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The Word "" and the $ Origins, History and Geography of Dollar

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i ic i History of Money n f t on Financial scandals

From to

The history of the dollar is a story involving many countries in different continents. The word dollar is much older than the American unit of . It is an Anglicised form of "", (pronounced taler, with a long "a"), the name given to first minted in 1519 from locally mined in Joachimsthal in . (Today the town of Joachimsthal lies within the borders of the and its Czech name is Jáchymov). Thaler is a shortened form of the term by which the was originally known - Joachimsthaler.

Later on the English version of the name (dollar) was also applied to A similar coins, not only ones minted in central Europe but also the History of money Spanish and the Portuguese eight-real piece. Both these large from ancient times silver coins were practically identical in weight and . Today we to the present day, are familiar with the phrase pieces of eight from tales of pirates in the by Glyn Davies, 3rd Caribbean. , University of Press, 2002. Those coins, particularly the Spanish peso or dollar circulated widely in 720p. Britain' North American colonies because of a shortage of official British coins. That is why, after the gained its Much of the independence the new nation chose "dollar" the name of its currency information in this instead of keeping the . page comes from the above- mentioned book. Later Thalers See the website for Probably the most famous thaler coins were those minted during the additional reign of Maria Theresa, Archduchess of and queen of Hungary information about and Bohemia (1740-80). Maria Theresa thalers were in common use in the history of Aden and some other parts of the Middle East as recently as the 1960s. money. The thaler was the unit of currency in and some of the other Other printed German states until the second half of the 19th century. The unification sources were used, of in 1871 and the adoption of the as the common particularly in currency put an end to the old units, just as the adoption of the and the introduction of new notes and coins in 2002 put an end to the connection with French , the German Deutschemark, Italian lire, , dollar sign, and are and other European currencies. mentioned below. There are also links to the most important web sources used.

The Scandinavia Daler

While on the subject of currency unions, before the formation of the Scandinavian in 1873 and the adoption of the krone or krona, (the first being the Danish and Norwegian word for "" and the second, the Swedish word) each of the Scandinavian countries had their own version of the "daler" as their currency. Like "dollar" the name "daler" came from "thaler" and provides a clue as to how the word evolved. (The term "daler" was also used in Low German and Dutch). In dalers were minted from 1534 onwards, and in from 1544. As Denmark and formed a until the Napoleonic Wars, when Norway passed into Swedish rule, the two countries shared a common currency.

The Scandinavian Currency Union was modelled on the much larger Latin Currency Union which was inspired by . effectively put an end to the Latin Currency Union. Although Denmark, Norway and Sweden were neutral, World War I put a considerable strain on their economies too, and consequently the Scandinavian Currency Union was officially dissolved not long after, in 1924.

Dollars in Shakespeare

Interesting examples of the use of the word "dollar" in Britain long before the creation of the United States - in fact the English colonisation of North America had scarcely begun - can be found in two of Shakespeare's plays.

Macbeth Act I, Scene 2

Rosse: "That now Sweno, the Norway's King, craves composition; Nor would we deign him burial of his men Till he disbursed at Saint Colme's Inch Ten thousand dollars to our general use."

The Tempest, Act II, Scene 1

Gonzalo: "When every grief is entertain'd that's offer'd, Comes to th' entertainer - Sebastian: "A dollar." Gonzalo: "Dolour comes to him, indeed: you have spoken truer than you purpos'd."

The last remark by Gonzalo was, of course, a pun since "dolour" is an old-fashioned word for pain or grief, like the modern Spanish word dolor, which also means pain.

Shakespeare's use of the word "dollar" in Macbeth was anachronistic since the real Macbeth probably died in the middle of the 11th century, nearly 500 years before the first thalers were minted. Nevertheless the use of the word in Macbeth and the Tempest, both of which were first performed in about 1611, is a clear indication that the term dollar was already in use in English before the the Pilgrim Fathers set sail for America in 1620.

The Aztecs, Incas and the

The reasons for the adoption of the dollar as the official currency of the US are bound up with events in Mexico, and . Small bands of Spanish adventurers had overthrown the empires of the Aztecs and Incas, plundering their temples and razing them to the ground or converting them to cathedrals - Machu Picchu was the outstanding exception, not being "discovered" until the 20th century.

In addition to the treasures they melted down, the Spanish conquerors soon began to produce large quantities of silver from mines in Mexico and Peru. Most important of all were the enormous reserves they discovered at Potosi in what is now Bolivia. Ships laden with silver regularly crossed the Atlantic and Pacific Oceans. Those crossing the Atlantic were naturally bound for . Others sailed west across the Pacific to China to trade silver for Chinese goods. As the Spaniards controlled the sources of most of the world's silver their coins were widely accepted, especially in places like Britain's American colonies where silver was in short supply.

The

During colonial times the official British coinage was in short supply and as a result the a variety of substitutes was used in Britain's American colonies, including wampum, in some of the northern colonies, and tobacco, or more conveniently, certificates for tobacco deposited in public warehouses, in Virginia. The colonists also used whatever foreign coins they could obtain. At various times in different colonies paper money was issued and disputes with the British government over this were one of the causes of the . The rebels financed their war of independence largely by printing paper money notes that were called Continentals. By the end of the war, these had been rendered practically worthless by but financial prudence is a luxury in wartime. The notes had served their purpose and, with the help of their French allies, the won the war. As Spanish or dollars had long been in wide circulation in North America, some of the paper money issued in some of the colonies before the war had been denominated in dollars. Other notes used British monetary units. During the war too, some Continentals were denominated in British units, others in dollars. In 1792 the newly independent United States chose the dollar, subdivided into 100 cents, as the unit of American currency in preference to the British pound.

Foreign coins were supposed to lose their status as within 3 years of the US coins coming into circulation. A new was established in Philadelphia and started its operations in 1794. The mint was the first purpose-built structure authorized by the United States government. However, because of a shortage of both and silver, in 1797 the government extended legal tender status to Spanish dollars for an indefinite period. The discoveries in California, which sparked off the Gold Rush in 1848, led to a massive increase in the production of gold coins by the mint, and in 1857 the United States finally removed legal tender status from all foreign coins. By then, although as necessary to the retail trade as ever, developments in banking meant that coins were just the small change of commerce.

British Dollars

In 1797, owing to a desperate shortage of silver coins, the Bank of issues altered foreign coins from its reserves. Half a million pounds worth of Spanish dollars issued by King Charles IV were over-stamped with a small engraving of George III. The re-issued coins, with a value of 4 and 9 pence, attracted ridicule. "Two Kings' heads and not worth a crown" was one witticism. (A 'crown' in this context meant 5 shillings, "half-a-crown", sometimes colloquially known as "half-a-dollar", being a common coin before in 1971). A cruder, description was "the head of a fool stamped on the neck of an ass". The issue failed because over-stamping was also applied unofficially to the plentiful supplies of light or base Spanish dollars.

A few years later a more successful issue of dollars was made by the . In 1804 Matthew Boulton, the business partner of the steam engine pioneer James Watt, was employed to erase completely the existing design on full-weight Spanish coins and stamp them as Bank of England Five Dollars.

Dollars in the and Commonwealth

Canada

A great deal of the trade of was with the United States and as a result pressure grew for a switch of currency from the to a decimal system similar to the American one. The British government agreed and the Province of Canada gradually changed over to the dollar between 1853 and 1857. Canadian dollars and cents were minted in Britain until the establishment of the Ottawa Mint in 1908. , and the Pacific Islands

In contrast to Canada Australia kept the sterling system for well over half a century after being gaining independence from Britain. Because of the cumbersome nature of the division of the pound into 20 shillings and the shilling into 12 pence there had been many proposals in Britain over the years for the adoption of a decimal system. In 's time the two shilling coin or was introduced as a step in that direction. However it was not until 1971 that Britain finally adopted the decimal system and divided the pound into 100 new . The Australians decimalised their currency five years earlier but, in contrast to Britain, decided to abolish the pound and adopt the dollar. Two new Australian dollars were worth one old , i.. the was the equivalent of ten shillings.

New Zealand followed Australia's lead and replaced their own pound with the in 1967. and the both adopted the dollar as their national currencies. Some of the smaller island states such as , and continue to use the Australian Dollar.

Africa

One of the very few former colonies in Africa to use the dollar is . Some years after unilaterally declaring independence from Britain, replaced the Rodesian pound by the . After majority rule was introduced the country changed its name to Zimbabwe and changed the name of its currency accordingly. still uses the rand. Most other former British colonies have adopted African names for their currencies. Kenya and Uganda use the shilling.

The Caribbean

In 1935 the British government introduced a new currency, the British Dollar, in many of the British colonies in the Caribbean. Previously, in some of those colonies the US dollar had circulated in addition to the pound sterling. Later, after gaining independence, the former colonies adopted their own versions of the dollar as their national currency. Of the remaining British colonies in the Caribbean, the and the use the US dollar as their currency but the have chosen to issue their own dollar.

