History of Currency and Collecting Currency

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Paper currency was first developed in China in the 7th century and later adapted by the Mongol Empire before spreading to Europe and then the United States. China developed currency because of a shortage or metals. Notes printed promised the holder that it be redeemed for something of value and can be traded as specie. The Mongolian Empire learned from the Chinese and issued currency that they backed by the assets of their conquests. Since both China and Mongolia issued state guaranteed currency, the paper was trusted in commerce and helped build a steady stream of commerce between Europe and the east.

Although Europe traded eastern currency as trade was opened between the regions, currency was not a part of regular trade until the 13th century. In Europe, individual banks issued currency as a promissory note against assets held by the bank. Essentially, these were promissory or demand notes that was supposed to allow the holder to trade the note for specie on demand. Unfortunately, the practice was abused to try to raise additional capital and caused a lot of banks to fail.

The problem was not limited to private banks or loan companies. Banks owned by the nation states also tried to use currency as an investment vehicle without sufficient funds to back their values. Currency manipulation by those banks lead to man bank failures and economic depression that are woven through some of the strife through Europe.

Switzerland, France, and England were the first counties to organize and regulate the banks and regulate how they issue currency. Each country has experienced bank failures of not only the state chartered banks but the state central bank making the issued paper currency worthless.

Currency did not see a wide acceptance until it was issued in the Massachusetts Bay Colony in the 17th century. It was the first time that currency was issued in predetermined amounts. Since the colonies did not have the ability to coin money, all colonies issued its own currency by the 18th century. These notes functioned as currency but actually were bills of credit, short-term public loans to the government. For the first time, the money had no intrinsic value but was valued at the rate issued by the government of the colony in payment of debt. Every time the colonial government would need money, they would authorize the printing of a specified quantity and denomination of notes that it would use to pay creditors. The emission laws also included a tax that would used to repay the bill of credit and the promised interest.

As taxes were paid using the paper currency, the paper was retired. As the notes were removed from circulation, that was less payments the government had to make. On the maturity date, people brought their notes to authorized agents who paid off the loan. Agents then turned the notes over to the colonial government to be reimbursed and collect a commission for acting as an agent.

Sometimes, colonies could not pay back the loan. In those cases, the colonies passed another emission law to cover the debt owed from the previous emission plus further operating expenses. In this case, mature notes were traded for new notes. The colonists accepted this system since there were shortages of coins as well as there being an inability to convert the value of foreign coins into colonial shillings by farmers and other unskilled in such matters.

During the revolutionary war, the Continental Congress began to issue paper money to support the war efforts. The colonies also continued to issue paper currency. While the colonial issued notes had some value, those issued by the Continental Congress was not as sure and the notes’ value plummeted. With the saying “Not Worth a Continental” becoming popular so did the term “shinplasters” to describe the notes lining colonialist’s boots to help keep their feet warm.

Counterfeiting was rampant by the mid-18th century. In order to combat the problem, Benjamin Franklin devised the nature print, an imprint of a leaf or other natural item with its unpredictable patterns, fine lines, and complex details made it more difficult to copy.

To create a nature print, Franklin placed a leaf on a damp cloth. The cloth was placed on top of a bed of soft plaster that pressed the leaf into the plaster. Once the plaster hardened, it had a negative impression of the leaf. Molten copper was then poured over the plaster to make the printing plate. Franklin first used nature prints for the 1737 New Jersey emission. He also used different leaves for different denominations and elaborately engraved borders to further thwart the efforts of potential counterfeiters.

Franklin partnered with David Hall printing notes for New Jersey and Pennsylvania colonies. Along with his nature print, Franklin also included the phrase “Tis Death to Counterfeit.” Aside from trying to scare away potential counterfeiters, the penalty for counterfeiting in the 18th century was death. No convictions for counterfeiting colonial currency or death sentences have been recorded.

Later, Hall partnered with William Sellers to print Pennsylvania currency when the Pennsylvania assembly sent Franklin to England as their colonial agent.
Other printers tried different methods to thwart counterfeiters. James Parker of Woodbridge, New Jersey printed notes in two colors. With printing a labor-intensive process, it was thought the process to cumbersome for counterfeiters to go through the process of the second printing. Also, Parker used red ink as the second color. Red was more expensive than black ink in the 18th century.

The next wave of note is known as Obsolete Notes, sometimes called Broken Banknotes. These were privately issued currency starting in the 1830s backed by the assets of the issuing bank. These notes became obsolete in the 1860s when many of the issuing banks failed and the federal government changed the laws regarding currency issues. Obsolete notes are a popular collectible since many feature beautiful images, called vignettes, that represent local industries or patriotic themes.

As the Civil War raged, the public hoarded coins creating a shortage of circulating coinage. People started to use postage stamps for transaction requiring small change. Stamps were traded in envelopes that would fall apart causing the gum on the back to make them a sticky mess. As a result, the post office issued small, rectangular Postage Currency in 1862. Postage currency was larger than the postage stamp without the gum on the reverse, and the front depicted the postage stamp and its value. Without the adhesive, they could not be used for postage but could be redeemed at any post office for its face value.

Currency in the United States went from its chaotic stage to something the government issued and regulated with the passage of the National Bank Act of 1863. The law replaced the postage currency with fractional currency. Authorize by the government and printed by the American Banknote Company, fractional currency was issued through 1876 when coinage production caught up with demand and hoarding had ended. At this time, the Currency Bureau, later to be renamed the Bureau of Engraving and Printing (BEP) was created to cut and distribute the notes. Fractional currency is a popular collectible especially amongst those with interest in the Civil War.

