News and Analysis regarding scarce coins, coin markets, and the coin collecting community #249

A Weekly CoinWeek Column by Greg Reynolds………

On Oct. 30, at the “Winter” (!) Baltimore Coin & Currency Expo, Stack’s-Bowers auctioned an astonishing collection of coins, patterns, tokens and medals from 1853. The focus here is on the PCGS graded and CAC approved, MS-66 grade 1853 business strike Liberty Seated Silver Dollar in that “1853 Collection,” which is a wonderful representative of an historically important coin issue. “Phenomenal, best business strike 1853 Seated Dollar I have ever seen,” John Albanese declares. This coin sold for $129,250, a result which will be discussed herein, after the “1853 Collection” and historical aspects are covered. This coin issue is especially relevant to the monetary history of the U.S.

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1853 Liberty Seated Silver Dollar. MS-66 (PCGS). CAC

Lower grade Liberty Seated Silver Dollars are much less expensive and are available to many collectors. An Almost Uncirculated (AU) grade 1853 is could be acquired for less than $2600. A Fine-12 or -15 grade 1853 dollar, if one could be found, would probably cost less than $1000. Some non-gradable 1853 Liberty Seated Dollars have been auctioned for less than $1000 each.

I. “1853 Collection”

As was emphasized in my piece on the rarest coin in this “1853 Collection,” an 1853-O ‘No Arrows’ Liberty Seated Half Dollar, the year 1853 was extremely important in the monetary history of the United States. The “1853 Collection” was the most newsworthy consignment to an auction extravaganza of U.S. coins, colonial coins, world coins, paper money, tokens and medals.

In addition to this 1853 silver dollar, which is a strong candidate for being the finest known business strike of this date, there was a wonderful Proof 1853 Liberty Seated Silver Dollar in the “1853 Collection,” too, and a second business strike. The “1853 Collection” PCGS certified and CAC approved Proof-66 Liberty Seated Silver Dollar brought $105,750.

It is not practical to review the one hundred items in the consignment of the “1853 Collection.” Indeed, this collection contained coins of all pertinent copper, silver and gold denominations, plus various patterns, medals and tokens, all dated and/or probably made in 1853. An item can be made in 1853 without being explicitly dated ‘1853,’ and an item may be dated ‘1853’ without having been made in 1853.

This was an intriguing collection and was a clever choice for a collecting specialty. In addition to having important historical connections, the “1853 Collection” contained a fascinating assortment of metal alloys, finishes, formats, sizes and grades.

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1853 Pattern Cent. Judd-151,

I was drawn to one cent nickel patterns that have an obverse (head) like that of regular issue Quarter Eagles ($2½ gold coins) of the time period. One such piece is PCGS graded as 65 and was earlier in the epic Harry Bass Collection. It brought $3055. Another is PCGS and CAC graded 62 and realized $1527.50.

Also, there was a Proof 1853 silver dollar denomination piece that was struck in copper, as a die trial or, more likely, for collectors. That entirely copper ‘silver dollar’ is PCGS certified ‘Proof-64 Red & Brown,’ and is CAC approved. This copper dollar piece brought $19,975, which is a strong result, though understandable. In addition to being cool, this copper dollar is attractive and very much original.

Of the one hundred or so items in the “1853 Collection,” the Proof 1853 Liberty Seated Silver Dollar (of regular 90% silver alloy) and the PCGS graded MS-66 1853 business strike are among the most aesthetically appealing and popular. As I declared before the auction, the 1853-O ‘No Arrows’ Half Dollar is spoken about softly and does not receive the attention this issue deserves. The presently discussed, PCGS graded MS-66 1853 Silver Dollar is probably the most ‘talked about’ business strike from this collection.

