Encyclopedia of Money: Vellon

Originally, vellon was a mixture of copper and silver that became widely used for subsidiary coinage in Spain in the sixteenth, seventeenth, and eighteenth centuries. Over its history vellon took several forms. Calderilla, an early type of vellon, contained a variable but modest amount of silver, and was coined mainly in the sixteenth century. Another type of vellon, rich vellon, was coined mainly in the seventeenth century and contained a token 6.95 percent of silver. A pure copper vellon containing no silver or metal alloys also appeared in the seventeenth century.

Vellon was coined into units of maravedis, ranging from 1/2 maravedi to 12 maravedis. The maravedi was a large Moorish coin that emerged as the smallest unit of account in the Castile monetary system.

Vellon coinage circulated before the era of paper money in Spain. Just as paper money bears a face value far in excess of the value of the paper, vellon coins bore face values far in excess of the value of their metal content. Seventeenth-century Spain saw one of the last great episodes of inflation before the development of paper money vastly multiplied the inflationary potential of modern monetary systems. As Spain debased vellon coinage to pure copper, vellon coins drove out silver and gold coins according to the merciless logic ordained by Gresham’s law. The government called in vellon coins and restamped them at higher values and in time vellon was carried in bags to transact business.

In 1654 the government complained that owners of calderilla had not surrendered them as requested and ordered that within a month all calderilla should be used to pay government obligations or returned to the mint for restamping. Nobles who failed to comply within the specified time faced six years’ imprisonment, and commoners faced a comparable sentence to the galleys.

Like modern paper money, counterfeiters saw vellon coinage as an opportunity to profit from differences in intrinsic values, based upon metal content, and extrinsic values, reflected in face values. On 29 October 1660 the government enacted a statue setting forth that: (1) counterfeiting, and efforts to import vellon counterfeited abroad, were capital offenses, (2) importing, receiving, or assisting the importation of counterfeit coins would lead to confiscation of importing vessels, forfeiture of goods, and burning at the stake, and (3) a mere failure to denounce smuggling and counterfeiting merited a sentence to the galleys and confiscation of goods.

Early in the eighteenth century Spain’s government limited the legal-tender status of vellon to transactions under 300 reales, and placed the practice of selling gold and silver at a premium in a category with “theft, highway robbery, and counterfeiting,” with penalties commensurate with the crime. Meanwhile economic growth had caught up with monetary policy, stabilizing the value of vellon coinage, and monetary order was for a time restored in Spain.