State quarters teach many lessons

The numismatic hobby has been forever changed by the state quarter program. It is hard to imagine 50 different designs issued over 10 years not changing collecting.

But such a massive program raises some questions and offers some lessons.

There is no question the 50 state quarter program begun in 1999 was a success beyond the wildest dreams of almost everyone. In terms of creating interesting coins, in terms of creating a new interest and enthusiasm for coin collecting and in terms of providing millions with a great deal of fun, the state quarter program worked and it did so in ways many would have found hard to believe when it started.

Trying to figure out the keys to the success of the program is a challenge as there is no single aspect of the state quarters that by itself created success and that means there are lessons to be learned in a variety of areas as well as perhaps questions still waiting for answers.

One of the first lessons to be learned and one that was applied to the nickel as well is that the designs on American coins are not by definition required to remain unchanged forever. It had started to look that way in the years prior to 1999 as until the quarter program came along officials had treated changing designs a bit like the third rail of government coinage policy. The fear seemed to be that if you did anything to Washington, Jefferson or the other Presidents you would be fired and sent packing to some remote area of the country in disgrace.

Naturally when designs are changed everyone will not be pleased. That simply comes with the turf. Back in 1959 which was the last time a secretary of the Treasury used his power to change a design after it had been in use 25 years people called the Lincoln Memorial reverse the “trolley car” cent. In fact, that wasn’t bad as new coin designs have been called a lot worse over the history of the United States. In fact, there are very few designs that were not called something when they were first released.

The changes made to Washington on the obverse of state quarters while not enormous were significant not for the state quarter program as much as for future coin designs. William Cousins did some major revisions to the old John Flanagan obverse and there was also a number of changes in location. The Cousins changes especially in terms of additional detail on the hair saw his initials “WC” added next to the “JF” in the truncation of the neck and it is fair as the changes were significant. More significant, however, is that while some might have liked to see a completely new portrait, the fact is that Washington was at least altered and there was little if any negative comment.

Since that change in 1999 we have seen new Jefferson portraits on the nickel and while it may be expecting too much to see the individual depicted on the circulating denominations changed, it now appears that the Republic will not come to an end if we have a different portrait of Washington, Jefferson or any of the others.

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It would be fair to ask is the Victor D. Brenner design the only way to depict Lincoln? It would also be fair to look at the Kennedy half dollar, which realistically is now moving toward its 50th anniversary and say might it be time for a new Kennedy? It is worth remembering that at the time the Kennedy family was actually interested in a half-length portrait for the coin, but there was not time. Now there is and with the success of the 50 state quarters and the Jefferson nickel, it might be time to seriously consider continuing the process and exploring new possibilities for designs of the circulating denominations.

While it has not worked perfectly and without controversy, the process for selecting designs has proven to be a help in creating interest. Basically every state was asked in advance of their reverse to provide the Citizens Coinage Advisory Committee, the United States Commission of Fine Arts and the Mint with at least three concepts. There were things that were not supposed to be used in the concepts such as busts, state flags, logotypes and depictions of living people. The review process would eventually see approved final designs submitted to the state that would then make the final decision. Of course, there have been unhappy artists whose designs were not selected, but the process got people involved in creating coin designs in every state in the Union. There were even votes in some states to determine the final design.

As suggested, the design process has not worked perfectly but never in the history of the United States have so many been involved so deeply in creating coin designs. It brought coins and their designs to many Americans who had previously probably never given the idea of coin designs a second thought and there can be no doubt that it also gave every state a sense of pride and involvement all of which was far better than had the designs simply be prepared by Mint artists and released without ever consulting anyone. The state quarter approach took more time and trouble, but it was definitely worth it.

Certainly the state quarter program was been a commercial success far beyond anything imagined at the time it was being proposed. In fact, for many years some in the hobby had basically given up hope that there would ever be a new generation of collectors. The advent of video games and other forms of entertainment were seen as too appealing to ever convince the young of the fun to be experienced by simply filling holes in an album. Of course to have those holes filled with coins where each one taught those completing the set something about the geography and history of the United States was asking far too much or so it would have seemed. As it turned out, everything old is new again and millions of youngsters and their parents were enthusiastic about the state quarter program. The whole idea has been so popular that there are even state quarter collections being assembled by collectors living outside the United States.

There is no doubt that the program has produced many new coin collectors and there really is no down side to that. If there is any concern it is perhaps that there can be too much of a good thing. The state quarter program was long and while enormously successful it may not by definition be a blueprint for future successes. As so often happens when one idea works, others seem to follow the pattern. When the Statue of Liberty commemorative program worked well for a time, that seemed to be the model for future programs with a $5 gold coin, silver dollar and clad half dollar.

Gold then lost some popularity as a commemorative vehicle and more and more programs that feature just silver dollars emerged. Some, like the Benjamin Franklin program featured multiple silver dollars.

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Now that the state quarter program was seen to be working, additional ideas popped up, be it the Presidents of the United States or First Ladies, and while other programs might potentially work there is no guarantee.

The quarter is a widely used denomination and every state is represented. That is part of the beauty of the concept as at one time or another almost all Americans will give some thought to the quarter from their own state. Other programs may not have that advantage and the higher the denomination involved the less likely that another program will work as well.

We have also seen from the market that the state quarter program has been an enormous help, but there too it is far too early to suggest that other programs would work as well or even that everyone collecting the state quarters will ultimately finish their collection and move on to other issues.

