Trade coin
Encyclopedia
Trade coins are coins minted by a government, but not necessarily current within the territory of the issuing country. These quasi bullion coins (in rarer cases small change) were thus actually export goods - that is, bullion in the form of coins, used to bulk buy important goods from other countries, where they could be bought at a favourable price, compared to the purchasing power of the same amount of bullion within the trade coins' country of origin.
One of the most famous trade coins of the 18th century is the Austrian Maria Theresa thaler
. Although dated 1780, it has been minted continuously well into the 20th century in several cointries. It is still produced in Austria for sale to collectors. The Maria Theresa thaler was previously exported in large quantities to East Africa and the Middle East. It was so highly regarded in Africa that its purchasing power for goods and raw materials was higher there than in Austria.
A distinction must be drawn between full value bullion trade coins, that were used in ordinary peacetime trade on the one hand, and on the other hand debased coins, that were usually made with the intention to deceive. Such debased "trade coins" were occasionally minted during times of war, e.g. the Prussian ephraimiten
, silver-clad copper coins minted during the Seven Years' War
. If these were ever accepted or approved as legal tender, they would be valued far below the regular coins, their value being calculated according to a specified formula. The conversion rates were even then usually significantly below the intrinsic value of the coins, to cover costs of melting and recoinage etc.
In preparation for the slow transition to the gold standard
in England between 1717 and 1816, in trade with the Prussians England preferred 5 and 10 thaler gold pieces (Friedrich d'or
) in exchange for quality goods. The Friedrich d'or thus became a trade coin, while it was also current in Prussia itself (although with a decreasing exchange rate against the silver Reichstaler, see bimetallism
).
The Hungarian and Dutch gold ducat
s, minted for centuries with a stable fineness, were esteemed trade coins. Other trade coins were the so-called silver Trade dollar
s used by Mexico and the USA to buy South American or Chinese goods relatively cheaply. These countries mostly had a currency based on the silver standard
or even a paper currency, and domestically set the value of silver too high even though the world market price of silver had long been lower.
Since the 1920s there have been hardly any true trade coins, though some are still traded by coin collectors with a premium. Their role has now been taken over by (paper or electronic) United States dollar
s as a world currency.
One of the most famous trade coins of the 18th century is the Austrian Maria Theresa thaler
Maria Theresa thaler
The Maria Theresa thaler is a silver bullion-coin that has been used in world trade continuously. Maria Theresa Thalers were first minted in 1741, using the then Reichsthaler standard of 9 thalers to the Vienna mark. In 1750 the thaler was debased to 10 thalers to the Vienna Mark...
. Although dated 1780, it has been minted continuously well into the 20th century in several cointries. It is still produced in Austria for sale to collectors. The Maria Theresa thaler was previously exported in large quantities to East Africa and the Middle East. It was so highly regarded in Africa that its purchasing power for goods and raw materials was higher there than in Austria.
A distinction must be drawn between full value bullion trade coins, that were used in ordinary peacetime trade on the one hand, and on the other hand debased coins, that were usually made with the intention to deceive. Such debased "trade coins" were occasionally minted during times of war, e.g. the Prussian ephraimiten
Ephraimiten
From 1756, Ephraimiten were the inferior coins which dominated the economy of the kingdom of Prussia during the Seven Years' War. They were traded by normal citizens at the value of coins with the pre-war precious metal content, but they were in fact inferior to them in fineness.-Financing the cost...
, silver-clad copper coins minted during the Seven Years' War
Seven Years' War
The Seven Years' War was a global military war between 1756 and 1763, involving most of the great powers of the time and affecting Europe, North America, Central America, the West African coast, India, and the Philippines...
. If these were ever accepted or approved as legal tender, they would be valued far below the regular coins, their value being calculated according to a specified formula. The conversion rates were even then usually significantly below the intrinsic value of the coins, to cover costs of melting and recoinage etc.
In preparation for the slow transition to the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
in England between 1717 and 1816, in trade with the Prussians England preferred 5 and 10 thaler gold pieces (Friedrich d'or
Friedrich d'or
The Friedrich d'or was a Prussian gold coin nominally worth 5 silver Prussian Reichsthalers. It was used from 1741 to 1855 and since it was a silver standard regular issue coin and trade coin at this time, it had a different purpose to domestic silver coinage or Kurantgeld, the so-called window...
) in exchange for quality goods. The Friedrich d'or thus became a trade coin, while it was also current in Prussia itself (although with a decreasing exchange rate against the silver Reichstaler, see bimetallism
Bimetallism
In economics, bimetallism is a monetary standard in which the value of the monetary unit is defined as equivalent both to a certain quantity of gold and to a certain quantity of silver; such a system establishes a fixed rate of exchange between the two metals...
).
The Hungarian and Dutch gold ducat
Ducat
The ducat is a gold coin that was used as a trade coin throughout Europe before World War I. Its weight is 3.4909 grams of .986 gold, which is 0.1107 troy ounce, actual gold weight...
s, minted for centuries with a stable fineness, were esteemed trade coins. Other trade coins were the so-called silver Trade dollar
Trade dollar
-United States:The United States trade dollar is a silver dollar coin that was issued by the United States Mint and minted in Philadelphia, Pennsylvania, Carson City, and San Francisco from 1873 to 1885. Trade dollars intended for circulation were last produced in 1878 while proof coin production...
s used by Mexico and the USA to buy South American or Chinese goods relatively cheaply. These countries mostly had a currency based on the silver standard
Silver standard
The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. The silver specie standard was widespread from the fall of the Byzantine Empire until the 19th century...
or even a paper currency, and domestically set the value of silver too high even though the world market price of silver had long been lower.
Since the 1920s there have been hardly any true trade coins, though some are still traded by coin collectors with a premium. Their role has now been taken over by (paper or electronic) United States dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
s as a world currency.