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Saturday, June 29, 2013

China's History with the Chop-Marked US Silver Trade Dollars


There are probably no coins more interesting than United States Trade dollars. The list of unique features of this dollar is long. To begin with, they were slightly larger than the standard silver dollar, and that was unusual.

Of course, Trade dollars were larger for a reason – they were designed to be exported to help expand trade with China, whose merchants wanted silver coins, not gold. The merchants in China might have accepted Trade dollars, but back in the United States a couple of years after they were first issued, no merchant wanted to accept them, at least as a dollar. That’s because they had their legal tender status revoked, making them the only coin in U.S. history that was circulating in significant numbers at less than face value.

That alone would make the Trade dollar interesting, but there are other parts to the story which go back to the idea of having them used in the China trade. In fact, American merchants since the late 1700s had been interested in trade with China. That interest grew as the nation grew. When commercial activity in San Francisco increased with the discovery of gold, many merchants in San Francisco turned their eyes toward the Orient as a source for silks, tea and other products. The problem was having a coin the Chinese would accept. An early indication of the matter was seen in the 20,000 mintage of the 1859-S Seated Liberty dollar. The 1859-S was created at the request of San Francisco business interests primarily for use as export, and in the years that followed, other ideas would be considered.

The Trade dollar was a classic case of killing two birds with one stone. The United States had more than enough silver, and the coin being larger than a standard silver dollar would use more silver, which was fine with everyone concerned. The silver interests were also happy with the notion that once made into Trade dollars, the silver would be leaving the country and present no more threat to the domestic price. On top of those advantages, the merchants trying to trade with China would no longer have to pay extra to have their U.S. coins converted into Mexican silver, which the Chinese would accept.

The idea of a Trade dollar clearly had advantages for almost everyone, but the first hurdle was getting the Chinese to accept the new coins. As lovers of silver, the Chinese carefully studied the first shipment of Trade dollars, and much to the relief of those sponsoring these coins, approved them. Ultimately, however, acceptance of the Trade dollar in China would not be universal, and that meant the coin was not as successful as some had hoped.

Although the Trade dollar had problems in the end, something over $30 million in Trade dollars headed off to China, which was not an insignificant sum back in the 1870s. It has generally been believed that the dates from the first two years, 1873 and 1874, were exported in particularly large numbers. Over the course of regular production from 1873 through 1878, the Trade dollar was produced at Philadelphia, Carson City and San Francisco, in large numbers for silver dollars for the time, and some examples from all dates and all years were thought to have been exported.

When a Trade dollar reaching the ports in China was accepted by a merchant as being full value, the merchant would chop the coin, which was to stamp his unique Chinese character on it. As a coin changed hands from one merchant to another, it could receive a number of different chops from the various merchants. The coins with such chops have always been an interesting but not a well understood group, as they present a problem in terms of how collectors evaluate them.

When the United States was forced to redeem Trade dollars some years after the last were issued, it excluded coins which had been mutilated (chop marked). That was basically a step to avoid having to redeem Trade dollars which had returned to the United States but had been chopped by the merchants of China. Some collectors have tended to view them the same way as damaged examples, worth less than a regular Trade dollar.

Over time, however, some have come to appreciate the chop marked dollar, as in a sense, it really tells a story. Someone who can read the Chinese characters on a Trade dollar can trace the travels of the coin back in the 1870s from one merchant to another in a Chinese port. That makes them fascinating to study, as the characters are each different, representing a certain business at the time.

Some fascinated by such chop marked Trade dollars have attempted to collect them as you would non-chop marked Trade dollar dates. That has proven to be interesting. Years back, the brother of current Littleton president Dave Sundman collected chop marked Trade dollars by date. His collection was complete except for the 1878-CC, which has a low mintage and which also was believed to have had perhaps 40,000 pieces melted. With a mintage just under 100,000 and some melting, the 1878-CC would be difficult anyway, but it was the last year of regular production, and the Trade dollar was already in trouble. There was some doubt as to whether the 1878-CC ever made it to China. In later years, David Sundman was able to put together a complete collection of chopped Trade dollar dates.

In an attempt to find the elusive 1878-CC, I went to one American coin dealer who was a pioneer in terms of traveling to Asia and attempting to buy coins. He seemed to have a love for danger, and was the one dealer at the time who was regularly traveling to Hong Kong. When he returned, he would usually have groups of Trade dollars and other silver coins with chop marks. When I asked him how he was finding chop marked Trade dollars and other issues, he explained, and the story seemed more appropriate for Hollywood than a coin show.

He said that his source for Trade dollars was lesser known warehouses located in a somewhat unsafe section of Hong Kong. The coins, he explained, were sold by weight, as they were smuggled out of the People’s Republic of China at night in small boats.

He explained further that with the communist takeover in the 1940s, owning and trading in silver had become illegal and that the punishment for violating the law could be death. Despite the threat, many in China had small amounts of silver coins buried in the ground or hidden in other safe places. Many of those coins were older coins that had come to China in the 1800s, which included Trade dollars. Over the course of a few years, he showed me chop marked silver coins from many nations, each time reading the Chinese characters to me to give me a better feel of the commercial activity in the Chinese ports back in the 1870s. It was like a walk back into history, but, as he explained, the risks of recovering the coins were great, as the only way they could be smuggled out of mainland China was at night by small boats which had no lights. Facing prison or worse, those in the boats took great risks to sell their Trade dollars and other silver in Hong Kong. Each and every Trade dollar purchased from those warehouses in Hong Kong seemed even more special; if you add being buried in a pot for decades, then smuggled out at night at great risk to the already fascinating Trade dollar story, these coins become all the more interesting.

As it turned out, we never were able to find an 1878-CC, although the Professional Coin Grading Service is now grading chop marked Trade dollars. They report two examples of the 1878-CC with chop marks, one being an AU-55 and the other an XF-40. In fact, PCGS reports 142 chop marked dollars as having been graded, and every possible date is represented, so the goal of completing a collection is possible.

Whether you want to attempt a complete collection or simply have one of these fascinating coins, the chop marked Trade dollar is special. They can be found with one chop or sometimes many, and each chop tells a story. As interesting to me is to consider how the coin traveled to China and then returned to the United States, for many of the chop marked Trade dollars in the market today that return trip to the United States involved a dangerous boat ride at night to a warehouse in Hong Kong, adding to an already remarkable history.

For those who like coins with an interesting story, it would be hard to do better than a chop marked Trade dollar. That is why those who understand and appreciate how these silver dollars reached the market in the United States probably consider them cheap at any price.