The United States dollar (sign: $; code: USD; also abbreviated US$ and referred to as the dollar, U.S. dollar, US dollar or American dollar) is the official currency of the United States and its overseas territories. It is a Federal Reserve Note and consists of 100 smaller cent units.
The U.S. dollar is fiat money. It is the currency most used in international transactions and is the world's most dominant reserve currency.[7] Several countries use it as their official currency, and in many others it is the de facto currency.[8] Besides the United States, it is also used as the sole currency in two British Overseas Territories in the Caribbean: the British Virgin Islands and the Turks and Caicos islands. Some cities around the world use the U.S. Dollar as the de facto currency alongside its own.
Contents [hide]
1 Overview
2 Etymology
2.1 Nicknames
3 Dollar sign
4 History
4.1 Continental currency
4.2 Silver and gold standards
5 Coins
5.1 Collector coins
5.2 Dollar coins
5.3 Mint marks
6 Banknotes
7 Means of issue
8 Value
9 Exchange rates
9.1 Historical exchange rates
9.2 Current exchange rates
10 See also
11 Notes
12 References
13 Further reading
14 External links
14.1 Images of U.S. currency and coins
Overview[edit]
The Constitution of the United States of America provides that the United States Congress has the power "To coin money".[9] Laws implementing this power are currently codified in Section 5112 of Title 31 of the United States Code. Section 5112 prescribes the forms, in which the United States dollars should be issued.[10] These coins are both designated in Section 5112 as "legal tender" in payment of debts.[10] The Sacagawea dollar is one example of the copper alloy dollar. The pure silver dollar is known as the American Silver Eagle. Section 5112 also provides for the minting and issuance of other coins, which have values ranging from one cent to fifty dollars.[10] 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".[11] That provision of the Constitution is made specific by Section 331 of Title 31 of the United States Code.[12] 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).[13] The U.S. dollar may therefore be described as the unit of account 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 UNITS—each 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.
Unlike the Spanish milled dollar the U.S. dollar is based upon a decimal system of values. In addition to the dollar the coinage act officially established monetary units of mill or one-thousandth of a dollar (symbol ₥), cent or one-hundredth of a dollar (symbol ¢), dime or one-tenth of a dollar, and eagle or ten dollars, with prescribed weights and composition of gold, silver, or copper for each. It was proposed in the mid-1800s that one hundred dollars be known as a union, but no union coins were ever struck and only patterns for the $50 half union exist. 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 "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies, and gasoline prices are usually in the form of $X.XX9 per gallon, e.g., $3.599, sometimes written as $3.599⁄10. 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 Federal Reserve 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 (fractional currency) and gold coins were issued for circulation up to the value of $20 (known as the "double eagle", discontinued in the 1930s). The term eagle was used in the Coinage Act of 1792 for the denomination of ten dollars, and subsequently was used in naming gold coins. Paper currency less than one dollar in denomination, known as "fractional currency", was also sometimes pejoratively referred to as "shinplasters". 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",[14] 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 United States Mint. 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). When the current, smaller sized U.S. currency was introduced it was referred to as Philippine-sized currency because the Philippines had previously adopted the same size for its legal currency.
Etymology[edit]
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 Kingdom of Bohemia, now part of the Czech Republic).[15] Joachimstaler was later shortened to the German Taler, a word that eventually found its way into Danish and Swedish as daler, Dutch as daler or daalder, Ethiopian as ታላሪ (talari), Hungarian as tallér, Italian as tallero, and English as dollar.[15] Alternatively, thaler is said to come from the German coin Guldengroschen ("great guilder", being of silver but equal in value to a gold guilder), minted from the silver from Joachimsthal.
The coins minted at Joachimsthal soon lent their name to other coins of similar size and weight from other places. One such example, was a Dutch coin depicting a lion, hence its Dutch name leeuwendaler (English lion daler).
The leeuwendaler was authorized to contain 427.16 grains of .750 fine silver and passed locally for between 36 and 42 stuivers. It was lighter than the large-denomination coins then in circulation, thus it was more advantageous for a Dutch merchant to pay a foreign debt in leeuwendalers and it became the coin of choice for foreign trade.
The leeuwendaler was popular in the Dutch East Indies and in the Dutch New Netherland Colony (New York), and circulated throughout the Thirteen Colonies during the 17th and early 18th centuries. It was also popular throughout Eastern Europe, where it led to the current Romanian and Moldovan currency being called leu(literally "lion").
Among the English-speaking community, the coin came to be popularly known as lion dollar – and is the origin of the name dollar.[16] The modern American-English pronunciation of dollar is still remarkably close to the 17th-century Dutch pronunciation of daler.[17]
By analogy with this lion dollar, Spanish pesos – with the same weight and shape as the lion dollar – came to be known as Spanish dollars.[17] By the mid-18th century, the lion dollar had been replaced by the Spanish dollar, the famous "piece of eight", which was distributed widely in the Spanish colonies in the New World and in the Philippines.[18] Eventually, dollar became the name of the first official American currency.
