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United States dollar
he dollar (currency code USD) is the unit of currency of the United States. It is normally abbreviated as the dollar sign, $, or as USD or US$ to distinguish it from other dollar-denominated currencies and from others that use the $ symbol. The U.S. dollar is divided into 100 cents.
Adopted by the Congress of the Confederation of the United States on July 6, 1785[3], the U.S. dollar is the currency most used in international transactions.[4] Several countries use the U.S. dollar as their official currency, and many others allow it to be used in a de facto capacity. In 1995, over US $380 billion were in circulation, two-thirds of which was outside the United States. By 2005, that figure had doubled to nearly $760 billion, with an estimated half to two-thirds being held overseas,[5] representing an annual growth rate of about 7.6%. However, as of December 2006, the dollar was surpassed by the euro in terms of combined value of cash in circulation. The value of euro notes in circulation had risen to more than €610 billion, equivalent to US$802 billion at the exchange rates at the time.
The U.S. dollar uses the decimal system, consisting of 100 (equal) cents (symbol c). In another division, there are 1,000 mills or ten dimes to a dollar; additionally, the term eagle was used in the Coinage Act of 1792 for the denomination of ten dollars, and subsequently was used in naming gold coins. In the second half of the 19th century there were occasional discussions of creating a $50 gold coin, which was referred to as a "Half Union," thus implying a denomination of 1 Union = $100. However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10c, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices. When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes (with the exception of gold, silver and platinum coins valued up to $100 as legal tender, but worth far more as bullion). (Both one-dollar coins and notes are produced today, although the note form is significantly more common.) In the past, paper money was occasionally issued in denominations less than a dollar (fractional currency) and gold coins were issued for circulation up to the value of 20 dollars.
U.S. coins are produced by the United States Mint. U.S. dollar banknotes are printed by the Bureau of Engraving and Printing, and, since 1914, have been issued by the Federal Reserve. The "large-sized notes" issued before 1928 measured 7.42 inches by 3.125 inches; small-sized notes, introduced that year, measure 6.14 inches by 2.61 inches.
Notes above the $100 denomination ceased being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily either in inter-bank transactions or by organized crime; it was the latter usage that prompted President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became less necessary. Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details.
The colloquialism buck is often used to refer to dollars of various nations, including the U.S. dollar. This term, dating to the 18th century, may have originated with the colonial fur trade. Greenback is another nickname originally applied specifically to the 19th century Demand Note dollars created by Abraham Lincoln to finance the costs of the Civil War for the North. The original note was printed in black and green on the back side. It is still used to refer to the U.S. dollar (and not to the dollars of other countries).
Grand, sometimes shortened to simply G, is a common term for the amount of $1,000. The suffix K (from "kilo") is also commonly used to denote this amount (such as "$10K" being pronounced "Ten kay" to mean $10,000). Banknotes' nicknames are usually the same as their values (such as five, twenty, etc.) The $5 bill has been referred to as a "fin" or a "fiver" or a "five-spot", and the $10 bill as a "sawbuck", a "ten-spot", or a "Hamilton", the $20 Bill as a "double sawbuck" or a "Jackson", the $1 bill is sometimes called a "single", the $2 bill a "deuce" or a "Tom" and the $100 bill is nicknamed a "Benjamin", "Benjie", or "Frank" (after Benjamin Franklin, who is honored on the note) or a C-note (C being the Roman numeral for 100) or a Century Note. Occasionally these will be referred to as "dead presidents", although neither Hamilton ($10) nor Franklin ($100) was President. $100 notes are occasionally referred to as 'large' in banking ("twenty large" being $2,000, etc.). The newer designs are sometimes referred to as "Bigface" bills.
In Panama, the translation of buck is palo (lit. stick); a nickname for the balboa (dollar). For example: Esto vale 20 palos ("This is worth 20 bucks").
The symbol $, usually written before the numerical amount, is used for the U.S. dollar (as well as for many other currencies). An example would be "$45", which is read as "forty-five dollars".
The first dollar coins issued by the United States Mint were of the same size and composition as the Spanish dollar and even after the American Revolutionary War the Spanish and U.S. silver dollars circulated side by side in the United States. The coinage of various English colonies also circulated. The lion dollar was popular in the Dutch New Netherland Colony (New York), but the lion dollar also circulated throughout the English colonies during the Seventeenth and early Eighteenth centuries. Examples circulating in the colonies were usually fairly well worn so that the design was not fully distinguishable, thus they were sometimes referred to as "dog dollars. [7]
Private banks issued currency backed by Spanish and U.S. silver dollars, although the federal government did not do so until the American Civil War.
