Shave and a Haircut ... Two Bits.

The Federal Reserve Bank of New York's always informative and frequently delightful blogger, Amy Farber, at Liberty Street Economics, provides us with a dip into monetary history... including refreshing her readers' memory as to the origin of the phrases "pieces of eight" and "two bits."  Farber:

Historical Echoes: Aye, That Piece of Eight You Be Thinkin’ of Were a Precursor to Today’s Dollar

Amy Farber

Why do we associate pieces of eight with pirates? Perhaps it has to do with the role of the phrase “pieces of eight” in one of the greatest pirate adventures in literature, Treasure Island* (Robert Louis Stevenson, 1883). It’s Captain Flint the parrot, belonging to the pirate Long John Silver, who’s continually screaming “pieces of eight!” The last few sentences of the book read:

The bar silver and the arms still lie, for all that I know, where Flint buried them; and certainly they shall lie there for me. Oxen and wain-ropes would not bring me back again to that accursed island; and the worst dreams that ever I have are when I hear the surf booming about its coasts or start upright in bed with the sharp voice of Captain Flint still ringing in my ears: “Pieces of eight! Pieces of eight!”


     The San Francisco Fed’s 1995 annual report has a section “A Brief History of Our Nation’s Paper Money.” In the “Did You Know?” section, we read:

During much of the 17th and 18th centuries, the Spanish Dollar coin served as the unofficial national currency of the American colonies. To make change the dollar was actually cut into eight pieces or “bits.” Thus came the terms “pieces of eight” from these early times and “two bits” from our time.

"Two bits" used to be used as a practical synonym for a quarter.  The phrase mostly, now, is remembered for its inclusion in the comic couplet, "shave and a haircut, two bits."  (Or as slang, reports the Urban Dictionary, for cheap or of bad quality.)

Recently at a Kemp Forum/American Principles In Action event held, at the Capitol, to observe the 30th anniversary of Jack Kemp's introduction of the Gold Standard Act of 1984, John Mueller, who was Kemp's staff economist, recalled how his father had been a coin collector. 

In inventorying the collection it was discovered that the base metal coins in it had lost real value from their original purchase price. 

But the old silver quarters had appreciated, in nominal value ... at least by a factor ten ... or more just based on the value of the silver.

Precious metals retain value over time. 

Paper and base metal money depreciates.

It's a historical fact.