18 | Spanish Banknotes

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500 Reales de Vellón. 1863. Banco de Santiago. Series C and with matrix on the left. (Edifil 2023: 164). Extremely rare, previously mounted and moth spot in the lower right corner, of no importance. Extremely Fine. Encapsulated PMG53 (previously mounted, small hole).

500 REALES 1865 BANK OF SANTIAGO

During the first half of the 19th century, the Galician tanneries suffered a major recession due to the independence of the Spanish-American territories and particularly Argentina, on whose market the raw materials of this industry depended. From 1860, with the improvement of roads, the construction of railways and the specialisation of this industry in the production of leather soles, the economy of Santiago de Compostela experienced a notable recovery. In the midst of this optimistic environment, the Banco de Emisión y Descuentos de Santiago was founded with the acquiescence of the Bank of Spain, which had no interest in Galicia, and in a fairly short period of time; its creation was authorised in May 1864, and it began to operate on 20 September of that same year with a share capital of 3 million reales. A large part of the shares were subscribed by Galician businessmen and merchants, related to the tanneries; there were also many Riojan industrialists. However, the main shareholder was the Sociedad de Crédito Vasco, which subscribed a third of the shares.

The Board of Governors of the Bank immediately ordered the production of banknotes in England for a total of 5 million reales. These banknotes did not begin to circulate until March 1865 and in a quantity of barely 1 million reales.

The Bank's low income from deposits and the crisis of 1866 put an end to the young institution's hopes of survival. Mutual requests for cash between the Banco de Santiago and the Banco de la Coruña caused the circulation of banknotes to fall. Despite an initial good acceptance that placed more than eight hundred thousand reales in circulation at the end of that year, the following year the paper money in the hands of the public plummeted to just over two hundred thousand reales in mid-1866 and to just over half that figure at the end of the summer. The banknotes of the Banco de Santiago did not have a real acceptance and therefore the Bank maintained very high metal reserves (close to 50%) to keep the local economy going. In 1867 the liquidation of the institution was already being considered, although it would not be authorized until 1870, when the Bank was liquidated in 1871.
Given the very short life of the banknotes of the Banco de Santiago and taking into account that its main shareholder, the Sociedad de Crédito Vasco, was also the shareholder of the Banco de Oviedo, it is not surprising that there are hardly any copies of these institutions. There are no known copies of the Asturian bank and only a remainder of 200 reales of the Basque company is known.

Most of the Banco de Santiago notes must have been destroyed as soon as the liquidation began, since there were very few in the hands of the public, so the survivors are anecdotal and all with matrix and without signatures, as far as we know: 100 reales (series A), 500 reales (series C), 1000 reales (series D), 2000 reales (series E) and 4000 reales (series F). Of these, the 1000 reales note has some notable paper faults on its right side, the 4000 reales note has minor faults on the bottom and the 100 reales note has one corner missing and another damaged. Only the 500 and 2000 reales notes are in good condition. We assume that there is a 200 reales note (series B), although we have never seen it. Of all these, the only one that has a number is the 500 real note, which makes it probably the rarest of the entire series, which is already unique in itself.

From this numbering it does not seem too risky to deduce that the amounts assigned for each value would be the following to constitute five million reales:

Value Amount Real
100 2,500 250,000
200 2,500 500,000
500 2,500 1,250,000
1,000 1,000 1,000,000
2,000 500 1,000,000
4,000 250 1,000,000

According to these figures, it is surprising that only 5 (perhaps 6) copies of 9,250 printed have survived. Such is the rarity of the banknote that Ibercoin offers.

We would like to thank Jose Antonio Castellanos Vargas for his collaboration in the historical contextualization of this extraordinary and historic piece of Spanish notaphilia.