Money comes in all shapes and sizes.
For instance, soldiers in ancient Rome may have received some of their pay in salt. That’s how the Latin term salarius—“of salt”—became the English word salary. Other strange items have served as money as well, including cigarettes, shells, and rocks.
But money is most often made of precious metals. They last long, are seen as beautiful, and have value apart from their use as money. Before 1900, all U.S. government money was backed up with gold or silver. The Gold Standard Act was passed in 1900. It said that for every paper dollar, the U.S. government had to store a certain amount of gold. This system was called the gold standard. It tied the money supply to the amount of gold in the U.S. treasury. The government said it would swap 25.8 grains of 90 percent pure gold for one paper dollar.
Beginning in 1933, the U.S. began to leave the gold standard. It had placed tight limits on the number of dollars available. Today, the dollar is a “fiat money,” as are most currencies. That means they are backed not by gold, but by the faith people have in their governments.
