According to the U.S. Department of Treasury’s Web site (http://www.treasury.gov/about/education/Pages/in-god-we-trust.aspx), adding a reference to God to American currency was first proposed during a period of increased religious fervor during the Civil War. Many devout citizens appealed to then-Secretary of the Treasury Salmon P. Chase to include God on the nation’s money.
According to Treasury Department records, the Rev. M.R. Watkinson, Minister of the Gospel from Pennsylvania, wrote the first such appeal on Nov. 13, 1861. Watkinson wrote that he felt a reference to the “Almighty God” had been seriously overlooked. In his plea, Watkinson wrote, “You are probably a Christian. What if our Republic were shattered beyond reconstruction? Would not the antiquaries of succeeding centuries rightly reason from our past that we were a heathen nation?”
As a remedy to the situation, Watkinson proposed inscribing American currency with the words “Perpetual Union” and adding an image of a flag with the words, “God, Liberty, Law,” inscribed within the folds of the flag’s bars.
Sec. Chase eventually asked the director of the U.S. Mint to design a religious-themed motto. At the direction of Congress, a two-cent coin bearing the words, “In God We Trust,” first appeared in 1864. Further congressional action extended the motto to many other coins. The motto has been used continuously on the one-cent coin since 1909; on the two-cent coin since 1916; and on numerous gold and silver coins since 1908.
The motto was extended to paper currency during another time of increased religious zeal – the 1950s, when Americans clung to their religious roots as a contrast to what was seen as the Cold War threat of the “godless” communism of the Soviet Union.
Congress passed and the President then approved a resolution declaring “In God We Trust” the national motto in 1956. The motto was first inscribed on and circulated on paper money in 1957. Around the same time, the Bureau of Engraving and Printing started converting to a more modern printing process for producing paper currency.
As the printing process was updated, “In God We Trust” was added to various denominations of currency throughout the 1960s. This included the $1 Federal Reserve Note; the $5 United States and Federal Reserve notes; and the $10, $20, $50 and $100 Federal Reserve notes.
Not everyone, however, was happy with the added inscription. California atheist Michael Newdow expressed his displeasure to a federal appeals court in 2007. He claimed that the religious reference on currency violated the U.S. Constitution’s First Amendment. That amendment guarantees freedom of religion. Newdow argued that the motto makes atheists into political outsiders and inflicts “stigmatic injury” upon them (http://www.csmonitor.com/layout/set/print/USA/Justice/2010/0311/Federal-court-approves-under-God-in-Pledge-of-Allegiance).
The 9th Circuit Court of Appeals in San Francisco disagreed with Newdow. The judicial panel ruled that the motto is ceremonial and patriotic and “has nothing whatsoever to do with the establishment of religion.” (http://www.cbsnews.com/2100-201_162-6291463.html)
Newdow asked the 9th Circuit to rehear his case. It did so in 2010 and again disagreed with Newdow, citing the earlier decision by the same panel. The court also ruled that Newdow did not have legal standing to challenge the phrase, “In God We Trust.” In its decision the court took issue with Newdow’s claim of “stigmatic injury” inflicted by the monetary motto.
“… an ‘abstract stigmatic injury’ resulting from such outsider status is insufficient to confer standing,” the court ruled.
Newdow later appealed this decision to the U.S. Supreme Court. In 2011, the federal court refused to hear Newdow’s appeal (http://www.washingtonpost.com/wp-dyn/content/article/2011/03/07/AR2011030701699_pf.html)