The unusual history of the pataca, Macao’s local currency

7 December 2012

The pataca is the official currency of the Macao Special Administrative Region – a fact that nobody disputes. This wasn’t always the case, however – as seen in the difficulties the territory encountered on creating its own stable monetary system, even after the pataca had gone into circulation in 1906.

At the end of the 19th century, the Macao economy was based on the value of silver and on the circulation of a number of local and regional currencies calculated in terms of their equivalent in silver. The variety of denominations and values led to some confusion in day-to-day Macao economics, as people dealt in a mixture of Hong Kong dollars, the payment certificates of British territories in the strait of Malacca (later to become Singapore dollars), a number of different currencies from China’s Guangdong province, and the currency known to the Portuguese as the “Mexican pataca”. This latter coin, minted by the Spanish empire and known as the famous “piece of eight”, was immortalised in pirate tales because it was part of the cargo of  a good many galleons that crossed the Atlantic. It was, in fact, in general use across the Far East. It explains the origin of the name for Macao’s official currency today.

“Pataca’s” past

The name pataca, however, had been common since the end of the 17th century, to identify the currencies of other Portuguese overseas territories.

In Brazil, the pataca was a silver coin in a variety of denominations that circulated between 1695 and 1834, initially coined in Portugal and sent to the South American colony, but which was later coined in Brazil itself, at the mints at Pernambuco, Bahia, Rio de Janeiro and Minas Gerais.

In Timor (now Timor Leste or East Timor), the pataca was the Portuguese colony’s currency between 1894 and 1959, except for between 1942 and 1945, during the Japanese occupation in the Second World War.

In 1901, the Lisbon government, in an attempt to streamline the monetary system in Macao, decided to create a specific currency for the territory and gave Banco Nacional Ultramarino (BNU) exclusive rights to issue banknotes with the official name Patacas. BNU is now part of state banking group Caixa Geral de Depósitos and only retains its original name in Macao.

Given the responsibility of being the issuing bank for Macao, BNU – created in 1864 as the issuing bank for the Portuguese colonies at the time – opened its doors in 1902 on Avenida Almeida Ribeiro – the city’s main street at the time. It followed the establishment of subsidiaries in Angola and Cape Verde in 1865, in Sao Tome and Principe and India in 1868, and Mozambique in 1877.
After Macao, BNU also opened branches in Guinea-Bissau, in 1903, and in Timor, in 1912.

In 1917, after opening branches in the then Portuguese colonies in Africa and the East, BNU started to set up a network of branches in mainland Portugal, Madeira and the Azores.

The first banknotes issued by BNU in Macao – with denominations of one, five, ten, 20, 25, 50 and 100 patacas – were put into circulation on 27 January 1906, and the new currency was declared to be the only legal tender in Macao, with an official exchange rate of one pataca to 450 réis (unit of currency of the Portuguese monarchy).

Banknotes from this first issue – which became known in the BNU archives as the “Old Simple issue” (emissão Antiga-Simples) – were printed in London at Barclay & Fry Ltd, and included printed signatures of the Governor and Deputy Governor of BNU and the handwritten signature of the manager of the Bank’s Macao subsidiary. The paper used was of poor quality and only the 100 pataca notes had a watermark.

Changing people’s minds

Making the pataca the only legal tender in Macao and issuing banknotes were far from enough to change the local monetary system. It would take a lot more than this to encourage the Macao population to accept the new currency in shops, factories, warehouses, taverns, exchange houses, and on the streets. Macao people were used to using coins rather than paper money, which they viewed with suspicion and were quickly exchanged for silver coins at very low exchange rates.

Everyday transactions continued as they always had done, using a variety of traditional currencies still in circulation despite the official decrees. The new currency was only used for paying official taxes and expenses such as electricity bills.
A 1914 report from the manager of BNU in Macao outlined the difficulties the pataca was having in being accepted as a currency for general use, noting that even civil servants were quick to exchange the salaries they were paid in patacas for silver coins.

In its first few decades, the pataca also faced competition from traditional Chinese deposit certificates – pangtan – denominated in silver coins. Issued by local private banks and exchanged on demand for silver, they were accepted like banknotes, and were transferable and convertible into their corresponding silver value.

Pangtan remained in circulation as the de facto currency until 1944, when they were banned. Local legislation was passed to prohibit the circulation of any other currency but the pataca.

The “certificates” – a currency for wartime

One of the most unusual chapters in Macao’s monetary history involved the local issue of “certificates” to replace the usual banknotes. It occurred in response to the exceptional situation the territory faced in the Second World War and to the Japanese occupation of China as well as much of Asia.

Portugal’s neutral status during the war meant that Macao escaped an actual Japanese occupation – although the commander of the Japanese garrison that occupied a neighbouring Chinese island set himself up in Macao. The island was left practically isolated as a place of neutrality in an occupied Asia.

The effects of the Japanese invasion of China, which began in 1931 in Manchuria, started to be felt in Macao in 1937 when a large number of refugees moved onto the island. Meanwhile, there was a significant drop in the circulation of foreign currencies, which the local government collected and used to pay for imports.

The war also made it impossible to send banknotes from Portugal to the territory. One of those shipments of patacas was retained in Mozambique and would only be put into circulation in Macao in November 1945, some months after the end of the war.

In an attempt to solve the situation, the authorities at the time decided to set up a money reserve by ordering official treasuries to keep all silver and foreign currencies that made it into the official coffers.

