The History of the Trade Dollar
Article Written by Kathleen Duncan – Pinnacle Rarities
CoinWeek Content Partner
Until the 1850′s, Americans spent most of their history looking towards the East Coast and Europe. Thereafter, we began to explore the strategic and economic significance of developing the West Coast and maintaining shipping routes from there to the Far East. The problem for U.S. merchants was that China preferred the higher silver content of the Mexican peso, also called the eight Reale. Seated Liberty Dollars were reluctantly accepted at a discount and most subsequently melted. To compete efficiently, American bankers and merchants often imported pesos, paying a premium of 7.5% over bullion value to acquire them. The concept of a special “commercial” Dollar of greater silver content that would facilitate Asian trade was born from this hurdle.
Minted for circulation from July, 1873 until April, 1878, the Trade dollar represents one of the shortest-lived of all United States numismatic series. Across all dates and mintmarks nearly 36 million were produced. However, due to heavy circulation within Asian markets, frequent counterstamping with Chinese characters, or chop-marks (merchants in Asia stamped the Dollars with Chinese characters to attest to their weight and fineness, allowing them to be confidently accepted at face value) , and melting, nearly every issue is elusive in MS65 and finer conditions. Proofs, with the exception of the later proof-only issues, are also rare in gem and better.
Besides its commonly known purpose as a United States coin to compete with the Mexican “Dollar”, the Trade dollar had a lesser known, but equally imperative role. The politically important mining interests needed a new outlet for the huge supply of Silver glutting the world market. In the years during and after the Civil War, the Comstock Lode and other Western mines were producing large quantities of Silver. For a time, miners found outlets in foreign markets. Canada, Latin America and Europe all absorbed significant quantities during the 1860′s. But after Prussian Chancellor Otto von Bismarck united Germany in 1871 and subsequently placed it on a gold standard, Silver was dumped onto the international market.
As supplies escalated, prices plummeted. Under a long-standing law, silver could be deposited with the U. S. Mint for conversion into Silver coins, for which it could then be exchanged. Miners invariably chose Silver Dollars, the one denomination that hadn’t been changed when all other silver coins experienced a reduction in weight in 1853. As a direct result, Silver Dollar mintages soared above one million in 1871 and 1872. The Coinage act of 1873 (a.k.a. the Crime of ’73) put a stop to this by suspending production of Silver Dollars. Mining interests were placated by the approval of the new Trade dollar that would provide an outlet for their metal and hopefully open it up to new Asian channels.
In addition to providing a green light for the Trade Dollar, the Act of February 12th, 1873 abolished the Two-Cent piece, the Three-Cent Silver, the Half Dime and the Seated Dollar. Due to the declining price of Silver, weights were again reduced on the Dime, Quarter and Half Dollar as they had been twenty years prior. A rider on the bill made Trade Dollars legal tender, but only up to $5. In other words, no more than five could be spent at one time. As they weren’t intended to circulate in the States, this must not have been considered a potential problem at the time, but would soon prove to be. At that time, the bullion value of a Trade dollar averaged $1.02.
During the first two years of production, the vast majority of Trade Dollars were shipped to the Orient. In 1875 and early 1876 more were used in the states. A further decline in the price of silver in 1876 caused millions of Trade Dollars to return to the U.S. from China, leading Congress to demonetize the issue entirely. This was the first and only time the U.S. government revoked the legal tender status of any of our nation’s coinage. After 1876, Trade Dollars could not legally be spent at face value; their value fluctuated in the metal market.
Although coinage was intended solely for export to the Orient, generous numbers eventually found their way into domestic commerce. In 1877 Secretary of the Treasury John Sherman directed that Silver deposited for coinage into Trade Dollars would only be paid upon evidence that it would by exported. Evidence, sadly, was in some instances fabricated. Profiteers sold some of these “commercial” Dollars to unscrupulous employers who used them to pay their workers. One-sixth to one-fifth of these salaries were lost when the coins were redeemed, creating serious public discontent.
This was the beginning of the end and on February 22, 1878, John Sherman mandated the end of production with his Sherman Silver Act. By this time Philadelphia had produced no business strikes, only proofs. Almost simultaneously, on February 28th, 1878, the Bland Allison Act directed the government buy vast quantities of Silver at subsidized prices to be coined exclusively into Morgan dollars. Proof Trade dollars were issued for an additional five years in mintages that ranged from 960 to 1,987.
It wasn’t until 1887 that the public was allowed to redeem them again at face value. All told 35,958,460 Trade Dollars were produced; 20,327,910 after they were demonetized on July 22, 1876. Of the grand total coined from 1873 to 1878 all were exported except for 6,607,632 pieces. 82% served their intended purpose as items for international commerce.
The Trade Dollar’s design is widely viewed as an attractive upgrade to Gobrecht’s Seated Liberty on which it was loosely based. William Barber’s graceful Liberty is seated on bales of merchandise, facing westward. In her right hand she holds an olive branch which she extends to the West, while a ribbon inscribed with “Liberty” appears in her left. The 13 stars of the original colonies surround the upper obverse rim and waves representing the Pacific Ocean appear in her background. The reverse depicts an eagle with wings outspread above the coin’s prominently displayed weight and fineness, 420 GRAINS, 900 FINE. The inscription UNITED STATES OF AMERICA and TRADE DOLLAR surrounds.