The U.S. dollar was originally specified by the Coinage Act of 1792 to be a unit of weight and not one of money as it is thought of today. The value of gold or silver contained in the dollar was then converted into relative value in the economy for the buying and selling of goods. This allowed the value of things to remain fairly constant over time, except for the influx and outflux of gold and silver in the nation's economy. According to an evaluation of data from the U.S. Department of Treasury, the cost of goods and services remained relatively consistent between 1635 and 1913, around a level of roughly 25 times the buying power of the U.S. dollar in 2006. Substantial devaluing of money has occurred only since the creation of the Federal Reserve Bank and its established system of credit [citation needed].
For articles on the currencies of the colonies and states, see Connecticut pound, Delaware pound, Georgia pound, Maryland pound, Massachusetts pound, New Hampshire pound, New Jersey pound, New York pound, North Carolina pound, Pennsylvania pound, Rhode Island pound, South Carolina pound and Virginia pound.
From 1792, when the Mint Act was passed, the dollar was pegged to silver and gold at 371.25 grains of silver, 24.75 grains of gold (15:1 ratio). 1834 saw a shift in the gold standard to 23.2 grains, followed by a slight adjustment to 23.22 grains in 1838 (16:1 ratio).
In 1862, paper money was issued without the backing of precious metals, due to the Civil War. Silver and gold coins continued to be issued and in 1878 the link between paper money and coins was reinstated.
In 1900, the bimetallic standard was abandoned and the dollar was defined as 23.22 grains of gold, equivalent to setting the price of 1 troy ounce of gold at $20. Silver coins continued to be issued for circulation until 1964, when all silver was removed from dimes and quarters, and the half dollar was reduced to 40% silver. Silver half dollars were last issued for circulation in 1969.
Gold coins were withdrawn in 1933 and the gold standard was changed to 13.71 grains, equivalent to setting the price of 1 troy ounce of gold at $35. This standard persisted until 1968. Between 1968 and 1975, a variety of pegs to gold were put in place. 1975 saw the U.S. dollar freely float on currency markets.
Official United States coins have been produced every year from 1792 to the present. In normal circulation today, there are coins of the denominations 1c ([One] Cent, also referred to as a Penny), 5c (Nickel), 10c (Dime), 25c (Quarter Dollar officially, or simply Quarter in common usage), 50c (Half Dollar; uncommon), and $1 (Dollar; uncommon). Federal Reserve Notes exist as $1, $2 (uncommon), $5, $10, $20, $50, and $100 denominations. Previously to 1934 there were also $500, $1000, $5000, $10000, and 7 $100,000 bills made. According to http://www.highdenomination.com/Gold_Details.asp?id=904 there were 42,000 $100,000 notes printed, all of which were gold certificates and are accounted for. They were never intended for general circulation and are illegal to own.
Dollar coins have not been very popular in the United States.[citation needed] Silver dollars were minted intermittently from 1794 through 1935; a copper-nickel dollar of the same large size, featuring President Dwight D. Eisenhower, was minted from 1971 through 1978. Gold dollars were also minted in the 1800s. The Susan B. Anthony dollar coin was introduced in 1979; these proved to be unpopular because they were often mistaken for quarters, due to their nearly-equal size, their milled edge, and their similar color. Minting of these dollars for circulation was suspended in 1980 (collectors' pieces were struck in 1981), but, as with all past U.S. coins, they remain legal tender. As the number of Anthony dollars held by the Federal Reserve and dispensed primarily to make change in postal and transit vending machines had been virtually exhausted, additional Anthony dollars were struck in 1999. In 2000, a new $1 coin featuring Sacagawea was introduced, which corrected some of the mistakes of the Anthony dollar by having a smooth edge and a gold color, without requiring changes to vending machines that accept the Anthony dollar. However, this new coin has failed to achieve the popularity of the still-existing $1 bill and is rarely used in daily transactions. The failure to simultaneously withdraw the dollar bill and weak publicity efforts have been cited by coin proponents as primary reasons for the failure of the dollar coin to gain popular support.
