The American dollar began life as a copy of a Spanish silver coin
When Congress created the dollar in 1792, it simply matched the value of the Spanish milled dollar, the silver piece of eight minted in Mexico City, Potosí and Lima and spent across three continents. Spanish coins stayed so common that they remained legal tender in the United States until 1857.
The name itself is older still. In the sixteenth century a Bohemian count, Hieronymus Schlick, minted silver coins from a valley called Joachimstal; the coins became joachimstalers, then simply talers, and the word spread into Danish, Dutch, Polish and many other languages. Spain's eight-real coin inherited it. Those eight reales, nicknamed bits, explain why Americans still call a quarter two bits, and why a 25-cent coin exists at all rather than a 20-cent one. Stock prices on the New York exchange were quoted in eighths of a dollar until 2001.
Unlike its Spanish model, the new currency was decimal: a dime was a tenth, a cent a hundredth, and a mill a thousandth. Only the cent survived in daily use, except at the petrol pump, where prices ending in nine-tenths of a cent quietly preserve the mill. One proposal never got off the ground: in 1854 the Treasury secretary suggested a 100-dollar gold coin called the union, but only patterns for a half union were ever made.
Where did the symbol come from? One theory holds that scribes writing ps for pesos gradually stacked the letters. Another points to the twin Pillars of Hercules wrapped in a banner on Spanish coins. A third, promoted by Ayn Rand, reads it as U over S, but the sign predates the country. Greenback originally meant the Demand Notes Lincoln issued to pay for the Civil War, printed green on the back. Buck may come from the colonial leather trade, or possibly from poker.
Originally the dollar was tied to both silver and gold. The Gold Standard Act of 1900 pegged it to gold alone, the price was reset to $35 an ounce from 1934, and in 1971 every link to gold ended. After the First World War it grew into a major international reserve currency. The Federal Reserve estimated that about $2.37 trillion in cash was circulating at the start of 2025.
Source: United States dollar
