USA
Coin Album: America’s Coinage Abroad, Part One NGC
- Posted by David W. Lange, NGC Research Director on 4/8/2010
There’s
been little research done on the circulation of USA coins
in other countries, so David W. Lange casts some light on
this still-intriguing topic. Read on for the first part in
a new series.
Books and articles have been written about the
various World coins that formerly circulated as legal tender
in the United States, but very little has appeared regarding
the circulation of USA coins in other countries. Unlike the
former practice, which effectively ended with the demonetization
of foreign coins in 1857, the circulation of our own coinage
overseas is ongoing. While this commerce pales in comparison
to the value of paper dollars being held and used in other
countries, it is still worthy of study by numismatists.
In the first decades of the US Mint’s operations, many of
our silver and gold coins were exported to Europe, due largely
to Congress’s failure to respond quickly to fluctuating bullion
values. These coins did not actually circulate in the conventional
sense; in fact, most were almost immediately melted and recoined
into native issues. Our copper cents, however, served a more
utilitarian purpose across the border in Canada. Circulating
as half pennies, they were never formally recognized as such
by the government and banks, yet the local shortage of copper
coin gave them wide acceptance by merchants and the public.
When Canadian businesses began to produce their own token
coinage in copper, some of these pieces bore reverse dies
already familiar from the American large cents. Canada finally
received its own bronze cent coinage in 1858–59, and the USA
copper cents, already obsolete in our own country, were gradually
withdrawn.
In the meantime, United States silver dollars continued to
be shipped overseas as just so much bullion. This trend accelerated
in 1853, when Congress lowered the weight of fractional silver
coins but retained the “standard” value of the silver dollar,
thus condemning it to obscurity within our own borders. Though
depositors of silver had to pay over their nominal face value
to receive dollars from the Mint, they did so with a specific
purpose in mind. The silver dollars produced in 1853–73 were
made almost exclusively for export to China and India at a
profit. The Chinese utilized them as a circulating currency,
alongside the eight reales coins of Mexico and other internationally
recognized issues. These pieces likely comprise the few survivors
known today of the rare 1853–57 and 1861–70 silver dollars,
such coins having been repatriated over the past 70 years
or so. As for the ones sent to India, these were quickly melted
and fashioned into jewelry or ingots and are forever lost.
The onset of America’s Civil War in 1861 soon disrupted our
economy. To pay for the war, both the USA and the CSA issued
paper currency. Initially exchangeable for hard money at par,
by the end of 1861 these notes were no longer being redeemed
in gold. By the middle of 1862, this suspension of specie
payment spread to silver coins, as well, for both banks and
the two respective governments. Gold and silver could be had,
but only in exchange for ever-increasing premiums as measured
in paper money. This situation did not apply in the American
West, where paper currency was either shunned by common consent
or actually prohibited by law, and both metals were in daily
circulation throughout the war years.
United States fractional silver coins did find other homes
during this period, most notably north of the border. Canada
received only a limited silver coinage of its own until 1870,
though New Brunswick and Newfoundland had likewise been provided
a small issue of fractional silver pieces during the 1860s.
USA silver coins had long enjoyed circulation in Canada at
face value, an awkward situation when Canada’s trade was officially
tied to the British pound and its fractional pence. Nevertheless,
American fractional silver was widely used there. In fact,
the Bank of Montreal purchased for import approximately 1/8
of the half dimes and dimes minted in 1838.
With the United States stepping up its purchases of goods
from Canada during the Civil War, and with gold no longer
available for such payments, millions of additional USA silver
coins made their way north after 1861. As with any invasive
species, however, these coins soon overpopulated and became
a nuisance. They quickly accumulated in the hands of merchants
who had no choice but to sell them to brokers at a discount.
As USA coins enjoyed no legal tender status in Canada, banks
would not redeem the coins in lawful money nor accept them
in deposits beyond their own needs. The USA would redeem its
silver coins only in federal paper money, the value of which
declined throughout the war.
So much silver in circulation actually reduced the circulation
of Canadian bank notes, which distressed their issuing banks
even more. Demands for action by the government led to the
announcement in January 1870 that it would buy up American
silver coins at discounts ranging from 5–6% below their nominal
face value on a basis of the amounts received. This discount
would increase to 20% after April 15 and even further in stages
thereafter. The place of these coins would be taken by an
issue of fractional paper notes redeemable in gold, the notes
to later be retired through an issue of Canadian silver coinage.
Though money brokers fought this challenge by offering holders
of foreign silver a bit over the government rate, eventually
the program was successful in replacing American coins with
Canada’s own pieces dated 1870.
David W. Lange's column, “USA Coin Album” appears monthly
in The Numismatist, the official publication of the American
Numismatic Association.