Contemporary (1872) argument for creation of Trade Dollar
jonathanb
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A few weeks ago I bought a used book that turned out to contain a contemporary argument for the creation of the Trade Dollar. I don't collect Trade Dollars, so maybe this is old news, but I don't remember seeing this sort of thing before, and I though it was interesting enough to retype.
From "Report of the Examination of Branch Mints on the Pacific Coast", by H. R. Linderman, internally dated November 19, 1872:
"
The United States silver dollar of 412 1/2 grams has never been well received in China, nor amounted to much as a coin of commerce, for the reason that its bnllion value is less than that of the old Spanish dollar, and its successor, the Mexican dollar, both of which have played an important part in the commerce of the world. The standard aimed at when the United States silver dollar was first authorized to be issued was the Spanish dollar. The act of 1792 provided that the dollar should be of the value of the Spanish milled dollar, as the same was then current in the United States. The act also provided that it should contam 371 1/4 grains of pure silver. The content of pure silver should have been within a fraction of 377 1/4 grains. The mistake made in specifying 371 1/4 instead of 377 1/4 grains, was due to an error in determining the quantity of pure silver in the Spanish dollar, the art of assaying being then imperfectly understood in this country. Dr. Rittenhouse, the first Director of the Mint, must have recognized the error, because the earlier issues of the Mint corresponded very closely to the Spanish dollar. His successor, however, caused the standard to be conformed to law, so that the dollar would contain 371 1/4 grains, which proportion of fine siIver has never since been altered.
Had the United States dollar been issued to correspond in content of fine silver to the old Spanish dollar, as was originally intended, It would no doubt long since have become an important agent of commerce.
The silver dollar being a useless coin, both as respects circulation and commerce, should be abolished, and we should inquire whether some new medium may not be substituted approximating in general
character and value, which will meet certain commercial requirements becoming daily more pressing without giving rise to any of those perplexing questions or complications resulting from the varying values of the precious metals, under a double standard, and at the same time afford some relief to our mining industries from the serious decline and further apparent depreciation in the value of silver.
[...]
For a long time much of the business both of Europe and this country with China and Japan has been done in Mexican dollars, (formerly the Spanish dollar). Indeed this coin has now practically become the money of account in those countries and of commercie with foreign nations, and so necessary has it become for this purpose that it readily commands about 8 per cent. premium both in London and San Francisco though intrinsically worth only 1 6/10 per cent. more than our dollar of 412 1/2 grains.
This is a serious tax upon our commerce, while our own silver is being exported from the country at a heavy discount, and to the serious detriment of both our commerce and mining interests.
[...]
After consulting with some of the leading business men of San Francisco, as well as with some of the most prominent and intelligent Chinese merchants as to its probable success, I do not hesitate to recommend, in lieu of our old dollar, a new coin or disk, which shall be slightly more valuable than the Mexican dollar, to be made only upon the request of the owner of the bullion, and to be paid for by him.
It is not proposed to make the new coin or disk a legal tender in payment of debt, but simply a stamped ingot with its weight and fineness indicated. Its manufacture can therefore in nowise give rise to any complication with our monetary system, and neither in theory or principle differ in any respect from the manufacture of unparted or refined bars now authorized by law, except in being of uniform weight and fineness.
If this new coin should be accepted at all as a medium in our trade with China, it will doubtless very soon supersede the Mexican dollar, and there is no reason why it should not in a short time command a premium of 6 or 8 per cent.
As the product of our silver mines is at present being exported abroad at an average discount of at least 2 per cent., it will be seen at once that such a result would be of immense advantage not only to our commerce, but also to our mining industries. As this new coin would als be a most desirable for for use in the arts, it would most probably put a stop to the melting of our subsidiary silver coins, now so extensively carried on by silversmiths in certain localities.
As the trade of San Francisco with China direct, and by exchange for account of the eastern cities and Europe, would readily cover our entire production of silver, it will be seen that a safe outlet for this commodity would be thus secured, and the perplexing proposition as to the decline in price of this metal, and its increasing production, be at once solved in a most satisfactory manner.
The proposed coin or disk should weight 420 grains, and contain 378 grains of pur silver, and the weight and fineness be stamped on the reverse of the coin.
There is certainly sufficient inducement to issue such a coin, and the proposition does not appear to be open to any objection. It will not be a coin of circulation, or legal tender in payment of debts, but simply an agent in our commerce with foreign countries.
