In the 1860s and 1870s, American silver production increased dramatically. Major discoveries like the Comstock Lode in Nevada substantially increased the silver supply—and emboldened the silver lobby. In an effort to maintain the price of the white metal, silver producers persuaded Congress to purchase more silver and convert it into coinage. This effort resulted in one of America’s most interesting coins: the silver trade dollar.
In the 1870s, most Asian merchants used Mexican pesos (the successor of the Spanish dollar) in their day-to-day commerce. The coin was universally trusted in the Orient, as it was difficult to counterfeit and consistent in its weight/fineness. The United States silver dollar was considered an inferior and less trustworthy unit of exchange; few merchants would accept it.
The United States Mint decided to introduce a new silver coin specifically to compete with the Mexican peso; the coin would be slightly heavier than a normal silver dollar (420 grains vs 412.5) with its weight/purity clearly inscribed on each piece. This coin, dubbed the “trade dollar” was first manufactured in 1873.
Surprisingly, despite their tendency towards paranoia, Asian merchants were quite accepting of the new American coin. One reason was that the Emperor of China issued an official proclamation in 1873 confirming the coin’s composition, weight and quality. Several million coins were shipped to Asia in the mid-1870s.
Many of the coins shipped to Asia bear “chop marks,” or Chinese letters stamped into the coin’s surface. These marks were used to identify genuine coins of correct weight and fineness; chop marked coins were verified by merchants and considered more trustworthy. Normally such marks would detract from a coin’s value, but they are very common for trade dollars and thus are considered less derogatory.
Back in the states, however, the coin was highly unsuccessful. Despite weighing slightly more than a normal silver dollar, the coin was actually demonetized in 1876. Since it was not legal tender—and its melt value was less than $1—the trade dollar was not accepted by American banks or merchants. They were often bought and sold on the wholesale market for less than their supposed $1 face value.
Production of trade dollar “business strikes” (i.e. coins made for circulations) halted in 1878, but the United States Mint continued to strike a small quantity of collector-edition proofs until 1885. The mintages for the final two years were tiny; just 10 pieces were struck in 1884 and a measly five coins came off the dies in 1885. Today, an 1885 trade dollar is worth well over $1,000,000 due to its extreme rarity.