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 as 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. It was then 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 dollar symbol itself ($) is said to be derived from a combination of the P and S that represented the Mexican peso, Spanish piaster, or pieces of eight. This theory is based on the study of old manuscripts, in which it is demonstrated that the dollar ($) symbol was in use before the United States started using it 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 these symbols to convey strong messages; however, they have become garbled over 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.
- The 13 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."
There are six denominations produced in coins:
- Penny: Its value is 1 cent. In 2017, the U.S. Mint made 8.426 billion pennies, costing taxpayers $68.8 million. Producing one penny costs more than it is worth, 1.9 cents. This one of the reasons many feel America should get rid of the penny.
- Nickel: The equivalent of 5 cents. 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 7.6 cents each to produce and distribute. As a result, they add about $21 million to the U.S. debt.
- Dime: Worth 10 cents. Dimes only cost 3.5 cents each to produce.
- Quarter: Worth 25 cent. It only costs 9 cents to make and distribute.
- Half Dollar: Worth 50 cents.
- Dollar: There are 100 cents in a dollar, but Americans prefer to carry $1 bills as they are less heavy and bulky. The United States is the only developed country that still uses $1 bills. One dollar bills wear out so quickly, most counties do not use the equivalent of them any more. Coins are used much more, as they average about 40 years of circulation.
The United States no longer produces the half-cent coin, the two-cent coin, the three-cent coin, the half-dime coin (different from the nickel), or the twenty-cent coin.
U.S. Dollar Bills
There are seven denominations in bills still being printed: $1, $2, $5, $10, $20, $50, and $100. There are five larger denominations that are no longer being printed; however, some of these are in circulation among collectors and are still considered legal tender: the $500, $1,000, $5,000, $10,000 bills. The $100,000 bill was never circulated and is not legally able to be held by collectors or consumers.
The pie chart below shows how many bills of each denomination were circulating in 2018. This is the first year that the number of $100 bills circulating was larger than the number of $1 bills.
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 Bureau of Engraving and Printing 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.
Very few older and current bills have pictures of people other than presidents. The three that were not are Alexander Hamilton, the first Secretary of the Treasury, on the $10 bill; Benjamin Franklin on the $100 bill; and Salmon P. Chase, Treasury Secretary during the Civil War, on the $10,000 bill, which is no longer printed.
Dollar Exchange Rate Conversion
When you travel overseas or conduct any international business, you want to know how much your dollar will buy. To find out, you must convert your currency to the local one 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: the interest rate paid on the dollar, how fast the economy is growing and how large the country's debt-to-GDP ratio is.
In addition to exchange rates, the dollar's value is also measured by U.S. Treasury notes and the number of dollars held in reserves by foreign governments. Countries that export more to America than they import hold an excess of dollars; this helps to increase the value of the dollar by absorbing the excess supply. This also makes the value of their currency weaker in comparison, allowing their goods to seem cheaper. In addition to holding onto dollars, these countries buy Treasury notes as well, which helps make 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 in lieu of their own currency, most oil contracts are in dollars, and 86% of all foreign exchange trade is conducted in dollars.
The dollar's unique status as a world currency is due to the Bretton Woods Agreement, in which the victors of World War II agreed they would peg their currency to the dollar, and tie it to a fixed amount of gold. President Nixon ended the gold standard in 1973, which allowed the dollar to have a floating value rather than a fixed one.
Disconnecting gold from the dollar had the effect of tieing the dollar to the country's economy and the three factors mentioned earlier: exchange rates, Treasury notes, and foreign exchange reserves.
United States Department of the Treasury. "Currency Notes," Accessed Feb. 17, 2020.
Federal Reserve Bank of Philadelphia. "Symbols on American Money." Accessed Feb. 17, 2020.
U.S. Mint. "Circulating Coins." Accessed Feb. 17, 2020.
Coin News. "Penny Costs 1.99 Cents to Make in 2019, Nickel Costs 7.62 Cents; US Mint Realizes $318.3M in Seigniorage." Accessed Feb. 17, 2020.
The United States Mint. "Five Facts Every Coin Kid Should Know." Accessed Feb. 17, 2020.
Bureau of Engraving and Printing, U.S. Treasury. "$100,000 Gold Certificate." Accessed Feb. 17, 2020.
Board of Governors of the Federal Reserve. "Currency in Circulation: Volume." Accessed Feb. 17, 2020.
Federal Reserve Bank of New York. “Is the International Role of the Dollar Changing?" Accessed Feb. 17, 2020.