Infographic: 31 Fascinating Facts on the Early History of the U.S. Dollar
Connect with us

Money

31 Fascinating Facts on the Early History of the U.S. Dollar

Published

on

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

31 Fascinating Facts on the Early History of the U.S. Dollar

Today, we all know the U.S. dollar as an iconic currency that is recognizable to people around the world.

And while we’ve previously looked at the buying power of the U.S. dollar over time, as well as important events like the Great Depression, we have not looked at the history of the dollar itself.

How and why was it conceived, and why do we call it a “dollar” or a “buck”? How did the dollar’s early history help to shape today’s world?

Before the Dollar

For the early colonists, currency was a bit of a free-for-all.

Officially, cash was denominated in pounds, shillings, and pence, but in reality things were a different story. Cash was often scarce, and colonists needed to be innovative to fulfill transactions. At various points in time, they used tobacco, beaver skins, and wampum in the place of money. Some colonies even tried to issue their own fiat currencies – many of which went bust.

As it turned out, the Spanish dollar was often the most abundant form of cash – and this is what led to U.S. currency eventually being denominated in dollars.

The Revolution

During the American Revolution in 1775, the Continental Congress issued a money known as the Continental Currency to try and fund the war. The government printed too many, and the value of a Continental diminished rapidly.

Just five years later, after runaway inflation, the Continental was worth 2.5% of its face value. Benjamin Franklin rightly noted that the depreciation of the Continental had, in fact, acted as a tax to pay for the war. Holders of the currency – everyday people – were punished by losing massive amounts of buying power. Interestingly, this is where we get the phrase “Not worth a Continental”.

Birth of the Dollar

The failure of the Continental Currency must have been top of mind during the writing of the Constitution. A clause was even added, under Article 1, Section 10, to make sure such a failure would never happen again. It was written that states were not permitted to “coin Money; emit Bills of Credit; [or] make any Thing but gold and silver Coin a Tender in Payment of Debts.”

And so, the Coinage Act of 1792 created the U.S. dollar as a standard unit of currency. The U.S. Mint was authorized to oversee coinage, and the Act also established a penalty of death for debasing coinage issued by the Mint.

The Almighty Buck

In the 19th Century, a new slang term emerged for the dollar.

Especially in the Great Lakes area, different amounts of money were equated with animal skins. One particular reference showed that in Ohio in 1851, the skin of a muskrat was worth $0.25, and that of a doe was worth $0.50. Meanwhile, the skin of a buck was equal to the “almighty dollar” – and hence, the word “buck” became synonymous with the U.S. dollar.

The Civil War

Leading up to the Civil War, private banks around the country issued their own paper currencies.

With 10,000 or so of these currencies in circulation as the war broke out, governments soon found it very cumbersome to try and pay debts with many different types of notes. As a result, the $10 Demand Note was the first official paper currency issued in 1861 by the government to help finance the war.

The North began paying debts with a fiat currency called the “greenback”, while Confederate states issued their own paper currency as well. The latter was worthless by the time the Confederacy lost the war.

The Counterfeiting Problem

Around this time, counterfeiting was a widespread problem with greenbacks and all the private notes that were circulating. More than 1/3 of bills were fake at this time.

Sophisticated counterfeit operations were happening in British Canada, and some bank engravers would even moonlight as counterfeiters, using the same plates and dyes they had from their day job.

To deal with the problem, the Secret Service was formed in 1865.

The Modern Dollar

Counterfeiting measures have come a long way since the late 19th century. Today, it’s estimated that less than 0.01% of notes are fake.

Learn more about the modern U.S. dollar in the next part of this series.

The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

Get a free Beginner's Guide to Buying Precious Metals

Subscribe to Visual Capitalist
Click for Comments

Money

How Central Banks Think About Digital Currency

Central bank digital currencies are on the horizon. What do 65 central banks representing 91% of global GDP think about them?

Published

on

How Central Banks Think About Digital Currency

In the late 1600s, the introduction of bank notes changed the financial system forever. Fast forward to today, and another monumental change is expected to occur through central bank digital currencies (CBDC).

A CBDC adopts certain characteristics of everyday paper or coin currencies and cryptocurrency. It is expected to provide central banks and the monetary systems they govern a step towards modernizing.

But what exactly are CBDCs and how do they differ from money we use today?

The ABCs of CBDCs

To better understand a CBDC, it helps to first understand the taxonomy of money and its overlapping properties.

For example, the properties of cash are that it’s accessible, physical and digital, central bank issued, and token-based. Here’s how the taxonomy of money breaks down:

  • Accessibility: The accessibility of money is a big factor in determining its place within the taxonomy of money. For instance, cash and general purpose CBDCs are considered widely accessible.
  • Form: Is the money physical or digital? The form of money determines distribution and the potential for dilution, and future CBDCs issued will be completely digital.
  • Issuer: Where does the money come from? CBDCs are to be issued by the central bank and backed by their respective governments, which differs from cryptocurrencies which mostly have no government affiliations.
  • Technology: How does the currency work? CBDCs break down into token-based and account-based approaches. A token-based CBDC operates like banknotes today, where your information is not known nor needed by a cashier when accepting your payment. An account-based system, however, requires authorization to partake on the network, akin to paying with a digital wallet or card.

