Throughout the late 1860’s and early 1870’s, American trade with countries in
the Far East, particularly China, was moving along at a steady clip, but things
could have been better.
Unfortunately for U.S. businessmen, Chinese merchants favored the Mexican peso
as their medium of exchange, for it contained slightly more silver than a
standard U.S. silver dollar. In order to compete in the region, the Americans
were forced to swap dollars for pesos, usually paying currency broker fees.
In 1873,
Congress sought to negate the peso's advantage and promote American commerce
overseas at the same time by authorizing a new coin called the US Trade Dollar. The Trade
Dollar weighed 420
grains (.900 fine), compared to the peso at 416 grains (.903
fine) and the standard silver dollar at 412.5 grains (.900 fine).
The US Trade Dollar design depicted Lady Liberty resting on a cotton bale by the
seashore. To her back stands a shock of grain. In her right hand she extends an
olive branch, a friendly gesture meant for those on the other side of the
Pacific. The reverse shows an eagle with arrows and olive branch in its talons.
Below the eagle are the inscriptions “420 GRAINS .900 FINE” and “TRADE DOLLAR”.
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Trade Dollar
Specifications |
Diameter: |
Weight: |
Minted: |
Composition: |
Designer |
Edge: |
38.1 mm |
27.220 g |
1873-1885 |
.100 Cu .900
Ag |
William Barber |
Reeded |
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Coin Photos courtesy of
Ira & Larry Goldberg Coins & Collectibles, Inc., Beverly Hills, CA. |
On the home front, silver Trade Dollars were approved as legal tender in domestic
transactions up to five dollars, but nearly all of them produced during the first
two years were sent overseas, where they were received enthusiastically. In
Peking, China, the US Trade Dollar was proclaimed as the official trade coin in
the country, replacing the lighter Mexican peso.
Demand for the US Trade Dollar in Asia remained strong into 1875, as evidenced
by this report filed by San Francisco Mint Superintendent A.H. LaGrange:
At no time
since the commencement of the present calendar year has the mint been able
to accumulate a surplus of trade dollars, and the public demand has not been
fully met…but the favorable introduction of the trade dollar into China has
most effectually destroyed the use of the Mexican silver dollar as the
medium of exchange between this city and the ports in the Chinese Empire.
The Trade Dollar might have achieved its purpose for many years had it
not been for events in America. By 1876, mine owners in western states were
dumping massive amounts of silver onto the market, sending the silver price
into a tailspin, dropping the intrinsic metal value of a Trade Dollar to
levels as low as 80 cents. Within a very short period of time, millions of
bullion-discounted Trade Dollars flowed back to the U.S., where they were
validly spent at face value.
To curb this abuse, Congress revoked the legal tender status of the Trade
Dollar on July 22, 1876, and ostensibly restricted their coinage to exportation
demand
only. This did not put an end to the Trade Dollar troubles, however.
Unscrupulous individuals acquired large numbers of Trade Dollars at bullion
cost and dispersed them at face value to unsuspecting wage earners and
merchants, who then tried to pass them on. Invariably, someone got stuck
holding a Trade Dollar at a loss.
In hindsight, the nation probably
would have been better off had Congress instead chosen to altogether stop
coinage of the US Trade Dollar and permit its immediate redemption at government
facilities. As it was, the Trade Dollar remained in public view, where
opportunists repeatedly bought and sold the coin at the expense of others.
To compound matters, anyone could receive new Trade Dollars at the Mint in
exchange for 378 grains of silver plus a small coining fee!
Treasury Secretary John Sherman halted commercial
production of the coin in 1878. From 1879 onward, Trade Dollar production
was limited to Proof strikes for collectors. But what of the millions of
Trade Dollars still in domestic circulation? They continued to be exploited
for the same nefarious purposes.
Finally, in February 1887,
legislation passed that opened the door for redemption of non-mutilated
Trade Dollars. About eight million of them were turned in. Trade
Dollars never regained their status as legal tender, and to this day remains
the only US coin to be permanently demonetized.
The rarest of all US
Trade Dollars are those dated 1884 and 1885. Issued only in Proof and in
quantities of ten and five, respectively, the existence of these coins was
not revealed until 1908. They were most likely made "under the
table" for a collector buddy of the Mint, William Idler. Despite
their dubious origin, the 1884 and 1885 Trade Dollars rank among the most
valuable of all United States coins. When a PF-65 1884 sold in
November 2005, it brought $603,750. A PF-66 example of the 1885 was
sold in January 2006 for an astonishing $3.3 million!
All Trade
Dollars in Proof condition dated 1879 through 1883 have shown solid value
increases over many decades. This should not surprise anyone, for they
exist in very small numbers:
Remember, Trade Dollars for these dates were
issued only in Proof condition, but many of them have circulation
wear. Based on the story above, we can
reasonably speculate the motives of those who released them into
circulation. High end Proofs are generally unaffordable, but those in
lower grades hold promise to collectors likewise, but cost much less up
front.
Be careful when buying, as there are many Trade Dollar
counterfeits in the marketplace, many of which, ironically, originated in China.
The best way to protect yourself is to purchase only examples that have been
graded by PCGS, NGC, ICG, or ANACS, or at least are being sold by a
reputable dealer.
The left hand side of the "Sales Box" below is value trend data over a very long
period of time for an 1879 Trade Dollar in PF-65 condition. The
percent annual increase is computed for comparative purposes, and largely
represents the trends for all Trade Dollar Proofs of 1879-1883. The
right side of the box is a link to eBay US coin auctions, that pulls the
coins, if any, of these dates in all conditions offered. One last warning: Run, don't
walk, if the Trade Dollar being auctioned does not meet the selling
requirements specified above.
An interesting historical footnote to the Trade Dollar
series is the presence of punched insignias, called "chop marks", as seen
above. These marks are said to have been created by untrusting Chinese
merchants to test the authenticity of a Trade Dollar. Some of the more
fascinating chop marked dollars can bring premiums as collectors compete for
an unusual artifact that obviously "was there". Chop marks are but another
characteristic that makes the Trade Dollar series one of the most unique and
intriguing in American coinage.