The

In the British colonies of Malaya and the official currency was the Indian but the general public kept their accounts and made most of their payments, including taxes, in dollars and cents. Therefore in 1867 the public's preferences were recognised when legal tender status is given to various foreign coins such as dollars from Hong Kong, Mexico, Bolivia and Peru. Subsequently, in 1874, the British authorities in Singapore also made the and US dollar legal tender. Competition was provided for these foreign coins twenty years later in 1894 when British dollars were first minted for the colonies in the Far East. Most of these "British" dollars were actually minted in Bombay in . A much bigger step towards the replacement of the foreign dollars was taken in 1902 when the Straits Settlement (Singapore) dollar was introduced, and two years later legal tender status was withdrawn from the foreign coins.

Of course a currency does not have to be official for it to be acceptable to traders. In his reminiscences about World War II an American sailor described how a shipmate once bought a basket containing a live cobra at Candy on the island of Ceylon (modern ), then still a British colony, because he laughingly offered two "dollars Mex" (i.e. two Mexican dollars) to the young street peddler. See playing the game for his account of the incident.

Foreign Dollars in China

The Chinese had used base metals for their coins ever since they invented them, independently of but probably slightly later than the Lydians and Greeks. For large transactions base metal coins were not very convenient and silver, in weighed quantities, was used. Another alternative was paper money, which the Chinese invented centuries before it became common in Europe but abandoned after about 1455.

Not long after that, Spanish galleons laden with silver began to sail regularly from Acapulco in Mexico to in the where the silver was used to buy Chinese goods such as porcelain and silk. Supplies of silver from the Americas started to dry up towards the end of the Ming dynasty and were probably a significant factor in the economic crisis China experienced at that time. Subsequently supplies picked up again as new mines were developed. After the Opium War China was forced by Britain and other countries, including France, Germany, America and to open up major harbours as treaty ports and to cede land to those countries as foreign concessions. As a result a large variety of foreign silver coins, particularly Mexican dollars, circulated widely in China.

Prior to 1890 the Chinese had rarely minted coins but in that year they started to produce their own silver coins. In the early decades of the 20th century output of silver coins from Chinese mints increased but political stability prevented the complete replacement of foreign coins.

The fate of Gareth Jones, the Welsh journalist, illustrates how Mexican dollars continued to be important in China even in the 1930s. Jones had been the first person to report the terrible Soviet famine in 1933, caused by Stalin's policies. A couple of years later, in the spring of 1935, Jones travelled to Manchuria, or Manchukuo as the Japanese called the conquered province, but was captured by bandits and held for a ransom of 100,000 Mexican dollars. After 16 days in captivity he was murdered. The bandits had been coerced by the Japanese military which was holding their families hostage as it did not want Jones to expose the army's actions in Manchuria. The successful Communist Revolution finally brought an end to the chaos of currencies that had long afflicted China.

The Dollar Sign $ - Theories of its Origins

Since the is more recent than the name, and the origins of the latter are well understood, one might expect that the origins of the sign would also be known for certain particularly when the origin of the British , £, which is far older, is well-established. However that is not the case with regard to the dollar.

Perhaps this is less surprising when there has been controversy over the origin of the sign for the European euro, ¼, a currency that did not come into existence until 1999. (It has been claimed that the was invented by Arthur Eisenmenger more than a quarter of a century before the currency was introduced). Nevertheless a number of theories about the origin of the dollar symbol have been proposed.

The United States Abbreviation Theory

One of the most popular theories is that the dollar sign is derived from the initials of the United States. If you superimpose a capital "U" on a capital "S" then drop the lower part of the "U", what you end up with is a version of the dollar symbol with two strokes. This theory was endorsed by the American libertarian philosopher and staunch defender of capitalism, , in her novel . Chapter 10 is entitled the Sign of the Dollar. Rand claimed the dollar sign was the symbol not only of the currency, but also the nation, a free economy, and a free mind.

The Peso Abbreviation and Piece of Eight Theories

However, a more widely accepted theory nowadays is that the sign owes its origins to the Spanish peso.

One version of this theory is that the standard abbreviation of "peso" was simply "P", but the plural form was a large "P" with a small "s" above it and to its right. This was simplified by retaining only the upward stroke of the "P" and superimposing the "S" upon it. Hence the symbol of the dollar.

See:

Dreyfuss, Henry Symbol source book : an authoritative guide to international graphic symbols. New York : McGraw-Hill, 1972.

If the peso abbreviation theory is the correct one why is the US dollar sign sometimes written with two vertical strokes? A possible explanation is that the best known Spanish Peso coin had two pillars engraved on the reverse side to symbolise the "" at Gibraltar and the words "Plus Ultra" indicating that beyond the Pillars of Hercules there were other lands. That coin was called the Pillar Dollar in the British colonies in North America and the two pillars may have become the two strokes in the Dollar sign.

For brief information on the "Pillar Dollar" see:

Nussbaum, Arthur A history of the dollar. New York : Columbia U.P., 1957.

There is another version of the theory linking the sign to the Spanish peso. As mentioned earlier the peso was subdivided into eight reals, hence the name piece of eight. This was represented as P8 or /8/. Eventually it became customary to write the oblique strokes across the figure 8. In the past precious metal coins were sometimes split into pieces to provide small change. The use in America of the expression two bits for 25 cents is a legacy of this since if a or peso or piece of eight was split into quarters each part would consist of two of the original eight pieces or reals.

The 8 with two strokes became a letter S with two strokes since S looks like an 8 that has been split, as when a peso was broken to provide change in reals. Eventually a further simplification was introduced by dropping one of the strokes.

The Potosi Theory

Adherents of this theory also believe that the source of the dollar sign is to be found in the Spanish peso but they would attribute it specifically to coins minted in Potosi which was, as mentioned above, the world's richest source of silver. The mint mark of the Potosi mint evolved to become a monogrammed PTSI with all those letters completely superimposed so that the symbol looked like an S wrapped around a T. The resemblance to the dollar sign can be seen from the images of the Potosi Pillar Dollars. Click on the image for a larger picture. The mint mark is near the date.

The Shilling Abbreviation Theory

There is a view, held by some typographers, that the dollar symbol derives from the abbreviation for the shilling, s, which was used in Britain, both as a coin and as a monetary unit, until decimalisation in 1971. A stroke through a letter was sometimes used to indicate that the letter was an abbreviation. The classic example of this is the British pound symbol £ which is a cursive capital with a stroke through it. The pound symbol is derived from the Latin word for a pound weight, libra, since a pound of silver was the standard on which the monetary unit was based. In the case of the shilling the stroke through the s would have had an added significance.

Until 1971 when Britain divided the pound into 100 (new) pennies and abandoned the old sub- units, two different methods of representing the shilling were used; one was simply the letter s and the other was the oblique slash / which is also known as a , the name of the Roman coin from which the shilling is derived. Actually the slash or solidus was used to separate shillings from pence when sums of money were written down, e.g. 4/6 for four shillings and . (For an amount consisting of an integral number of shillings a dash indicated zero pence, e.g. 3/- for three shillings). If you make the slash or solidus vertical and combine it with the S you end up with $ - the dollar sign.

It may seem strange that having thrown off British rule and rejected the British pound in favour of the Spanish dollar, the Americans should adopt a symbol based on the abbreviation for the British shilling but during colonial times they had used British units for financial calculations even when they used substitutes, such as the Spanish dollar, as currency. Even today Americans still often refer to cents as pennies.

Furthermore, shillings had been produced in the colonies without authorisation from the British authorities. In 1652 John Hall set up a private mint in Massachusetts and produced coins known as pine tree shillings because of the picture of a pine tree stamped on them. His mint was forced to close in 1684, but because of it the word shilling would still have carried patriotic connotations a century later.

The Portuguese Cifrão Theory

Even though numbers are used all over the world today, there are still differences in the way in which numbers are represented in different countries. In the English-speaking world a period is used to separate integral numbers from decimal fractions whereas in continental Europe the comma is used instead of the decimal point and either a period or a is used for thousands and other groups of three digits. In the past the Spanish used a symbol called the calderon to separate the thousands, and the Portuguese used one called the cifrão. As the cifrão was also used to separate expressions of different denominations and it consisted of the letter s with two vertical lines it has been suggested that it gave rise to the dollar symbol. (Über die Herkunft des Dollarzeichens, Christian Weyers, Zeitschrift für Semiotik, vol 13, no. 3-4, 1992).

The Hand Counted Paper Theory

The management of Em Letterpress, a firm based in New Bedford, Massachusetts, pointed out in May 2008 that the dollar sign is used in marking hand counted sheets of paper, e.g. 7$ would indicate seven sheets. Em Letterpress suggested that the most likely reason for that would be that a hastily scrawled 'S' would too closely resemble a numeral 5, so 'SH' was used, abbreviated over time to an imposed SH, and then the H's crossbar eliminated resulting in the $ symbol but with a double vertical stroke. Paper money being counted in sheets could have used same symbol.

