The dollar is the basic unit of U.S. currency. It has been so since 1792. That year the United States began its own coinage system. Before then, the most accepted coin was the Spanish peso. Americans called it the Spanish dollar.
The value of a Spanish peso was eight reales (pronounced ray-AHL-ays). To make change for an eight-reales coin, merchants would cut the coin into smaller pieces. The change might be one-half (four reales), one-quarter (two reales), or one-eighth (one real, also called one bit). This is the origin of "pieces of eight," a familiar phrase in pirate tales.
Americans were used to seeing prices stated in Spanish dollars. The United States thus selected the dollar as its basic unit. Thomas Jefferson thought that dividing money by eight was impractical. As a result, Congress adopted the decimal system. In this system each dollar is divided into 100 cents.
Dollars in Circulation
The United States Treasury Department produces U.S. currency through two branches. The Bureau of Engraving and Printing designs and prints paper bills, or notes. The U.S. Mint produces coins. The bureau and the mint ship the finished bills and coins by truck to the U.S. Federal Reserve. The Federal Reserve puts the currency into circulation. It also shreds and disposes of worn-out bills.
The mint issues 1-cent, 5-cent, 10-cent, 25-cent, 50-cent, and 1-dollar coins for circulation. It has facilities in Philadelphia, Pennsylvania; Denver, Colorado; San Francisco, California; and New York City. The mint also keeps the government's holdings in silver and gold bullion (bars). Gold is kept at Fort Knox, Kentucky. Silver is kept at West Point, New York.
Since the early 1970s, all U.S. bills have been Federal Reserve Notes. Before that, other types of bills were issued. They included Silver Certificates, Gold Certificates, U.S. Notes, Treasury Notes, and National Bank Notes. Today’s bills measure 6.14 by 2.61 inches (15.6 by 6.6 centimeters). Before 1929, bills were larger.
Currently $1, $2, $5, $10, $20, $50, and $100 bills are used. In the past, $500, $1,000, $5,000, and $10,000 notes were also issued. The highest-value note ever issued was worth $100,000. Banks used it to transfer large sums of money. But it never circulated in public.
Outmoded U.S. bills remain legal tender. That is, they are valid at face value for payment. But many outmoded bills are worth more than their face value to collectors.
Faces and Symbols on Dollar Bills
The fronts of U.S. bills carry portraits of presidents and others who served the country. The backs display important symbols and events in U.S. history.
George Washington was the first U.S. president. He is on the front of the $1 bill. On the reverse is the Great Seal of the United States. The front of the Great Seal shows a bald eagle. It has outstretched wings and a shield on its breast. The back shows an unfinished pyramid. Atop the pyramid is a symbol representing the all-seeing eye of God. Roman numerals at the base show the date the Union was begun — 1776.
The front of the $2 bill shows Thomas Jefferson. He was the third U.S. president. The back of the bill depicts the signing of the Declaration of Independence in 1776.
Abraham Lincoln, the 16th president, is on the front of the $5 bill. Lincoln led the United States through the Civil War (1861–65). On the back is the Lincoln Memorial, in Washington, D.C.
The $10 bill features Alexander Hamilton. He was the first secretary of the treasury. The reverse shows the U.S. Treasury Building. Andrew Jackson was the seventh U.S. president. He appears on the front of the $20 bill. On the back is the White House, in Washington, D.C. The White House is the official residence of the president.
Ulysses S. Grant, the 18th president, is on the front of the $50 bill. The back shows the U.S. Capitol, where Congress meets.
Benjamin Franklin appears on the face of the $100 bill. Franklin was one of the country's Founders and most famous statesmen. On the back is Independence Hall, in Philadelphia. That is where the Founders signed the Declaration of Independence and drafted the U.S. Constitution.
The United States has issued dollar coins since 1794. The first ones were made of silver. Gold dollars were first minted in 1849. The fronts of silver and gold dollars depict a female figure of Liberty. Today the U.S. Mint issues silver and gold coins for investors and collectors. They are not in general circulation.
In 1971 the United States issued a circulating copper-nickel dollar. It featured President Dwight D. Eisenhower. Another copper-nickel $1 coin showed Susan B. Anthony, who campaigned for women’s rights. It was minted from 1979 to 1981 and again in 1999.
In 2000 the United States issued a gold-colored $1 coin depicting Sacagawea. A Native American, she guided much of the Lewis and Clark Expedition of 1804–06. The coin has layers of copper, zinc, manganese, and nickel.
In 2007 the mint began a new series of circulating $1 coins honoring U.S. presidents. It will issue four coins a year, one for each president, in the order they served. The mint also planned to issue a series of $1 coins honoring Native Americans starting in 2009.