Talk:History of the United States dollar

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Untitled[edit]

Wasn't there a period of time in the U.S. when banks would issue their own currency?24.6.67.144 18:08, 29 July 2005 (UTC)[reply]

Yes, they are called bank notes, or broken bank notes. I dont know if those articles have that history in them. They were issued by federally chartered, private banks up till the civil war.

Joe I 03:10, 14 October 2005 (UTC)[reply]

These were called "National Currency Notes", "National Bank Notes", and "Demand Notes", among other things, and were issued between 1863 and 1935 inclusive. At least in the later decades of this period, the notes all had a uniform appearance, much like currency of today, because the basic designs--portraits, denominations, payability clauses, and so on, were printed by the BEP or its predecessors. Then, much like how the black stamp of an individual Federal Reserve Bank is still printed on singles today, the name of the issuing bank would be overstamped to the left of the portrait; elsewhere would also be stamped the signatures of the bank president and chief cashier. The last issues of these notes, after the change to small size notes, look very much like small-size, small-portrait notes we used until the currency redesigns beginning in the early 1990s.Pithecanthropus (talk) 23:12, 1 January 2011 (UTC)[reply]

I noticed this error:

The article states: "Until 1974 the value of the United States dollar was tied to and backed by silver, gold, or a combination of the two. From 1792 to 1873 the U.S. dollar was freely backed by both gold and silver at a ratio of 15:1 under a system known as bimetallism." However, it later states that "Bimetallism persisted until March 14, 1900, with the passage of the Gold Standard Act."

I presume the first fact is a typographic error and that the value of the dollar was tied to and backed by silver and gold until 1874.

13 March 2006

Now that that line has been removed, the 2nd paragraph in Early History makes no sense because there is no indication as to what the "15:1" and "16:1" ratios refer to.

In the early 1800s, gold rose in relation to silver, resulting in the removal from commerce of nearly all gold coins, and their subsequent melting. Therefore, in 1834, the 15:1 ratio was changed to a 16:1 ratio by reducing the weight of the nation's gold coinage.

--Dwchin (talk) 11:33, 30 August 2009 (UTC)[reply]

Payability clause[edit]

The caption accompanying the $1 United States Note is incorrect. The explicit promise to pay the bearer, still found on the notes of many other countries' central banks, didn't necessarily mean in gold. Technically, the paper note could be redeemed with dimes and quarters, regardless of whether those coins were the pre-1965 ones mostly of silver, or the later cupro-nickel ones. The key distinction is between "lawful money", or "coins of the realm", and paper notes, which was issued by the Treasury. Admittedly, this is close to hairsplitting, because the Treasury, and not the Fed, was the issuer of U.S. Notes. But the point remains that redeemability in lawful money did not, and does not, necessarily mean gold. Incidentally, for most of American history prior to 1965, the silver content of dollar coins, halves, quarters, and dimes was worth a lot less than their face values.Pithecanthropus (talk) 23:14, 1 January 2011 (UTC)[reply]

"Entirely worthless"[edit]

In the article:

Today, like the currency of most nations, the dollar is fiat money without intrinsic value, which means that it has no backing and would be entirely worthless but for the fact that people have been persuaded to use and accept it as if it had worth.

Before I edit the article to correct this, it is going to trigger an edit war? I don't want to edit it if it shall.

The reason people accept the dollar as not worthless is because it is backed.

The backing, according to the Federal Reserve, and almost any economics text one can find, is that a dollar is backed by future claims to wealth of American taxpayers and other income sources of the Treasury. There is no metallic reserve. patsw 03:02, 21 September 2006 (UTC)[reply]

That is accurate. Much of the value derives from the fact that taxes in the US must be paid in Federal Reserve money. Another way of putting it is that dollars are backed by guns and prisons. Adherents of sound money have called Federal Reserve Notes "stay out of jail credits." But the IRS is not the only organization "backing" the dollar. The US armed forces protect oil fields in countries that agree to sell oil only for Federal Reserve Notes. — Preceding unsigned comment added by Jive Dadson (talk • contribs) 20:49, 2 March 2011 (UTC)[reply]
No, probably not. This isn't a highly looked-at/changed article. Also, remember that you can always be bold in your edits. --Kurt 06:04, 23 September 2006 (UTC)[reply]