Another Civil War collectible is Confederate Currency. These banknotes were primarily demand or promissory notes back by non-existent assets that made the notes worthless by the end of the war. During the war, the Confederate States of America issued seven series of currency printed by different printers throughout the south, some in the north, and in London. Confederate coinage, also collectible, was struck using mints under siege in Charlotte, Dahlonega, and New Orleans. During the Civil War, the chief coiner of the New Orleans Mint fled to France to continue producing coins for the Confederacy. This history makes these numismatics are very collectible by history and Civil War buffs.

Following the Civil War, paper currency is identified by type, denomination, and series date. The series date is not necessarily the date in which the note was issued. The series could represent the year the law authorized the notes, the year the production began, or in the case of current Federal Reserve Notes, the year when the signature of the Secretary of the Treasury changes.

Not including fractional and Confederate currency, the following are characteristics of United States currency:

  • Demand Notes were the first paper currency printed for the United States government for general circulation. These notes were essentially loans to the government during the Civil War to be paid on demand at designated Treasury offices following a maturity date. The backs of these notes were printed in green to prevent counterfeiting by people taking pictures of the note using a camera, the new technology of the time. Green did not photograph well. The term “greenback” came from the use of green inks to print these notes.
  • United States Notes were the first currency authorized by the Legal Tender Act of 1862 and the first notes printed by the National Currency Bureau. Also known as Legal Tender Notes, these notes were supposed to be backed by assets held by the government that were not necessarily precious metals. Large size United States Notes are very collectible with great designs that make them special.
  • National Bank Notes allowed banks with a federal charter to issue notes against their assets. In order for the banks to be allowed to issue currency, they had to purchase bonds from the Treasury and were allowed to issue currency up to 90-percent of the value of those bonds. The bonds were used by the federal government to insure the value of the notes. All notes were printed by the Bureau of Engraving and Printing to ensure that the designs were identical with only the bank name, location, and charter number printed for the issuing banks. The National Bank Note program ended in 1935 when the bonds securing the notes were terminated as part of the banking reorganization during the Great Depression. National Bank Notes are great collectibles for those interested in collecting items representing a state or region.
  • Silver Certificates began in 1878 when the government decided to increase the production of silver coinage with the passage of the Bland-Allison Act to satisfy silver mining interests. Silver coins were deposited with the Treasury and the equivalent dollar amount of silver certificates where produced. Silver Certificates could have been presented to the Treasury Department and redeemed for silver dollars. The series 1953B silver certificates were the last produced for circulation. In 1964, with the price of silver rising, the Treasury stopped redeeming silver certificates for silver dollars and started to distribute small vials of silver flake equal to $1. This redemption program stopped in 1968. All but the very rare 1934 Yellow Seal North Africa notes are available for collectors in nearly every denomination.
  • Gold Certificates were generally used to transfer money between banks and other large financial institutions. First issued in 1878, Gold Certificates were backed with gold deposited with the Treasury. Some of the lower denominations did circulate to a limited degree, but banks used others. Gold certificates were printed with bright colors, mostly gold-colored, and the reverse on the large notes (pre-1929) were also gold-colored. Small notes were printed with the traditional green reverses. Gold certificates were recalled with the gold recall in 1933.
  • Treasury Notes were issued as part of an 1890 and 1891 series to be paid to individuals selling silver bullion to the Treasury. Those paid with these notes could redeem them for the equivalent value in gold coins. The Treasury stopped this program after 10 years because of the considerable amount of labor required to carry out this program.
  • Federal Reserve Notes (FRN) were first issued in 1914 by the newly formed Federal Reserve System and are still being printed and distributed today. When first issued, FRNs were printed as large size notes and were reduced to the small notes we are used to today in 1929. After 1945, the Bureau of Engraving and Printing stopped printing all denomination over $100. By 1969, those large denominations were removed from circulation. Designs of FRNs remained the same until 1995 when the BEP altered the designs to include new security features. However, the $1 FRN has not changed since it was first introduced in 1929. FRN are readily available and accessible to most collectors. Common ways of collecting is by signature pairs. Other ways of collecting FRNs is by serial number patterns (e.g., radar patterns, series, low numbers, etc.), and by Federal Reserve District represented by the note.
  • Federal Reserve Bank Notes (FRBN) began to be issued in 1915 to transition from National Bank Notes to Federal Reserve notes. FRBN were obligations of the issuing Federal Reserve Bank branch and not the U.S. government. FRBN production was discontinued in 1934 and were stopped being issued in 1945. Since FRBN resembled National Bank Notes except that the issuing bank is a Federal Reserve Branch and are printed with “National Currency” across the top.

Currency collections can be as varied as the types of currency printed. Some currency was printed with themes such as the Educational Series of 1896 that used allegorical images in an attempt to educate the public. Other ways to collect currency is by their design, the color of the seal, the issuing bank, serial numbers, and signers.

If you collect by signers on the note, one of the more interesting notes is known as Barr Notes named for Joseph W. Barr, the 59th Secretary of the Treasury. Barr was confirmed and sworn into office on December 21, 1968, one month before the end of the Lyndon B. Johnson administration. Since the Secretary of the Treasury’s signature is on all Federal Reserve Notes, the BEP printed over 485 million one dollar notes with Barr’s signature before his term ended on January 20, 1969.

