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Were US Trade Dollars ever considered legal tender?
MKUltra24
Posts: 652 ✭✭✭✭
Hey everyone,
Today I was looking at Trade Dollars and I’m wondering if anyone knows if they were considered legal tender as $1 within the US?
I know most of them were sent overseas to buy things from China but if someone kept one in the US could they spend it as $1 to buy stuff?
Or was it only meant for foreign trade?
Thanks!
P.S. Picture below is not mine.
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It was only intended for foreign trade, but that wasn't what ended up happening. The wording of the law was initially vague as to whether a trade dollar was actually a dollar, and while the bullion value of the type was above a US dollar they were used in domestic commerce on a limited basis. Once the price of silver collapsed though, millions came flooding back from China by people attempting to redeem them for a dollar (which a subsequent law that more explicitly outlined their legal tender status allowed for a brief window, as long as they were not mutilated), and both merchants and the government would only take them in commerce at a discount that changed frequently. Post-demonetization, most went back to China, were melted, or were treated as curiosities.
Thanks for the detailed information and explanation! It was kind of confusing for me because I know they had silver in them but I’m not sure if they had the same amount of silver as a Morgan Dollar.
However If they did have the same exact amount of silver I don’t understand why people wouldn’t accept them. Wasn’t the value of a coin based on it’s silver content?
But you did say the silver price crashed so in that case I understand why there was a discount for those redeemed them for US Dollars.
It can be argued that Trade Dollars were made legal tender again under the Coinage Act of 1965 which made all US coins legal tender.
Worry is the interest you pay on a debt you may not owe.
And I didn’t know what they were even used for. I may have to look into them more. Thats pretty cool 😎
Can it be read that the US Philippine coins become legal tender under the same act?
Trade dollars actually had more silver in them than a regular silver dollar. the Trade dollar has 27.22 grams of .900 silver while a regular silver dollar has 26.73 grams of .900 silver.
Young Numismatist/collector
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WAG, but I think it's more a question of acceptance in commerce. Unless you are melting them, the coin needs to be recognized in daily commerce. Think IKE $s today. Coin people find them "fun". Stores find them confusing and annoying. If Trade $s didn't circulate in large numbers, they wouldn't necessarily be recognized or accepted by the public.
I will try to alleviate the confusion, and will accept all Trade Dollars for one FRN each... even exchange....
Cheers, RickO
FR(B)N's please, Choice and Gem only, Large size ... I'll go find you some Trade Dollars!
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
Good question. Not sure if they are or not.
Worry is the interest you pay on a debt you may not owe.
@PerryHall
@Zoins
The Filipino coins aren’t dollars theyre centavos and pesos. While made in amercia they were never legal American tender
11.5$ Southern Dollars, The little “Big Easy” set
There is a book on the subject.
Americas only unwanted coin. Don’t have it in front of me just now but I believe I have the full title....
The real problem was that US employers were purchasing them on the world market for bullion, significantly less than face value, and then paying workers with them at face hence making a significant profit. Local merchants didn’t recognize them and began refusing to accept them. The government then demonetized them nationally.
A: The year they spend more on their library than their coin collection.
A numismatist is judged more on the content of their library than the content of their cabinet.
Initially, legal tender up to $5
Great thread! I learned some things about Trade dollars today!
An authorized PCGS dealer, and a contributor to the Red Book.
The word dollar got them in trouble when they charged for them by weight but started taking them back as dollars when the silver markets crashed in 74. By 75 they were coming back into the country (chops were so prevalent that they were banned from redemption) so fast that Congress killed their tie to the dollar.
Rare type 2/2 large S
11.5$ Southern Dollars, The little “Big Easy” set
The more fascinating angle on why they had to be demonetize which was the flood of silver on the international market as industrialization amplified the global input to the market. It crashed the the supply/demand ratio and forced countries to find to buyers for their silver. Lots of countries were making silver trade dollars. Some even copied the American weight standard of 420 grains as to snipe are attempts to penetrate the Chinese market.
