Posted by Allison on 6 April 2009, 15:13
Most people today would agree that the strongest and best known currency in the whole world is the American dollar. Virtually everyone knows about the dollar – what it looks like, what it's made up of and what it means for the rest of the world when it comes to exchange rates.
But how did the mighty dollar begin its life? Where can we trace its beginnings back to, before it gradually grew to be the mighty currency it is today?
As it stands today, the American dollar is a little over two hundred and twenty years old. It made its first appearance in 1785, after Congress agreed that the currency should be used for the whole of America. Even though 1785 is the official year of its birth, the dollar actually goes back further than this, and in a sense the official start of its life was more of a token than a huge change, since it was already being used in some areas and virtually everyone was familiar with the dollar, since its history stretched back quite a way into past history.
But while the whole of America began using the new currency in their daily transactions, not everyone was using the same type of dollar. In today's world we know that there are several different types of dollar in existence. Apart from the American dollar there is also the Canadian dollar, the Hong Kong dollar, the Singapore dollar and the New Zealand dollar, for example.
But back in the early days of the American dollar you would have seen the Massachusetts dollar, the South Carolina dollar, the Seattle dollar and many, many more, since each state decided it would print its own banknotes, instead of there being a common note which was legal tender across the whole of America.
While this led to a delightful history to plunder for enthusiasts around today, since there are many rarities of different states to try and collect, it wasn't too practical at the time, and eventually in the 1860s the government decided that it would be better to come up with a single design that would be issued right across the country.
Even though the design of that first nationwide note was different to the one we all know and recognise today, there are unmistakable similarities and it certainly looks like a dollar.
But the main difference back then was that certain currencies around the world were backed by gold or silver. The American dollar was backed by both, which meant that there was additional wording on the banknotes that doesn't exist today, since it is no longer backed in such a way. Times have certainly changed for the dollar, just as they have for many other currencies around the world.
The more you delve into the history of the mighty dollar, the more you learn about how mighty – or not – it actually is. The whole concept of what money is has changed markedly over the years, and it is probably true to say that our ancestors would scoff at how we use money now.
For example, the American silver dollar used to be made from silver, as did many other coins. But nowadays they are made from other metals and as such their face value is worthless. It seems ironic to think that while the dollar might now be the world's mightiest currency, it is actually worthless compared to what it used to actually be backed by, which was gold and silver.
To illustrate the idea of how a currency once mentioned in the same breath as the words gold and silver has changed, it may surprise you to know that it costs the Federal Reserve just four cents for each new banknote that is made. When you bear this fact in mind you can have some sympathy for those people who believe the dollar is essentially worthless.
The way the design of the American dollar has changed over time is also fascinating, from the banknotes issued to serve every single state in America to the banknotes we would recognise today, which actually aren't made of paper at all, but material. The reason why you can leave an American banknote in your pocket and put it through the washing machine without ruining it is because it's made from linen and cotton. The term paper money is still used because the origins of banknotes do indeed have their roots in paper, but nowadays different methods are used to ensure that American banknotes last rather longer than they would if they were still made from paper.
But of course the US currency doesn't just consist of banknotes. The coins have also changed in design over the years and perhaps one of the most striking sets of coins is actually being rolled out now. The US Mint is issuing a series of what it calls Presidential coins in the one dollar denomination, which are designed to commemorate the various Presidents who have served the country over the years.
As with many other currencies, the US banknotes are now smaller than they used to be. Recent decisions to redesign them, however, have been more concerned with adding new measures to help combat forgeries rather than altering the actual size. It seems that the Federal Reserve Bank – which issues the American currency – is happy with the size as it is.
Even the name dollar has changed over the years, and it has acquired several slang nicknames – the most popular today being 'greenback' owing to its colour – some of which have become just another part of its long history. The word dollar itself comes from the word 'thaler' which originated in Bohemia. Another popular modern word for a dollar is a buck, while many of the notes are referred to by the name of the person whose face appears on them.
As you can see from the moment the dollar appeared to the present day, the dollar has had an entertaining and ever changing history.