Morgan Silver Dollar Prehistory
Silver dollars were struck as early as 1794 but the coinage was halted in 1804 because too many of the silver dollars were finding their way to the Orient for luxury goods and were not returning.
In the early 1830’s, Mint Director Robert M. Patterson felt the time was right for a resumption of silver dollar coinage. By 1840 full-scale striking had begun in earnest. The new coinage was primarily kept for bank reserves but also found their way into commerce.
The new silver dollar coinage came to a screeching halt in the late 1840s. This was due to new gold discoveries in California and Australia that pushed up the price of silver. Bullion dealers bought up dollars and other silver coins and shipped them to Europe for a tidy profit. By 1850 American silver dollars ceased to circulate and would not be in circulation until 1878.
A revision of the coinage laws in 1853, permitted silver dollars to be struck from private bullion brought to the mints, although some minor coins were struck on government accounts. Silver dollars continued to be struck through the 1850s and the 1860s. They were only used for two purposes. The first was for bank reserves and the second was for export to the West Indies and Europe.
In the 1850s, the status of silver dollars began to change. New discoveries of silver in Nevada made the U.S. a silver exporter for the first time rather than an importer. During the Civil War, silver mining escalated, but much of the silver was shipped to Europe to pay for war materials and bond obligations.
Eventually the Europeans indicated that they were being paid too much silver and expected to be paid in gold. As such silver began to accumulate back in the U.S. Around 1868, much of this overload of silver found its way to the Philadelphia Mint where it was coined into dollars.
To further complicate things, paper money was the prime legal tender of the day for most of the country. Except for small coins, such as the cent and the nickel, paper was used for virtually every transaction, as the government printed notes with denominations as low as three cents.
The increased quantities of silver being mined in the American Southwest meant that the value of silver slowly declined at first. This trend forced then President Ulysses S. Grant to order a through review of the situation by the Treasury Department in 1869. President Grant hoped that gold and silver coins would find their way into general circulation.
Bankers and mining men were interviewed. Those with vested interests in the mining industry searched for a new use for all of the excess silver that was available.
A plan was conceived to produce a disk of silver that became known as the “Trade Dollar” for export to China. Many experts of the day thought this would be a great way to compete with the Mexican dollars that were widely used in world commerce at the time.
Between 1870 and 1873, this whole matter of coinage and the Trade Dollar was hotly debated in Congress. February of 1873 brought a new coinage act that was signed into law by President Grant.
This new coinage act abolished the standard silver dollar as a denomination and established the Trade Dollar as the new denomination. This act bothered few people at the time, but was later named the “Crime Of 1873.”
As the Trade Dollar coinage began to be produced in July of 1873, the Treasury Department ordered the Mints to start producing large quantities of minor silver coins. These were put into circulation and by the summer of 1874 silver coins started to circulate across the U.S. Much silver was purchased for this coinage, helping to slow down the fall in value of silver. All of this set the stage for the introduction of what was to be called the Morgan Silver Dollar.
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