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When Was the Dollar Created?

When Was the Dollar Created?

When was the dollar created? US currency history extends back to America’s earliest days. Over centuries there have been multiple US currency design changes, culminating in the creation of the green dollar bills and dollar symbol that have become synonymous with money the world over. Multiple events over generations have shaped the creation and evolution of America’s currency - from thirteen separate colonies to the United States that it is today.

During America’s formative years there was a money shortage. This was largely due to its metropoly, England, providing insufficient coinage and not allowing their colonies to produce their own. Colonists’ primary form of exchange was bartering or using Native American currency. In 1690, the Massachusetts Bay Colony was the first to introduce paper notes to fund military missions, with the other colonies introducing paper notes soon after. The paper currency introduced in Massachusetts was the first to be sanctioned by any government in the Western world. In 1776, the Continental Congress introduced America’s first national paper money, known as “Continentals”. Soon after paper notes entered the colonies, criminals began to produce fake notes. After gaining independence in 1776, Great Britain attempted to damage America’s new economy and public confidence by creating counterfeit notes to put into circulation. Far from being a modern problem, counterfeiting was rampant in early America and easy to accomplish. Today, using advanced security features, it is increasingly difficult for fake bills to go undetected.The period during and after the Civil War was one that saw attitudes towards paper currency, and how it was controlled by the Federal government, drastically change.

Paper money was distributed from America’s earliest years, however, people did not trust paper currency, preferring to trade with either gold or silver. Demand notes were issued in 1861 in order to help fund the Civil War. These demand notes were made available in denominations of $5, $10 and $20. The name originated from the fact that these demand notes could be redeemed “on-demand” for coins. Demand notes were also nicknamed “Greenbacks”, referencing their green hue, a term which is still used today. The first $1 note was released in 1862 as Legal Tender Notes. The first portrait on a US bill was that of Salmon P. Chase, the Treasury Secretary during Abraham Lincoln’s time as president. 

In 1862 demand notes were incorporated with features that are still prominent on dollar bills today. These identifiable features include intricate engraving, complex lathe work patterns, inscribed signatures, and a U.S Department of the Treasury seal. These features were created to prevent counterfeiting of notes. Unlike today, there were no counterfeit bill detectors to efficiently and accurately detect fake bills.

Early dollar bills were easily identifiable by their distinctive features. They were the size of modern bank checks, covered with the portrait of Salmon P. Chase and included the unique features mentioned above. The Treasury seal was originally printed in red ink, unlike the green ink that is used today. Thirty-four spikes surrounded the seal, representing the thirty-four states that the Union was comprised of at the time. The phrases found on the bills were a mixture of both English and Latin. The famous “In God We Trust” motto would only be incorporated later as the United States grew older and added alterations to the bills’ design.

The dollar as we know it was first created in 1914 after the establishment of the Federal Reserve Bank. The Federal Reserve Act of 1913 ushered in the creation of the Federal Reserve Bank as a reaction to the growing unreliability and instability caused by a financial system centered around individual banks issuing banknotes

Established in 1862, the BEP began with employees cutting, separating, and signing sheets of United States currency. As bills adopted more security features and grew in demand, the BEP was given more responsibilities in the form of printing and engraving. By 1877, the BEP became the exclusive producer of United States currency and a pivotal player in United States dollar history. Additional responsibilities were given to the organization in 1894 when the BEP took over postage stamp production, cementing its position as the United States’ security printer during periods of war and peace. Although they no longer produce postage stamps nor government obligations, the BEP remains the biggest producer of government security documents. They have facilities in Texas and Washington, D.C.

In 1929, efforts were made to standardize the design of dollar notes. To lower manufacturing costs, the dollar bill was made 30 percent smaller, from 7.375 x 3.125 inches to 6.14 x 2.61 inches. This allowed the BEP to print twelve notes on a sheet, compared to the eight notes it had previously been printing per sheet. Standardization was implemented across all denominations and classes of currency, limiting the variety of designs that enter circulation. It was also introduced to help consumers differentiate more easily between authentic and fake notes.

As the century progressed, new technologies were introduced to prevent forgery by printers and copiers. These features were introduced to US notes in 1990 and were initially used on Series 1990 $100 notes. By the time Series 1993 was introduced, these security features could be found on all denominations, excluding $1 and $2 notes. 

Security threads may be revealed when positioning a note in front of a light source. Each thread has a unique color depending on which denomination is being used. The security thread is also positioned differently on different notes. Since its introduction on dollar bills, the positioning of microscopic words has been periodically adjusted. The minuscule lines and writing often go unnoticed yet play an important role in distinguishing genuine notes from their fake counterparts and deterring possible counterfeiters. Microprinting may be found in many different locations on a note.

From 1996 onwards, there would be regular redesigns of American currency:

  1. Currency Redesign - 1996 was the first noteworthy change in design since the 1920s and incorporated multiple new features to discourage counterfeiting. The $100 note was the first to be redesigned, showing simpler, inscribed borders and more space in the note, allowing the introduction of a watermark on the right-hand side of the Treasury seal. Color-shifting ink was also used on the “100” denomination, causing it to change colors when held at certain angles. The $100 note was issued in 1996, the $50 note in 1997, the $20 note in 1998, and the $10 and $5 notes in 2000.
  2. Redesigned $20 Bill - In 2003, the reworked $20 note included green and peach background hues. The note’s security thread illuminates green when lit up with a UV light. The portrait watermark of Andrew Jackson may be seen from both sides when illuminated by a light source. The 20 in the lower right-hand corner changes color.
  3. Redesigned $50 Bill - In 2004, the reworked $50 note included blue and red background hues. The note’s security thread illuminates yellow when lit up with a UV light. The portrait watermark of Ulysses S. Grant may be seen from both sides when illuminated by a light source. The 50 in the lower right-hand corner changes color.
  4. Redesigned $10 Bill - In 2006, the reworked $10 note included red, orange, and yellow background hues. The note’s security thread illuminates orange when lit up with a UV light. The portrait watermark of Alexander Hamilton may be seen from both sides when illuminated by a light source. The 10 in the lower right-hand corner changes color.
  5. Redesigned $5 Bill - In 2008, the reworked $5 note included gray and light purple background hues. The note’s security thread illuminates blue when lit up with a UV light. There are two watermarks on the bill which may be seen from both sides when illuminated by a light source. A large 5 is placed on the right-hand side of the portrait, while a vertical pattern of three 5s is placed on to the left of the portrait.
  6. Redesigned $100 Bill - In 2013, the $100 bill had its first design change since 1996. New security features include a 3D security braid and a bell located in the inkwell that changes color when the bill is tilted. There is also a portrait watermark of Benjamin Franklin that may be seen from both sides when illuminated by a light source

The birth of the American dollar is just one of many interesting chapters in the country’s history. Borne from necessity, in a time when paper money was regarded with suspicion, the American dollar is now one of the most recognizable currencies in the world and is the world’s reserve currency. From America’s earliest days, counterfeiters attempted to forge notes. However, as notes continue to be redesigned periodically, increasingly-advanced security features are being incorporated, and are complemented by counterfeit detection technology to prevent fake bills from entering circulation.

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