In February 2007, the US Mint, under the Presidential $1 Coin Act of 2005,[8] introduced a new $1 US Presidential dollar coin. Based on the success of the "50 State Quarters" series, the new coin will feature a rotating portrait of deceased presidents in order of their inaugurations, starting with George Washington, on the obverse side. The reverse side will feature the Statue of Liberty. To allow for larger, more detailed portraits, the traditional inscriptions of "E Pluribus Unum," "In God We Trust," the year of minting or issuance, and the mint mark will be inscribed on the edge of the coin instead of the face. This feature, similar to the edge inscriptions seen on the British L1 coin, is not usually associated with US coin designs. The third required inscription, "Liberty", has been eliminated, with the Statue of Liberty serving as a sufficient replacement. In addition, due to the nature of US coins, this will be the first time there will be circulating US coins of different denominations with the same President featured. (Lincoln/penny, Jefferson/nickel, Franklin D. Roosevelt/dime, Washington/quarter and Kennedy/half dollar.) Another unusual fact about the new $1 coin is Grover Cleveland will have two coins with his portrait issued due to the fact he was the only US President to be elected to two non-consecutive terms.[9]
Early releases of the Washington coin included error coins shipped primarily from the Philadelphia mint to Florida and Tennesee banks. Highly sought after by collectors, and trading for as much as $850 each within a week of discovery, the error coins were identified by the absence of the edge impressions "E PLURIBUS UNUM IN GOD WE TRUST 2007 P". The mint of origin is generally accepted to be mostly Philadelphia, although identifying the source mint is impossible without opening a mint pack also containing marked units. Edge lettering is minted in both orientations with respect to "heads", some amateur collectors were initially duped into buying "upside down lettering error" coins.[10] Some cynics also erroneously point out that the Federal Reserve makes more profit from dollar bills than dollar coins because they wear out in a few years, whereas coins are more permanent. The fallacy of this argument arises because new notes printed to replace worn out notes which have been withdrawn from circulation bring in no net revenue to the government to offset the costs of printing new notes and destroying the old ones. As most vending machines are incapable of making change in banknotes, they commonly accept only $1 bills, though a few will give change in dollar coins. Also, some banks, such as Bank of America, distribute dollar coins only through the same mechanisms as for foreign currency; however, the new Presidential Dollars can be purchased normally.[citation needed]
The United States has minted other coin denominations at various times from 1792 to 1935: half-cent, 2-cent, 3-cent, 20-cent, $2.50, $3.00, $5.00, $10.00, $20.00 and $50.00. Technically, all these coins are still legal tender at face value, though they are far more valuable today for their numismatic value, and for gold and silver coins, their precious metal value. In addition, an experimental $4.00 coin was also minted, but never placed into circulation and is properly considered to be a pattern rather than an actual coin denomination. The $50 coin mentioned was only produced in 1915 for the Panama-Pacific International Exposition (1915) celebrating the opening of the Panama Canal. Only 1,128 were made, 645 of them were octagonal; this remains the only US coin that was not round as well as the largest and heaviest US coin ever.
In the 1936 to present period the only denominations produced for circulation have been the familiar penny, nickel, dime, quarter, half dollar and dollar. (The nickel is the only coin we use today that is essentially unchanged (except in its design) from its original version. Every year since 1866 our nickel has been 75% copper and 25% nickel, except for 4 years during World War II when nickel was needed for the war.) Since 1982 the United States Mint has also produced many different denominations and designs specifically for collectors and speculators. The rest of this paragraph briefly mentions some of these coins. There are silver, gold and platinum bullion coins, called "American Eagles," all of which are legal tender though their use in everyday transactions is non-existent. The reason for this is that they are not intended for use in transactions and thus the face value of the coins is much lower than the worth of the precious metals in them. The American Silver Eagle bullion coin is issued only in the $1 (1 troy ounce) denomination. The American Gold Eagle bullion coin denominations (with gold content) are: $5 (1/10 troy oz), $10 (1/4 troy oz), $25 (1/2 troy oz), and $50 (1 troy oz). The American Platinum Eagle bullion coin denominations (with platinum content) are: $10 (1/10 troy oz), $25 (1/4 troy oz), $50 (1/2 troy oz), and $100 (1 troy oz). The silver coin is 99.9% silver, the gold coins are 91.67% gold (22 karat), and the platinum coins are 99.95% platinum. These coins are not available from the Mint for individuals but must be purchased from authorized dealers. In 2006 The Mint began direct sales to individuals of uncirculated bullion coins with a special finish, and bearing a "W" mintmark. The Mint also produces high quality "proof" coins intended for collectors in the same denominations and bullion content which are available to individuals.
The largest denominations of currency currently printed or minted by the United States are the $100 bill and the $100 troy ounce Platinum Eagle.
The dollar is also used as the standard unit of currency in international markets for commodities such as gold and petroleum (the latter sometimes called petrocurrency). Even foreign companies with little direct presence in the United States, such as the European company Airbus, list and sell their products in dollars, although some argue this is attributed to the aerospace market being dominated by American companies.
