Wednesday, February 08, 2012

What is a Goloid Metric Dollar?

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In April of 1876, Dr. William Wheeler Hubbell of Philadelphia filed a patent in the U.S. for a new metal alloy to be used in coins. Referred to as "goloid," this alloy was a compound that consisted of gold, silver, and copper.

In 1878 it was proposed that goloid be used instead of silver in America's circulating coinage resulting in a reduced size to the coins. The dual benefits would be increased convenience for the public, and larger number of coins being produced without increasing capacity at the U.S. Mint.

Goloid would also help prevent changes in bullion prices that would result in one precious metal driving the other out of circulation and into the melting pots.

The Crime of '73

In 1873 Congress passed a bill that effectively terminated the silver dollar and for all practical purposes put the United States on the gold standard. The result was that lower demand caused silver prices to plummet. This infuriated the western mining interests and others of the Free Silver Movement. They referred to the Coinage Act of 1873 as the "Crime of '73."

Can't We All Just Get Along

Throughout the 1870s, and even until the Presidential election of 1896, the question of gold versus silver would be the dominant issue in American politics. It was amid this backdrop that Dr. Hubbell invented his alloy.

Probably the most obvious reason for proposing goloid coinage was that it would "destroy the rivalry between the two metals [gold and silver], and compel them both to be used as currency." It was a way to placate both sides of the political debate between gold and silver.


The Goloid Metric Dollar

According to Dr. Hubbell's patent, the goloid metric dollar was to be 1 part gold, 24 parts silver, and 2.5 parts copper. However those proportions were not set in stone and the patent allowed for those proportions to vary based on bullion prices.

When the first goloid metric dollar pattern coins were produced in 1878, the bullion value of the goloid metric dollar was equivalent to that of either the gold or silver dollar. In other words, the bullion value of two goloid dollars was equivalent to that of one gold dollar plus one silver dollar.

Over the next 3 years, the U.S. Mint would produce goloid metric dollar pattern coins with the proportions of gold to silver varying.

Goloid: A Counterfeiter's Dream

In the end, the goloid dollar was rejected as a replacement for our silver coinage.

One theory on Wikipedia suggests that the reason goloid was rejected was that "it could not be distinguished from the normal U.S. 90% silver coin alloy without chemical analysis, thus inviting counterfeiters to use silver-copper alloys alone to make lower-value copies."

The first strikings of goloid dollars by the U.S. Mint would seem to confirm this theory as the coins exhibited a "silver hue or color."  However, Dr. Hubbell believed that if his instructions for making his alloy were followed correctly, the resulting coins would be a "purple-golden" in color. During use "the goloid coin wears bright, clean, and more and more golden-purple."

Dr. William Wheeler Hubbell
Pickled Dollars

After conducting some tests, Hubbell concluded that the reason some of the pattern goloid dollars appeared silver was that their planchets were impregnated with sulfur after being "pickled" in sulfuric acid. This was a process the mint normally used with silver planchets but was opposed by Dr. Hubbell.

According to Dr. Hubbell, sulfuric acid will "bleach" goloid of its true purple-golden color and allow it to be "easily counterfeited."

Soon after his tests, Dr. Hubbell received a new example of a goloid dollar from the mint. He responded "it is much better than the first striking. It exhibits the purple-golden tint and reflection I said was the color of the body of the goloid metal." So it would seem that the color of the goloid coins would not be the reason for their rejection.

The Goloid Dollar Just Fades Away

A more likely reason that goloid metric dollars were never accepted is that Congress just simply lost interest.

The Coinage Act of 1878 placated the silver mining interests by authorizing the government to purchase millions of ounces of silver to be produced into silver dollars.

In addition, by December 1878 gold and paper dollars traded at par for the first time since the Civil War.

Goloid metric dollar patterns were produced in 1878, 1879, and 1880. But by 1881, Congress had moved on to other issues. The goloid metric dollar was simply no longer needed.