II. Design Types

Liberty Seated Silver Dollars date from 1840 to 1873, and there are two design types. ‘No Motto’ Dollars date from 1840 to 1865. (The two known Proof 1866 ‘No Motto’ pieces are controversial.) In 1866, a motto, ‘In God We Trust,’ was added to the reverse (back) design. The ‘With Motto’ type dates from 1866 to 1873. Gobrecht Silver Dollars, which are dated 1836, 1838 or 1839, are a different species and should not be called Liberty Seated Silver Dollars.

Silver Dollars of 1853 are more interesting than most other ‘No Motto’ Liberty Seated Silver Dollars. First, it is generally believed that all known Proof 1853 Liberty Silver Dollars were struck after 1857 for collectors and thus 1853 business strikes are probably the only silver dollars that were really made in 1853. Second, arrows were added to the obverse (front) designs of half dimes, dimes, quarters and half dollars in 1853, and rays were added to the reverse (back) designs of quarters and half dollars. The design of silver dollars was not changed in 1853. Indeed, neither arrows nor rays were ever added to silver dollars.

III. Historical Importance

The addition of arrows in 1853 indicated that the weight (and corresponding silver content) of all the other Liberty Seated coin denominations had been reduced, as I explained in the already cited article about 1853-O ‘No Arrows’ Liberty Seated Half Dollars. The weight of silver dollars was not then reduced and these continued to each contain more than one dollar worth of silver bullion. There was thus an incentive to melt them or trade them as bullion items, rather than spend 1853 Liberty Seated Silver Dollars as money.

The economist Neil Carothers extensively researched the history of U.S. coinage. “The Silver Dollar was not affected by the law” that was passed on Feb. 21, 1853, states Carothers in his famous book, “Fractional Money.” Carothers asserts that the fact that the weight (and corresponding silver content) of the silver dollar was not reduced in 1853 indicates the continuance of a policy of bimetallism, rather than the adoption of a gold standard.

sb_1853_bimetalA monetary policy of bimetallism involves tying a monetary unit, such as the U.S. dollar, to both gold and silver, and thus maintaining a fixed ratio of silver to gold in terms of dollars (or another monetary unit). The U.S. dollar was, during parts of U.S. history, legally pegged to a specific weight of gold and simultaneously to a specific weight of silver. Carothers spotlights 1853 Liberty Seated Dollars as the items that embodied the continuation of bimetallism in 1853.

J. Laurence Laughlin put forth a contrasting view. “It is,” Laughlin asserts, “to be kept distinctly in mind that in 1853 the actual use of silver as an unlimited legal tender equally with gold was decisively abandoned.”

Laughlin was an economics professor at the University of Chicago. Furthermore, he was one of the most famous and influential economists in the U.S. from the early 1880s to the time of his death in 1933. Laughlin finds that the change in policy in 1853 effectively established a gold standard and ended bimetallism. Laughlin concludes that a gold standard was in effect long before a gold standard was explicitly legislated.

“The real demonetization of silver in the United States was accomplished in 1853. It was not the result of accident; it was a carefully considered plan, deliberately carried into legislation in 1853, twenty years before its nominal demonetization by the act of 1873” (Laughlin, History of Bimetallism, 1895, p. 80).

Whether a policy of bimetallism did continue, or should have continued, to be in effect in 1853 and afterwards, is a subject that was fervently debated in public for decades. Most economists regard a policy of bimetallism as impractical, as it would be extremely difficult for the government of a nation to effectively maintain a price or trading ratio of silver to gold, even approximately, and the value of the nation’s monetary unit fluctuates as well.

After the passage of the coinage act of 1853 in February, the “United States was still on” both a gold standard and a silver standard, under a policy of bimetallism, with “free coinage at the 1837 ratio,” 15.988 silver dollars to 1 gold dollar, Carothers insists (in Fractional Money, p. 118). “Congress elected” to “leave” the policy of bimetallism “as it was,” while authorizing the production of coins of most other silver denominations that each had less silver value than face value, Carothers holds.

