Useful Notes / American Money
"The buck stops here."
— sign on President Harry Truman's desk note
The standard unit of American money is called the dollar
, presumably from the German word "Taler" which was used for various now obsolete currencies and is originally derived from "Joachimsthal", a town in Bohemia where coins were minted. More directly, the original U.S. dollar was based on the Spanish eight-real coin, called the Spanish Dollar (and occasionally the Dollero
) because of its resemblance to the taler
coin. Even though the north American colonies belonged to Great Britain, the Spanish Dollars were more popular there because of their finer silver.
The dollar is subdivided into 100 individual units, called cents
. Each cent is in turn further divided into 10 mills
, a unit of currency largely rendered hypothetical through inflation (except in the price of gasoline, although property-tax rates are often expressed in mills, hence the name mill levy
, or if you're a Michigander, "millages"), of which there are 1000 in a dollar. The only physical representations of mills were the half-cent (or 5 mill) piece
issued before the American Civil War
, "mill tokens" used for tax purposes and made of cheap metal, paper, or plastic (not to be confused with company scrip issued by cotton mills and other factories
), and the "cash value less than 1/10 of 1 cent" message
found on coupons.
The central bank of the United States is known as the Federal Reserve, or "Fed" for short. The Fed's role is to monitor the national economy and to supply, via loans to private banks, money across the United States. Basically when a Fed branch determines that the cash supply is too low it will place an order with the US Mint or US Bureau of Engraving and Printing then loan the money at an interest rate to private banks who then loan it to businesses and people. The Fed has 12 branches in various regions across the country. The most notable of the 12 is the New York branch, which serves in a "first among equals" role within the Fed - when the Fed decides to shift monetary policy, it does so through the New York branch.
Since World War II
, the U.S. dollar has been the world's reserve currency. This means that the currencies of other nations tend to fix their value in relation to the dollar. This developed out of the Bretton Woods System—after World War II, all the European economies were shot to hell, and Western Europe collectively decided that for the sake of economic stability, they would all peg their currencies to the dollar, and the dollar would be on the gold standard (i.e., pegged to gold). Eastern Europe didn't participate, having non-convertible currencies anyway (for various reasons). The dollar went off the gold standard in 1971 after changes in the world economy made this system untenable, and European currencies gradually decided to float afterward.
By law, all U.S. coins must bear the inscriptions "Liberty," "E Pluribus Unum," and "In God We Trust." While the phrase "In God We Trust" has appeared on coins since the 1860s, only in 1957 was it introduced for paper banknotes.
Most U.S. coins show the year of issue somewhere on the face. The exceptions include newer quarters, which have it on the back, and the 1976 Bicentennial quarters, half-dollars and dollar coins, which replaced the heads-side year-mark with a dual-year "1776-1976" numbering, and also featured special tails-side designs. (These Bicentennial coins were actually minted during the years 1975 and
1976, which is the reason why catalogs that offer "one coin of each denomination from a year of your choice" often state they can't offer a set from 1975.)
The currently circulating coins are:
|Official name||Colloquial name||Value|
| cent || penny || 1˘ |
| nickel five cent piece || nickel || 5˘ |
| dime || dime || 10˘ |
| quarter dollar || quarter || 25˘ |
| half dollar* || 50 cent piece || 50˘ |
| dollar* || dollar || $1 |
(*) The half dollar and dollar coin are rarely seen in circulation.
(not "pence"): Officially called the cent. Each cent is one one hundredth of a dollar, and comes in the form of a small coin formerly made of bronze, but since 1981 made of zinc with a copper coating. In the early 1800s the one-cent piece was a very large coin, mid-way in size between the quarter and the half-dollar, but by the 1850s copper had become valuable enough that there was now more than a cent's worth of copper in a one-cent coin — the solution was to shrink it to its modern size, add 12% nickel to "make up for" the sharp reduction in size, and then remove this added nickel content a few years later when no one was looking. As copper became even more expensive, a proposal to switch to an aluminum cent was made in 1974; over a million were struck, but the release was cancelled due to a drop in copper prices, complaints from vending machine manufacturers who feared would mistake the new pennies for higher-value coins and jam their machines, and warnings from pediatricians that a swallowed aluminum coin would be difficult to detect via X-rays. In 1981 the all-copper composition was replaced with copper-coated zinc, but the spectre of negative seigniorage
faces the coin again today as even the price of zinc now outstrips the value of the penny. It's had Abraham Lincoln
's profile on the front since 1909 (the 100th anniversary of his birth), when it replaced the classic "Indian Head" penny. The back has held various designs over that same period; the "wheat ear" design (1909-1958), the Lincoln Memorial (1958-2008), four images celebrating Lincoln's life and accomplishments for his bicentennial (2009), and the current "Union Shield" (2010-).
