American Currency

One dollar and eighty-seven cents. That was all. And sixty cents of it was in pennies.

—The Gift of the Magi, O. Henry^[1]

The spread of American media and American influence has made American currency at least somewhat well-known in many places.

Coins currently in circulation (excluding special coins made only for collectors):

• Cents, featuring the head of Abraham Lincoln. Represented with the symbol '¢'. 100¢ make up a dollar. The coins themselves are often called pennies (never "pence"), but prices are still in "cents". These used to be made of solid copper (with a few years of steel cent coins being manufactured during World War II) but increasing copper prices (and pressure from the zinc industry) resulted in a change to zinc with copper plating in 1982. They are worth less than the cost it takes to manufacture them -- the mint spends 1.5¢ to make 1 penny. Most vending machines won't accept them, but they are handy in making change; because the sales tax in the United States is added to the sale price, totals come out uneven more often than not. In any case, there's no real sign of them going away.
• Nickels (5¢), showing Thomas Jefferson. Despite what its name indicates, the coin is only about 25% nickel.
• Dimes (10¢), with Franklin Roosevelt. The smallest coin in circulation. Contained silver up to 1964. Also, it is the lowest denomination to have a scalloped edge; the edge of the dime, quarter and half dollar have grooves; all the other coins (except the Susan B. Anthony dollar) are flat-edged.
• Quarters (25¢), with George Washington. Like the dime, contained silver up to 1964. Many prices on coin-operated devices are in quarters, and if there's one coin a device is guaranteed to accept, it's the quarter.
• Half-dollars (50¢). Has the head of John F. Kennedy. Contained silver up to 1970. Generally not accepted by vending machines and rarely seen in circulation. Some small businesses will give you them in change as a gimmick.
• Dollar coins ($1.00). The designs for these coins vary widely, and some are more well-received than others.
  • The first design was composed of silver, and was in general circulation up to the 1930s.
  • Then not until the Eisenhower dollar in the 1970s (not silver).
  • The modern size of dollar coin was introduced with the Susan B. Anthony coin in 1979, which was reviled for looking almost exactly like a quarter. The other mistake with the Susan B. was that the edge was scalloped, exactly the way a quarter is, making it virtually impossible to tell the difference between this dollar coin and the quarter unless you looked at it.
  • The current Sacajawea dollar coins are gold-colored and easier to distinguish because the edge is flat instead of scalloped, but remain unpopular, appearing mostly in post office and subway vending machines.
  • There is also an ongoing series of collectible dollar coins with portraits of U.S. presidents.

As pointed out with the page quote, there have been some even odder coins, such as 2 and 3 cent pieces, as well as mill (1/1000th of a dollar) tokens representing fractions of a cent. Of course, none have been made or used for years.

Until 1999, all U.S. quarters had an eagle on the back, except for the 1976 quarter, whose reverse features a Revolutionary War drummer. From 1999 to 2008, commemorative quarters were issued for the 50 states, followed by the District of Columbia and five U.S. territories. After this came a series of quarters commemorating U.S. national parks. These were put into circulation by the U.S. partially to encourage a new generation of coin collectors, and so far have been exceedingly popular.

By law, all US coins must bear the inscriptions "Liberty" and "In God We Trust." While the phrase "In God We Trust" has appeared on coins since the 1860s, only in 1957 was it introduced for paper banknotes.

Banknotes

The technical term for US paper currency is Federal Reserve Notes. We could get into great detail about how banknotes have changed in design. Most of this will be useless information to you. The dominant color on them is green, as it long has been, but shades of color were added when they were redesigned circa 2005 (except for the $1 and $2 bill). Green was selected because in the nineteenth century green was a hard color to reproduce. Banknotes contain anti-counterfeiting strips which, of course, led to a conspiracy theory on The X-Files. Most of them feature the heads of dead presidents and the phrase "Dead Presidents" is sometimes used to refer to money.

