by R.W. Julian
Dollar Production Halted
In March 1804 the government finally managed to halt the coinage of silver dollars, which would not resume for more than 30 years. Too many of them were leaving the country. The loss of silver to the United States was not good for the economy or long-term prospects of the Philadelphia Mint. The whole point was to force exporters to use Spanish dollars for export and, on the whole, this was done.
It is not quite clear how the halt in dollar coinage was accomplished, but it is very likely that Elias Boudinot was the man behind the action. There were probably confidential discussions with key government officials in Washington (the capital had moved there in 1800) over the course of action proposed by the director. In 1806 Secretary of State James Madison belatedly issued an order confirming the suspension of eagle and dollar coinage, but the true decision had been made two years earlier. Part of the drive to suspend dollar coinage came from the Bank of the United States; it was this institution which made the formal request to the State Department for the action.
Beginning in 1804 it was government policy to coin the half dollar as the largest silver coin. These were used as bank reserves but also circulated heavily, especially in the interior of the country. Treaty payments to Indians were often made in half dollars and spent by the recipients in frontier stores.
Background of the 1804 Dollar
It is perhaps an axiom of modern life that we are fascinated by those people and things that have a stigma of some kind. So it is with the 1804 silver dollar. It was not struck until 30 years after the date it bears but was originally struck for royalty. Now it is known by collectors as the "King of American Coins," a title suggested decades ago by numismatic promoter B. Max Mehl.
Suspension of the dollar coinage in 1804 was primarily due to the increase in silver dollar coins of various dates going to the Chinese port of Canton and not returning. The sending of silver to China in exchange for luxury goods became a serious problem for American authorities as it was felt that Spanish coins should be used if at all possible. The ending of American dollar coinage in 1804 forced exporters in that direction.
It must be remembered that the silver dollars actually struck in 1804, all 19,570 of them, were dated 1803 or earlier. There were two primary reasons for the old dies being used, with a third thrown in for good measure. The most important reason was that the decision had been made, probably no later than December 1803, to end the dollar coinage as soon as possible. Under these circumstances there was little point in cutting new dies when the old ones of 1803 (or any earlier dates on hand) were still perfectly good.
The second reason for using the 1803 dies was a shortage of die steel. From 1803 through 1805 there was difficulty in this area, and the order of striking for several denominations is confused. The die steel shortage is also clearly seen in the half dollar coinage of 1804, which used dies of 1803 exclusively; there are no 1804-dated half dollars for an otherwise large coinage of more than 150,000 pieces. The cents of 1804 are another well-known example, with only one obverse die known for a calendar-year coinage of nearly 100,000 pieces.
The last reason, and perhaps the least important, is the penchant for economy which existed in the early Mint. Die steel cost money, and if a dated die was still serviceable it might still be in use two or three years later; 1797 half cent dies, for example, were still minting coins in the spring of 1800.
One of the odder controversies of the past century was not setded until a few decades ago. Mint reports long carried the cryptic entry that 321 dollars had been coined in 1805, and thereby hangs a tale.
A deposit from a major bank in that year was found to contain 321 American dollars. Once the deposit had been accepted and entered into the records, the only way of handling the U.S. coinage was to route them through the Mint in a bookkeeping operation that left the coins untouched, They were then retumed to the depositor-the Bank of the United States-at the proper time.
The official Mint report .for 1805 does not mention the 321 silver dollars. However, there was an 1805 document which did mention these coins, the annual report from the Treasury Department to Congress on the operations of the 'Mint. The Treasury report did not flag the 321 dollars as something special-however, The matter would have lain undisturbed except that someone, reading the 1805, Treasury report, assumed that the regular. Mint report for 1805 was in error and simply added the figure.
At some unknown date, probably in the, 1930s, an enterprising engraver re-engraved the dates on some original dollars of the early 1800s to give them new dates: 1804 and 1805. There was considerable fanfare in the 1960s when the owner of these pieces, haying bought them from old-time dealer Louis S. Werner and believing them to be genuine, published the two coins in the numismatic press. (It was generally overlooked or forgotten at the time) that these same two 1804 and 1805 silver dollars had been the, subject of a letter to the editor of The Numismatist, January 1940, by David Spink, who stated that the 1804 had been altered from an 1801 and that the 1805 had been altered from 1803. (Actually, the "1804" had been altered from an 1802/1 B4, andthe "1805" had been 'altered from an 1803 E-6). They were then both exposed as altered dates by Eric P, Newman, who has specialized in the history of the 1804 dollar. Â
From 1804 to the 1830s the place of the dollar was taken by the half dollar, coined in great quantities. There is a persistent rumor that these halves did not circulate, being locked up in bank vaults to back the issuance of paper currency by private banks. There is an element of truth in this rumor, but the reality is more complex.
While it is true that half dollars were used as backing for paper currency and were even found in bank vaults as late as the 1930s, large numbers of them went directly to circulation. 'the government favored the half dollar, for example, as a coin of choice to make treaty payments to Indians; once paid over at the usual annual or semi-annual ceremony, the recipients would rush off to a frontier store to spend the money. In this way the half dollar was relatively plentiful, compared to other U.S. silver coins, on the frontier before 1830. (Harry E. Salyards, M.D. note, per letter to Q.D.B., January 15, 1993: "The circulation of the half dollar is. in inverse proportion to its estimated survival, which Walter H. Breen (Silver Coinages of the Philadelphia Mint, p.5) put at "about 5%" for halves 1794-1803, "rising to possibly 30% or more in the 18205 and 1830s." (Spanish silver was used on the frontier as well.)
The government also used the half dollar in pay-merit for of her contractual obligations, such as bond redemptions, Many of these coins, however, eventually wound up inbank vaults. The same mercantile process of sending silver to Canton continued unchanged through the late 1820s, but in early 183l there was a sudden reverse flow, which confounded the experts on trade, On April 13, 1831, Mint Director Samuel Moore, in office since the death of his predecessor Robert Patterson in 1824, wrote Secretary S.D. Ingham that the Mint had actually received for deposit a large parcel of Spanish dollars that had originated in Canton. Moore had made inquiries and found that this was not the first occasion of silver being shipped to America from the Orient.