The dollar has taken a beating from many observers, as they loudly proclaim the future irrelevance of this storied currency, and as more robust and emerging economies jockey to replace its status in the world economy. Here are seven facts about the dollar that might surprise you. (For further reading, see Forex Articles and Insight.)
TUTORIAL: Introduction To The Forex Market
Many investors decry the debasement of the U.S. dollar today, making it especially difficult to believe that the United States didn't even issue paper currency for the first time until 1861 as the government sought to finance the cost of the Civil War. These first "demand notes" were issued to the public in August, 1861, and become known as greenbacks due to the green ink used by the U.S. Treasury. From that inauspicious beginning 150 years ago, the Bureau of Engraving and Printing produced paper currency with a face value of $974 million every day in the latest fiscal year.
2. Change Anyone?
The highest U.S. currency denomination ever printed was the $100,000 gold certificate, series 1934, which has a portrait of Woodrow Wilson on the front. The $100,000 gold certificate was printed for only a three-week time period in 1934 and 1935, and was never circulated among the general public. The note was used to settle transactions between various Federal Reserve Bank branches.
Other high-value U.S. currency notes that were printed over the last century include the $10,000, $5,000, $1,000 and $500 bills. These notes were officially discontinued in 1969 by the government, but are still in circulation, although rarely seen. If you do stumble across one of these bills, they may be worth more than the face value to a private collector.
3. Gold and Silver Certificates
Silver certificates of various denominations were first issued in 1878, and were redeemable for silver dollars until Congress changed the law in the 1960s. The last date that a bearer could exchange a silver certificate for silver dollars was June 24, 1968.
Gold certificates were first issued by the government in 1865, and were redeemable for gold bullion until the early 1930s. An executive order issued by President Roosevelt in 1934 and the passage of the Gold Reserve Act of 1934 made it illegal for U.S. citizens to hold gold certificates, coin or bullion, and required private holders of gold certificates to turn them into the government by January 17, 1934. This restriction on private ownership of gold certificates lasted until April, 1964.
Gold and silver certificates are still in circulation, are legal tender and can be spent like regular currency. However, like the high denomination noted discussed earlier, these notes may have a higher value to a collector. (Add some sparkle to your portfolio by getting in on this classic commodity. Read Getting Into The Gold Market.)
4. Famous Women
The only woman ever to appear on U.S paper currency was Martha Washington, the wife of President George Washington. She appeared on two issues of silver certificates printed in 1886 and 1891, and with her husband on a note issued in 1896. Pocahontas appeared on paper currency from the late 1800s, but as part of a group of other figures in a painting, entitled "Introduction of the Old World to the New World."
5. Counterfeit or Reproduction
Making counterfeit copies of U.S. currency is considered counterfeiting, as per the Counterfeit Detection Act of 1992. Creating counterfeit currencies is subject to a maximum fine of $5,000, 15 years of imprisonment, or both.
6. Mutilated Currency
Did you find a cash hoard buried in your backyard, only to find that it is a mass pulp of muddy green paper? There might be hope yet, as the government has a procedure to exchange new currency for bills that are in a mutilated condition. The general policy is that more than 50% of the currency note must be present to qualify for an exchange, unless the holder presents supporting evidence that the missing portions have been totally destroyed. Holders of mutilated currency can make a claim with the Bureau of Engraving and Printing, which handles approximately 30,000 claims per year.
7. Legal Tender?
Despite the familiar phrase "this note is legal tender for all debts, public and private" on the front of U.S. currency, there is currently no federal law that requires a business to accept currency in payment for goods or services. The Coinage Act of 1965 states that coin and currency as defined in the statute can be legally offered as payment for goods and services, but says nothing about a creditor accepting this payment.
The Bottom Line
Although the dollar is under assault by economists and rival currencies, there is still much that we don't know about this ubiquitous currency that is still used all over the globe. (Stick to your budget every day with these 15 simple tips. Check out Squeeze A Greenback Out Of Your Latte.)