• 1 dollar (George Washington again); The most common bank note. Often referred to as a "single", a "one", or simply a "buck".
• 2 dollars (Thomas Jefferson again): The $2 bill is a common butt of jokes and is seldom seen in the wild, but is still printed in small amounts and can be requested at banks. Stories of merchants believing they are fake turn up every so often, with varying degrees of dubiousness. Nicknames include "deuce", "Tom", and "T.J."
• 5 dollars (Abraham Lincoln again). Currently a grayish-green bill becoming a purple color in the center. Nicknames include "fin", "fiver" (yes, the same nickname used for a British five-pound note), and "five-spot".
• 10 dollars (Alexander Hamilton; not a president, but a secretary of the Treasury). Current issue is a lovely shade of orange fading to yellow in the center. Referred to as a "sawbuck", "ten-spot", or "Hamilton".
• 20 dollars (Andrew Jackson). Currently the only denomination dispensed by the vast majority of cash machines. This leads to it getting the nickname of "Yuppie food stamps" since splitting a bill at a restaurant invariably leads to the diners paying with a pile of twenties. Current bills have a faint green edge becoming orange-yellow in the center. Other nicknames are "double sawbuck", "dub", and "Jackson".
• 50 dollars (Ulysses S. Grant). Current issue has a stylized image of the U.S. flag on it, in appropriate colors (though the white looks more buff). Nicknamed a Grant, of course.
• 100 dollars (Benjamin Franklin; not a president). The highest denomination in circulation. Remained green the longest out of all the denominations higher than 2 dollars, but the current issue has a teal-blue edge that becomes white in the center. It's all about the Benjamins, baby. Or the Benjis. Or the Franklins. Or the C-notes.
• Larger bills existed but have not been produced since the 1930s. They were essentially used for interbank transactions and settlement of debts owed by banks, but with the use of the Federal Reserve, wire transfers and computer transaction matching they're generally not needed any more. They're graced by such luminaries as Grover Cleveland and Obscurity Hall-of-Famer Salmon P. Chase.

It's worth noting that in the past, certain types of notes were certificates representing a specific amount of specie held by the government, and in theory could be converted into the amount of precious metal denoted on the bill. The US long practiced bimetallism, with smaller denominations being backed in silver and larger ones backed in gold. (This practice was bitterly fought over - William Jennings Bryan's famous "Cross of Gold" speech was a passionate defense of bimetallism against pushes for a gold-only currency.) At a certain point, the value of silver was left to float relative to the value of gold, making gold the sole standard of value for the currency (the gold standard). Of course, the US has since left the gold standard, and today all US currency is fiat currency - backed not by specie, but the credit of the US government. Coins and banknotes of the US dollar are legal tender in the US, which, contrary to popular belief, does not simply mean that you can use them to pay for things--rather, it means that if someone under the jurisdiction of the US refuses to take them in payment, you can actually sue them for doing that. The law is funny that way, but to be fair, it's that way in every country in respect to the national currency.

The central bank of the United States is known as the Federal Reserve, or "Fed" for short. The Fed's role is to monitor the national economy and to supply, via loans to private banks, money across th US. Basically when a Fed branch determines that the cash supply is too low it will place an order with the US Mint or US Bureau of Engraving and Printing then loan the money at an interest rate to private banks who then loan it to businesses and people. The Fed has 12 branches in various regions across the country. The most notable of the 12 is the New York branch, which serves in a "first among equals" role within the Fed - when the Fed decides to shift monetary policy, it does so through the New York branch.

Since World War II the US dollar has been the world's reserve currency. This means that the currencies of other nations tend to fix their value in relation to the dollar. This developed out of the Bretton Woods System--after World War II, all the European economies were shot to hell, and Western Europe collectively decided that for the sake of economic stability, they would all peg their currencies to the dollar, and the dollar would be on the gold standard (i.e. pegged to gold). Eastern Europe didn't participate, having non-convertible currencies anyway (for various reasons). The dollar went off the gold standard in 1971 after changes in the world economy made this system untenable, and European currencies gradually decided to float afterward.

1. ↑ published 1906, the last 2¢ pieces were issued in 1873 and the last 3¢ pieces in 1889; it's conceivable that some were still circulating