It looks like it may be a lamination. Not a mint error, but a flaw in the silver planchet used for this strike. When the silver was mixed and rolled to the correct thickness, it may have had been mixed with impurities and variation in the alloy that are causing the surface to flake and separate.
Some laminations fall off of the coin leaving a recognizable trench in the surface.
Let's see what a Morgan expert says about this.
"Shine, shine a Roosevelt dime. All the way to Baltimore and runnin' out of time." Tom Waits-Clap Hands