The change from bronze to copper-plated zinc in 1981 occurred because, thanks to inflation and the demand for copper to make electrical wires, the bronze cent contained more
than one cent's worth of metal. As of 2013, even zinc is now worth more than the face value of the cent, so even cheaper materials are currently under investigation. In the mean time, U.S. law forbids these coins from being melted down, or from being shipped overseas in large quantities.
Most vending machines won't accept pennies and they are nearly worthless, but they are handy in making change (note that sales tax in the United States is added to the sale price, resulting in uneven totals) and there's no real sign of them going away.
As a side note, in 1943 pennies were made of zinc-coated steel ("steelies") to save copper for the war effort
. Literally a handfulnote
of copper 1943 cents were accidentally struck from blanks left in the stamping machines after the patterns were changed; the real ones are extremely valuable, but far outnumbered by fakes made from copper-plated steelies or pennies from other years that had their dates altered.
Officially called the nickel five-cent piece, to distinguish it from nickel three-cent pieces minted in the 1800s. Despite its name, 75% of its weight is made out of copper — only 25% is actual nickel metal. It's had Thomas Jefferson
on the front since 1938 (replacing the "Buffalo Nickel"). The back has shown Jefferson's home, Monticello, for that entire period except during 2004 and 2005, when a set of four "Westward Journey" commemorative designs were used to celebrate the 200th anniversary of the Lewis and Clark expedition that Jefferson authorized.
Like the cent, the metals that the nickel is made out of are now (in 2013) worth more than its face value. A new, cheaper alloy may be in the works.
Officially called the dime. That's right. "Dime" is an official currency unit in the Federal monetary system, just like "dollar" and "cent" are. The word comes from the French disme
, meaning tenth — it's one-tenth of a dollar, or ten cents. Until 1965, dimes were composed of 90% silver, which is why they are smaller than nickels and pennies and have grooves in their edges. The dime has had Franklin D. Roosevelt
's profile on the front since 1946, a year after he died, and a tails-side design derived from the Roosevelt family coat-of-arms; prior to that, they had the head of Mercury (in his role as the Roman god of commerce)
. It has Roosevelt because as President he created the March of Dimes, a charity organization where people would donate dimes to help support polio research and give money to families whose children had polio. Roosevelt famously lost the use of his legs to the disease when he was 39.
Officially called the quarter dollar, worth 25 cents. Until 1965, quarters were composed of 90% silver, but today they're "copper-nickel clad", meaning they have an inner layer of copper "clad" in two outer layers of the same alloy that the nickel coin (above) is made of. It's had George Washington
's profile on the front since 1938, which replaced the "Standing Liberty" design. Until 1999, these coins featured an eagle on the tails-side except for the Bicentennial coins which instead featured a likeness of a Colonial drummer, along with a flaming torch surrounded by 13 five-pointed stars representing the original thirteen colonies. Starting in 1999, a series of multiple tails-side designs commemorating each of the fifty states were issued, followed subsequently by a 51st design for Washington, DC
and a quintet of designs following that to provide one for each of the five United States territories populous enough to merit non-voting Congressional representatives: Puerto Rico, Guam, American Samoa, the United States Virgin Islands, and the Commonwealth of the Northern Mariana Islands. Once those series were completed, a (still ongoing) series of designs commemorating the United States' National Parks was introduced. These coin series were introduced in hopes of promoting public interest in coin collecting, and have proven wildly successful in that regard.
Officially called the half dollar. At some points in American history, this coin was actually more popular than the quarter. Like the dime and quarter, it was made of 90% silver until 1965, but unlike the dime and quarter it switched to a "copper-silver clad" configuration in 1965, resulting in people hoarding them in anticipation of rising silver prices. The composition switched in 1971 to the same copper-nickel clad configuration as the dime and quarter (and the new Eisenhower dollar coin), but by then it was too late. The coin fell almost completely out of favor, and to this day no vending machines (other than post office vending machines) accept the half dollar coin any more. It's had John F. Kennedy
's profile on the front since 1964, the year after his assassination. Before then, it had featured a profile of Benjamin Franklin
, whose likeness still graces the $100 bill to this day. The half-dollar coin features an eagle on the tails-side, or Independence Hall on the Bicentennial issue.
