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Collectors have to pay up now for history

In the past there has been reason to question just how important history is to coin pricing. The traditional factors of supply and demand certainly were at the top of the list of considerations when market prices were moving up and down, but it now appears that the historical importance of a coin may be becoming an increasingly important factor.

At the American Numismatic Rarities sale of the Cardinal Collection of Early Silver Dollars and A Gentleman’s Collection of Gold Coins June 30, 2005, we saw two surprising additions to the list of million dollar coins and both clearly point toward historical importance as a factor in their price.

The first of the surprises came when a 1796 No Stars quarter eagle graded by the Professional Coin Grading Service as MS-65 became the 17th U.S. coin to reach the $1 million plateau when it sold for $1,380,000. The only U.S. gold coins to reach $1 million beforehand had been double eagles and Brasher doubloons.

The second coin to reach the $1 million mark might have even been more surprising as a 1794 silver dollar graded MS-64 by Numismatic Guaranty Corp. opened at $500,000 and then managed to surge past the $1 million mark to $1,150,000. As it actually sold before the 1796 No Stars quarter eagle, the 1794 dollar became the 16th coin to reach the $1 million mark. Worth noting however, was the fact that this particular 1794 silver dollar is not seen as the finest known although it is the highest grade received by a 1794 at NGC. Rather this coin was seen as perhaps the fourth finest known and the 1794 dollar in general with perhaps 135 known examples was not seen in years past as $1 million material except perhaps in extraordinary cases.

In the past the key to a coin reaching the $1 million mark was significant rarity.  We have seen unique issues like the 1933 Saint-Gaudens double eagle easily top $1 million and in that case soar to $7.59 million. Class I 1804 dollars have topped $1 million a number of times, but in that case there are only eight examples known while the 1913 Liberty Head nickel has only five examples known, which is the same total as the 1885 Trade dollar.

The lesser known 1866 No Motto dollar which is also in this exalted company has just two examples known and we have fewer than a dozen examples of the 1894-S Barber dime accounted for.

In a small number of other cases, the rarity has been helped by exceptional grade. We saw that when a 1907 Ultra High Relief Saint-Gaudens double eagle topped $1 million and its price was helped by the fact that the Ultra High relief is especially popular as it was the Saint-Gaudens double eagle President Theodore Roosevelt and Augustus Saint-Gaudens really wanted to make but because of the exceptionally high relief that dream proved to be impractical.

In the case of an 1870-S Seated Liberty dollar it was believed to be the only known example recognized as being Mint State out of a group of less than a dozen, which was a significant factor.

The 1796 No Stars quarter eagle and 1794 silver dollar suggest that history, while perhaps not priceless, has become a significant market factor and one that needs to be considered in future coin purchases.
In fairness, it was not history alone which produced what many saw as surprising prices for the 1796 "no stars" quarter eagle or the 1794 dollar but it had to play an extremely important role in pushing both coins to record levels.

While certainly a tough coin, the 1796 No Stars quarter eagle is not in the same group as the prior great rarities that first reached $1 million. The 1796 No Stars by most estimates has perhaps 200 known surviving examples. That makes the 1796 No stars quarter eagle very elusive in Mint State. For the 2005 auction it stood at the head of that group as an MS-65, making it by most accounts the finest known.

What is special about the 1796 No Stars quarter eagle is that it has a fascinating story. It is without a doubt the first gold quarter eagle produced by the United States Mint. In fact, the 1796 No Stars quarter eagle was probably a transitional piece. After the production of just 963, stars were added to the obverse. As a low mintage but high face value coin roughly 20 years after George Washington had convinced the troops to extend their service in the Revolutionary War by raising their wages to $10 per month, it is safe to assume that not many Americans could afford to save a $2.50 gold coin in 1796.

Clearly with its low mintage and fairly small numbers today, the 1796 No Stars quarter eagle in any grade is worthy of a high price, but no price guide had the 1796 No Stars quarter eagle at $1 million in MS-65. As interesting it is, realistically it is not the first gold coin of the United States as both the half eagle and eagle had been produced in 1795.

Even so, the historical importance of the finest known 1796 No Stars quarter eagle had to be a factor in the price as it stands as the first quarter eagle of the United States and that makes any 1796 No Stars quarter eagle a coin worth more than might normally be expected based simply on numbers known and grade.

