American Coinage Abroad
by David W. Lange
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
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obsolete in our own country, were gradually withdrawn.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