The Columbian. [volume] (Bloomsburg, Pa.) 1866-1910, 1883-07-27
Trnde Dollar History.
Ey.sECRErARY SHERMAN TELLS IT IN EN-
ACT DETAlI.

ter TO Mr.. James y. Holland, IT., M. d.,
of Brooklyn, New York, in regard to
the trade dollar, of which the following
is copy; have to acknowledge the
receipt by reference from the president
of the 11th instant, concerning the
trade dollar. The gist of the newspa-
per slip enclosed therein by you, so far
as the executive branch of the govern
ment is concerned, is contained in this
sentence: president Arthur has ample
authority TO order their receipt at the
treasury the same as the standard silver
dollars" AS the resolution has not
concluded that it has no authority TO
order such treasury officers to receive
trade dollars as indicated in your letter.
Very respectfully,
CHARLES j. FoLGER
| SHERMAN ON THE SUBJECT.
Folger encloses a copy of a letter
written by Secretary Sherman in regard
to the issue of the trade dollar, and the
depreciation in its value. Secretary
Sherman, after quoting the text of the
act of February IL, 1878, authorizing
the coinage of the trade dollar, says:
'As the name indicates the purpose of
this coin was for trade, not for circula-
ton, though by classifying it with other
silver coins the law made it a legal
tender 10 the amount of five dollars in
any one payment. AT the time of the
passage of the act the actual value of
this dollar, including the charge Of one
and one-fourth cents for coinage, was
little more than Sl.04 in gold.
TIE CIRCULATION IN CHINA.
Under such circumstances there could
be no object for the owner to put the
coins into circulation, and consequently
they were exported mostly to China
where, from the lack of a circulating
medium these pieces, convenient in size
and bearing the guarantee of a great
government as to their weight and
fineIess, obtained an extensive circula-
tion and created market for the silver
of the Pacific states as intended by the
act. After few months, however, an
unforeseen depreciation in the value of
silver bullion occurred, and in the early
part of 1876 this depreciation reached
such point that one dollar in gold
would purchase more than the neces-
sary amount Of silver for a trade dollar
and pay for its coinage. Under such
conditions dealers in bullion found a
profit in putting trade dollars into cir
culation at par in the Pacific states
where the currency was upon a gold
basis, but the coin being a legal tender
for only five dollars, its circulation was
necessarily limited in amount as well as
restricted in the locality. The people
Of the Pacific states, however, objected
to its use at all for circulation, and the
attention Of congress having been called
to the matter on the Sth day of May,
1876, Hon. Samuel J. Randall, of Penn
sylvania, introduced into the house a
bill, the third section of which repealed
the legal tender qualities of these coins.
COINED ACCORDING TO LAW.
On the 10th of July following, Hon.
S. S. Cox, of New York, reported the
measure to the house urging its adop-
ton. No objection was made and it
became a law July %, 1876, without
notifications or an opposing voice or
vote in either house as follows 'That
the trade dollar shall not hereafter be
legal tender, and the secretary of the
treasury is hereby authorized to limit
from time to time the coinage thereof
to such an amount as he may deem suf-
ficient to meet the export demand from
the same up to the time Except few
days., and for several months thereafter.
The trade dollar cost more than pap
er currency dollar, and consequently
none of the coins got into circulation
in other than the Pacific states. Owing
to the depreciation of the paper cur
rency, however, in the fall of 1877 the
trade dollar became of less value than
the paper dollar, and in December of
that year large number Of them were
put into circulation at their face value,
at profit to the owner Of bullion, ap-
prehensive of such misuse of the coins.
On the 10Th of October in that year |
ordered the dscontinuance of their
coinage at the mint at Philadelphia,
and four days later at the other mints.
Meanwhile this department, had uni
formly stated that the trade dollar pos
sessed a commercial value depending
upon the price of silver bullion. 1t
will be seen that the coins were put
into circulation months after the pas
sage of the act taken from them their
legal tender character, mainly after the
coinage had ceased But in their use
as money the department has
never had any interest or derived any
profit. For the expense of their coin
age the owner of the bullion reimb urs
ed the government, and this ended the
connection of the government with the
transaction. AT no time and on no &C.
count have they ever been received or
paid by the treasury, and it isa cause
of regret that so many of our people
should have accepted them at their face
value, thus enabling their owners to
put them into circulation at consi-
derable profit. Under date of July 25,
1878, the director of the mint published
tables from which the value of these
coins can be ascertained and the terms
on which they are received at the mint,
He does not desire any one to dispose
of them at such rate. The law under
which the department buys bullion with
which to coin the standard silver dol
lars requires the same to be bought at
the market price, and it can purchase
trade dollars only as bullion. Possibly
in time these coins will find a ready
market in China at nearly or quite
their face value on circulation coin. In
this connection permit me to correct
any msapprehensious as to the purpose
and effect of the directors circular.
As early as August "a, 1876, the de
partment informed an inquirer that the
trade dollar had only market value,
and this information has been reported
scores of times and published by the
press throughout the country. To avoid
the labor of preparing manuscript let
ters the director embodied the informa-
ton in circular, adding thereto tables
for the computation of such value.
Il