Q. David Bowers
"The total amount of trade dollars struck at the mints since the passage of the act authorizing their coinage has been 35,959,360, and the total number exported, as shown by the returns of the United States customs collectors, has been 25,703,950, leaving a balance of 10,255,410, a considerable portion of which has found its way out of the country through Chinese returning to their own land. It is impossible to ascertain with any degree of accuracy what this last may amount to, but I estimate that during the past five years it would not fall short of $5 million, leaving about five and a quarter millions held by California banks and in circulation as money; about $106,000 of this last amount has been melted as bullion at the mints.
"The principal portion of trade dollars now in circulation was coined since the passage of the act depriving them of their limited legal tender quality, and they were manufactured for depositors with the distinct understanding that they were to be exported and not placed in domestic circulation; and it was also well understood that they had been deprived of their limited legal tender character (to the extent of five dollars) by the Act of July 22, 1876. The government, having received nothing whatever for executing these coins except the actual expense of coinage, is in no degree responsible for their redemption. It would not do to give them a legal-tender character; lest it should result in bringing back large amounts from other countries; nor would it be right to add a large percentage to the value of these coins by making them a legal tender or redeeming them in legal-tender money. If made a legal tender, the purposes of the act authorizing their coinage would be practically destroyed.
"It appears from the dispatches of Minister Seward to the Department of State that all efforts to induce the Chinese government to establish a mint have failed, and it is quite certain that the empire must depend on foreign coins, the use of which has been gradually increasing for some years past at the principal ports of the empire. It will be to our advantage to furnish these coins, so far as we can without detriment to our own money system, and the trade dollar having attained such a favorable position in China, it would not appear to be advisable to repeal the law authorizing its coinage.
"The secretary of the Treasury possesses the power under existing laws to restrict this coinage to the actual export demand. Silver is the money standard of Oriental nations, and the extent of our silver producing territory justifies the belief that our production, together with the silver that our trade will naturally command from Mexico and South America, will, in the near future, be in excess of any probable demand for our coinage purposes, and we must look to China principally for a market for our surplus.
"Circulation of the Mexican Silver Dollar: After trade dollars could no longer be procured to be placed in domestic circulation, money dealers and speculators imported Mexican silver dollars to a large extent, and placed them in circulation at par in the same manner as had previously been done with the trade dollar. On these coins being offered on deposit or in payment at the banks and savings institutions by persons who had taken them at par, they were refused. (This scam has not been mentioned before in numismatic literature, to our knowledge.)
"This was followed by the receipt at the Treasury Department of numerous letters from different parts of the country, in which the question was in almost all cases asked why the United States Treasury would not receive these coins. To furnish accurate and uniform information upon the subject, as well as to protect the people as far as possible from the imposition practiced upon them, it was decided, after consultation with the secretary, to issue a circular, in which should be plainly stated the fact that these coins were not a legal tender in the United States, and could be received only at the mints as bullion.
"The trade dollar, occupying the same position in respect to legal tender, was also referred to in the circular. The effect of this circular was to put an almost immediate stop to the placing of Mexican dollars in circulation in the United States.
"REPORTS FROM THE ORIENT "Legation of the U.S.,
"Peking, July 1, 1878.
"SIR: Referring to Mr. Seward's dispatch, No. 398, of February 7 last, enclosing a copy of a circular-letter addressed to our consuls at the several ports, inquiring whether the trade dollar is coming into circulation, and whether any official action may be taken which will increase the demand for it, I now have the honor to hand to you copies of the several replies which have been received.
"From these you will see that the coin in question has obtained no circulation in China, except at Amoy, Canton, Foo-Chow, Swatow, and the Formosa ports. At these places it seems to be preferred by the natives to the Mexican, and to command a small premium.
"The burden of opinion would appear to be that no official effort to extend its circulation is advisable, unless it can be made a legal tender for the payment of customs dues at a fixed rate.
"I desire to request your special attention to the remarks contained in the dispatches from the consuls at Amoy, Foochow, and Ningpo as to the desirability of preventing, if possible, the 'chopping' or mutilation of the trade dollar. This practice, which had its origin in a rule made by mercantile houses in the south of China, requiring each firm to guaranty the genuineness of dollars paid out by affixing to each coin its 'chop' or Chinese firm name, and which was done by stampingwith a die upon the surface of the coin, has grown into such an abuse that current dollars are defaced beyond all possibility of recognition, and not infrequently coins are found in circulation through which holes have been punched.
"In some cases indeedthere is good reason to believe that the die has been displaced by a gouge, and a small portion of the metal has thus been abstracted from the coin. In this connection I enclose a copy of a memorial upon this subject presented to the governor of Hong-Kong in June, 1877, by the leading bankers and merchants of that colony, in which the evils of the 'chopping' system are set forth.
"It is evident that the mutilation and defacement of any coin tends largely to limit and interfere with its circulation. Whether it is wise to undertake negotiations with this government at the present time, looking to a suppression of this practice in China so far as it effects United States coins, is a question for the department to decide.
"I desire, however, to point out that steps in that direction, if entered upon at all, should be undertaken simultaneously in Peking and London, as the practice referred to is not more common in this country than in Hong-Kong, which, as you are aware, is a British colony.
"I have the honor to be, sir, your obedient servant, "CHESTER HOLCOMBE.
"Hon. WILLIAM M. EVARTS,
"Secretary of State.