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The United States dollar (
symbol A symbol is a mark, sign, or word In linguistics, a word of a spoken language can be defined as the smallest sequence of phonemes that can be uttered in isolation with semantic, objective or pragmatics, practical meaning (linguistics), m ...

symbol
: ;
code In communication Communication (from Latin Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', mean ...
: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed t ...

currency
of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
and its
territories A territory is an administrative division, usually an area that is under the jurisdiction of a sovereign state. In most country, countries, a ''territory'' is an organized division of an area that is controlled by a country but is not formally d ...
. The
Coinage Act of 1792 The Coinage Act or the Mint Act, passed by the United States Congress The United States Congress or U.S. Congress is the bicameral legislature of the federal government of the United States and consists of the House of Representatives a ...
introduced the U.S. dollar at par with the Spanish silver dollar, divided it into 100 cents, and authorized the minting of coins denominated in dollars and cents. U.S. banknotes are issued in the form of
Federal Reserve Notes Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
, popularly called greenbacks due to their historically predominantly green color. The
monetary policy of the United States Monetary policy concerns the actions of a central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity), state or formal monetary union, and oversees ...
is conducted by the
Federal Reserve System The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity ...
, which acts as the nation's
central bank A central bank, reserve bank, or monetary authority is an institution that manages the and of a or formal monetary union, and oversees their . In contrast to a , a central bank possesses a on increasing the . Most central banks also have ...

central bank
. The U.S. dollar was originally defined under a bimetallic standard of fine silver or, from 1837, fine gold, or $20.67 per
troy ounce 1 troy ounce (1.097 avoirdupois ounces, 31.1 g) coin example ( Platinum Eagle) File:1000oz.silver.bullion.bar.underneath.jpg, A Good Delivery silver bar weighing Troy weight is a system of Physical unit, units of mass that originated in 15th-ce ...
. The
Gold Standard Act The Gold Standard Act of the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists of 50 U.S. ...
of 1900 linked the dollar solely to gold. From 1934 its equivalence to gold was revised to $35 per
troy ounce 1 troy ounce (1.097 avoirdupois ounces, 31.1 g) coin example ( Platinum Eagle) File:1000oz.silver.bullion.bar.underneath.jpg, A Good Delivery silver bar weighing Troy weight is a system of Physical unit, units of mass that originated in 15th-ce ...
. Since 1971 all links to gold have been repealed. The U.S. dollar became an important international
reserve currency A reserve currency (or anchor currency) is a foreign currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a ...
after the
First World War World War I, often abbreviated as WWI or WW1, also known as the First World War or the Great War, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainmen ...
, and displaced the
pound sterling The pound sterling (symbol: £; ISO code: GBP), known in some contexts simply as the pound or sterling, is the official currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the ...
as the world's primary reserve currency by the
Bretton Woods Agreement The Bretton Woods system of Monetary system, monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreeme ...
towards the end of the
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literatur ...
. The dollar is the most widely used currency in international transactions. It is also the official currency in several countries and the ''de facto'' currency in many others, with
Federal Reserve Notes Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
(and, in a few cases, U.S. coins) used in circulation. As of February 10, 2021, currency in circulation amounted to , of which is in Federal Reserve Notes (the remaining is in the form of
coins A coin is a small, flat, (usually, depending on the country or value) round piece of metal A metal (from Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hell ...
and older-style
United States Note A United States Note, also known as a Legal Tender Note, is a type of paper money that was issued from 1862 to 1971 in the U.S. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money. They were known ...
s).


Overview


In the Constitution

Article I, Section 8 of the
U.S. Constitution The Constitution of the United States is the Supremacy Clause, supreme law of the United States, United States of America. This founding document, originally comprising seven articles, delineates the national frame of government. Its first t ...

U.S. Constitution
provides that
Congress Congresses are formal meetings of the representatives of different countries A country is a distinct territorial body or political entity A polity is an identifiable political entity—any group of people who have a collective identity, ...

Congress
has the power " coin money." Laws implementing this power are currently codified in Title 31 of the
U.S. Code The Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) is the official compilation and codification Codification may refer to: *Codification ( ...
, under Section 5112, which prescribes the forms in which the United States dollars should be issued.''Denominations, specifications, and design of coins''. . These coins are both designated in the section as "
legal tender Legal tender is a form of money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner, 1 ...
" in payment of debts. The
Sacagawea dollar The Sacagawea dollar (also known as the "golden dollar") is a United States Dollar coin (United States), dollar coin first minted in 2000, although not minted for general circulation between 2002 to 2008 and again from 2012 onward due to its ge ...
is one example of the
copper alloy Copper alloys are metal alloys An alloy is an admixture of metal A metal (from Ancient Greek, Greek μέταλλον ''métallon'', "mine, quarry, metal") is a material that, when freshly prepared, polished, or fractured, shows a lust ...
dollar, in contrast to the
American Silver Eagle The American Silver Eagle is the official silver Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': " ...
which is pure
silver Silver is a chemical element In chemistry, an element is a pure Chemical substance, substance consisting only of atoms that all have the same numbers of protons in their atomic nucleus, nuclei. Unlike chemical compounds, chemical ele ...

silver
. Section 5112 also provides for the
minting Minting is a village and civil parish in the East Lindsey district of Lincolnshire, England. The village is situated south from the A158 road. The population (including Gautby) at the 2011 census was 286. Minting Priory was located here. Mint ...
and issuance of other coins, which have values ranging from one cent ( U.S. Penny) to 100 dollars. These other coins are more fully described in
Coins of the United States dollarCoins of the United States dollar The United States dollar (Currency symbol, symbol: ; ISO 4217, code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, ...
. Article I, Section 9 of 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," which is further specified by Section 331 of Title 31 of the U.S. Code. The sums of money reported in the "Statements" are currently expressed in U.S. dollars, thus the U.S. dollar may be described as the
unit of account In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
of the United States. "Dollar" is one of the first words of Section 9, in which the term refers to the Spanish milled dollar, or the coin worth eight
Spanish real Silver 8-real coin of 1768 from the Potosí mint. The real (English: /ɹeɪˈɑl/ Spanish: /reˈal/) (meaning: "royal", plural: reales) was a unit of currency in Spain , * gl, Reino de España, * oc, Reiaume d'Espanha, , , image_f ...
es.


The Coinage Act

In 1792, the
U.S. Congress The United States Congress or U.S. Congress is the bicameral legislature of the federal government of the United States and consists of the House of Representatives and the Senate. The Congress meets in the United States Capitol in Wa ...
passed the
Coinage ActCoinage Act is a stock short title used for legislation in the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Brita ...
, of which Section 9 authorized the production of various coins, including:
U.S. Congress The United States Congress or U.S. Congress is the bicameral legislature of the federal government of the United States and consists of the House of Representatives and the Senate. The Congress meets in the United States Capitol in Wa ...

U.S. Congress
. 1792.
Coinage Act of 1792
'. 2nd Congress, 1st Session. Sec. 9, ch. 16. Retrieved 6 June 2020.
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
grain A grain is a small, hard, dry seed A seed is an embryonic ''Embryonic'' is the twelfth studio album by experimental rock band the Flaming Lips released on October 13, 2009, on Warner Bros. Records, Warner Bros. The band's first double album ...
s and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver.
Section 20 of the Act designates the United States dollar as the of the United States:
e 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.


