Trade dollar intentions went wrong

It is actually surprising that someone has not been on the television marketing an historic bullion coin set featuring one silver American Eagle and one Trade dollar. Issued over a century apart, the two share the common traits of being large silver coins of the United States that traded at bullion levels. Moreover, such a promotion might well make more aware of the Trade dollar and its fascinating story.

In fact, the story of the Trade dollar really goes back well beyond the production of the first Trade dollar for there is very little doubt that had there been no excess silver there might well have never been a Trade dollar. So we go back to 1859 and the first major silver strikes in what we now know as Nevada.

It is hard to imagine too much silver being a problem as most of us would love to have that problem, but too much silver is actually a problem if you happen to own a silver mine and you and your fellow mine owners have more silver than you can use. In that unlikely event, if you mine all the silver you can, the price will go down and if you do not mine all the silver, your income will go down. That is when too much silver is a problem. That is what was taking place as the Civil War disrupted 1860s came to a close. Prior to that to an assortment of factors, all the silver mined could be sold in Europe, the Far East, Latin America or even at home. Moreover, with a Civil War going on, the United States had more than a few debts. The war also limited manpower for tasks like mining and limited commercial expansion to places like China.

By the early 1870s, everything had changed. All of the silver coins hoarded during the Civil War began to be returned to circulation. People began to trust that the Union-issued bank notes really were to be trusted. Silver production increased at the same time and the market demand for the metal did not grow with it.

In fact, if anything, demand especially from Europe was down and suddenly the mine owners were looking directly at that strange problem of too much silver.

They had not let out a peep when the old half dime and silver dollar had been abolished in 1873. The public didn’t like them.
Expected salvation came mainly in the form of a commercial dollar that was created by the legislation that weighed 420 grains, which was more than the 412.5 grains of the abolished silver dollar. The increase in weight would give the coin more silver than the Mexican 8 reales (peso), which it was thought would make it popular in China. To this point, the Mexican issue was preferred by merchants in China.

The silver interests must have been overjoyed. They looked forward to a large new demand for their metal in China. After all, if you have too much silver, just make the coins heavier and give them a one-way ticket to China so the silver will never return home to depress the market. People will then need more of the newly mined metal.

It was seemingly as perfect as such a plan could go. Few, if any, probably gave a second thought to the provision in the legislation that said that the new Trade dollar as it was called would have a limited legal tender value. After all, at the time of the legislation’s passage in 1873, the coin contained $1.05 in silver, so few would have cared to use these coins at home for $1. For a time, it did not seem to matter as Trade dollars were cheerfully shipped to China where early reports were good.

That, however, was 1873. Two years later it had all gone south. In China, the Trade dollar was accepted in some areas, but did not catch on it others. The price of silver was also a problem, having fallen to the point where the Trade dollar was no longer worth a dollar in silver. It go so bad in the United States you could tender 90 cents in silver and get back a Trade dollar.

Then in July of 1876 Congress did basically the unthinkable when it abolished the legal tender status completely. The Trade dollar was suddenly the Trade 87 cents or so. With over 9 million struck by that time and many still in the United States, owners quickly worked out deals with some major employers to pay workers in Trade dollars. When the employees went to spend their pay, it was at that point that they came face to face with the notion that a coin that said “Trade Dollar” on the reverse wasn’t really a dollar at all. This did not help labor relations at the time.

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In 1877, the Treasury tried to stop Trade dollar production but had to change that position, producing the coins for those promising to export them, which in many cases did not happen and increased the incidence of fraudulent pay practices. Desperate silver interests manage to pass another law, the Bland-Allison Act that would bring about the massive purchase of silver in a manner less odious than the Trade dollar.

Their new savior was the Morgan dollar.

But the Trade dollar continued to linger. The last significant mintage was the 4,162,000 coin struck at San Francisco in 1878, the first year the Morgan dollar was produced.

Although regular production was ended, Philadelphia continued to strike proof-only Trade dollars until 1883 and in 1884 and 1885 Trade dollars were produced clandestinely for a few who wanted them.

