The History of the Dollar

By Freedom Juice


1500s: The “dollar” originates in Bohemia as a one-ounce silver coin known as the “Joachimsthaler.” The uniformity and fineness of these so-called “Thalers” earns them such popularity that similar coins are minted across Europe. The general term for large silver coins becomes “thalers,” which later transliterates into “dollars.”

1520 Joachimsthaler

1700s: The most widely circulated coin in Colonial America is the Spanish “Piece of Eight” or “Spanish Milled Dollar.” By the War of Independence, it is adopted as the de facto monetary unit of the American people.

1768 Spanish Milled Dollar

1775-1779: The Continental Congress emits bills of credit ostensibly redeemable in Spanish Milled Dollars, but far more promises to pay are issued than can be honored. The bills rapidly depreciate and become worthless by 1781. Hence the phrase, “Not worth a Continental.”

1776 Continental Currency

1792: The U.S. “dollar” is officially created by the Coinage Act of 1792 and defined as a fixed weight of silver equal to that of a current Spanish Milled Dollar: 371.25 Troy grains. The Act also creates a fixed legal exchange ratio between silver and gold of 15 to 1 by defining 24.75 grains of pure gold (the market equivalent of one Spanish Milled Dollar) as being equivalent to one dollar.
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First Paper Money in the West

Playing card money was the first paper money introduced in Western civilization. Issued in 1685 by Jacques de Meulles, the intendant of New France, the cards were an emergency measure to pay colonial officials and troops after the annual appropriations failed to arrive from France. At first, the issue of card money was not inflationary: the cards were backed by funds that were supposed to arrive from France, and were fully redeemed when those funds arrived.

1685 Playing Card Money

As might be expected, however, the issue of card money became a regular practice. Confidence in the new money grew, and the population began to save some of the cards instead of redeeming their entire holdings every year. But instead of keeping currency reserves to cover the card money still in circulation, colonial authorities increased their spending. They also started to issue card money in excess of the French government’s annual appropriation. The cards remained useful, but prices started increasing as people realized there were more and more of them in circulation.

In the early 1700s, the War of the Spanish Succession extended to the French and English colonies in North America. Military spending rose continuously and the growth in the supply of card money far outstripped that of the colonial budget. In 1705, the French Crown refused to redeem all of the card money presented to it, which amounted to a devaluation. The colonial authorities responded by creating more, and inflation ran rampant. In 1714, with the colonial economy in disarray, the Crown decided to get rid of the system and buy back the cards at half their face value.


Sources:

A History of Money and Banking in the United States” by Murray Rothbard.

Early History of Paper Money

Jiaozi, or “exchange bills,” generally considered the world’s earliest paper money, originated in Sichuan, China in the mid-990s. Initially issued privately by merchants in exchange for deposits of cash, gold, silver, or silk, jiaozi were subjected to government regulation in 1005 by Zhang Yong, the prefect of Chengdu. The right to issue the notes was restricted to sixteen merchant houses deemed to have sufficient financial resources, and the government imposed no limits on the amount of jiaozi they could issue. The merchant houses invested their cash deposits in real estate, arable lands, and luxury commodities, leaving many of them without the liquidity to redeem the notes they issued. By 1019, jiaozi were being discounted by 20-30 percent and the issue of new bills was halted.
960 Song Dynasty Jiaozi

In 1023, a central Currency Bureau was established with exclusive authority to issue jiaozi. In order to control the amount of paper money in circulation, as well as discourage counterfeiting, the government required that notes be redeemed for new ones every 2 years (at the cost of a 3 percent commission fee), during which time a fixed amount of jiaozi was issued. The currency became highly popular and often traded at a premium over its nominal value.

Following the outbreak of war in the 1040s, however, the government increased the amount of jiaozi it issued to cover military expenditures. By the early 1100s, with defense costs spiraling out of control, the government drastically raised the emission of currency by 20-fold. This increase in the supply of paper money, combined with a growing problem with counterfeiting, incited a steep depreciation of jiaozi, which by 1107 sank to less than 10 percent of their face value.

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Bastiat’s “The Law” – Condensed

Freedom Juice – A glass a day keeps tyranny at bay

Edited by Freedom Juice


We hold from God the gift which, as far as we are concerned, contains all others, Life—physical, intellectual, and moral life.

But life cannot support itself. We have been entrusted with the care of supporting it, of developing it, and of perfecting it. To that end, we have been provided with a wonderful collection of faculties, and plunged into the midst of a variety of elements. It is by the application of our faculties to these elements, that we acquire property.

Personality, liberty, property—this is man.

It is of these three things that it may be said, that they are anterior and superior to all human legislation.

It is not because men have made laws, that personality, liberty, and property exist. It is because personality, liberty, and property exist beforehand, that men have made laws. What, then, is law? It is the collective organization of the individual right to lawful defense.

Every man has the right of defending his person, his liberty, and his property, since these are the three constituent or preserving elements of life; elements, each of which is rendered complete by the others, and cannot be understood without them. For what are our faculties, but the extension of our personality? and what is property, but an extension of our faculties?

If every man has the right of defending, even by force, his person, his liberty, and his property, a number of men have the right to combine together, to extend, to organize a common force, to provide regularly for this defense.

Collective right, then, has its principle, its reason for existing, its lawfulness, in individual right. Thus, as the force of an individual cannot lawfully touch the person, the liberty, or the property of another individual—for the same reason, the common force cannot lawfully be used to destroy the person, the liberty, or the property of individuals or classes. For this perversion would be in contradiction to our premises. Who will dare say that force has been given to us, not to defend our rights, but to annihilate the equal rights of our brethren?

Man can only derive life and enjoyment from perpetual application of his faculties to objects, or from labor. This is the origin of property.

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