Decimal units

Unlike the Spanish milled dollar, the
Continental Congress The Continental Congress was a series of legislative bodies A legislature is a deliberative assembly A deliberative assembly is a gathering of members (of any kind of collective) who use parliamentary procedure Parliamentary procedure is ...
and the Coinage Act prescribed a
decimal systemDecimal system may refer to: * Decimal (base ten) number system, used in mathematics for writing numbers and performing arithmetic * Dewey Decimal Classification, Dewey Decimal System, a subject classification system used in libraries * Decimal curr ...
of units to go with the unit dollar, as follows: the mill, or one-thousandth of a dollar; the cent, or one-hundredth of a dollar; the dime, or one-tenth of a dollar; and the eagle, or ten dollars. The current relevance of these units: * Only the cent (¢) is used as everyday division of the dollar. * The dime is used solely as the name of the
coin A coin is a small, flat, (usually, depending on the country or value) round piece of metal A metal (from Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hell ...
with the value of 10 cents. * The mill (₥) is relatively unknown, but before the mid-20th century was familiarly used in matters of sales taxes, as well as gasoline prices, which are usually in the form of $ΧΧ.ΧΧ9 per
gallon The gallon is a unit Unit may refer to: Arts and entertainment * UNIT Unit may refer to: Arts and entertainment * UNIT, a fictional military organization in the science fiction television series ''Doctor Who'' * Unit of action, a discrete pie ...
(e.g., $3.599, commonly written as $). * The eagle is also largely unknown to the general public. This term was used in the ''Coinage Act of 1792'' for the denomination of ten dollars, and subsequently was used in naming gold coins. The Spanish peso or dollar was historically divided into eight reales (colloquially, ''bits'') - hence ''pieces of eight''. Americans also learned counting in non-decimal ''bits'' of 12 cents before 1857 when Mexican ''bits'' were more frequently encountered than American cents; in fact this practice survived in
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange A stock exchange, securities exchange, or bourse is an exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an U ...

New York Stock Exchange
quotations until 2001. In 1854,
Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, which is concerned with all financial and monetary matters relating to the federal government, and, until 2003, also included several major ...
James Guthrie proposed creating $100, $50, and $25 gold coins, to be referred to as a '' union'', '' half union'', and ''quarter union'', respectively, thus implying a denomination of 1 Union = $100. However, no such coins were ever struck, and only patterns for the $50 half union exist. When currently issued in circulating form, denominations less than or equal to a dollar are emitted as U.S. coins, while denominations greater than or equal to a dollar are emitted as
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
s, disregarding these special cases: * Gold coins issued for
circulation Circulation may refer to: Science and technology * Atmospheric circulation, the large-scale movement of air * Circulation (physics), the path integral of the fluid velocity around a closed curve in a fluid flow field * Circulatory system, a biolo ...
until the 1930s, up to the value of $20 (known as the ''
double eagle A double eagle is a gold coin of the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consis ...
'') * Bullion or commemorative
gold Gold is a chemical element In chemistry, an element is a pure Chemical substance, substance consisting only of atoms that all have the same numbers of protons in their atomic nucleus, nuclei. Unlike chemical compounds, chemical elemen ...
,
silver Silver is a chemical element In chemistry, an element is a pure Chemical substance, substance consisting only of atoms that all have the same numbers of protons in their atomic nucleus, nuclei. Unlike chemical compounds, chemical ele ...
,
platinum Platinum is a chemical element In chemistry, an element is a pure Chemical substance, substance consisting only of atoms that all have the same numbers of protons in their atomic nucleus, nuclei. Unlike chemical compounds, chemical el ...
, and palladium coins valued up to $100 as legal tender (though worth far more as
bullion Bullion is non-ferrous metal In metallurgy Metallurgy is a domain of Materials science, materials science and engineering that studies the physical and chemical behavior of metallic Chemical element, elements, their Inter-metallic alloy, in ...
). * Civil War paper currency issue in denominations below $1, i.e. fractional currency, sometimes pejoratively referred to as '' shinplasters''.


Etymology

In the 16th century, Count Hieronymus Schlick of
Bohemia Bohemia ( ; cs, Čechy ; ; hsb, Čěska; szl, Czechy) is the westernmost and largest historical region Historical regions (or historical areas) are geographical Geography (from Greek Greek may refer to: Greece Anything of, from, ...

Bohemia
began minting coins known as ''joachimstalers'', named for , the valley in which the silver was mined. In turn, the valley's name is titled after
Saint Joachim Joachim (; ''Yəhôyāqîm'', "he whom Yahweh has set up"; Greek Ἰωακείμ ''Iōākeím'') was, according to Christian tradition, the husband of Saint Anne and the father of Mary, the mother of Jesus Mary; arc, ܡܪܝܡ, trans ...

Saint Joachim
, whereby ''thal'' or ''tal'', a cognate of the English word , is
German German(s) may refer to: Common uses * of or related to Germany * Germans, Germanic ethnic group, citizens of Germany or people of German ancestry * For citizens of Germany, see also German nationality law * German language The German la ...

German
for 'valley.'"Ask US." ''
National Geographic ''National Geographic'' (formerly the ''National Geographic Magazine'', sometimes branded as NAT GEO) is an American monthly magazine published by the National Geographic Society The National Geographic Society (NGS), headquartered in Was ...
''. June 2002. p. 1.
The ''joachimstaler'' was later shortened to the German '''', a word that eventually found its way into many languages, including: ''tolar'' (
Czech Czech may refer to: * Anything from or related to the Czech Republic The Czech Republic, also known by its short-form name Czechia and formerly known as Bohemia, is a landlocked country A landlocked country is a country A countr ...
and
Slovak Slovak may refer to: * Something from, related to, or belonging to Slovakia (''Slovenská republika'') * Slovaks, a Western Slavic ethnic group * Slovak language, an Indo-European language that belongs to the West Slavic languages * Slovak, Arkans ...
); ''daler'' (
Danish Danish may refer to: * Something of, from, or related to the country of Denmark * A national or citizen of Denmark, also called a "Dane", see Demographics of Denmark * Danish people or Danes, people with a Danish ancestral or ethnic identity * Danis ...
and
Swedish Swedish or ' may refer to: * Anything from or related to Sweden, a country in Northern Europe * Swedish language, a North Germanic language spoken primarily in Sweden and Finland * Swedish alphabet, the official alphabet used by the Swedish langua ...
); ''dalar'' and ''daler'' (
Norwegian Norwegian, Norwayan, or Norsk may refer to: *Something of, from, or related to Norway, a country in northwestern Europe *Norwegians, both a nation and an ethnic group native to Norway *Demographics of Norway *The Norwegian language, including the t ...
); ''daler'' or ''daalder'' (
Dutch Dutch commonly refers to: * Something of, from, or related to the Netherlands * Dutch people () * Dutch language () *Dutch language , spoken in Belgium (also referred as ''flemish'') Dutch may also refer to:" Castle * Dutch Castle Places * ...
); '' talari'' (
Ethiopian Ethiopians are the native inhabitants of Ethiopia, as well as the global diaspora of Ethiopia. Ethiopians constitute Ethiopians#Component Ethnicities, several component ethnic groups, many of which are closely related to ethnic groups in neighbo ...
); ''tallér'' (
HungarianHungarian may refer to: * Hungary, a country in Central Europe * Kingdom of Hungary, state of Hungary, existing between 1000 and 1946 * Hungarians, ethnic groups in Hungary * Hungarian algorithm, a polynomial time algorithm for solving the assignmen ...
); ''tallero'' (Italian); ''دولار'' (
Arabic Arabic (, ' or , ' or ) is a Semitic language The Semitic languages are a branch of the Afroasiatic language family originating in the Middle East The Middle East is a list of transcontinental countries, transcontinental region ...

