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What Is A Dollar Really

Updated on February 26, 2014

U.S. One Dollar Silver Certificate

Dollars used to be worth silver, now silver is worth dollars.
Dollars used to be worth silver, now silver is worth dollars. | Source

What Is A Dollar?

What is a dollar? Is it that piece of green paper the government prints or is it something else? Why are they called U.S. dollars and why are there other kinds of dollars too? Have you ever noticed how there are Canadian dollars, West Indian Dollars, Australian Dollars and many other kinds used in the world today? These are some of the questions I had and the answers were very enlightening. Today, a dollar is nothing more than a piece of paper backed by a government. The word "dollar" is just a name used to distinguish it from Reals, Pesos, Krugerans, Yen, Yuan and other types of global currency. In the past however, the dollar meant much much more.

Maria Theresia Thaler

This is a Maria Theresia Thaler I bought with my dad at a flea market in Germany.
This is a Maria Theresia Thaler I bought with my dad at a flea market in Germany. | Source

Dollar, Daler, Taler, Thaler

My first experience with anything other than the standard greenback issued today was when my father and I were at a flea market when I was very young. This flea market extends for miles along both sides of the Rheine River in Frankfurt, Germany. Over the course of the four years we lived in Germany my dad and I went to flea market many times. Of the many things that interested him, and me by proxy, were silver dollars. In particular U.S. Peace Dollars and another types of coin he called "Mother Theresa" dollars. Little did he or I know that what he called a "Mother Theresa" dollar was actually an Austrian Thaler with the likeness of Maria Theresia, Empress of the Habsburg Dynasty. The Maria Theresia Thaler is one of the worlds earliest standardized currencies and one used in global trade for more than 200 years. The name and coin were copied by the Dutch, Daler or Dalder, and by the Spanish who minted thousands of silver coins in the new world. The coin was sell well thought of by traders and other countries that in 1780 it began to be minted and backed by other nations, a practice that continued on into the late 1900s in some areas.

Kaiser Maximillian I Thaler

An early Thaler, late fifteenth century.
An early Thaler, late fifteenth century. | Source

A Piece From The Valley

Up until the mid-15th century, particularly in Europe, money and coinage was very random. Nations were small, each one minting some for of coin or other all based on silver, gold and copper. No two coins were the same in size, weight or silver content which made exchange rates and international trade very difficult. Over time, as more and more of the European coinage was sent overseas to purchase silks, spices and other exotic commodities the amount of silver and gold in the region began to run out. When this happened coins began to have less silver and gold content, making them worth less and devaluing the currency.

The silver was found in deposits in Bavaria and other regions Europe. When this happened the quality of coinage went up and trade grew. Merchants and traders alike had to carry large quantities of silver coins in order to do business. Or else smaller amounts of gold coins. The first was cumbersome and dangerous, the second less cumbersome but far more dangerous. In order to make transporting larger amounts of silver easier a larger coin was made. Until that time coins were small like nickels and dimes, after that they became much larger and more like what is known today as a silver dollar.

The coins first appeared in the hill country of present southern Germany, Bavaria and Austria. The people who first began to make these coins lived in the cities and towns in the valleys of the Alps, known as "thals", which means valley. People from the valleys, and by extension the coins used by the people who came from the valleys, became know as "thalers"- those who come from the valley. Thalers were all large but still had different sizes, shapes and silver content. It wasn't until changes in monetary policy within the Habsburg Empire that the thaler became standardized. The coin produced by the Habsburgs was of such quality and precision it became the standard of trade throughout the contemporary world and beyond.

Spanish Cob Coins

Spanish 8 Real Cob Coin
Spanish 8 Real Cob Coin | Source

Shave And A Haircut

Shave And A Hair Cut, Two Bits. Who hasn't heard that little ditty but have you ever thought about what two bits are? For those of you who don't know two bits is a quarter but why do we call a quarter two bits? Well, this is why. A Spanish dollar, the standard currency for the early U.S., is divided by 8, it is an 8 real coin. One real is called one bit, two real is two bits, two reals is one fourth or a quarter of a dollar. A 2 real coin is the equivalent to a silver U.S. quarter.