Officially called the dollar. Prior to 1979, it was a huuuuge
honkin' coin, with twice the weight of a 50-cent piece; this was due to its legacy of being made out of 90% silver, just like the dime, quarter, and half dollar were. To this day, these old large-sized dollar coins are still called "silver dollars", even though they were last made of silver in 1935 with the final issue of the "Peace Dollar" design. In 1971, a new copper/nickel dollar coin was released with the heads-side profile of Dwight Eisenhower
and a tails-side design based on the Apollo 11 mission patch
(a reference to the fact that the lunar module of that mission was christened "Eagle"). The Bicentennial commemorative design featured a likeness of the Liberty Bell superimposed on an image of the moon. Starting in 1979, a new, smaller dollar coin appeared sporting Susan B. Anthony's profile on the front. These were not only about the same size as a quarter, they also had the same copper-nickel clad construction and reeded edge as a quarter, making them easy to confuse in loose change. In 2000, the mint attempted to remedy this by introducing the "gold" (really manganese brass) dollar coin with Sacagaweanote
pictured on the front. By this time, though, most Americans had gotten out of the habit of carrying change pouches around, and eminently preferred the paper dollar, so even this new easy-to-distinguish dollar coin never caught on. From 2007-2011, an attempt was made to revive interest in this coin by putting all of the U.S. presidents on them in chronological order so as to release a series with the intent being to use coin-collecting as a hobby to garner public support for the $1 coin, but this worked too
well when people showed more interest in collecting the series than in using it as money
and the program stopped at James Garfield
. (Instead of issuing to general circulation, starting with Chester A. Arthur
, the remainder of the coins in the series are to be minted for collectable purposes only.) The presidential $1 coin series are the first ever American coinage to feature lettering/numbering engraved on the coin's edge that is neither on the heads-side nor the tails-side of the coin.
It's worth noting that Canadian coins come in the same size, color, and denominations as Americans until you get to one dollar. The dollar coin, called a "Loonie" because of the loon bird picture on one of its faces. Unlike the American efforts, the Canadian government moved decisively to get it accepted, such as giving it a golden colour to make it look valuable while immediately discontinuing the $1 paper bank note; as a result, the Canadian public started using it without hesitation. They also have a $2-coin called a "toonie" that's bimetallic, with a central disc of a brass alloy encased in a silvery-colored outer ring. They're traditionally worth less and weigh less than American coins but are usually interchangeable to all but the most nitpicky cashiers and vending machines, and they draw less attention from cashiers the closer you get to the Canadian border. In some border states (e. g. Michigan) it's not unusual for up to half the change in a local's pocket to be Canadian. In addition, the Canadian government, recognizing the worthlessness of the penny nowadays, discontinued it in February 2013.note
As an artifact of their origins as bullion, the dime, quarter, half-dollar, and "large" (Peace/Eisenhower) dollar coin are interchangeable by weight. In other words, ten dimes, four quarters, two half dollars, and one dollar coin all have the same currency value ($1) and the same weight (24.624 grams when they were 90% silver, 22.68 grams with the current copper/nickel composition). For the same historical reason, all dime, quarter and half-dollar coins have "reeded" edges—the vertical grooves carved into the edge made it easy to tell if someone had shaved a little bit of silver off the outside of the coin.
When the British colonists came to America, their money was originally the good old-fashioned Old British Money
—pounds, shillings, and pence. However, British mercantilist policy in the 17th and 18th centuries meant that British hard currency in the form of gold and silver coins was always hard to come by in the colonial period, and so the colonists tended to look elsewhere for their preferred medium of exchange. As luck would have it, the Spanish had a giant mint at Mexico City pumping out pesos
worth eight reales
made of Mexican and South American silver. British Americans involved in the semi-illegal trade with Latin America brought back lots of this stuff from their trading jaunts and pretty soon the Spanish coins were pretty standard currency throughout the Colonies. These peso
coins eventually became the basis for modern American currency—but under a different name.
You see, the peso
was made to the specifications of a coin originally minted in a town in Central Europe (to be precise, Bohemia, then ruled by Austria, now in the Czech Republic) called Joachimsthal (Jáchymov in the modern Czech). Joachimsthal was in a major mining area, with many metals known, but it was particularly known for the high quality of its silver. When the Austrian Habsburg dynasty married into the Spanish royal family and took the country over in the 16th century, they brought their coinage with them—and, secondarily, the common name for the coins minted at Joachimsthal: Joachimsthaler
, or thaler
for short. For whatever reason, it was this German term that came to America, becoming the familiar word "dollar."
