Failed Trade Dollar Now Sought After

By Mike Thorne, Coins Magazine March 30, 2011

This article was originally printed in Coins Magazine.
>> Subscribe today!

China is much in the news today. At the time I’m writing this, for example, the headlines talk about the president of China’s visit to our leaders in Washington. In addition, it sometimes seems as though everything we buy nowadays has a “Made in China” sticker on it. As a consequence, our nation’s trade with China is badly imbalanced in their favor.

Believe it or not, trade with China figured importantly in the desire for a new silver coin in the latter part of the 19th century. I’m referring to the Trade dollar, minted from 1873-1878, and then as proofs only from 1879-1885.

The idea for a trade dollar originated in the late 1860s, according to David Bowers, writing in his monumental encyclopedia, Silver Dollars & Trade Dollars of the United States:

One-Minute Coin Expert Collecting rare coins has become a lucrative global game – learn how to play with this award-winning book! Get your copy today!

“During this time there was extensive commerce between American merchants and banking interests in China. Distrustful of paper currency, Chinese suppliers preferred to receive payment in silver coins.”

Unfortunately for American interests, the Seated Liberty dollar (the “standard” U.S. dollar of the time) weighed 412.5 grains. This was slightly lighter than the then-circulating Mexican eight-reales coins, which Chinese merchants preferred. U.S. silver dollars were accepted, but only at a discount.

With prodding from silver-mining interests in the West, Congress decided that a special coin, a “trade” dollar (or, as it was initially called, a “commercial” dollar) was needed. The specifications called for a greater silver content than in the standard dollar, and the resulting Trade dollar actually contained slightly more silver than the Mexican eight-reales coin.

The Trade dollar was authorized by the Coinage Act of 1873. The Act also made Trade dollars legal tender in the United States, which was fine at first, as the coins contained slightly more than a dollar’s worth of silver. However, as the price of silver declined, enterprising people began to deposit silver bullion in the Treasury, receive Trade dollars in exchange, and then spend the Trade dollars for their face value, which was now greater than the value of the silver bullion in them.

As a result, in 1876, Congress removed the legal-tender status of Trade dollars. As Bowers writes, “After 1876, trade dollars could not legally be spent at face value within the United States.… Nevertheless, employers often flouted the law, putting them into pay envelopes.…”

The Trade dollar was designed by William Barber, chief engraver at the Mint. The obverse is dominated by a seated figure of Liberty. In her left hand, Liberty holds a ribbon inscribed “LIBERTY,” and with her right hand she is extending an olive branch westward toward China. She is seated on a bale of cotton, which is tied with ropes, and at her back is a sheaf of wheat. Below the bale is another ribbon inscribed with the motto, “IN GOD WE TRUST,” and below that is the date.

On the reverse is a perched eagle, holding an olive branch in its left talon, three arrows in its right. Around the top border are the words “UNITED STATES OF AMERICA”; around the bottom border, “TRADE DOLLAR”. Immediately above these words are the coin’s specifications: “420 GRAINS, 900 FINE”. Over the eagle’s head, a ribbon declares “E PLURIBUS UNUM”.

So, how did the coin fare in trade with China? If we could believe the Professional Edition of A Guide Book of United States Coins, the Trade dollar was a winner. “Produced in quantity from 1873 through 1878, the trade dollars were a great success, particularly in China, where merchants preferred silver to gold and would not accept paper money of any kind.”

However, perhaps the picture was not as rosy as that account would have us believe. In Chapter 11 of Bowers’ encyclopedia, R. W. Julian writes, “…in China matters were going rather slowly. Despite optimistic reports made in 1873, the progress was not that good.…American consuls and commercial representatives did their best, but it was difficult for them to persuade the Chinese to accept anything new.”