In fact, stopping production did not solver the problem as millions of Trade dollars were still circulating at assorted prices, causing economic problems as they went. In 1887, the Congress belatedly was forced to authorize redemption of the remaining Trade dollars at their face value, but with the stipulation they could not be mutilated with chopmarks. This ruled out any Trade dollars coming home from China. Trade dollars were chopmarked there to attest to their correct weight and fineness to merchants who could not read the English on the coins.

This might seem like a trivial point, but it would have been profitable to pay say, 87 cents for the coins in China and ship them to the United States for redemption. This is not something the Treasury wanted to contemplate.

The whole Trade dollar fiasco had taken just a bit over a decade to play out. The first ones were coined with high hopes in 1873. Those who were cheated with the coins probably thought it seemed longer.

The Trade dollar was the first time a coin of the United States had seen active trading primarily not at its face value but rather at its bullion value, making the Trade dollar very clearly the nation’s first bullion coin.

While the Trade dollar might have been minted for a relatively short period of time, that does not mean there are few interesting dates. From 1873 when the first Trade dollars were produced until 1878, the Trade dollar was produced at Philadelphia, San Francisco and Carson City. After 1878, the proof-only issues came from Philadelphia.

If you attempt to determine key Trade dollars, the simply mintage numbers are not as good indicators as might normally be the case for a couple of reasons. First, especially in the case of the 1873 coins, none of which had a mintage of even 1 million pieces, the mintages might make them seem more available than is really the case as many 1873 and 1874 coins were shipped to China where they were either chop marked or melted.

In the case of all dates, there is another factor and that is that in addition to regular factors that cause some of any coin to be lost, the Trade dollar had special provisions for their redemption long after their production for circulation had stopped. In the case of the Trade dollar, which had made so many people angry and which had caused so many to lose money by accepting them, that possibility of turning them in for a dollar was an opportunity many might well have taken, meaning a destruction level higher than would normally be the case for a silver dollar of the period.

If you look at a potential Trade dollar collection today you actually have a couple of options. They can be collected in the normal manner, but at least a few specialists have opted instead to assemble a collection of each date and mintmark with one or more of the interesting chops from Chinese merchants of the period who had accepted the coins.

It is an interesting experience to examine a Trade dollar with chops with someone who can read them as the Trade dollar suddenly takes on a new life as you see the chop from a merchant who was selling one product or another. In fact, you can virtually trace the coin going hand-to-hand in China after having made the long voyage across the Pacific Ocean.

While a Trade dollar with one or more chops will naturally be circulated in many instances they can be found in grades of VG-8 and up, usually VF-20 or better if they just received one chop, so while circulated, they are still decent looking, but with an added feature. Usually coins with chops sell at slight discounts and most dates are available except for the proof-only dates and perhaps the 1878-CC that just had a 97,000-piece mintage.

Embarking on a normal collection of Trade dollars, you learn that their stormy history still has an influence on a collection today. In circulated grades, the San Francisco issues are the cheapest. You can pick up 1875-S, 1876-S, 1877-S or 1878-S pieces for $98 in G-4. Philadelphia coins are a bit higher. The 1875 has the lowest mintage from Philadelphia 1873-1877, so its $160 G-4 price is higher than the $108 and $118 prices of the other years.

Carson City Trade dollars, even when they have mintages higher than their Philadelphia counterparts have higher prices because of the existence of the Carson City specialty collectors. It might also be presumed that being close to the West Coast, more of these were exported, but if we make that presumption, why did exportation not all affect the relative scarcity of the San Francisco coins?

The 1874 Philadelphia is $118 in G-4 while the 1874-CC is $235. Mintage of the Philadelphia coin was 987,100 while the CC was 1,373,000.

