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A More Perfect Dollar · Worth Its Weight

0:02
SPEAKER_01: Thomas Jefferson has appeared on the nickel since 1938.
0:07
SPEAKER_01: For most of that history, his portrait faced left on the obverse while Monticello, his carefully designed Virginia home, appears on the reverse.
0:16
SPEAKER_01: His name is there, his house is there, even his handwriting is there, reproduced in the inscription Liberty.
0:24
SPEAKER_01: But Jefferson's most important contribution to American money is not the portrait on the front of the nickel.
0:31
SPEAKER_01: It's the number on the back.
0:34
SPEAKER_01: Five cents.
0:36
SPEAKER_01: Five one-hundredths of a dollar.
0:39
SPEAKER_01: That probably doesn't sound revolutionary.
0:42
SPEAKER_01: It barely sounds interesting.
0:44
SPEAKER_01: We use dollars and cents so instinctively that the system itself has become almost invisible.
0:50
SPEAKER_01: Ten cents make a dime.
1:00
SPEAKER_01: But there is nothing inevitable about that arrangement.
1:04
SPEAKER_01: America had plenty of other options.
1:07
SPEAKER_01: We could have continued calculating money in pounds, shillings, and pence, even thrown in a guinea, just for kicks and giggles.
1:15
SPEAKER_01: We could have adopted an entirely new unit with an entirely new name.
1:20
SPEAKER_01: Or America's economy could have been built around a monetary unit so small that one Spanish dollar equaled precisely 1,440 of them.
1:32
SPEAKER_01: That last option may sound ridiculous, but it was seriously proposed by Robert Morris, one of the most important and most frequently forgotten figures in America's founding.
1:44
SPEAKER_01: His plan was mathematically brilliant.
1:48
SPEAKER_01: It was also magnificently impractical.
1:52
SPEAKER_01: And yet, hidden within it was the idea that would become the foundation of American money.
1:59
SPEAKER_01: Because before the United States could place its ideals on coins, it first had to decide what American money actually was.
2:09
SPEAKER_01: I'm Caroline Turco, and this is worth its wait.
2:40
SPEAKER_01: The British colonies did business within the broader world of pounds, shillings, and pence.
2:46
SPEAKER_01: Twelve pence made one shilling, and twenty shillings made one pound.
2:50
SPEAKER_01: Already, this is less intuitive than 101010.
2:54
SPEAKER_01: But even those figures give the colonial economy more consistency than it truly possessed.
3:00
SPEAKER_01: British coins were chronically scarce in North America.
3:04
SPEAKER_01: Mercantilist policies encouraged wealth to flow toward Britain, not outward into the colonies.
3:11
SPEAKER_01: So colonists assembled a hodgepodge economy from whatever forms of value were available.
3:17
SPEAKER_01: Tobacco became a form of money in parts of the Chesapeake area.
3:21
SPEAKER_01: Wampum circulated in certain regions, colonies issued their own paper notes, merchants used bills of exchange, and foreign coins, which arrived through trade, legal and otherwise, were eagerly accepted into circulation.
3:36
SPEAKER_01: Spanish silver dollars, the most familiar coins in North America, circulated alongside smaller Spanish reals, Portuguese gold, French ecos, Dutch dollars, and other money from across the Atlantic world.
3:49
SPEAKER_01: Colonial America was a collage of coins and paper money, and merchants were therefore required not only to recognize a coin, but to know its weight, fineness, local rating, and how that rating compared with whatever unit appeared in their account book.
4:06
SPEAKER_01: The math must have been dizzying.
4:09
SPEAKER_01: Compounding that complexity, each colony employed its own money of account.
4:15
SPEAKER_01: A Spanish dollar was worth eight shillings in New York, six in New England, five in Georgia, and an astonishing 32 shillings and sixpence in South Carolina.
4:26
SPEAKER_01: Almanacs printed conversion tables, but financial literacy hinged on barter values, bills of exchange, foreign coin standards, and the varying worth of paper money across all 13 colonies.
4:39
SPEAKER_01: Unfortunately, independence did not simplify the situation.
4:44
SPEAKER_01: The Revolutionary War created an urgent and nearly insatiable demand for money.
4:50
SPEAKER_01: I can't stress this enough.
4:54
SPEAKER_01: The Continental Congress issued paper currency, but it had no independent power to tax, and no reliable stream of revenue with which to redeem those notes.
5:04
SPEAKER_01: As more currency entered circulation, its value collapsed, and the phrase not worth the Continental became shorthand for something nearly worthless.
5:14
SPEAKER_01: By the end of the war, the United States had achieved political independence at the cost of enormous debts that the fledgling nation had no real way to pay.