Digital Currency vs Digital Coins

In essence, digital currency is the electronic form of banknotes that exists today. Therefore, it’s viewed by some as a modern and efficient version of the cash you hold in your wallet or purse.

On the other hand, cryptocurrencies like Bitcoin are a store of value like gold that is secured by encryption. Cryptocurrencies are privately owned and fueled by blockchain technology, compared to digital currencies which do not use decentralized ledgers or blockchain technology.

Digital Currency: Regulatory Authority and Stability

Digital currencies are issued by a central bank, and therefore, are backed by the full power of a government. According to the Bank for International Settlements, over 20% of central banks surveyed say they have legal authority in issuing a CBDC. Almost 10% more said laws are currently being changed to allow for it.

As more central banks issue digital currencies, there’s likely to be favorability between them. This is similar to how a few currencies like the U.S. dollar and Euro dominate the currency landscape.

The Benefits of Issuing a CBDC

There are several positives regarding the issuance of a CBDC over other currencies.

First, the cost of retail payments in the U.S. is estimated to be between 0.5% and 0.9% of the country’s $20 trillion in GDP. Digital currencies can flow much more effectively between parties, helping reduce these transaction fees.

Second, large chunks of the global population are still considered unbanked. In this case, a CBDC opens avenues for people to access the global financial system without a bank. Even today, 6% of Americans do not have a single bank account.

Other motivations for a CBDC include:

  • Financial stability
  • Monetary policy implementation
  • Increased safety, efficiency, and robustness
  • Limit on illicit activity

An example of payments efficiency can be seen during the onset of the COVID-19 pandemic, when some Americans failed to receive their stimulus check. Altogether, some $2 billion in funds have gone unclaimed. A functioning rollout of a CBDC and a more direct relationship with citizens would minimize such a problem.

Status of CBDCs

Although widespread adoption of CBDCs is still far away, research and experiments are making notable strides forward:

  • 81 countries representing 90% of global GDP are exploring CBDCs.
  • The share of central banks actively engaging in CBDC work grew to 86% in the last 4 years.
  • 60% of central banks are conducting experiments on CBDCs (up from 42% in 2019) and 14% are moving forward to development and pilot arrangement.
  • The Bahamas is one of five countries currently working with a CBDC – the Bahamian Sand Dollar.
  • Sweden and Uruguay have shown interest in a digital currency. Sweden began testing an “e-krona” in 2020, and Uruguay announced tests to issue digital Uruguayan pesos as far back as 2017.
  • The People’s Bank of China has been running CBDC tests since April 2020. In all, tens of thousands of citizens have participated, spending 2 billion yuan, and the country is poised to be the first to fully launch a CBDC.

The U.K. central bank is less optimistic about a rolling out a CBDC in the near future. The proposed digital currency—dubbed “Britcoin”—is unlikely to arrive until at least 2025.

Disrupting The World of Money

Wherever you look, technology is disrupting finance and upending the status quo.

This can be seen through the rising market value of fintech firms, which in some cases are trumping traditional financial institutions in value. It is also evident in the rapid rise of Bitcoin to a $1 trillion market cap, making it the fastest asset to do so.

With the rollout of central bank digital currencies on the horizon, the next disruption of financial systems is already beginning.

Continue Reading

Demographics

The Richest Women in America in One Graphic

Only 12% of billionaires in the U.S. are women. Who is part of this prestigious group of the richest women in America?

Published

on

The Richest Women in America in One Graphic

The majority of the world’s billionaires hail from the United States.

But of the 724 American billionaires whose net worths are tracked daily by Forbes, only 86 are women. That’s just 12% of the country’s billionaires.

This visualization examines the select few who have made the cut into this prestigious list, using data compiled from Forbes’ real-time billionaires list.

Note: All data is as of November 1, 2021 unless otherwise stated.

Top 10 Richest Women in America

Since 2020, MacKenzie Scott has donated over $8.5 billion and counting of her wealth. Yet, she still remains one of the richest women in the world. This is largely due to the Amazon shares that she received in her divorce settlement.

Amazon’s stock performance soared amid the pandemic, which resulted in the initial value of her shares ($38.3 billion) nearly doubling.

Top 10 overallNameNet WorthAgeSource of wealth
#1Alice Walton$68.1 B72Walmart
#2MacKenzie Scott$56.1 B51Amazon
#3Julia Koch & family$52.2 B59Koch Industries
#4Jacqueline Mars$31.5 B82Candy, pet food
#5Miriam Adelson$29.2 B76Casinos
#6Abigail Johnson$26.2 B59Money management
#7Laurene Powell Jobs & family$16.7 B57Apple, Disney
#8Diane Hendricks$11.7 B74Roofing
#9Ann Walton Kroenke$9.3 B72Walmart
#10Blair Parry-Okeden$8.8 B71Media, automotive

Miriam Adelson inherited her late husband’s 57% stake (worth ~$19 billion) in Las Vegas Sands, making her one of the richest newcomers to the Forbes list. The casinos have locations across Las Vegas, Singapore, and Macao.