In the case of currency, size matters. Aside from the denomination, standard currency printed by the BEP used to be larger than it is today. Prior to 1929, U.S currency was 7 1/2 inches long by 3 1/8 inches wide. These are commonly called large notes. Another nickname for these notes are horse blankets. Beginning in 1929 with the Series 1928 notes, U.S. currency was reduced to the 6 1/8 inches by 2 5/8 inches notes we are used to using today. These are commonly called small notes.

If you ever looked at a note and noticed that a star (“*”) was included in the beginning or end of the serial number, you have a Star Note. A Star Note is used to denote that the note is a replacement note for one found to be defective or damaged during the printing process. To maintain the correct number of notes in a print run, the serial numbers are reclaimed and a star is added to note the replacement. Since Star Notes are replacements for errors, they are not as common as normal notes and are popular with collectors.

SF Mint 75th Anniversary Eagles

The San Francisco Branch of the U.S. Mint first opened in 1857 to serve the coinage needs caused by the California Gold Rush. With the population growth in California and the demand for coins the Mint out grew the building and built a new Mint that was opened in 1874.

The new building was built beyond specification to be secure based on the known risks of the times. One worry about the new building was preventing the ability for someone to break into the building by tunneling into the basement. To prevent this, the foundation and basement were made with granite. Although the above ground structure was built using sandstone, the building earned the title “Granite Lady” following the 1906 San Francisco Earthquake when it survived with only a few exterior cracks.

The Granite Lady was the only building in its area to survive the destructive force of the quake. After the earthquake, the Mint Superintendent Frank Leach and his staff used the building and the grounds to assist with the rescue and housing effort after the earthquake. A tent city was built around the Mint and stayed until there were places for them to move.

Production continued with coins bearing the familiar “S” mintmark. Amongst the coins struck at The Granite Lady is the famous 1909-S VDB Lincoln Cent. The year after producing only 309,000 1908-S Indian Head Cents, the San Francisco Mint geared up to increase the production of the newly introduced Lincoln Cent. As the new coins landed in circulation, there was an outcry over the large “V.D.B” initials on the reverse for designer Victor David Brenner, the Mint stopped production of the coins. The Mint in San Francisco stopped after production of 484,000 of these cents, making it one of the most desired collectibles and a key date in the Lincoln Cent series.

As what happened after the San Francisco Branch Mint opened, they began to outgrow The Granite Lady. At the same time that congress authorized $524,000 to build the Bullion Repository at Fort Knox in 1935, they authorized $1.225 million to build the new San Francisco Mint.

The state of the art facility was built as a fortress with two-foot reinforced concrete walls to protect the vaults, a pistol range on the fifth floor, and tear gas pipes throughout the building for security. Also included in the construction was a generator to operate the electricity in case the power was cut to the building. When it opened, there was a plumbing shop, carpentry shop, and a blacksmith shop to support operations.

San Francisco’s new Mint opened in 1937 and became fully operational by 1938. It continued to strike circulating coins until 1955. In 1962, San Francisco was “downgraded” to an assay office. As an assay office, it struck circulating coinage starting in 1968 and ending in 1974. The San Francisco facility continued to strike proof coinage and added striking circulating Susan B. Anthony Dollars from 1979 through 1981.

Since 1981, the San Francisco Mint has struck Lincoln Cents for circulation to supplement the output of the Philadelphia Mint. It is not known how many cents San Francisco produced since their coins contained no mint mark and their inventory was included in the general reporting by the U.S. Mint without distinguishing between the facilities.

The San Francisco Assay Office was officially granted mint status again on March 31, 1988 as part of Public Law No. 100-274. That law also granted mint status to Silver Bullion Depository at West Point.

To celebrate the 75th Anniversary of the “new” San Francisco Mint, the U.S. Mint will sell a two-coin American Silver Eagle Proof set struck at the San Francisco Mint featuring the “S” mintmark. The set will include one regular proof and one reverse proof coin in a special presentation case.

In an attempt to avoid the problems of the past, the U.S. Mint will take pre-orders for the set and strike as many as collectors purchase. The U.S. Mint is likely to limit the number of sets sold during the pre-sale period, but there will be no limits on the number of sets produced.

The San Francisco Mint will begin to strike American Silver Eagle Proof coins on May 11 and will host a public ceremony on May 15. This set be on sale only during the period of June 7, 2012, to July 5, 2012 with mintage limits is being reported as “to demand.” Price has yet to be announced.

The American Silver Eagle Reverse Proof has to be one of the best looking coins produced by the U.S. Mint in the last 50 years. Aside from using the Adolf A. Weinman Walking Liberty design, which is one of my favorites, the shiny relief over the matte field really makes the design pop.

With the current American Silver Eagle Proof coin selling for $59.95, it is possible that the San Francisco set would be priced around $120. However, I think the set price may be set to $99.95 to increase sales and show some good will to collectors, especially those that were shutout of purchasing the 25th Anniversary Silver Eagle Set.

As an aside, the 100,000 unit 25th Anniversary set sold for $299.95. Recent price guides show that the set is selling is worth $825. Since the U.S. Mint plans to strike “to demand,” it is unlikely the San Francisco Anniversary set will see that kind of increase on the secondary market.

Image of the San Francisco Mint after the 1906 Earthquake courtesy of the Library of Congress.
Image of the new San Francisco Mint courtesy of Wikipedia.
Image of the San Francisco 75th Anniversary Silver Eagle Set courtesy of the U.S. Mint.