Arabic
); and ''
dollar Dollar is the name of more than 20 currencies A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a 1786 James Gi ...

dollar
'' (
English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the World language, leading lan ...

English
). Though the
Dutch Dutch commonly refers to: * Something of, from, or related to the Netherlands * Dutch people () * Dutch language () *Dutch language , spoken in Belgium (also referred as ''flemish'') Dutch may also refer to:" Castle * Dutch Castle Places * ...

Dutch
pioneered in modern-day
New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * New ...
in the 17th century the use and the counting of money in silver dollars in the form of German-Dutch ''
reichsthaler The Reichsthaler () was a standard Thaler silver coin of the Holy Roman Empire, established in 1566 by the Leipzig convention. This original Reichsthaler specie was supplemented in the 16th century by various Reichsthaler units of account in nort ...
s'' and native Dutch '' leeuwendaalders'' ('lion dollars'), it was the ubiquitous
Spanish America Hispanic America ( Spanish: ''Hispanoamérica'' or ''América Hispana'') (also known as Spanish America ( es, América española)) is the portion of the Americas The Americas (also collectively called America) is a landmass comprising th ...
n eight-real coin which became exclusively known as the ''dollar'' since the 18th century.


Nicknames

The
colloquialism Colloquialism or colloquial language is the style (sociolinguistics), linguistic style used for casual (informal) communication. It is the most common functional style of speech, the idiom normally employed in conversation and other informal cont ...
'' buck(s)'' (much like the British ''quid'' for the
pound sterling The pound sterling (symbol: £; ISO code: GBP), known in some contexts simply as the pound or sterling, is the official currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the ...
) 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 Leather is a strong, flexible and durable material obtained from the tanning Tanning may refer to: *Tanning (leather), treating animal skins to produce leather *Sun tanning, using the sun to darken pale skin **Indoor tanning, the use of arti ...

leather
trade, or it may also have originated from a
poker Poker is a family of card games in which Card player, players betting (poker), wager over which poker hand, hand is best according to that specific game's rules in ways similar List of poker hands, to these rankings. While the earliest known f ...

poker
term. ''Greenback'' is another nickname, originally applied specifically to the 19th-century
Demand Note A Demand Note is a type of United States banknote, paper money that was issued between August 1861 and April 1862 during the American Civil War in denominations of United States five-dollar bill, 5, United States ten-dollar bill, 10, and United ...
dollars, which were printed black and green on the backside, created by
Abraham Lincoln Abraham Lincoln (; February 12, 1809 – April 15, 1865) was an American statesman and lawyer who served as the 16th president of the United States The president of the United States (POTUS) is the head of state and head of governme ...

Abraham Lincoln
to finance the
North North is one of the four compass points The points of the compass are the vectors by which planet A planet is an astronomical body orbiting a star or Stellar evolution#Stellar remnants, stellar remnant that is massive enough to be Hydro ...
for the
Civil War A civil war, also known as an intrastate war in polemology, is a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine publis ...
. It is still used to refer to the U.S. dollar (but not to the dollars of other countries). The term ''greenback'' is also used by the financial press in other countries, such as
Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...

Australia
,
New Zealand New Zealand ( mi, Aotearoa ''Aotearoa'' (; commonly pronounced by English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon Engl ...

New Zealand
,
South Africa South Africa, officially the Republic of South Africa (RSA), is the southernmost country in Africa. With over 60 million people, it is the world's 23rd-most populous nation and covers an area of . South Africa has three capital citie ...

South Africa
, and
India India, officially the Republic of India (Hindi Hindi (Devanagari: , हिंदी, ISO 15919, ISO: ), or more precisely Modern Standard Hindi (Devanagari: , ISO 15919, ISO: ), is an Indo-Aryan language spoken chiefly in Hindi Belt, ...

India
. Other well-known names of the dollar as a whole in denominations include ''greenmail'', ''green'', and ''dead presidents'', the latter of which referring to the deceased presidents pictured on most bills. Dollars in general have also been known as ''bones'' (e.g. "twenty bones" = $20). The newer designs, with portraits displayed in the main body of the obverse (rather than in
cameo Cameo or CAMEO may refer to: * Cameo appearance, a brief appearance of a known figure in a film or television show * Cameo (carving), a method of carving, making use of layers of different colours, or an item made with such a method Music * Ca ...
insets), upon paper color-coded by denomination, are sometimes referred to as ''bigface'' notes or ''
Monopoly A monopoly (from Greek#REDIRECT Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hellenic Republic, is a country located in Southeast Europe. Its population is approxi ...
money''. ''
Piastre 275px, A 100 piastre note from French Indochina, circa 1954. The piastre (in Commonwealth English The use of the English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon Eng ...
'' was the original French word for the U.S. dollar, used for example in the French text of the
Louisiana Purchase The Louisiana Purchase (french: Vente de la Louisiane, translation=Sale of Louisiana) was the acquisition of the territory of Louisiana by the United States The United States of America (U.S.A. or USA), commonly known as the United St ...

Louisiana Purchase
. Though the U.S. dollar is called ''dollar'' in Modern French, the term ''piastre'' is still used among the speakers of
Cajun French Louisiana French (french: français de la Louisiane, lou, françé la lwizyàn) is an umbrella term for the dialects and varieties of the French language spoken traditionally in colonial Lower Louisiana. As of today Louisiana French is primaril ...
and
New England French New England French (french: français de Nouvelle-Angleterre) is a variety of Canadian French spoken in the New England region of the United States. New England French is one of the major forms of the French language that developed in what is now ...
, as well as speakers in
Haiti Haiti (; ht, Ayiti ; french: Haïti ), officially the Republic of Haiti (; ), and formerly known as Hayti, is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean Sea, to the east of Cuba and J ...

Haiti
and other French-speaking Caribbean islands. Nicknames specific to denomination: * The quarter dollar coin is known as ''two bits'', betraying the dollar's origins as the "piece of eight" (bits or ''reales''). * The $1 bill is nicknamed ''buck'' or ''single''. * The infrequently-used $2 bill is sometimes called ''deuce'', ''Tom'', or ''Jefferson'' (after
Thomas Jefferson Thomas Jefferson (April 13, 1743 – July 4, 1826) was an American statesman, diplomat, lawyer, architect, philosopher, and Founding Father The following list of national founding figures is a record, by country, of people who were cr ...