At the present time, the U.S. dollar remains the world's foremost reserve currency, primarily held in $100 denominations. The majority of U.S. notes are actually held outside the United States, known as eurodollars (not to be confused with the euro) regardless of the location. Economist Paul Samuelson and others maintain that the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate and the flow of trade to readjust. Milton Friedman at his death believed this to be the case but, more recently, Paul Samuelson has said he now believes that at some stage in the future these pressures will precipitate a run on the U.S. dollar with serious global financial consequences.[13]
Not long after the introduction of the euro (€; ISO 4217 code EUR) as a cash currency in 2002, the dollar began to depreciate steadily in value. After the euro started to rise in value in March 2002, the U.S. trade and budget deficits continued to increase. By Christmas 2004 the dollar had fallen to new lows against all major currencies, especially the euro. The euro rose above $1.36/€ (under 0.74 €/$) for the first time in late December 2004, in sharp contrast to its lows in early 2003 ($0.87/€). In late May and early June, the U.S. dollar, with the advantage of Federal Reserve's policy of raising rates, rose significantly against all major currencies. The U.S. dollar broke almost all expectations in 2005 (some analysts previewed the dollar dropping as far as $1.60 per euro), finished the year with a significant double-digit recovery against the euro and Japanese Yen. However in 2006, the dollar again showed a double digit (11%) loss against the euro. This fall continued and the dollar hit a new record low in 2007 with 1.38 per euro.
Other nations besides the United States use the U.S. dollar as their official currency, a process known as official dollarization. For instance, Panama has been using the dollar alongside the Panamanian balboa as the legal tender since 1904 with a rate of change of 1:1. Ecuador (2000), El Salvador (2001), and East Timor (2000) all adopted the currency independently. The former members of the U.S.-administered Trust Territory of the Pacific Islands, which included Palau, the Federated States of Micronesia, and the Marshall Islands, chose not to issue their own currency after becoming independent, having all used the U.S. dollar since 1944. Two British dependencies also use the U.S. dollar: the British Virgin Islands (1959) and Turks and Caicos Islands (1973).
Some other countries link their currency to U.S. dollar at a fixed exchange rate. The local currencies of Bermuda and the Bahamas can be freely exchanged at a 1:1 ratio for USD. Argentina used a fixed 1:1 exchange rate between the Argentine peso and the U.S. dollar from 1991 until 2002. The currencies of Barbados and Belize are similarly convertible at an approximate 2:1 ratio. In Lebanon, one dollar is equal to 1500 Lebanese pound, and is used interchangeably with local currency as de facto legal tender. The exchange rate between the Hong Kong dollar and the United States dollar has also been linked since 1983 at HK$7.8/USD, and pataca of Macau, pegged to Hong Kong dollar at MOP1.03/HKD, indirectly linked to the U.S. dollar at roughly MOP8/USD. Several oil-producing Gulf Arab countries, including Saudi Arabia, peg their currencies to the dollar, since the dollar is the currency used in the international oil trade.
The renminbi used by the People's Republic of China was informally and controversially pegged to the dollar in the mid-1990s at Y8.28/USD. Likewise, Malaysia pegged its ringgit at RM3.8/USD in 1997. On July 21, 2005 both countries removed their pegs and adopted managed floats against a basket of currencies. Kuwait did likewise on May 20, 2007,[15] and Syria did likewise in July 2007. [citation needed]
In some countries, such as Peru, although USD is not officially regarded as a legal tender, it is commonly accepted. In Cambodia, the USD circulates freely, or even preferred over the Cambodian riel. Amounts of one dollar or more are given in dollars, while the riel serves as a subunit.
On Tuesday, November 28, 2006 U.S. District Judge James Robertson ordered the Treasury Department to change U.S. banknotes to make it easier for blind and visually impaired people to determine their denominations.
Ruling on a lawsuit filed in 2002 by the American Council of the Blind, Judge Robertson accepted the plaintiff's argument that current practice violates Section 504 of the Rehabilitation Act. (Ruling as PDF file) The Treasury is appealing the decision.
The plaintiff's attorney was quoted as saying "It's just frankly unfair that blind people should have to rely on the good faith of people they have never met in knowing whether they've been given the correct change."
Government attorneys estimated that the cost of such a change ranges from $75 million in equipment upgrades and $9 million annual expenses for punching holes in bills to $178 million in one-time charges and $50 million annual expenses for printing bills of varying sizes
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