Interesting history lesson

on the Mises Blog:

Way, way back in the beginning, there was no problem with coinage whatsoever. The dollar was simply a measure of silver that happened to approximately equal the amount in the Spanish Dollars that were then in circulation in the country.

These Spanish Dollars were very nice coins. Being made out of silver, they were very hard and did not much wear out in use. Being dollar coins, they were large. Their hardness, their heft, and the distinctive sound they made when flipped onto a solid wood counter top made them difficult to counterfeit, and very useful as hand-to-hand money. But, being dollar coins, they were of limited use for making change.

These Spanish Dollars were also known as "Pieces of Eight," since — in Spanish denominations — they were worth eight reals (pronounced "ree-als"). Smaller denomination Spanish coins, including the Half Dollar (four reals) and Quarter Dollar (two reals) also circulated; as did the one bit (one real) and half bit (one-half real). The last two coins — the one bit and half bit — were rather small coins, in terms of weight, diameter and thickness, and didn't hold up very well in circulation. But, given the social necessity of making change, they circulated nevertheless.