The Slavery Theory

There have been claims that the dollar symbol, $, is derived from the words for "slave" and "nail" in Spanish (or in Latin, according to one version of this theory that posits an earlier date for the invention of the symbol). The shackles worn by slaves could be locked by a nail which was passed through the rings or loops at the ends of the shackle and bent while it was still hot and malleable. The Spanish for slave is esclavo and for "nail" is clavo. Therefore the "S" with a nail, $, or S-clavo = esclavo or slave. Slaves constituted a store of wealth and as a result the abbreviation for slaves that slave-owners used in their account books came to represent money.

This seems like the kind of explanation that would be popular with conspiracy theorists. It does not seem to be very popular in printed sources, at least not in ones, but I (Roy Davies) have seen it on the Internet and was also told it by someone who said he had heard it from a Latin-American economist and an American history professor.

Other Websites on the Dollar Sign

Origin of the dollar sign An essay by Mark Brader. Where did the dollar sign come from? An article attributing its invention to Oliver Pollock. International abbreviations for the new eurocurrency This article also includes a discussion of the dollar sign and propounds the view that it is derived from the abbreviation for the shilling. The dollar sign and the Potosi mint mark Messages to a numismatic discussion forum about the resemblance of the dollar sign to the Potosi mint mark. Type Glossary A-Z The entry on currency symbols also claims that the dollar sign is derived from an old symbol for the shilling. The Origins of $, The Dollar Symbol One of the few sites to consider the Portuguese cifrão theory, although in the end the author plumps for the peso theory. Dollar is Dolor One of the very few articles available on the Internet advocating the view that the dollar symbol is derived from a symbol for slaves.

"Dolar" redirects here. For the Slovenian philosopher, see Mladen Dolar. For other uses, see Dollar (disambiguation).

Canadian one-dollar coin (Loonie)

United States one dollar coin

United States dollar bill

Australian one-dollar coin

A New Zealand One Dollar coin

One New dollar

500 old bill

The dollar (often represented by the dollar sign $) is the name of the official currency of many countries, including the United States, Canada, the Eastern Caribbean territories, , , , , , Singapore, Hong Kong, Taiwan, , , Australia, and New Zealand. Contents

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y 1 History o 1.1 Etymology o 1.2 Development of use o 1.3 Adoption by the United States o 1.4 Usage in Great Britain o 1.5 Usage elsewhere y 2 National currencies called "dollar" y 3 Economies which use the dollar o 3.1 Economies currently using the dollar o 3.2 Countries and regions which have previously used the dollar o 3.3 Other territories which currently use the dollar o 3.4 Countries which accept the dollar, but do not use it as their official currency y 4 See also y 5 References y 6 External links

[edit] History

[edit] Etymology

On the 15th of January, 1520, Count Hieronymus Schlick (Czech: Jeroným Šlik z Passounu) of Bohemia began minting coins known as Joachimsthaler, named for Joachimstal (modern Jáchymov in the Czech Republic), where the silver was mined.[1] (In German, thal or tal refers to a valley or dale.) "Joachimsthaler" was later shortened in common usage to taler or thaler (same pronunciation), and this shortened word eventually found its way into Danish and Norwegian as (rigs)daler, Swedish as (riks)daler, Dutch as (rijks)daalder, Ethiopian as LLL talari, Italian as tallero, Flemish as daelder, and into English as dollar.[1]

[edit] Development of use

The coins minted at Joachimsthal soon lent their name to other coins of similar size and weight from other places. One such example, the Dutch dollar, circulated throughout the Middle East and was imitated in several German and Italian cities. Carried by Dutch traders, this coin was also popular in the Dutch as well as in the Dutch Colony (New York), and circulated throughout the during the 17th and early 18th centuries. Some well-worn examples circulating in the Colonies were known as "dog dollars".[2] By the mid-18th century, the lion dollar had been replaced by the Spanish "pieces of eight" which were distributed widely in the Spanish colonies in the and in the Philippines.[3] Pieces of eight (so-called because they were worth eight "reals") became known as Spanish dollars in the English-speaking world because of their similarity in size and weight to the earlier Thaler coins.

[edit] Adoption by the United States

By the American Revolution, Spanish dollars gained significance because they backed paper money authorized by the individual colonies and the .[3] Common in the Thirteen Colonies, Spanish dollars were even legal tender in one colony, Virginia.

On April 2, 1792, U. S. Secretary of the reported to Congress the precise amount of silver found in Spanish milled dollar coins in common use in the States. As a result, the United States Dollar was defined[4] as a unit of weight equaling 371 4/16th grains (24.057 grams) of pure silver, or 416 grains of standard silver (standard silver being defined as 1,485 parts fine silver to 179 parts alloy[5]). It was specified that the "money of account" of the United States should be expressed in those same "dollars" or parts thereof. Additionally, all lesser-denomination coins were defined as percentages of the dollar coin, such that a half-dollar was to contain half as much silver as a dollar, quarter-dollars would contain one-fourth as much, and so on.

In an act passed in January 1837, the dollar's alloy (amount of non-silver metal present) was set at 11%. Subsequent coins would contain the same amount of pure silver as previously, but were reduced in overall weight (to 412.25 grains). On February 21, 1853, the quantity of silver in the lesser coins was reduced, with the effect that their denominations no longer represented their silver content relative to dollar coins.

Various acts have subsequently been passed affecting the amount and type of metal in U. S. coins, so that today there is no legal definition of the term "dollar" to be found in U. S. statute.[6][7][8] Currently the closest thing to a definition is found in Title 31, Section 5116, paragraph b, subsection 2: "The Secretary [of the Treasury] shall sell silver under conditions the Secretary considers appropriate for at least $1.292929292 a fine troy ounce."

Silver was mostly removed from U. S. coinage by 1965 and the dollar became a free-floating fiat currency without a commodity backing defined in terms of real gold or silver. The US Mint continues to make silver $1-denomination coins, but these are not intended for general circulation.

[edit] Usage in Great Britain

The word dollar had been in use in the English language as a variant for "thaler" for about 200 years before the founding of the United States, with many quotes in the plays of Shakespeare referring to dollars as money. Coins known as "Thistle dollars" were in use in during the 16th and 17th century,[9] and use of the English word, and perhaps even the use of the coin, may have begun at the University of St Andrews.[citation needed] This might be supported by a reference to the sum of "ten thousand dollars" in Macbeth (Act I, Scene II) (an anachronism because the real Macbeth, upon whom the play was based, lived in the 11th century). In 1804, a British five-shilling piece, or crown, was sometimes called "dollar". It was an overstruck Spanish 8 Real coin (the famous 'piece of eight'), the original of which was known as a Spanish dollar. Large numbers of these 8-real coins were captured during the Napoleonic Wars, hence their re-use by the Bank of England. They remained in use until 1811.[10] During World War II, when the US dollar was (approximately) valued at 5 shillings, the halfcrown (2s 6d) became nicknamed a "" by US personnel in the UK.

[edit] Usage elsewhere

Chinese demand for silver in the 19th and early 20th centuries led several countries, notably the United Kingdom, United States and Japan, to mint trade dollars, which were often of slightly different weights to comparable domestic coinage. Silver dollars reaching China (whether Spanish, Trade, or other) were often stamped with Chinese characters known as "chop marks", which indicated that that particular coin had been assayed by a well-known merchant and determined genuine. [edit] National currencies called "dollar"

Prior to 1873, the silver dollar circulated in many parts of the world, with a value in relation to the British gold of roughly $1 = 4s 2d (21p approx). As a result of the decision of the to stop minting silver thaler coins in 1871, in the wake of the Franco-Prussian war, the worldwide price of silver began to fall.[11] This resulted in the US Coinage Act (1873) which put the United States on to a 'de facto' . Canada and Newfoundland were already on the gold standard, and the result was that the value of the dollar in North America increased in relation to silver dollars being used elsewhere, particularly and the Far East. By 1900, value of silver dollars had fallen to 50 percent of gold dollars. Following abandonment of the gold standard by Canada in 1931, the began to drift away from parity with the US dollar. It returned to parity a few times, but since the end of the of fixed exchange rates that was agreed in 1944, the Canadian dollar has been floating against the US dollar. The silver dollars of Latin America and South East Asia began to diverge from each other as well during the course of the 20th century. The adopted a gold exchange standard in 1906 after it had been forced to rise in value against other silver dollars in the region. Hence, by 1935, when China and Hong Kong came off the , the Straits dollar was worth 2s 4d (11.5p approx) sterling, whereas the was worth only 1s 3d sterling (6p approx).

Existing dollar units today are the , the Barbados dollar, the , the dollar, the , the Canadian dollar, the East Caribbean dollar, the , the Hong Kong dollar, the , the , the Trinidad and Tobago dollar, and the United States dollar. The only ones on this list that have still retained their original parity from the days of the universal Spanish dollar are the Singapore dollar and the Brunei dollar.