Thomas Jefferson
). * The $5 bill is sometimes called ''Lincoln'', ''fin'', ''fiver'', or ''five-spot''. * The $10 bill is sometimes called ''sawbuck'', ''ten-spot'', or ''Hamilton'' (after
Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American statesman, politician, legal scholar, military commander, lawyer, banker, and economist. He was one of the Founding Fathers of the United States The Founding Fa ...

Alexander Hamilton
). * The $20 bill is sometimes called ''double sawbuck'', ''Jackson'' (after
Andrew Jackson Andrew Jackson (March 15, 1767 – June 8, 1845) was an American lawyer, soldier, and statesman who served as the seventh president of the United States The president of the United States (POTUS) is the head of state and head of ...

Andrew Jackson
), or ''
double eagle A double eagle is a gold coin of the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consis ...
''. * The $50 bill is sometimes called a ''yardstick'', or a ''grant'', after President
Ulysses S. Grant Ulysses S. Grant (born Hiram Ulysses Grant; ; April 27, 1822July 23, 1885) was an American military leader who served as the 18th president of the United States The president of the United States (POTUS) is the head of state and he ...

Ulysses S. Grant
. * The is called ''Benjamin'', ''Benji'', ''Ben'', or ''Franklin'', referring to its portrait of
Benjamin Franklin Benjamin Franklin ( April 17, 1790) was one of the Founding Fathers of the United States The Founding Fathers of the United States, or simply the Founding Fathers or Founders, were a group of American revolutionary Patriots (also ...

Benjamin Franklin
. Other nicknames include ''C-note'' (C being the
Roman numeral Roman numerals are a numeral system A numeral system (or system of numeration) is a writing system for expressing numbers; that is, a mathematical notation for representing numbers of a given set, using Numerical digit, digits or other s ...
for 100), ''century note'', or ''bill'' (e.g. ''two bills'' = $200). * Amounts or multiples of $1,000 are sometimes called ''
grand Grand may refer to: People with the name * Grand (surname) Grand * Cedric Grand (born 1976), Swiss bobsledder * Gil Grand (born 1968), Canadian country music singer * Jean-Pierre Grand (born 1950), French politician * Pascale Grand (born 1967), ...
'' in colloquial speech, abbreviated in written form to ''G'', ''K'', or ''k'' (from ''kilo''; e.g. $10k = $10,000). Likewise, a ''large'' or ''stack'' can also refer to a multiple of $1,000 (e.g. "fifty large" = $50,000).


Dollar sign

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 Scribal abbreviations or sigla (singular Singular may refer to: * Singular, the grammatical number In linguistics, grammatical number is a grammatical category of nouns, pronouns, adjectives, and verb agreement (linguistics), agreement th ...
''ps'' for the
peso The ''peso'' is the monetary unit A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray carica ...
, the common name for the
Spanish dollars The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstru ...
that were in wide circulation in the
New World The "New World" is a term for the majority of Earth's Western Hemisphere, specifically the Americas."America." ''The Oxford Companion to the English Language'' (). McArthur, Tom, ed., 1992. New York: Oxford University Press, p. 33: "[16c: from ...
from the 16th to the 19th centuries. The ''p'' and the ''s'' eventually came to be written over each other giving rise to ''$''. Another popular explanation is that it is derived from the Pillars of Hercules on the Coat of arms of Spain, Spanish Coat of arms of the
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver Silver is a chemical element Image:Simple Periodic Table Chart-blocks.svg, 400px, Periodic table, The periodic table of the chemical el ...
. 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 Ayn Rand (; born Alisa Zinovyevna Rosenbaum;,  – March 6, 1982) was a Russian-American writer and philosopher. She is known for her two best-selling novels, ''The Fountainhead'' and ''Atlas Shrugged'', and for developing a philosophic ...

Ayn Rand
in ''
Atlas Shrugged ''Atlas Shrugged'' is a 1957 novel by Ayn Rand. Rand's fourth and final novel, it was also her longest, and the one she considered to be her '' magnum opus'' in the realm of fiction Fiction generally is a narrative form, in any media (communic ...
'', does not consider the fact that the symbol was already in use before the formation of the United States.


History


Origins: the Spanish dollar

The US dollar was introduced at par with the Spanish-American silver dollar (or ''Spanish peso'', ''Spanish milled dollar'', ''eight-real coin'', ''piece-of-eight''). The latter was produced from the rich silver mine output of
Spanish America Hispanic America ( Spanish: ''Hispanoamérica'' or ''América Hispana'') (also known as Spanish America ( es, América española)) is the portion of the Americas The Americas (also collectively called America) is a landmass comprising th ...
; minted in
Mexico City Mexico City ( es, link=no, Ciudad de México, ; abbreviated as CDMX; nah, Āltepētl Mēxihco) is the capital city, capital and largest city of Mexico, as well as the List of North American cities by population, most populous city in North Americ ...

Mexico City
,
Potosí Potosí, known as Villa Imperial de Potosí in the colonial period, is the capital city and a municipality of the Department of Potosí in Bolivia Bolivia ; ay, Wuliwya ; Quechuan languages, Quechua: ''Puliwya'' , officially the Plurin ...

Potosí
(Bolivia),
Lima Lima ( ; ) is the capital and the largest city of Peru , , image_flag = Flag_of_Peru.svg , image_coat = Escudo_nacional_del_Perú.svg , other_symbol = Great Seal of the State , other_symbol_t ...

Lima
(Peru) and elsewhere; and was in wide circulation throughout the Americas, Asia and Europe from the 16th to 19th centuries. The minting of machine-milled Spanish dollars since 1732 boosted its worldwide reputation as a trade coin and positioned it to be model for the new currency of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
. Even after the
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
commenced issuing coins in 1792, locally minted ''dollars'' and ''cents'' were less abundant in circulation than
Spanish America Hispanic America ( Spanish: ''Hispanoamérica'' or ''América Hispana'') (also known as Spanish America ( es, América española)) is the portion of the Americas The Americas (also collectively called America) is a landmass comprising th ...
n ''pesos'' and ''reales''; hence Spanish, Mexican and American dollars all remained legal tender in the United States until the
Coinage Act of 1857The Coinage Act of 1857 (Act of Feb. 21, 1857, Chap. 56, 34th Cong., Sess. III, 11 Stat. 163) was an act of the United States Congress The United States Congress or U.S. Congress is the bicameral legislature of the federal government of t ...
. In particular, Colonists' familiarity with the Spanish two-''real quarter peso'' was the reason for issuing a quasi-decimal 25-cent quarter dollar coin rather than a 20-cent coin. For the relationship between the
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver Silver is a chemical element Image:Simple Periodic Table Chart-blocks.svg, 400px, Periodic table, The periodic table of the chemical el ...
and the individual state colonial currencies, see
Connecticut pound A 40 shilling note, dated 1775 The pound was the currency of Connecticut Connecticut () is the southernmost state in the New England region of the United States. As of the 2010 Census, it has the highest per-capita income, second-highest level ...
,
Delaware pound The pound was the currency of Delaware Delaware ( ) is a U.S. state, state in the Mid-Atlantic (United States), Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and ...
,
Georgia pound The pound was the currency of Georgia (U.S. state), Georgia until 1793. Initially, the British pound circulated. This was supplemented from 1735 with local paper money denominated in sterling, with 1 pound = 20 shillings = 240 penny, pence. The St ...
, Maryland pound,
Massachusetts pound The pound was the currency of the Commonwealth of Massachusetts Massachusetts (, ), officially the Commonwealth of Massachusetts, is the most populous state in the New England New England is a region comprising six states in the Northe ...
, New Hampshire pound, New Jersey pound, New York pound, North Carolina pound, Pennsylvania pound, Rhode Island pound, South Carolina pound, and Virginia pound.


