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May 30, 2014

Historical Echoes: Aye, That Piece of Eight You Be Thinkin’ of Were a Precursor to Today’s Dollar

Amy Farber

Why do we associate pieces of eight with pirates? Perhaps it has to do with the role of the phrase “pieces of eight” in one of the greatest pirate adventures in literature, Treasure Island* (Robert Louis Stevenson, 1883). It’s Captain Flint the parrot, belonging to the pirate Long John Silver, who’s continually screaming “pieces of eight!” The last few sentences of the book read:

The bar silver and the arms still lie, for all that I know, where Flint buried them; and certainly they shall lie there for me. Oxen and wain-ropes would not bring me back again to that accursed island; and the worst dreams that ever I have are when I hear the surf booming about its coasts or start upright in bed with the sharp voice of Captain Flint still ringing in my ears: “Pieces of eight! Pieces of eight!”

The San Francisco Fed’s 1995 annual report has a section “A Brief History of Our Nation’s Paper Money.” In the “Did You Know?” section, we read:

During much of the 17th and 18th centuries, the Spanish Dollar coin served as the unofficial national currency of the American colonies. To make change the dollar was actually cut into eight pieces or “bits.” Thus came the terms “pieces of eight” from these early times and “two bits” from our time.

A wonderful recording by the BBC about the history of pieces of eight (number 80 in the series “A History of the World in 100 Objects”) contains a detailed explanation, including sound effects (parrot screaming, coins jingling). The narrator reminds us that it’s not only the popular-culture references that made the coin so important, but that it was the first real global currency. The text to accompany the audio tells us that:

‘Pieces of Eight’ is one of many names for the large silver coins of the king of Spain, a multiple of the basic Spanish denomination, the silver real: so a piece of 8-reales, peso de ocho reales, or peso. It is also the original silver dollar, a name that starts out as a place in the Czech Republic in the sixteenth century and ends as the currency of the modern USA.

Pieces of eight pretty much ruled the monetary world from the 1570s till the French Revolution, the main vehicle for the transfer across the globe of silver from the great mines in Mexico and Bolivia in Spain’s American empire. It was a coin that would be familiar in every part of the inhabited world.

Throughout this period only infinitesimal quantities of pieces of eight ever fell into pirate hands. The Spanish operated a highly successful system of security and transport, the threats to which came from organised enemy fleets, not rag-tag pirate crews. Most of their silver sailed around the world paying for wars, encouraging trade, changing the fates of empires. You cannot write a history—especially an economic history—of the early modern world without engaging with pieces of eight. Pirates of the Caribbean merely nibbled on the insignificant fringes of this world.

Forbes had a 2008 blog post that provides some general information about pirates and lists the top-earning pirates of all time. The beginning of the post proposes that high-seas piracy “was the colonial era’s version of investment banking.”

As alluring and popular as pirates are in today’s culture (note the Pirates of the Caribbean films, the movie Dodgeball’s Steve the pirate, International Talk Like a Pirate Day, Capt’n Crunch’s nemesis Jean LaFoote, Captain Morgan rum, and so much more), let’s not forget that modern pirates are no laughing matter.

*A recent Wall Street Journal article about Treasure Island has a good discussion of the book’s origins and legacy.

The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

Amy Farber is a research librarian in the Federal Reserve
Bank of New York’s Research and Statistics Group.


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Of more recent relevance: the Spanish dollar was the origin of U.S. stock market trading in 1/8s. This began with the Buttonwood Tree Agreement in 1792 and the arcane practice continued until decimalization was adopted in 2000.

“It is also the original silver dollar, a name that starts out as a place in the Czech Republic in the sixteenth century and ends as the currency of the modern USA.” Silver mining was a major industry in the Czech region in the 16th century and before. A co-worker’s tale of mining there reminded me of Tolkien’s dwarves. But I don’t think it was the Czech Republic in the sixteenth century 🙂

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