Later on the English version of the name (dollar) was also applied to similar coins, not only ones minted in central Europe but also the Spanish peso and the Portuguese eight-real piece. Both these large silver coins were practically identical in weight and fineness. Today we are familiar with the phrase pieces of eight from tales of pirates in the Caribbean.
Those coins, particularly the Spanish peso or dollar circulated widely in Britain's North American colonies because of a shortage of official British coins. That is why, after the United States gained its independence the new nation chose "dollar" as the name of its currency instead of keeping the pound.
Later Thalers The thaler was the unit of currency in Prussia and some of the other German states until the second half of the 19th century. The unification of Germany in 1871 and the adoption of the mark as the common currency put an end to the old units, just as the adoption of the Euro and the introduction of new notes and coins in 2002 put an end to the French franc, the German Deutschemark, Italian lire, Spanish peseta, and other European currencies. |
A History of money from ancient times to the present day, by Glyn Davies,
3rd ed, University of Wales Press, 2002. 720p.
Much of the information in this page comes from the above-mentioned book.
See the website for additional information about the history of money.
Other printed sources were used, particularly in connection with dollar sign,
and are mentioned below. There are also links to the most important web sources
used.
The Scandinavia Daler
While on the subject of currency unions, before the formation of the Scandinavian
Currency Union in 1873 and the adoption of the krone or krona, (the first being
the Danish and Norwegian word for "Crown" and the second, the Swedish
word) each of the Scandinavian countries had their own version of the "daler"
as their currency. Like "dollar" the name "daler" came from
"thaler" and provides a clue as to how the word evolved. (The term
"daler" was also used in Low German and Dutch). In Sweden dalers were
minted from 1534 onwards, and in Denmark from 1544. As Denmark and Norway formed
a united kingdom until the Napoleonic Wars, when Norway passed into Swedish
rule, the two countries shared a common currency.
The Scandinavian Currency Union was modelled on the much larger Latin Currency
Union which was inspired by France. World War I effectively put an end to the
Latin Currency Union. Although Denmark, Norway and Sweden were neutral, World
War I put a considerable strain on their economies too, and consequently the
Scandinavian Currency Union was officially dissolved not long after, in 1924.
Dollars in Shakespeare
Interesting examples of the use of the word "dollar" in Britain long
before the creation of the United States - in fact the English colonisation
of North America had scarcely begun - can be found in two of Shakespeare's plays.
Macbeth Act I, Scene 2
Rosse:
"That now
Sweno, the Norway's King, craves composition;
Nor would we deign him burial of his men
Till he disbursed at Saint Colme's Inch
Ten thousand dollars to our general use."
The Tempest, Act II, Scene 1
Gonzalo:
"When every grief is entertain'd that's offer'd, Comes to th' entertainer
-
Sebastian:
"A dollar."
Gonzalo:
"Dolour comes to him, indeed: you have spoken truer than you purpos'd."
The last remark by Gonzalo was, of course, a pun since "dolour" is
an old-fashioned word for pain or grief, like the modern Spanish word dolor,
which also means pain.
Shakespeare's use of the word "dollar" in Macbeth was anachronistic
since the real Macbeth probably died in the middle of the 11th century, nearly
500 years before the first thalers were minted. Nevertheless the use of the
word in Macbeth and the Tempest, both of which were first performed in about
1611, is a clear indication that the term dollar was already in use in English
before the the Pilgrim Fathers set sail for America in 1620.
The Aztecs, Incas and the Spanish Empire
The reasons for the adoption of the dollar as the official currency of the US
are bound up with events in Mexico, Peru and Bolivia. Small bands of Spanish
adventurers had overthrown the empires of the Aztecs and Incas, plundering their
temples and razing them to the ground or converting them to cathedrals - Machu
Picchu was the outstanding exception, not being "discovered" until
the 20th century.
In addition to the treasures they melted down, the Spanish conquerors soon began
to produce large quantities of silver from mines in Mexico and Peru. Most important
of all were the enormous reserves they discovered at Potosi in what is now Bolivia.
Ships laden with silver regularly crossed the Atlantic and Pacific Oceans. Those
crossing the Atlantic were naturally bound for Spain. Others sailed west across
the Pacific to China to trade silver for Chinese goods. As the Spaniards controlled
the sources of most of the world's silver their coins were widely accepted,
especially in places like Britain's American colonies where silver was in short
supply.
