U.S. Trade Dollars were never intended to be the same as silver dollars for domestic circulation, even though they have the same one dollar face value. The two coins were produced to serve very different purposes.
Trade Dollars were designed and minted essentially as bullion coins for trade in the orient.
American Trade Dollars, as well as all post 1836 Silver Dollars were specified to be 90% silver and 10% copper, but the Trade unit weighs slightly more. The Trade Dollar weighs in at 420 grains, while the U.S. silver dollar weighs 412.5 grains.
American circulating Silver Dollars were just too light to interest Chinese businessmen, so a silver coin was developed with increased weight to compete with the slightly heavier Mexican and Spanish 8 Reales, or the British Crown.
Trade Dollars weren't intended to circulate in the U.S., although a few did. Americans strangely enough shunned them for domestic trade. This coin was created to be used for trade in the Orient, especially with businesses at the ports in Canton and in Hong Kong.
In the 19th century, the Chinese used silver as their primary medium of exchange. Before the U.S. Trade Dollar came into existence, Americans trading with the Chinese often resorted to Spanish or Mexican silver 8 Reales coins. The U.S. wanted a coin to compete directly with these coins.
The Chinese merchants would test the foreign silver coins and stamp their insignia on the coin. These stamps are now known as chop marks. You can find these chop marks on any of the coins used in trade with the orient.
During the 1860s, U.S. citizens with silver mining interests sought ways to market more silver. They persuaded Congress and other U.S. government officials that Trade Dollars should be minted for foreign use.
It was costly for U.S. businesses to exchange U.S. silver dollars for Spanish or Mexican 8 Reales coins before doing business with the Chinese. It made sense for U.S. businesses to get silver coins minted in the U.S., rather than use foreign silver coins for trade with China.
The Coinage Act of 1873 made Trade Dollars legal tender. Barber designs were used for this now rare American coin. Production stopped in 1878, except for a few proof coins.
France, Britain and Japan also developed their own dollar to the same standards as the other foreign countries for use in trade with the Orient. The newly opened oriental market was very lucrative for western merchants.
Nearly 36 million Trade Dollars were produced from 1873 to 1878, with the vast majority after 1875. It was more efficient for the San Francisco and Carson City Mints to use silver mined in the western U.S. for these coins. Therefore the majority of Trade Dollars came from San Francisco. They minted more than Philadelphia and Carson City combined.
As far as collecting goes, the chopped coins are generally considered problem coins and not worth as much as their unchopped counterparts. Uncirculated versions are relatively scarce, but are really beautiful specimens of U.S. silver coinage and one of Barber's better designs.