The upper end of the Trade dollar mintages was set by the 1877-S at just over 9.5 million pieces. San Francisco was the hub of Trade dollar production. It stands to reason as while there was commerce from the East Coast to China, the bulk of the activity departed for China from San Francisco. Moreover, the whole Trade dollar idea had been championed by Western state interests. In the case of the Trade dollar, Philadelphia was closer to an innocent bystander and in fact only once, in 1877, did a Philadelphia mintage top 1 million pieces, so there are going to be some better than might be normally expected Philadelphia dates in the collection.

In circulated grades, the 1873-S is the better date for the San Francisco issues thanks to a 703,000-piece mintage and heavy shipments to China. The Carson City Trade dollars, however, are uniformly higher in price and the 1875-CC with a mintage of 1,573,500 is priced at $200 in G-4 while the 1873-CC with a mintage of 124,500 is $230. You would think the difference in mintage would justify a much higher price for the 1873-CC.

It is the 1878-CC Trade dollar in any grade that deserve a serious look from collectors. Remember, it was 1878 and by that time the Trade dollar was on its way out. In Philadelphia only proofs were struck. Only San Francisco would have anything close to a normal mintage in this year. In Carson City, just 97,000 coins were produced. At $425 in G-4, or $12,000 in MS-60 it has the highest price of the issued intended for use. The 1878-CC stands alone of the regular strikes from Carson City a coin with a low mintage issued at a time when people were trying desperately to unload any Trade dollars they might receive. It is a perfect recipe for poor survival.

In upper grades, the Trade dollar can get extremely tough. It was after all a bullion coin and not a very popular one. The 1878-CC is tops, but not far behind in MS-60 is the 1873-CC at $8,850 and the 1876-CC at $8,500.

Presently, if you want an MS-60 Trade dollar, the cheapest options are the 1876-S, 1877-S or the 1878-S at $940.

If you move to MS-65, your checkbook needs to have lots of zeros on the balance.

The 1873-CC is $122,000 in MS-65 and the 1878-CC is $112,000. These are the only two over $100,000, but other dates range from $7,500 for the 1876 to $78,500 for the 1876-CC in MS-65.

If Trade dollars had stopped with the 1878 issue, that would be enough challenge, but there were the proof-only dates as well struck for collectors in the vicinity of the Philadelphia Mint. The first proof in this sequence, the 1878, started strong and stayed in demand until 1883. The proof-only dates had mintages of 900 to almost 2,000 pieces and prices in Proof-65 at $10,500 each. Lower quality pieces, even impaired proofs, can be had for much less.

The year 1883 is another logical stopping point. This is where average collectors of the time ended their involvement.

However, there are the matters of the 1884 and 1885 coins. The former had a mintage of 10 and the latter five coins. These two coins were produced in secret. They left the Philadelphia Mint by the back door and their existence was not even discovered for some years after they were made.

The two are rarely offered for sale, but in the 1997 Eliasberg Sale there was a rare chance to see both come up for bids in the same sale. While either can create excited, both together are a phenomenon.

Back in 1997, the 1884 brought a total of $396,000 while the 1885 nearly hit $1 million, stopping just short at $907,500.
With the time elapsed since then, it seems logical to suggest that the 1885 is solidly a $1 million-plus rarity.

There are also minting varieties and errors to consider. For example, 1875-S with the “S” mintmark punched over a “CC” mintmark beneath attracts prices worthy of the Carson City Mint. In MS-60 is valued at $4,650 and in MS-65 it is $65,000. In the G-4 grade it is attainable at $220.

Clearly a complete and top grade Trade dollar collection is something only for millionaires, but if you focus on the lower circulated grades, the compact size of the collection allows many more hobbyists to consider taking up the challenge of putting a set together.

Certainly there are enough circulated coins to pair up with a silver American Eagle for that special television offering mentioned at the beginning of this article.

Hype aside, interest in the Trade dollar as America’s first bullion coin might increase on its own. At this point, the Trade dollars tend to have solid market support.

In most grades, the majority of dates move little in price from month to month. They have risen solidly above any influence the bullion market might have on them. They are, after all, no longer bullion coins.

While their prices might be high, it is hard to find a more interesting group of coins from America’s past at any price.