The United States Dollar
During colonial times the official British coinage was in short supply and as
a result the a variety of substitutes was used in Britain's American colonies,
including wampum, in some of the northern colonies, and tobacco, or more conveniently,
certificates for tobacco deposited in public warehouses, in Virginia. The colonists
also used whatever foreign coins they could obtain. At various times in different
colonies paper money was issued and disputes with the British government over
this were one of the causes of the American Revolution. The rebels financed
their war of independence largely by printing paper money notes that were called
Continentals. By the end of the war, these had been rendered practically worthless
by hyperinflation but financial prudence is a luxury in wartime. The notes had
served their purpose and, with the help of their French allies, the Americans
won the war.
As Spanish pesos or dollars had long been in wide circulation in North America,
some of the paper money issued in some of the colonies before the war had been
denominated in dollars. Other notes used British monetary units. During the
war too, some Continentals were denominated in British units, others in dollars.
In 1792 the newly independent United States chose the dollar, subdivided into
100 cents, as the unit of American currency in preference to the British pound.
Foreign coins were supposed to lose their status as legal tender within 3 years
of the US coins coming into circulation. A new mint was established in Philadelphia
and started its operations in 1794. The mint was the first purpose-built structure
authorized by the United States government. However, because of a shortage of
both gold and silver, in 1797 the government extended legal tender status to
Spanish dollars for an indefinite period. The discoveries in California, which
sparked off the Gold Rush in 1848, led to a massive increase in the production
of gold coins by the mint, and in 1857 the United States finally removed legal
tender status from all foreign coins. By then, although as necessary to the
retail trade as ever, developments in banking meant that coins were just the
small change of commerce.
British Dollars
In 1797, owing to a desperate shortage of silver coins, the Bank of England
issues altered foreign coins from its reserves. Half a million pounds worth
of Spanish dollars issued by King Charles IV were over-stamped with a small
engraving of George III. The re-issued coins, with a value of 4 shillings and
9 pence, attracted ridicule. "Two Kings' heads and not worth a crown"
was one witticism. (A 'crown' in this context meant 5 shillings, "half-a-crown",
sometimes colloquially known as "half-a-dollar", being a common coin
before decimalisation in 1971). A cruder, description was "the head of
a fool stamped on the neck of an ass". The issue failed because over-stamping
was also applied unofficially to the plentiful supplies of light or base Spanish
dollars.
A few years later a more successful issue of dollars was made by the Bank of
England. In 1804 Matthew Boulton, the business partner of the steam engine pioneer
James Watt, was employed to erase completely the existing design on full-weight
Spanish coins and stamp them as Bank of England Five Shilling Dollars.
Dollars in the British Empire and Commonwealth
Canada
A great deal of the trade of Canada was with the United States and as a result
pressure grew for a switch of currency from the pound sterling to a decimal
system similar to the American one. The British government agreed and the Province
of Canada gradually changed over between 1853 and 1857. The first Canadian dollars
and cents were minted in Britain.
Australia, New Zealand and the Pacific Islands In contrast to Canada Australia kept the sterling system for well over half a century after being gaining independence from Britain. Because of the cumbersome nature of the division of the pound into 20 shillings and the shilling into 12 pence there had been many proposals in Britain over the years for the adoption of a decimal system. In Queen Victoria's time the two shilling coin or florin was introduced as a step in that direction. However it was not until 1971 that Britain finally adopted the decimal system and divided the pound into 100 new pennies. The Australians decimalised their currency five years earlier but, in contrast to Britain, decided to abolish the pound and adopt the dollar. Two new Australian dollars were worth one old Australian pound, i.e. the Australian dollar was the equivalent of ten shillings. New Zealand followed Australia's lead and replaced their own pound with the New Zealand dollar in 1967. Fiji and the Solomon Islands both adopted the dollar as their national currencies. Some of the smaller island states such as Kiribati, Tuvalu and Nauru continue to use the Australian Dollar. |
Africa
One of the very few former colonies in Africa to use the dollar is Zimbabwe.
Some years after unilaterally declaring independence from Britain, Rhodesia
replaced the Rodesian pound by the Rhodesian dollar. After majority rule was
introduced the country changed its name to Zimbabwe and changed the name of
its currency accordingly. South Africa still uses the rand. Most other former
British colonies have adopted African names for their currencies. Kenya and
Uganda use the shilling.
The Caribbean
In 1935 the British government introduced a new currency, the British West Indies
Dollar, in many of the British colonies in the Caribbean. Previously, in some
of those colonies the US dollar had circulated in addition to the pound sterling.
Later, after gaining independence, the former colonies adopted their own versions
of the dollar as their national currency. Of the remaining British colonies
in the Caribbean, the Turks and Caicos Islands and the British Virgin Islands
use the US dollar as their currency but the Cayman Islands have chosen to issue
their own dollar.