A rare Japanese for Chinese export American standard trade dollar
11.5$ Southern Dollars, The little “Big Easy” set
But then wouldn’t people have gladly accepted them in place of a “normal” Morgan Dollar?
They could accept Trade Dollars and have them melted and reminted into MORE Morgan Dollars than however many Trade Dollars they had and actually make a profit.
But couldn’t people simply melt them down into silver bullion and have the government coin them into “normal” Morgan Dollars?
I recall someone telling me the government used to coin silver bullion for a small fee.
Sure! I’ll take 10x Trade Dollars please! 😊
That is a cool looking coin!
May I ask how much you paid for it?
I’d like to get one myself.
Per "The United States Trade Dollar, America's only unwanted, unhonored coin" (1959) (John H. Willem)
"It never had legal-tender quality."
They were redeemable for a while up to $5, but not considered to be legal tender. The trade dollar was re-monitized in the coinage act of 1965. This had little meaning however as no trade dollars were circulating in1965. Because they were unredeemable, there was a time when you could get a trade for 75 cents or less.
Very interesting! Thanks!
Does the book happen to mention anything about people melting down Trade Dollars for the silver bullion and then having that silver bullion coined by the Mint into legal tender Morgan Dollars?
I mean silver is silver regardless of which coin it’s minted into. It can always be melted into bullion bars and have some value. Even if it’s less than the original coin’s legal tender value.
For example let’s say the US Dollar was abandoned tommorow and all US dollar denominated currency was rendered worthless and unredeemable.
My 1 oz American Gold Eagle with a $50 face value would be worthless in the legal tender sense but I could still easily sell it to a refinery and they could melt it down into a 1 oz gold bar or something and sell it for its precious metal value without me losing too much more than I originally paid for the American Gold Eagle itself.
Someone else said they had more silver than a normal Morgan Dollar so if they could be bought for $0.75 in large quantities and then melted & recoined as $1 Morgan Dollar coins there is some huge potential profits that could’ve been had easily.
That’s true!
However all stores are required by law to accept Ike $1 coins as $1 whether they find them annoying or not.
Or if you get a speeding ticket you could pay the full ticket in Ike $1 coins if you wanted and they would be required by law to be accept each one as $1.
In fact it’s funny you mentioned it because I went to 7-11 yesterday and used an Ike $1 to as part of my payment to buy a drink & chips. 😆
I got it from the car wash.
I think that depends on the state you are in. Stores have some latitude in determining the type of payment they will accept.
https://blogs.findlaw.com/free_enterprise/2019/08/is-it-legal-for-businesses-to-refuse-to-take-cash.html
Also:
https://www.usatoday.com/story/news/factcheck/2020/09/16/fact-check-cashless-businesses-banned-only-some-local-state-laws/3330804001/
The Morgan dollar was the first coin that they abandoned the pretense of it containing $1 worth of silver. People could no longer deposit silver and order them coined - the government got to profitably coin them for itself
https://en.wikipedia.org/wiki/Bland–Allison_Act
Oh really?
What about silver dollars prior to the Morgan?
Did this one I picked up not long ago contain $1 worth of silver when it was in circulation since it’s pre-Morgan?
It was minted almost 50 years before George T Morgan was even born.
That's not Large Size
but touché
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
The Japanese 420 Trade dollars are rare and only made from 1875-77. A choice one like this in AU would be a couple grand easily (bit less when chop marked). You can get a regular 416 grain Morgan competitor Yen of the same design for decent prices. NGC anything on ebay tends to trade at a discount unless the series is hot. The same PCGS coins will often be much more esp in world stuff
https://www.ebay.com/itm/M28-1895-Japan-Yen-AU55-NGC-939441-7/313334042526?hash=item48f42a0f9e:g:BwEAAOSwbs9fzpQd
11.5$ Southern Dollars, The little “Big Easy” set
When your coin was minted, it contained $1 worth of silver. He's talking about the coining process not the circulation 50 years later. The Mint does not benefit in any way from coins already in circulation.