THE BASICS :((
The United States dollar originally formed from the Spanish dollar (or peso), which was considered as the main coin in the Americas from the 1500's to 1800's. Only around 1792 did the US start minting currency, yet Spanish currency was so commonplace at the time that both pesos and dollars remained legal tender in the United States until the Coinage Act of 1857.
During the formation of US currency, the Coinage Act of 1972 dictated that the US dollar would be similar to the peso in terms of silver count, which would be 375.64 grains* of fine silver per coin, compared to the Spanish's average of 371 grains of fine silver per peso. Eagles were also an important coin minted by the United States. It was decided that it would contain 247.5 grains of fine gold or 270 grains of 22 karat or 91.27% fine gold. They were worth ten dollars back then, which would be about $292.49 today.
The US dollar was received pretty well with foreign payments. It was considered to be on par with the Spanish peso. After 1803, however, the United States had to suspend the production of these coins due to limited resources, and that they failed to stay in domestic circulation. Mexico's independence in 1821 set the standard of 377.1 fine silver grains per peso, which the United States responded with a 378.0 trade dollar coin.
However, in the early days during the American Revolution, a paper currency was used in order to fund the military, known as the "continental currency," or continentals. This form of currency heavily deprecated throughout the war. There were two main causes of this- The 13 separate states simply producing too many continentals, and British economic warfare, in which the British counterfeited the continental on a large scale. States were unable to remove old currency from circulation due to the lack of willpower and funds needed to tax continentals or through selling bonds.
At 1778, they were worth only 1/5ths of their face value. Two years later, in 1780, they were worth around 1/40th of face value.
Due to the rapid collapse of the continental, Congress decided to appoint a man named Robert Morris to the position of "Superintendent of Finance of the United States," which acted as the head of the Department of Finance at that time. Morris helped usher in the first financial institution of the United States- the Bank of North America. This bank was funded by coins loaned by France in 1782, the same year the bank was established. He also financed the last stages of the war through passing notes in his name, along with receiving financial backing by French loans, totaling up to 450 thousand dollars. On top of that, Morris overlooked the first mints of the United States, creating the Nova Constellatio pattern of 1783.
The bank itself issued notes that were able to be converted to gold or silver.
Because of the multiple problems rapid inflation caused, the United States Constitution ruled that states could not coin legal tender through anything except gold and silver. However, congress was exempt from this.
One important thing to note that each of the 13 states had a separate set of currency before the constitution ruled this.
During the formation of US currency, the Coinage Act of 1972 dictated that the US dollar would be similar to the peso in terms of silver count, which would be 375.64 grains* of fine silver per coin, compared to the Spanish's average of 371 grains of fine silver per peso. Eagles were also an important coin minted by the United States. It was decided that it would contain 247.5 grains of fine gold or 270 grains of 22 karat or 91.27% fine gold. They were worth ten dollars back then, which would be about $292.49 today.
The US dollar was received pretty well with foreign payments. It was considered to be on par with the Spanish peso. After 1803, however, the United States had to suspend the production of these coins due to limited resources, and that they failed to stay in domestic circulation. Mexico's independence in 1821 set the standard of 377.1 fine silver grains per peso, which the United States responded with a 378.0 trade dollar coin.
However, in the early days during the American Revolution, a paper currency was used in order to fund the military, known as the "continental currency," or continentals. This form of currency heavily deprecated throughout the war. There were two main causes of this- The 13 separate states simply producing too many continentals, and British economic warfare, in which the British counterfeited the continental on a large scale. States were unable to remove old currency from circulation due to the lack of willpower and funds needed to tax continentals or through selling bonds.
At 1778, they were worth only 1/5ths of their face value. Two years later, in 1780, they were worth around 1/40th of face value.
Due to the rapid collapse of the continental, Congress decided to appoint a man named Robert Morris to the position of "Superintendent of Finance of the United States," which acted as the head of the Department of Finance at that time. Morris helped usher in the first financial institution of the United States- the Bank of North America. This bank was funded by coins loaned by France in 1782, the same year the bank was established. He also financed the last stages of the war through passing notes in his name, along with receiving financial backing by French loans, totaling up to 450 thousand dollars. On top of that, Morris overlooked the first mints of the United States, creating the Nova Constellatio pattern of 1783.
The bank itself issued notes that were able to be converted to gold or silver.
Because of the multiple problems rapid inflation caused, the United States Constitution ruled that states could not coin legal tender through anything except gold and silver. However, congress was exempt from this.
One important thing to note that each of the 13 states had a separate set of currency before the constitution ruled this.