Before the The American Revolution
, it was common in multiple world currencies to physically slice a dollar (or equivalent) coin into eight bits
worth 12.5 cents each. The highly popular Spanish Milled Dollar, as already mentioned, was worth eight Spanish Reals — which was why pirates called them "pieces of eight". Slicing it into 8 pieces produced 8 bits worth one Real apiece. The "bit" denomination has survived today primarily in colloquialism: a Shave And A Haircut
cost a quarter of a dollar, or "two bits", as advertised by barbershop quartets. This convention of dividing a dollar into 8 pieces also persisted in the Stock Market all the way through the 1980s; if you watch an older movie with the Stock Market in it, you'll see stock prices like "11 ⅝" dollars per share.
Prior to the mid-19th century, there were also silver five-cent "half dimes" — among the smallest and thinnest coins ever minted in the U.S. — and half cent coins. One mill tokens were unofficially made by some private firms, but never officially minted by the Federal government. In the mid-19th century, the U.S. experimented unsuccessfully with 20 and 2 cent coins. The 20 cent coin failed to catch on because it was so easy to confuse with a quarter (much like the Susan B. Anthony dollar was in 1979); and although the 2 cent coin eventually faded into obscurity, it has the distinction of being the very first
piece of U.S. currency — coin, paper, or otherwise — to bear the words "In God we trust." (This last was partly a result of the increased religious fervor felt during the The American Civil War
; the 2 cent piece was first minted in 1864.)
Until 1933, the U.S. also minted gold
currency, based around a gold-only denomination called the Eagle. Just as a Dime is an official currency unit worth 1/10 of a dollar, so an Eagle was an official currency unit worth 10 dollars. There were quarter eagle coins (worth $2.50 each), half eagles ($5), eagles ($10), and even double eagles ($20)note
. There were also gold $1 coins; during the The American Civil War
, the gold dollar was actually more popular than the silver dollar. With the coming of The Great Depression
, though, private ownership of gold in any form other than jewelry was outlawed. Gold coins were systematically removed from circulation and melted down; only those kept by private collectors survived. Today, the U.S. mint produces a series of bullion coins called American Eagles in their honor.
Paper money is called "bills" in the U.S. Unlike some other countries, American bills are all the same size and until recently all the same color (Black on white on the front. Green on white on the back. Hence greenbacks). Redesigns in the early 21st century have made some bills slightly more colorful as part of anti-counterfeiting measures, though still nowhere as colorful as Euro (or Canadian) bills.note
With the exception of the $10 and $100 dollar bill, all the US bills depict presidents of the United States, and the term "Dead Presidents" is a common colloquialism for money. Contrary to what Dave Barry Slept Here
says, the idea of putting images of former American Presidents and/or other government figures, living or
dead, on our money was largely not
made a routine practice until well into the 20th century.
The currently circulating bills are:
- 1 dollar (George Washington again); The most common bank note; far more popular than one-dollar coins. Often referred to as a "single", a "one", or simply a "buck". The one- and two-dollar bills retain their older designs (black-on-white front; small, centered portrait; no highly-visible anti-counterfeiting features) and no longer "match" the higher denomination bills.
- 2 dollars (Thomas Jefferson again): The $2 bill is a common butt of jokes and is seldom seen in the wild, but is still printed in small amounts and can be requested at banks. Stories of merchants believing they are fake turn up every so often, with varying degrees of dubiousness. Nicknames include "deuce", "Tom", "Tom-Tom", and "T.J."
- 5 dollars (Abraham Lincoln again). Currently a grayish-green bill becoming a purple color in the center. Nicknames include "fin", "fiver" (yes, the same nickname used for a British five-pound note), and "five-spot".
- 10 dollars (Alexander Hamilton). Current issue is a lovely shade of orange fading to yellow in the center. Referred to as a "sawbuck"note , "ten-spot", or "Hamilton".
- 20 dollars (Andrew Jackson). Currently the only denomination dispensed by the vast majority of cash machines. This leads to it getting the nickname of "Yuppie food stamps" since splitting a bill at a restaurant invariably leads to the diners paying with a pile of 20s. Current bills have a faint green edge becoming orange-yellow in the center. Other nicknames are "double sawbuck", "dub", and "Jackson". Ironically, President Jackson was a firm believer in hard currency and tried to outlaw paper money.
- 50 dollars (Ulysses S. Grant). Current issue has a stylized image of the U.S. flag on it, in appropriate colors (though the white looks more buff). Nicknamed a Grant, of course.