The Far East
In the British colonies of Malaya and Singapore the official currency was the
Indian rupee but the general public kept their accounts and made most of their
payments, including taxes, in dollars and cents. Therefore in 1867 the public's
preferences were recognised when legal tender status is given to various foreign
coins such as dollars from Hong Kong, Mexico, Bolivia and Peru. Subsequently,
in 1874, the British authorities in Singapore also made the Japanese yen and
US dollar legal tender.
Competition was provided for these foreign coins twenty years later in 1894 when British dollars were first minted for the colonies in the Far East. Most of these "British" dollars were actually minted in Bombay in India. A much bigger step towards the replacement of the foreign dollars was taken in 1902 when the Straits Settlement (Singapore) dollar was introduced, and two years later legal tender status was withdrawn from the foreign coins.
Of course a currency does not have to be official for it to be acceptable to
traders. In his reminiscences about World War II an American sailor described
how a shipmate once bought a basket containing a live cobra at Candy on the
island of Ceylon (modern Sri Lanka), then still a British colony, because he
laughingly offered two "dollars Mex" (i.e. two Mexican dollars) to
the young street peddler.
Foreign Dollars in China
The Chinese had used base metals for their coins ever since they invented them,
independently of but probably slightly later than the Lydians and Greeks. For
large transactions base metal coins were not very convenient and silver, in
weighed quantities, was used. Another alternative was paper money, which the
Chinese invented centuries before it became common in Europe but abandoned after
about 1455.
Not long after that, Spanish galleons laden with silver began to sail regularly
from Acapulco in Mexico to Manila in the Philippines where the silver was used
to buy Chinese goods such as porcelain and silk. Supplies of silver from the
Americas started to dry up towards the end of the Ming dynasty and were probably
a significant factor in the economic crisis China experienced at that time.
Subsequently supplies picked up again as new mines were developed. After the
Opium War China was forced by Britain and other countries, including France,
Germany, America and Japan to open up major harbours as treaty ports and to
cede land to those countries as foreign concessions. As a result a large variety
of foreign silver coins, particularly Mexican dollars, circulated widely in
China.
Prior to 1890 the Chinese had rarely minted precious metal coins but in that year they started to produce their own silver coins. In the early decades of the 20th century output of silver coins from Chinese mints increased but political stability prevented the complete replacement of foreign coins.
The fate of Gareth Jones, the Welsh journalist, illustrates how Mexican dollars continued to be important in China even in the 1930s. Jones had been the first person to report the terrible Soviet famine in 1933, caused by Stalin's policies. A couple of years later, in the spring of 1935, Jones travelled to Manchuria, or Manchukuo as the Japanese called the conquered province, but was captured by bandits and held for a ransom of 100,000 Mexican dollars. After 16 days in captivity he was murdered. The bandits had been coerced by the Japanese military which was holding their families hostage as it did not want Jones to expose the army's actions in Manchuria.
The successful Communist Revolution finally brought an end to the chaos of
currencies that had long afflicted China.
The Dollar Sign $ - Theories of its Origins
Since the symbol is more recent than the name, and the origins of the latter
are well understood, one might expect that the origins of the sign would also
be known for certain particularly when the origin of the British pound sign,
£, which is far older, is well-established. However that is not the case
with regard to the dollar.
Perhaps this is less surprising when there has been controversy over the origin
of the sign for the European euro, €, a currency that did not come into
existence until 1999. (It has been claimed that the euro sign was invented by
Arthur Eisenmenger more than a quarter of a century before the currency was
introduced). Nevertheless a number of theories about the origin of the dollar
symbol have been proposed.
The United States Abbreviation Theory
One of the most popular theories is that the dollar sign is derived from the
initials of the United States. If you superimpose a capital "U" on
a capital "S" then drop the lower part of the "U", what
you end up with is a version of the dollar symbol with two strokes. This theory
was endorsed by the American libertarian philosopher and staunch defender of
capitalism, Ayn Rand, in her novel Atlas Shrugged. Chapter 10 is entitled the
Sign of the Dollar. Rand claimed the dollar sign was the symbol not only of
the currency, but also the nation, a free economy, and a free mind.
The Peso Abbreviation and Piece of Eight Theories
However, a more widely accepted theory nowadays is that the sign owes its origins
to the Spanish peso.
One version of this theory is that the standard abbreviation of "peso"
was simply "P", but the plural form was a large "P" with
a small "s" above it and to its right. This was simplified by retaining
only the upward stroke of the "P" and superimposing the "S"
upon it. Hence the symbol of the dollar.
See:
Dreyfuss, Henry Symbol source book : an authoritative guide to international graphic symbols. New York : McGraw-Hill, 1972.