"
From "Report of the Examination of Branch Mints on the Pacific Coast", by H. R. Linderman, internally dated November 19, 1872:
"
The United States silver dollar of 412 1/2 grams has never been well received in China, nor amounted to much as a coin of commerce, for the reason that its bnllion value is less than that of the old Spanish dollar, and its successor, the Mexican dollar, both of which have played an important part in the commerce of the world. The standard aimed at when the United States silver dollar was first authorized to be issued was the Spanish dollar. The act of 1792 provided that the dollar should be of the value of the Spanish milled dollar, as the same was then current in the United States. The act also provided that it should contam 371 1/4 grains of pure silver. The content of pure silver should have been within a fraction of 377 1/4 grains. The mistake made in specifying 371 1/4 instead of 377 1/4 grains, was due to an error in determining the quantity of pure silver in the Spanish dollar, the art of assaying being then imperfectly understood in this country. Dr. Rittenhouse, the first Director of the Mint, must have recognized the error, because the earlier issues of the Mint corresponded very closely to the Spanish dollar. His successor, however, caused the standard to be conformed to law, so that the dollar would contain 371 1/4 grains, which proportion of fine siIver has never since been altered.
Had the United States dollar been issued to correspond in content of fine silver to the old Spanish dollar, as was originally intended, It would no doubt long since have become an important agent of commerce.
The silver dollar being a useless coin, both as respects circulation and commerce, should be abolished, and we should inquire whether some new medium may not be substituted approximating in general
character and value, which will meet certain commercial requirements becoming daily more pressing without giving rise to any of those perplexing questions or complications resulting from the varying values of the precious metals, under a double standard, and at the same time afford some relief to our mining industries from the serious decline and further apparent depreciation in the value of silver.
[...]
For a long time much of the business both of Europe and this country with China and Japan has been done in Mexican dollars, (formerly the Spanish dollar). Indeed this coin has now practically become the money of account in those countries and of commercie with foreign nations, and so necessary has it become for this purpose that it readily commands about 8 per cent. premium both in London and San Francisco though intrinsically worth only 1 6/10 per cent. more than our dollar of 412 1/2 grains.
This is a serious tax upon our commerce, while our own silver is being exported from the country at a heavy discount, and to the serious detriment of both our commerce and mining interests.
[...]
After consulting with some of the leading business men of San Francisco, as well as with some of the most prominent and intelligent Chinese merchants as to its probable success, I do not hesitate to recommend, in lieu of our old dollar, a new coin or disk, which shall be slightly more valuable than the Mexican dollar, to be made only upon the request of the owner of the bullion, and to be paid for by him.
It is not proposed to make the new coin or disk a legal tender in payment of debt, but simply a stamped ingot with its weight and fineness indicated. Its manufacture can therefore in nowise give rise to any complication with our monetary system, and neither in theory or principle differ in any respect from the manufacture of unparted or refined bars now authorized by law, except in being of uniform weight and fineness.
If this new coin should be accepted at all as a medium in our trade with China, it will doubtless very soon supersede the Mexican dollar, and there is no reason why it should not in a short time command a premium of 6 or 8 per cent.
As the product of our silver mines is at present being exported abroad at an average discount of at least 2 per cent., it will be seen at once that such a result would be of immense advantage not only to our commerce, but also to our mining industries. As this new coin would als be a most desirable for for use in the arts, it would most probably put a stop to the melting of our subsidiary silver coins, now so extensively carried on by silversmiths in certain localities.
As the trade of San Francisco with China direct, and by exchange for account of the eastern cities and Europe, would readily cover our entire production of silver, it will be seen that a safe outlet for this commodity would be thus secured, and the perplexing proposition as to the decline in price of this metal, and its increasing production, be at once solved in a most satisfactory manner.
The proposed coin or disk should weight 420 grains, and contain 378 grains of pur silver, and the weight and fineness be stamped on the reverse of the coin.
There is certainly sufficient inducement to issue such a coin, and the proposition does not appear to be open to any objection. It will not be a coin of circulation, or legal tender in payment of debts, but simply an agent in our commerce with foreign countries.
"
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Comments
Very interesting read.
-Randy Newman
<< <i>What was the used book that you found this letter in? >>
The book was a rebound collection of four pamphlets published in 1872-1874:
There was this one (the quoted section was only a small piece of the 30-ish page pamphlet), a longer pamphlet describing the scientific process for doing assays of gold and silver using two different methods (a method using nitric acid was on it way out, and being replaced by a slightly different method using sulfuric acid), a report on the Federal Reserve in New York City, which apparently was involved in some scandal a few years earlier, and a completely unrelated pamphlet talking about some tropical plant being used as a cure for cancer.
