Abstract: American Silver in China: Trade Dollars and the Money of Empire

Stephen Mihm


The decades after the Civil War witnessed struggles over the money supply, with rival political factions favoring a currency of gold, silver, greenbacks, or some combination of these three. The problem, of course, was that the growing abundance of domestic silver, combined with events overseas, sent the price of silver ever lower. Congress demonetized silver in 1873, but it did something else that is rarely mentioned: it sanctioned the creation of a silver "trade dollar" meant for commerce with China. The United States was acquiring a taste for empire, one in which unwanted surplus silver could be palmed off on other countries. In the process, these countries might also adopt the dollar as their unit of account, bringing them further into the orbit of the United States. This paper examines the rise and fall of the trade dollar. Though the trade dollar was initially a success, Chinese authorities ultimately frustrated its adoption, rightly fearing that its widespread use would permit the United States a far greater degree of leverage. In the end, the trade dollars flowed back to the United States, where they became a kind of pariah currency, melted down or forced into the hands of low-paid laborers in company towns. Nonetheless, the silver trade dollar anticipated much of the monetary history of the late nineteenth-century United States: the denigration of silver as a domestic currency, the embrace of the gold standard, and a growing aggression toward countries or colonies that relied heavily or exclusively on silver as their principal currency.