If the peso abbreviation theory is the correct one why is the US dollar sign sometimes written with two vertical strokes? A possible explanation is that the best known Spanish Peso coin had two pillars engraved on the reverse side to symbolise the "Pillars of Hercules" at Gibraltar and the words "Plus Ultra" indicating that beyond the Pillars of Hercules there were other lands. That coin was called the Pillar Dollar in the British colonies in North America and the two pillars may have become the two strokes in the Dollar sign.
For brief information on the "Pillar Dollar" see:
Nussbaum, Arthur A history of the dollar. New York : Columbia U.P., 1957.
There is another version of the theory linking the sign to the Spanish peso. As mentioned earlier the peso was subdivided into eight reals, hence the name piece of eight. This was represented as P8 or /8/. Eventually it became customary to write the oblique strokes across the figure 8. In the past precious metal coins were sometimes split into pieces to provide small change. The use in America of the expression two bits for 25 cents is a legacy of this since if a Spanish dollar or peso or piece of eight was split into quarters each part would consist of two of the original eight pieces or reals.
The 8 with two strokes became a letter S with two strokes since S looks like an 8 that has been split, as when a peso was broken to provide change in reals. Eventually a further simplification was introduced by dropping one of the strokes.
The Shilling Abbreviation Theory
There is a view, held by some typographers, that the dollar symbol derives from
the abbreviation for the shilling, s, which was used in Britain, both as a coin
and as a monetary unit, until decimalisation in 1971. A stroke through a letter
was sometimes used to indicate that the letter was an abbreviation. The classic
example of this is the British pound symbol £ which is a cursive capital
L with a stroke through it. The pound symbol is derived from the Latin word
for a pound weight, libra, since a pound of silver was the standard on which
the monetary unit was based. In the case of the shilling the stroke through
the s would have had an added significance.
Until 1971 when Britain divided the pound into 100 (new) pennies and abandoned
the old sub-units, two different methods of representing the shilling were used;
one was simply the letter s and the other was the oblique slash / which is also
known as a solidus, the name of the Roman coin from which the shilling is derived.
Actually the slash or solidus was used to separate shillings from pence when
sums of money were written down, e.g. 4/6 for four shillings and sixpence. (For
an amount consisting of an integral number of shillings a dash indicated zero
pence, e.g. 3/- for three shillings).
If you make the slash or solidus vertical and combine it with the S you end up with $ - the dollar sign.
It may seem strange that having thrown off British rule and rejected the British pound in favour of the Spanish dollar, the Americans should adopt a symbol based on the abbreviation for the British shilling but during colonial times they had used British units for financial calculations even when they used substitutes, such as the Spanish dollar, as currency. Even today Americans still often refer to cents as pennies.
Furthermore, shillings had been produced in the colonies without authorisation from the British authorities. In 1652 John Hall set up a private mint in Massachusetts and produced coins known as pine tree shillings because of the picture of a pine tree stamped on them. His mint was forced to close in 1684, but because of it the word shilling would still have carried patriotic connotations a century later.
The Portuguese Cifrão Theory Even though Arabic numbers are used all over the world today, there are still differences in the way in which numbers are represented in different countries. In the English-speaking world a period is used to separate integral numbers from decimal fractions whereas in continental Europe the comma is used instead of the decimal point and either a period or a space is used for thousands and other groups of three digits. In the past the Spanish used a symbol called the calderon to separate the thousands, and the Portuguese used one called the cifrão. As the cifrão was also used to separate numeral expressions of different denominations and it consisted of the letter s with two vertical lines it has been suggested that it gave rise to the dollar symbol. (Über die Herkunft des Dollarzeichens, Christian Weyers, Zeitschrift für Semiotik, vol 13, no. 3-4, 1992). |
The Slavery Theory
There have been claims that the dollar symbol, $, is derived from the words
for "slave" and "nail" in Spanish (or in Latin, according
to one version of this theory that posits an earlier date for the invention
of the symbol). The shackles worn by slaves could be locked by a nail which
was passed through the rings or loops at the ends of the shackle and bent while
it was still hot and malleable. The Spanish for slave is esclavo and for "nail"
is clavo. Therefore the "S" with a nail, $, or S-clavo = esclavo or
slave.
Slaves constituted a store of wealth and as a result the abbreviation for slaves
that slave-owners used in their account books came to represent money.
This seems like the kind of explanation that would be popular with conspiracy theorists. It does not seem to be very popular in printed sources, at least not in English language ones, but I (Roy Davies) have seen it on the Internet and was also told it by someone who said he had heard it from a Latin-American economist and an American history professor.
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