Shakespeare's dollar

In the 250th anniversary-year of America, Brendan Greeley writes the 500-year history of its currency.

“The dollar,” he says, “is both older and more powerful than the United States.”

The story begins in the silver mines of Joachim’s Valley in modern-day Czechia, where Joachimsthaler were first minted in 1520.

The big silver coins — known as thaler (rhymes with dollar) — weren’t meant to be money. They seemed too valuable for that. Instead, they were minted as dividends to pay out to the investors who funded the mine.

Paying investors in ingots (too irregular) or bars (too large) was inconvenient. Sending the silver to the regional Bohenmian mint was inconvenient and expensive, cutting into the mine’s already razor-thin profits.

To avoid all that, the operator of the mine — Count Stephan Schlick — built his own mint, striking coins with an image of St. Joachim on the front and the Lion of Bohemia on the back. At 29.2 grams of nearly pure silver, the coins were far too valuable to pay miners' wages, but ideal for paying investors.

As investors collected their dividends, however, the coins inevitably began circulating as money — big money, used to settle the Early Modern economy’s biggest transactions.

Prized for their purity, standardization, and trustworthiness, thaler became a currency of international trade: “a way to move a lot of value over long distances,” Greeley explains. 

Soon, they were the standard, with mints around Europe compelled to copy them because merchants and bankers wanted nothing else. Close replicas of the thaler included the Danish rigsdaler, Dutch rijksdaalder, Habsburg doler, and Swedish riksdaler.

All of which rhymed with dollar. In the 16th century, a “dollar” referred to the original thaler or any of its near-exact copies.

By the early 17th century, the most successful of these copies — the Spanish dollar, or "pieces of eight" — had become the dominant coin of international trade.

Perhaps nothing better illustrates the value of the Spanish dollar than its journey across the Pacific. Despite abundant supplies of gold at home, China chose to import its primary form of money from mints in the Americas — a year-long round-trip voyage by sea.

Even more telling, the dollar’s fame extended far beyond commerce.

As early as 1611, Shakespeare could reference the dollar in The Tempest without explanation, confident that audiences at The Globe would recognize it as an especially prized form of money.

This, Greeley explains, is why the dollar was adopted in America, too. He cites Thomas Jefferson, who reasoned that the money of the United States had to be familiar to people, and that no money was more familiar than the Spanish copy of the thaler.

Hence, the US dollar.

But this was more than a naming convention.

We naturally think of the US dollar as something invented by the US government. But Greeley’s history suggests the opposite. He documents that today’s dollars are just another iteration of the thaler — a copy of the Spanish dollar that was embedded in the colonial economy well before the colonies became a country.

When Spanish dollars ran short in 1720s Maryland, for example, the colonial government printed its own currency — and called it “dollars.”

They really wanted you to know these were paper versions of the world-famous Spanish coin.

“DOLLAR,” always capitalized, appears on the front of the bill four times. And in case that didn’t get the message across, there’s also an engraved image of a Spanish dollar displayed front and center.

And if that isn’t clear enough, two hands engraved on either side of the image point directly at the coin.

The repeated emphasis was necessary, Greeley explains, because Maryland's paper wasn't meant to be a sovereign currency. It was meant to be something more modest: a stand-in for Spanish dollars whenever the coins ran short (which they usually did).

“The Maryland assembly took the dollar as it found it,” Greeley writes, “and adapted to it as best it could.”

A few decades later, the US Congress did the same, adopting the dollar it found rather than inventing one of its own.

That, in miniature, is Greeley's central argument.

Part one of his book, The Almighty Dollar: 500 Years of the World’s Most Powerful Currency, is largely the story of why the US modeled its currency on a Spanish coin made from Mexican silver with a German name.

He makes a convincing case for the historical continuity of today’s dollar: the American currency wasn’t simply invented by America, Greeley writes. Instead, “the dollar had to become American.”

Part two of Greeley’s book is about that becoming: "How people stopped thinking of a dollar as a big silver coin and started thinking of it as either a piece of paper or as a deposit marked down in a bank ledger."

That is a story I’ll save for another newsletter (next week, maybe). 

But here’s the TL;DR: Shakespeare's dollar is our dollar.

— Byron Gilliam