Owner Comments:
The Trade Dollar was approved for use abroad, mostly for trade with China in Asia. The coin gained acceptance abroad, but caused problems at home. That resulted in its abrupt discontinuance.
Late date Trade Dollars, like this 1881 dated piece, were made only as Proof coins after the government determined that the issue posed a threat to the domestic economy. The problem was they were met for trade abroad, mostly Asia, and not for within the United States. Extensive use of them in the U.S. economy would have resulted in rapid inflation, which would have undermined the monetary system.
The trouble is people put them into domestic circulation, even after the U.S. Government took away their legal tender status. A vicious cycle occurred when they were traded at less than a dollar each, even in numismatic auctions! It’s hard to believe, but during this period in American history, a large silver coin like this melted for less than a dollar because there was so much silver on the market. Major silver strikes, like the Comstock Lode, were the cause of this unusual situation.
Slippery employers palmed them off on unsuspecting workers who found out that the coins were not worth a dollar, even though it said "Trade Dollar" on them. The hapless employees sold them for whatever they could get, and the vicious cycle started again.
Dave Bowers wrote that the coin collectors of the period were not fans of these coins. They didn't sell for strong prices and a fair number of them were spent.