Principles Of Banking BSAD 120
Shakira Harper, Brady Hayden, John Gianlombardo
May 3, 2014
History of American Currency

When we go to store and buy a soda, or a candy bar, what do you use to pay for it? Did you use change? How about dollar bills? Did you use your debit or credit card? Money is a medium of exchange for people to use to trade things of value. When we think of currency, most people will generally just think of paper money, and they are right. However, in today’s world, the term currency extends much further than just paper money; it includes coins, bonds, checks, and even some types of loan papers.
The earliest days of American currency is typically referred to as a history of a mixture of types of money. All the way to the beginning of when the settlers first came over to the States, shells and nails were used to trade for other goods that they may need. This made these shells and nails a kind of coinage. Back in the colonial days, cons were the most common form of exchange. As early as the 1650’s, British coins were being minted on American soil but colonists usually did not trust them. In fact, colonists trusted the Spanish dollar which was referred to as the Real. There were also forms of paper money back in the colonial days. However this paper money was typically traded for coins because of the trust issue.
Currency in America has been an ever evolving thing even since the colonial days. The way currency has been made and the way it is used has changed drastically over the years. Before currency was even adopted, people would barter, which is the exchange of a good or service for another good or service. So a simple example of this would be back of rice traded for a bag of beans. This system fell through when items couldn’t be agreed upon for their worth. Once coin and paper money was introduced, it made it easier for people to compare the cost of items people wanted because the coins were given a certain value. Today, we have all sorts of forms of currency. Let’s take checks for example. Checks are just as much of a form of currency as paper money and coins, same as debit and credit cards. The only difference in forms of currency is how liquid they are. With more and more forms of currency being introduced into the United States, the government has had to make sure that they keep scammers and counterfeit money from entering the market. In an article written by Bill McCleery, he discusses how Inkjet and color printers are making printing fake bills much easier than ever before. According to McCleery, more than $54,000 in fake bills were seized in Indianapolis in January of 2013. The Penalty for counterfeiting is as follows: “Manufacturing counterfeit United States currency or altering Genuine currency to increase its value is a violation of Title 18, Section 471 of the United States Code,” and it goes on to say, “and is punishable by fine or imprisonment for up to 15 years, or both.” (McCleery). This leads to my next point of how the government has changed how the paper currency in the US looks to prevent counterfeiting from happening. They have implemented watermarks, color-shifting inks, fine-line printing patterns, enlarged off-center portraits, and low-vision feature.
We use currency in our lives today for many different reasons and purposes. We use it as an acceptable form of payment for goods and services as its value is back by the United States government. Essentially it is the way we buy things and we need currency in order to accomplish day to day tasks such as buying food, transportation, clothing and shelter. We also use currency for to buy goods that we don’t need and that we want known as luxuries instead, such as the newest cell phone or candy.
Currency helps us in many ways from paying your mortgage to going out to the movies. We need currency to practically do everything throughout the day and it is essential for our survival. The more currency an individual has, the wealthier they are considered to be and they can buy more things that the typical person wouldn’t be able to afford. We acquire currency by performing a service for a company in which they pay us where we then use our wages to buy food and pay for a place to live. Currency can also hurt us as well such as in times of inflation where the value of the currency decreases so the prices of goods and services are more expensive and you need more money to pay for them. The highest rate of inflation over the past decade has been 2007-2008 when inflation was at 4.1% which caused an increase in the price of goods.

There has been talk recently of a new form of currency known as Bitcoin which was first introduced in 2009 which is a virtual currency in which people buy “bitcoins” for use as payment on online websites. With the advances of technology there is great speculation that there will eventually be a cease in the use of physically currency and everything will become electronic. Merchants have an incentive to accept these Bitcoin payments because the transaction fees are actually lower than those of credit cards making them the most attractive form of currency.

The future of our currency depends on the dollar because the Unites States currency is the most popular form of currency backed by international reserves. This is due to the fact that our economy is so large and that our currency and assets are very liquid and can be sold quickly. Nations across Europe have adapted the Euro as a way to make traveling and trade between different European nations easier now due to an internationally accepted form of currency. This has hurt countries such as England which stopped using the Euro after some time because the value of the Pound was actually higher than that of the Euro.

Overall the history of currency is very important and it affects the lives of everyone to various extents. The currency used has changed many times over the years from its early use as being simply metal coins to its introduction of paper money and credit card payments, and now the possibility of only a virtual currency. We need the currency to survive and we need to stay high in value so that inflation does not cause prices of goods and services to increase.

Sources:
McCleery, Bill . "Counterfeiters use digital technology to their benefit." . The Indianapolis Star, 12 Mar. 2013. Web. 30 Apr. 2014. <http://www.usatoday.com/story/news/nation/2013/03/12/counterfeit-money-on-rise/1983067/>. http://www.usinflationcalculator.com/inflation/current-inflation-rates/ http://www.forbes.com/sites/paularosenblum/2014/01/27/bitcoin-the-currency-of-the-future/
http://www.forbes.com/sites/billconerly/2013/10/25/future-of-the-dollar-as-world-reserve-currency/