Pieces of eight were Spanish silver coins (pesos) that circulated along with other hard currency in the American colonies. Since the settlements in the New World were all possessions of their mother countries (England, Spain, France, Portugal, and the Netherlands), they did not have monetary systems of their own. England forbade its American colonies to issue money. Colonists used whatever foreign currency they could get their hands on. Pieces of eight (from Spain), reals (from Spain and Portugal), and shillings (from England) were in circulation; the pieces of eight were most common. The Spanish silver coin was so named because it was worth eight reals and at one time had an eight stamped on it. To make change, the coin was cut up to resemble pieces of a pie. Two pieces, or “two bits,” of the silver coin made up a quarter, which is why Americans still refer to a quarter (of a dollar) as two bits.

There were frequent money shortages in the colonies, which usually ran a trade deficit with Europe. The colonies supplied raw goods to Europe, but finished goods, including manufactured items, were mostly imported, resulting in an imbalance of trade. With coinage scarce, most colonists conducted trade as barter, exchanging goods and services for the same. In 1652 Massachusetts became the first colony to mint its own coins; that year there was no monarch on the throne of England. Although the issue of coinage by colonists was strictly prohibited by England, the Puritans of Massachusetts continued to make their own coins for some 30 years thereafter, stamping the year 1652 on them as a way to circumvent the law.