The term "dollar" has also been adopted by other countries for currencies which do not share a common history with other dollars. Many of these currencies adopted the name after moving from a sterling-based to a decimalized monetary system. Examples include the Australian dollar, the New Zealand dollar, the , the , the Fiji dollar, the , the Rhodesian dollar, the Zimbabwe dollar, and the .

y The tala is based on the Samoan pronunciation of the word "dollar". y The had the same etymological origin as dollar (i.e. thaler). [edit] Economies which use the dollar

[edit] Economies currently using the dollar

Date ISO 4217 Countries Currency Established Preceding Currency code

Antigua and East Caribbean XCD

Barbuda Dollar Australia and

its external Australian Dollar AUD 1966-02-14 Australian Pound territories

Bahamas Bahamian Dollar BSD

Barbados Barbados Dollar BBD

Belize Belize dollar BZD 1973 British Honduran Dollar

Brunei Brunei dollar BND

Canada Canadian Dollar CAD

East Caribbean XCD

Dollar

East Timor United States Dollar USD

Ecuador United States Dollar USD 2001 Ecuadorian Sucre

El Salvador United States Dollar USD 2001-01-01 Salvadoran colón

Fiji Fiji Dollar FJD

East Caribbean XCD

Dollar

Guyana Guyana Dollar GYD

Rupee, Real

Hong Kong Hong Kong Dollar HKD 1863 (Spanish/Mexican), Chinese

Jamaica Jamaican Dollar JMD 1969 Kiribati dollar along Kiribati with the Australian N/A/AUD

Dollar

Liberia LRD

Marshall United States Dollar USD

Islands Federated

States of United States Dollar KWD

Micronesia Namibian Dollar

Namibia along with the South NAD 1993 African rand

Nauru Australian Dollar AUD

New Zealand and its external New Zealand Dollar NZD 1967 New Zealand pound territories

Palau United States Dollar USD

Saint Kitts and East Caribbean XCD

Nevis Dollar East Caribbean XCD

Dollar Saint Vincent East Caribbean XCD

and the Grenadines Dollar Saint Pierre Canadian Dollar, CAD and Miquelon unofficial[12]

Singapore Singapore Dollar SGD

Solomon Solomon Islands SBD

Islands Dollar

Suriname SRD

Republic of

New Taiwan Dollar TWD China (Taiwan) Trinidad and Trinidad and Tobago TTD

Tobago Dollar along Tuvalu with the Australian TVD/ AUD

Dollar United States

United States Dollar USD and its territories United States Zimbabwe [13] USD

Dollar

The United States dollar (sign: $; code: USD) is the official currency of the United States of America. The U.S. dollar is normally abbreviated as the dollar sign, $, or as USD or US$ to distinguish it from other dollar-denominated currencies and from others that use the $ symbol. It is divided into 100 cents.

The U.S. dollar is the currency most used in international transactions and is one of the world's reserve currencies.[12] Several countries use it as their official currency, in many others it is the de facto currency,[13] and it is also used as the sole currency in some British Overseas Territories.

Contents

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y 1 Overview y 2 Etymology o 2.1 Nicknames y 3 Dollar sign y 4 History o 4.1 Continental currency o 4.2 Silver and gold standards y 5 Coins o 5.1 Collector coins o 5.2 Dollar coins o 5.3 Mint marks y 6 y 7 Means of issue y 8 Value y 9 International use o 9.1 The dollar as international o 9.2 U.S. Dollar Index o 9.3 Dollarization and fixed exchange rates o 9.4 Dollar versus Euro y 10 Exchange rates o 10.1 Historical exchange rates y 11 See also y 12 References y 13 External links o 13.1 Images of U.S. currency and coins

[edit] Overview

The Constitution of the United States of America provides that the shall have the power "To coin Money".[14] Laws implementing this power are currently codified in Section 5112 of Title 31 of the United States Code. Section 5112 provides in which forms the United States dollars shall be issued.[15] Those coins are both designated in Section 5112 as "legal tender" in payment of debts.[15] The dollar is one example of the alloy dollar. The pure silver dollar is known as the . Section 5112 also provides for the minting and issuance of other coins, which have values ranging from one-hundredth of one dollar to fifty dollars.[15] These other coins are more fully described in Coins of the United States dollar.

The Constitution provides that "a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time".[16] That provision of the Constitution is made specific by Section 331 of Title 31 of the United States Code.[17] The sums of money reported in the "Statements" are currently being expressed in U.S. dollars (for example, see the 2009 Financial Report of the United States Government).[18] The U.S. dollar may therefore be described as the of the United States.

The word "dollar" is one of the words in the first paragraph of Section 9 of Article 1 of the U.S. Constitution. In that context, "dollars" is a reference to the Spanish milled dollar, a coin that had a monetary value of 8 Spanish units of currency, or reales. In 1792 the U.S. Congress adopted legislation titled An act establishing a mint, and regulating the Coins of the United States. Section 9 of that act authorized the production of various coins, including "DOLLARS OR UNITS²each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver". Section 20 of the act provided, "That the money of account of the United States shall be expressed in dollars, or units... and that all accounts in the public offices and all proceedings in the courts of the United States shall be kept and had in conformity to this regulation". In other words, this act designated the United States dollar as the unit of currency of the United States.

The U.S. dollar bill uses the decimal system, consisting of 100 equal cents (symbol ¢). In another division, there are 1,000 mills or ten dimes to a dollar, or 4 quarters to a dollar. However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10¢, while "eagle" and "" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices. When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as notes (with the exception of gold, silver and platinum coins valued up to $100 as legal tender, but worth far more as bullion). Both one-dollar coins and notes are produced today, although the note form is significantly more common. In the past, "paper money" was occasionally issued in denominations less than a dollar () and gold coins were issued for circulation up to the value of $20 (known as the "," discontinued in the 1930s). The term eagle was used in the for the denomination of ten dollars, and subsequently was used in naming gold coins. In 1854, James Guthrie, then Secretary of the Treasury, proposed creating $100, $50 and $25 gold coins, which were referred to as a "Union," "Half Union," and "Quarter Union,"[19] thus implying a denomination of 1 Union = $100.

Series of 1917 $1 United States bill

Today, USD notes are made from cotton fiber paper, unlike most common paper, which is made of wood fiber. U.S. coins are produced by the . U.S. dollar banknotes are printed by the Bureau of Engraving and Printing, and, since 1914, have been issued by the Federal Reserve. The "large-sized notes" issued before 1928 measured 7.42 inches (188 mm) by 3.125 inches (79.4 mm); small-sized notes, introduced that year, measure 6.14 inches (156 mm) by 2.61 inches (66 mm) by 0.0043 inches (0.11 mm). [edit] Etymology

Further information: Dollar

In the 16th century, Count Hieronymus Schlick of Bohemia began minting coins known as Joachimstalers (from German thal, or nowadays usually Tal, "valley", cognate with "dale" in English), named for Joachimstal, the valley where the silver was mined (St. Joachim's Valley, now Jáchymov; then part of the , now part of the Czech Republic).[20] Joachimstaler was later shortened to the German Taler, a word that eventually found its way into Danish and Swedish as daler, Dutch as daalder, Ethiopian as talari, Italian as tallero, Flemish as daelder, and English as dollar.[20] Alternatively, thaler is said to come from the German coin Guldengroschen ("great ", being of silver but equal in value to a gold guilder), minted from the silver from Joachimsthal.

[edit] Nicknames

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The colloquialism "buck" (much like the British word "quid" for the pound sterling) is often used to refer to dollars of various nations, including the U.S. dollar. This term, dating to the 18th century, may have originated with the colonial fur trade. "Greenback" is another nickname originally applied specifically to the 19th century dollars created by to finance the costs of the Civil War for the North. The original note was printed in black and on the back side. It is still used to refer to the U.S. dollar (but not to the dollars of other countries). Other well-known names of the dollar as a whole in denominations include "greenmail", "green" and "dead presidents" (the last because late presidents are pictured on some of the bills).

"Grand", sometimes shortened to simply "G", is a common term for the amount of $1,000. The suffix "K" or "k" (from "kilo-") is also commonly used to denote this amount (such as "$10k" to mean $10,000). In colloquial English, when someone refers to a "large" or "stack", it is usually a reference to an amount that is a multiple of $1,000 (such as "fifty large" meaning $50,000). Banknotes' nicknames are the same as their values (such as "five", "twenty" etc.) The $100 bill is nicknamed "Benjamin", "Benji" or "Franklin" (after , who is pictured on the note), "-note" (C being the Roman numeral for 100), "Century note" or "bill" (e.g. "two bills" being $200). The $20 bill has been referred to as "double sawbuck", "dub" or "Jackson" (after ); the $10 bill - as "sawbuck", "ten-spot" or "Hamilton" (after Alexander Hamilton); the $5 bill - as "fin", "fiver" or "five-spot". The $2 bill is sometimes called "deuce", "Tom", "Jefferson" or "T.." (after ); and the $1 bill - "single" or "buck". The dollar has also been referred to as a "bone" and "bones" in plural (e.g. "twenty bones" is equal to $20) or a "bean". The newer designs are sometimes referred to as "Bigface" bills or "Monopoly money". Some people refer to U.S. money as "cha-chingers", "bucks", "green-backs" and "smackers".

In French-speaking areas of , the dollar is referred to as "" (pronounced "pee- as") and the French holdover "sous" (pronounced "soo") is used to refer to the .

