The U.S. already had a silver dollar at the time, but Mexico was producing a silver peso with a higher silver purity, making their coins more valuable by weight than the U.S. dollar. To even the field, the mint developed a slightly heavier coin, using the same purity metal as the previous dollar, which brought it on par with the peso. To differentiate the more-valuable coin from the regular dollar, the U.S. marked its weight and purity on the reverse — “420 grains, .900 fine” — and identified them as a “Trade Dollar”, a coin for international trade rather than domestic commerce. The U.S. Mint performed more direct service to citizens at the time, and anyone who produced a silver ingot could have it “converted” to Trade Dollars for a small fee. Operators of silver mines found themselves with the ability to place their silver on the international market without a middle-man, which resulted in a quick increase in the U.S.’ trade wealth. Millions of Trade Dollars were minted and were sent overseas; however, some didn’t make it. The coin, as a precious metal, had a intrinsic value and people began using them in stateside transactions as well.
By 1876, however, the Trade Dollar ran into trouble. Silver continued to flow into the market, both from domestic and foreign sources, which led to a drop in silver’s value as a precious metal. There were hundreds of thousands of the coin in circulation in the U.S., being transferred at face value, while the actual metal value was far less. This imbalance had been the source of much of the U.S.’ banking troubles in one way or another for decades, wobbling between devaluation and hoarding, and the Trade Dollar was now worth far less than its transactions. For the one and only time in U.S. history, the Mint demonetized a circulating coin, declaring all Trade Dollars only as valuable as the precious metals inside as of July 1876. For a short time, unscrupulous people bought the Trade Dollar at scrap value — pennies on the dollar — and spent them with whoever would take them. Banks, however, wouldn’t accept them as deposits, and the declining silver market continued to reduce their value to a mere fraction of what they had been worth when backed by the Mint. Foreign trade still used the silver coin so the Mint continued to produce them until 1878. After that time, small numbers of the coin were produced as proofs for collectors.
Most Trade Dollars went into the furnaces of precious metal dealers, and those that ended up back at the Mint met a similar fate. Many examples, however, did survive, especially in the coffers of those overseas traders who chose to accept the Trade Dollar in commerce. The proofs produced from 1876 to 1885 have the most firmly-placed values, because there were a specific number produced and they are quite scarce.
There is no way to know how many pre-1876 coins are still in circulation, because it is likely many that went overseas were melted for their metal as well.
The majority of Trade Dollars that still exist bear the marks of the Far East traders who accepted them, called “chop marks”. The traders cut the coins, or struck them deeply with an identifying character, to ensure that the metal was of the right softness and there wasn’t a copper layer beneath the silver. As such, most coins in the collector’s market today have these chopmarks, while the unmarked ones tend to be proofs. The proofs, due to their scarcity, sell for hundreds of dollars, while the rarer proofs from the 1880s are worth thousands. Marked and circulated coins may sell for $50-$100, which is still far more than the value of the silver as a precious metal. Much of that value is purely the collector’s market, due to this unique coin’s rarity and history.
View Article Source