There is no escaping the fact that the state quarter program is important to the rare coin market. Even though some may not see a direct link from state quarters to something like 1793 Wreath reverse cents the fact is that added money and profits from modern issues tends to find its way into older issues as well. Certainly all of the profits from state quarters are not spent by dealers on older issues but some of that money is spent on older more classic American coins. Just as the profits realized by many on the Statue of Liberty $5 gold of 1986 saw the coin market experience a very active period, the same can be said of the state quarters.

While there is no doubt that the program has helped the rare coin market it is hard to know just how large and long lasting its impact will be. When the first quarters were introduced it is clear that everyone basically underestimated the impact of the program. The initial saving of the Delaware, Pennsylvania and New Jersey quarters was not enough to meet the later demand and as a result we see all the 1999 quarters with higher prices in top Mint State grades.

As so often happens, there was an overreaction in 2000. The 2000 quarters had enormous mintages topped by the Philadelphia Virginia mintage of 943,000,000. That total is reasonable for an entire year and while probably hoarded in large numbers it along with the other heavy mintages of 2000 were enough to create a situation where totals were bound to decrease. Since 2000 we have seen lower totals.

Basically from the start, attempting to predict prices and likely better states has been risky business. Some felt that the quarters of some of the larger states like New York and California would be better on the basis that with more residents those states would have greater demand. That made sense to a degree, but it overlooked the other part of the pricing equation, which is supply and when it comes to supply, the U.S. Mint has proven itself fully up to the task of producing 1, 10 or 1,000 coins for every resident of every state no matter how large. Consequently there are no indications that a New York will prove to be any more costly than an Iowa or Vermont unless future analysis of available high-grade supply justifies it.

If anything, the real question for the future will not be the size of the state or the mintage, but rather the number saved. It might be more accurate to suggest the number saved and hoarded as there is no doubt that there are some very large supplies of some states still basically untouched.

The matter of such hoards is tricky to evaluate especially when you have no idea as to what coins are still in vaults in what numbers. The hoards are not likely to equal great percentage hoards of the past. For examples the 1931-S Lincoln cent has never been as tough as its mintage of less than 1 million pieces would suggest and with good reason as there was a hoard estimated at perhaps 200,000 pieces along with other smaller holdings at the time. The same thing is true of the 1950-D nickel, which had a low mintage but a number of very large hoards perhaps equal to more than 50 percent of the entire mintage. When there are such supplies in reserve waiting to be sold, it is hard if not impossible for a date to rise very dramatically in price.

In fact, in the past few years we have seen relatively little in terms of dramatic price movements. In the future, a shortage might appear, but that is in the distant future as the saving during the program seems to have squirreled away vast numbers.
Where we have seen some significant price movements in recent times have been in the proof-only San Francisco coins. Whether it is the clad version or the silver, the San Francisco proof-only dates are ones that should be easier to project as ultimately their prices should basically follow their mintages. It might take some time for that market to become fully stable and correctly priced, but eventually those coins with the lowest mintages are likely to be the most expensive. There is another factor to be considered in that with the proof-only San Francisco dates there is no cloud of perhaps large future supplies to hold back their prices. We know how many sets of the coins were sold and that is the final supply. The price has to factor in the probability that most if not all of the coins produced will be available at some point in the future, but the market is used to that concept as we have been dealing with proof-only San Francisco coins since 1968, and if anything, collectors have often marveled at just how cheap some of the clad proofs can get.

Where the state quarters may have had a very surprising impact in the market is not in state quarters but rather on clad Washington quarters. It is an old concept that when a new design becomes more numerous in circulation than an old design people start saving the old design. In this case it seems that with the state quarters people suddenly discovered the old clad Washington quarters.

We cannot say the clad quarter prices increases have been solely a result of the state quarter program, but there certainly seems to be some influence as if you look at 1998 prices for many Washington quarters they were in the case of dates like the 1985-D, 1994-P and a host of others in the $1-$2 range, yet these dates and many others are now at least $15 in MS-65. Even the dates already known in 1998 like the no-mint-set years have soared and sometimes more than the regular dates as the 1983-P and 1983-D were both under $5 in MS-65 in 1998 and now they are $45 and $30, respectively. It is a situation where very simply almost across the board the Washington quarters since 1965 have soared in price since 1998 and the likely reason at least in part has to be interested generated by the state quarters.

In terms of the state quarters themselves, it is unlikely there will be any that are particularly tough, but some are better than the others. What we may well see evolve over time is that any number of states tend to be more difficult in certain grades than others and with demanding collectors seeking the highest possible grades there may be some premium prices in places we might not expect.

For example, among all the 2001-D New York quarters graded by Numismatic Guaranty Corp. there have been only 41 graded MS-68. That might seem unimportant until you consider the fact that among the business strikes MS-68 tends to be the top grade seen on a regular basis. In some cases there have been hundreds of examples seen in MS-68 but there are other cases such as the 2001-D from New York where MS-68 are rarely if ever seen. Down the road, we could well see a great deal of pressure from demanding collectors for MS-68 or even MS-69 coins and if that happens these coins may well produce surprising prices.

Once again, although it is far too early to reach conclusions it is also worth noting the average grades seen for the various states as they are not equal. The average 1999 New Jersey quarter for example is between MS-65 and MS-66, but the average Texas quarter seen at grading services is between MS-67 and MS-68. That can be a significant difference and if the current indications prove to be correct there may well be premiums for certain states in certain grades.

Clearly the state quarter program has already had an enormous impact on coin collecting. It is, however, far from completed and it is likely that we have a number of things yet to learn from the remaining years and market activity as the state quarter program concludes an enormously successful decade in the spotlight.