Coinage Act of 1792

On the 6th of July 1785, the
Continental Congress The Continental Congress was a series of legislative bodies A legislature is a deliberative assembly A deliberative assembly is a gathering of members (of any kind of collective) who use parliamentary procedure Parliamentary procedure is ...
resolved that the money unit of the United States, the dollar, would contain 375.64 Grain (unit), grains of fine silver; on the 8th of August 1786, the Continental Congress continued that definition and further resolved that the money of account, corresponding with the division of coins, would proceed in a Decimalisation, decimal ratio, with the sub-units being mills at 0.001 of a dollar, cents at 0.010 of a dollar, and dimes at 0.100 of a dollar. After the adoption of the United States Constitution, the U.S. dollar was defined by the
Coinage Act of 1792 The Coinage Act or the Mint Act, passed by the United States Congress The United States Congress or U.S. Congress is the bicameral legislature of the federal government of the United States and consists of the House of Representatives a ...
. It specified a "dollar" based on the Spanish milled dollar to contain 371
grain A grain is a small, hard, dry seed A seed is an embryonic ''Embryonic'' is the twelfth studio album by experimental rock band the Flaming Lips released on October 13, 2009, on Warner Bros. Records, Warner Bros. The band's first double album ...
s of fine silver, or of "standard silver" of fineness 371.25/416 = 89.24%; as well as an "eagle" to contain 247 grains of fine gold, or of 22 karat or 91.67% fine gold.
Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American statesman, politician, legal scholar, military commander, lawyer, banker, and economist. He was one of the Founding Fathers of the United States The Founding Fa ...

Alexander Hamilton
arrived at these numbers based on a treasury assay of the average fine silver content of a selection of worn
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver Silver is a chemical element Image:Simple Periodic Table Chart-blocks.svg, 400px, Periodic table, The periodic table of the chemical el ...
s, which came out to be 371 grains. Combined with the prevailing gold-silver ratio of 15, the standard for gold was calculated at 371/15 = 24.73 grains fine gold or 26.98 grains 22K gold. Rounding the latter to 27.0 grains finalized the dollar's standard to 24.75 grains of fine gold or 24.75*15 = 371.25 grains fine silver. The same coinage act also set the value of an eagle at 10 dollars, and the dollar at eagle. It called for silver coins in denominations of 1, , , , and dollar, as well as gold coins in denominations of 1, and eagle. 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. Though a
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver Silver is a chemical element Image:Simple Periodic Table Chart-blocks.svg, 400px, Periodic table, The periodic table of the chemical el ...
freshly minted after 1772 theoretically contained 417.7 grains of silver of fineness 130/144 (or 377.1 grains fine silver), reliable assays of the period in fact confirmed a fine silver content of for the average Spanish dollar in circulation. The new US silver dollar of therefore compared favorably and was received at par with the Spanish dollar for foreign payments, and after 1803 the
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
had to suspend making this coin out of its limited resources since it failed to stay in domestic circulation. It was only after Mexican independence in 1821 when their peso's fine silver content of 377.1 grains was firmly upheld, which the US later had to compete with using a heavier Trade dollar (United States coin), Trade dollar coin.


Design

The early currency of the United States did not exhibit faces of presidents, as is the custom now; although today, by law, only the portrait of a deceased individual may appear on United States currency. In fact, the newly formed government was against having portraits of leaders on the currency, a practice 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).


Continental currency

After the American Revolution, the thirteen colonies became sovereignty, independent. Freed from British monetary regulations, they each issued £sd paper money to pay for military expenses. The
Continental Congress The Continental Congress was a series of legislative bodies A legislature is a deliberative assembly A deliberative assembly is a gathering of members (of any kind of collective) who use parliamentary procedure Parliamentary procedure is ...
also began issuing "Continental Currency" denominated in Spanish dollars. For its value relative to states' currencies, see Early American currency#Continental currency, Early American currency. Continental currency depreciation (currency), depreciated badly during the war, giving rise to the famous phrase "not worth a continental". A primary problem was that monetary policy was not coordinated between Congress and the states, which continued to issue bills of credit. Additionally, neither Congress nor the governments of the several states had the will or the means to retire the bills from circulation through taxation or the sale of bonds. The currency was ultimately replaced by the silver dollar at the rate of 1 silver dollar to 1000 continental dollars. It gave rise to the phrase "not worth a continental", and was responsible for the clause in Article One of the United States Constitution#Section 10: Limits on the States, article 1, section 10 of the United States Constitution which reads: "No state shall... make anything but gold and silver coin a tender in payment of debts".


Silver and gold standards, 19th century

From implementation of the 1792 Mint Act to the 1900 implementation of the gold standard the dollar was on a bimetallism, bimetallic silver-and-gold standard, defined as either 371.25 grain (unit), grains (24.056 g) of fine silver or 24.75 grains of fine gold (gold-silver ratio 15). Subsequent to the Coinage Act of 1834 the dollar's fine gold equivalent was revised to 23.2 grains; it was slightly adjusted to in 1837 (gold-silver ratio ~16). The same act also resolved the difficulty in minting the "standard silver" of 89.24% fineness by revising the dollar's alloy to 412.5 grains, 90% silver, still containing 371.25 grains fine silver. Gold was also revised to 90% fineness: 25.8 grains gross, 23.22 grains fine gold. Following the rise in the price of silver during the California Gold Rush and the disappearance of circulating silver coins, the Coinage Act of 1853 reduced the standard for silver coins less than $1 from 412.5 grains to , 90% silver per 100 cents (slightly revised to 25.0 g, 90% silver in 1873). The Act also limited the free silver right of individuals to convert
bullion Bullion is non-ferrous metal In metallurgy Metallurgy is a domain of Materials science, materials science and engineering that studies the physical and chemical behavior of metallic Chemical element, elements, their Inter-metallic alloy, in ...
into only one coin, the silver dollar of 412.5 grains; smaller coins of lower standard can only be produced by the
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
using its own bullion. Summary and Coins of the United States dollar, links to coins issued in the 19th century: * In base metal: Half cent (United States coin), 1/2 cent, Penny (United States coin), 1 cent, Nickel (United States coin), 5 cents. * In silver: half dime, Dime (United States coin), dime, quarter dollar, Half dollar (United States coin), half dollar, Dollar coin (United States), silver dollar. * In gold: Gold dollar, gold $1, Quarter eagle, $2.50 quarter eagle, Half eagle, $5 half eagle, Eagle (United States coin), $10 eagle, Double eagle, $20 double eagle * Less common denominations: Two-cent piece (United States coin), bronze 2 cents, Three-cent nickel, nickel 3 cents, Three-cent silver, silver 3 cents, Twenty-cent piece (United States coin), silver 20 cents, Three-dollar piece, gold $3.