History of Coin Collecting

Numismatics is the collecting and study of items used in the exchange for goods, resolve debts, and objects used to represent something of monetary value. The dominant area of numismatics is the collection and study of legal tender coins with United States coins being the most collected. But there are so many other forms of numismatics that there are collectibles to pique anyone’s interest.

Evidence of coin collecting has been found as far back to the early days of the Roman Empire when collecting art came into vogue. Since coin design was considered art, it was assumed that coins were part of every collection. Archeologists have discovered hoards of coins with no two being alike in the areas believed to be cultural centers of the Roman Empire. The fact that the hoards have unique coins have archeologist beliving that these were lost collections.

Coin collecting did not become a broader hobby until the Italian Rennaisance when the lords and kings began to collect what we call ancient coins primarily found on their land or during conquests of other lands. Since only these nobles could afford to collect, coin collecting became known as the “Hobby of Kings.”

By the 17th century, collectors started to study and catalog the coins in their collection beginning the era of numismatic research that continues today. As the study of the coins began to advance, there was the rise of public collections. Coins held by the royalty were either given or confiscated for the state and placed in museums. As the collections began to build, museums began to sponsor research to document their holdings.

Modern numsimatics is said to have begun in the 19th century with the interest in the coins of a new nation. Collectors in the United States and overseas saw potential in the promise of the new coinage as the nation grew. By the latter part of the century after congress ended the use of foreign coins in commerce, collectors started to hoard older designs and created clubs for collectors to network and share information.

The 20th century saw new markets for numismatics develop. Growing interest in numismatics caused excavation of sites believed to have been inhabited in ancient times to find coins while hoards of United States gold and silver coins were being discovered primarily in Europe with others found in Asia. Collectors started searching banks and pocket chains for coins like the 1909-S VDB and 1914-D Lincoln Cents, 1913 Type 1 Buffalo Nickels, and 1916-D Mercury Dime.

The first change in numismatics came with the introduction of the coin board, cardboard-made boards with holes the size of the coins so that collectors can organize their collections. Coin boards introduced the concept of collecting coins in a series. Boards were printed to allow the collector to insert coins of each date and the date with mint mark. Soon after publishers printed folders that brought down the size of the coin board so it could fit on a book shelf and then the album with the ability to view both sides of the coin.

Another change occurred in 1955 when the 1955 Double-Die Obverse (DDO) Lincoln Cent was discovered. Known as the “King of Errors,” this coin lead to collectors to search for errors, varieties, and anything out of the ordinary. New clubs were formed to organize and promote this new hobby segment. One of the most comprehensive study of die varieties was published in 1971 by Leroy C. Van Allen and A. George Mallis. Their book, The Comprehensive Catalog and Encyclopedia of Morgan & Peace Dollars, documents the dies and strike varieties of America’s last circulating large silver dollars. Their catalog, also known as the “VAM Book” provides a numbering system to identified the different varieties whose impact created a new way to collect silver dollars.

The biggest change in coin collecting occurred in 1965 when the United States stopped striking coins using silver. With the price of silver rising and costing more than their face value, the country was facing a coinage shortage as people started to hoard the coins vor their silver values. Although the government erroneously blamed collectors, congress voted to change the composition of what were silver coins to copper-nickel clad alloy. Even though the half-dollar continued to be minted in silver until 1970, the silver was clad over a copper core.

Collectors consider 1964 the end of the United States’s classic coin era and 1965 the beginning of the modern era. The modern era saw the last of the large dollars and the transition to the small dollars, changes in composition for the Lincoln cent, the rotating circulating commemorative series beginning with tht 50 State Quarters program, and the reintroduction of the commemorative coin program. Another addition to the modern era in the United States and around the world is the resurgance of bullion coins.

After the world stopped using precious metals for coins, South Africa made a strategic decision to continue to strike the 22-karat krugerrand for world investment. For many years, the krugerrand was the standard for bullion investment until the United States began the American Eagle Bullion Program striking silver and gold coins. While other countries have followed suit, the American Eagle set the standard that other countries followed. Also popular at the Chinese Pandas, Canadian Maple Leafs, British Britannias, Mexican Libertads, and Australia Kookaburra.

Bullion programs lead to a new set of collectibles that are a cross between bullion and commemoratives called non-circulating legal tender (NCLT) coins. NCLT collecting has introduced new collecting opportunities by allowing mints and central banks to create new themes to intice new collectors and established collectors to expand their collections with new coins.

Rotating circulating commemorative designs and NCLT coins along with an expanded interest in other numismatic collectibles from the past including obsolete tokens, medals, old stock certificates, and paper money gives the numismatic collector an opportunity to create great collectings by collecting what you like.

John Albanese Sells Out Ordinary Collectors

When I wrote “eBay to ANACS and ICG: You Lose!” it was based on the release eBay provided to sellers. This was not the complete story as reported by CoinNews.

According to the release published by CoinNews, eBay worked with John Albanese to develop the standards that will be used for graded coins. Albanese is the founder of the Certified Acceptance Corporation, a third-party grading verification service, and Numismatic Consumer Alliance, which calls itself a numismatic protection corporation. Albanese is one the the original founders of Numismatic Guarantee Corporation, one of the leading third-party grading services.

On the surface it may look like a good idea to work with someone of Albanese’s alleged stature to set these standards. However, if you look at Albanese’s business interests, Albanese is not working for the ordinary collector.

