Interesting side question - does anyone know why the convention became to subdivide by 100 instead of another number? Maybe just because 100 is easy to count on a reasonably sized abacus...?
Will
Examples of currencies which do not feature centesimal (1⁄100) units:
Japanese yen – no fractional denomination in circulation, formerly divided into 100 sen and 1000 rin.
Kuwaiti dinar – divided into 1000 fils
Omani rial – divided into 1000 baisa
Mauritanian ouguiya – divided into 5 khoums
Malagasy ariary – divided into 5 iraimbilanja
The currencies were all divisible in different ways. The British pound was divided into 20 shillings, and each shilling was divided into 12 pence. The Spanish dollar was divisible into eight reales, one for every finger (thumbs didn't count).
The founding fathers agreed that the former colonies needed a single currency to help unite them into a single country. Even Thomas Jefferson, famously wary of the power of the central government, thought the currency situation was crazy.
In April of 1784, Jefferson wrote Notes on the Establishment of a Money Unit, and of a Coinage for the United States. It's essentially this 11-page ramble about currency, rates of exchange, weights of gold and silver coins. It made the U.S. dollar what it is today.
The U.S. needed a currency that was so simple that any farmer could do his own accounting, Jefferson said. "The bulk of mankind are schoolboys through life," he wrote. "These little perplexities are always great to them."
The U.S. currency shouldn't be divided into eight pieces, like the Spanish dollar. It shouldn't be divided into 90 pennies, as Robert Morris, the central government's superintendent of finance believed. The dollar had to be decimalized — divided based on powers of 10. "Every one knows the facility of Decimal Arithmetic," he wrote.
Jefferson wasn't the inventor of the dollar, and he wasn't the first person to come up with decimalization. But he was extremely influential, and it was his influence that persuaded the new government to do things the way he outlined in this essay.
In 1792, Congress passed the Coinage Act, which laid out the national currency — including dollars, quarters, dimes (then known as "dismes") and cents, "each to be the value of the one hundredth of a dollar."
