- Personal Finance
What Is A Dollar Really
U.S. One Dollar Silver Certificate
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
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
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
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
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
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.