History of the US Dollar

The history of the US dollar starts of with its adoption by the Congress of the Confederation of the United States on 6th of July, 1785. However, there started the history of the US dollar in the form that we know of today. Its actual history dates back many centuries before 1785.

The history of the US dollar can be traced back to the bohemian coin of Tolar which was minted out of silver in the 1500s. The name Dollar can also be traced back to Daalder which was prevalent in Netherlands and Daler of Sweden, Norway and Denmark. The Dutch Lion Dollar started being circulated among the English colonies during the 17th and 18th centuries. The Spanish Dollar become very prevalent during the 18th century and it was circulated among the Spanish colonies extensively. The Spanish Dollar became quite common in America as well.

The American Revolutions marked a significant landmark in the history of the US dollar. By 1775, the Spanish Dollar became even more important although the individual colonies used to issue their own currencies. At that point of time, as many as thirteen colonies used Spanish Dollars as their currency. Once these thirteen colonies became United States, Dollar became the de facto currency. Before the declaration of independence was signed, the congress did authorize the minting of currency named Dollar as it was the most common currency in those colonies.

History of the US dollar has it that at first, the Spanish Dollars were in circulation for many years. Then efforts were made to calculate the amount of silver that went into a Spanish Dollar and then the Dollar weight against weight of silver was defined. Accordingly, smaller denominations with pro rata weight of silver were also coined.

As we move down the years, the history of the US dollar took another turn in 1874. Till that time, the US dollar was always fixed to a certain weight of gold or silver although the weight changed over time. Then, with gold and silver being independently traded in the open market, it was feared that it would be very difficult to maintain currencies of gold and silver as any price fluctuations could lead to melting of coins. Slowly, the silver coins were withdrawn making gold the only metal to be used for coins.

Gold standard was implemented in 1900 which marked another point of significance in the history of the US dollar. However, the World War II and the pegging of many foreign currencies against the Dollar started putting pressure on the gold Standard which ultimately led to it being discarded.

Another landmark in the history of the US dollar has to be the establishment of Fiat Standard where the coin is not backed by any intrinsic value of the metal it is made of.

As we can see, there have been many significant landmarks in the history of the US dollar which led to the form as we see it today.