US Currency

The US Dollar (USD) is the official currency of the United States of America. It is the only currency accepted in the USA. The history of the US Dollar is as exciting as the history of US immigration. Continue reading below so that you know how to use the US Dollar when vacationing in the land of unlimited possibilities. 

What is the US Dollar?

The United States Dollar (USD, Symbol $), often shortened to US Dollar, is the official currency of the United Stated of America. The currency uses coins as well as banknotes. One dollar is divided into 100 cents (Symbol: ¢). 

  • The US Dollar is only used in America
  • The US Dollar is officially used in the following countries: Ecuador, El Salvador, Micronesia, Panama, Palau, the Virgin Islands, as well as unofficially in some countries like Aruba and Bermuda.
  • In American slang, the US Dollar is often called a “Greenback” (because of its greenish color) or “buck”.
  • The dollar is convertible, which means it can be exchanged for other currencies without any limits.

The motto “E Pluribus Unum” (out of many one) has been printed on all US coins and notes since 1786. A few decades later, the phrase “In God We Trust” was added to the two-cent coin. The two-cent coin no longer exists, but the phrase continues to be printed on all US currency.

The Bureau of Engraving and Printing is responsible for printing all banknotes and the United Stated Mint for all coins.    

The currency in America: US Dollar.

 

History of the US Dollar

The introduction of a standard currency in paper form in the USA first occurred in 1690. This was not so easy since many different European colonies had to agree on a currency that fit their needs. Even though the English colonies on the East coast were strongly represented, the British pound was not recognized as legal tender. Among the colonies, there were several different currencies being used for trade.

At the time …

  • …the East India Company and other trading companies dominated the American economy.
  • … trading within America was made more difficult by the control of customs and declarations on the borders of 13 American colonies which were viewed as sovereign states.
  • …bills of exchange were handed over which could then be exchanged in England to enter into trade with the United Kingdom.
  • … but it was not allowed to introduce English money in America.

In the 17th and beginning of the 18th century, corn, tobacco, and Native American beads and shells (called Wampum) was often used as a currency. There were also at this time, seven colonies who were known to mint their own coins. One of the main problems was that the coins were all of different value. Another problem was that the minting of coins broke English laws. The law at the time only allowed the production of coins under the English King and Parliament.

  • In 1704, the production of coins was clearly forbidden.
  • The ban was meant to prevent the American economy from growing which would in turn give them more independence.
  • Foreign currency (e.g. from the Netherlands and Spain) was used as legal tender by Americans and made trading between the colonies easier.
  • The word dollar came into use during this time. Its origins can be traced back to the word for “taler” (a series of silver coins minted in Germany).

The US currency got its official name from the south and middle-American word “Dolares”, which the English named the “Spanish Dollar”. During the American Revolutionary War, the colonies introduced their own currency to emphasis their self-reliance. Former President Thomas Jefferson was the first to divide the US Dollar into 100 cents, which was a clear sign of their independence from their colonizer. Until that time, there had been no standard currency. 

Picture of Thomas Jefferson in black and white for the history of US currency

 

The first American cent was minted in 1787 in the USA. The half and quarter dollar as well as the dollar and dime (ten-cent piece) were soon to follow. These coins were made of silver and copper and the high-valued “Eagles” (10 dollars) were made out of gold. The first dollars to be printed on paper were created at the end of the 19th century. They were printed with pictures of famous Americans and the Financial Department seal to make them harder to counterfeit.

In the 19th century, the US dollar’s development had its ups and downs in tune with the economy. With the influx of immigrants to the USA and the Gold Rush, America experienced a period of economic growth. In 1862, the dollar was created with the greenish color that we now know and recognize.

The first copper cent was minted in 1787. 

 

In 1867, Napoleon III tried to set a fixed exchange rate for the US Dollar and the Franc. This did not, however, happen. In 1944, the US Dollar was chosen to be the international reserve currency. Cotton, oil, gold and much more is paid for in dollars.

The dollar reached a historical low against the Euro on July 15th, 2008 with an exchange of 1.5990. It reached a historical high against the dollar on October 26, 2000 with .8252    

International importance

Since the end of World War II, the US Dollar has gown as an international currency and has replaced the British Pound as the dominating currency.

  • In countries around the world, the US Dollar is often unofficially accepted as a legal tender in hotels or stores.
  • Natural resources traded on the world market, especially crude oil, are paid for in US Dollars (Petrodollar).

In 2003, US Dollar transactions accounted for 50% of foreign exchange market compared to 25% in Euro and 10% in Sterling and Japanese Yen.

Nicknames for the US Dollar

In general, the US Dollar is referred to as a “buck”. It is believed that the term most likely comes from the word “bugskin” (a wild animal fur), which were used as a type of currency in the past. The nickname “greenback” is also used often and refers to the banknotes’ greenish color.

Here are the nicknames of the following banknotes:

Banknote Nickname
1-Dollar bill single
2-Dollar bill deuce
5-Dollar bill fin oder fiver
10-Dollar bill sawbuck
20-Dollar bill double sawbuck
100-Dollar bill Benjamin
1000-Dollar bill Grand oder G

Banknotes can also be called by the person who appears on the front of them, for example: George, Tom or Frank. Some notes are called “dead presidents” since the people on them, like Alexander Hamilton (10-dollar bill) and Benjamin Franklin (100-dollar bill) were never really US Presidents.

Is there a one-dollar coin in the USA?

Picture of a silver dollar in US currency

One-dollar coins are popular with collectors. The last coins to excite collectors was the series of US quarters printed from 1999. On the front of these coins is a picture of George Washington and on the back is a picture provided by each US state.

At the moment, there are three different one-dollar coins in circulation:

First of all, there is a one-dollar coin depicting Susan B. Anthony. The coin was first minted in 1979 but proved to be very unpopular. The coin had a slightly rectangular form which was about the same size as a quarter. This led to many people confusing the two. The dollar remained then, as now, the most popular payment method. The coin was minted again in the year 1980 as well as 1981 and 1999.

In the year 2000, the US tried once again to introduce a one-dollar coin. The new coin depicted the Shoshone woman Sacagawea. The coin is golden and round, but easy to discern from others. The coin only became popular in Ecuador because Sacagawea resembles peoples living in the highlands there. 

On February 15th, 2007, there was a third attempt to introduce a new generation of one-dollar coins, the president-dollar.

  • The Statue of Liberty is depicted on the front side.
  • Every three months, a new coin is minted with the face of a former, deceased US President.
  • The first coin showed George Washington and three months later, the new coin showed John Adams.
  • This coin is also a golden color.
  • This coin is not often used, and some stores may not even accept it as a form of payment.

Types of US bills and coins

There are many different types of banknotes and coins in circulation in the USA. Banknotes are the more popular form of US currency. Most people prefer to use the bills rather than coins. The most popular method of payment in the USA though is credit or debit cards. Most people always pay with a card even if the price is only a few dollars. Banknotes and coins are divided into the following types: 

Coins (in $) Banknotes (in $)
0,01 Penny 1
0,05 Nickel 2
0,10 Dime 5
0,25 Quarter Dollar 10
0,50 Half-Dollar 20
1 Dollar 50
  100