Q. David Bowers
The problem with gold and silver being out of daily use was not the lack of coinage, which was hoarded all over the country, but rather the fact that such coinage was worth more than face value in terms of the all-pervasive paper currency. It would have cost the taxpayers a vast sum in 1865 to put even the silver back into daily use, but still the public demanded that this be done as soon as possible.
As early as the summer of 1868 the government quietly began to stockpile minor silver coins. The coinage continued to be struck and laid away for such time as it would again be used in the market-place. In the meantime the coinage of dollars for depositors continued to grow in strength and numbers. Even though nothing circulated, this mintage had the potential of destroying the 1853-established monetary system.
The value of silver was dropping in the late 1860s, which was part of the reason for the increased dollar coinage. Those who understood monetary matters saw that the nation had twin problems on its hands: the increased coinage of dollars would eventually undermine the gold standard established in 1853 and a growing surplus of silver was a dangerous political uncertainty. Beginning in 1869, serious discussions were held on what to do about this problem. H.R. Linderman, no longer in the Mint, was one of the key people involved; John J. Knox, deputy comptroller of the currency, was another government official closely connected to the discussions.
The 1870s
In 1870, President Ulysses S. Grant's administration introduced a bill drafted by Knox to reform the coinage system. The proposed legislation contained input from a number of experts, but Congress was maddeningly slow about doing anything. After interminable hearings and debate, the comprehensive Mint Act of 1873 was passed in February of that year.
One of the major provisions of the February 1873 law was the abolition of the dollar and the substitution of a slightly heavier trade dollar. The increase in weight was to provide competition to the Mexican dollar, which had a strong hold on the Oriental trade during this era. That the dollar had to be heavier to compete suggests that while silver dollars of the 1850s and 1860s went to the Orient, the numbers were not as large as they would have been had the silver dollar been a heavier coin.
While Congress did nothing, the number of dollars struck at Philadelphia continued to grow by leaps and bounds. More than a million pieces were struck in both 1871 and 1872. The coinage in the first quarter of 1873, before the new law took effect, was at an annual rate well above the preceding two years. Bullion owners had realized that in a short time their right to deposit silver for regular silver dollar coinage would be gone.
Dollars were also struck at the branch mints at San Francisco and Carson City but these were show coinages and little else. The 1870-S is a somewhat special case as one theory holds that all of the known specimens were made as part of a celebration honoring the laying of the cornerstone of the new mint in 1870 (it was completed in 1874). Otherwise the coinage was negligible through 1873. Only 700 silver dollars were struck at San Francisco in the first quarter of 1873, but not a single one appears to have survived.
The Carson City dollar coinage was mainly designed to impress Californians with the importance of the Nevada branch mint. Only a few thousand pieces were made from 1870 to 1873. Most of the bullion deposits at Carson were not made into coinage during this period, and the institution acted as little more than a glorified assay office for refining bullion into bars for shipment to the East Coast and abroad.