5:24
SPEAKER_01: Congress depended on the states for funds.
5:27
SPEAKER_01: The states protected their own interests.
5:30
SPEAKER_01: Creditors wanted payments.
5:32
SPEAKER_01: Soldiers wanted their wages, merchants wanted stability, and everyone had a recent reason to distrust paper promises.
5:41
SPEAKER_01: The United States was becoming a country, but its finances still resembled a collection of competing arithmetic problems.
5:49
SPEAKER_01: Something had to change.
5:51
SPEAKER_01: And in 1781, Congress handed that problem to Robert Morris.
5:57
SPEAKER_01: Born in Liverpool, raised partly in Maryland, Morris became one of the most successful merchants in Philadelphia.
6:04
SPEAKER_01: By the time of the Revolution, he was one of the wealthiest men in America.
6:09
SPEAKER_01: And one of only two men to sign the Declaration of Independence, Articles of Confederation, and the United States Constitution.
6:17
SPEAKER_01: The other, incidentally, was Roger Sherman.
6:20
SPEAKER_01: But Morris did not merely sign the documents that created the country.
6:24
SPEAKER_01: He repeatedly put his own fortune and his financial reputation at risk to keep that country alive.
6:32
SPEAKER_01: By 1781, the United States government was effectively broke.
6:38
SPEAKER_01: Its paper currency had collapsed in value.
6:41
SPEAKER_01: Its credit was nearly exhausted, yet the army still needed food, clothing, transportation, ammunition, and wages.
6:48
SPEAKER_01: The government promised payment it could not deliver.
6:52
SPEAKER_01: It was Morris who saved the day and the country.
6:56
SPEAKER_01: He supplied money from his own resources, secured loans through his commercial connections, and issued notes backed not by credit of the United States, but by his personal guarantee.
7:08
SPEAKER_01: At a moment when creditors no longer trusted Congress, many of them still trusted Robert Morris.
7:15
SPEAKER_01: When Washington moved American and French forces toward Yorktown, the campaign required money the government did not have.
7:23
SPEAKER_01: After years of missed wages, some soldiers were reluctant to march without at least partial payment.
7:30
SPEAKER_01: Morris raised the funds, redirected resources, appealed to the state, sought additional French assistance, and pledged his own credit to keep Washington's campaign moving.
7:40
SPEAKER_01: And the financial crisis did not end with the victory at Yorktown.
7:44
SPEAKER_01: America's soldiers had gone months, in some cases years, without receiving everything they were owed.
7:51
SPEAKER_01: The same men who secured the nation's independence now faced the possibility of returning home without the money to support their families.
7:59
SPEAKER_01: Their anger brought the army dangerously close to open unrest.
8:05
SPEAKER_01: Once again, Morris stepped forward.
8:08
SPEAKER_01: He assembled what funds he could and issued hundreds of thousands of dollars bearing his name to provide at least part of the army's overdue pay.
8:17
SPEAKER_01: These obligations rested substantially upon his own credit.
8:21
SPEAKER_01: And all this is why Morris became known as the financier.
8:26
SPEAKER_01: He used his own wealth, borrowed power, and leveraged his reputation to keep the soldiers supplied and to give them some measure of what the government owed them.
8:35
SPEAKER_01: Without Robert Morris, the revolution might not have reached its decisive victory in the way or at the moment that it did.
8:44
SPEAKER_01: It might sound like I have a little thing for him, but don't tell my husband.
8:49
SPEAKER_01: Robert Morris, however, is an unsung hero who truly risked everything for an independent America.
8:56
SPEAKER_01: And I personally am just a little smitten.
8:59
SPEAKER_01: However, Morris understood that no nation could survive indefinitely on the willingness of one wealthy man to make yet another promise.
9:08
SPEAKER_01: The United States needed institutions strong enough to do what Morris had been doing personally.
9:14
SPEAKER_01: In 1782, Congress looked to the man who had bailed them out many times before and directed Morris to prepare a plan for a national mint and coinage.
9:25
SPEAKER_01: Which leads to the obvious question: what should the basic unit of American money be?
9:31
SPEAKER_01: Hmm.
9:32
SPEAKER_01: Retaining the pound might have seemed obvious.
9:35
SPEAKER_01: Americans already used the complicated British system in their accounts, but which pound?
9:41
SPEAKER_01: A pound in New Jersey wasn't equivalent to a pound in North Carolina.
9:45
SPEAKER_01: And preserving the old terminology might preserve the regional divisions as well.
9:51
SPEAKER_01: Nope, nope, a national system was meant to unite, not divide.
