Two Cents

In 1519, Bohemian Count Hieronymus Schlick discovered a rich vein of silver near his estate and decided to mint his own coins.

Named after the valley they where were mined, these Joachimsthalers-- or "thalers" for short-- became so popular around the world that the word became synonymous with any big silver coin, from the Italian tallero to the Ethiopian talari to the American dollar.

But why would an English colony use dollars instead of the currency of its motherland: pounds and shillings?

Well, during the 1700s, London was intent on keeping as much gold and silver in the country as possible.

They actually outlawed the export of their currency, even to their own colonies.

That meant that American colonists had to rely on silver dollars from other countries, and the most plentiful supply came from Mexico.

(host 1) Just south of the border, Spain was producing vast amounts of silver coins at the Casa de Moneda de Mexico, still operating today as the oldest mint in the Americas.

Officially called pesos, these silver coins were worth eight reals, which is why you might have heard pirates call them "pieces of eight."

Arrr!

But to the American colonists, they were simply dollars.

(host 2) No one knows for sure where the dollar sign came from, but two of the leading theories involve the peso.

One is that the abbreviation for it, PS, became scrunched by hurried bookkeepers over time.

Another suggests that the symbol refers to an image on the back of the coin: a pillar of Hercules with a banner wrapped around it in an S shape.

(host 1) Still, coinage in the colonies was hard to come by.

What little there was went to Europe to pay for imported goods, and it rarely came back.

In 1729, a young printer saw how a lack of currency in Philadelphia was stifling the local economy, prompting him to write an anonymous pamphlet called "A Modest Enquiry into the Necessity of a Paper-Currency."

This was the same man responsible for many famous financial quotes like "time is money," and "nothing is certain but death and taxes."

Yep, it was Benjamin Franklin.

(host 2) Franklin's advocacy of paper currency earned him contracts for printing money for the Pennsylvania colony, but the English crown saw this as a usurpation of its authority.

By 1764, the British Parliament had outlawed the use of paper money in America-- just one of many stubborn decisions that would eventually provoke the colonies to rebellion.

(host 1) But to finance a revolution, you need cash, so the newly formed Continental Congress authorized the printing of millions of dollars of Continental Currency.

Originally, these "continentals" were valued at one to one Spanish dollar, but as more and more were printed, their value fell dramatically.

If you've ever heard the saying, "Not worth a continental," that's where it came from.

Though the American Revolution became the first war financed and won with paper money, the American people felt totally burned.

The Founding Fathers decided to avoid the controversy altogether by not mentioning paper money in the Constitution at all, and it would be almost a hundred years before the Federal Government would print money again.

With the Coinage Act of 1792, the United States officially made the dollar the national currency.

Instead of the confusing British system of pounds, shillings, pence, and farthings, the dollar would be neatly divided into 100 equal parts, which Thomas Jefferson suggested they call "cents" after the Latin for 100.

Thus, the American dollar became the first fully decimal currency in the world, and the new coins were struck in the first federal building in America: the U.S. Mint in Philadelphia, which predates even the White House and the Capitol.

(host 2) Looking at these coins today, the first thing you might notice is what they're missing: famous people.

America had just dispensed with monarchy and elitism.

The Founding Fathers wanted the images on their money to represent ideas, not people.

So when did that start to change?

The same time we started printing money again: the Civil War.

Before we get there, we should introduce an important but little-known figure in American history: Salmon P. Chase.

Yes, that's Salmon, like the fish.

Hmm.

It's biblical.

(host 2) Salmon was an anti-slavery senator from Ohio who earned his reputation as a lawyer defending Black fugitives from being shipped back to their captors in the South.

Salmon had his eye on the Oval Office for a long time.

(host 1) But in 1861, Salmon lost the Republican nomination to the more moderate Abraham Lincoln, who went on to win the presidency.

As an olive branch to the radical wing of the party, Lincoln made Salmon his Secretary of the Treasury, and it was under Salmon that the Treasury started printing paper money again to finance the Union Army.

As ambitious as ever, Salmon decided to put the face of his ideal president on the first American one dollar bill: his own!

The Treasury printed over $400 million worth of paper notes, which came to be known as greenbacks, because, well... As with Continental Currency, greenbacks depreciated as more were printed, at one point only worth one-third their face value.

As bad as that sounds, it was a lot worse in the South.

The Confederacy printed more than twice as many of their Confederate State dollars.

The value dropped so precipitously that by 1865, a ten-dollar Confederate note would only get you one or two cents' worth of goods.

Incidentally, this bill printed in Louisiana was commonly known as a "Dixie," thanks to the French word for ten.

Some people think that's how the area around New Orleans got the moniker "Dixieland," and how the South generally came to be known as the "Land of Dixie."

(host 2) Neither Dixies nor greenbacks could be exchanged for gold and silver.

Their value was based on the promise that the government would redeem them once their side won the war.

With the North's decisive victory, Confederate dollars were suddenly useless scraps of paper.

But the greenback became such a trusted standard that most people didn't even bother redeeming them, and America finally became a land of federally regulated paper money.

(host 1) Ironically, in 1870, Salmon Chase, now a Supreme Court Justice, claimed that the federal government had no constitutional right to force people to use paper money... effectively ruling against his own actions as Secretary of the Treasury.

I'm sure it had nothing to do with the fact that his face had recently been removed from the one-dollar bill and replaced with George Washington's.

The ruling was overturned a couple years later, but Salmon would eventually make his final mark on our currency, when in 1918 his portrait was used on the $10,000 bill-- the largest intended for general circulation.

The next great leap forward for the dollar would be thanks to, you guessed it, another war.

[fanfare] America emerged from World War II as a major global power.

Its economy was perceived as so strong and stable that, in 1945, the U.S. dollar replaced the British pound sterling as the world's global reserve currency.

Basically, this meant that banks and governments around the world kept more U.S. dollars on hand than any other foreign currency and used it as the metric for their own currency's value.

(host 1) Throughout the 20th century, the connection between gold and the dollar got weaker and weaker until it was finally severed by the Nixon Administration in 1971.

The U.S. dollar is now a fiat currency, meaning its value is based only on the people's faith in their government.

While that sounds risky, it actually gives Congress more power to deal with economic crises, as it did just this March by printing extra money as a response to the coronavirus pandemic.

It's probably not a coincidence that over that time, we started to see more and more faces on our money, faces that inspire trust and confidence in the American system.

They're mostly ex-presidents and Treasury Secretaries, though not all, and the final decision goes to the Secretary of the Treasury, with the only guideline that they be "persons whose places in history the American people know well."

However, in honor of our anti-royal origins, living people are prohibited from appearing on U.S. currency.

In 2016, the Treasury Department announced that it would unveil a new $20 bill in 2020, which would replace Andrew Jackson with the famed abolitionist Harriet Tubman, making her the first African American historical figure to appear on federal U.S. currency.

Don't feel bad for Ol' Hickory, though.

He was vehemently opposed to paper money, so he probably wouldn't have wanted his face on the bill anyway.

However, in 2019 the Trump Administration announced that they would be delaying this change by another ten years at least.

As Americans, we tend to take the dollar for granted, almost like it's an unchanging natural phenomenon, like earth or air or water.

But like any human tool, it was designed for a purpose, and we constantly shape it to meet the needs of the moment.

It can cause stress and greed and misery, but also hope and progress and prosperity.

Without the dollar, we couldn't have declared independence or eradicated slavery.

The more we understand it, the better we can control it.

So maybe the next time you use a greenback, you'll think of the long journey it took to end up in your pocket.

(both) And that's our Two Cents!