Q. David Bowers:
The following narrative, with minor editing, is from my "Silver Dollars & Trade Dollars of the United States: A Complete Encyclopedia" (Wolfeboro, NH: Bowers and Merena Galleries, Inc., 1993).
Silver coins in circulation: By the summer of 1876 there were vast quantities of coins stored at the mints. Under the Specie Resumption Act of January 14, 1875, they could be exchanged for Fractional Currency notes, but the public was slow in making such redemptions. As it developed, millions of dollars' worth of Fractional Currency pieces were never turned in. The Act of April 17, 1876 directed the Treasury to issue coins, but relatively little coinage circulated until after the Act of July 22, 1876, which provided that Legal Tender notes could be used to secure silver coins. The same act demonetized the trade dollar and limited its production to coinage for export. (Nearly a century later, the Coinage Act of July 23, 1965 inadvertently restored legal tender status to the trade dollar; see Additional Information under the 1885 trade dollar.)
To this point in American history there were many teenagers who had never held silver dimes, quarters, or half dollars in their hands or jingled them in their pockets. They were accustomed to Fractional Currency notes, usually referred to as "stamps," and coins of smaller denominations, the Indian cents, the bronze two-cent pieces, and the nickel three-cent coins.
Trade dollars: Carothers wrote:(Fractional Money, p. 277.) "Early in 1876 the price of silver reached the point where it was profitable to coin [trade dollars] for circulation on the Pacific coast. By the middle of that year the coins were flooding retail trade in California and shortly thereafter they were selling at a discount. Before the end of the year the rising value of greenbacks brought a similar development in the East. Trade dollars appeared in circulation all over the country."
Unadopted proposals: Director of the Mint Dr. Henry R. Linderman, a long-time friend of the silver political interests, recommended in 1875 that the trade dollar be made legal tender in amounts up to $10, a doubling of the trade dollar's current limit. In early 1876 the House of Representatives passed legislation which went beyond Linderman's hopes and provided that the coins be legal tender in amounts up to $50. However, the bill did not pass the Senate.
Linderman also proposed that a special commemorative reverse be made for 1876 trade dollars, to honor the 100th anniversary of American independence. Had this come to pass-which it didn't-it would have been the first United States silver commemorative coin. Elements of the proposed design were used in the 1876 Assay Commission medal, which has the border inscription YEAR ONE HUNDRED/OF AMERICAN INDEPENDENCE enclosing a heavy oak wreath.
Later production limited to export: While many if not most of the 1876 trade dollars minted in the first half of the year may have been used domestically (and this constituted the bulk of the coinage for the year), virtually all of the later ones were shipped to China. After the implementation of the Act of July 22, 1876, American citizens who had received trade dollars for face value could obtain no more than melt-down or bullion value for them.
A spate of legal challenges ensued. Some keen minds proposed that trade dollars minted after July 22, 1876 bear distinguishing marks. Under this suggestion, earlier trade dollars would be legal tender and later ones wouldn't. Nothing came of the idea, and the government continued to repudiate its earlier obligation. The American public was left holding the bag.
Varieties: As noted earlier, in 1876 there was an obverse hub change. The Type I obverse (in use since 1873 and continued in use in 1876) is readily distinguished by having the ends of the ribbon (on which LIBERTY is imprinted) pointing to the left. The new Type II obverse, introduced in 1876, has the ribbon ends pointing downward. A coin with a Type I obverse and Type I reverse is referred to as Type I/I, a coin with a Type I obverse and Type II reverse is Type I/II, etc.
The 1876 Philadelphia Mint trade dollar in circulation strike form comes in Types I/I, I/II, and II/II, the last being very rare.
Circulated grades: 1876 trade dollars are readily available in grades from VF-20 through AU-58. I estimate the population to be in the range of 2,000 to 4,000 pieces.
Most surviving 1876 trade dollars are Type I/II. However, among chopmarked coins, the Type I/I seems to be more available than the Type I/II; the explanation for this is unknown. In general, chopmarked 1876 trade dollars are rare. Perhaps after demonetization, fewer 1876 Type 1/11 trade dollars went overseas, while increasing numbers reached citizens by way of unscrupulous bosses and company stores.
Mint State grades: Among Mint State Philadelphia Mint trade dollars, the 1876 is the most plentiful date in existence today, although in lower Mint State ranges the 1877 gives it a run for the money. Many Uncirculated coins seen in collections today have deep gray or even black toning and may represent specimens saved by the public as a souvenir of the 1876 centennial year, or perhaps there is another explanation.