Note issues, 19th century

In order to finance the War of 1812, Congress authorized the issuance of Treasury Note (19th century), Treasury Notes, interest-bearing short-term debt that could be used to pay public dues. While they were intended to serve as debt, they did function "to a limited extent" as money. Treasury Notes were again printed to help resolve the reduction in public revenues resulting from the Panic of 1837 and the Panic of 1857, as well as to help finance the Mexican–American War and the
Civil War A civil war, also known as an intrastate war in polemology, is a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine publis ...
. Paper money was issued again in 1862 without the backing of precious metals due to the
Civil War A civil war, also known as an intrastate war in polemology, is a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine publis ...
. In addition to Treasury Notes, Congress in 1861 authorized the Treasury to borrow $50 million in the form of Demand Notes, which did not bear interest but could be redeemed on demand for precious metals. However, by December 1861, the Union (American Civil War), Union government's supply of specie was outstripped by demand for redemption and they were forced to suspend redemption temporarily. In February 1862 Congress passed the Legal Tender Cases, ''Legal Tender Act of 1862'', issuing United States Notes, which were not redeemable on demand and bore no interest, but were
legal tender Legal tender is a form of money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner, 1 ...
, meaning that creditors had to accept them at face value for any payment except for public debts and import tariffs. However, silver and gold coins continued to be issued, resulting in the depreciation of the newly printed notes through Gresham's Law. In 1869, Supreme Court ruled in Hepburn v. Griswold that Congress could not require creditors to accept United States Notes, but overturned that ruling the next year in the Legal Tender Cases. In 1875, Congress passed the ''Specie Payment Resumption Act'', requiring the Treasury to allow US Notes to be redeemed for gold after January 1, 1879.


Gold standard, 20th century

Though the dollar came under the gold standard ''de jure'' only after 1900, the bimetallism, bimetallic era was ended ''de facto'' when the Coinage Act of 1873 suspended the minting of the standard Dollar coin (United States), silver dollar of 412.5 grains, the only fully legal tender coin that individuals can convert bullion into in unlimited (or Free silver) quantities, and right at the onset of the silver rush from the Comstock Lode in the 1870s. This was the so-called "Crime of '73". The ''
Gold Standard Act The Gold Standard Act of the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists of 50 U.S. ...
'' of 1900 repealed the U.S. dollar's historic link to silver and defined it solely as of fine gold (or $20.67 per
troy ounce 1 troy ounce (1.097 avoirdupois ounces, 31.1 g) coin example ( Platinum Eagle) File:1000oz.silver.bullion.bar.underneath.jpg, A Good Delivery silver bar weighing Troy weight is a system of Physical unit, units of mass that originated in 15th-ce ...
of 480 grains). In 1933, gold coins were confiscated by Executive Order 6102 under Franklin D. Roosevelt, and in 1934 the standard was changed to $35 per troy ounce fine gold, or per dollar. After 1968 a series of revisions to the gold peg was implemented, culminating in the Nixon Shock of August 15, 1971, which suddenly ended the convertibility of dollars to gold. The U.S. dollar has since floated freely on the foreign exchange markets.


Federal Reserve Notes, 20th century to present

Congress continued to issue paper money after the Civil War, the latest of which is the
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
that was authorized by the Federal Reserve Act of 1913. Since the discontinuation of all other types of notes (Gold Certificates in 1933, Silver Certificates in 1963, and United States Notes in 1971), US dollar notes have since been issued exclusively as
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
s.


Emergence as reserve currency

The U.S. dollar first emerged as an important international
reserve currency A reserve currency (or anchor currency) is a foreign currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a ...
in the 1920s, displacing the British
pound sterling The pound sterling (symbol: £; ISO code: GBP), known in some contexts simply as the pound or sterling, is the official currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the ...
as it emerged from the
First World War World War I, often abbreviated as WWI or WW1, also known as the First World War or the Great War, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainmen ...
relatively unscathed and since the United States was a significant recipient of wartime gold inflows. After the United States emerged as an even stronger global superpower during the
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literatur ...
, the
Bretton Woods Agreement The Bretton Woods system of Monetary system, monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreeme ...
of 1944 established the U.S. dollar as the world's primary reserve currency and the only post-war currency linked to gold. Despite all links to gold being severed in 1971, the dollar continues to be the world's foremost reserve currency for international trade to this day. The Bretton Woods Agreement of 1944 also defined the post-World War II monetary order and relations among modern-day United Nations, independent states, by setting up a system of rules, institutions, and procedures to regulate the international monetary system. The agreement founded the International Monetary Fund and other institutions of the modern-day World Bank Group, establishing the infrastructure for conducting international payments and accessing the global capital markets using the U.S. dollar. The
monetary policy of the United States Monetary policy concerns the actions of a central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity), state or formal monetary union, and oversees ...
is conducted by the
Federal Reserve System The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity ...
, which acts as the nation's
central bank A central bank, reserve bank, or monetary authority is an institution that manages the and of a or formal monetary union, and oversees their . In contrast to a , a central bank possesses a on increasing the . Most central banks also have ...

central bank
. It was founded in 1913 under the Federal Reserve Act in order to furnish an elastic currency for the United States and to supervise its banking system, particularly in the aftermath of the Panic of 1907. For most of the post-war period, the U.S. government has financed its own spending by borrowing heavily from the dollar-lubricated global capital markets, in debts denominated in its own currency and at minimal interest rates. This ability to borrow heavily without facing a significant balance of payments crisis has been described as the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
's exorbitant privilege.


Coins

The
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
has issued legal tender coins every year from 1792 to the present. From 1934 to the present, the only denominations produced for circulation have been the familiar penny, nickel, dime, quarter, half dollar, and dollar. Gold and silver coins have been previously minted for general circulation from the 18th to the 20th centuries. The last gold coins were minted in 1933. The last 90% silver coins were minted in 1964, and the last 40% silver half dollar was minted in 1970. The
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
currently produces circulating coins at the Philadelphia Mint, Philadelphia and Denver Mints, and commemorative and proof coins for collectors at the San Francisco Mint, San Francisco and West Point Mints. Mint mark conventions for these and for past mint branches are discussed in ''Coins of the United States dollar#Mint marks''. The Dollar coin (United States), one-dollar coin has never been in popular circulation from 1794 to present, despite several attempts to increase their usage since the 1970s, the most important reason of which is the continued production and popularity of the United States one-dollar bill, one-dollar bill. Half dollar (United States coin), Half dollar coins were commonly used currency since inception in 1794, but has fallen out of use from the mid-1960s when all silver half dollars began to be hoarded. The nickel (United States coin), nickel is the only coin whose size and composition (5 grams, 75% copper, and 25% nickel) is still in use from 1865 to today, except for wartime 1942-1945 Jefferson nickels which contained silver. Due to the penny's low value, some Efforts to eliminate the penny in the United States, efforts have been made to eliminate the penny as circulating coinage. For a discussion of other discontinued and canceled denominations, see ''Obsolete denominations of United States currency#Coinage'' and ''Canceled denominations of United States currency#Coinage''.