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Cross of Gold speech was delivered by William Jennings Bryan

Laughlin (1895) and David Watson (1899) emphasize that there was no longer ‘free coinage’ of silver bullion deposited by the public into half dimes, dimes, quarters and/or half dollars. William Jennings Bryan made his advocacy of a return to bimetallism and “free coinage” of silver, at a 16:1 silver to gold ratio, a main theme of his presidential campaign in 1896.

My theory is that Congress was, in 1853, suspending bimetallism, sustaining a gold standard, and maintaining the option of somewhat easily reviving bimetallism in the future. Many members of Congress, from 1792 to 1853, clearly thought that bimetallism was or could practically be a viable, realistic policy.

I suggest that the decision by Congress to require 1853 silver dollars to be coined in accordance with the old weight standard, under the previously established silver-gold-dollar ratio that was established by the coinage act of 1837, meant that 1853 Liberty Seated Silver Dollars represented a policy of keeping a mechanism in place for bimetallism to be re-established if economic and political conditions in the future (after 1853) were such that strong political forces favored bimetallism. Therefore, 1853 business strike Liberty Seated Dollars were really products of a policy controversy that rocked the nation in the early 1850s and was to be at the center of political debates later in the 19th century.

IV. Rarity

Because so many were melted, only a small number of 1853 Liberty Seated Silver Dollars survive. The “Survival Estimate” of “1,700” on PCGS CoinFacts is extremely wrong, in my view.

PCGS and NGC together have graded around 350 1853 Silver Dollars, a total that probably amounts to fewer than 240 different coins. There probably are twenty to fifty gradable or borderline gradable 1853 Liberty Seated Dollars that have never been submitted to PCGS or NGC, or were rejected when grading standards were tougher before 1997.

Although the number of non-gradable coins is probably lower than 200, the existence of as many as 260 non-gradable representatives of this issue would not be surprising. During the years that followed 1853, people probably pulled them from scrap silver holdings or pots of coins earmarked for melting, out of curiosity, as it was readily apparent that most 1853 half dimes, dimes, quarters and halves have arrows, while 1853 dollars do not have arrows. So, 550 at most 1853 Liberty Seated Dollars survive, perhaps fewer than 400!

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The 1853 Silver Dollar “pattern” in copper

In the context of business strike ‘No Motto’ Liberty Seated Dollars, the 1853 is a condition rarity in grades above MS-64, though is not a key date in lower grades. The 1851 and the 1852 are the keys. The 1854 is perhaps a semi-key. Among ‘With Motto’ Liberty Seated Dollars, the 1870-S is a Great Rarity and the Carson City Mint issues are keys, especially the 1871-CC (Clickable links are in blue.)

V. Inexpensive 1853 Silver Dollars?

Non-gradable 1853 silver dollars do not cost a fortune. In March 2013, Stack’s-Bowers auctioned an 1853 in a PCGS holder that indicates “Fine Details”; it has the sharpness of a Fine-12 grade coin. That non-gradable piece brought $470 and is half-decent, maybe. A piece with more serious problems and the details of an Extremely Fine grade coin, which is also in a PCGS holder, was auctioned by Stack’s-Bowers for $747.50 in Jan. 2012.

As for the costs of well worn PCGS or NGC certified coins with numerical grades, a very small number of these openly trade. Back in 2007, a PCGS graded AG-03 coin was reportedly sold by Teletrade for $287.50. In Jan. 2013, Teletrade sold a PCGS graded Fine-15 1853 Liberty Seated Silver Dollar for $793.13.

There was as a second business strike 1853 silver dollar in the “1853 Collection,” which is PCGS graded Extremely Fine-40. This second piece sold for $1175, a strong price. It was heavily dipped in the past, and has not fully recovered. Undoubtedly, there are coin buyers who like or even prefer such an appearance, though, objectively, this coin does not score as high in the category of originality as many other Extremely Fine grade Liberty Seated Dollars.

