Gibraltar was captured by the British Fleet in 1704 and, under the 1713 Treaty of Utrecht, was ceded to Britain, by Spain, in perpetuity.
An Act of 1686 prohibited the export of British silver coins, even to the British colonies. A subsequent Act of 1707 allowed the Spanish dollar to be used in British colonies valued at 6/-, a third above its value of 4/6d in sterling. The rationale being that overseas possessions should provide Britain with silver rather than vice versa.
It was fortunate that Gibraltar was not considered a British colony at the time as the Spanish silver dollar (or hard dollar) was the Gibraltarian currency. It was minted in Mexico and was known as the 'Mexican dollar' or 'cob'. At that time the hard dollar was subdivided into 8 réales and 128 copper quartos.
The silver réal was debased by Spain in 1642 through the addition of copper (60% copper, 40% silver), known as a réal de vellón (billon réal). It was an attempt by Philip IV to raise funds to pay for military expeditions associated with the Thirty Years War and to put down revolts in Catalonia and Portugal. One silver réal was worth 2 to 2½ réales de vellon dependent on silver content. Both the réal and the réal de vellón circulated alongside one another both in Gibraltar and Spain. With no distinction being made between the silver réales and billon réales in Gibraltar, a substantial profit was made by the army officers when making payments to troops. It was found that the regimental officers had created the fiction, for their own profit, that in Gibraltar a réal was a réal, regardless of whether it was silver or billon. The soldiers were being in effect cheated of almost 40% of their pay. The Spanish made an unsuccessful attempt to recapture Gibraltar in 1727. In the aftermath of the siege, the officers were ordered to give back, to the soldiers who had survived, the 40% they had that was deducted from their wages.
A reform in 1737 set the silver réal (hard dollar) at 2½ réales de vellon. This coin, called the réal de plata fuerte (hard silver réal), became the new standard and was issued as coins until the early 19th century.
Gibraltar's currency was impacted in 1739 following the scarcity of silver coin in Spain that year resulting in the Mexican dollar becoming scarce in Gibraltar. Faced with shortages of silver coin, and the need for a supply of such coin for paying the troops and for the day-to-day commercial transactions, the Governor of Gibraltar, in 1741, ordered that a heart shape be punched out of silver coins, in both dollars and smaller denominations. The intention was to retain sufficient silver in the garrison for its needs, and prevent it being exported to Morocco, which would only accept unpierced coin. The amount of silver removed from a Mexican dollar was worth 2 réales.
As the hard dollar could be bought for less réales de vellon in Gibraltar than in Spain there was a tendency for dollars to be exported from Gibraltar to Spain. The piercing of silver coin in Gibraltar had the consequence that a pierced dollar could not continue to have the same value as an uncut dollar, since it had less silver. At the time, the Mexican dollar in both Spain and Gibraltar was worth 10⅝ réales. With the introduction of the piercing of coin, the uncut Mexican dollar acquired a greater value (12 réales, 192 quartos) in Gibraltar. The currency of Spain and Gibraltar were now no longer the same. All piercing was ordered to cease in 1749 and cut hard dollars were withdrawn from circulation in 1762. Smaller pierced denominations were allowed to continue to circulate in Gibraltar due the shortage of small denomination coins.
Dollar, host coin 1744 Philip V 8 réales. Mexico City mint, assayer MF. Heart-shaped hole.
Heart plug from a Spanish-American 8 réales.
There is no evidence that the plugs circulated. They were probably melted, but a few escaped the melting pot.
Dominica was colonised by the Frenched in 1632, but captured by the British in 1761 and made a British colony in 1763.
Martinique been under French control since 1635, with the exception of three different occupancies by the British, these being 1762-1763, 1793-1801 and 1809-1816.
Contemporary documents point to a second series of pierced coins being authorised in Gibraltar c. 1762 and exported to the Caribbean for use in Martinique and Dominica, the aim being to retain money in the islands of use. All denominations were Spanish-American host coins. These coins displayed a pierced heart-shaped hole with patterned border on the cut edges.
Gibraltar exported for use in Martinique and Dominica.
Host coin 1753 Ferdinand VI, 8 réales, Lima mint, assayer J, heart-shaped hole with patterned border
Such piercings also applied to quarter, eighth, and sixteenth dollars.