In a survey of auction appearances of 21 Mint State 1876 trade dollars, Mark Borckardt found 14 (66%) to be Type 1/1, six (29%) to be 1/11, and one (5%) to be II/II. Although this sample is small, it does give an indication of relative availability.
My estimates of the surviving population are as follows: MS-65 or better: 40 to 60; MS-64: 150 to 300; MS-63: 200 to 400; MS-60 to 62: 700 to 1,200.
OBVERSE TYPE I: RIBBON ENDS POINT LEFT, 1873-1876
REVERSE TYPE I: BERRY BELOW CLAW, 1873-1876
1. Breen-5798. Obverse type of 1873-1876. Most surviving 1876 trade dollars are of the I/I type.
2. Breen-5798. Obverse type of 1873-1876. As preceding, but reverse with broken letters (hub damage); tops of E's and F gone, missing serifs on UNI D S M RI. No period after FINE.
OBVERSE TYPE I: RIBBON ENDS POINT LEFT, 1873-1876
REVERSE TYPE II: NO BERRY BELOW CLAW, 1875-1885
1. Breen-5799. Often chopmarked. Eight pairs of dies. This issue is about twice as scarce as I/I.
OBVERSE TYPE II: RIBBON ENDS POINT DOWN, 1876-1885
REVERSE TYPE II: NO BERRY BELOW CLAW, 1875-1885
1. Type II/II. Very rare. Apparently, only a few were struck. In a survey of 21 auction appearances of Mint State 1876 trade dollars, Mark Borckardt found only one of the Type II/II issue.
Circulation strike mintage: 455,000. Delivery figures by month: January: 81,000; February: 64,000; March-May: none; June: 65,000; July: 86,000; August: 84,000; September: 75,000; October-December: none. If all eight die-pairs were used, the average is only 56,875 per pair, fewer than at the S or CC mints. Possibly fewer die pairs were used.
Characteristics of striking: Many are well struck, but many others are lightly struck on the eagle's dexter claws.
Known hoards of Mint State coins: None
Rarity with original Chinese chopmark(s): Type I/I, the combination usually seen; Type I/II, very scarce. Type II/II, believed to be very rare.
Despite its relatively low mintage the 1876 Philadelphia Mint trade dollar is readily available in most grades.
An Overview of Trade Dollars in 1876
Although it was not the intent of the drafters of the Mint Act of 1873 to have trade dollars circulate domestically in the United States, a rider attached to the legislation made the coins legal tender in domestic transactions up to $5. For this reason, trade dollars circulated within the United States. During the first two years of trade dollar production, 1873-1874, the vast majority of trade dollars were shipped to the Orient, and few were kept on our shores. In 1875 and early 1876, more trade dollars were used in the states. Early in the latter year a decline in the price of silver was the reason that millions of trade dollars, now not as popular for the China trade, were dumped into circulation, particularly in the West Coast. On July 22, 1876, the legal tender status of trade dollars was revoked.
Production of trade dollars for export continued for two more years, but in 1877 and 1878 over 8.6 million pieces went into circulation in the United States. At that time they were available for bullion value, or sometimes even less. Unscrupulous mine and factory owners, rural mercantile outlets, retailers (especially in areas in which there was little competition), and others bought the coins and put them at face value in the pay envelopes of employees. Banks and other commercial interests accepted trade dollars only at deep discounts. Aggrieved workers complained, and petitions reached Congress seeking recall of the coins or restoration of the legal tender status at $1 each. Later, this was done for just a brief period.
Decade after decade passed, and, finally, the Coinage Act of July 23, 1965 apparently restored legal tender to the trade dollar, although by then both bullion and numismatic values were so high that it was no longer relevant. No one cared. (See text of Act under Additional Information, 1885, below.)
New Machinery to be Used
The Annual Report of the Director of the Mint, 1876, noted that gold coins and trade dollars were weighed and adjusted by hand. The 1876 report said that arrangements had been made to import automatic weighing and sorting machines that would be used for coins other than trade dollars and gold coins.
Specie Payments Resumed
Although the Act of January 14, 1875 provided for the exchange of subsidiary silver coins for Fractional Currency, little was done, and immense quantities of freshly-minted dimes, quarters, and half dollars accumulated in Treasury vaults. The Act of April 17, 1876 directed the secretary of the Treasury to begin such exchange, but still relatively few coins were paid out. Then came the Act of July 22, 1876, which provided that Legal Tender notes could be exchanged for silver coins as well. The doors of the Treasury vaults swung open wide, and beginning in the autumn of 1876 there was an abundance of silver coins in circulation for the first time since early 1862.
