Market Focus : Battered Peso Is Still Beloved by Mexico and Its People : Once the coin of the realm throughout the Americas and Asia, it is an integral part of culture and daily life.

When financial crises strike, money changes--not just hands, but names. Argentina abandoned its peso in the 1980s at the height of disaster, renaming it the austral before it changed back to the peso. Brazil has moved from a cruzado to a cruzeiro to its real of today.

But Mexico, whether its currency is battered, beleaguered or buoyant, has stood by its peso from colonial days through independence, foreign occupation, revolution, numerous devaluations and the nation’s current monetary emergency.

“In Mexico, the currency is the peso,” declared Alfredo Lelo de Larrea, the silver-haired director of Mexico’s Casa de la Moneda, the oldest mint in the Americas and birthplace of billions of pesos. “There is no reason to change the root of our money.”

Despite the economic crisis that has slashed the peso’s value 37% during the last month, to about 5.5 to the U.S. dollar, Lelo de Larrea--and most other Mexicans--takes great pride in the latest incarnation of the peso. Unveiled, ironically perhaps, less than a year before its recent nose dive, the New Peso is a coin of bronze and aluminum, whose design re-creates the Aztec calendar and underscores the depth of Mexico’s historic and cultural roots. In its long history, the peso has been a silver coin, an elaborately decorated bill and, at one point, a domination worth so little it was not even minted.

But, through it all, the peso has become more than a currency. It is, like the ancient calendar on its coins and the past patriots portrayed on its crisp, new bank notes, an integral part of Mexican culture and daily life.

And the peso lives deep in the dialect of the streets. Collective taxis--mini-vans on fixed routes that fall between a private cab and a public bus in status, comfort and cost--are known to every Mexican as peseros , a name that stuck in the days when a ride cost a peso.

Anyone who knows the value of a bird in hand will understand the old Mexican saying, “a peso in the pocket is worth 100 flying.” Tightwads must be reminded occasionally that “pesos are round so that they can roll”--from one hand to another.

For worthless objects, no one gives a quinto , a five-centavo piece. A 50-centavo piece is a toston , an adaptation of the nickname for the Spanish four-real coin, worth half a “Spanish dollar,” the colonial pieces of eight minted in Mexico.

It is in the peso’s checkered history that the currency’s present crisis finds its perspective. The devaluation that triggered billions of dollars in losses for foreign investors last month and brought the nation’s economy to a standstill is, in fact, just the latest tarnish on the face of a currency whose roots are as deep as its disputes.

Mexico’s minting operations run far deeper in history than any other in the Americas. Mexico was chosen as the mint site for all of colonial Spain in the 16th Century because it has the richest veins of gold and silver in both North and South America.

The word peso means weight or measure. The first coins minted in Mexico in 1536 were not even round. The original pesos were just chunks of silver bearing a stamp that certified their weight.

In 1704, England’s Queen Anne decreed that size and weight would be the determining factors in deciding the value of foreign money circulating in her American colonies. The decree was a tacit recognition that the coin of the realm was the peso, which was used throughout the Americas and Asia. In colonial times, 77% of the coins minted in Mexico were exported. The British East India Co. even bought Chinese tea in peso-denominated contracts.

Austrian Archduke Maximilian, the emperor that Napoleon III imposed upon Mexico during the French occupation, was the first ruler to order the words “1 PESO” engraved on a coin, in 1864. On the flip side of the coin was his profile.

In Maximilian’s day, the peso was worth about a nickel more than the U.S. dollar. The currency was so widely accepted in international trade, in fact, that many Asian governments simply stamped their own seals on Mexican coins and used them domestically.

The Hong Kong & Shanghai Banking Corp. issued bearer notes--in effect, currency--denominated in “Mexican dollars.” The Russo-Chinese Bank issued similar notes, with English wording on one side and Russian on the other.

But those Eastern markets also forced the Mexican government to admit failure in its attempt to introduce a new coin that turned out to be about as popular as the Susan B. Anthony dollar. The new peso of the late 19th Century, called a “scale peso” for the image of a scale on its face, had the same weight and silver content as the original version, but was smaller and had a different design. The change caused such a scandal that the mint went back to the old design in 1873.

A few years later, the first coins made of nickel, rather than silver, received a similar reception at home. Introduced by the government of Manuel Gonzalez--one of the various puppet presidents during the Porfiriato, the long de facto reign of dictator Porfirio Diaz--the coins were soon nicknamed bilimbiques , roughly translated as wooden nickels.

