Pataco – Portugal

In 1811, Portugal’s currency situation was one of profound crisis and complexity, directly caused by the ongoing Peninsular War (1807-1814). Following the French invasions, the Portuguese royal court had fled to Brazil in 1807, leaving the country under British military administration led by the Duke of Wellington. To finance the war effort against Napoleon’s forces, the government resorted to massive currency debasement. The mint in Lisbon, operating under extreme pressure, churned out vast quantities of low-value copper réis coins, while also striking limited silver coins often reserved for military payrolls. This resulted in severe inflation and a breakdown of public confidence in the coinage.

The monetary system became a chaotic patchwork. Alongside the debased Portuguese coins, British gold and silver circulated widely, used to pay and supply the allied troops. Spanish coins, both legitimate and counterfeit, also flooded the market due to the fluid movements of armies and refugees. Furthermore, the government and local authorities issued emergency paper money, including vales reais (royal treasury bills), which traded at a steep discount. The effective disappearance of high-value gold and silver coinage from everyday circulation crippled commerce, creating a multi-tiered system where foreign and precious metal coins commanded a premium over the proliferating low-intrinsic-value copper.

This monetary instability had severe social and economic consequences. Prices for basic necessities skyrocketed, punishing the civilian population and leading to widespread hardship and famine in some regions. The situation was somewhat stabilized by the presence and financial support of the British army, but a true resolution was impossible without the end of the war. Ultimately, the currency chaos of 1811 reflected the broader state of a nation serving as a devastated battlefield, with its economy subordinated to the immediate demands of military survival, awaiting peace and the eventual return of the monarchy to begin a long process of monetary reconstruction.