The U.S. dollar bestrides the world. Acceptable in every country, fervently desired in most, it is a potent symbol of American economic strength and power. But it was not always so. Indeed, it was less than a hundred years ago that the U.S. Congress established the Federal Reserve Bank, the American equivalent of the Bank of England or European Central Bank.
For most of America’s history from the English colonies established on the seaboard fringe of the continent over four hundred years ago to the early twentieth century, a wide and at times bizarre range of different types of money circulated within the United States itself. The monopoly of the dollar there is a comparatively recent event. The U.S. republic was established in 1783, but as late as the mid-nineteenth century, a tremendous array of different types of money circulated in America, with states and banks being free to issue their own notes. As late as 1860, there were some 9,000 different kinds of privately issued dollar bills circulating, around a third of which were counterfeit. On no less than six occasions in the first half of the nineteenth century, Congress passed acts allowing foreign coins-French, Spanish, British to circulate as legal tender.
Two attempts to establish a U.S. central bank, of the kind with which we are all now familiar, failed. Prosaically called the First and Second Banks of the United States, both had short lives, which ended by 1840. America then waited until 1907 (sic 1913) before the Federal Reserve Bank, with us today, was established.