In his mammoth Complete Encyclopedia of U.S. and Colonial Coins, Walter Breen, who can always be relied upon for an entertainingly negative comment, wrote the following about the Trade dollar:

“The issue of this coin was an expensive mistake its motivation mere greed, its design a triumph of dullness [Breen made similar comments about the designs of William Barber’s son, Charles Barber, who succeeded his father as chief engraver at the Mint], its domestic circulation and legal-tender status a disastrous provision of law leading only to ghastly abuses, its repudiation a source of hardship for Pennsylvania coal miners and other laborers held in virtual peonage by company stores, its recall a long overdue but very mixed blessing, and its collection a source of decades of frustration.”

Success or failure, Trade dollar coinage for circulation came to an end in 1878, with the passage of the Bland-Allison Act. This authorized the purchase of millions of ounces of silver to be made into standard silver dollars, and the Morgan dollar was the result.

Today, Trade dollars can be collected in a number of different ways. For most collectors, obtaining one for a type collection will be sufficient, and the most common dates for this purpose are dollars minted in San Francisco from 1874-1878. Mintages for this group range from 2,549,000 (1874-S) to a whopping 9,519,000 (1877-S).

Although values for Trade dollars in “Coin Market” (Numismatic News) are given beginning with the grade of Good-4, if you’re looking for a coin for a type set, surely you’ll want one with as much of the original detail as possible. A coin in Extremely Fine-40 will have all the major details and most of the minor ones, and a common date should be modestly priced. An EF-40 1877-S, for example, should cost around $225. In About Uncirculated-50, the date lists for $275, and it’s worth $940 in Mint State-60, $1,950 in MS-63, and $13,750 in MS-65.

In MS-65, the least expensive date by a rather large margin is the 1876, which lists for “just” $7,500 in this condition. Bowers notes, “Many Uncirculated coins seen in collections today have deep gray or even black toning and may represent specimens saved by the public as a souvenir of the 1876 centennial year.”

Another way to collect Trade dollars by type is to look for major varieties within the business strike dates. Bowers discusses two different obverse and two different reverse types (obverse Types I and II, reverse Types I and II). Both obverse and reverse types are apparently found on pieces from all three mints (Philadelphia, San Francisco, Carson City) dated 1875 and 1876. Although these types are noted and valued in the A Guide Book of United States Coins, they’re not mentioned in “Coin Market.”

Beyond type collecting, another obvious way to collect Trade dollars is to obtain one of each date and mintmark combination of the dates minted for circulation. Such a collection would consist of 17 different coins: 1873-1877-P, -CC, -S, and 1878-CC and -S (proof-only coins were struck at the Philadelphia Mint in 1878).

In EF-40, only one of the 17 dates is valued above $1,000, and it is from the Carson City Mint (1878-CC, $2,400). Not counting the proof-only issues, the 1878-CC has the lowest mintage of the series, at only 97,000 produced. Even worse from a collector’s standpoint, Bowers reports that 44,148 undistributed Trade dollars were melted in July 1878, and all of these were 1878-CCs. This leaves a total of just 52,852 coins distributed, and Bowers estimates a population in grades of VF-20 and up of between 186 and 365 pieces.

Not counting CC dollars, the range of values in EF-40 of the Trade dollars struck for circulation is from $225 to $590. Actually, all but one of the non-CC dates are close to the bottom figure. The oddball is the 1875, with a mintage of 218,900 pieces. This is the lowest mintage of any of the P-mint issues and the third lowest mintage of any of the circulation-strike dates.

About this date, Bowers writes, “Worn unchopmarked specimens are scarcer than any other Philadelphia Mint business strike Trade dollar. Still, somewhere between 750 and 1,500 coins are believed to exist in grades from VF-20 to AU-58.” Bowers estimates that there are between 190 and 335 uncirculated 1875s.

Yet another way to collect Trade dollars discussed by Bowers is as chopmarked pieces. As defined by the International Encyclopaedic Dictionary of Numismatics, a chopmark (also chop mark) is a “small oriental character or special symbol counterstamped into the surface of a Trade dollar or other large silver coin to show that the coin’s weight and purity had been examined and approved.”