Fancy graph of impending doom[edit]

Gold Price Per Ton From 1900 to 2013 (USGS Dataset), Inflation Adjusted Using 1998 Dollars

Putting this here, because every time the gov. mess with the money it apparently shows up in this graph. --Nbritton (talk) 18:48, 15 April 2008 (UTC)[reply]

What were the changes to Comex?[edit]

In the article -

Fearing the emergence of a specie gold-based economy separate from central banking, and with the corresponding threat of the collapse of the U.S. dollar, the U.S. government approved several changes to the trading on the COMEX. These changes resulted in a steep decline in the traded value of precious metals from the early 1980s onward.

Need better graph[edit]

The graph of the Federal Reserve notes' purchasing power is deceptive. The linear scale obscures the more recent crashes. Debasement that results in a decline from 10 cents of a silver dollar to 5 cents of a silver dollar wipes out half of a saver's stash, but is hardly a blip on the present graph. A graph on a semi-log scale is needed. — Preceding unsigned comment added by Jive Dadson (talk • contribs) 20:43, 2 March 2011 (UTC)[reply]

"Though several monetary systems were proposed for the early republic,"[edit]

What were they? I think that it would be extremely interesting to include a discussion of this. Brett ññññ — Preceding unsigned comment added by 190.121.30.50 (talk) 18:31, 31 August 2011 (UTC)[reply]

Notes with colors other than green or black[edit]

"On May 13, 2003, the Treasury announced that it would introduce new colors into the $20 bill, the first U.S. currency since 1905 (not counting the 1934 gold certificates) to have colors other than green or black."

I feel like this could be worded better seeing as the seals and serial numbers on the bills vary in color. Example: 1935 silver certificates had blue, red, yellow, or brown. There are plenty of other notes that have colors other than green and black. Ggpur (talk) 00:08, 5 July 2013 (UTC)[reply]

Actually, the '35A $1 silver certs that didn't have blue seals/serial numbers had a brown seal/numbers, or a yellow seal with blue numbers, and were for use during WW2 in Hawaii and North Africa, respectively. There were Series 1934A $5 and $10 silver certs issued for N. Africa that used the same color scheme, as well as an issue of 34A FRN's for use in Hawaii. Since they went to the small sized currency in 1928, only United States Notes have had a red seal/numbers.Almostfm (talk) 02:13, 16 January 2014 (UTC)[reply]

Tweak to the "Silver Standard" section[edit]

Made a couple of clean-up edits:

Clarified the reasoning behind issuing EO 11110 Also, notes were not issued specifically because of EO 11110. From 1962 on, the only silver certs issued were $1 notesAlmostfm (talk) 02:13, 16 January 2014 (UTC)[reply]

Date of Introduction.[edit]

RIght, I’m confused.

I’m doing some research for a blog post: and I find that — depending on which entry I read — the US adopted the dollar as currency/monetary unit/banknotes/whatever on EITHER 8th August, 1785[1], OR 6th July, 1785[2], or at some point in 1792[3].

Which is correct?

Can we have this clarified, please?

Cuddy2977 (talk) 15:19, 1 July 2014 (UTC)[reply]

I too am confused. This says 8 August 1787[4]. I am fairly sure the date in the article is wrong, but I don't know how to correct it without introducing more inaccuracies. AdventurousMe (talk) 07:56, 5 December 2014 (UTC)[reply]

References

  1. ^ https://en.wikipedia.org/wiki/History_of_the_United_States_dollar
  2. ^ https://en.wikipedia.org/wiki/July_6
  3. ^ https://en.wikipedia.org/wiki/United_States_dollar#Continental_currency
  4. ^ http://fee.org/the_freeman/detail/what-is-a-dollar

Read Friedman and Schwartz[edit]

I just read the classic Friedman and Schwartz's "A Monetary History of the United States 1867--1960". Their view doesn't line up with the current Wikipedia page. I didn't want to make massive changes, but I also didn't want to do nothing. I'm adding my knowledge here and hopefully someone can integrate it to the page.

