagari character ma (an abbreviation of masa).

The gold and silver coins minted in Java were not the only accepted currency. At the beginning of the 10th century, more and more Chinese copper coins and “pisis” were imported in larger quantities, and by the mid- 14th century, the Javanese court accepted them as the official currency for tax purposes.

After the piloncitos and Asian coins, the influence on money and its value was out of the hands of local people in the Philippines. Silver coins were brought in by the galleons from Mexico during the Spanish colonial era. The aesthetic money was replaced by the roughly-cut cobs called macuquinas. Later the columnarios (pillar dollars) screw-pressed coins were introduced. The milled floral edge made it harder to clip the coins, and together with the symmetrical round shape, these coins had a beautiful appearance. The stamp was showing the Eastern and western hemispheres, thus the name “dos mundos”. The print “VTRAQUE VNUM” – “Both are one”, placing the two worlds are under one crown – the Spanish crown indicating their true desire of the Spain by that time.

On June 12, 1989 the Philippines declared their independence, and General Emilio Aguinaldo introduced new coins called “centavo”.These had value backed by the country’s natural resources – and the decision on money was back in the hands of the people in the Philippines. However, this was only for a short period of time: the American’s took over the Philippines soon and with that the decision about their money: The Philippine Coinage Act of 1903, established a fixed currency. Typically for the time of it was pegged to gold being exactly half of the value of the U.S. dollar. It was a theoretical gold peso, that was never coined but consisted of 12.9 grains of gold 0.900 fine, equivalent to PHP 2,640 as of 22nd December 2010.

During World War II Guerrilla pesos were issued by banks and local governments. They were redeemable in silver pesos after the end of the war.  Besides the Japanese occupiers brought in fiat notes for using them in the Philippines, also called Japanese Invasion Money having “pesos” as currency.

Under José P. Laurel the guerrilla currency was declared illegal and punishments could even go to execution. The new money however had no value as being a true fiat currency. The Philippine economy suffered from hyperinflation as a consequence.

This was the time when the call for a central bank who would manage the currency system became louder and powder. Shortly after president Manuel Roxas took office in 1946, a charter for a central bank was drawn by the Finance Secretary Miguel Cuaderno, Sr. The central bank was then later implemented by president Elpidio Quirino in 1948.

The CBP had the power of administering the banking and credit system of the Philippines: the CBP was the only bank having the right for printing and mintage of Philippine currency. A fixed exchange system was introduced: the pesos’ convertibility was maintained at 2 pesos per 1 US dollar. This was a strategy to deal with the post-war problems – consequences of the slow recovery of agricultural production, trade deficits due to the need to import needed goods, and high inflation caused by the lack of goods.

The fixed exchange system made a major contribution to the reshape the country’s important patterns and balance of payments during the 1950s. However, the currency is always about value. Money needs to store and transfer value, and the fixed currency was completely disconnected from this concept. This gave rise to a black market where dollars were traded for more than PhP3/$, reflecting more the true value of the currency.

The pegged rate of ₱2/$ was condemned to break down, which happened in 1962. But even in the following “decontrol era”, administered by Diosdado Macapagal, the CBP had problems in keeping the currency stable. The major problem was mostly seen in the lack of independence of the CBP from the governments. The peak of inflation came during the Ferdinand Marcos era when capital flights doubled the prices for good and exchange rates went up to ₱11/$ to ₱20/$.

On June 14, 1993, the New Central Bank Act (Republic Act No 7653) finally replaced the old CBP with a new Bangko Sentral ng Pilipinas. The new Bangko Sentral has fiscal and administrative autonomy given by law, which was lacking for the old CBP. Now the market started to decide on the level in which the peso trades versus foreign currencies – the Philippine pesos finally became a free-floating currency.

Cryptocurrencies, starting about 10 years ago with Bitcoin, are independent of central bank and government. Thus, there is high speculation, especially among anarchists, if cryptocurrencies will replace the usual fiat money. Especially in economies where the central bank appears to be unable to fulfil a good management of the countries currencies, they believe in local currencies is mainly forced rather than true.

Same as the piloncitos every currency needed to have an underlying belief in their value. Gold has a “value” because of its rareness, endurance and shininess, associating it with the power of the sun. This is a very emotional, aesthetic perception of gold – and gold is still used as storage of value by investors and nations. Cryptocurrencies are more theoretical and complicated. They are attractive to people who value rationality and transparency, and at our times are future-oriented. Having alternatives for a government-issued money, will thus bring in a competition. A competition between two (or more) value systems reflecting what people or cultures value.