US Dollar Symbols and Denominations
The Secret Symbols on the Back of the Dollar
The U.S. dollar is the most powerful currency in the world. It's backed by the world's third-largest economy, the United States of America. The strength of the U.S. economy supports the dollar's use as a global currency. The U.S. dollar was first designated the world's currency in the 1944 Bretton Woods Agreement.
The term U.S. dollar refers to a specific denomination and to the U.S. currency in general. It was initially traded as a coin worth its weight in silver or gold. Then it was exchanged as a paper note redeemable in gold. In the 1970s, the gold standard was dropped and the dollar's value was allowed to float. Today, although its value fluctuates, it's in strong demand.
Although the dollar is still represented by currency, its true value is represented by credit. Now more than ever, the U.S. dollar is the real symbol of faith in the power of the U.S. economy.
U.S. Dollar Symbols
The $ symbol itself is derived from a combination of the P and S for Mexican pesos, Spanish piasters, or pieces of eight. This theory is based on the study of old manuscripts. They show that the $ symbol was widely used before the United States started using the dollar in 1785.
There has been a great deal of controversy surrounding the enigmatic symbols on the U.S. dollar. In fact, the Founding Fathers used the symbols to convey strong messages. They have gotten garbled through the years.
The dollar bill shows the Great Shield of the United States, which contains:
- The American eagle flying free, holding 13 arrows of war in its non-dominant left talon and an olive branch for peace in its dominant right talon.
- The banner in its beak reads "E Pluribus Unum" meaning “Out of Many, One.”
- The shield's horizontal blue band represents Congress uniting the original 13 colonies. These are represented by 13 red and white vertical stripes.
- Thirteen stars above the eagle represent a new nation or a constellation in the universe.
- Red stands for valor, white stands for purity, and blue stands for justice.
On the reverse of the Great Seal stands an unfinished pyramid of 13 rows, symbolizing strength and duration. The first row reads "1776" in Roman numerals. The banner below reads "Novus Ordo Seclorum" which means "A New Order of the Ages." This refers to a new form of government or "the beginning of the new American Era." The all-seeing eye of the Divine is bordered by the phrase "Annuit Coeptis." This means "Providence Has Favored Our Undertakings." (Source: “Federal Reserve Bank of Philadelphia,” Symbols on American Money.)
There are 18 denominations in U.S. coins and bills.
U.S. Coins. There are six dollar denominations produced in coins.
- Penny: Its value is one cent. In 2017, the U.S. Mint made 8.426 billion pennies, costing taxpayers $68.8 million. Producing the penny cost 1.82 cents. That's one of the 10 reasons why many feel America should get rid of the penny.
- Nickel: In 1793, the sizes of coins were proportional to the U.S. silver dollar. But this made the five-cent coin too small. In 1866, the Mint made it larger by replacing the silver with nickel. Nickels cost 6.6 cents each to produce and distribute. As a result, they add $21 million to the U.S. debt.
- Dime: It is worth 10 cents. Dimes only cost 3.33 cents to produce.
- Quarter: It is worth 25 cents. It only costs 8.24 cents to make and distribute.
- Half Dollar: It is worth 50 cents.
- Dollar: It is worth 100 cents. But Americans prefer to carry $1 bills. The United States is the only developed country that still uses $1 bills. But they wear out after a year or so. On the other hand, $1 coins can last 40 years.
The United States no longer produces the half-cent coin, the two-cent coin, the three-cent coin, the half-dime coin, or the twenty-cent coin.
U.S. Dollar Bills. There are 12 denominations in bills. Seven are still being printed: $1, $2, $5, $10, $20, $50, and $100. There are five larger denominations that are no longer being printed. But these are in circulation among collectors and are still considered legal tender: $500, $1,000, $5,000, $10,000, and $100,000.
The pie chart below shows how many bills of each denomination of U.S. currency were circulating in 2018. This is the first year that the number of $100 bills was larger than the number of $1 bills. It could be an indication of the growth of the global black market. It could also be because people may as well keep their money in cash because interest rates are so low.
The Federal Reserve, as the nation's central bank, is responsible for making sure that enough currency is in circulation. It commissions the U.S. Treasury Department's Office of Printing and Engraving to print the bills. It also authorizes its Mint Department to cast the coins. Once produced, the currency is shipped to the Federal Reserve banks where members can exchange credit for currency as needed.
The Secretary of the Treasury designs the U.S. currency. No living person's picture can appear. For the most part, only past U.S. Presidents appear. The exceptions are:
- Alexander Hamilton, the first Secretary of the Treasury, on the $10 bill.
- Benjamin Franklin on the $100 bill.
- Salmon P. Chase, Treasury Secretary during the Civil War, on the $10,000 bill. This bill is no longer printed.
Dollar Exchange Rate Conversion
When you travel overseas or conduct any international business, you want to know how much your dollars will buy. To find out, you must convert your dollars to the local currency using an exchange rate.
Traders in the foreign exchange market determine the dollar's value compared to other currencies every moment. It's determined by a wide variety of factors, including the interest rate paid on the dollar, how fast the economy is growing and how large the country's debt-to-GDP ratio is. The euro to dollar exchange rate shows how much euros a dollar can buy and vice-versa.
In addition to exchange rates, the dollar's value is also measured by U.S. Treasury notes and the amount of dollars held in reserves by foreign governments. Countries that export more to America than they import hold an excess of dollars. That's fine with them. They want to sop up the excess supply of dollars and keep its value strong. That makes the value of their currency weaker in comparison, allowing their goods to seem cheaper. In addition to holding dollars, they also buy Treasury notes. It has the same effect of making the dollar stronger.
Exchange rates, Treasury notes, and foreign exchange reserves are three factors by which the value of the U.S. dollar is measured.
The World's Reserve Currency
Part of the reason for the dollar's strength is its role as the world's reserve currency. Most people around the world will accept a $20 bill for payment even in lieu of their own currency. Almost 50% of all international trade is done in dollars. Most oil contracts must be paid in dollars.
The dollar's unique status is due to the Bretton Woods Agreement. In 1944, the victors of World War II agreed they would peg their currency to the dollar which would be backed by a fixed amount of gold. This system fell apart in 1973 when President Nixon ended the dollar's tie to the gold standard by allowing its value to float.