How the U.S. Dollar Began

THE SPANISH MILLED DOLLAR (8 REALES COIN) WAS THE BASIS FOR THE U.S. SILVER DOLLAR

- GREG REYNOLDS

Official U.S. silver coins were first minted in 1794, and the new coinage system of the United States revolved around the silver dollar, as this was the base unit. The U.S. silver dollar, in turn, was based upon the Spanish milled dollar (8 reales coin).

Before the 20th century, the main unit of money in a society was generally defined by a physical amount of gold or silver. Throughout history, however, an amount of gold or silver that was determined by a government to define a unit of money was subject to change for political or economic reasons.

To understand the U.S. dollar in the present, it may be necessary to have some understanding of how it came about. To think about the history of the dollar and U.S. coinage in the past, it helps to refer to grains.

For centuries, grains were used as a measure of weight for many things, including gold and silver. 480 grains equals one troy ounce and 5.500 grains equals one troy pound. 7.000 grains equals one standard or regular pound. Original amounts in grains tend to be clearer and more straightforward then their equivalents in troy ounces, which are usually awkward approximations.

Amounts in grains can easily be understood in troy ounces if it is remembered that 480 grains equals one troy ounce, but a conversion from an historically noteworthy number of grains to troy ounce may include many digits to the right of a decimal point. For example, before the Coinage Act of 1853, a dime was mandated to have 37.125 grains of silver, a number that seems sensible and can be remembered. The conversion, however, works out to 0.07734375 troy ounce, a number that is awkward and difficult to remember. Ten times this number, 0.7734375 troy ounce, is the amount of silver in a U.S. silver dollar, which is better remembered as 371.25 grains.