9:56
SPEAKER_01: The Spanish dollar offered another possibility.
9:59
SPEAKER_01: It was recognizable, widely circulated, and closely connected to actual commerce.
10:04
SPEAKER_01: But the dollar too had been assigned different values within the various state account systems.
10:11
SPEAKER_01: Choosing one local valuation risked privileging one state's custom over another's.
10:17
SPEAKER_01: Morris wanted a system that could reconcile all of them.
10:22
SPEAKER_01: But, as any politician would tell you, good luck.
10:26
SPEAKER_01: Working with his assistant, Governor Morris, who, despite the shared surname, was no relation, Morris analyzed the different ways the states valued the Spanish dollar, converted those values into pence, and searched for a common mathematical denominator.
10:41
SPEAKER_01: So, for all you math teachers out there, this would be an amazing problem to give your students.
10:48
SPEAKER_01: Reconcile America's colonial money.
10:52
SPEAKER_01: In the end, South Carolina's system proved too difficult to accommodate, but the Morrises did find a common denominator that reconciled the remaining states.
11:03
SPEAKER_01: It was 1,440.
11:07
SPEAKER_01: Which means, under Morris's proposal, the basic American monetary unit would be equal to 1440th of a Spanish dollar.
11:17
SPEAKER_01: He actually proposed this idea, in all sincerity.
11:21
SPEAKER_01: The unit was so small that it could not reasonably be struck as an individual coin.
11:27
SPEAKER_01: But that wasn't considered necessary.
11:30
SPEAKER_01: The teensy tiny unit would function as the foundational measure from which larger denominations could be calculated.
11:37
SPEAKER_01: Morris proposed coins valued at 5, 80, 100, 500, and 1,000 units.
11:44
SPEAKER_01: The 100-unit silver piece became known as the bit.
11:48
SPEAKER_01: The 500-unit piece was the quint, and the 1,000 unit piece, which still didn't equal a single Spanish dollar, mind you, was the mark.
11:57
SPEAKER_01: Meanwhile, the smallest proposed copper coin, worth 5 units, would represent just over one-third of a cent.
12:05
SPEAKER_01: On paper, it was elegant.
12:08
SPEAKER_01: In a shop, it could easily become bewildering.
12:12
SPEAKER_01: But amazingly, in 1783, pattern coins were produced as tangible examples of Morris's proposed system.
12:20
SPEAKER_01: Today, these extraordinary pieces are associated with the name Novo Constellacio from the legend that appears on them, Latin for a new constellation.
12:30
SPEAKER_01: Surrounding an all-seeing eye, 13 stars represent the 13 states joined in a shared American constellation.
12:39
SPEAKER_01: The symbolism was hopeful.
12:41
SPEAKER_01: The financial reality was less so.
12:45
SPEAKER_01: The government under the Articles of Confederation could not compel the states to provide the revenue necessary to establish a mint.
12:53
SPEAKER_01: Congress could approve ambitious plans, but approval did not produce silver, machinery buildings, or dependable public income.
13:02
SPEAKER_01: The mint he imagined never materialized, and Morris resigned as superintendent of finance in 1784, frustrated by a government that assigned him responsibility without giving him sufficient power to act.
13:17
SPEAKER_01: Thus, his proposed units disappeared from American commerce before they had truly entered it.
13:23
SPEAKER_01: However, his central insight survived.
13:26
SPEAKER_01: America's money should be national, and it should be decimal.
13:32
SPEAKER_01: In 1784, Thomas Jefferson studied Morris's proposal as he prepared notes on the establishment of a money unit and of a coinage for the United States.
13:43
SPEAKER_01: The title may have been long-winded, but Jefferson's reasoning was direct.
13:47
SPEAKER_01: He approached architecture, agriculture, education, government, natural history, and even the arrangement of his home as problems that could be studied, organized, and improved.
13:57
SPEAKER_01: Money was no different.
13:59
SPEAKER_01: However, Jefferson tackled the problem from a slightly different premise.
14:04
SPEAKER_01: Morris had asked, what unit could reconcile the greatest number of existing calculations?
14:10
SPEAKER_01: Whereas Jefferson asked, what unit would people actually understand?
14:16
SPEAKER_01: A monetary unit, he argued, needed to meet several practical requirements.
14:21
SPEAKER_01: Its value should be convenient, not so large that ordinary prices required constant fractions, and not so small that ordinary prices required enormous numbers.
14:31
SPEAKER_01: It should also be instinctive.
14:33
SPEAKER_01: A mathematically flawless currency would be of limited use if buyers and sellers alike could not instinctively understand what its basic unit meant.
