Chester Holcombe to Evarts, July 1, 1878

No. 91. Mr. Holcombe to Mr. Evarts.

Sir: Recurring to Mr. Seward’s dispatch No. 398, of February 7 last, inclosing a copy of a circular letter addressed to our consuls at the several ports, inquiring whether the trade-dollar is coming into circulation, and whether any official action may be taken which will increase the demand for it, I now have the honor to hand to you copies of the several replies which have been received.

From these you will see that the coin in question has obtained no circulation in China, except at Amoy, Canton, Foo-Chow, Swatowyand the Formosan ports. At these places, it seems to be preferred by the natives to the Mexican, and to command a small premium.

The burden of opinion would appear to be that no official effort to extend its circulation is advisable, unless it can be made a legal tender for the payment of customs dues at a fixed rate.

I desire to request your special attention to the remarks contained in the dispatches from the consuls at Amoy, Foo-Chow, and Ningpo as to the desirability of preventing, if possible, the “chopping,” or mutilation, of the trade-dollar. This practice, which had its origin in a rule made by mercantile houses in the south of China, requiring each firm to guarantee the genuineness of dollars paid out by affixing to each coin its “chop,” or Chinese firm-name, and which was done by stamping with a die upon the surface of the coin, has grown into such an abuse, that current dollars are defaced beyond all possibility of recognition, and not infrequently coins are found in circulation through which holes have been punched.

In some cases, indeed, there is good reason to believe that the die has been displaced by a gouge, and a small portion of the metal has thus been abstracted from the coin.

In this connection, I inclose a copy of a memorial upon this subject presented to the governor of Hong-Kong, in June, 1877, by the leading bankers and merchants of that colony, in which the evils of the “chopping” system are set forth.

It is evident that the mutilation and defacement of any coin tends largely to limit and interfere with its general circulation. Whether it is wise to undertake negotiations with this government, at the present time, looking to a suppression of this practice in China, so far as it affects United States coins, is a question for the Department to decide. I desire, however, to point out that steps in that direction, if entered upon at all, should be undertaken simultaneously in Peking and London, as the practice referred to is not more common in this country than in Hong-Kong, which, as you are aware, is a British colony.

I have, &c.,