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Mohamed Darrazi
mohamed.darrazi@educa.madrid.org
CP INF-PRI Antonio Machado, Collado Villalba (cp.machado.colladovillalba@educa.madrid.org)

 

The dollar, which today is as much a symbol of the United States as the Statue of Liberty, has a history that dates back to before its independence and that is linked to a territory that is difficult to imagine: the Spanish empire.

Its history on North American soil, however, began to take shape when the United States did not yet exist as such.

Why is the US dollar the main currency in the world?
The footprint of the Spanish empire on the dollar
In colonial times, coins and paper money created in the territory and from abroad coexisted.

As early as 1690, the first local paper money was born, the "colonial notes" issued by the Massachusetts Bay Colony to finance military expeditions, according to information from the Federal Reserve Board's Currency Education Program.

Over the years there were other options. In 1775, for example, against the backdrop of a by-then inevitable war for independence, the Continental Congress authorized the issuance of a "continental coin" to finance the conflict. The coin quickly lost its value due to a lack of solid backing and counterfeits. And that's where the phrase "not worth a Continental" comes from, that is to say something that "is not worth a continental".

In addition, various foreign currencies circulated in the territory: German thalers, British pounds and the "real de a ocho" or "strong peso" of the Spanish empire that was known in English as the "Spanish milled dollar", reports the Casa de la Moneda.

The latter became the favorite for "the consistency of the silver content over the years," the institution explains. "To get change for a dollar, people would sometimes cut the coin into halves, quarters, eighths, and sixteenths to accommodate the fractional denominations that were in short supply," he says.

The decimal system as a symbol of a new identity
In addition to 1876, a milestone in the history of the dollar is 1792, when Congress approved the Coinage Act, which determined the creation of a mint in Philadelphia, which was then the capital (a curious fact highlighted by the Mint de la Moneda of its history: in 1795 it became one of the first federal agencies to hire women, who at that time did not yet have the right to vote).

That law adjusted the US dollar to the Spanish, which was the known reference, and established the decimal system. In addition, the metal and value of the first coins that it would produce were determined. In copper those of half a penny and a penny; in silver the ten cents, the quarter dollar, the half dollar and the dollar; and gold the 2.5, five and 10 dollars.

This decimal system was completely different from the one you had in circulating foreign currencies.

"They ended up adopting a system that was completely new (...) which was a base 10 system. I think the founding fathers thought that if we were really going to be an independent entity and be taken seriously, we needed our own identity. And therefore That's why they chose the system that was unlike anything at the time," explained Vincent Marra, a professor of economics at the University of Delaware.

The dollar sign had already been consolidated previously, in 1785, as a result of a modification of the peso symbol.

And the green of the bills?
The green of the notes is the result of another story whose fundamental date is 1861, according to the Federal Reserve Board.

That year, Congress authorized the Treasury Department to issue interest-free "demand notes" called "greenbacks" because they had green ink on the back. Does the image sound more familiar to you?

This is what "greenbacks" looked like in 1861. (Source: Federal Reserve Bank of San Francisco)

The first US$10 bills have the portrait of President Abraham Lincoln. Redeemable for gold or silver "on demand" at seven specified banks across the country, the Treasury issued these notes in 1861 and 1862. Congress later authorized a new class of currency known as "United States notes" or "Legal Tender notes." ". It was also green.

In 1862, "demand notes" incorporated fine-line engraving, geometric patterns, a Treasury Department seal, and engraved signatures to help deter forgery. According to the Federal Reserve, this is the foundation of the "modern model."

The origin of the word, even more distant
The word "dollar" comes from the German "thaler" (thaler in Spanish), which is a shortened version of "joachimthalers", according to the explanation of the Museum of the Czech Center in Houston.

"The thaler originally referred to silver coins minted in the silver mines of a town called Joachimsthal in Bohemia, now Jachymov in the Czech Republic. The original thaler bore a lion from the coat of arms of the kingdom of Bohemia on one of its faces," explains the museum. Thalers have been made in Joachimsthal since the 16th century.