14:43
SPEAKER_01: Jefferson weighed the available choices.
14:45
SPEAKER_01: The pound shilling-pence system remained awkward.
14:49
SPEAKER_01: Plus it was British, so no.
14:51
SPEAKER_01: Morris's tiny unit would allow extraordinary precision, but at the cost of usability.
14:58
SPEAKER_01: Or, he thought, America could select a coin already circulating across much of the country, the Spanish dollar.
15:06
SPEAKER_01: Jefferson referred to it as, quote, a known coin and the most familiar of all to the people.
15:12
SPEAKER_01: Americans recognized its general size and value.
15:16
SPEAKER_01: Its fractions, the half quarter and eighth dollar, were already an intrinsic part of American commercial life.
15:22
SPEAKER_01: The United States could, therefore, create a new national currency without asking Americans to abandon the coin they trusted most.
15:31
SPEAKER_01: But Jefferson could not forget the mathematical precision of Morris's system.
15:36
SPEAKER_01: Thus, he paired the familiar dollar with Morris's most important innovation, decimal calculation.
15:44
SPEAKER_01: Instead of dividing the dollar into eighths for accounting purposes, or translating it into varying numbers of shillings and pence, the United States could simply divide it into tenths and hundredths.
15:57
SPEAKER_01: A tenth of a dollar would be ten cents, a hundredth would be one cent.
16:01
SPEAKER_01: The relationship remained consistent in every direction.
16:05
SPEAKER_01: Now I can hear some of you rolling your eyes saying, we know, but that's precisely the point.
16:11
SPEAKER_01: It's utterly logical.
16:13
SPEAKER_01: Jefferson suggested a series of silver coins based on a decimalized dollar.
16:18
SPEAKER_01: In the end, not all of his suggested denominations were adopted into the American system, but the underlying organization held fast.
16:26
SPEAKER_01: Every denomination could be expressed within one base 10 system of account.
16:32
SPEAKER_01: And this system had implications far beyond the mint.
16:36
SPEAKER_01: A common decimal currency would make contracts easier to interpret, simplify government accounts, and reduce conversions among state systems.
16:44
SPEAKER_01: It would make arithmetic easier to teach and financial records easier to audit.
16:50
SPEAKER_01: Most importantly, it would give Americans from different states a shared language of value, making decimalized money more than a matter of convenience.
17:01
SPEAKER_01: It was a nation-building tool.
17:04
SPEAKER_01: The United States was desperately trying to persuade 13 states, each protective of its authority, economy, and traditions, to think of themselves as parts of a larger whole.
17:17
SPEAKER_01: A national currency could travel where political arguments could not.
17:22
SPEAKER_01: Every transaction conducted in dollars reinforced the idea that Americans participated in one economy.
17:29
SPEAKER_01: Jefferson's solution succeeded because it united two seemingly contradictory impulses.
17:36
SPEAKER_01: The decimal structure, which looked toward a rational future, and the Spanish dollar, which preserved a familiar past.
17:44
SPEAKER_01: Jefferson's proposal did not instantly produce coins in American pockets.
17:49
SPEAKER_01: The change, pun intended, unfolded over several years and through the work of several American founders.
17:57
SPEAKER_01: In July 1785, the Continental Congress adopted the dollar as the United States' basic monetary unit.
18:04
SPEAKER_01: The following year, Congress developed a decimal coinage structure based on dollars and cents.
18:10
SPEAKER_01: But the institutional weakness that had frustrated Morris remained.
18:17
SPEAKER_01: That changed with the Constitution.
18:20
SPEAKER_01: The Constitution gave Congress the authority to coin money and regulate its value.
18:26
SPEAKER_01: Even more importantly, it empowered Congress to levy and collect taxes, borrow money on the credit of the United States, and regulate commerce among the states and with foreign nations.
18:37
SPEAKER_01: For the first time, the new federal government possessed the financial machinery necessary to support its ambitions.
18:45
SPEAKER_01: It could now create the institution that the Congress of the Confederation had encouraged but failed to sustain.
18:53
SPEAKER_01: And this is where another founding father enters our story, Alexander Hamilton.
19:00
SPEAKER_01: No, I will not be breaking into song, although the temptation is there.
19:03
SPEAKER_01: As the first secretary of the Treasury, Hamilton was asked to prepare a plan for establishing a national mint.
19:09
SPEAKER_01: His 1791 report took the dollar and decimal framework and confronted the physical and economic questions to turn them into coins.
19:18
SPEAKER_01: How much silver should a dollar contain?
19:22
SPEAKER_01: While this sounds like a simple question, it was anything but.
