Puerto Rico: The First Place in the Americas to Print Banknotes

Wealth & Business · Published 18 October 2026 Swipe more like this →

In short: Long before Cuba or even Spain itself, Puerto Rico was pioneering paper currency. Driven by a desperate shortage of gold and a complex web of colonial taxes, the island became an early laboratory for fiat money—a move that would eventually lead to one of the most dramatic cases of hyperinflation in history.

The transition to paper money in Puerto Rico was born of necessity. Following Spanish colonization in 1508, the island's mineral reserves were quickly depleted, causing a severe economic recession. The 'situado' was established by Spain as periodic gold deliveries from New Spain's Viceroyalty to steady the financial situation. However, piracy and shipwrecks frequently disrupted these shipments, leading to chronic instability and a reliance on silver 'pieces of eight.'

The first major shift toward paper occurred in 1766. Inspired by revenue stamps used for taxes under Philip IV, Puerto Rico became the first Overseas Province in the Spanish Empire to print 8-real banknotes—beating Cuba by 15 years and Spain itself by seven. These early notes were often issued as a stopgap when gold shipments failed to arrive. By 1769, authorities had already reclaimed 88,000 of these notes once the expected metal finally reached the island.

The system faced its ultimate test in the early 19th century. When the 'situado' was discontinued between 1809 and 1810 due to Mexico's independence, Puerto Rico entered a fiscal crisis. Governor Salvador Meléndez Bruna ordered the production of provincial pesos to cover military costs and debts. However, without gold backing, these notes suffered catastrophic depreciation. By 1814, the currency had lost 300% of its value; by 1815, it had plummeted to a staggering 600%, making merchandise prices exorbitant and forcing a total restructuring of colonial governance.

After 1898, the United States completely incorporated Puerto Rico's currency into its own monetary framework. By rebranding as the Bank of Puerto Rico, the Banco Español de Puerto Rico started providing notes equal in value to U.S. dollars. currency. Eventually, these were redeemed for U.S. Treasury notes, ending centuries of local provincial issuance.

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