The book starts with 1862 to 1879, when the US issued "greenbacks". These were fiat currency. (I'd heard that they were called "greenbacks" because they weren't backed by gold, but Wikipedia seems to contradict that.) The Union government still used gold for some things - collecting custom duties and for paying its debt. During the period, the west coast actually operated with gold, not the greenbacks. This may be why the post-war government decided to deflate the greenback and re-establish the gold standard at pre-war parity.

From 1879 to 1923, the US was on a gold standard. Anyone could exchange a paper dollar for gold and trade imbalances with countries were settled quickly with gold.

From 1890 to 1896 there was a scare with silver. The US had minted "trade dollars" for trade with China and Mexico. But now, there was a popular campaign to move from the gold to silver, to stop deflation. Most of America's trading partners were on the gold standard and bankers fought any change. With fears of a change, gold started to leave the US. On Feb. 8, 1895, J. P. Morgan and August Belmont (and others?) loaned the U.S. government 3.5 million ounces of gold. They also used their banking connections to prevent gold from leaving the US, by making sure that every import was matched with an equally valuable export. The default of William Jenning Bryan in 1896 the speculation ended.

From 1923 to 1933, the US exports in gold were "sterilized". Citizens could still exchange a paper dollar for gold, but trade imbalances had only a loose effect on the economy. The Federal Reserve had been created in 1914 and in 1923 it started trying to soften the effects of the gold standard. That is, an import or export would not be immediately balanced by a payment of gold, but the difference might be covered by inflating or deflating the currency. This insulated the US markets from the effects of its trade, which meant they did not adjust promptly like under the gold standard. In practice, the people in charge of sterilizing the flow of gold do not treat gold flowing in to a country equally to gold flowing out of a country, making some adjustments more severe.

In 1933 and 1934, a lot changed. Prior to Franklin D. Roosevelt becoming President on March 4th, 1933, there was fear that he would devalue the dollar. People withdrew gold and gold certificates. This risked more bank failures and bank runs. Banks were closed. When they opened, they were limited from exporting gold without government approval. On April 5th, gold hoarding was outlawed. On April 20th, FDR said he would devalue the dollar, but did not state what the new value would be. For a while, the dollar was a fiat currency. The government did influence its value, by making the rate match that in London to prevent export of gold from the country. In June, Congress passed a law that modified all contracts that required payment in gold. By December 1933, all gold and gold certificates had been force sold to the government. On January 31st, 1934 the new value of $35 per ounce was set.

From 1934 until 1960 (the last year covered by the book), the dollar was a "managed standard". Citizens can not redeem paper money for gold. It is very much like a government subsidized commodity. Unlike a subsidized commodity like grain, where the low price is available to citizens and foreigners, the low price of gold is only available to foreigners.

Obviously, after 1960 the US stayed on the "managed standard" only until Nixon put the US on a fiat currency.

Mdnahas (talk) 16:56, 24 March 2015 (UTC)[reply]

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Inconsistencies in exposition[edit]

Trying to follow the math across various sections of this article is impossible. In the section on the Gold Standard we find this: "the dollar consisting of twenty-five and eight-tenths grains (1.67 g) of gold nine-tenths fine, as established by section thirty-five hundred and eleven of the Revised Statutes of the United States, shall be the standard unit of value," which works out roughly to $17 dollars an ounce and then immediately the following: "Thus the United States moved to a gold standard, making both gold and silver the legal-tender coinage of the United States, and guaranteed the dollar as convertible to 1.5 g (23.22 grains) of gold." which works out to $18.84 per ounce with no explanation of the difference.

