Another day, another dollar
A biography of American money from wampum to bytes
The billions of electronic dollars zipping from computer to computer each day provoke an interesting question: What really is an American dollar? British author and journalist Jason Goodwin takes a crack at the answer with "Greenback," a biography of the buck that traces it from native American wampum to today's almighty bill.
It is a riveting story with a quirky cast of early American characters that includes a few of the Founding Fathers, inventors, counterfeiters, secret agents, bankers, and swindlers, each placing their thumbprint on the young country's currency and monetary system, whether they knew it or not.
We call them bucks, dough, cash, wad, clams, boodle, beans, C-notes, and moola. America's monetary system is a raging river of them - some 22 billion paper bills in denominations from $1 to $10,000. In printed form, they total $666 billion, about a third of which exists outside the US. An additional $6.3 trillion exists electronically.
Indeed, money can be anything - gold, silver, paper bills, digital 1s and 0s. The key is that people agree on what it is. "Paper money was the social contract in motion," Goodwin writes, "a signal of value that presumed upon the trust of a community. Paper money cost nothing to produce; it was just a promise, like America."
A promise works if there is trust. Thus a key to the success or failure of the colonists' early money was the creation of an exchange that promised security. Former Sen. Nelson W. Aldrich pegged it correctly when he called money "stored possibility." The story of American money is the drawing out of opportunity through trust.
The colonists may not have called it an economic experiment, but that's what was under way in 17th-century America. The Spanish silver dollar was the coin of repute for commerce, but gold, silver, and even wampum (tiny shells that native Americans strung together) served as currency.
In 1691, Massachusetts became the first state to issue paper currency. The state's intent was to boost lackluster commerce: The new notes allowed farmers to take money upfront, use it to plant their crops, and then pay up at harvest time.
Colonists also discovered that money could finance war. The Continental Congress issued paper money in 1777 to fund the War of Independence. The new bills, called Continentals, were valued at a Spanish silver dollar. They were a promise of gold and silver that the government would later collect in taxes.
Benjamin Franklin, an advocate of paper currency, printed Continentals using nature designs he took from books in his library. Goodwin writes: "Money, as [Franklin] said, made men associate with one another; it enlivened and quickened, it turned over products and ideas, it encouraged the poor and ensured that the rich spread their wealth about them by buying things and employing people."
President Abraham Lincoln financed the Civil War in 1862 and 1863 by printing about $450 million in notes. They became known as "greenbacks" because of the green dye used on the bill's back was resistant to chemical change.
Gold was the substance behind these paper bills, and gold could not be counterfeited, but paper bills could. The 1839 issue of the Counterfeit Detector and Bank Note List reported 1,395 fake bank-notes that year in denominations from $1 to $500. One determined counterfeiter even ran his print operation out of his prison cell.
But Massachusetts engineer Jacob Perkins was just as determined to find a solution to counterfeiting. The inventor who had once created a ship pump in 27 minutes using a leather boot, a piece of board, and two broom handles created a system of 64 printing dies, each an elaborate work of art by an artist. The single printing plate that resulted when the dies were brought together created a bill that proved counterfeit proof.
Today, of course, the buck - so named because a single buckskin could purchase a dollar's worth of supplies at a store - is slowly vanishing in a metaphysic of e-money. What a good time for Goodwin's book to help us understand the admirable job that paper money has done. As a definitive history, however, "Greenback" comes up a few dollars short. What it lacks is a contextual overview that could have transformed this fascinating collection of historical vignettes into something greater than the sum of its parts.
No matter what form it takes in the future, the dollar will remain a symbol of our promise and prosperity, our industry and image.
• Christopher L. Tyner, a former writer for Investor's Business Daily, lives in Santa Cruz, Calif.