ARTICLE: WHEN MONEY BROUGHT US TOGETHER

Dick Johnson writes:

As the American economy reckons with the fallout of the debt-limit crisis, it's easy to forget about the far bigger train wreck underway in Europe, where the continent's grand experiment with a common currency is becoming more imperiled by the day. The euro, the powerful currency unveiled to great fanfare a little over a decade ago as a symbol of a new, united continent, is quickly becoming a victim of the very nationalist infighting that prompted its creation in the first place.

All of this threatens to deliver a crippling blow to Europe, with grave repercussions for the broader global economy. But the more immediate casualty of the ongoing crisis is the optimism at the root of the euro itself - the belief that the nations of Europe might move beyond their history of internecine strife by uniting under the banner of a common currency.

That belief now seems naive to many people. And the very notion that disparate nations might be brought together by a single currency looks increasingly absurd. But currency unions have a deeper history then just the euro, and a look at their record over time suggests that currency unions have, indeed, worked. In fact, we're living in one: The dollar is itself the product of a long struggle to unite America's states and businesses under a single currency.

America's road to the unified dollar was not easy, and its early struggle, never mind the long history of failed attempts to stretch other currency unions beyond national borders, offers a sobering lesson for euro-optimists. This is not to suggest that the euro project is doomed. It is, however, a problematic idea. It is one thing to create a currency union within national borders; it is a very different matter to argue that a shared currency can unite people across them.

Officially speaking, the American dollar was born even before the Constitution was signed. But the actual money supply of the young United States was far from uniform. Anyone doing business here in America's first few decades would have encountered thousands of different notes issued by private banks. These were usually redeemed not in dollars issued by the United States mint, but in silver coins from places like Mexico and Bolivia. Travelers also found that merchants and storekeepers often reckoned prices not in dollars and cents, but in local versions of pounds and shillings that varied in value from place to place. European visitors to the United States frequently commented on the heterogeneity of the new nation's money.

To read the complete article, see: When money brought us together (www.boston.com/bostonglobe/ideas/articles/2011/08/14/
when_money_brought_us_together/)

Wayne Homren, Editor

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