Federal Republic of Central America
On July 1, 1823, after the empire of Iturbide's fall, Central America declared its independence both from Mexico, Spain and any other country and created the United Provinces of Central America or the Federal Republic of Central America, which included Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica. The province of Chiapas which belonged to the former Captaincy General of Guatemala joined the Mexican Republic.
According to The Constitutional Charter promulgated on November 22, 1824, each province had its own local government directed by a prime minister. All local governments obeyed to the federal government, based in Guatemala and led by its president, Manuel José Arce.
Juan Barrundia was the first mayor of Guatemala, due to differences with the federal president, he was deposed and imprisoned. The state's seat was moved to Quetzaltenango where was murdered the Guatemalan deputy Cirilo Flores. Given this, the states of El Salvador, Honduras and Nicaragua protested and declared war on the federal government. On April 13, 1829, Guatemala City is occupied and looted by the army commanded by Honduran general Francisco Morazán, who reinstated in their positions the authorities deposed by Manuel José Arce. In 1833, Francisco Morazan,the federation president, moved the seat of the federal government to San Salvador upon suggestion of Dr. Mariano Galvez, head of state of Guatemala. Galvez, with his liberal tendencies, was reelected in 1835, but had to flee to Mexico in February 1838, given the progress of conservative forces led by Rafael Carrera. From El Salvador, the Federal President could do nothing to prevent Rafael Carrera and the Conservative Party from taking control of Guatemala. In May, 1838 , Congress authorized the federal states of the federation to organize themselves as they saw fit. Following that Nicaragua segregates from the federation in April 1838, Honduras and Costa Rica in November 1838, El Salvador, February 1841 and finally in 1847, the Republic of Guatemala is founded.
Economically, when it gained independence, Central America was in bankruptcy. No taxes were collected anymore. Mining was down considerably. The passage of the Mexican troops had left all state institutions without funds. The country was dragging a colonial debt towards Mexico that could not be paid. Although opened to foreign trade, Central America had little to export. Trade between provinces was almost non-existent and difficult to implement due to the lack of roads that linked them. The various struggles between the provinces worsened the economic situation. The people treasured the few gold and silver coin that still existed to prevent future instability, this being the only means of saving insurance available to them. With time and the shortage of coins, many macacos (rough coins of varying value) began to appear, they had been kept by Colonial Indians during all those years. They were subsequently coined again by the authorities along with foreign currency which also came into circulation. Also, many fake currency cob made in Honduras began to circulate, which the government banned it and collected.
With the economic situation against them and being freed from the heavy hand of colonial ruling, which apparently was the only thing that united the five provinces of the Captaincy General, a strong local-ism emerged in each province, that was not counterbalanced by any economic interest, political or social common ground. In an attempt to bring the provinces together, the Unionist contracted in 1828, the "English" debt, presumably to invest in infrastructure and generate wealth, but it was used to pay back wages and debts of the state. The expenses of the Union as well as debts were basically absorbed by Guatemala.
The Guatemalan Mint had been virtually paralyzed since 1821. In 1824, began the coinage of the federation in very scarce quantities and many were exported or leaved the country to pay for goods being imported. For the minting, they used pesos, modules, ridges and titles of the colonial period differing only in design and the addition of 10Ds20Gs ( 0.90277 silver) for the silver coins and 21 carats for gold coins. Guatemala continued to use the "NG" as mint mark except in the smaller coins (cuartillos) that used only the "G". Some coinages were also conducted sporadically and only in some denominations in the provinces of Honduras ("T" of Tegucigalpa) and Costa Rica ("CR"). Guatemala minted coins of 1 / 4, 1 / 2, 1 and 8 reales in silver and 1 / 2, 1, 2, 4 and 8 escudos in gold, but only the coinage of quarters, 8 reales and 2 escudos were made almost regularly.
There are two known tested 8 reales, in 1824. One with the foliage of the largest ceiba (common Central American tree) in two varieties, with fluted edge and ridge. And the other, with the sun in the middle of the 5 volcanoes. In 1829, during the occupation of Francisco Morazan, the provisional coin of 1 real is wedged for the state of Guatemala. From 1838 to 1841, Guatemala reseals for the second time foreign currency and local macacos.