By Patrick Heller
Most of the first colonists in what is now the United States came from England. They adopted many English customs and laws which have continued to the present day. But, have you ever wondered why the American money system is based on the decimal system of dollars and cents rather than the on the British pounds, shillings, and pence?
The dollar is derived from the term thaler. The denomination first appeared in the Tyrol region of Austria in 1484. The first widely produced thaler appeared in 1518 Bohemia, now in the Czech Republic. The original large silver coin was struck using metal from a nearby silver mine. The initial coin was called a Joachimsthaler, named after Saint Joachim’s valley where the coins were struck (thaler or taler translates into English as “valley”). Over the centuries, the large silver coin, generally ranging from 26 to 28 grams in weight, was adopted for money used across much of Europe, with most referring to it by some version of thaler, dollar, rijksdaalder, rigsdaler, tallero, talar, jocandale, jefimok, and the like.
The largest producer of thalers continued to be in St. Joachim’s value until large silver deposits were discovered in Mexico and other Spanish colonies in the New World. The Spanish colonies mostly struck silver 8 reales coins, which were also referred to as dollars and pesos (the Spanish word for dollar.)
In the British colonies, there were constant shortages of circulating British coins. As a consequence, coins from several other European countries and Spain’s New World colonies also circulated. The 8 reales were the most common circulating coins during the English North American colonial era. Consequently, when different colonies issued early paper currency, some were denominated in British pounds, shillings, and pence, while others were denominated in dollars and cents.
When the Continental Congress issued its currency in the Revolutionary War era, all notes were denominated in dollars and promised redemption in “Spanish Milled dollars or their value thereof in gold or silver.”
After the Revolutionary War, the fledgling state governments adopted different monetary systems, making interstate commerce difficult. In 1784, Thomas Jefferson wrote “Notes of the Establishment of a Money Unit and a Coinage for the United States.” In this report, he recommended a federal decimal coinage system based on the dollar. The Latin term, cent, was suggested for the coin that was 1/100 of a dollar and dime to indicate 1/10 of a dollar. After significant discussion, the federal government adopted all of his recommendations on July 6, 1785.
When America’s first coinage act was enacted on April 2, 1792, a group of Spanish silver 8 reales had been weighed to calculate the average content. That average weight was incorporated as the legal definition of one U.S. dollar—416 grams gross weight of 89.243 percent silver purity = 371-1/4 grams of silver.
There has also been significant research into why the “$” is the symbol for a U.S. dollar. A common misconception is the symbol was created by superimposing a capital U over a Capital S, the initials for this country but researchers could not find any support for this theory.
In fact, there is no clear direct historical line showing the origin of this popular symbol. One researcher even hypothesized that the symbol was adapted from a Portuguese coin.
However, it is generally accepted that the dollar sign came from the same source as the dollar denomination itself--the Spanish colonial 8 reales, also known as dollars and pesos.
In the New World, when records of 8 reales were created, they were usually noted as pesos. The abbreviated symbol for pesos was a capital “P” followed by a superscript lower-case letter “s." In superscript, the letter is written a half-line higher than other text.
In writing this abbreviation for pesos, the symbol evolved to where the “s” was written right over the “P” and the loop of the P was dropped. Voila. You have the "$" dollar sign.
In some monetary systems, the unit symbol is placed to the left of the quantity, while others show the symbol to the right. In the British pounds, shillings, pence system, the pound sign (£) is always placed to the left of the quantity, while the symbols for shillings (s) and pence (d—derived from the Roman denarius that circulated in Britain 2,000 years ago) appear to the right. Thus, Americans were used to putting the larger value symbol ($) to the left and the cents symbol (¢) to the right.
Sometimes, the dollar sign is noted with two vertical lines instead of one. While research is not clear how that may have developed, there is one plausible theory. The two Pillars of Hercules obverse design of the 8 reales began in 1732. These Pillars are at the southern tip of Spain where the Atlantic Ocean and the Mediterranean Sea meet. Forty years later, when the obverse design was changed to show the bust of the Spanish King, the two Pillars of Hercules were moved to the obverse of the 8 reales. It is possible that the use of two vertical lines in the U.S. dollar sign may be an allusion to the Pillars of Hercules.
This is just some of the fascinating history of the evolution of money that the general public and numismatists love.
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award 2012 Harry Forman National Dealer of the Year Award, and 2008 Presidential Award winner. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2019), Professional Numismatists Guild, Industry Council for Tangible Assets, and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and become part of the audio and text archives posted at http://www.1320wils.com).