The years following the Civil War posed a challenge to federal officials. Although Western mines were producing abundant silver, the government had limited use for it in coinage. Surprisingly, silver coins were scarce in circulation, despite the high demand. The problem was that people preferred paper money due to the abundance of fractional currency. Mint officials feared that new silver coins would also be hoarded. To tackle this issue, miners found alternative markets for their silver, including Canada, Latin America, and Europe. However, these markets eventually became oversaturated, causing the price of silver to decline.
The Birth of Trade Dollars
In response to the decreasing demand and falling prices, Congress passed the Coinage Act of 1873, which suspended the production of silver dollars. Miners, along with their allies in Washington, managed to secure approval for a new silver coin – the Trade dollar. The Trade dollar aimed to create a fresh market for silver in Asia, particularly China, where silver coins were highly desired. To compete with Spanish and Mexican dollars, the architects of the Trade dollar increased its silver content and explicitly inscribed “420 GRAINS, 900 FINE” on the coin.
The Features of Trade Dollars
At first glance, the Trade dollar closely resembled the regular silver dollar. Both coins shared a similar diameter, weight, and featured designs by Mint Chief Engraver William Barber. However, the regular U.S. silver dollar weighed less and had a lower fineness compared to the Mexican dollar. The Chinese, being astute, recognized this and preferred the Mexican dollar over the Trade dollar.
Challenges at Home and Abroad
Although over 27 million Trade dollars were sent overseas and used in Asian commerce, the coin failed to meet American expectations. Back home, Congress designated the Trade dollar as legal tender for domestic payments up to five dollars. However, when silver prices plummeted in 1876, millions of Trade dollars flooded the U.S. circulation, making them more valuable as money than as metal. Congress, alarmed by this situation, quickly revoked their legal tender status. Nevertheless, this led to serious issues as employers bought the coins at a slightly higher value and distributed them to workers. Merchants and banks only accepted them at bullion value, resulting in workers losing a significant portion of their pay.
The Fall of the Trade Dollar
Rejected abroad and despised by many at home, the Trade dollar soon faded into obscurity. Production ceased in 1878, except for proof coins. The 1884 and 1885 proofs, which were struck clandestinely for Mint crony William Idler, were unknown to the numismatic community until 1908. These two dates are now considered rare collectibles. In total, fewer than 36 million Trade dollars were minted over the coin’s 13-year lifespan, with the majority being proofs.
Trade dollars hold historical significance as an attempt to create a new market for silver, particularly in China. Their unique story, combined with their scarcity, makes them highly sought-after by collectors. However, due to the limited number of business strikes available, proof coins dominate the demand from collectors. The beauty and condition of these coins, along with the scarcity of certain dates, continue to fascinate numismatists and collectors alike.
Coin Descriptions Provided by Numismatic Guaranty Corporation (NGC)