Collector coins

Collector coins are technically legal tender at face value but are usually worth far more due to their numismatic value or for their precious metal content. These include: * American Eagle bullion coins **
American Silver Eagle The American Silver Eagle is the official silver Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': " ...
$1 (1 troy ounce, troy oz) Silver bullion coin 1986–present **American Gold Eagle $5 ( troy oz), $10 ( troy oz), $25 ( troy oz), and $50 (1 troy oz) Gold bullion coin 1986–present **American Platinum Eagle $10 ( troy oz), $25 ( troy oz), $50 ( troy oz), and $100 (1 troy oz) Platinum bullion coin 1997–present **American Palladium Eagle $25 (1 troy oz) Palladium bullion coin 2017–present * United States commemorative coins—special issue coins, among these: **Half union, $50.00 (Half Union) minted for the Panama-Pacific International Exposition (1915) **Silver proof sets minted since 1992 with dimes, quarters and half-dollars made of silver rather than the standard copper-nickel **Presidential dollar coins proof sets minted since 2007


Banknotes

The Constitution of the United States, U.S. Constitution provides that Congress shall have the power to "borrow money on the credit of the United States." Congress has exercised that power by authorizing Federal Reserve Banks to issue
Federal Reserve Notes Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
. 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 Federal Reserve bank". Federal Reserve Notes are designated by law as "
legal tender Legal tender is a form of money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner, 1 ...
" for the payment of debts. Congress has also authorized the issuance of Federal Reserve Note, more than 10 other types of banknotes, including the
United States Note A United States Note, also known as a Legal Tender Note, is a type of paper money that was issued from 1862 to 1971 in the U.S. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money. They were known ...
and the Federal Reserve Bank Note. The Federal Reserve Note is the only type that remains in circulation since the 1970s.
Federal Reserve Notes Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1913 ...
are printed by the Bureau of Engraving and Printing and are made from Cotton paper, cotton fiber paper (as opposed to Wood fibre, wood fiber used to make common paper). The "large-sized notes" issued before 1928 measured , while small-sized notes introduced that year measure . The dimensions of the modern (small-size) U.S. currency is identical to the size of Philippine peso banknotes issued under United States administration after 1903, which had proven highly successful. The American large-note bills became known as "horse blankets" or "saddle blankets." Currently printed denominations are United States one-dollar bill, $1, United States two-dollar bill, $2, United States five-dollar bill, $5, United States ten-dollar bill, $10, United States twenty-dollar bill, $20, United States fifty-dollar bill, $50, and United States one hundred-dollar bill, $100. Notes above the $100 denomination stopped being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily in inter-bank transactions or by organized crime; it was the latter usage that prompted President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became less necessary. 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. With the exception of the $100,000 bill (which was only issued as a Series 1934 Gold Certificate and was never publicly circulated; thus it is illegal to own), these notes are now collectors' items and are worth more than their face value to collectors. Though still predominantly green, the 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 and the current version of the $100 bill. It also plans larger, higher-contrast numerals, more color differences, and distribution of currency readers to assist the visually impaired during the transition period.


Monetary policy

The Federal Reserve Act created the
Federal Reserve System The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity ...
in 1913 as the
central bank A central bank, reserve bank, or monetary authority is an institution that manages the and of a or formal monetary union, and oversees their . In contrast to a , a central bank possesses a on increasing the . Most central banks also have ...

central bank
of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
. Its primary task is to conduct the nation's monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy. It is also tasked to promote the stability of the financial system and regulate financial institutions, and to act as lender of last resort. The Monetary policy of the United States is conducted by the Federal Open Market Committee, which is composed of the Federal Reserve Board of Governors and 5 out of the 12 Federal Reserve Bank presidents, and is implemented by all twelve regional Federal Reserve Banks. Monetary policy refers to actions made by central banks that determine the size and growth rate of the money supply available in the economy, and which would result in desired objectives like low inflation, low unemployment, and stable financial systems. The economy's aggregate money supply is the total of * M0 money, or Monetary Base - "dollars" in currency and bank money balances credited to the central bank's depositors, which are backed by the central bank's assets, * plus M1, M2, M3 money - "dollars" in the form of bank money balances credited to banks' depositors, which are backed by the bank's assets and investments. The FOMC influences the level of money available to the economy by the following means: * Reserve requirements - specifies a required minimum percentage of deposits in a commercial bank that should be held as a reserve (i.e. as deposits with the Federal Reserve), with the rest available to loan or invest. Higher requirements mean less money loaned or invested, helping keep inflation in check. Raising the federal funds rate earned on those reserves also helps achieve this objective. * Open market operations - the Federal Reserve buys or sells United States Treasury security, US Treasury bonds and other securities held by banks in exchange for reserves; more reserves increase a bank's capacity to loan or invest elsewhere. * Discount window lending - banks can borrow from the Federal Reserve. Monetary policy directly affects interest rates; it indirectly affects stock prices, wealth, and currency exchange rates. Through these channels, monetary policy influences spending, investment, production, employment, and inflation in the United States. Effective monetary policy complements fiscal policy to support economic growth. The adjusted monetary base has increased from approximately $400 billion in 1994, to $800 billion in 2005, and to over $3,000 billion in 2013. 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—it is at this point that the Federal Reserve has created new high-powered money. Commercial banks then decide how much money to keep in deposit with the Federal Reserve and how much to hold as physical currency. In the latter case, the Federal Reserve places an order for printed money from the U.S. Treasury Department. The Treasury Department, in turn, sends these requests to the Bureau of Engraving and Printing (to print new Federal Reserve notes, dollar bills) and the Bureau of the Mint (to stamp the coins). The Federal Reserve's monetary policy objectives to keep prices stable and unemployment low is often called the ''dual mandate''. This replaces past practices under a gold standard where the main concern is the gold equivalent of the local currency, or under a gold exchange standard where the concern is fixing the exchange rate versus another gold-convertible currency (previously practiced worldwide under the
Bretton Woods Agreement The Bretton Woods system of Monetary system, monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreeme ...
of 1944 via fixed exchange rates to the U.S. dollar).


