Coin Collecting and Numismatics – Thoughts on Rarity, Part 4

By Harvey Stack – Founder, Stack’s Bowers….
Part 1 | Part 2 | Part 3

When I left off last time I was discussing how the entire landscape of gold double eagle ($20) collecting was changed by first Franklin Roosevelt’s recall of gold coins in 1933 and by the examples that were eventually found in overseas banks and hoards in the 1950s and later. When these coins were discovered, many previously scarce and rare dates and mintmarks suddenly were more available than they had been for decades.

One such double eagle was the 1926-S, missing from many a collection. Mr. Josiah “J.K.” Lilly, whose collection Stack’s helped to build, needed the 1926-S to complete his series. He had decided not to pursue other denominations and dates until he had finished this part of the collection. Stack’s offered a $500 reward to anyone who would sell us a specimen for $3,000. At a coin show, after we made this offer, James Kelly of Dayton, Ohio came to our counter, claimed the $500 and we purchased the coin for $3,000. We wired Mr. Lilly of the acquisition, and got a quick response: “I am glad I finished that series, so now I will go ahead.”

However, within the next few days, a number of 1926-S double eagles were offered to us, at figures as low as $1,250. Some dealers who were aware of our offer (high for the times), thought that they could make a “killing” by selling to Stack’s. However, we had withdrawn the offer after purchasing the first coin.

We immediately wired J.K. Lilly again about the availability of more than one specimen. Mr. Lilly responded to us that since we spent so much time and effort on locating a single specimen, he would keep the one we sold him and thanked us for helping complete the collection, even at a very high premium. He told us that because of all that we had sold him previously at very fair prices, he would not ask for a refund. Stack’s remained his sole numismatic agent till the day he died in 1967. As many know, the coins collected by J.K. Lilly became an essential part of the National Coin Collection at the Smithsonian Institution after that gentleman’s passing.

The story of the double eagles recovered from overseas and the story of the bank hoard of half dollars show clearly that a rarity may not always stay a rarity. There are factors of supply and demand that must be understood, beyond what may be in the headlines at any given time.

Knowledge and research are important, as is an understanding of economic and numismatic history. Studying coins and history not only makes for better comprehension of what is rare and scarce, it makes you a smarter collector, allows you to make better financial and purchasing decisions and also increases your enjoyment of the hobby. Understanding all the factors that affect a coin gives you the confidence to build a top-notch collection and experience the pleasure of viewing, owning and completing it.

Can Supply Factors Make Rarities Scarce or More Common?

The question often arises whether a rare or scarce coin that was difficult to find can sometimes become more common. The answer is Yes. Many things affect the supply of a given coin, including how many were made, the amount of commercial use received, bullion value versus face value, popularity of a design or denomination, international and domestic affairs, and much more. Since 1793 the U.S. Mint has struck large numbers of coins, and these factors have all played their parts in determining which coins are scarce and rare.

But just because a coin is scarce or rare at any given time doesn’t mean it will always be that way.

Let me tell you what happened to silver dollars (primarily the Morgan design) when more were struck than were needed or even wanted in circulation. At the time that Morgan dollars were being made from 1878 to 1921, they were the largest silver coins in the United States. There was some call for them in circulation, especially in our western states where people loved “hard money” and liked the silver dollar as a medium of exchange.

However, the U.S. mints in Philadelphia, New Orleans, San Francisco, and Carson City struck hundreds of millions of Morgan dollars. Many of these were stored at banks or at the Mint to back paper currency issued by the United States, held as a valuable exchange coin for currency.

Just after World War I, in 1918, the Mint realized that paper money was being accepted nationwide and Congress passed the Pittman Act, legislation that resulted in 272,232,722 silver dollars being melted and the ingots stored at the Mint and Treasury Department. These were sooner or later used to pay national debts and also to strike new silver coins. So some dates and mintmarks were destroyed and were not available for circulation, collecting or as a store of value.

One would think that this would have made the silver dollar rare, as so many were melted in a short span of time and there was the usual attrition of commercial use. But there were not millions of collectors of silver dollars in that period. A complete set was limited by the Philadelphia Mint 1895, available only in Proof and to the extent of about only 800 examples. There were other dates/mintmarks that required a large premium, but many collectors decided to acquire one of each year, regardless of the mintmark. This seemed to satisfy many who could not find or afford scarcer and rarer coins that had higher premiums.

However, not all silver dollars were melted or released. Many were retained in the Treasury, at the Mint or in banks. For years, the silver dollars sat in the vaults. Since gold coins had been recalled in 1933 and were no longer in circulation, the silver dollar remained the largest coin one could retain.

Over the years, some of the coins were released from storage and eventually millions of silver dollars that had never been placed into circulation were found–to the great delight of collectors. This find changed the availability of certain dates and eventually there was a complete review of what was stored in the vaults. The bags were opened, the coins were sorted by date and the population available for collectors changed dramatically. The interest in silver dollars grew immediately and even the non-collecting public sought to acquire an example as a “relic of American history.” The Treasury packed the coins in special Lucite holders and sold them at a premium. It was a great stimulus to the collecting of United States silver dollars, and also increased interest in numismatics as a whole.

It was and still is a fascinating story.