Underscoring the traditional importance Mexicans attach to their currency, crowds marched to Mexico City’s Zocalo, or central plaza, to throw the coins at the National Palace, shouting, “Take back your bilimbiques .”

In 1875, the dollar and the peso were valued equally--for the first and last time. As the peso’s value slid, it ceased to be an international currency for the first time in more than a century. By 1905, with the peso worth less than 50 cents, Diaz put the country on the gold standard and fixed the peso-dollar exchange rate at 2:1.

That scheme fell apart with Mexico’s 1910 revolution. Every army commander of the revolution’s many factions and shifting alliances issued his own currency--bills backed by nothing but the commander’s good faith.

Wary citizens hid their silver and gold coins in clay pots, which they buried in back yards or in the thick walls of old haciendas. Tales of buried riches spread with the return of peace and, by the late 1920s and 1930s, treasure-hunting reached a fever pitch. Even today, amid the worst currency crisis in more than a decade, nearly every Mexican family has a story of a crazed relative looking for old silver pesos during far worse times in the decades before.

At the same time, cooler heads were trying to stabilize and modernize the monetary system. With the peso worth 2.25 per dollar, the government founded the Bank of Mexico in 1925 and began issuing paper money backed by the government.

Initially, those bills were about as popular as the coins made of nickel. Banks in the industrial city of Monterrey at first refused to accept them, as did the railroads in the western states of Coahuila and Zacatecas. Bank of Mexico historian Eduardo Turrent found that while the number of bills issued remained steady from 1925 to 1931, the number of bills in circulation shrank. Mexicans simply changed the new bills for gold as quickly as possible.

Realizing that drastic measures were in order, the government took gold coins out of circulation in 1931. Bills would no longer be exchanged for gold on demand.

By 1933, the peso dropped to 3.60 to the dollar. And five years later, the government’s radical expropriation of all foreign oil companies threw Mexico and its peso into yet another crisis. Foreign reserves were depleted by indemnification payments to the oil companies, and capital flight began. By 1939, the peso had reached 5.50 to the dollar.

Despite the peso’s upheaval in foreign exchange markets, history now records that the currency actually was at its artistic epitome. The American Bank Note Co., at the direction of the Bank of Mexico, printed a striking one-peso note that is still highly coveted by collectors. A detailed engraving of the sun-shaped Aztec calendar is at the center of the ornate bill, printed on a sky blue and pink background.

The mint also designed a memorable one-peso coin with an engraving of the Pyramid of the Sun at Teotihuacan, north of Mexico City. The coin was eventually issued as a 20-centavo piece.

Of all the coins Mexico has minted, Lelo de Larrea said, the Sun Pyramid is his favorite. “It was my weekly allowance when I was a child,” he explained--the currency of candy, toys and movie tickets.

Coming in a close second, he said, is the coin series Mexico released just over a year ago, when Mexico dropped three zeros from the peso and again officially placed the word “new” before it. Every coin, from a quinto to a 20-peso piece, now features a different element of the Aztec calendar. Most are adaptations of different rings of the circular calendar, which are used as frames for the coins. The coins are smaller and lighter than before.

“People like them because they don’t rip your pockets,” insisted Lelo de Larrea.

But, like the scale peso fiasco, the bilimbiques and the first attempt to get Mexicans to accept paper money, this new set of coins has also generated controversy. The quintos and 10-centavo pieces are so small and light that many Mexicans fear they will accidentally throw them away. And many have.

Silver miners also are furious that the new stainless steel and aluminum bronze coins are made with imported materials, when Mexico remains the world’s largest silver producer. In an attempt to placate them, mint officials introduced domestic silver centers in the 10- and 20-peso coins, and surrounded them with aluminum bronze frames to protect the softer metal.

Still, silver mine owner Fernando Ysita argued that is not enough. He is on a decade-long, one-man campaign to put Mexico on the silver standard and replace the current coins and bills with silver pieces.

Meanwhile, all the changes over the 459-year history of the peso have created a rich tradition that Lelo de Larrea plans to celebrate with a museum now being created in the old mint building downtown. But in testimony to the peso’s present hard times, he added that neither he nor the government has any idea when the new museum will be completed. Money problems.