Why Does the World Put Up With the Dollar?

Schlick’s purpose was not to create currency. The Holy Roman Empire already had a currency, the silver groschen coin and the gold Rhine florin. Rather, Schlick extracted hunks of silver to ship in ingots to Nuremberg, located outside Bohemia and therefore an illegal destination for Bohemian silver. The ingots were to pay off a debt of 34,000 Rhine florins that Schlick borrowed so he could live beyond his means. Schlick never paid off his loan in full, situating the dollar’s origin story in a familiar mire of insolvency.

To pay for his operations, Schlick had to mint coins—crummy little silver pennies mixed with copper for his peasant employees, and big, prettily milled silver coins to pay dividends to his Saxon investors. The big coin, first created in 1520, was named the joachimsthaler after the Bohemian town where it came from, Joachimsthal (“the Valley of Saint Joachim”). The Saxon investors who received joachimsthaler dividends resided in Leipzig, a key center of finance and trade. That enabled the stateless and abundant joachimsthaler to spread far and wide. Within a decade, joachimsthaler were known familiarly as taler, a nickname later corrupted into dollar. “By the middle of the sixteenth century,” writes Greeley, “merchants in Leipzig, Hamburg, Antwerp, Amsterdam, and even Florence and Genoa had come to expect their silver in taler.” In 1566, the Holy Roman Empire, bowing to reality, adopted it as official currency.

Meanwhile, Spaniards (specifically Castilians) were finding fantastic quantities of silver in Mexico, Peru, and Bolivia. They hired Saxons and Bohemians, by now Europe’s recognized silver experts, to mine it and mill it into a deliberate knockoff of the taler. The result was a real de a ocho (piece of eight), made to look like the taler, that came to be known as the Spanish dólar. Spanish dollars were made in even greater quantities than the joachimsthaler and its various other knockoffs minted throughout Europe. Extracted from the bottomless silver mines of the New World, the dólar eclipsed them all. By 1611, the coin was sufficiently familiar to Elizabethan audiences that William Shakespeare could spin wordplay out of it in The Tempest, with Sebastian speaking of “a dollar” and Gonzalo answering, “Dolour comes to him, indeed; you / have spoken truer than you purposed.”