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Vol. 73, No. 5
Posted 1991-09-01

The U.S. Currency System: A Historical Perspective

by Steven H. Russell

Steven Russell uses historical examples to define currency and currency systems, describe the various forms that currency can take and identify the distinctive features of the U.S. currency system. He also provides a short history of the U.S. currency system from its origins through the end of the Civil War. In recent years, Russell notes, there has been considerable interest in alternative currency systems. Many of the alternatives that have been proposed are patterned after systems that existed in the past. Defenders of the modern U.S. currency system, says the author, frequently portray it as the outgrowth of a process of natural selection: As the U.S. economy evolved, less efficient systems were rejected by the public in favor of more efficient ones. This portrayal interprets the very fact of the modern system’s existence as evidence of its superior efficiency. Russell’s account suggests that economic Darwinism has not played a dominant role in the development of the modern U.S. currency system. Historically, U.S. currency systems seem to have risen and fallen for reasons that had more to do with political crises—particularly, major wars—than with efficiency considerations.



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