International use as reserve currency


Ascendancy

The primary currency used for global trade between Europe, Asia, and the Americas has historically been the Spanish-American silver dollar, which created a global silver standard system from the 16th to 19th centuries, due to abundant silver supplies in
Spanish America Hispanic America ( Spanish: ''Hispanoamérica'' or ''América Hispana'') (also known as Spanish America ( es, América española)) is the portion of the Americas The Americas (also collectively called America) is a landmass comprising th ...
. The U.S. dollar itself was derived from this coin. The
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver Silver is a chemical element Image:Simple Periodic Table Chart-blocks.svg, 400px, Periodic table, The periodic table of the chemical el ...
was later displaced by the British
pound sterling The pound sterling (symbol: £; ISO code: GBP), known in some contexts simply as the pound or sterling, is the official currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the ...
in the advent of the international gold standard in the last quarter of the 19th century. The U.S. dollar began to displace the
pound sterling The pound sterling (symbol: £; ISO code: GBP), known in some contexts simply as the pound or sterling, is the official currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the ...
as international
reserve currency A reserve currency (or anchor currency) is a foreign currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a ...
from the 1920s since it emerged from the
First World War World War I, often abbreviated as WWI or WW1, also known as the First World War or the Great War, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainmen ...
relatively unscathed and since the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
was a significant recipient of wartime gold inflows. After the U.S. emerged as an even stronger global superpower during the
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a global war A world war is "a war War is an intense armed conflict between states State may refer to: Arts, entertainment, and media Literatur ...
, the
Bretton Woods Agreement The Bretton Woods system of Monetary system, monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreeme ...
of 1944 established the post-war international monetary system, with the U.S. dollar ascending to become the world's primary
reserve currency A reserve currency (or anchor currency) is a foreign currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a ...
for international trade, and the only post-war currency linked to gold at $35 per
troy ounce 1 troy ounce (1.097 avoirdupois ounces, 31.1 g) coin example ( Platinum Eagle) File:1000oz.silver.bullion.bar.underneath.jpg, A Good Delivery silver bar weighing Troy weight is a system of Physical unit, units of mass that originated in 15th-ce ...
. Despite all links to gold being severed in 1971, the dollar continues to play this role to this day.


As international reserve currency

The U.S. dollar is joined by the world's other major currencies - the euro,
pound sterling The pound sterling (symbol: £; ISO code: GBP), known in some contexts simply as the pound or sterling, is the official currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the ...
, Japanese yen and Chinese renminbi - in the currency basket of the special drawing rights of the International Monetary Fund. Central banks worldwide have huge reserves of U.S. dollars in their holdings and are significant buyers of United States Treasury security, U.S. treasury bills and notes. Foreign companies, entities, and private individuals hold U.S. dollars in foreign deposit accounts called eurodollars (not to be confused with the euro), which are outside the jurisdiction of the
Federal Reserve System The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a State (polity ...
. Private individuals also hold dollars outside the banking system mostly in the form of United States one-hundred-dollar bill, US$100 bills, of which 80% of its supply is held overseas. The United States Department of the Treasury exercises considerable oversight over the Society for Worldwide Interbank Financial Telecommunication, SWIFT financial transfers network, and consequently has a huge sway on the global financial transactions systems, with the ability to impose sanctions on foreign entities and individuals.


In the global markets

The U.S. dollar is predominantly the standard currency unit in which goods are quoted and traded, and with which payments are settled in, in the global commodity markets. The U.S. Dollar Index is an important indicator of the dollar's strength or weakness versus a basket of six foreign currencies. The United States Government is capable of borrowing trillions of dollars from the global capital markets in U.S. dollars issued by the Federal Reserve System, Federal Reserve, which is itself under US government purview, at minimal interest rates, and with virtually zero default risk. In contrast, foreign governments and corporations incapable of raising money in their own local currencies are forced to issue debt denominated in U.S. dollars, along with its consequent higher interest rates and risks of default. The United States's ability to borrow in its own currency without facing a significant balance of payments crisis has been frequently described as its exorbitant privilege. A frequent topic of debate is whether the strong dollar policy of the United States is indeed in America's own best interests, as well as in the best interest of the United Nations, international community.


Currencies fixed to the U.S. dollar

For a more exhaustive discussion of countries using the U.S. dollar as official or customary currency, or using currencies which are pegged to the U.S. dollar, see ''International use of the U.S. dollar#Dollarization and fixed exchange rates'' and ''Currency substitution#US dollar''. Countries using the U.S. dollar as its official currency include: * In the Americas: Panamanian balboa, Panama, Ecuadorian centavo coins, Ecuador, El Salvador, British Virgin Islands, Turks and Caicos Islands, and the Caribbean Netherlands. * The constituent states of the former Trust Territory of the Pacific Islands: Palau, the Federated States of Micronesia, and the Marshall Islands. * Others: East Timor centavo coins, East Timor. Among the countries using the U.S. dollar together with other foreign currencies and its local currency are Cambodian riel, Cambodia and Zimbabwe. Currencies pegged to the U.S. dollar include: * In the Caribbean: the Bahamian dollar, Barbadian dollar, Belize dollar, Bermudan dollar, Cayman Islands dollar, East Caribbean dollar, Netherlands Antillean guilder and the Aruban florin. * The currencies of the oil-producing Arab countries: the Saudi riyal, United Arab Emirates dirham, Omani rial, Qatari riyal and the Bahraini dinar. * Others: the Hong Kong dollar, Macanese pataca, Lebanese Pound .


Value

The 6th paragraph of Coinage clause, 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 The Coinage Act or the Mint Act, passed by the United States Congress The United States Congress or U.S. Congress is the bicameral legislature of the federal government of the United States and consists of the House of Representatives a ...
. That Act provided for the minting of the Flowing Hair Dollar, 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". The table above shows the equivalent amount of goods that, in a particular year, could be purchased with $1. The table shows that from 1774 through 2012 the U.S. dollar has lost about 97.0% of its buying power. 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. 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. It reflects inflation as experienced by consumers in their day-to-day living expenses. 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. 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 banknotes, and silver coins. 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 were 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% deflation in U.S. prices in the 1930s. Under the Bretton Woods system established after World War II, the value of gold 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 currency crisis 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 Richard Nixon, President Nixon, resulting in the "Nixon shock". 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 stagflation 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 Phillips curve), and so inflation was regarded as relatively benign. Between 1965 and 1981, the U.S. dollar lost two thirds of its value. In 1979, Jimmy Carter, President Carter appointed Paul Volcker 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. Over the thirty-year period from 1981 to 2009, the U.S. dollar lost over half its value. 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 "Great Moderation" of economic conditions since the 1970s is credited to monetary policy targeting price stability. There is an 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, others contend that such a policy limits the ability of the central bank to control interest rates and stimulate the economy when needed.


Exchange rates


Historical exchange rates


Current exchange rates


See also

* Counterfeit United States currency * Dedollarisation * International use of the U.S. dollar * List of the largest trading partners of the United States * Monetary policy of the United States * Petrodollar recycling * Strong dollar policy * U.S. Dollar Index


Notes


References


Further reading

*


External links


U.S. Bureau of Engraving and Printing



American Currency Exhibit at the San Francisco Federal Reserve Bank

Relative values of the U.S. dollar, from 1774 to present



Summary of BEP Production Statistics


Images of U.S. currency and coins


U.S. Currency Education Program page with images of all current banknotes

U.S. Mint: Image Library


{{DEFAULTSORT:United States Dollar United States dollar, Currencies introduced in 1792 Currencies of British Overseas Territories Currencies of East Timor Currencies of Ecuador, Dollar Currencies of El Salvador Currencies of the Kingdom of the Netherlands Currencies of the United States, Dollar Currencies of Zimbabwe Historical currencies of the United States 1792 establishments in the United States