The standards eBay is adopting are almost aligned with the submission policies of the CAC which Albanese is president. The difference is that modern coins (coins struck after 1964) and bullion coins graded by the acceptable third-party grading services can be listed as graded. Any other coin is considered a raw coin and cannot be listed or described as graded. While a picture of the coin in the holder is allowed, the listed cannot name the grading service or the numerical grade.

I have never met John Albanese and have been told that he is respected by those who know him. I do not know him and only know of his current efforts with the CAC. The CAC is a company owned by high end dealers who had complaints with the work of the grading companies. While a verification service is good, the CAC and its partners are working hand-in-hand to buy, sell, and trade these coins which, in essence, drives up the prices of the coins.

It is part of the CAC business model only to accept coins graded by NGC and PCGS for evaluation. It is part of the CAC business model not to accept modern coins with the exception of certain Lincoln Cent errors. And up until the last year, collectors could only submit coins through CAC affiliated dealers. The business model skews to higher-end coins with the partners creating their own trading market based on the CAC opinion.

Let’s look at the business model of the CAC using a different market. A stock broker buys a series of loan interests he wants to valuate based on a criteria held by those who are not happy with the current valuation services. Rather than look at everything, they start with a series of loan shares whose valuation are certified by certain services because they have a biased opinion against other services. They evaluate shares, put their seal of approval on it, bundle them and trade them amongst themselves create a new market that is currently not existent. Once these shares are traded in this closed market, their value is set then traded to the public. If this sounds like the derivatives market that crashed the economy in 2008, you would be correct. It also parallels the rise of the CAC and its creation of an artificial market.

If the CAC was working as an independent organization without its market-making activities, there would be nothing wrong with what it is doing. However, its market-making activities leaves open questions about its objectivity.

In the securities business, there are laws against artificially building up the price of a stock and then selling them for profit. It is called “pump-and-dump.” Those not in the securities business cannot collude to artificially fix or advance prices, as the airlines have been accused of doing. This is a potential violation of the antitrust laws of the United States. Specifically, it can be alleged that their practices are violations of the provisions of The Clayton Act. The purpose of The Clayton Act is to protect against price discrimination by using influence over markets using exclusive dealing agreements and tying arrangements. Recent cases involving antitrust applies the law to the manipulation of markets to create exclusivity.

Rather than find a better solution to cover the entire market, eBay spoke with someone who has an economic stake in the market for which eBay is trying to regulate. Thus, the new rules adopted by eBay is an attempt to influence the market and create a tying arrangement to manipulate the market to the business model and agenda supported by Albanese, the CAC, and its investors.

Coin collecting is more than the market promoted by Albanese and the CAC. Ebay, Albanese, the CAC, and those who support the CAC do not think in the context of the average collector. I am amongst the average collector. I am the one who sees ICG holders signed by the artist of the New York State Quarter and has to add it to his specialized collection of New York items. If I decide to divest this collection, I would not be able to mention anywhere in the listing the grading service or the numerical grade assigned by ICG. While I can include a picture, I would have to create a listing that would border on being fraudulent for not being able to disclose the actual details of what I was selling.

I am for sensible guidelines that would be inclusive of the ordinary collector as well as protection for those buying higher end coins. However, the route eBay has used to consult with someone who has a fiscal agenda in the market appears to be shaping the market into that agenda that will leave the rest of collecting community behind.

If you think that eBay has gone too far, I urge you to contact their customer support and express your opinion. I also call on the American Numismatic Association to step in on behalf of its member, not all are rare coin collectors, to work as an independent organization to protect the seller against an agenda-based policy. Finally, if you feel that this is the beginning of a restraint of trade violation by eBay, I urge you to file a complaint with the Federal Trade Commission and ask them to look into hampering the sale of legal collectibles.

eBay to ANACS and ICG: YOU LOSE!

This week, eBay sent a message to sellers who listed coins and currency for sale on the site to announce new listing policies for coins.

As coin collecting continues to grow and thrive on eBay, customers have told us time and again that knowing they can buy and sell with confidence is important. “We’ll be updating eBay’s Stamps, currency, and coins policy to help foster that confidence—this update may impact your coin listings,” read eBay’s note.

Starting May 30, all new listings and relistings in coin categories will need to meet the following requirements:

  1. First, listings for coins will be allowed to include a numeric grade in their listing title or item description only if the coin grading company meets certain objective standards.* Coins that haven’t been graded by these companies will be considered raw or ungraded. Currently, eBay has determined that only the Numismatic Guaranty Corporation (NGC) and the Professional Coin Grading Service (PCGS) meet these standards.
  2. Second, for US Coins only, grading by companies meeting these standards will now be required for all coins listed with a Buy It Now, reserve, or start price of $2,500 and above.

A footnote for the asterisked line says, “These standards will be posted on eBay’s website shortly.” The policy page has not been updated to explain the standards which the decision is based.

By this rule, coins certified by ANACS and ICG have now been reduced to second class status even though there may be nothing wrong with them. Nice coins still in old PCI holders with J.T. Stanton’s signature are also reduced to “irrelevancy” becuase of eBay’s undisclosed decision.

This is not the first time eBay has made arbitrary decisions about coin collecting based on questionable advice. In January, eBay banned the sale of replica coins where they said they worked in conjunction with the Professional Numismatic Guild to come up with a policy.

“We’ve heard from both buyers and sellers that they’d like to see more coins on eBay graded by companies who meet high standards,” read the eBay release. “These new requirements are an important step toward meeting these marketplace demands.”