Then, in the following section on the Gold Reserve Act: "For foreign exchange purposes, the set $20.67 per ounce value of the dollar was lifted..." with no explanation of how or when the "standard" became $20.67 per ounce. One is forced to conclude that the "standard" was anything but. The reader can make guesses as to why these values are inconsistent, and likely guess wrong. We will make allowances for the difficulty the author faces in tracing every minor fluctuation through a long history of Acts and so on... Still, one expects a consistent account or at least some remarks such as, "the standard fluctuated for various reasons over this period and finally settled on..." We also expect consistency of units. It does not serve the reader to begin talking about grams and grains and end talking about ounces. I think the language of the original acts should be quoted, as it is, but the helpful parentheticals should be expressed in the same units throughout to aid the reader in following the story of the fluctuating standard. Baon (talk) 15:30, 4 December 2017 (UTC)[reply]

Currency speculation versus balance of trade[edit]

In the section titled "Gold Reserve Act is the following: "Under the Gold Reserve Act the value of gold was fixed at $35 per ounce, making the dollar more attractive for foreign buyers (and making foreign currencies more expensive for those holding dollars). This change led to more conversion of gold into dollars, allowing the U.S. to effectively corner the world gold market"

The phrase "making the dollar more attractive for foreign buyers" purports to explain how more gold came to be converted into dollars. But it doesn't really explain anything. It is similar to saying, "because currency speculation". It is not clear why foreign currency speculators would find more, less valuable dollars, preferable to fewer, more valuable dollars. There is a psychological effect in stock markets where splitting apparently makes a stock "more attractive" without changing the underlying value. So perhaps the author has some similar psychological effect in mind. But a simple search on the effects of devaluing a currency brings up results that talk about making a nation's exports more attractive and changing the balance of trade. This seems to be a real and significant effect, that is much easier to grasp and that would explain how more gold was converted into dollars, than some unexplained, perhaps psychological, effect of currency markets. All this is very far outside my wheelhouse, so I don't know. It is impossible to lay every question to rest, but I find this statement mystifying. Baon (talk) 16:15, 4 December 2017 (UTC)[reply]

non sequitur?[edit]

In the section "U.S. dollar value vs. gold value": "In September 1987 under the Reagan administration the U.S. Secretary of the Treasury James Baker made a proposal through the International Monetary Fund to use a commodity basket (which included gold).[citation needed]"

This is something of a non sequitur. It is not clear what this factoid has to do with the subject. Also, the factoid itself is an incomplete thought. Used a commodity basket to do what? Baon (talk) 19:19, 4 December 2017 (UTC)[reply]

Insufficiently specified and supported claims[edit]

In the section "U.S. dollar value vs. gold value" the following: "Fearing the emergence of a specie gold-based economy separate from central banking, and with the corresponding threat of the collapse of the U.S. dollar, the U.S. government approved several changes to the trading on the COMEX. These changes resulted in a steep decline in the traded value of precious metals from the early 1980s onward." is very difficult to understand in the context of the rest of the article.

1) The claim that the U.S. government "fear[ed] the emergence of a specie gold-based economy" does not square with the fact that gold specie had been illegal since 1933 as the article itself tells us in the section on the Gold Reserve Act: "banned private ownership of significant amounts of gold coin". At the very least, the claim needs some support and a citation. Why should the reader believe that the government's power to ban gold specie is not absolute? Why and how (and by whom) was this power being challenged?

2) Previously, in the section "Gold Reserve Act", the article states: "By the early 1960s, compensation for these pressures started to become too complicated to manage. In March 1968, the effort to control the private market price of gold was abandoned." How is the reader supposed to understand that at one point regulating the market was "too complicated" and "abandoned" and then, a little later, a few simple changes in the COMEX "resulted in a steep decline in the traded value of precious metals"? What changed? Did the government suddenly become much smarter and able to handle what was previously "too complicated"? Or did the situation resolve itself into a simpler configuration that was no longer "too complicated". Or Did these 1980s era change in the market fall short of the kind of complete control the government sought in the the 1960s? Does the government have the power to regulate the gold market or doesn't it? This statement raises many more questions than it lays to rest, is vague (what changes were made), and is left unsourced. Baon (talk) 19:48, 4 December 2017 (UTC)[reply]

