The history of the U.S. dollar dates back to 1690 before the birth of the country, when the region was nothing more than a collection of European colonies. The earliest known glimpse of the dollar belongs to a Massachusetts colony that began using paper bills to finance military expeditions. Thus, after the introduction of paper money in Massachusetts, the rest of the colonies adopted this technique of exchange.
However, the British imposed various restrictions on paper money and when it began to become popular they decided to outlaw it. In 1775, when the colonists were preparing to go to war against the British, continental currency was introduced with the aim of unifying transactions. However, this currency did not last long as there was not enough financial backing and the bills could be easily counterfeited.
Later, the newly created U.S. Congress instituted the first national bank in Philadelphia, the Bank of North America, in order to help with government finances. Eventually, the dollar was the currency chosen to become the monetary unit of the U.S. in 1785.
Where does the word dollar come from?
The word dollar is much older than the U.S. currency itself. It actually comes from the word “Thaler”, (pronounced “taler”, with a long “a”) which is the name of coins minted in 1519 from the town of Joachimsthal in Bohemia, known for its silver mines. Today the town is within the borders of the Czech Republic and its present name is Jáchymov. Thaler is just a shortened form of the term by which the coin was originally known – Joachimsthaler.
Later, the English version of the name (dollar) was also applied to similar coins, not only those minted in Central Europe, but also to the Spanish peso and the Portuguese eight-real piece. These coins, in particular the Spanish peso or dollar, circulated widely in the British colonies of North America due to the scarcity of official British coins. Therefore, after the independence of the United States, the new nation chose “dollar” as the name of its currency instead of keeping the English pound.
What is the origin of the dollar sign $?
Since the symbol is more recent than the name and the origins of the latter are already well known to us, we might expect to be clear about where this symbol comes from. However, this is not the case for the dollar.
One of the most popular theories is that the dollar sign comes from the initials of the United States of America. If we superimpose the capital letter “U” over an “S” and remove the bottom part of the U, we end up with an S with two vertical lines. This theory was endorsed by the American philosopher Ayn Rand, in her novel “The Atlas Rebellion”.
Chapter 10 is entitled “The Dollar Sign” where Rand stated that the dollar sign was not only the symbol of the currency, but also of the nation.