In Panama, the equivalent of buck is "palo" (literally "stick").

In Ecuador, the dollar is referred to as "lata".

In Peru, a nickname for the U.S. dollar is "coco", which is a pet name for Jorge ("George" in Spanish), a reference to the portrait of on the $1 note.

Puerto Ricans, both living in and in the United States, may refer to the dollar as "peso".

In some places in Mexico, prices in U.S. dollars are referred to as "en americano" ("in American"), with the word "peso" used in Mexico primarily to refer to the .

Cubans call the U.S. dollar "fula". Loosely translated from Cuban jargon mean bad or not good. American money was not bad to have or use by Cubans in the island, but it's possession was penalized before the mid-90's, hence the nickname. [edit] Dollar sign

Main article: Dollar sign

Silver real of 1768.

The symbol $, usually written before the numerical amount, is used for the U.S. dollar (as well as for many other currencies). The sign's ultimate origins are not certain, though it is possible that it comes from the Pillars of Hercules on the Spanish Coat of arms on the Spanish dollars that were minted in the New World mints in , Potosí, Bolivia, and in , Peru. These Pillars of Hercules on the silver Spanish dollar coins take the form of two vertical bars (||) and a swinging cloth band in the shape of an "S".[21]

Another explanation is that this symbol for peso was the result of a late 18th-century evolution of the "ps." The p and the s eventually came to be written over each other giving rise to $.[22][23][24]

A fictional possibility suggested is that the dollar sign is the capital letters U and S typed one on top of the other. This theory, popularized by novelist Ayn Rand in Atlas Shrugged,[25] does not consider the fact that the symbol was already in use before the formation of the United States.[26] [edit] History

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See also: History of the United States dollar

Obverse of rare 1934 $500 Federal Reserve Bill, featuring a portrait of President William McKinley.

Reverse of $500 Bill

The first dollar coins issued by the United States Mint (founded 1792) were similar in size and composition to the Spanish dollar. The Spanish, U.S. silver dollars, and Mexican silver pesos circulated side by side in the United States, and the Spanish dollar and Mexican peso remained legal tender until 1857. The coinage of various English colonies also circulated. The lion dollar was popular in the Dutch New Netherland Colony (New York), but the lion dollar also circulated throughout the English colonies during the 17th century and early 18th century. Examples circulating in the colonies were usually worn so that the design was not fully distinguishable, thus they were sometimes referred to as "dog dollars".[27] The U.S. dollar was created and defined by the Coinage Act of 1792. It specified a "dollar" to be based in the Mexican peso at 1 dollar per peso and between 371 and 416 grains (27.0 g) of silver (depending on purity) and an 'eagle" to be between 247 and 270 grains (17 g) of gold (again depending on purity). The choice of the value 371 grains arose from Alexander Hamilton's decision to base the new American unit on the average weight of a selection of worn Spanish dollars (and later Mexican peso). Hamilton got the treasury to weigh a sample of Spanish dollars and the average weight came out to be 371 grains. A new Spanish dollar was usually about 377 grains in weight, and so the new U.S. dollar was at a slight discount in relation to the Spanish dollar. The gold equivalent of the Spanish dollar in sterling was ǧ1 = $4.80, whereas the gold equivalent of the U.S. dollar was ǧ1 = 4.86˜. This exchange rate with sterling remained right up until Britain abandoned the gold standard in 1931.

The Coinage Act of 1792 set the value of an eagle at 10 dollars, and the dollar at 1/10th eagle. It called for 90% silver alloy coins in denominations of 1, 1/2, 1/4, 1/10, and 1/20 dollars; it called for 90% gold alloy coins in denominations of 1, 1/2, 1/4, and 1/10 eagles.

The value of gold or silver contained in the dollar was then converted into relative value in the economy for the buying and selling of goods. This allowed the value of things to remain fairly constant over time, except for the influx and outflux of gold and silver in the nation's economy.

The early currency of the USA did not exhibit faces of presidents, as is the custom now. In fact, George Washington was against having his face on the currency, a practice he compared to the policies of European monarchs. The currency as we know it today did not get the faces they currently have until after the early 20th century; before that "heads" side of coinage used profile faces and striding, seated, and standing figures from Greek and Roman mythology and composite native Americans. The last coins to be converted to profiles of historic Americans were the dime (1946) and the Dollar (1971).

For articles on the currencies of the colonies and states, see Connecticut pound, Delaware pound, , , Massachusetts pound, , New , , , , Rhode Island pound, South Carolina pound and Virginia pound.

[edit] Continental currency

See also: Continental currency

Continental One Third Dollar Bill (obverse)

In 1775, the United States and the individual states began issuing "Continental Currency" denominated in Spanish dollars and (for the issues of the states) the £sd currencies of the states. The dollar was valued relative to the states' currencies at the following rates:

Value of Dollar State in State Currency 5

Georgia Shillings 6 Connecticut, Massachusetts, New Hampshire, Rhode Island, Virginia Shillings 7½ Delaware, Maryland, New Jersey, Pennsylvania Shillings 8 New York, North Carolina Shillings 32½

South Carolina Shillings

The continental currency suffered from printing press and was replaced by the silver dollar at the rate of 1 silver dollar = 1000 continental dollars.

[edit] Silver and gold standards

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From 1792, when the Mint Act was passed, the dollar was pegged to silver at 371.25 grains (24.056 g), or 24.75 grains (1.604 g) of gold. Many historians[who?] erroneously assume gold was standardized at a fixed rate in parity with silver, however there is no evidence of Congress making this law. This has to do with Alexander Hamilton's suggestion to Congress of a fixed 15:1 ratio of silver to gold, respectively. The gold coins that were minted however, were not given any denomination whatsoever and traded for a market value relative to the Congressional standard of the silver dollar. 1834 saw a shift in the gold standard to 23.2 grains (1.50 g), followed by a slight adjustment to 23.22 grains (1.505 g) in 1837 (16:1 ratio).[citation needed]

In 1862, paper money was issued without the backing of precious metals, due to the Civil War. Silver and gold coins continued to be issued and in 1878 the link between paper money and coins was reinstated. This disconnection from gold and silver backing also occurred during the . The use of paper money not backed by precious metals had also occurred under the Articles of Confederation from 1777 to 1788. With no solid backing and being easily counterfeited, the continentals quickly lost their value, giving rise to the phrase "not worth a continental". This was a primary reason for the "No state shall... make any thing but gold and a tender in payment of debts" clause in article 1, section 10 of the United States Constitution.

The of 1900 abandoned the bimetallic standard and defined the dollar as 23.22 grains (1.505 g) of gold, equivalent to setting the price of 1 troy ounce of gold at $20.67. Silver coins continued to be issued for circulation until 1964, when all silver was removed from dimes and quarters, and the half dollar was reduced to 40% silver. Silver half dollars were last issued for circulation in 1969.

Gold coins were confiscated in 1933 and the gold standard was changed to 13.71 grains (0.888 g), equivalent to setting the price of 1 troy ounce of gold at $35. This standard persisted until 1968. Between 1968 and 1975, a variety of pegs to gold were put in place. The price was at $42.22 per ounce before August 15, 1971[citation needed] saw the U.S. dollar freely float on currency markets.

According to the Bureau of Engraving and Printing, the largest note it ever printed was the $100,000 , Series 1934. These notes were printed from December 18, 1934 through January 9, 1935, and were issued by the Treasurer of the United States to Federal Reserve Banks only against an equal amount of gold bullion held by the Treasury. These notes were used for transactions between Federal Reserve Banks and were not circulated among the general public. [edit] Coins

Main article: Coins of the United States dollar Official United States coins have been produced every year from 1792 to the present.

y Half-cent 1792 - 1857 y 1793±present y 2-cent 1864±1873 y 3-cent 1851-1873 y 1792-1873 (Not to be confused with the below also worth 5 cents) y Nickel 1866±present y Dime 1792±present y 20-cent 1875-1878 y Quarter 1796±present y Half dollar 1794±present y Dollar coin 1794±present y ($2.5 ) 1792-1929 y Three-dollar piece 1854-1889 y ($5 gold coin) 1795-1929 y Eagle ($10 gold coin) 1795-1929 y Double Eagle ($20 gold coin) 1850-1933

Collector coins for which everyday transactions are non-existent.[28]

y American Eagles originally were not available from the Mint for individuals but had to be purchased from authorized dealers. In 2006 The Mint began direct sales to individuals of uncirculated bullion coins with a special finish, and bearing a "W" mintmark.

* American Silver Eagle $1 (1 troy ounce) silver bullion coin 1986-Present * $5 (1/10 troy oz), $10 (1/4 troy oz), $25 (1/2 troy oz), and $50 (1/4 troy oz) Gold bullion coin 1986-Present * American Platinum Eagle ($10, $25, $50, and $100 ) 1997±present

y United States commemorative coins - special issue coins

* $50.00 (Half Union) 1915 * Presidential Proofs (see below) 2007-present

Technically, all these coins are still legal tender at face value, though some are far more valuable today for their numismatic value, and for gold and silver coins, their precious metal value. From 1965 to 1970 the was the only circulating coin with any silver content though the Mint still makes what it calls Silver Proof sets for collectors.

