"Shave and a haircut, two bits." Ah those were the days! We know that a quarter is also known as "two bits," and that when a shave and a haircut was a quarter, it was back in the 1930's and earlier. Actually, that shave and a haircut for two bits, was the common price for over a hundred years! See what inflating does for the money? Now, a shave and a haircut is $25 or a lot more in an expensive salon. But, where in the world did that phrase, "two bits" come from? Funny you should ask, but since you did, I'll tell you.
It all has Spanish origins, going back at least to the Spanish currency reform in 1497, which coincided with the Columbus expedition. Spain conquered Mexico, and Mexico had, and still does have, huge amounts of silver. The Spanish mixed with the Mexican Indians, (Aztecs), and the skin hue gradually became lighter. After the currency reform, the Spanish began making the "dolar" or "peso," meaning literally "weight." The peso had a value of eight "reales," and the peso was roughly the equivalent of the German 'thaler.' This became "dollar" in French and English. Got it?
The peso, or dollar, then had eight reales in it, and they became known as "pieces of eight." As in pirate movies, huh? These reales were often cut into quarters or "eight bits," to make change for small purchases or transactions. "Two bits" then, became a quarter U.S. Before the American Revolution, due to English fiscal policies, a chronic shortage of English currency was felt in the colonies, and the colonists began conducting trade in Spanish dollars. The Spanish dollars, "bits," reales, and pieces of eight, were silver coins.
While the pieces of eight, bits, and reales were silver, there were also gold coins used in trade, and they were known as doubloons. The 'doubloon' had its silver ratio or equivalent. One reale was then one eighth of a piece of eight, or 1/128 of a doubloon. Eight reales, was one Peso, or one thaler, or a sixteenth of a doubloon. The ratio of silver to gold, even in Spanish times, over 500 years ago, was 16 to 1. The gold coins, or "doubloons' were valued at sixteen ounces of silver, as in the reales, pieces of eight, or bits. A doubloon was one ounce of gold, and a piece of eight, peso, or thaler was one ounce of silver.
Ever wonder why the coins weren't round? The money was minted by hand. The gold and silver were melted down and then poured into thin strips. As the metal strips cooled, they were beaten into the desired thickness by hand. The coins, or what we today would call a "blank," were cut to an approximate size and then placed in a coin die. The minter would then strike the die with a hammer, and the faces of the coin were then imbedded in the soft metal. After "striking," (that's where the phrase came from), small excess amounts of metal would be scraped off, and the result was weighed. If the coin was too heavy, it was nipped until it weighed the proper amount. No coin therefore, was ever perfectly round.
In Robert Louis Stevenson's "Treasure Island," the pirates' parrots are commonly represented as being trained to cry out, "Pieces of Eight."
There are several theories or legends about the so-called "dollar sign," or $, as we currently use it.
According to the U.S. Mint, the "$" came into use, as a sort of plural for peso. The "s" from "pesos" was written over the "p," and it sort of became a $, if you can imagine that. Anther theory, is that when King Ferdinand reformed his currency, Columbus discovered America, and Gibraltar was added to Spanish holdings, the "Pillars of Hercules" became a symbol of Spanish holdings, and represented the 'end of the known world.' The two pillars were struck through the Spanish "S" and the dollar sign with two bars through it was born. Salesmen, abbreviating dollars, always wrote an S with two bars through it for dollars.
We are not the only nation using $ or 'dollars' for our national currency. Other nations using the term "dollar" for their currencies are: Australia, Barbados, Bahamas, Belieze. Bermuda, Bruunei, Canada, Cayman Islands, Fiji, Guyana, Hong Kong, Jamaica, Liberia, Namibia, New Zealand, Singapore, Solomon Islands, Suriname, Taiwan, Trinidad, Tobago, and Zimbabwe.
In addition, there are some nations use the $ sign for their currencies, which are not called "dollars." They are Portugal, Argentina, Bolivia, Chile, and Columbia. All but Portugal use the "peso," and Portugal uses the "escudo."
Before automatic pin-setters, bowlers used to throw coins down the bowling alley as a tip for the pin boy, who reset the pins after their being knocked down, and this became "pin money." Or do you youngsters think that bowling alleys have always had automatic pin-setters? They haven't, and many a time I threw a couple of quarters down the alley as a tip for the pin boy, who could set pins for two alleys at the same time, if he was good.
The term "pin money," didn't come from bowling alleys, however. It goes back many more years before bowling alleys. Actually, "pin money" originated during the American Revolution. The Continental Congress, when it ran out of silver and gold, made money out of cardboard, which was brittle. Being brittle, they easily broke, and Scotch Tape not having been invented, the colonists then pinned the broken pieces of money together, and the term "pin money" was born.
For hundreds and thousands of years, gold and silver was used as money, and was and still is…real money. Whether they were called thalers, reales, escudos, pieces of eight, pesos, or whatever; the world's citizens, traders, customers, and manufacturers, used real gold and silver pieces for trade, wealth storage, and indicators of wealth. Pieces of paper, were never given much thought or value, other than for instruments of contract, deeds, or notes. It was an absurd idea, to ever consider anything but silver or gold as actual "money." How times have changed! Today, the world operates on pieces of paper, which are called "money," but which have absolutely no intrinsic value of any kind, and neither are these currencies redeemable in anything other than more of them. They can purchase things, but being able to buy something, and being redeemable in something that in itself is valuable, are two different things.
When one bought something, in history, one traded something of value, for something else of similar value. Money was valuable in itself, and the valuable money (silver and gold) was traded to someone for something of equal value they were selling.. Value for value. Today, worthless pieces of paper representing nothing, are used to buy tangible goods. Isn't it reasonable and logical, for "money" to be valuable in itself? If the "money" has no value, when one buys something, one is trading value for no value, other than because of government rules, called "legal tender laws." When real money ruled the world, laws such as these were unnecessary. The "money' was valuable in itself, and when one had wealth, it wasn't in worthless pieces of paper, but wealth was stored in real money, which was silver and gold. Silver and gold have value, because they require capital, effort, exploration, machinery, and industry to produce them. They are durable, beautiful, and desirable. Fiat money, only requires a supply of paper and a printing press, neither of which will ever come in short supply. Silver and gold have always been in short supply, or they wouldn't command value in currencies. They can't be printed by the trillions, but have to be dug, sorted, milled, smelted, and minted. Isn't it nice to realize that you can convert your declining value paper dollars into real money? Protect yourself.
July 7, 2005
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com