- from Money
All kinds of things can work as money.
For example, back in ancient Rome, soldiers may have been paid partly in salt. Salt was rare back then. Our word salary comes from the Latin word salarius, “of salt.” What else has served as money? Shells, rocks, and cigarettes, for starters.
Usually, though, money is made of precious metals. They last long, and they’re pretty. Also, they 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 have a certain amount of gold. This was called the gold standard. It tied the money supply to the gold in the U.S. Treasury. The government said it would swap 25.8 grains of 90 percent pure gold for one paper dollar.
Starting in 1933, the U.S. began moving away from the gold standard. It had tightly limited the number of dollars available. Today’s dollars are “fiat money.” Most currencies are. Fiat means they are backed only by the faith that people have in their governments.