In addition, an experimental $4.00 (Stella) coin was also minted, but never placed into circulation and is properly considered to be a pattern rather than an actual coin denomination.

The $50 coin mentioned was only produced in 1915 for the Panama-Pacific International Exposition (1915) celebrating the opening of the . Only 1,128 were made, 645 of which were octagonal; this remains the only U.S. coin that was not round as well as the largest and heaviest U.S. coin ever.

From 1934 to present the only denominations produced for circulation have been the familiar penny, nickel, dime, quarter, half dollar and dollar. The nickel is the only coin still in use today that is essentially unchanged (except in its design) from its original version. Every year since 1866, the nickel has been 75% copper and 25% nickel, except for 4 years during World War II when nickel was needed for the war.

[edit] Collector coins

The United States Mint produces Proof Sets specifically for collectors and speculators. Silver Proofs tend to be the standard designs but with the dime, quarter, half dollar, and in some cases the dollar having silver content. Another type of proof set is the Presidential Dollar Proof Set where four special $1 coins are minted each featuring a president.

y 2007 had George Washington, John Adams, Thomas Jefferson, and James Madison y 2008 had James Monroe, John Quincy Adams, Andrew Jackson, and Martin Van Buren y 2009 had William Henry Harrison, John Tyler, James K. Polk, and Zachary Taylor y 2010 has Millard Fillmore, Franklin Pierce, James Buchanan, and Abraham Lincoln y 2011 is to have Andrew Johnson, Ulysses S. Grant, Rutherford B. Hayes, and James A. Garfield

[edit] Dollar coins

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the talk page. (April 2010)

Flowing Hair Dollar

The first United States dollar was minted in 1794. Known as the , it contained 416 grains of "standard silver" (89.25% silver and 10.75% copper), as specified by Section 13 [29] of the Coinage Act of 1792. It was designated by Section 9 of that Act as having "the value of a Spanish milled dollar".

Dollar coins have not been very popular in the United States.[30] Silver dollars were minted intermittently from 1794 through 1935; a copper-nickel dollar of the same large size, featuring President Dwight D. Eisenhower, was minted from 1971 through 1978. Gold dollars were also minted in the 19th century. The Susan B. Anthony dollar coin was introduced in 1979; these proved to be unpopular because they were often mistaken for quarters, due to their nearly equal size, their milled edge, and their similar color. Minting of these dollars for circulation was suspended in 1980 (collectors' pieces were struck in 1981), but, as with all past U.S. coins, they remain legal tender. As the number of Anthony dollars held by the Federal Reserve and dispensed primarily to make change in postal and transit vending machines had been virtually exhausted, additional Anthony dollars were struck in 1999. In 2000, a new $1 coin, featuring Sacagawea, (the ) was introduced, which corrected some of the mistakes of the Anthony dollar by having a smooth edge and a gold color, without requiring changes to vending machines that accept the Anthony dollar. However, this new coin has failed to achieve the popularity of the still-existing $1 bill and is rarely used in daily transactions. The failure to simultaneously withdraw the dollar bill and weak publicity efforts have been cited by coin proponents as primary reasons for the failure of the dollar coin to gain popular support. There are indications that the dollar coin's failure was also due to the reluctance of armored transport companies to make the necessary adjustments to handle the new coins, and the government's reluctance to mandate it.[31] The result of the armored carriers' unwillingness to handle the new coins was that they virtually never reached merchants in quantities sufficient to be given out as change on a routine basis, or for retail clerks to become used to handling them.

In February 2007, the U.S. Mint, under the Presidential $1 Coin Act of 2005,[32] introduced a new $1 U.S. Presidential dollar coin. Based on the success of the "50 State Quarters" series, the new coin features a sequence of presidents in order of their inaugurations, starting with George Washington, on the obverse side. The reverse side features the . To allow for larger, more detailed portraits, the traditional inscriptions of "," "," the year of minting or issuance, and the mint mark will be inscribed on the edge of the coin instead of the face. This feature, similar to the edge inscriptions seen on the British £1 coin, is not usually associated with U.S. coin designs. The inscription "Liberty" has been eliminated, with the Statue of Liberty serving as a sufficient replacement. In addition, due to the nature of U.S. coins, this will be the first time there will be circulating U.S. coins of different denominations with the same President featured on the obverse (heads) side. (Lincoln/penny, Jefferson/nickel, Franklin D. Roosevelt/dime, Washington/quarter and Kennedy/half dollar.) Another unusual fact about the new $1 coin is Grover Cleveland will have two coins with his portrait issued due to the fact he was the only U.S. President to be elected to two non- consecutive terms.[33]

Early releases of the Washington coin included error coins shipped primarily from the to Florida and Tennessee banks. Highly sought after by collectors, and trading for as much as $850 each within a week of discovery, the error coins were identified by the absence of the edge impressions "E PLURIBUS UNUM IN GOD WE TRUST 2007 P". The mint of origin is generally accepted to be mostly Philadelphia, although identifying the source mint is impossible without opening a mint pack also containing marked units. Edge lettering is minted in both orientations with respect to "heads", some amateur collectors were initially duped into buying "upside down lettering error" coins.[34] Some cynics also erroneously point out that the Federal Reserve makes more profit from dollar bills than dollar coins because they wear out in a few years, whereas coins are more permanent. The fallacy of this argument arises because new notes printed to replace worn out notes which have been withdrawn from circulation bring in no net revenue to the government to offset the costs of printing new notes and destroying the old ones. As most vending machines are incapable of making change in banknotes, they commonly accept only $1 bills, though a few will give change in dollar coins.

[edit] Mint marks Most U.S. coins bear a mint mark as part of the design, usually found on the front of the coin near the date although in the past it was more commonly found on the reverse. The Philadelphia Mint issues coins bearing a letter P (or no mark at all), while the uses a letter D. The uses an S, though no coins have been released from that mint for general circulation since 1980. It does, however, continue to strike proof coins for collectors. The uses a W, though this is rarely seen as the West Point mint generally only makes high denomination coins (with face values over $1.00) which are not meant for everyday use. A CC mark, for the , was used for a short time in the mid-19th century, but the mint at that location was only a temporary establishment. The used a mint mark O. It operated from the 1830s until the , and again from 1879 to 1909. The letter D was also used for coinage of the from 1837 to 1861, and C was used for the during the same timespan. The latter two mints struck gold coins only. [edit] Banknotes

Main article:

The U.S. Constitution provides that Congress shall have the power to "borrow money on the credit of the United States".[35] Congress has exercised that power by authorizing Federal Reserve Banks to issue Federal Reserve Notes. Those notes are "obligations of the United States" and "shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any ."[36] Federal Reserve Notes are designated by law as "legal tender" for the payment of debts.[37] Congress has also authorized the issuance of more than 10 other types of banknotes, including the United States Note[38] and the Federal Reserve Bank Note. The Federal Reserve Note is the only type that remains in circulation since the 1970s.

Currently printed denominations are $1, $2, $5, $10, $20, $50, and $100. Notes above the $100 denomination ceased being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily in inter-bank transactions or by ; it was the latter usage that prompted President to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became less necessary.[citation needed] Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details. These notes are now collector's items and are worth more than their face value to collectors.[citation needed]

Though still predominantly green, post-2004 series incorporate other colors to better distinguish different denominations. As a result of a 2008 decision in an accessibility lawsuit filed by the American Council of the Blind, the Bureau of Engraving and Printing is planning to implement a raised tactile feature in the next redesign of each note, except the $1 (which it is by law not allowed to redesign[why?]) and the version of the $100 bill already in process. It also plans larger, higher-contrast numerals, more color differences, and distribution of currency readers to assist the visually impaired during the transition period.[39] [edit] Means of issue Currently, the US government maintains over 800 billion US dollars in cash money (primarily Federal Reserve Notes) in circulation.[40][41] The amount of cash in circulation is increased (or decreased) by the actions of the Federal Reserve System. Eight times a year, the 12-person Federal Open Market Committee meet to determine US .[42] Every business day, the Federal Reserve System engages in Open market operations to carry out that monetary policy.[43] If the Federal Reserve desires to increase the , it will buy securities (such as US Treasury Bonds) anonymously[citation needed] from banks in exchange for dollars. Conversely, it will sell securities to the banks in exchange for dollars, to take dollars out of circulation.[44]

When the Federal Reserve makes a purchase, it credits the seller's reserve account (with the Federal Reserve). This money is not transferred from any existing funds ± at this point that the Federal Reserve has created new high-powered money. Commercial banks can freely withdraw in cash any excess reserves from their reserve account at the Federal Reserve. To fulfill those requests, the Federal Reserve places an order for printed money from the US Treasury Department.[45] The Treasury Department in turn sends these requests to the Bureau of Engraving and Printing (to print new dollar bills) and the Bureau of the Mint (to stamp the coins).