- 100 dollars (Benjamin Franklin). The highest denomination now in circulation. Remained green the longest out of all the denominations higher than 2 dollars, but the current issue has a teal-blue edge that becomes white in the center. It's all about the Benjamins, baby. Or the Benjis. Or the Franklins. Or the C-notes.
There were also 3˘, 5˘, 10˘, 15˘, 25˘, 50˘, $500, $1,000, $5,000, and $10,000 bills in circulation at one time, but they are no longer used and essentially never seen outside of collections. A famous (though sadly no longer existing) collection was a set of $10,000 bills on display at a Las Vegas casino to visually depict exactly what one million dollars looked like. (The $10,000 bill pictured another non-President, Salmon P. Chase, who was Secretary of the Treasury under Lincoln at the time the first "greenbacks" were printed.) $100,000 bills were used to settle accounts between banks, but were never released outside the banking system.
Through most of U.S. history, there were four types of bills issued by the US government - Silver Certificates
, Gold Certificates
, United States Notes
, and Federal Reserve Notes
The first two were specie-backed currency, meaning that their value was backed by an equivalent amount of the specific precious metal in their name. Because of the large number of gold certificates in circulation in 1933, there was a fear that a national panic would result in everybody trying to redeem their gold certificates at the same time, bankrupting the U.S. gold reserves; it was for this reason that private ownership of non-jewelry gold was outlawed. That law was not lifted until the 1960s.
United States Notes, and Federal Reserve Notes before 1963, were redeemable in "lawful money," which was never defined by Congress; the only difference between these two types of paper money was that one was issued directly by the U.S. Treasury and was severely limited in the amount issued, and the other was issued by the Federal Reserve, the United State's decentralized central bank. Additionally, there were National Bank Notes
, bills issued by federally chartered banks that were backed by bonds deposited with the Treasury. After 1929, when US bills were shrunk to their current size and designs standardized for all five types, the color of the Treasury seal on the face could identify the type; gold certificates had yellow seals, silver certificates blue, US Notes red, Federal Reserve notes green and National Bank Notes brown.
Modern Federal Reserve Notes, which have been the only sort of paper money issued by the US Government since 1963, are fiat
currency - their value is not backed by any hard resource, but by the "full faith and credit" of the U.S. Government. In other words: it's partially trust (that the United States won't disappear tomorrow and the US government will be able to pay back its debts) and fear (because if you refuse to accept Federal Reserve Notes, someone can sue you and order you to—this is what "legal tender" means).note
One more fun fact: American currency has never been devalued, meaning that every coin minted and bill printed are still legal tender worth their face value. If you have a dollar bill from 1862 (the first year they were printed), you can still buy a candy bar with it. You are, of course, a damn fool for doing so — the bill has immense value as a collectible — but you can
. Even though almost nobody intentionally makes common purchases with rare coins and banknotes, it's often surprisingly easy to find rare coins in common circulation. You just need to know what to look for.
"Dollars" and "cents" are usually not spelled out, so here are the relevant abbreviations (and symbols):
- $: Dollars. Appears before the number. Canada, which lies to the north of the U.S., also has a unit of currency called the dollar that's abbreviated by placing a $ before the number, except in Quebec.
- Confusingly, $ is also the abbreviation for Pesos in Mexico, which borders the U.S. to the south.
- Doubly confusing, some areas that operate with the US dollar (such as Puerto Rico or the Virgin Islands) may refer to a dollar as a "peso".
- ˘: Cents. Appears after the number. Used instead of, not in addition to, the dollar sign, and only if an integer number of cents are specified (rather than a decimal value of dollars). Almost never used these days, as (thanks to inflation) most goods worth buying cost more than a dollar. Even as early as the 1960s, when computer character sets were becoming standardized, neither the ASCII nor the EBCDIC character set contained a cents sign (American computer keyboards replaced it with the caret, i.e, ^). Windows allows you to access it (relatively) quickly by holding down ALT and typing "0162" (alternatively, ALT and "155") on the number pad; on an Apple keyboard, type Option-Shift-4.
- Prices in dollars and cents are written with a decimal point; e.g., $4.35 means 4 dollars and 35 cents. A zero at the end of the decimal is never dropped, so 4 dollars and 50 cents would be written not as $4.5, as though it were a proper fraction, but always as $4.50. (This is occasionally ignored on bar and restaurant menus, though nowhere else.)
A dollar is sometimes called a "buck," in the same way a British pound sterling is called a "quid." It got this slang name because, when the dollar was formally introduced in 1792, it was worth about as much as a deerskin, which were a kind of unofficial currency out in the wilderness. One thousand dollars is called a "grand" (or "large"); the origins of this slang term are unclear.