In a letter dated November 18, 1858, Superintendent of the San Francisco Mint Charles H. Hempstead wrote to Mint Director James Ross Snowden in Philadelphia the following: 'We are now attracting to our shores large quantities of silver, in bars, from Mexico, for which we pay in silver coins. By reference to your letter from the fourth of August last, I find that you say that single 'silver deposits may be received, but they are only payable in silver dollars or in fine silver bars.' We have never received any dies for silver dollars, nor am I aware of the reason why this branch has never made that denomination of coin. I would, therefore, suggest that the coinage of silver dollars (if it be not contrary to the policy of government) would relieve us just one-half of the labor now necessary in the coinage of large quantities of Mexican silver.' A few months later, Snowden sent a reply that stated: 'As the facts stated by you indicate the propriety of coinage of silver dollars at your branch of the mint, I have caused four pairs of dies of that denomination to be prepared to you per express. A weight for the adjustment of the coin (from which others can be made) will be found in the box containing the dies.' From this simple exchange of correspondence, the United States Trade dollar was born.
Even though numismatists use the title 'Trade dollar' to refer to William Barber's design of 1873-1885, the 1859-S Liberty Seated dollar is actually the first silver dollar that the United States coined for express export to the Far East. Although it represented a significant step in the nation's coinage history, the 1859-S delivery was isolated by the political trauma of the Civil War and Reconstruction that would dominate the better part of the next three decades. It was, nonetheless, an event before the outbreak of war that would ensure the continued flow of silver dollars from the coinage presses of the United States to the markets of the Orient.
In 1859, while the San Francisco Mint was busy striking its first 20,000 silver dollars, the Comstock Lode was discovered in Nevada. The vast quantities of silver that poured from the ground presented a curious problem for the United States in the decades immediately following Appomattox Courthouse. As the price of silver fell relative to gold throughout the 1860s, it became increasingly more difficult for Uncle Sam to export his surplus of the precious metal. In 1871, the situation went from bad to worse when the newly formed German Reich adopted a gold standard and flooded European markets with its unwanted silver. With this avenue of export effectively closed, the United States government had little choice but to look east toward China as the market for its excess silver. Even though some American silver continued to reach the Orient in the form of ingots, Spanish and Mexican dollars remained the preferred method of exchange among Chinese merchants throughout the late 1860s and early 1870s. Clearly, the United States needed a silver dollar of sufficient size in order to compete with its Latin American counterparts.
The Coinage Law of 1873 marked the birth of the official Trade dollar. Whereas the 1859-S Liberty Seated dollar conformed to the 1837 weight standard of 412.5 grains, the lawmakers fixed the Trade dollar's weight at 420 grains in order to ensure its effectiveness against the competition. Despite great expectations, the entire concept proved a disaster. Chinese merchants still shunned the American coins in favor of issues from Latin America and, to complicate matters, Japan stiffened the competition by introducing its own Trade dollars. While many of the Trade dollars that were melted overseas undoubtedly helped to offload some of the United States' unwanted silver, they proved unable to stop the ore's continuing decline in value. As unwanted Trade dollars were simply building up within the United States' borders, the Treasury Department finally halted business strike production on February 22, 1878, although proof specimens would continue to flow from the Philadelphia Mint through 1885. The government redeemed about 7.7 million of the extant business strikes starting in 1887, although numerous pieces continued to circulate well into the 20th century.
Description and Analysis courtesy of Heritage Auctions and may not be republished without written permission.