Everyone knows that money didn’t exist from the beginning of time; prior to its invention, people didn’t have access to working capital, so they simply bartered or exchanged goods. Later on, various nations used gold dust, clam shells, cocoa beans (and so on) as money; nevertheless, this didn’t simplify the process too much, so the invention of money was the result of a needed, expected course of action. While some money is still made from precious metals today, most of it now is exchanged electronically as bytes through computer networks around the world.
The first American colonists were using all sorts of currencies (mostly from England, France and Spain) for their transactions; it’s a known fact that by the end of the 18th century there were about 20 officially accepted forms of legal tender in North Carolina alone! Different states had different payment instruments, with tobacco being used as money in the form of “tobacco notes” in the state of Virginia for over two centuries.
The first credit bills which were accepted as legal tender were printed in Massachusetts as a means to pay the soldiers for their military expeditions, and could be exchanged for silver or gold. Meanwhile, by the end of the 18th century, many private banks were allowed to produce their own bills, so in only a few decades there were thousands and thousands of different U.S. bills floating around the continent.
The end of the 19th century brought the death of the silver dollar; the massive gold supplies that came from Alaska and Australia imposed gold as the currency standard. Despite all of this, a few decades later, the great depression (which cut the net national product to less than 50% from its initial value) forced Congress to raise interest rates significantly, in order to keep a proper gold vs. dollar ratio.
The Federal Reserve System, which was set up in 1913, continues to act as a national bank, regulating the money flow and thus ensuring the much needed economical stability. The Federal Reserve Notes are the only currency produced in the U.S.
Amazing facts:
1. Producing a penny costs about... two pennies! The price of Zinc (the main ingredient in the penny formula) has increased a lot during the last decade, so the government is actually losing money with each penny that’s minted.
2. Congress authorized the usage of paper money in 1775 in order to finance the war, but they had to give up the idea quickly, because the printing costs were greater than the value of the bills.
3. The Secret Service was founded in 1865; its main role was to fight the counterfeiters and thus restore people’s trust in the U.S. currency. Its authority broadened two years later, giving it the responsibility to discover any possible frauds against the U.S. government. Congress passed an Act making it unlawful to counterfeit coins 12 years later, in 1877.
4. There are many theories regarding the origin of the dollar sign, but we know for sure that it had been used way before the U.S. dollar bills were invented back in 1875. Strangely, the dollar sign doesn’t appear on any of the U.S. bills.
5. Congress authorized the production of the first U.S. dollar coins in 1792, but paper money wasn’t produced until 1861 – and each one of the produced bills was initially signed by hand by a handful of people!
6. The U.S. reduced the size of their bills by about 30% in 1929, in an effort to save money by using less paper. As an added benefit, the new bills have been of great help in fighting counterfeiters because the new designs were standardized.
7. The largest U.S. bill ever printed was a $100,000 note; nevertheless, this bill has never been released to the public, only being used for transactions that were involving the Federal Reserve and the Treasury Department. Other seldom found bills include the $500, $1,000, $5,000 and $10,000 notes, which can be found in limited quantities (mostly in museums) these days.
8. The paper used for the bills (which is secretly produced by a single manufacturer from cotton, linen, colored fibers, polymers, etc) can be folded about 5,000 times without needing to be replaced.
9. Starting with 1993, all paper money (except the $1 bill) include micro-printing, which wraps the “The United States of America” text around the portraits that are printed on the bills – the text appears 12 times on the $100 bill. The size of the micro-printing is only 0.006 inches, so you will definitely need a magnifying glass if you want to read the text.
10. While a $1 bill will only last for about 2 years, due to its special texture, a $100 bill can be used for up to 10 years without getting deteriorated.
I’ll have to admit that the U.S. bills don’t look too exciting when compared with other countries’ bills, but their somewhat dull aspect was intended – it allows the subtle incorporation of more and more security features, and thus limits the amount of counterfeit bills on the market.
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money, working capital, financing
financing, working capital, money