Several of the women in this top 10 list also share membership with some of the richest families in America—from the Walmart Waltons, to the Johnsons at the helm of Fidelity Investments and Fidelity International.

The Oldest Richest Women in America

The oldest female billionaire in the world, Alice Schwartz, is 95 years old. She co-founded Bio-Rad Laboratories with her husband, which operates in the life sciences research and clinical diagnostics markets. They started the company in 1952 with only $720 in the bank.

OldestNameNet WorthAgeSource of wealth
#1Alice Schwartz$3.0 B95Biotech
#2Wilma Tisch$1.4 B94Diversified
#3Doris Fisher$2.8 B90Gap
#4Johnelle Hunt$4.7 B89Trucking
#5Marian Ilitch$4.4 B88Little Caesars
#6Pauline MacMillan Keinath$8.5 B87Cargill
#7Margot Birmingham Perot$4.2 B87Computer services, real estate
#8Martha Ingram & family$3.9 B86Book distribution, transportation
#9Janice McNair$4.2 B85Energy, sports
#10Norma Lerner$1.1 B85Banking

After her husband’s passing in 2018, Janice McNair (aged 85) took over his 80% stake in the NFL team Houston Texans, which ranks highly as one of the world’s most valuable sports teams. This also subsequently catapulted her position as being among the wealthiest sports owners in the country.

The Youngest Richest Women in America

In the online dating era, Whitney Wolfe Herd has made a name for herself. The female-first dating app she co-founded, Bumble, grew into a formidable competitor for her former employer, Match Group (which owns Tinder and OkCupid, among others).

At age 31, Wolfe Herd became the youngest self-made female CEO in the country after Bumble’s $2.2 billion IPO in February 2021.

YoungestNameNet WorthAgeSource of wealth
#1Whitney Wolfe Herd$1.2 B32Dating app
#2Rihanna$1.7 B33Cosmetics, music
#3Neha Narkhede$1.4 B37Software
#4Lynsi Snyder$4.2 B39In-N-Out Burger
#5Kim Kardashian West$1.2 B41Cosmetics, reality TV
#6Jane Lauder$6.7 B48Estée Lauder
#7Amy Wyss$2.0 B50Medical equipment
#8Sara Blakely$1.2 B50Spanx
#9MacKenzie Scott$56.1 B51Amazon
#10Aerin Lauder$4.2 B51Cosmetics

Wearing many hats from influencer to entrepreneur, socialite Kim Kardashian West’s cosmetics and fashion companies (KKW Beauty and shapewear line Skims) have catapulted her to a newfound billionaire status. She has a set of diverse revenue streams, from reality TV royalties to blue-chip and real estate investments.

Top 20 Self-Made Richest Women in America

The self-made label is an additional fascinating avenue to explore. Forbes defines this category as people who establish a fortune independently, rather than partly or wholly through inheritance.

One of the newest entrants into this mix is Rihanna. She already enjoyed significant success as an entertainer, with her claim to fame being one of the best-selling artists of the 2010s. However, it was her entrepreneurial spirit that put her on the Forbes list in August 2021. Rihanna owns 50% of her cosmetics company, Fenty Beauty. The other half is run by Bernard Arnault, who is among the world’s top billionaires.

Here is the rest of the top 20 self-made richest women in America:

Self-MadeNameNet WorthAgeSource of wealth
#1Diane Hendricks$11.7 B74Roofing
#2Judy Faulkner$6.5 B77Health IT
#3Meg Whitman$6.3 B65eBay
#4Judy Love$5.2 B84Retail and gas stations
#5Marian Ilitch$4.4 B88Little Caesars
#6Johnelle Hunt$4.1 B89Trucking
#7Thai Lee$4.1 B62IT Provider
#8Lynda Resnick$4.0 B78Agriculture
#9Gail Miller$3.2 B77Car dealerships
#10Doris Fisher$2.8 B90Gap
#11Alice Schwartz$3.0 B95Biotech
#12Oprah Winfrey$2.7 B67Media
#13Elaine Wynn$2.2 B79Casinos, hotels
#14Peggy Cherng$2.0 B73Fast food (Panda Express)
#15Sheryl Sandberg$1.9 B51Facebook
#16Rihanna$1.7 B33Cosmetics, music
#17Jayshree Ullal$1.7 B60Computer networking
#18Safra Catz$1.6 B59Software
#19Jenny Just$1.5 B53Fintech
#20Eren Ozmen$1.4 B62Aerospace

Source: Forbes, as of Aug 2021 (latest available)

For those paying attention to the rapid rise of the fintech industry, Jenny Just’s entry on this list will come as no surprise. Her firm, Apex Fintech Solutions powers the trading technology behind companies like SoFi and eToro. In fact, she has started or bought 15 businesses in the space in just 24 years.

As the richest women in America continue to make great strides, this list could look very different in coming years.

Continue Reading

Subscribe

Popular