Q. David Bowers
A Comprehensive Report
The Annual Report of the Director of the Mint, 1878, included a detailed discussion of the trade dollar and how it was serving its intended purpose. Reports from various correspondents in China told of differences in popularity of the American trade dollar from one area to another. The commentary includes information concerning circulation of the trade dollar in the United States, as well:
"The purpose for which the trade dollar was instituted and the mode in which these coins were supplied by the mints are already well-known, and it is unnecessary to advert in this report to that subject. It is sufficient to state that wherever they have been introduced in China they have met with a favorable reception and continue to grow in the estimation of the Chinese.
"It is only in the southern ports, however, of the Chinese empire, that the people are familiarized with these coins; in the northern part they are as yet unknown. The extracts from reports made by the Hong-Kong & Shanghai Banking Corporation, and the Oriental Bank, two of the principal foreign banking companies, dated respectively January 30 and 31, 1877, as well as the dispatches from the United States legation in China and consuls at the various ports establish satisfactorily the fact that the trade dollar has proved beneficial to the Chinese, the American merchant, and the producer of silver.
"[A spokesman for the aforementioned banks reported as follows:] 'The United States trade dollar has been well received in China, and is eagerly welcomed in those parts of the country where the true value of the coin is known. It is a legal tender at the ports of Foochow and Canton in China, and also at Saigon and Singapore, and, although not legally current in this colony, it is anxiously sought after by the Chinese, and in the bazaars it is seldom to be purchased. In proof of the estimation in which the trade dollar is held in the south of China, we need only state that the bulk of the direct exchange business between San Francisco and Hong-Kong (which is very considerable) is done in this coin, the natives preferring it to the Mexican dollar.
" 'Late advices from San Francisco report that so great is the demand for trade dollars for shipment to China, that the California mint is unequal to the task of turning out the coin fast enough to convince the most skeptical as to whether the United States trade dollar has been a success or not. It is the best dollar we have ever seen here, and as there can be no doubt as to the standard and purity being maintained, it will become more popular day by day, and, we doubt not, ultimately find its way into the north of China, where the people are more prejudiced against innovation.
"'Trade dollars are current by count at Singapore, Penang, Bangkok, and Saigon; they are current by weight at Swatow, Amoy, Foochow, and Canton. In Hong-Kong they are not a legal tender, and the banks will only take them from each other by special arrangement; but the Chinese take them freely in Hong-Kong when they want coin of any description, which is very seldom, as they prefer bank-notes, and only take coin from the banks when they require to export it from the colony. In the South of China, the Straits and Cochin China, the trade dollar is well known and passes without comment along with the clean Mexican dollars, but in Shanghai and the northern ports it is unknown, and is not likely to be current for a length of time.
" 'My opinion is that ultimately it will be current all over China; it is the best coin that ever has been imported and, being produced at the fountainhead of silver can be laid down more cheaply than any other dollar. The reliable character of the coin (for weight or purity) is a further consideration which must be favorably entertained.
" 'China requires many millions of dollars annually, and while the clean Mexican dollar will be imported for the North of China, the trade dollar will be imported for the South. I would roughly estimate that the San Francisco steamers will bring from four to six lacs (four to six-thousand) (The parenthetical note appeared in the original report. Walter I-I. Breen comments: "Lac or lakh is not Chinese but Indian, and means much more than a thousand.") of trade dollars each fortnightly trip, all the year round. I base this estimate upon the experience of last season's requirements.'
[The Mint director's commentary continues at this point:] "It has benefited the Chinese by giving them a coin of more uniform fineness and value and of better execution than any other current in their country; it has proved advantageous to the American merchant by furnishing him a coin more acceptable to his foreign customer and at a cheaper rate to himself; and the producer of silver has not only obtained a better price for his silver, but an increased demand for the same has been created.
"So long as gold continued at a premium and silver bullion commanded a price sufficient to keep the bullion value of 420 grains of standard silver, together with the coinage charge for a trade dollar, above the gold value of a United States legal-tender dollar note, there was no likelihood of trade dollars finding their way into domestic circulation, at least not to any embarrassing extent; but when, from the appreciation of United States notes as compared with gold, and the decline in the value of silver, a trade dollar added to its coinage charge became of less intrinsic value than the gold value of a dollar note, owners of silver bullion deposited the same at the mints for returns in trade dollars, and placed them in circulation at a profit to themselves. This state of affairs first manifested itself in the latter part of 1877, and in October of that year the secretary of the Treasury directed that the receipt of deposits of silver for coinage into trade dollars should be discontinued at the coinage mints and at the assay office at New York.
"In November of the same year an increased demand arose on the Pacific coast for trade dollars for Chinese new year settlements, and as it was alleged that the coins were required for export, the secretary so far modified the former order for discontinuance as to authorize receipts at the Western mints for returns in these coins.
"It subsequently transpired that trade dollars manufactured under this authorization at the mint at San Francisco were not all shipped to China, but the larger portion were transported to the Mississippi Valley as well as to the eastern states, and there placed in circulation; accordingly, on February 22, 1878, an order was issued for the final discontinuance of the receipt of deposits for returns in trade dollars at the Western mints."
"At the time of the order being issued to the Philadelphia Mint and New York Assay Office, October 1877, there was due depositors for bullion previously deposited at those institutions 590,795 trade dollars, and at the San Francisco Mint at the date of the final order, February 1878,1,695,819 trade dollars; the superintendent was instructed to settle for these deposits in trade dollars, upon satisfactory evidence being given that the same would be exported, or, if the depositor preferred, he could receive his silver back in fine mint-bars. The bullion was accordingly coined, and settlement made with the depositors; the last coinage for this purpose being executed at Philadelphia in the beginning of December 1877, and at San Francisco early in the ensuing April, since which time none have been coined.
"At the mint in Carson no trade dollars were due depositors for deposits made prior to the date of the order for discontinuance, and the coinage, therefore, ceased with the reception of the order.