In Nov. 2011, Stack’s-Bowers sold a PCGS graded EF-45 1853 for $1380, from the George Dyer Collection. In March 2009, Spectrum-B&M auctioned a PCGS graded AU-55 piece for $1725. In Nov. 2012, Stack’s-Bowers sold one that is PCGS graded and CAC approved as MS-61, for $4112.50. The small number of 1853 Liberty Seated Dollars that have appeared over the last fifteen years provide further evidence that well under 500 exist, a true rarity.

VI. Finest Known?

PCGS has graded sixteen 1853 Liberty Seated Dollars as MS-64, one as MS-64+, one as MS-65, and one as MS-65+. The presently discussed piece was PCGS graded MS-66 in the 1990s. In addition to many as MS-64, NGC has graded one as MS-65 and one as MS-66. The total of six that are PCGS or NGC graded above MS-64 may amount to just four or five different coins.

The NGC graded MS-66 coin was auctioned by Spectrum-B&M in 2005 for $85,100. Rod Sweet may have been the consignor. I did not attend that event.

“I am sure” I bought that 1853 dollar, Bruce says. “I remember the sale. I bought the 1841 Proof, the 1853 [business strike] and the 1871 MS-66 from the Sweet sale. I was there,” Morelan remembers. As for the NGC graded MS-66 1853, “we downgraded it to PCGS MS-65.”

I received a PCGS picture of the coin from Morelan. Assuming that Bruce’s recollections are accurate, the NGC graded MS-66 coin and current PCGS graded MS-65 coin are the same 1853 Liberty Seated Silver Dollar.

The grade of the “1853 Collection” PCGS graded MS-66 coin is in the middle of the 66 range, at some level from 66.4 to 66.6. If the reverse had more eye appeal, the grade of the whole coin might very well reach the high end of the MS-66 range.

This coin is moderate to very brilliant in an original way. Certainly, it is not unnaturally bright in the sense that very apparently dipped coins are brilliant. Indeed, it has terrific luster that is semi-satiny with considerable frost. The toning is natural and nice, with blue and typical shades of russet. This is a terrific coin, one of the best business strike Liberty Seated Dollars that I have ever seen, of any date. I have been carefully examining them, at times, for more than twenty years.

In addition to being a prize to those who collect Liberty Seated Dollar ‘by date,’ this coin thus has tremendous value to someone assembling a type set of gem quality silver coins. It is not easy to find a true MS-66 grade ‘No Motto’ Liberty Seated Dollar, and there are not even a large number of true MS-65 grade pieces of this design type.

VII. Value

The $129,250 result was slightly strong and a retail price. Assuming that the buyer was a collector, both the buyer and the consignor should be happy with this result.

Reportedly, the PCGS graded “MS-65+” 1853 Liberty Seated Dollar has been offered more than once in 2014. During those times, however, prospective buyers were probably not aware that this PCGS graded MS-66 coin would be auctioned on Oct. 30. Also, market prices for rare U.S. coins in general were higher earlier in 2014 than prices are currently.

It is now hypothesized that a moderate price for the PCGS graded and CAC approved ‘MS-65+’ coin would be around $85,000, if it was auctioned again in the near future, and a retail range for that coin may range from $95,000 to $115,000. A moderate auction result for this “1853 Collection” PCGS graded and CAC approved MS-66 coin would have been around $115,000 and a retail price range may be from $125,000 to $142,500.

These numbers might seem confusing to many coin buyers. After analyzing auction results for more than twenty years and learning about prices for rare coins that are sold privately, I believe I have developed a considerable understanding of the functioning of markets for rare coins and the demand structures for particular kinds of coins. There are no simple formulas, however, as multiple factors relate to the value of any one rare coin in any one setting during a particular time period. (Points about auction results in general are put forth in a relevant article, What are Auction Prices?’)

© 2014 Greg Reynolds

The above article was edited during the night of Nov. 5, 2014, to incorporate additional information that was provided by Bruce Morelan, the owner of the incredible Carter 1794 Silver Dollar.

Further input is welcome – insightful10 {at} gmail.com

 

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