History of the Dollar

Abstract

W HAT IS THE DOLLAR, and from where did it come? The first question, on the surface, may seem foolish, and the second immaterial. Everyone knows what dollars are; they are that green, crinkly paper stuff which the philosopher scorns and everyone else is constantly struggling to accumulate. But on more searching analysis, the actual meaning of a dollar is not so clear. Those bills you carry in your left hip pocket are not really dollars; instead they are tokens which presumably entitle you to receive dollars upon demand. Just what real dollars look like since devaluation and where you receive them remains somewhat of a fiscal mystery. The second question, from where did the dollar come, is the easier to answer. Irrelevant, perhaps, but for a few minutes let us try to prove to our European critics that our interest in the dollar is not purely mercenary, but also cultural. Money serves two major purposes: first, a medium of exchange, and, second, a measure of value. These two functions are closely related and yet they are not identical; different characteristics in a currency unit may serve each of them better. As a medium of exchange money must be uniform in appearance, easy to identify, difficult to counterfeit, and convenient in size and shape. As a measure of value the most important attribute is widespread usage. It is possible that values may be expressed in a money unit that does not exist in tangible form, or even, as was true during the colonial period in our own country, that the common medium of exchange may be a different currency unit than the system in which prices are reckoned and accounts kept.