Usually, the short term goal of open market operations is to achieve a specific short term target. In other instances, monetary policy might instead entail the targeting of a specific exchange rate relative to some foreign currency or else relative to gold. For example, in the case of the USA the Federal Reserve targets the , the rate at which member banks lend to one another overnight. The other primary means of conducting monetary policy include: (i) Discount window lending (as ); (ii) Fractional deposit lending (changes in the reserve requirement); (iii) Moral suasion (cajoling certain market players to achieve specified outcomes); (iv) "Open mouth operations" (talking monetary policy with the market). [edit] Value

Buying power of one U.S. dollar compared to 1774 USD Equivalent Equivalent Equivalent Year buying Year buying Year buying power power power 1774 $1.00 1860 $0.97 1950 $0.33 2010 $0.03

1780 $0.59 1870 $0.62 1960 $0.26 1790 $0.89 1880 $0.79 1970 $0.20 1800 $0.64 1890 $0.89 1980 $0.10 1810 $0.66 1900 $0.96 1990 $0.06 1820 $0.69 1910 $0.85 2000 $0.05 1830 $0.88 1920 $0.39 2007 $0.04 1840 $0.94 1930 $0.47 2008 $0.04 1850 $1.03 1940 $0.56 2009 $0.04

U.S. 1913±2006

The 5th paragraph of Section 8 of Article 1 of the U.S. Constitution provides that the U.S. Congress shall have the power to "coin money" and to "regulate the value" of domestic and foreign coins. Congress exercised those powers when it enacted the Coinage Act of 1792. That Act provided for the minting of the first U.S. dollar and it declared that the U.S. dollar shall have "the value of a Spanish milled dollar as the same is now current".[46]

The table to the right shows the equivalent amount of goods that, in a particular year, could be purchased with $1. The table shows that from 1774 through 2009 the U.S. dollar has lost about 96.4% of its buying power.[47]

The decline in the value of the U.S. dollar corresponds to price inflation, which is a rise in the general level of prices of goods and services in an economy over a period of time.[48] A consumer price index (CPI) is a measure estimating the average price of consumer goods and services purchased by households. The United States Consumer Price Index, published by the Bureau of Labor Statistics, is a measure estimating the average price of consumer goods and services in the United States.[49] It reflects inflation as experienced by consumers in their day-to-day living expenses.[50] A graph showing the U.S. CPI relative to 1982-1984 and the annual year-over-year change in CPI is shown at right.

The value of the U.S. dollar declined significantly during wartime, especially during the American Civil War, World War I, and World War II.[51] The Federal Reserve, which was established in 1913, was designed to furnish an "elastic" currency subject to "substantial changes of quantity over short periods," which differed significantly from previous forms of high- powered money such as gold, national bank notes, and silver coins.[52] Over the very long run, the prior gold standard kept prices stable - for instance, the price level and the value of the U.S. dollar in 1914 was not very different from the price level in the 1880s. The Federal Reserve initially succeeded in maintaining the value of the U.S. dollar and price stability, reversing the inflation caused by the First World War and stabilizing the value of the dollar during the 1920s, before presiding over a 30% in U.S. prices in the 1930s.[53]

Under the Bretton Woods system established after World War II, the value of the U.S. dollar was fixed to $35 per ounce, and the value of the U.S. dollar was thus anchored to the value of gold. Rising government spending in the 1960s, however, led to doubts about the ability of the United States to maintain this convertibility, gold stocks dwindled as banks and international investors began to convert dollars to gold, and as a result the value of the dollar began to decline. Facing an emerging and the imminent danger that the United States would no longer be able to redeem dollars for gold, gold convertibility was finally terminated in 1971 by President Nixon, resulting in the "Nixon shock."[54]

The value of the U.S. dollar was therefore no longer anchored to gold, and it fell upon the Federal Reserve to maintain the value of the U.S. currency. The Federal Reserve, however, continued to increase the money supply, resulting in and a rapidly declining value of the U.S. dollar in the 1970s. This was largely due to the prevailing economic view at the time that inflation and real economic growth were linked (the ), and so inflation was regarded as relatively benign.[54] Between 1965 and 1981, the U.S. dollar lost two thirds of its value.[47]

In 1979, President Carter appointed Chairman of the Federal Reserve. The Federal Reserve tightened the money supply and inflation was substantially lower in the 1980s, and hence the value of the U.S. dollar stabilized.[54]

Over the thirty-year period from 1981 to 2009, the U.S. dollar lost over half its value.[47] This is because the Federal Reserve has targeted not zero inflation, but a low, stable rate of inflation - between 1987 and 1997, the rate of inflation was approximately 3.5%, and between 1997 and 2007 it was approximately 2%. The so-called "" of economic conditions since the 1970s is credited to monetary policy targeting price stability.[54]

There is ongoing debate about whether central banks should target zero inflation (which would mean a constant value for the U.S. dollar over time) or low, stable inflation (which would mean a continuously but slowly declining value of the dollar over time, as is the case now). Although some economists are in favor of a zero inflation policy and therefore a constant value for the U.S. dollar,[53] others contend that such a policy limits the ability of the to control interest rates and stimulate the economy when needed.[55] [edit] International use

Worldwide use of the U.S. dollar and the euro: United States External adopters of the US dollar Currencies pegged to the US dollar Currencies pegged to the US dollar w/ narrow band External adopters of the euro Currencies pegged to the euro Currencies pegged to the euro w/ narrow band Note that the Belarusian is pegged to the Euro, , and U.S. Dollar in a currency basket.

The dollar is also used as the standard unit of currency in international markets for commodities such as gold and petroleum (the latter sometimes called is the source of the term petrodollar). Some non-U.S. companies dealing in globalized markets, such as Airbus, list their prices in dollars.

The U.S. dollar is the world's foremost reserve currency. In addition to holdings by central banks and other institutions, there are many private holdings, which are believed to be mostly in one- hundred-dollar banknotes (indeed, most American banknotes actually are held outside the United States). All holdings of U.S.-dollar bank deposits held by non-residents of the United States are known as "" (not to be confused with the euro), regardless of the location of the bank holding the deposit (which may be inside or outside the U.S.).

Economist Paul Samuelson and others (including, at his death, ) have maintained that the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate or the flow of trade to readjust. But Samuelson recently has said he now believes that at some uncertain future period these pressures will precipitate a run against the U.S. dollar with serious global financial consequences.[56]

[edit] The dollar as international reserve currency

Main article: Reserve currency

Percentage of global currencies

The U.S. dollar is an important international reserve currency along with the euro. The euro inherited this status from the German mark, and since its introduction, has increased its standing considerably, mostly at the expense of the dollar. Despite the dollar's recent losses to the euro, it is still by far the major international reserve currency, with an accumulation more than double that of the euro.

In August, 2007, two scholars affiliated with the government of the People's Republic of China threatened to sell its substantial reserves in American dollars in response to American legislative discussion of trade sanctions designed to revalue the Chinese .[57] The Chinese government denied that selling dollar-denominated assets would be an official policy in the foreseeable future.

Former Federal Reserve Chairman Alan Greenspan said in September 2007 that the euro could replace the U.S. dollar as the world's primary reserve currency. It is "absolutely conceivable that the euro will replace the dollar as reserve currency, or will be traded as an equally important reserve currency."[58]

Currency composition of official foreign exchange reserves v · d · e '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09

US 59.0 62.1 65.2 69.3 70.9 70.5 70.7 66.5 65.8 65.9 66.4 65.7 64.1 64.1 62.2 dollar % % % % % % % % % % % % % % % 17.9 18.8 19.8 24.2 25.3 24.9 24.3 25.2 26.3 26.4 27.3

Euro % % % % % % % % % % % Pound 2.1% 2.7% 2.6% 2.7% 2.9% 2.8% 2.7% 2.9% 2.6% 3.3% 3.6% 4.2% 4.7% 4.0% 4.3%

sterling Japane 6.8% 6.7% 5.8% 6.2% 6.4% 6.3% 5.2% 4.5% 4.1% 3.9% 3.7% 3.2% 2.9% 3.1% 3.0%

se yen Germa 15.8 14.7 14.5 13.8

n mark % % % % French 2.4% 1.8% 1.4% 1.6%

franc Swiss 0.3% 0.2% 0.4% 0.3% 0.2% 0.3% 0.3% 0.4% 0.2% 0.2% 0.1% 0.2% 0.2% 0.1% 0.1% franc 13.6 11.7 10.2

Other 6.1% 1.6% 1.4% 1.2% 1.4% 1.9% 1.8% 1.9% 1.5% 1.8% 2.2% 3.1% % % % Sources: 1995-1999, 2006-2009 IMF: Currency Composition of Official Foreign Exchange Reserves Sources: 1999-2005 ECB: The Accumulation of Foreign Reserves

[edit] U.S. Dollar Index

Main article: U.S. Dollar Index

The U.S. Dollar Index (Ticker: DXY) is the creation of the New York Board of Trade (NYBOT). It was established in 1973 for tracking the value of the USD against a basket of currencies, which, at that time, represented the largest trading partners of the United States. It began with 17 currencies from 17 nations, but the launch of the euro subsumed 12 of these into one, so the USDX tracks only six currencies today.