Nicknames[edit]
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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 leather trade. It may also have originated from a poker term.[19] "Greenback" is another nickname originally applied specifically to the 19th century Demand Note dollars created by Abraham Lincoln to finance the costs of the Civil War for the North.[20] The original note was printed in black and green 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 deceased presidents are pictured on most bills).
A "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). However, the $1,000 note is no longer in general use. A "large" or "stack", it is usually a reference to a multiple of $1,000 (such as "fifty large" meaning $50,000). The $100 note is nicknamed "Benjamin", "Ben", or "Franklin" (after Benjamin Franklin), "C-note" (C being the Roman numeral for 100), "Century note" or "bill" (e.g. "two bills" being $200). The $50 note is occasionally called a "yardstick" or a "grant" (after President Ulysses S. Grant, pictured on the obverse). The $20 note is referred to as a "double sawbuck", "Jackson" (after Andrew Jackson), or "double eagle". The $10 note is referred to as a "sawbuck", "ten-spot" or "Hamilton" (after Alexander Hamilton). The $5 note as "fin", "fiver" or "five-spot". The infrequently-used $2 note is sometimes called "deuce", "Tom", or "Jefferson" (after Thomas Jefferson). The $1 note as a "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). The newer designs, with portraits displayed in the main body of the obverse rather than in cameo insets upon paper color-coded by denomination, are sometimes referred to as "bigface" notes or "Monopoly money".
In French-speaking areas of Louisiana, the dollar is referred to as "piastre" or "piasse" (pronounced "pee-as") and the French holdover "sou" (pronounced "soo") is used to refer to the cent.
In El Salvador, the dollar replaced the Salvadoran colón under the presidency of Francisco Flores Pérez.
In Panama, the equivalent of buck is "palo" (literally "stick"). Also, the Panamanian balboa is directly tied to the U.S. dollar, and US dollars are frequently used in place of the minted Panamanian currency.
In Ecuador, the dollar is referred to as "plata" (literally "silver").
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 George Washington on the $1 note.
Puerto Ricans, both living in Puerto Rico 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") or en oro ("in gold"), with the word "peso" used in Mexico primarily to refer to the Mexican peso.
Cubans call the U.S. dollar "fula", loosely translated from Cuban jargon meaning bad. Possession of American money was penalized before the mid-1990s, hence the nickname.
Dollar sign[edit]
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 was the result of a late 18th-century evolution of the scribal abbreviation "ps" for the peso. The p and the s eventually came to be written over each other giving rise to $.[21][22][23][24]
Another popular explanation is 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 Mexico City, Mexico; Potosí, Bolivia; and Lima, 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".
Yet another explanation suggests that the dollar sign was formed from the capital letters U and S written or printed 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]
History[edit]
See also: History of the United States dollar
Obverse of rare 1934 $500 Federal Reserve Note, featuring a portrait of President William McKinley.
Reverse of a $500 Federal Reserve Note.
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 by the Constitution and defined by the Coinage Act of 1792. It specified a "dollar" to be based in the Spanish milled dollar and of 371 grains and 4 sixteenths part of a grain of pure or 416 grains (27.0 g) of standard silver and an "eagle" to be 247 and 4 eighths of a grain or 270 grains (17 g) of gold (again depending on purity).[28] 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. 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 Coinage Act of 1792 set the value of an eagle at 10 dollars, and the dollar at 1/10 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 United States did not exhibit faces of presidents, as is the custom now;[29] although today, by law, only the portrait of a deceased individual may appear on United States currency.[30] In fact, the newly formed government was against having portraits of leaders on the currency, a practice compared to the policies of European monarchs.[31] 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, Georgia pound, Maryland pound, Massachusetts pound, New Hampshire pound, New Jersey pound, New York pound, North Carolina pound, Pennsylvania pound, Rhode Island pound, South Carolina pound and Virginia pound.
Continental currency[edit]
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:
State Value of dollar
in state currency
Georgia 5 Shillings
Connecticut, Massachusetts, New Hampshire, Rhode Island, Virginia 6 Shillings
Delaware, Maryland, New Jersey, Pennsylvania 7½ Shillings
New York, North Carolina 8 Shillings
South Carolina 32½ Shillings
The continental currency suffered from printing press inflation and was replaced by the silver dollar at the rate of 1 silver dollar = 1000 continental dollars.
Silver and gold standards[edit]
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From 1792, when the Mint Act was passed, the dollar was defined as 371.25 grains (24.056 g) of silver. 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 War of 1812. 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 silver coin a tender in payment of debts" clause in article 1, section 10 of the United States Constitution.
The Gold Standard Act 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 1970. Gold coins were confiscated by Executive Order 6102 issued in 1933 by Franklin Roosevelt. 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, eventually culminating in a sudden end, on August 15, 1971, to the convertibility of dollars to gold later dubbed the Nixon Shock. The last peg was $42.22 per ounce[citation needed] before the U.S. dollar was let to freely float on currency markets.
According to the Bureau of Engraving and Printing, the largest note it ever printed was the $100,000 Gold Certificate, 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.
Coin