In 1944, after repeated requests from Macao’s governor at the time, Gabriel Maurício Teixeira, the then Portuguese Colonies Minister authorised the Macao subsidiary of BNU to issue “certificates” as “the colony’s private currency, of a nominal value to be set by the Macao governor.”

The Certificates were a provisional solution from the start, and plans were made for them to go out of circulation as soon as communications were re-established and it was possible to supply the territory with banknotes.

Private currency

The “private currency” was printed on locally made paper and, as it was impossible to use the metal plates normally used to print banknotes, two 35-kilogramme blocks of limestone were employed as lithographic stones by local printing company Litografia Sin Chon & Cia.

A currency issue in Macao required exceptional security measures to be put into place to prevent fraud and falsification. This turned into a physical endurance test for the authorities of the time.

The official stipulation was that the certificates had to have a handwritten original signature by the financial services director and manager of the local BNU, Carlos Eugénio de Vasconcelos. In a report addressed to Lisbon headquarters, Vasconcelos said that for several months he had had to sign between 1500 and 2000 certificates a day, and that there were days on which the number of signatures reached 5000.

The exceptional security measures also applied to printing staff, who had to eat and sleep at their place of work whilst being watched by government soldiers while the certificates were being printed.

During breaks in the printing work, the lithographic stones were locked in a room guarded by a Portuguese soldier.

Despite all of these precautions, false certificates quickly appeared in circulation. Most of these forgeries were of poor quality and could be easily identified, but others were only discovered because they were missing inscriptions that were invisible to the naked eye that had been included in the genuine certificates.

The security inscriptions were inspired by a Luís de Camões poem called “On Never Navigated Seas” (Por Mares Nunca Antes Navegados), a popular and traditional verse from Póvoa de Varzim “go with God” (vai com Deus) and the Greek letter Omega.

The certificates, which were issued in denominations of five, ten, 25, 50, 100 and 500 patacas, had an issue date of 5 February 1944 and remained in circulation until 1947.

An unusual footnote in the history of the pataca is that coins only went into circulation alongside banknotes as of 1952, when five, ten and 50 avos (cent), and five pataca coins went into circulation, after being minted in Lisbon at Casa da Moeda.

The five pataca silver coin minted that year was named by the International Numismatic Society as one of the “Great Historic Silver Coins of the World”.

Issuing banks

The history of the pataca cannot be separated from that of BNU. When the Macao Issuance Institute was created in 1980, gaining exclusive responsibility for issuing Macao’s coins, BNU became the agent bank for the Macao government and continued to issue banknotes.

On 16 October 1995, via an agreement between Portugal and China to prepare for the sovereignty handover of Macao in 1999, the Macao branch of the Bank of China became the second issuing bank, whilst the official body responsible for currency issuance became the Macao Monetary Authority.

The banknotes that are currently in circulation in Macao are the 10, 20, 50, 100, 500 and 1000 pataca notes, and the latest banknote issues were carried out by BNU dated 2005 and by the Bank of China dated 2003.

As well as banknotes that are currently in circulation, the two banks have also recently issued commemorative notes. In 2008 the Bank of China issued four million 20 pataca notes to commemorate the Beijing Olympic Games, and this year it launched a 100 pataca note, to commemorate the bank’s centenary.

This year BNU and the Bank of China have both issued 10 pataca notes celebrating the Year of the Dragon.

Competition from other currencies

However, despite the undisputed status of the pataca as Macao’s official currency, even now the Hong Kong dollar is in general circulation, and in some cases – such as in the casinos, which drive the local economy – it is preferred because it is an established international currency.

A law passed in 1995 bans Macao retailers from refusing payment in patacas, but cases in which the Hong Kong dollar is explicitly preferred are still frequent.

Due to the predominance of the neighbouring territory’s currency, Macao’s government departments also accept payments in Hong Kong dollars.

The small geographical size and population of Macao and the comparatively small international profile of its economy make the pataca an essentially local currency, which is difficult to use and exchange outside the confines of the Special Administrative Region.

For exchange purposes the pataca is pegged to the Hong Kong dollar (at a rate of around 103 patacas to 100 Hong Kong dollars).

As well as the Hong Kong dollar, the currency of the People’s Republic of China, the yuan, is also in general circulation, and in many cases is preferred in Macao.

The pataca tree

Beyond its official role as the currency of the Macao Special Administrative Region, the pataca also has a place in Portugal and Brazil’s popular culture through the expression “the pataca tree,” (árvore das patacas), as a way of talking about easy money.

But the money tree, or the pataca tree, does actually exist. It is the common name given in Brazil to Dillenia indica, a tree originally from India, which can reach a height of 40 metres.

Its association to the money tree is, according to Brazilian folklore, linked to the Portuguese prince D. Pedro, who declared Brazil’s independence.

Dillenia indica – which was introduced to South America in the reign of King D. João VI (1816–1826), who transferred the Portuguese court to Brazil – is singular in that its petals close over the centre of its flowers to make its fruit, which means that any object placed in the tree’s flower ends up inside the fruit.

The legend of the pataca tree is that D. Pedro placed coins – Brazilian patacas – inside the tree’s flowers and then sent the fruit to Portugal with the message that, “in this land money even grows on trees”.

Legends aside, it’s fair to say that despite the initial difficulties in asserting its (essentially local) influence, the pataca has become an important part of Macao’s institutional structure. It is a part of Macao’s own identity and autonomy, at one time as a territory under Portuguese administration and now as a Special Administrative Region of the People’s Republic of China.  (macauhub)