A Dollar Is A Piece Of Eight

A Spanish silver dollar, also known as a piece of eight because it divides into 8 reales.
A Spanish silver dollar, also known as a piece of eight because it divides into 8 reales. | Source

Spanish Cobs And Silver Dollars

When Spain claimed the new world and set up the Spanish Colonial Empire in the Caribbean, Mexico, Central and South American it also gained vast quantities of silver. In order to ship the silver back to the mother country and to promote trade within the region and with the British Colonies to the north they produced ingots, cobs and coins. An ingot is a large bar, disc or other shape used for mass quantities and large transactions. A coin is a smaller piece used for making small transactions or to give change from a large transaction. A cob is somewhere in between. Before Spain began to make what is known by collectors as a "milled" dollar they also made cob coins. A cob coin is one where instead of using a specially prepared disc called a planchet, the minter simply cuts a piece off of an ingot, makes sure it is the right weight, and then stamps it with the die.

  • Cob Coin - cob coins are very simple coins made by cutting a "cob" or end piece off of an ingot and then stamping it with the die. These coins are very rough to look at and easy to defraud. Because of the irregular shape it is possible to cut or shave some of the silver off of it and claim that was how you got it. Cobs were also called bits because of their shape.

After a while the Colonial mines and mints were able to improve their methods and that experience, plus the standardization that produced the Maria Theresia Thaler, led to the "milled" Spanish dollar. The Spanish equivalent to the thaler was an 8 real silver coin, also known as a "piece of eight" or a Spanish Dollar but I like to call them pirate treasure. A milled Spanish dollar is one made from a special planchet that is carefully crafted to be set weight, a set size and specific silver content. The dollars were so well crafted that they became the standard of currency in the New World and throughout the Pacific. Spanish Dollars were money in America before American was the United States and long after. In fact, it wasn't until many years after later that the U.S. began to make silver dollars.

Early American Silver Dollar

U.S. silver dollars are modeled after thalers and pieces of eight.
U.S. silver dollars are modeled after thalers and pieces of eight. | Source

U.S. Silver Dollars

There were of course other types of dollars and coins in the British Colonies and early America but the Spanish Dollar was prevalent simply because of the quantity in circulation and the vigorous colonial trade with the West Indies. There were even a few attempts at minting coins by individual colonies and states. After the ratification of the constitution the founding fathers recognized the need to have a sovereign currency in order to have better standing as a nation and to ensure fair and easy trade among the states. The U.S. Mint was set up in 1792 and has been producing coinage ever since.

The U.S. silver dollar is a coin based both on the Thaler and the Spanish Silver dollar and was inter changeable with either. In essence, a dollar is not a piece of paper, it is a specific measure of silver standardized throughout the modern world .... until we left the gold standard but that is a whole different story. In the past a greenback dollar was called a "silver certificate", words printed on each and every bill. This is because the bill was a coupon good for one silver dollar, as backed by the U.S. government. Now money is not backed by silver or gold, just by political mumbo jumbo.

$5 Dollar Silver Certificate, You Know, What Grandma Called Money

This is a five dollar silver certificate, or also known as a U.S. five dollar bill. Notice how the text along the top and bottom certifies that the U.S. will pay the bearer five silver dollars.
This is a five dollar silver certificate, or also known as a U.S. five dollar bill. Notice how the text along the top and bottom certifies that the U.S. will pay the bearer five silver dollars. | Source

What Do You Think?

Should money be based on silver and gold or based on nothing like it is now?

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    • TMHughes profile imageAUTHOR


      5 years ago from Asheville, NC

      Keith! For sure you are my best commenter! Thank you and I appreciate the Alabama roots, we lived I ft benning .... Army brat, . The dollar is just so .... Interesting ;-)

    • kenneth avery profile image

      Kenneth Avery 

      5 years ago from Hamilton, Alabama

      Hi, TM ,

      I really enjoyed this fantastic hub. It was well-written. Loved the lay-out and use of graphics. I couldn't vote any other way but Up and all of the buttons.

      You have a wonderful gift for writing. I admire you for the job that you do.

      I am going now to leave you some fan mail that I want you to read. Then I am going to follow you. I simply ask that you look at two or three of my offerings and be one of my followers.

      Thank you sincerely.

      Kenneth/ from northwest Alabama and may I add that a lot of these dollars in our area would be very welcome.

    • DDE profile image

      Devika Primić 

      5 years ago from Dubrovnik, Croatia

      Great help here and so interesting about the dollar

    • Sullen91 profile image


      5 years ago from Mid-Atlantic Region, US

      I admire the aesthetics. I couldn't mix and match parts to give the patina of elegance the way you manage with this hub.

      The hub is light on the subject represented in the title. Although as I think about it, perhaps the hub is not mismatched to the title; rather, the title could be mismatched to the hub, which would make sense considering the salience of the title.

      It's a very respectable hub in the measure of its prudence to standards.


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