The Trade Dollar
Meanwhile the newspapers of the day presented the complete opposite picture. Under no uncertain terms they blasted the coin’s existence and use. Of course most of the glowing government reports were bought and paid for by the silver interests of the time and had no relation to reality.
In 1873 a new law abolished the standard silver dollar. However the law allowed for the production of a slightly heavier silver dollar to compete with the more popular Mexican silver that were popular in China. In a way the idea for a Trade silver dollar actually did make sense. Some folks felt that the Oriental nations had a peculiar ability to absorb silver in large quantities.
It was true that Chinese merchants did favor the use of silver for the purchase of their goods over other means of trade. And naturally the coin that contained the most silver was preferred by them. The Chinese merchants first used the Spanish silver dollar, but later switched to the Mexican silver dollar.
Until 1873 U.S. banks bought and sold Mexican silver dollars to supply merchants who had payments to make for their Orient transactions. The U.S. Trade silver dollar was intended to knock the Mexican silver dollar off of its pedestal. Trade dollars only had a limited legal-tender status in the United States. They had the legal-tender status of $5.
The Trade dollar was designed by Mint engraver William Barber. The coin was intended to represent the country of origin as well as fill the bill for all of the uses to which it would be put to. Barber used the standard Sitting Liberty design wit a few modifications. Instead of the Liberty being seated on a rock, it was seated on bales of export goods.
The Trade dollar’s weight and fineness was stamped on the reverse of the coin—“420 grains, 900 Fine.” In reality the Trade dollar was more of a round ingot than a standard silver dollar. And it was slightly heavier than a standard silver dollar which had a weight of 412.5 grains of silver.
Trade dollars were struck at the Philadelphia, Carson City, and San Francisco Mints in 1873. More than 1 million Trade dollars were produced from all three Mints. In 1874 Production quickly soared. By 1875 the San Francisco Mint alone had minted over 4 million Trade dollars.
Unfortunately, most of the Trade dollars were finding their way home from the Orient. As the price of silver declined, speculators bought up Trade dollars at a discount. Trade dollars soon flooded into general circulation.
An 1876 law revoked the Trade dollar’s legal-tender status. However the law failed to deal with the problem of the Trade dollars already in circulation. Government reports gave glowing testimonials of the Trade dollar’s success and recommended its continued use.
Many U.S. banks stopped accepting Trade dollars. Other banks only took them at a discount. In reality, Trade dollars were a complete failure. They simply failed to fulfill their original intent. All the Trade dollar did was to enrich the silver interests of the time.
The Chinese merchants stuck with the Mexican silver dollars and accepted the Trade dollar only at a heavy discount. Another problem was that Trade dollars were counterfeited and many were clipped—shaved of silver from the edge. Starting in 1879 only proof Trade dollars were minted.
While the Trade dollar was an utter failure in its heyday, they have become a success as a collectible. Though millions were sent to the Orient, they failed to replace the Mexican silver dollar as the most preferred coin. Although the Trade dollar ultimately lost its legal-tender status, it did tied the silver industry over until the 1878 Bland-Allison Act revived the standard silver dollar and eliminated the excuse of minting Trade dollars.
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