The US dollar
Money for business
The US dollar is the currency - the metal coins or paper money used to buy things - of the United States. Dollars are also used all around the world for business deals.
The Spanish dollar was created in 1497. Before the US dollar, the Spanish dollar was used for trade between countries. The modern Chinese yuan is based on this currency. The Spanish called their dollar the peso. The peso is still the currency in many countries, such as Mexico and the Philippines.
In 1792, the US government decided it was time to create its own currency. The first US dollars were made of silver. They looked much like Spanish dollars, and for more than 50 years America used both US and Spanish dollars.
From eagles to paper
When the US dollar was created in 1792, the highest value coin was called an 'eagle'. It was worth US$10. The eagle contained 17 grams of gold. Most smaller coins were made of 90 per cent silver.
Paper money was not introduced in the US until 1862. One problem with paper money was it was easy to counterfeit, or make fake copies.
In time, people came to see the paper notes as worthless. Gold and silver coins remained the popular type of money. Even today, all the coins ever made can still be exchanged for modern money.
The greenback
Because US dollars have almost always been printed using green ink, they were nicknamed 'greenbacks'. At first, the US government printed notes with many different values, or denominations.
Today, the highest denomination is a US$100 note. But in the past, there was even a US$100,000 note. Today, that note would be worth more than US$1.5 million.
From 1969, these sort of high value notes have no longer been in official use. Too many of them were being used by criminals. Some of these notes do still exist - although it is mainly collectors who want them.
What's it worth?
For a long time, countries could only create new notes, or new money, when they owned gold of the same value. This system is known as the gold standard.
China was the first country to use the gold standard, more than 1,000 years ago. The US officially began to use it in 1900.
Between the end of the second world war and 1971, all the world's currencies were based on the US dollar. In turn, the dollar was based on the value of gold.
Today, most countries, especially China, keep a lot of US dollars. But no one is sure what the value of the US dollar is now based on. Some economists worry that if everyone started selling their dollars, we would have a worse financial crisis than the one that started last year.
now do this
1 Before the US dollar became the world's most important currency, people used the ...
a. Chinese yuan
b. peso
c. Spanish dollar
2 The US issued its own currency for the first time in ...
a. 1792
b. 1893
c. 1900
3 The first country to back paper money with gold was ...
a. Spain
b. China
c. United States
Answers:
December 9