The 1794 silver dollar is even more historic than the 1796 No Stars quarter eagle. The 1794 silver dollar has the unique distinction of being the first official silver coin produced at the United States Mint.

 The date was Oct. 15, 1794, and the Mint was trying to make up for lost time. Even though it had opened in 1793, there was no production of silver or gold coins as officials had to post a $10,000 bond before they could produce either gold or silver coins. They had balked at the requirement, because they couldn’t come up with so much and it took most of 1793 for Secretary of State Thomas Jefferson to work out a compromise.

It was surprising that the Mint started with a silver dollar as the presses were good only for coins up to a half dollar in size. A silver dollar press was not installed until the following year, but the early Mint went ahead anyway.

It appears that one day of trying to make dollars was enough. A total of 1,758 coins were delivered. No one believes that was the number attempted, but the others were melted not meeting what were even minimal quality standards.

It is estimated that there are 135 or so surviving 1794 silver dollars today. We see evidence that they were having problems as most have very weak strikes and sometimes less than perfect alignment.

As the first silver coin of the United States Mint, the 1794 is one of the most important coins in U.S. numismatic history. That low 1,758 mintage and high face value worked against large numbers being saved but the general belief is that perhaps 135 examples exist in various grade today making any 1794 dollar a tough  coin and one that has always been seen as important. With more than 100 known, however, very few 1794 have ever been thought of in terms of $1 million prices.

Like the 1796 No Stars quarter eagle the number of 1794 silver dollars even in Mint State is higher than the total number known in all grades combined of most of the other coins that have reached the $1 million mark at auction. The 1794 dollar, however, has something the others do not have and that is the special place in history as the first silver coin produced in the United States Mint.

That special place has always left the door open to the notion that special 1794 silver dollars with some claim to be the finest known or perhaps even the first struck like the Neil/Carter/Contursi 1794 had the potential to command very special prices simply because of their potential historical importance. There had, however, been no indication of just what a particularly nice 1794 dollar might potentially do.

The importance of that historical fact has not been lost on serious collectors over the years, but it seems to have now become much more significant in terms of pricing. The specimen sold for $1.15 from the Cardinal collection was graded MS-64 by the NGC and was widely believed to be the fourth-finest known 1794 dollar.

As the fourth-finest known, the coin had the potential to reach a surprising price. Historically, however, the numbers of known 1794 dollars when compared to the great rarities have seemed to work against the 1794 reaching a high price.

Certainly the potential as America’s first silver dollar was always there to reach record levels, but in the past that important place in history did not seem to translate into headline prices. Now that the situation has changed, that should make owners of 1794 silver dollars or 1796 No Stars quarter eagles extremely happy and proud as at long last it appears that the historical importance of a coin is having a significant impact on prices.

It is not a case where coin buyers and the prices realized by some coins in the past have not indicated at least some consideration of the historical importance of an issue. Rather, it is a matter where generally in the past the price impact of a coin’s historical importance was not totally clear in its price.

There have been a few exceptions and in some cases they have been surprising. It can safely be suggested that the 1856 Flying Eagle cent is not technically a coin. It simply cannot be as the Flying Eagle cent was not even authorized until February of 1857. It can be suggested that the 1856 circulated and acted like a coin, but the date makes it impossible to technically call it a coin. Technically, it is a pattern.

The precise definitions have not held the 1856 Flying Eagle cent back in terms of price. Today at $6,250 in G-4 or $65,000 in MS-65, the 1856 Flying Eagle cent has been rising on a consistent basis over the years and frankly the prices have historically always been high when you consider the number of known examples of the 1856.

Realistically we cannot be sure precisely how many 1856 Flying Eagles cents there are, but the best guess is that between 1,500 and 3,500 were made. Many of that number still exist as there have been hoards of as many as 756 pieces and that was the George Rice of Detroit, Mich., hoard.

The Andrew Beck hoard had 531 pieces and R.R. Leeds of Atlantic City, N.J., had over 100. Some of the numbers were probably the same coins simply moving from one hoard to another, but the fact remains that there are safely hundreds of 1856 Flying Eagle cents known and most of them are fairly nice as they simply never had a real chance to circulate.