As both a buyer and seller, I have never been asked.

By making this statement, eBay and not experts or the numismatic public is telling the marketplace that they know better. By making this statement, eBay will not allow me to search for or buy that old ANACS photo holder or the ICG graded error coin verified by CONECA because ANACS and ICG cannot be used in the title and description.

Rather than managing its market place, eBay has now turned themselves into an enforcement bureau making policies that could be considered a restraint of trade by telling independent sellers what they can or cannot sell that would be legal elsewhere.

Ebay has a right to limit the type of item sold on via its service. Ebay has extensive policies regarding prohibited and restricted items as well remedies for violating these policies. Now, eBay has branched out from prohibited and restricted items to practically banning LEGAL products because they do not meet arbitrary and capricious standard that they have yet to divulge.

Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. By eBay telling me and other sellers that we cannot properly list and sell any other coin but those encapsulated by PCGS or NGC is restricting my freedom to conduct business. Ebay will not let me sell or advertise the ICG graded error coins or the artist signed state quarters also slabbed by ICG. In other words, I would be restrained from appropriately advertising LEGAL inventory by contractually restricting my freedom to conduct business.

If there is an alternative to eBay for selling legal coins, I would like to know. The extra coins from the divesting of part of my collection will be listed there. Ebay is no longer a viable outlet to sell collectible coins.

PNG Defines Coin Doctoring

In a late press release on April 17, it was announced that after two years, the members of the Professional Numismatists Guild approved a three-point definition of “coin doctoring.”

“This is a complex issue, but we needed to have a concise definition to help combat the deliberative and unacceptable alteration of coins in an effort to deceive,” said PNG President Jeffrey Bernberg.

As the hobby has grown and the ability to sell coins have become easier, the problem of coin doctoring has been one of those issues simmering just below the industry’s radar. But as the prices of key and semi-key coins have risen, the temptation by some to cash in has caused coin doctoring to be a more significant issue.

​“We’ve been working on this for over two years with Numismatic Guaranty Corporation and Professional Coin Grading Service as well as a committee of dealers and collectors to formulate an industry-acceptable definition,” said PNG Executive Director Robert Brueggeman.

According to PNG, coin doctoring refers to the alteration of any portion of a coin, when that process includes any of the following (emphasis added):

  1. Movement, addition to, or otherwise altering of metal, so that a coin appears to be in a better state of preservation, or more valuable than it otherwise would be.  A few examples are plugging, whizzing, polishing, engraving, “lasering” and adding or removing mint marks.
  2. Addition of any substance to a coin so that it appears to be in a better state of preservation or more valuable than it otherwise would be. The use of solvents and/or commercially available dilute acids, such as Jeweluster, by qualified professionals is not considered coin doctoring.
  3. Intentional exposure of a coin to any chemicals, substances, or processes which impart toning, such that the coin appears to be in a better state of preservation or more valuable than it otherwise would be. Naturally occurring toning imparted during long-term storage using established/traditional methods, such as coin albums, rolls, flips, or envelopes, does not constitute coin doctoring.

While much of this makes sense in the current environment, there are some things that the collecting public must remember. First, not all doctored coins are an effort to deceive. One example are Buffalo Nickels that have been treated with a chemical to make the date readable. These “acid coins” are easy to detect since the chemical leaves a stain where used and, in the vast majority of cases, are advertised as being altered coins.

Another issue is that at one time coin doctoring was an accepted practice. People did not want ugly coins, so dealers would use various methods to polish he coins to make them look better. It was also common for some to use the same abrasive copper polish that was used to clean copper cookware to clean older copper coins to try to make the coins look mint red. Others embraced the natural oxidation of copper that turned them brown and coated them with lacquer to preserve its rich, dark color.

When blatant altering of the surface fell out of fashion, dipping the coins in chemicals to improve the surface continued, especially for copper coins. While not as easy to detect, it is possible to find better and semi-key Indian and Lincoln cents that were dipped a long time ago when the practice was acceptable. An experienced eye can tell if a coin was once dipped, but it is not easy. If you have any question, either ask that coin be graded by a third party or do not buy the coin.

One item that is objectionable is in the second definition where it says, “the use of solvents and/or commercially available dilute acids… by qualified professionals is not considered coin doctoring.” What this says is that if I have coins that have been contaminated with polyvinyl chloride (PVC) from being improperly stored, I cannot buy acetone to rid the coins of the damage. Rather, it appears that NGC has preserved the business of its sister company, Numismatic Conservation Service by saying only NCS can do the job and a vigilant collector is a coin doctor.

Dear PNG: I am going to continue to carefully remove the deteriorated foam from a set of improperly stored 1939 World’s Fair tokens using olive oil and acetone. Just because I do not work for NCS does not mean I am doctoring  these coins.

A collector who uses a dilute or neutral acid that does not alter surfaces like acetone to remove PVC, dirt, or other contaminants is not a coin doctor!

Toning is a controversial topic because toning is he result of the oxidation of the coin metal accelerated by environmental contaminants. Oxidation alters the irreversibly alters the surface of a coin. Usual causes of toning comes from storage using non-neutral materials. Since toning can give coins a pleasing or pretty look with many interesting colors, there are collectors who seek out toned coins.

Artificially toning a coin can be used to hide the work of doctored coins or make the coin more desirable. The problem is that there is no definitive way to tell the difference between artificial and natural toning. There are ways to tell the difference between deliberate attempts at toning, but there has been anecdotal evidence demonstrating that it is possible tone a coin that has fooled the grading services.

