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Two Bits

Question: You’ve probably been asked this question a million times, but where in the world did the term “two bits” come from for our quarter dollar? My grandparents still call a quarter “two bits” today, although they don’t know where it got that nickname. Thanks, J.K.M.

 

Answer: Dear J.K.M., Thanks for the great question. In the days prior to the establishment of the U.S. Mint world coins circulated freely in what would become the United States. Foreign copper, silver, and the occasional gold coin were used in everyday commerce in the colonies, with the most popular of these coins struck by Spain in their New World colony mints. Beginning in the 1500s and lasting into the 1820s, the mints in Mexico City, Mexico and Potosi, Bolivia, and Lima, Peru, among others, struck tons of silver half real, one real, two reales, four reales, and eight reales coins for both New World commerce and for export back to the mother country in Spain.

Small change in America was a strictly catch-as-catch-can commodity, and any world coin with precious metal content was readily accepted, even into the late 1850s and early 1860s. The Spanish Milled dollar was the coin of choice, not only in the colonies and later the United States, but around the world. Wherever commerce was happening, the Spanish coins were there. To make small change in America a few centuries ago the largest of the coins, the eight reales or “piece of eight” was the coin of choice. These Spanish dollars were often cut into eight equal parts worth about 12-1/2 cents each. Each of these tiny pieces was called a “bit” and thus two bits (or two times 12-1/2) equaled 25-cents. When the dime denomination was first struck at the U.S. Mint in 1796, it was quickly nicknamed a “short bit” because it was two-and-a-half cents short of the accepted value of the popular “bit.” This popular nickname is still in use today! As for myself, I still call a quarter “two bits” – if it was good enough for my parents and grandparents, it’s still good enough for me.

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