Although Bowers is quite favorably disposed toward collecting chopmarked Trade dollars, collectors and investors today are likely to see such coins as damaged and thus not as valuable as their unchopmarked counterparts. In the past, this wasn’t necessarily true, as “some numismatists paid a premium for chopmarked coins, considering them to be especially historical and valuable.” Rather than considering the coins damaged (or “mutilated,” as the government called them in order not to have to redeem them), “A more enlightened view would be to consider them to be ‘countermarked’ coins with an added bit of history literally two coins in one.”

Of course, the well-heeled collector may choose to collect proof Trade dollars. Such a collection, not counting the two incredibly rare dates at the tail-end of the series (1884 and 1885, which I’ll discuss below), would consist of 11 coins: 1873-1877 and the proof-only dates, 1878-1883.

In Proof-65, these 11 dates range in value from $10,500 to $13,500. Actually, all are valued at $11,000 or less except for the 1878. It’s hard to see why the 1878 is significantly more expensive than the other dates, as its mintage (900) is not the lowest among the proof-only issues. Not counting the two anomalies at the end of the series, the lowest mintage goes to the proof 1877 Trade dollar (510, although Bowers suggests it should probably be 710). Either figure is lower than 900, of course, and Bowers also notes that most of the 1878 mintage has survived, which you would think would make it less expensive than the 1877.

There’s no question of why the 1884 and 1885 Trade dollars are so expensive (“Coin Market” lists a value for the former in AU-50 of $100,000 and a value for the latter in PR-65 of $200,000). Both are incredibly rare, with listed mintages of 10 and five, respectively.

Actually, it’s a mystery to me why “Coin Market” has the 1885 valued at just $200,000 in PR-65, as there’s a note below the listing giving the amount such a coin sold for in 1997 ($907,500). The 2009 A Guide Book of United States Coins prices the 1884 in PR-63 at $450,000 and the 1885 in the same grade at $1,750,000. A Guide Book of United States Coins further notes an auction price in 2005 of $603,750 for the 1884 in PR-65 and a 2004 auction value of $1,006,250 for the 1885 in PR-62.

Obviously, these are not coins that you and I are going to feel we must have, and whenever one comes on the market, it’s a newsworthy event. I see both dates as having the same place in the history of numismatics as the 1804 silver dollar and the 1913 Liberty Head nickel. They were not official Mint products. As Bowers notes, “So far as the government records are concerned, there is no such thing as an 1884 Trade dollar, either in business strike or Proof form (although there is an official record of dies having been made for the issue).”

In his closing commentary about 1884 Trade dollars, Bowers writes:

“Made in limited quantities by Mint personnel and filtered into the collecting community via William Idler, Philadelphia coin dealer. Date(s) when the coins were made unknown. Although such pieces were rumored to exist as early as 1884 (the date on the coins), they were generally unknown to the collecting fraternity until 1908.…”

About the 1885, Bowers writes, “In the year 1885 there was no business strike mintage of trade dollars, nor was there an official Proof coinage.… No Proof 1885 trade dollars are listed in Mint reports or records, and it is supposed that the coinage was unofficial, although not illegal.” Like the 1884 Trade dollar, the 1885 didn’t become known to collectors until 1908.

Whether you collect Trade dollars by type, by date/mintmark combination, by chopmarks, as proofs, or by some combination of these ways, you will find that such collecting is not for the faint of heart. Unless you are willing to settle for heavily circulated pieces, any Trade dollar you buy is likely to be expensive, as you will see if you look at any pricing guide.

In addition, I suspect that the “better” dates are likely to be hard to find. Actually, I should qualify this comment: It’s likely to be hard to find the scarcer dates in decent condition. I just looked on eBay and found at least 15 different dates listed. Unfortunately, many of the coins had problems such as cleaning, damage, stains, and so on. Many of the coins were noted as being rare, even when they were in fact common-date examples. Prices were often “out of sight.”

I’m reminded of Breen’s comment quoted above about the Trade dollar: “its collection a source of decades of frustration.” I can’t promise you “decades of frustration” if you choose to collect Trade dollars, but I think you’ll find accumulating a decent collection quite a challenge. Still, if you have the mental fortitude and the budget for it, I can guarantee that such a collection will be a source of great satisfaction for you. Good luck!