From "Report of the Examination of Branch Mints on the Pacific Coast", by H. R. Linderman, internally dated November 19, 1872:>>
That is a very interestig and significant piece. I have not seen it referenced before other than Dr. Henry Richard Linderman was a proponent and contributed to the bill that passed it. He was Director of the Mint from 1867-1869 and again after 1873. In 1872 he was a special agent for the Treasury department.
John M. Willem in his books on The United States Trade Dollar (1959,1965) gives credit for the concept of the trade dollar to Louis Anichars Garnett and says H. R. Lindeman took the credit for it.
The report as you quoted it is important, because even if HRL stole the idea, he was giving very official credence to it and keeping the concept alive. Eventually everything went as he proposed, except the trade dollar was given legal tender up to 5 dollars. I can find 3 reasons given for this. In 1870 when the mint reorganization bill was first introduced, the silver dollar was worth $1.0312 in gold (and even more in paper). It was generally agreed to eliminate it. There were also 3 proposals for this - eliminate it period, make a light weight dollar equivalent to 2 halves, or make the trade dollar. The Senate version went with the Trade dollar; the House went for the lightweight subsidiary dollar with limited legal tender. In the rushed conference meeting, the trade dollar was substituted for the light weight dollar and the legal tender tender status accidentally retained according to Willem. Walter Breen says that it was put in as a benefit for the silver interests and R. W. Julian writes that it was done to make it look "more proper in the Far East".
<<Linderman was the primary author of the Coinage Act of 1873. He might have incuded ideas from many parties. His primary interest was in cleaning up the confusion of denomenations and administrative responsibiities by placing the Mint within the treasury dept and with clear overall management of the bureau.>>
Roger, your quote sounds like a very positive attitude towards Dr. Linderman. John Willem was much more negative than I have indicated here. I sanitized Willem's thoughts in my short sentence and added a couple positive comments. Now, I realize that it is so similiar to what R. W. Julian did and wrote that I owe the man a sincere apology.
Mr. Willem gives credit for writing the Coinage Act of 1873 to John Jay Knox, Deputy Controller of the Currency, who he says was FORCED by the Secretary of the Treasury to consult with Linderman. I think Willem might be reading too much into the correspondence. Willem also states that the mint reorganization was Linderman's feathering his own nest in order to set up a cushy job for himself (Willem's thoughts, if not the words he used).
Prior to the 1873 act the mint had been the victim of several embarrassing incidents from theft to surreptitious activates and sloppy accounting.
Linderman definitely wanted to control things and after the Act of 1873 took effect, he made sure to keep his thumb on Pollock (former Governor of PA) who was Superintendent at Philadelphia. Since both men had held the mint director’s position previously (when it was part of the Philadelphia job), there was a considerable power struggle. Snowden also had his fingers in the pie and reality is probably something we only see through the fog of time. Linderman set up his own “special” advisors in Washington and had them check on the normal staff controlled by Pollock. Much of the animosity between Morgan and William Barber was due to Morgan being hired by the director as “Special Engraver” reporting only to the director, but having to work at Philadelphia where Pollock controlled resources and William Barber. Linderman maintained a display of pattern and experimental pieces in his Washington office and used the collection to influence legislators.
Linderman’s letters indicate he was planning for return of the standard silver dollar within a year of the act’s passage, but I’m not clear yet on how the standard dollar actually got removed from the final version of the bill. He also wanted to use a portrait of Liberty on the coins instead of the seated version.
"Standard" is a term that had me quite confused for awhile. In those days the term was used for the proposed lightweight silver dollar. In more recent times after the old "standard" silver dollar was restored, it referred to the full weight dollar. I remember Treasury bags in the 1960's with tags on them that read "1,000 SSD's". I presume that meant standard silver dollars.
Linderman at the time was in the pay of William C. Ralston, head of the Bank of California, and a proponent of a gold standard.
Some drafts contained the standard dollar others didn’t, but I’ll check my files to make sure.
It seems that there was monkey business at the mint during both his tenures as Director of the Mint. Or as Mr. Bowers puts it, "Why buy coins when you can make your own."
edited to add the title of the article.
As far as making restrikes and mules and other such stuff for trade or sale, that was marginally acceptable in the 19th century so long as everyone knew what was done. In the Mint’s case, it appears that the concoctions were made solely to catch a sucker, and would have been unacceptable.
Although we now think of copper examples are valuable experimental or pattern pieces, in their time, they were simply a cheap way to get a copy of a proposed coin (or a set of circulating designs). For example, examples of the Barber and Morgan silver dollar designs of 1877 were struck in normal silver alloy, and recipients paid the face value of the patterns. Copper examples were also struck and provided to those who requested them at no charge, because the copper had minimal metal value. Thomas Acton, Superintendent of the NY Assay Office, was one or several persons requesting copper specimens.