A new generation of American citizens saw for the first time the figure of Miss Liberty, seated, on hard money dimes, quarters, and half dollars. Presumably, some long-stored Liberty Seated silver dollars were paid out as well. Interestingly, the specie resumption acts of 1875 and 1876 were illegal under a provision still in effect from the Act of 1873, which stated that silver coins be paid out only in exchange for gold.
In 1876 there was a very curious double standard between the San Francisco Mint and the Philadelphia Mint. Silver coins were placed into circulation in quantity when specie payments were resumed. However, the San Francisco Mint had never stopped specie payments to begin with, but in recent times had been selling silver coins to anyone who wanted them, with the purchasers paying for them in gold (for paper money did not circulate in San Francisco). On the other hand, in Philadelphia silver coins in 1876 were obtainable at face value in greenback notes, but the notes themselves were selling at a discount in terms of gold coins. Thus, in effect, there were two different purchase prices for subsidiary silver coins depending upon from which mint they were purchased.
By December 31,1876 more than $15 million worth of the despised, and often dirty and tattered, Fractional Currency notes had been exchanged for coins (by October 1877 the total was $23 million). An additional $13 million worth of Legal Tender "greenback" notes had been exchanged for Liberty Seated silver ($3 million more than the law allowed for, but Congress was generally unaware of the niceties of coinage and currency laws and, in any event, typically forgot to repeal the provisions of old ones when enacting new ones).
Ever innovative, Secretary of the Treasury John Sherman came up with an idea. It was certainly the case that large amounts of paper money had been lost in the 1871 Chicago fire, shipwrecks, and other disasters. Obligingly, the Treasury Department staff determined that $8 million of "greenback" notes had met various fates over the years. Sherman then declared that additional coins could be paid out in an amount equal to such lost paper money (after all, Congress didn't say that it couldn't). Now, the "legal" limit of $10 million worth of Legal Tender to be exchanged was raised to $18.million.
Neil Carothers continues the story (Fractional Money, p. 259.): "The estimate of $8 million as.the amount lost turned out to be too conservative. By the end of October 1877 there was still $16 million in fractional notes officially outstanding. More than $36 million worth of silver coins had been issued, making a total of $2 million in excess of the $50 million limit stipulated in the resolution of 1876. More than $6 million worth of additional coins had been produced and stored in vaults. Further sales were brought to a complete stop by an unexpected and dramatic development-the winter of 1877 there reappeared in circulation hundreds of millions of silver three-cent pieces, silver half dimes, dimes, quarters, and half dollars that had gone to Canada in 1862. These came in from Canada, Central America, from South America, and from the West Indies. Some may have come from domestic hoards. People were startled, for many thought in 1862 all of these coins had been melted. This great influx showed that they had not been melted or exported to Europe as bullion, but instead, gone to Latin America [and Canada 1 and served as local currency for 15 years and then brought back. In 1880 Sherman estimated that $22 million worth of silver coins had come back, and even more came back after 1880."
There was much criticism leveled against the designs used by the Mint during the nineteenth century. An article in Galaxy Magazine, June 1876, contained this commentary: (As quoted by Ted Schwarz in The Numismatist, November 1975. The description is of Gobrecht's Liberty Seated design.)
"Why is it that we have the ugliest money of all civilized nations? -for such undoubtedly our silver coinage is. The design is poor, commonplace, tasteless, characterless, and the execution is like thereunto. Our silver coins do not even look like money. They have rather the appearance of tokens or mean medals. One reason of this is that the design is so inartistic and so insignificant. That young woman sitting on nothing in particular, wearing nothing to speak of, looking over her shoulder at nothing imaginable, and bearing in her left hand something that looks like a broomstick with a woolen nightcap on it-what is she doing there? What is the meaning of her?
"She is Liberty, we are told, and there is a label to that effect across a shield at her right, her need of which is not in any way manifest. But she might as well be anything else as Liberty, and at the first glance she looks much more like a spinster in her smock, with a distaff in her hand. Such a figure has no proper place upon a coin. On the reverse the eagle has the contrary fault of being too natural, too much like a real eagle. In numismatic art animals have conventional forms, which are far more pleasing and effective than the most careful and exact imitation of nature can be .... "