By Tyler Rossi for CoinWeek …..
By the late 1800s, New World silver had been flowing into China for hundreds of years. When Spain conquered most of what is now Central and South America, they began producing vast quantities of silver. It is estimated that approximately 85% of the world’s silver was mined in Mexico and Peru between 1500 and 1800. While the vast majority of this precious metal was funneled into the Spanish economy, it also slowly spread out across the globe. Perhaps as much as 40% of the total silver mined in the Spanish New World empire ended up in China.
China, which did not have many domestic sources of precious metal, relied heavily on bronze for their monetary system. This reliance on base metal coinage led to the need for massive, impractical, quantities of coins for trade. While the earlier Ming Dynasty had attempted to use fiduciary paper money as a tool to solve this reliance, this attempt ended in failure. As an extremely early experiment with paper money, these bills are quite rare today, and examples like this one can sell for thousands of dollars.
Turing to the outside world for help, the Chinese imported between 250 to 265 metric tons of silver per year in the early 17th century. Most of this silver was delivered in the form of the Spanish Real, and later the Mexican Peso, coins struck in the Americas. Since these coins were not guaranteed by any domestic authority, Chinese merchants needed to find a way to quickly authenticate the quality and weight of silver contained in each coin. This would alleviate the need to test each coin every time a transaction was made. As such, in the late 17th century, Chinese merchants began marking the coins with punches and stamps – in effect providing a local guarantee as to the value of the silver. Each merchant used a distinct symbol, which collectively are called chopmarks.
Since these marks are highly localized to a single merchant, as coins continued circulating, the host coin could receive a large number of different marks from various merchants.
While the United States was producing large quantities of silver Morgan dollars, they were 7.5 grains (0.49 g) lighter than the Mexican Peso, and, as a result, were unpopular in China. This led to American merchants being forced to purchase pesos in order to trade with Chinese merchants. Taking advantage, as any government would, the Mexican authorities agreed to sell their coins to American merchants at a markup.
This, in combination with the depletion of Central and South American silver deposits by the late 1800s, prompted a series of other countries to strike their own coins specifically for trade with China: the United States in 1873, France in 1885, and the United Kingdom in 1895.
Louis Garnett, Treasurer and Assayer at the San Francisco Mint, recommended that the US begin striking a coin specifically for international trade with China. After Congress finally approved production in the Coinage Act of 1873, the US Mint settled on a design proposed by Chief Engraver William Barber. Interestingy, the handsome coin was not originally supposed to be called the Trade Dollar; instead, Garnett proposed that the coin be called the “Silver Union” (Garnett).
While considered relatively successful in China, the Trade Dollar was only struck for circulation for a five-year period, from 1873 to 1878. On July 22, 1876, two years before production ended, the Trade Dollar was demonetized as a result of dramatically falling silver prices. Due to low silver prices, many of the coins exported to China were reimported and redeemed with the government for the equivalent value in gold. The gold was then sold, and more silver was bought.
Chopmarks on Trade Dollars can have many different sizes and shapes, with most being Chinese characters. The question is, should these counter stamps be view as damaged goods that are not worth collecting? Or do the chopmarks actually add to the piece’s historical value? This gray area has led to an interesting market for chopmarked coins. After the coins were demonetized, the US Government continued to allow individuals to redeem their coins for a short while. However, they definitely believed that chopmarked coins were damaged and refused to accept such examples. Today, what a numismatist thinks about the matter is generally due to the number and location of chopmarks on the host coin. Regardless, many numismatists do not agree on whether or not chopmarks should be considered post-mint damage.
For example, this host coin has a large number of chopmarks. While the majority were punched into the coin’s reverse, the force needed to stamp the chopmarks flattened the obverse design to the point that it is almost unrecognizable. NGC graded this 1877 dollar as an AU Details piece, meaning that the coin’s original details are in Almost Uncirculated condition, but that the damage done to the coin preclude the possibility of a straight grade. With a hammer price of $240 in the Stack’s Bowers May 2022 auction, this piece sold for a discount when compared to a non-chopmarked example, which sells for between $350 and $450 in comparable condition.
Another piece whose price was impacted, to an even greater extent than the last example, is the 1878-S pictured below. While there are no chopmarks on the EF Details NGC host coin’s reverse, there are at least 17 chopmarks on the obverse (many are overlapping). Most are centered on Lady Liberty and have flattened most of the reverse eagle. As a result of this and an earlier cleaning, the coin hammered for only $100 in the same auction as the prior coin. Comparable non-cleaned coins without chopmarks regularly sell for three to four times this amount. If the cleaning is considered, this coin sold for an approximately $100 to $150 discount.
The discount that numismatists apply, whether consciously or subconsciously, to chopmarked trade dollars even applies to high-grade examples with only a single chopmark.
This 1877-CC specimen was graded as MS62+ by PCGS and even received certification by CAC. Nevertheless, the coin hammered for $3,840 in Heritage Auctions’ June 2021 sale. This is significant since comparable non-chopmarked examples can sell for between $6,000 and $8,000.
An 1875-CC with a single chopmark, which received an Uncirculated Details grade from NGC, had the same issue. While comparable examples sell for between $2,000 and $3,000, this coin sold for only $1,300 in Heritage’s March 2022 sale. Since the chopmark on this coin is on the obverse while the previous one was reverse, one might assume that the price would be more affected. However, the two coins are discounted at roughly the same rate.
It would seem as if the smallest discount applied to the Trade Dollar series as a result of chopmarks can be found on lower-grade examples with only a few chopmarks.
This coin, graded as Choice Very Fine, sold for about $725 in March 2022. While there are no recent auction records for comparable non-chopmarked examples more recent than 2016, slightly higher-grade examples have sold for approximately $800 to $1,000. This means that there was a much smaller discount for these lower-grade chopmarked examples.
While difficult, it is possible to complete a countermarked Trade Dollar type set. Interested collectors may wish to start with an 1874-CC. As the year with the largest issuance by the Carson City Mint, this is one of the more common of the chop-marked Trade Dollars and will be a relatively easy example to find.
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Garnett (1917) – https://www.jstor.org/stable/pdf/1814353.pdf
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About the Author
Tyler Rossi is currently a graduate student at Brandeis University’s Heller School of Social Policy and Management and studies Sustainable International Development and Conflict Resolution. Before graduating from American University in Washington D.C., he worked for Save the Children creating and running international development projects. Recently, Tyler returned to the US from living abroad in the Republic of North Macedonia, where he served as a Peace Corps volunteer for three years. Tyler is an avid numismatist and for over a decade has cultivated a deep interest in pre-modern and ancient coinage from around the world. He is a member of the American Numismatic Association (ANA).