More than any other U.S. design, the Trade Dollar was a product of the western mints. Although production began at Philadelphia, the largest number of dies was sent to San Francisco where the majority of deposits were expected. The locale was also favored as the closest mint to the Orient. Trade dollars first reached China in October, 1873, where they were positively received. Nearly the entire production of 1873 went to that country.
Although first-year examples typically experience collector hoarding, the scanty availability in the states at the time of production has made high-grade examples particularly elusive. Even the 1873-S was exported nearly in its entirety and most of the production was melted in either China or India insuring few returned back home. It is the rarest of all the San Francisco business strikes. The 1873-CC is one of the top rarities in the series. Although both PCGS and NGC record a coin each in MS65, no recent trades can be found in auction. The most recent trade for a PCGS MS64 was $46,000 in January of 2007. 1873 also has the honor of being the rarest issue from the official eleven year proof run (1873-1883).
In this year the Philly mint experienced its highest production until 1877, although survivors in Gem are still obscure. The 1874-CC is one of the rarest issues in the series in high Mint State grades. The last recorded auction price realized for an NGC MS65 was $37,375 in September of 2008. Combined population in MS65 between PCGS and NGC is 5. The 1874-S is available in most conditions up to Gem. 1874 Proofs are exceptionally scarce and only slightly more available than 1873 Proofs.
A new reverse hub was put into use. Proof and business strikes exist from both old and new hubs. Type I has a berry below the eagle’s claw; the Type II lacks it. The Type I is considerably scarcer among the surviving 1875-S population and nearly all mint state examples known are of the I/II type. The 1875-S saw a record production of 4,487,000. The 1875 Philadelphia issue, however, saw a paltry mintage of 218,200, making it the scarcest among all of the Philly issues. The 1875-S/CC is the rarest of the regular issues in the series and the only over mintmark.
In 1876 there was an obverse hub change. The Type I is distinguished by the ends of the ribbon ‘held by Liberty( pointed to the left. The Type II obverse has the ribbon pointing down. This is the most plentiful Philly issue available. It was also the beginning of widespread use of the trade dollar domestically. Although the San Francisco mint saw record production as well, the 1876-CC is the third rarest regular striking in the series. This year also produced a highly popular 1876-CC Doubled Die Reverse variety. The reverse shows dramatic doubling on the eagle’s left wing (on the right side of the coin), the branches, berries, leaves and much of the lettering, making it one of the strongest and widely spaced doublings known in any series. Finding one is not easy, however, as few have been graded in any condition, and none higher than MS64.
The 1877-S was the highest production issue of the series, making it “relatively” common in Mint State, particularly at the lower levels. It is also the most common in all circulated grades, including chop-marked examples. All are Type II/II. Like all of its Carson City brethren, the 1877-CC is scarce in all grades and particularly in mint state. PCGS and NGC each show one MS65 example, the most recent auction trade being for a PCGS coin that brought $69,000 in November of 2005.
The 1878-S saw the second highest mintage for the series at production of over 4 million. Conversely, no coins were produced at all in Philadelphia that year and the 1878-CC has by far the lowest mintage of the series at 97,000 coins. Additionally, a good portion were melted shortly after striking, making it the second rarest issue in uncirculated grades, after only the 1875-S/CC. PCGS and NGC have each pronounced exactly one coin MS65, and the last trade was an NGC example selling for $143,750 in January of 2007.
The 1884 and 1885 Proofs
These issues are two of the most coveted in the entire numismatic kingdom. They were produced secretly at the Mint and provide an interesting addendum to the series. Although there is an official record of dies having been made for 1884, no production is listed for either date and no specimens were given to the Mint Collection following normal Proof procedures.
These issues were generally unknown to the collecting community until John W. Haseltine announced he had found the coins in the 1884 and 1885 proof sets owned by his father-in-law, William Idler’s estate. Idler was known to have had close ties to Mint personnel. Virgil Brand was the principle buyer after these coins were disclosed.
Absent official records, it is uncertain how many were produced, but only 10 1884′s and 5 1885′s are known. Both are among the most valuable of all numismatic rarities. In November of 2005 an 1884 PCGS PR65 example, the highest graded of the date, sold for $603,750. In November of 2004, an 1885 NGC PR62 sold for $1,006,250. The highest recorded grade for this date is an NGC PR63 Cameo (which may or may not be the coin that sold as a PR62 above).
Mintages ranged from a low of 97,000 for the 1878-CC to a high of more than 9 million for the 1877-S. The series includes 18 regular issues and 11 proofs (not counting the 1884 and 1885) making it a reasonable but not insurmountable challenge for collectors. Its intricate design and large size are intrinsically appealing to most, while its history places the United States on the precipice of becoming an major world power. This is a series that can provide years of satisfying exploration and collecting.