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Currency

Currency - US Dollar

The United States Dollar (USD, symbol: $, abbr.: US-dollar) is the currency of the United States. One dollar is divided into 100 cents (symbol: ¢). The US-dollar is also the currency of the British Virgin Islands, Ecuador, El Salvador, Panama, Micronesia, Palau and East Timor. 

The dollar is also known by the name "greenback" (an allusion to its color) or "buck". The dollar is also a freely convertible currency with no limitations. The slogan E Pluribus Unum (from many comes one) has been printed on the coins and bills since 1786. The phrase "In God We Trust" was first appeared on US coins in 1864 and on the paper bills since 1957. All bills are printed by the Bureau of Engraving and all coins are produced by the United States Mint.

History

The American colonies were very important to the United Kingdom for their raw materials including sugar, tobacco, cotton and other raw materials. Since these goods had to be shipped to Great Britain, the East Indian and other trading companies dominated the economy of the 13 colonies in North America. Each of the 13 colonies was treated as a sovereign state and caused problems for trade. The taxation of all goods at each of the borders and the prohibition of British currency in the colonies made trading difficult and expensive. To enable trade with Great Britain the colonists had to first get a bill of exchange which could then be redeemed in Great Britain.

In the 17th and 18th century many settlers used goods and wares like corn, tobacco, Wampum (shell beads used as currency), etc. Some colonies violated the British law and coined money on their own to finance military expeditions. The coins were different and even though they spread through the colonies, it was difficult to assign them with value.

In 1704 the British Crown restricted the issuing of paper money to weaken the economic power of colonies. This increased the use of Spanish and Dutch coins for trading within the 13 colonies. The word dollar can be traced back to the German word “Taler” which was a coin introduced to North and South America by King Karl V. The word dollar derives from the southern and middle-American version of the word (Dolares). 

Thomas Jefferson veranlasste weitere Unterteilung des neuen Dollar in 100 Cent

During the Revolutionary War, the colonists created their own currency. Thomas Jefferson was the one who divided the dollar into 100 cents. Since this differed from most of the other currencies of the time, it was interpreted as an important step towards independence.

The first one-cent coin was produced in 1787. At first, there were quarters, half-dollars, dollars and dimes. All coins, except for the Eagles which were a 10-dollar gold coin, were made of silver and copper.

After the Gold Rush (1848), the Civil War and the completion of the Rail Road Line the USA went through an economic crisis. But thanks to the immigrants, the international business flourished and with the issuing of paper money in 1862 the importance of the dollar arose. Napoleon tried to establish an exchange rate (franc against dollar) in 1867, although without success.

US-Münzen bestanden aus Silber und Kupfer

In 1913, the Federal Reserve Act created a central banking system with private and public entities. The Federal Reserve System had the authority to issue Federal Reserve notes (US dollars) and control inflation. This helped the US-dollar become a global currency because of the central bank helped with stabilization.

In 1994, the US-dollar was recognized as the official leading currency. This meant that oil, gold and cotton were only traded for in dollars. The US-dollar hit an historical low on July 15th, 2008 when the Euro exchange rate was at 1,5990. The highest exchange rate the US-dollar has ever reached was ,8252 on October 26th, 2000.

International Importance

In the period after World War II, the US-dollar became the leading currency worldwide and squeezed the British Pound out of the market. With the establishment of the European Union and the introduction of the Euro currency, the leading position of the US-dollar has weakened. In some countries, the US-dollar is used as a second currency. Shops and hotels accept US-dollars as payment and do not require exchanging money into the national currency. Raw resources, such as petroleum, are also traded in US-dollars on the world market (petrodollar).

Nicknames

A dollar is most commonly called a "buck". It is speculated that this nickname derives from “buckskin” (deer hides) which were used as a currency during America’s frontier days.
The one dollar bill is often referred to as a “buck”, the five as a “fiver”, the ten-dollar bill as a “Hamilton” and the twenty as a “Jackson” or “dub”. If an American speaks about having a “Benjamin” in his pocket, he means he has a 100 bill and if he has a grand, he has 1000 USD. It is a common mistake to think that Benjamin Franklin (100) and Alexander Hamilton (10) were US-presidents.

It is also important to know that one cent is called a penny, a five-cent piece is called a nickel, a ten-cent piece is a dime and a quarter is worth 25 cents. 

Coins

USA Quarters als Gedenkmünzen

In 1999 the 50 states commemorative quarters were introduced. On the front side of the quarter, the face of George Washington is displayed and on the tails side is the design for each individual state. The coins were released every 10 weeks in the order that each state become part of the United States. Each state created their own design to represent the history and tradition of their state.  

Even though one-dollar coins are rarely used, there are four different one-dollar-coins in circulation. The first of these coins was the Dwight D. Eisenhower silver dollar. It was minted between 1971-1976 has either shows the Apollo 11 mission or the Liberty Bell. It is no longer minted, but accepted as legal tender. The second of these coins was produced in 1979 and illustrates Susan B. Anthony. The coin is similar to the quarter-coin but bigger and has an eleven-sided inner ring. Due to the coin being confused with the quarter, it was taken off the market in 1981. It was minted one more time in 1999.

Dollars as coins do not seem to be very popular with Americans. In the year 2000, a new Sacajawea dollar was introduced. The coin commemorated the Shoshone Sacagawea who played a vital role in the Lewis and Clark expedition. The coin displays a picture of Sacagawea on the front and a golden eagle on the back. Even though the coin was unpopular in the USA, it became a hit in Ecuador and El Salvador.

On 15th February, 2007 a fourth coin was released - the president dollar. The Presidential Coin Program released a new coin for every president of the United States every three months starting with George Washington. The coins are made mainly from copper and are considered collector items. They are not accepted by most stores.

Division

Coins (in US-dollars)

0.01
0.05
0.10
0.25
0.50
1

Bills (in US-dollars)

1
2
5
10
20
50
100

 

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