Euro 57.6%

Japanese yen 13.6%

Pound sterling 11.9%

Canadian dollar 9.1%

Swedish krona 4.2%

Swiss franc 3.6% Source: NYBOT, " US Dollar Index", pg.3 (PDF)

The Index is described by the NYBOT as "a trade weighted geometric average".[59] The baseline of 100.00 on the USDX was set at its launch in March 1973. This event marks the watershed between the wider margins arrangement of the Smithsonian regime and the period of generalized floating that led up to the Second Amendment of the Articles of Agreement of the IMF. Since 1973, the USDX has climbed as high as the 160s and drifted as low as the 70s.

The USDX has not been updated to reflect new trading realities in the global economy, where the bulk of trade has shifted strongly towards new partners like China and Mexico and oil- exporting countries while the United States has de-industrialized.

[edit] Dollarization and fixed exchange rates

Other nations besides the United States use the U.S. dollar as their official currency, a process known as official dollarization. For instance, Panama has been using the dollar alongside the as the legal tender since 1904 at a conversion rate of 1:1. Ecuador (2000), El Salvador (2001), and East Timor (2000) all adopted the currency independently. The former members of the U.S.-administered Trust Territory of the Pacific Islands, which included , the Federated States of , and the , chose not to issue their own currency after becoming independent, having all used the U.S. dollar since 1944. Two British dependencies also use the U.S. dollar: the British Virgin Islands (1959) and Turks and Caicos Islands (1973). The islands Bonaire, Sint Eustatius and Saba have adopted the dollar on January 1, 2011 as a result of the dissolution of the Antilles.[60][61]

Some countries that have adopted the U.S. dollar issue their own coins: See Ecuadorian coins, Panamanian Balboa and East Timor centavo coins.

Some other countries link their currency to U.S. dollar at a fixed exchange rate. The local currencies of Bermuda and can be freely exchanged at a 1:1 ratio for USD. used a fixed 1:1 exchange rate between the and the U.S. dollar from 1991 until 2002. The currencies of Barbados and Belize are similarly convertible at an approximate 2:1 ratio. The Netherlands Antillean guilder (and its successor the Caribbean guilder) as well as the are pegged to the Dollar at a fixed rate of 1:1.79. In , one dollar is equal to 1500 , and is used interchangeably with local currency as de facto legal tender. The exchange rate between the Hong Kong dollar and the United States dollar has also been linked since 1983 at HK$7.8/USD, and pataca of Macau, pegged to Hong Kong dollar at MOP1.03/HKD, indirectly linked to the U.S. dollar at roughly MOP8/USD. Several oil-producing Arab countries on the Persian Gulf, including Saudi Arabia, peg their currencies to the dollar, since the dollar is the currency used in the international oil trade.

The People's Republic of China's was informally and controversially pegged to the dollar in the mid-1990s at ¥Ĵ8.28/USD. Likewise, pegged its ringgit at RM3.8/USD in 1997. On July 21, 2005 both countries removed their pegs and adopted managed floats against a basket of currencies. Kuwait did likewise on May 20, 2007,[62] and Syria did likewise in July 2007.[63] However, after three years of slow appreciation, the Chinese yuan has been de facto re- pegged to the dollar since July 2008 at a value of ¥6.83/USD; although no official announcement had been made, the yuan has remained around that value within a narrow band since then, similar to the Hong Kong dollar.

Belarus, on the other hand, pegged its currency, the , to a basket of foreign currencies (U.S. dollar, euro and Russian ruble) in 2009.[64]

In some countries such as Peru and Uruguay, the USD is commonly accepted although not officially regarded as a legal tender. In Mexico's border area and major tourist zones, it is accepted as if it were a second legal currency. Many Canadian merchants also accept U.S. dollars, albeit sometimes only at face value. In , U.S. notes circulate freely and are preferred over the for large purchases,[65][66] with the riel used for change to break 1 USD. After the U.S. invasion of Afghanistan, U.S. dollars are accepted as if it were legal tender. Prices of most big ticket items such as houses and cars are set in U.S. dollars[citation needed].

[edit] Dollar versus Euro

Euro-US Dollar exchange rate, 1999-2011 Euro per U.S. dollar 1999±2011 Highest Ĺ Lowest Ļ Year Date Rate Date Rate 1999 03 Dec ¼0.9985 05 Jan ¼0.8482 2000 26 Oct ¼1.2118 06 Jan ¼0.9626 2001 06 Jul ¼1.1927 05 Jan ¼1.0477 2002 28 Jan ¼1.1658 31 Dec ¼0.9536 2003 08 Jan ¼0.9637 31 Dec ¼0.7918 2004 14 May ¼0.8473 28 Dec ¼0.7335 2005 15 Nov ¼0.8571 03 Jan ¼0.7404 2006 02 Jan ¼0.8456 05 Dec ¼0.7501 2007 12 Jan ¼0.7756 27 Nov ¼0.6723 2008 27 Oct ¼0.8026 15 Jul ¼0.6254 2009 04 Mar ¼0.7965 03 Dec ¼0.6614 2011 08 Jan ¼10.8374 20 Jan ¼150.6867 Source: Euro exchange rates in USD, ECB

Not long after the introduction of the euro (¼Ĵ; ISO 4217 code EUR) as a cash currency in 2002, the dollar began to depreciate steadily in value, as it did against other major currencies.[67] From 2003 to 2005, this depreciation continued, reflecting a widening current account deficit. Although the current account deficit began to stabilize in 2006 and 2007, depreciation persisted.[67] The fallout from the subprime mortgage crisis in 2008 prompted the Federal Reserve to lower interest rates in September 2007,[68] and again in March 2008,[69] sending the euro to a record high of $1.6038, reached in July 2008.[70]

In addition to the trade deficit, the U.S. dollar's decline was linked to a variety of other factors, including a major spike in oil prices.[71] Economists such as Alan Greenspan suggested that another reason for the decline of the dollar was its decreasing role as a major reserve currency. Chinese officials signaled plans to diversify the nation's $1.9 trillion reserve in response to a falling U.S. currency which also set the dollar under pressure.[72][73] However, a sharp turnaround began in late 2008 with the onset of the global financial crisis. As investors sought out safe-haven investments in U.S. treasuries and Japanese government bonds from the financial turmoil, the Japanese yen and United States dollar sharply rose against other currencies, including the euro.[74] At the same time, however, many countries such as China,[75] India and announced their intentions to diversify their foreign reserve portfolios away from the U.S. dollar.[76]

The European sovereign debt crisis that unfolded in 2010 sent the euro falling to a four-year low of $1.1877 on June 7, as investors considered the risk that certain Eurozone members may default on their government debt.[77] The euro's decline in 2008-2010 had erased half of its 2000- 2008 rally.[70] [edit] Exchange rates

See also: Currencies pegged to the USD

[edit] Historical exchange rates

Currency units per U.S. dollar, averaged over the year.[78] * = value at start of year. 197 199 199 199 200 200 200 200 200 200 200 200 200 200 1980* 1985* 0* 0* 3 9 0 1 2 3 4 5 6 7 8 9 0.83 0.85 0.93 1.08 1.11 1.05 0.88 0.80 0.80 0.79 0.72 0.67 0.71

Euro - - - 43 51 87 32 71 78 33 40 33 60 93 91 76 Japane 357. 240.4 250.3 146. 111. 113. 107. 121. 125. 115. 108. 110. 116. 117. 103. 93.6

se yen 6 5 5 25 08 73 80 57 22 94 15 11 31 76 39 8 Pound 0.41 0.448 0.861 0.62 0.66 0.61 0.65 0.69 0.66 0.61 0.54 0.54 0.54 0.49 0.53 0.63 sterlin 64 4[79] 3[79] 07 60 84 98 46 56 17 56 93 25 95 92 85

g Canad 1.08 1.16 1.29 1.48 1.48 1.54 1.57 1.40 1.30 1.21 1.13 1.07 1.06 1.14 ian 1.168 1.321 1 05 02 58 55 87 04 08 17 15 40 34 60 12

dollar Mexic 2.50 3.12 9.55 9.45 9.33 9.66 10.7 11.2 10.8 10.9 10.9 11.1 13.4 an - 2.801 2.671 1 37 3 9 7 3 93 90 94 06 28 43 98

peso Renmi 1.705 2.936 4.78 5.76 8.27 8.27 8.27 8.27 8.27 8.27 8.19 7.97 7.60 6.94 6.83 nbi - 0 6 32 20 83 84 70 71 72 68 36 23 58 77 07

yuan Singap 1.90 1.61 1.69 1.73 1.79 1.79 1.74 1.69 1.66 1.58 1.50 1.41 1.45 ore - - 2.179 3 58 51 61 30 08 29 02 39 82 65 40 43

dollar

Source: Last 4 years 2005-2002 2003-2000 1996-1999 1993-1996 1990 1970-1992 1970-1985 Canada, China, Mexico

1. Mexican peso values prior to 1993 revaluation. [