Now that we have he definition of coin doctoring, what do we do with it? While PNG can use this definition to police its own members, what happens to dealers who are not PNG members? Will PNG work with the American Numismatic Association to adopt similar ethics rules? If so, will ANA members be allowed in this conversation?

“It frankly took longer than some of us expected or wanted to get something substantive finally approved, but the overwhelmingly vote now by PNG members to support a specific coin doctoring definition is an important, major step for the hobby and the profession. It needed to be done,” said Brueggeman.

Maybe they should have waited longer and put out their definition for general comment before enthusiastically adapt a message with questions.

Saga of the Half-Cent

Since the Canadian government has proposed the elimination of their one-cent coin from production and putting in measures to remove them from circulation, proponents of a similar policy in the United States have been pointing northward and the past to support their position. When they point to the past, the target is the Half-Cent, established as part of the Coinage Act of 1792 and eliminated by the Coinage Act of 1857.

The common argument is that if the United States could eliminate an unpopular low-denomination coin in the 19th century, why can’t we do this in the 21st century?

In order to understand why that question is a non-sequitor, you have to look back at the history of the half-cent.

After the passage of the Constitution by the constitutional convention, Alexander Hamilton wrote extensively for both the Federalist Papers and spoke in many venues how the a strong, centrally managed currency would improve commerce between the new states and promote the nation as a whole in foreign trade. While this view was shared by others, how to implement a new currency system became controversial.

On January 28, 1791, Hamilton submitted the Secretary of the Treasury Report, “On the Establishment of a Mint” to the House of Representatives. Hamilton tied the value of the basic unit to the Spanish Milled Dollar (8 reales) and called the basic unit a “dollar.” In that report, Hamilton proposed a simple system of currency that included a ten and one dollar gold coins, one and one-tenth dollar silver coins, and one-hundredth and two-hundredth copper coins. Hamilton surmised that using smaller denominations would standardize production around a few coins that could be produced in sufficient numbers to supply commerce.

While mostly in agreement with Hamilton’s report, Thomas Jefferson had another idea. Jefferson thought it would be better to tie subsidiary coins tied to the actual usage of the 8 reales coin. At the time, rather than worry about subsidiary coinage, people would cut the coin into pieces. A milled dollar cut in half was a half-dollar. That half-dollar cut in half was a quarter-dollar and the quarter-dollar cut in half was called a bit.

The bit was the basic unit of commerce since prices were based on the bit. Of course this was not a perfect solution. It was difficult to cut the quarter-dollars in half with great consistency which created problems when the bit was too small, called a short bit. Sometimes, short bits were supplemented with English pennies that were allowed to circulate in the colonies.

As an aside, this is where the nickname “two bits” for a quarter came from.

Jefferson felt that in order to convert the people from bit economy to a decimal economy, the half-cent was necessary to have 12½ cents be used instead of a bit without causing problems during conversion from allowing foreign currency to circulate as legal tender until the new Mint can produce enough coinage for commerce.

Much against Hamilton’s wishes, congress agreed and made the half-cent along with the eagle, half-eagle, quarter eagle, silver (not gold) dollar, half-dollar, quarter-dollar, disme (later renamed dime), cent, and half-cent. After the bill was passed and signed by President George Washington on April 2, 1792, Washington decided to put the new Bureau of the Mint under the jurisdiction of Secretary of State Thomas Jefferson to ensure that the currency system would be implemented since Secretary of the Treasury Alexander Hamilton objected to these provisions of the law.

As the new Mint ramped up production, there were other issues with U.S. coinage that overshadowed any perceived controversy that the half-cent would have received. Over the next 60 years, laws were passed to change the composition of coins, ratio of gold-to-silver, and even the problem with melting that caused the suspension of producing the silver dollar in 1804.

The half-cent would come into focus in the 1850s when the cost to produce the United State’s copper coins was nearly double their face value. In 1856, the Mint produced the first of the small cents, the Flying Eagle small cent, and produced 700 samples to convince congress to change to the small cent. As part of the discussion was the elimination of foreign currency from circulation making the U.S. Mint the sole supplier of coins.

There is no record of outcry from the public on the elimination of the half-cent. Its elimination came four years after the Coinage Act of 1853 that created the one-dollar and double eagle gold coins in response to the discovery of gold in North Carolina, Georgia, and California. The gold rush caused a prosperity and inflation that not only made the half-cent irrelevant but not something on the public’s mint. In that light, the Mint and congress felt that it just outlived its usefulness and would not be necessary with the elimination of foreign currency from circulation.

More controversy was generated in 1857 over the demonetizing foreign coins in the United States than the elimination of the half-cent. While the half-cent continued to circulate, it was estimated that one-third of the coins being circulated were foreign, primarily reales from Mexico. Redemption programs did not go smoothly, but in the end foreign coins were taken out of the market and the American people adapted and it could be said we prospered.

Comparing the elimination of the half-cent in 1857 with the trying to eliminate the one-cent coin today is like saying one baseball player is better than another because he hits a lot of home runs. Just like there is more to consider than hitting home runs in baseball, there is more to the discussion than pointing to an event that happened 155 years ago without considering entire picture.

