Greenback - How The Dollar Came To Rule The World

Episodes

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01From Wampums To Spanish Reals20131202

In the 17th century, the first colonists traded with native Americans using cowrie shells.

The US dollar - or the Greenback as it is often known - is still the world's most important currency today, just as it was for most of the 20th Century. Wherever you go in world, you can be fairly certain that one currency - the American dollar - will be accepted. Yet it was not always so - and indeed, the dollar had a tortuous birth and a chequered history.

In the year that marks the centenary of the US Federal Reserve System, Graham Ingham presents a five-part exploration of how the dollar became established and how it ultimately became a symbol of American identity - a process that took several hundred years, and was no easy task.

Although today it seems obvious that the international importance of the dollar is a reflection of American power, its establishment and development didn't mirror the growth of the US economy at first. Indeed, long before the dollar became America's currency, the 17th century colonists from Britain had been forced to address the basic question of what money was and who should control it.

In this first programme we hear how, when the first colonists arrived in the 17th Century, money was in such short supply they bartered with native Americans using Wampums, or cowrie shells, in order to survive. Later they traded with each other using nails, peas or even dried tobacco - anything that was small and could be carried around. They also used an assortment of foreign coins, but there was always a shortage of money because the British parliament prevented the colonies from raising taxes or issuing currency.

Producer: Ruth Evans

A Ruth Evans production for BBC Radio 4.

02Not Worth A Continental20131203

Throughout the 17th, 18th and 19th Centuries, the British pound - or sterling - was the internationally accepted medium of exchange, based on the gold standard. The American dollar only came into existence in late 18th century because of the desire of the inhabitants of what had already become Britain's most important colony to run their own lives. Indeed, the trigger for Revolution was money - the British Monarch's need for tax revenues from the colonies and the settlers' determination to run their own affairs.

In the second programme of this five-part series, Graham Ingham continues the story of how the dollar became the established currency of the United States - a process that took the best part of 200 years and was no easy task.

In 1785, nine years after the declaration of independence and two years after the end of the Revolutionary War, the leaders of the newly established republic declared that the dollar would be the monetary unit of the United States. At that time they were weren't thinking about global dominance or even about making America a mighty economic power - they were responding to the financial chaos that plagued their new country in the aftermath of the War of Independence. Establishing the dollar as the unit of currency was meant to provide economic and financial stability. The following year, in 1786, the first American mint was established in Philadelphia.

Producer: Ruth Evans

A Ruth Evans production for BBC Radio 4.

03The First And Second Banks20131204

In the chaotic aftermath of the War of Independence, one of the most pressing challenges facing the new nation was the need to establish a monetary system that would facilitate trade - both within the United States and with overseas trading partners. But the Founding Fathers disagreed about how to manage the monetary system.

In the third programme of this five-part series, Graham Ingham traces the history of how the dollar became the established currency of the United States - a process that took the best part of 200 years, and was no easy task.

Alexander Hamilton, the first Secretary of the Treasury, was convinced that a degree of central control over monetary policy, including a central bank, was essential for the future economic and political stability of the union and a prototype central bank was established in Philadelphia in 1791. But opponents of this approach succeeded in ensuring the first bank's charter wasn't renewed.

In 1816, Congress tried again with the second Bank of the United States. But in 1832, President Andrew Jackson vetoed attempts to renew the second bank's charter. The debate between those that wanted a strong federal government and those who supported states' rights continued throughout the 19th Century - and still echoes through Washington today

Producer: Ruth Evans

A Ruth Evans production for BBC Radio 4.

04Greenbacks And Goldbugs20131205

Battles between big finance and small, and between the North and the South, were to plague the US for much of the 19th Century - and in some ways came to a head in the Civil War of 1861 to 1865 and its aftermath.

In the fourth programme of this five-part series, Graham Ingham traces the history of how the dollar became the established currency of the United States - a process that took the best part of 200 years and was no easy task.

Before the Civil War there were thousands of different dollar bills in circulation because any bank could produce them. But this made life easier for counterfeiters and more difficult for traders who couldn't be sure of the worth of the currency they were using. The Civil War made this ad hoc system of currency issues unsustainable and, ultimately, led the federal government to start issuing its own, more widely accepted banknotes.

More Americans died in the four years of the Civil War than in the first and second world wars combined. Although slavery came to be seen as the key issue of the conflict, the underlying cause was the issue of the rights of individual states versus the federal government, which is what led the Southern states to secede from the Union. The federal government needed to finance the war somehow and started to issue banknotes not backed by gold. The notes became known as Greenbacks because of the green ink, used on the reverse of the bills to prevent counterfeiting.

Producer: Ruth Evans

A Ruth Evans production for BBC Radio 4.

05 LASTThe Missing Ingredient20131206

By the late 19th Century the US economy had begun to overtake Britain. So the continued pre-eminence of London as a financial centre, and the pound as the leading global currency, had begun to be something of an anomaly.

In the last programme of the series, considering how the dollar became the established currency of the US, Graham Ingham looks at the circumstances that eventually led to the establishment of the Federal Reserve.

One important factor holding back the dollar was the volatile nature of the American economy, which was plagued by financial panics throughout the 19th Century - 12 of them in the hundred years to 1913. Each time the financial system went into a tailspin, businesses went bust, jobs were lost and growth was harmed. The turning point came with the panic of 1907 when the stock market collapsed and had to be rescued by a consortium of private bankers. The system was no longer sustainable without a central monetary authority and Senator Nelson Aldrich was charged with finding a solution to the problem. The result of the process that involved officials dressed as duck hunters and secret meetings was the proposal to establish the Federal Reserve System, which came into being in December 1913.

Producer: Ruth Evans

A Ruth Evans production for BBC Radio 4.