Reserve currency Impact section[edit]

I have made a substantial edit to this section, removing most of it as incoherent or irrelevant. Here is the bulk of what I deleted: "The United States enjoys many benefits because the dollar serves as the international reserve currency. The United States could not face a balance of payments crisis as American debts are denominated in dollars, thus the Federal Reserve could simply print more dollars. In other words, the United States cannot suffer a debt crisis, per se, but would instead face an inflation crisis. The cost of producing a dollar to the United States is simply the cost of printing the note, whereas a foreign government must provide a dollar’s worth of goods for that dollar; the difference between these two values is called seigniorage and its benefits go directly to the American government.[25] Further, the United States dollar's position in the world allows the American federal government to borrow money at exceptionally low interests rates due to high demand for the dollar. This phenomenon is generally called "exorbitant privilege" and allows the United States to run a balance of payments deficit "without tears," as French economist Jacque Rueff said.[26]"

I tried to think of a way to fix this, but in the end I decided it is so wrong it was better just to delete it. Some of the problems:

1) A small amount of money is printed as notes, but the bulk of money is created by keystroke and use of the word 'print' here is obscurantism. 2) The Federal Reserve is not the monetary sovereign and it neither 'prints' nor issues dollars. 3) I agree that the US is not in danger of a balance of payment crises, but the reason is not because it is monetarily sovereign, which the above text implies. Consider this quote from the Wiki page on "Currency Crises": "A currency crisis is a situation in which serious doubt exists as to whether a country's central bank has sufficient foreign exchange reserves to maintain the country's fixed exchange rate." The U.S neither has a "fixed exchange rate, nor can its ability to "print" money solve a problem with *foreign* reserves. 4) Even if the statement about balance of payments is true, it does not illuminate how that is an "impact" of the US Dollar being the international reserve. 5) What is the connection between seigniorage and the international reserve? There is none made explicit here. There is a false implication that seigniorage is a benefit the US government receives from issuing the international reserve currency, but seigniorage is a benefit that any currency issuer can receive. The whole discussion of seigniorage seems out of place here. 6) The Fed has the power to set whatever interest rate it chooses without regard to whether foreigners use US dollars as a reserve or not. The author advances no argument to justify a claim that it is the status of the dollar as an international reserve that bestows that power on the Fed. The Fed had that power before the dollar was the international reserve and will have that power still if the dollar ever ceases to be such.

Baon (talk) 02:06, 5 December 2017 (UTC)[reply]

U.S. dollar value vs. gold value[edit]

There's a line in this subsection that bothers me: "Fearing the emergence of a gold-based economy separate from central banking,[citation needed] and with the corresponding threat of the collapse of the U.S. dollar,[citation needed] the U.S. government approved several changes to the trading on the COMEX. These changes resulted in a steep decline in the traded price of precious metals from the early 1980s onward.[citation needed]" It bothers me because of the lack of citations and the fact that it does sound like someone was pushing a POV about central banking. If nobody's willing to produce citations, I think it should be pulled. Almostfm (talk) 02:08, 14 March 2021 (UTC)[reply]

Since nobody has produced citations to support the claims, I've removed them.Almostfm (talk) 18:33, 8 January 2022 (UTC)[reply]

Eurion Constellation[edit]

I was surprised to see that none of the anti-counterfeiting features linked to the Eurion constellation page. Is this an oversight? I didn't want to just add it. Gushi (talk) 20:11, 1 April 2024 (UTC)[reply]

If you have reliable sources indicating that the anti-counterfeiting features of US currency include the EURion constellation, feel free to add it. Interestingly, there are no citations on the EURion constellation article for the claims that US currency uses it. - ꓛ\ꓕ ⱯƎꓶZ 21:25, 1 April 2024 (UTC)[reply]
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