The dollar is named after a silver valley in Bohemia
The word dollar comes from a valley. In 1516 silver mines opened near Joachimsthal, a town in Bohemia that is now Jáchymov in the Czech Republic. The Counts of Schlick, who mined there, had the silver struck into large coins, and from 1518 these were called Joachimsthalers. The name was soon shortened to thaler. The ending means "of the valley", a cousin of the English word dale.
A big silver coin of steady weight is exactly what traders want, and the thaler caught on. Similar coins from other silver valleys took the name too: tolar in Czech, daalder in Dutch. English borrowed it as daler by 1550, and by about 1600 it was spelled dollar.
The coin that crossed oceans
The coin that made the name global was Spanish. A monetary reform in 1497 introduced a coin worth eight reales, the piece of eight. It was struck from the enormous silver deposits Spain found in the Americas, above all at Potosí in today's Bolivia, at mints in Potosí, Lima and Mexico City. Because its weight and silver content were kept uniform, it became the first world currency by the sixteenth century. Mexican silver crossed the Pacific on the Manila galleons and paid for Chinese goods, since silver was the only foreign commodity China would accept.
The Spanish coin weighed almost the same as the German reichsthaler, so English-speaking colonists in North America called it a dollar. They used it so much that when the United States defined its own dollar in the Coinage Act of 1792, it set it at par with the Spanish one. Spanish coins stayed legal tender in the United States until 1857.
The economics is in the trust. Nobody decreed that the world should count in dollars. Merchants on several continents chose coins whose weight and purity they could rely on, and the names of those coins went wherever they went.
So the American dollar, and every other dollar, carries the name of a sixteenth-century silver coin from a Bohemian valley, by way of a Spanish one.
What does the word thaler originally refer to?
A coin people can trust spreads its name: the dollar began as a Bohemian silver coin and travelled the world on Spanish silver.