History of Women at the U.S. Mint & BEP

Originally released on March 30, 2012 and updated on April 12, the Department of the Treasury updated their video honoring the history of women working for the U.S. Mint and the Bureau of Engraving and Printing over its history. The video also honors the 220th Anniversary of the U.S. Mint and the 150th Anniversary of the BEP.

Introduced by Treasurer of the United States Rosie Rios, the video shows how both the U.S. Mint and the BEP have a history of providing opportunities for women since each agencies founding.

Considering that women were considered second class citizens in the 18th century, it is amazing to find out that within two years the U.S. Mint hired two women to be adjusters. When the BEP was founded in 1862, women were hired alongside men and held the majority of positions within four years. I do not think any other agency in the U.S. government has a similar recrod.

Exceptionalism or Follow the Leader?

Since the Canadian government announced that the Royal Canadian Mint will stop striking “pennies” in the Fall of 2012 and that cash transactions will be rounded to the nearest five-cent increment. Non-cash transactions will not be rounded.

As part of the transition to the centless society, Canada will withdraw these coins from the market using redemption programs to allow citizens to return the coins for compensation. The Canadian government has also committed to working with charities to use this as an opportunity to raise money for their causes.

Since the announcement, there has been a lot of chatter from around the world regarding the elimination of the lowest denomination coin from various countries, including here in the United States. While other countries have eliminated their lowest denomination coin, Canada is the largest economy who have made this move.

Canada’s proximity to the United States has generated a lot of discussion about the United States doing the same. Those arguing for the elimination of the cent begin with that it costs the U.S. Mint 2.11-cents to produce one coin, losing 1.11-cents per coin. Similarly, Canada began their discussion with that it costs the Royal Canadian Mint 1.6-cents to produce their one-cent coin.

If Canada can drop their penny, then why can’t we do that in the United States?

In 1986, Canada stopped producing one-dollar currency notes and went to exclusively coins. Nearly ten years later, Canada began to produce two-dollar coins eliminating the two-dollar paper note from circulation. If Canada can drop their lowest paper currency denominations, why can’t the U.S. do the same?

Those of us who use the argument that other countries no longer use paper currency as their basic unit of currency are told (paraphrasing) “we are the United States, we don’t have to do what others are doing.” Now those same people who want the U.S. Mint to stop striking cents are pointing to Canada using a similar argument and bristle when given the same response to their argument.

Every study by even the most partisan group shows that the government will “save money” by eliminating the one-cent coin, change the composition of the nickel, and produce the dollar coin rather than paper. The differences in the studies are what they call opportunity costs—the cost borne through the changes and processing by the businesses, banks, and citizens affected by the changes.

The concept of the government “saving money” is wrong. Production of money does not cost taxpayers any money. The high production costs of the cent and nickel does reduce the amount of seigniorage the government earns when the coins are sold to the Federal Reserve.

Ending the production of specific denominations is not new to U.S. coinage. The last change occurred in 1933 when the gold was no longer used for coinage eliminating the quarter eagle, half-eagle, eagle, and double eagle coins. At times in the past, the U.S. Mint also produced half-cent, 2-cent nickel, 3-cent, 20-cent, and dollar gold coins. All were seen as a good idea at the time but fell out of favor for many reasons and were discontinued.

At some point, the decision criteria must be baselined in order to come up with a fair analysis in order to determine the best policy. To start that analysis, let the policy basis be on the least amount the government could do in order to maximize seigniorage while treating all markets fairly. Based on those guidelines, eliminate the one-cent coin, but also eliminate the half-dollar and the one-dollar paper note. Even if the five-cent coin does not undergo a composition change, all studies show that the government will earn more in seigniorage than any other option.

Based on other studies, this policy will have an economic impact on the markets outside of the government and the Federal Reserve. But that is for the markets to work out on their own and not for the government to dictate.

It is also a policy recommendation that will make everyone upset on all sides of the issue, meaning that it wreaks of compromise—which should not be a dirty word when making serious policy decisions.

Yes, I Was Fooling!

Based on a few emails I received a few people did not pick up that my last post, Treasury Overhauls Circulating Coins, was an April Fool’s Joke!

I am happy it fooled a number of people since it takes a lot of work to come up with something that looks good and could be believable if it wasn’t posted on April 1.

Aside from the date, there are a few other subtleties I hid through the post for fun:

  1. Unless the world is falling apart, I cannot think of any reason why the Secretary of the Treasury would make this type of announcement on Sunday. Geithner may be a hard working person but unless the economy and markets are crashing, he was probably spending the weekend with his family.
  2. Although I found real numbers to calculate real weights, I just multiplied all of the Mint’s numbers by .75 and rounded up. I didn’t think there were many chemists or metallurgists who would try to validate my calculations.
  3. Notice that when I mentioned the discontinuation of the half-dollar, I did not mention who was on the obverse except to say, “the coin honoring the last assassinated president.” I know, it was an esoteric omission but it allowed me to do the next one—
  4. As far as I know, there is no such person named “Cathleen Towson” associated with the Kennedy family. It was a play on Kathleen Kennedy Townsend. Townsend is the eldest child of Robert and Ethel Kennedy and was once Maryland’s Lieutenant Governor. If you did not know, Towson is the name of a town northwest of Baltimore and the home of Towson University.
  5. Another subtle try to drop a hint was in the last paragraph where I wrote, “It may be foolish to think….”
  6. Finally, if you keep up with the tags at the end of the post, the tag was “Fun” and not something like “U.S. Mint” or anything more serious.

I had a lot of fun putting this together. I hope it brightened your April Fool’s Day!

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