19:26
SPEAKER_01: Morris's calculations produced one answer, Jefferson's another.
19:31
SPEAKER_01: Hamilton returned to the circulating Spanish dollars and found that even the coin America had chosen as its standard was not entirely standard.
19:41
SPEAKER_01: The Spanish dollars in circulation did not all weigh exactly the same, or possess identical fineness.
19:48
SPEAKER_01: There was no easy or perfect answer to the deceptively simple question.
19:53
SPEAKER_01: If the United States defined its dollar using an inaccurate estimate of the Spanish dollar's silver content, its new coins could immediately be undervalued or overvalued, exported, or melted.
20:06
SPEAKER_01: Hamilton studied assays of Spanish dollars to recommend a standard.
20:10
SPEAKER_01: He also considered the relationship between gold and silver, as well as the need for lower-value copper coins.
20:17
SPEAKER_01: He also pondered which denominations the mint should produce.
20:22
SPEAKER_01: Thus, the American system emerged through revision.
20:26
SPEAKER_01: Morris proposed a unified national coinage organized through decimal calculation.
20:30
SPEAKER_01: Jefferson attached that decimal principle to the familiar dollar.
20:34
SPEAKER_01: And Hamilton worked through the metallic standards and institutional machinery necessary to make that dollar real, which all culminated in the Coinage Act of 1792.
20:46
SPEAKER_01: The Act established a mint in Philadelphia and authorized a full range of national coins.
20:52
SPEAKER_01: There would be gold eagles worth$10, half eagles worth five, and quarter eagles at$2.50.
21:00
SPEAKER_01: In silver, America would mint dollars, half dollars, quarter dollars, dimes, and half-dimes, and as this is a podcast, I do want to spell out the word dim.
21:10
SPEAKER_01: D-I-S-M-E, which came from the French word for tenths.
21:15
SPEAKER_01: It would eventually be anglicized or maybe Americanified to the word we now think of, dime.
21:23
SPEAKER_01: Lastly, in copper, the 1792 Coinage Act authorized cents and half cents.
21:30
SPEAKER_01: The Act was a culmination of a debate that lasted roughly a decade.
21:35
SPEAKER_01: A debate about mathematics, metal, commerce, political power, and most importantly, national identity.
21:42
SPEAKER_01: The American monetary system was not inherited, nor was it thrown together.
21:47
SPEAKER_01: It was painstakingly planned, down to the smallest detail.
21:52
SPEAKER_01: But, as the number one economy in the world today, I think it's clear the founder's hard work paid off.
21:59
SPEAKER_01: Which brings us back to Thomas Jefferson's nickel, the half-dean of Hamilton's day.
22:06
SPEAKER_01: Jefferson did not invent the dollar.
22:09
SPEAKER_01: He did not originate the first decimal currency in world history, and he did not act alone.
22:14
SPEAKER_01: His contribution was subtler, and perhaps more consequential.
22:20
SPEAKER_01: He recognized that the most successful monetary system would combine innovation with familiarity.
22:28
SPEAKER_01: The Spanish dollar already possessed the confidence of American users.
22:32
SPEAKER_01: Morris's decimal calculation offered a simpler way to organize value.
22:37
SPEAKER_01: Jefferson melded the two together, and Hamilton helped turn the result into physical money.
22:44
SPEAKER_01: I will conclude today's episode with a final beautiful piece of irony.
22:49
SPEAKER_01: America rejected British pounds, shillings, and pence in favor of decimal money.
22:55
SPEAKER_01: Nearly two centuries later, in 1971, Britain finally did the same, dividing its pound into 100 new pens.
23:05
SPEAKER_01: Which means, in the end, Britain followed America into the decimal age.
23:12
SPEAKER_01: With that, I am Caroline Turko, and please like, subscribe, and join us next time for more history that is truly worth its weight.
23:22
SPEAKER_00: Worth its weight is brought to you by the American Numismatic Association.
23:25
SPEAKER_00: It cannot authenticate, grade, or appraise your coins, addict finds, or suspiciously shiny 1943 Copper Cents, because it is a podcast and therefore lacks opposable thumbs and a loop.
23:33
SPEAKER_00: Any opinions expressed about monarchs, pirates, or long-deceased mint officials should not be taken personally, especially by anyone who has been dead for more than 100 years.
23:40
SPEAKER_00: No historical figures were harm in the making of this episode, though some may have lost a little luster.
23:43
SPEAKER_00: If you find yourself explaining the difference between type one and type two varieties, or casually mentioning the coinage act of 1792 at dinner, there's only one cure.
23:50
SPEAKER_00: Join the ANA at money.org today.