The Evolution Of The Dollar BillMarch 17, 2021
The financial situation in our country is a living thing, fluctuating and changing throughout periods of time. This constant evolution has physically manifested itself within the changing images of our currency, be it in the physical form or the more recent digital developments.
The US is home to the largest economy in the world and while the constitution initially stated only coins were to be used as currency, paper money began to circulate within the country as early as February of 1690.
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Paper currency has been issued in a wide variety of sums and styles, ranging from the long-forgotten $10,000 dollar bill to the modern-day four-leaf clover of currency, the $2 bill.
But none are more iconic and as frequently traded as the $1 bill.
Birth Of A Currency
Currency in the colonies was first issued as a means of financing the military operations during King William’s War in which North America first assumed the responsibility for their own defenses.
Also labeled the Nine Years’ War, this conflict-stricken circumstance resulted in some original ideas for currency coming out of Massachusetts.
Despite the unification of Great Britain’s pound, America initially created 13 unique currencies for each of the colonies by the time of the American Revolution.
The amount and type of the currency varied between the colonies and included the Spanish reales, the British shillings, pounds, and pence.
This unique approach was quickly met with pushback from Great Britain when in 1763, they deemed the colonial currency illegal.
Founding father and polymath Benjamin Franklin became the first major proponent of paper currency throughout the colonies. In 1728, he started printing the first paper currency in New Jersey, Pennsylvania, and later Delaware.
Two years later, Franklin proposed to create a universal paper currency.
Tasked with finding a new way to tax the colonists to finance the Seven Years’ War, he proposed that the British operate the colonial land bank which would serve as a system for accruing interest through loans.
With heated tensions over the recent Stamp Act, Franklin had to apply a unique approach and eventually came up with the idea of creating a new legal tender that would not rely on commodities such as silver and gold, resulting in a new form of paper currency with its own distinct value.
His contributions to the paper currency would continue to be praised, eventually resulting in his face on the $100 dollar bill in 1914 after Congress passed the Federal Reserve act.
Franklin’s new concept for the bill carried its way into 1775 when the Continental Congress needed to finance the Revolutionary War. At this moment, the country began issuing notes called Continentals, resulting in the first official image of the $1 bill.
In 1792, regulation increased for coin-based currency with the Constitution proposing specific rules for foreign and domestic coins. But paper-backed bills were not a part of that regulation, allowing for banks to produce their own notes, resulting in several missteps related to inflation.
It wasn’t until 1861, at the start of the Civil War, that Congress issued paper currency known as demand notes, colloquially called “greenbacks”.
Debut Of The Green
Originally issued in denominations of $5, $10, and $20, Abraham Lincoln issued the first $1 bill a year later in 1862 adorned with the face of then-US Secretary of the Treasury Salmon P. Chase.
In 1869, the $1 bill began to resemble our now iconic currency when the US Bureau of Engraving and Printing took over production of US currency and placed founding father and the first President George Washington on the front of the bill.
Featuring a painting by Gilbert Stuart in 1796, this iconic photo of Washington has become known as the Athenaeum Portrait and is still on display at the National Portrait Gallery in Washington DC.
In 1874, the blue and green colors were removed from the front of the bill and in 1880, red floral designs were added to the front. A severe color change came shortly after in 1886 when the first $1 bill silver certificates were added into circulation.
These notes featured the face of Martha Washington on the front who became the second woman to be featured on US paper currency, the first being Pocahontas in 1865 who appeared on the back of the $20 bill with an image depicting her baptism.
The silver certificates began to drift from official-appearing designs and styles into more artistic territory. In 1896, several $1 silver certificates began to feature elaborate portraits of emotional scenes and landscapes, making them a highly prized collectors item with current values up to $7,000.
The year 1907 in the United States was filled with panic, chaos, and tumultuous change.
The Panic of 1907, also known as the Knickerbocker Crisis, was the year of the first financial crisis of the 20th century. During a three-week period in mid-October, the New York Stock Exchange fell 50% from its previous years peak.
This dramatic shift resulted in a serious economic recession, resulting in numerous runs on banks and trust companies.
As a preventative measure, several American financiers including J.P. Morgan, E. H. Harriman, Henry Clay Frick, and other Wall Street investors chose to pool over $25,000,000 to invest in the New York Stock Exchange, essentially bailing out the United States during their economic collapse.
This decision resulted in the establishment of the Federal Reserve System in 1913 which led to central control of the monetary system, allowing the United States to print money, maximize employment, stabilize pricing, and moderate long-term interest rates.
The repercussions of the creation of the Federal Reserve Act resulted in several financial changes including a new image on the $1 bill.
More Like Modern Times
The ultimate goal of this new system was to designate a new national currency, preventing banking panics and resulting in an increase in the use of the dollar worldwide.
During this era, the $1 bill began to resemble the one we are still familiar with, in color, image, and value, but with a larger size.
In the 1920’s, the Federal Reserve introduced a smaller version of the $1 bill to cut costs which closer resembles our current paper currency.
With no official government seal or symbol on the back of this dollar, it has gone on to be referred to by collectors as a “funnybacks”.
The Great Seal, known for its iconic pyramid and eagle, was first featured on the $1 bill in 1935 when Henry A. Wallace made the suggestion to Franklin D. Roosevelt.
While the motto “In God We Trust” was first minted on US coins during the Civil War, it made its first appearance on the $1 bill in 1957.
And finally, in 1963, the Treasury Department began issuing Federal Reserve notes in $1 denominations that are almost identical to the ones we still use today.
That same year, the government rendered $1 silver certificates as obsolete, officially replacing the currency. In 1969, the $1 bill began using key phrases in English instead of Latin. Since then, there have also been several small changes since 1969 to help detect counterfeit money. This includes enhanced color-shifting ink, a larger head in 1996 to better spot details, and additional color in 2004 to detect any small discrepancies.
Between the years of 1991 and 1995, the Bureau of Engraving and Printing also installed a web press similar to those that print newspapers, which became a more cost-effective and time-efficient method for printing the $1 bill.
Today, there is an estimated 11.7 billion $1 bills in circulation, the most of any other paper currency in the United States. It is also estimated that after being printed or minted, each $1 bill is passed between people and businesses about 110 times per year, making for an incredible story and journey for each $1 bill.
So the next time you hold a $1 bill in your hand, remember its history, its cultural significance, and imagine the journey it has already taken from the printing press to being held within your hands.
Its unique story and culture might give it more value than just its transactional list price.
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Sources: Insider, LoveMoney, OneDollarBill, Investopedia, FRBSF, MountVernon, Smithsonian, Washington Post, VisualCapitalist, MoneyFactory, Treasury.gov, CoinWorld, FederalReserveHistory, The Atlantic, WorldAtlas, History, ConstitutionCenter
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