Our mighty dollar

While global economics and the politics of power are resistant to oversimplification, it seems that the more I absorb and try to understand what makes the world work, the more convinced I become that our fates as Americans are tied directly to the prominence of the dollar. Thanks to the post-war powwow at Bretton Woods, our dollar has been the international trade standard for the last 75 years, but it is also integral to our personal lives. When we aren’t working to earn it, we are spending it or at least trying to preserve it. For better or worse, the almighty dollar has a grip on us, but do we ever stop to think about what a dollar is?

The etymology of the dollar points to the bohemian “thaler” of the Middle Ages in much the same way that the nickname for our smallest increment of currency borrows from the germanic “pfennig,” but first the currency had to work its way through Spain before it joined our lexicon.

In colonial America, there was no standard currency. Trade was conducted in a wide variety of denominations coined in England, France, Spain, and the Netherlands, in addition to paper currencies printed by the colonies. Of all of the many currencies in use, none was as popular in the colonies as the Spanish “tálero.” The English translation of tálero was “dollar, and the tálero became known in the colonies as the “Spanish dollar.”

You are already acquainted with the Spanish dollar by other names. If you read Treasure Island when you were a kid or immersed yourself in pirate lore or sunken treasure, you are familiar with the term, “pieces of eight.” That referred to the tálero (aka thaler, aka dollar) which could be divided into eight pieces, each valued as a Spanish “reale.” The triangular chunks of the severed dollar were also known as “bits,” and that is why to this day, the term “two bits” is understood by old-timers to mean 25 cents.

The Spanish tálero was popular because it held just the right amount of silver for easy trade, it was small enough to be portable, yet large enough to be easily divided. It didn’t take long for it to make its way up from the Spanish colonies and quickly became a favored unit of trade.

When our new nation decided to mint money of its own, there wasn’t much discussion about where to look for inspiration. Our goal was to produce coinage that would eventually replace the popular Spanish dollar, so our coin was designed to have the same approximate size, weight, and silver content.

The Coinage Act of 1792 established our first mint, but also spelled out the delicate details of how to issue currency and control it. The legislation also made the dollar and its fractions our official unit of money and pegged its value to that of the Spanish dollar.

Oddly enough, that wasn’t the first recognition of the value of the dollar in our civic dialogue. When our Constitution was written in 1787, the value of a dollar (still a Spanish dollar at the time) was recognized well enough to be included in two different sections of our Constitution. One of those sections makes perfect sense to us today as it did then, yet another is a bit harder for us to think about.

Article 1 of the constitution authorizes Congress to “coin money, regulate the value thereof…and fix the standard of weights and measures,” which is straightforward enough, but it doesn’t specifically mention the dollar. The powers in this clause simply established authority for the 1792 Act.

Later, when the Seventh Amendment was added, the sum of “twenty dollars” was set as the threshold for the right to a jury trial in a civil suit. That wouldn’t cover the filing fee now, but it was an official recognition of the value of the dollar.

The less-noble mention of our dollar is found in article one, section nine in reference to our nation’s original sin. You will recall that our thirteen colonies with disparate beliefs and economic systems were held together only by a gentleman’s agreement to put the issue of slavery on the back burner long enough to establish a new nation. To that end, clause one read, “The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.”

In that sad and regretful clause, the Constitutional Congress recognized that anti-slavery states could tax slave states out of existence without proper limits, and foreshadowed the use of the dollar as a political tool as it is today. The good news is that the ten-year sunset clause on limitations of taxes on “the migration or importation of such persons,” as ugly as that is, was also the first official volley in the anti-slavery effort that eventually gave us the Emancipation Proclamation in 1862 and ultimately the Voting Rights Act of 1965.

For better or worse, the dollar has been with us from the beginning. Those pieces of paper that we so casually hand the cashier in exchange for groceries are actually small works of art, steeped in history and truly international in origin. Between massive inflation, electronic transactions, and cryptocurrencies, our dollar is undergoing some dramatic changes right now, but the history of the dollar is no less interesting than its future