Vital Stats.

Trade Dollar

After the Civil War, the Comstock Lode and other Western mines were producing large quantities of silver, but the government could use only limited amounts of it in coinage.

For a time, the miners found outlets for their silver, often in coinage form, in foreign markets such as Canada, Latin America and Europe. But, for various reasons these markets became saturated and then The Coinage Act of 1873, Congress suspending further production of silver dollars.

That's where the trade dollar came in: The mining interests won approval for a new silver coin one that would not only provide an outlet for Silver, but also open a whole new market in Asia. Asia was already receiving much Congressional attention, particularly China.

Some U.S. silver had found its way to that region earlier and the Chinese had shown a preference for US silver coins, however, up to then the bulk of US trade with China had been carried out with Spanish and Mexican Silver.

The trade dollar's biggest problems was not in China but in the US. Congress had made the coin a legal tender for domestic payments up to five dollars. In 1876, millions were dumped into circulation in the United States when silver prices plummeted, making them worth more as money than as metal.

Congress quickly revoked the legal tender status (the only time this has been done with a U.S. coin). In the late 1870s, employers bought up huge numbers of the coins at 80 to 83 cents apiece and then put them in pay envelopes as face value coins. Merchants and banks accepted them only at bullion value or rejected them altogether, so the workers effectively lost one-sixth to one-fifth of their pay at a time when that pay often amounted to less than $10 a week.