This week’s entry: United States dollar
What it’s about: Dolla dolla bill, y’all! Actually, despite its title, this Wikipedia entry covers all U.S. paper currency and a fair amount of coinage. All in all, it paints a picture of a monetary system that has taken some strange twists and turns, including several failed attempts at introducing paper money, and a host of denominations ranging from the ha’penny (worth $0.14 in today’s money) to the $100,000 bill.
Strangest fact: No one knows exactly where the dollar sign came from. The prevailing theory is that the Spanish peso was abbreviated “ps,” and eventually the two letters were superimposed, creating something similar to the $. The U.S. dollar then adapted the sign as well. Another theory is that the $ denotes the Pillars Of Hercules, a coat of arms that represented Spain’s New World possessions and was printed on Spanish money in the West. Ayn Rand suggested in Atlas Shrugged that the sign was created by superimposing the letters in “U.S.,” but as the dollar sign predates the United States, this is just one of the many things Ayn Rand was wrong about. In fact, Spanish dollars (the “pieces of eight” sought after by pirates, because they were worth eight reales) were the standard currency in the Americas before U.S. independence, and legal tender in this country until 1857. When the U.S. dollar was created, its value was tied to the more reliable Spanish dollar, and imitated the Spanish $ sign.
Biggest controversy: Our current system of paper money began during the Civil War, when the Lincoln administration needed to pay for the war and didn’t have enough silver and gold to do so. Lincoln charged his treasury secretary, Salmon P. Chase, with issuing bills. There were only two denominations: Chase put Lincoln on the $2, and on the $1, Chase put his favorite person in American history… Salmon P. Chase. Eventually, it was decided no living person should be on the money, as it was too reminiscent of monarchy. Chase, not merely content to be the most important man in history named “Salmon,” ended up being one of the most powerful figures of his era. Before becoming treasury secretary, he helped found the anti-slavery Free Soil Party, which attempted to bring Whigs and Northern Democrats to its cause, and eventually became the Republican Party. Lincoln later appointed him Chief Justice; he was the first to allow an African-American lawyer to argue a case before the Supreme Court, and he later presided over the impeachment trial of Andrew Johnson.
Thing we were happiest to learn: There’s some big money out there. While the trillion-dollar bill of Simpsons fame doesn’t exist, there was briefly a $100,000 bill. Within one month, spanning 1934 to ’35, a $100,000 Gold Certificate, with Woodrow Wilson’s portrait, was printed for use in transactions between branches of the Federal Reserve. To Wikipedia’s knowledge, none have ever been held by a private citizen. The next-largest bill is $10,000, which has cropped up on various occasions between 1863 and 1934, with a portrait of either Andrew Jackson or Salmon P. Chase.
Thing we were unhappiest to learn: Paper money took a while to catch on. The Continental Congress issued paper “Continentals” to fund the Revolutionary War starting in 1775, but since the money was not backed by gold or silver, people generally didn’t trust its value, and the bills didn’t last long in circulation. There was a chaotic period in the mid-1800s in which every state was able to charter banks to print money with no federal oversight, resulting in a mishmash of state currencies with varying sizes and denominations. Lincoln finally put an end to this when the federal government began issuing paper money for the first time—again, to finance a war, and again, with no backing by hard currency. This eventually changed, and paper money was backed by gold or silver until 1971, when Richard Nixon made the dollar a fiat currency, meaning it was not backed by any precious metals. Our money has been backed by “because we say so” ever since.
Best link to elsewhere on Wikipedia: The one dollar bill page links to “Where’s George?”, a website devoted the curious hobby of currency tracking. Users enter the serial number of a bill in their wallet, and assuming other users of that same bill do the same, a picture gradually forms of the bill’s geographic movement. Multiple sites have been set up for various world currencies, although American money remains the most popular.
Further down the wormhole: After suffering runaway inflation through the ’70s, President Jimmy Carter and Fed Chairman Paul Volcker managed to stabilize the dollar. The greatest moment of Carter’s presidency, however, was the Rabbit Incident, in which the president was attacked by a giant, swimming rabbit during a fishing trip. We’ll look at the monster who attacked History’s Greatest Monster next week.