In most cases they received light circulation or were purchased directly from the Mint, which had made the initial batch as samples of what a proposed new smaller cent would be like. When it was discovered that there were 1856 Flying Eagle cents, collectors simply went to the Mint and asked for examples. The Mint was willing to supply them, making both business strikes and proofs and most of them received pretty good care.

What makes the 1856 so important is simple and obvious: it was the first small- size cent. Actually, it was the pattern for the first small-size cent, but its historical significance is hard to escape and that seems to have kept the interest unusually high over the years and that demand has kept the prices high as well.

With the prices and numbers known, there is really no escaping the idea that somewhere in the price of any 1856 Flying Eagle cent is a certain amount paid for its historical importance.

The 1794 dollar and 1796 No Stars quarter eagle suggest that there might be some added premiums now for the first coins of their specific denomination produced by the United States.

Historically there is some small indication of such premiums at least in a couple of cases. The most important is the 1793 Chain reverse cent. The 1793 chain cent was the first coin produced in the new United States Mint in 1793.  The belief is that the first of the Chain reverse cents to be produced in the period from Feb. 27 through March 12 were of the AMERI reverse with the other having AMERICA spelled out.

We see some added historical value in the price of any 1793 Chain cent. That is especially true when you compare its current price with that of the 1793 Liberty cap cent. The 1793 Liberty Cap cent had a mintage of just 11,056 and the 1793 Chain reverse mintage was 36,103. As important, is the fact that the 1793 Liberty Cap did not survive in any numbers.

If you look at prices today, the 1793 Chain reverse is more expensive in grades where the two have listed prices with Mint State not really being possible to compare simply because the 1793 Liberty Cap cent is so rare in Mint State it is not even priced.

Up to XF-40, however, the  1793 Chain cent lists for higher prices. Realistically, there is only one reason and that is special demand because of its historical importance. If it were strictly a case of rarity, the two cents created in the same year would have the reverse of today’s pricing, but the historical importance of the Chain reverse has always seemed to weigh heavily in the case of cents.

Historical importance may also be a factor in some of the prices of the other early issues, but it is rarely as clear as in the case of the 1793 chain cent. In most cases, the first issues produced had lower mintages and that means they are going to be expensive under any circumstances. Realistically, however, the assumption is that sometimes additional numbers were saved of the historic first coins of a denomination and that can at least potentially help to moderate high prices in top grades. In few cases, however, do we see a clear situation where because a coin is historic it is more expensive.

If there is any other possible case it would probably be the 1796 quarter. The 1796 quarter by all normal standards should be extremely expensive. With a mintage of just 6,146 and being the only year of the type as well as being the first quarter of the United States, the 1796 certainly has everything you could ever want in a coin. Its current MS-60 price of $82,500 or MS-65 price of $235,000 might actually be seen as low were it not for one important factor.

The important factor concerning the 1796 quarter is the reports of a hoard from Col. E.H.R. Green, which was placed at over 200 pieces by Walter Breen. Q. David Bowers confirms in his A Guide Book Of United States Type Coins that many sometimes prooflike 1796 quarters were seen in the market in the 1940s and 1950s. A little checking of the grading services suggests that while Breen might have been wrong in terms of the estimated numbers the fact is as Bowers observed there is an unusual number of very nice 1796 quarters reported. The combined Mint State total at NGC and PCGS is not 100 pieces, but it is close to 60 and that is a very large number for a coin like the 1796. In fact, it would be a large number for any coin put at $82,500 in MS-60.

The suspicion has to be that some of the price of the 1796 today is for its historical importance. It is, however, tough to be precise as the extremely low mintage and the fact that the 1796 is the only year of the type also has to be considered.

It might even be said that there is a premium attached to all 18th century American coins because there are so few of them, their history is rich and collectors who consider themselves to be students of numismatics often are strongly focused on them.

It is hard to ignore the fact that the historical importance of  a coin is playing a greater role in arriving at fair market values.

Certainly condition and rarity will always be the most important factors in pricing a coin. Adding a pricing variable for history does not in any way diminish this. Collectors have pretty much always considered themselves students of history: owning history now pays higher dividends.

More Resources:

2010 U.S. Coin Digest, The Complete Guide to Current Market Values, 8th ed.

State Quarters Deluxe Folder By Warmans

Standard Guide to Small-Size U.S. Paper Money, 1928 to Date

Strike It Rich with Pocket Change, 2nd Edition

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