News and Analysis regarding scarce coins, coin markets, and the coin collecting community, #23
A Weekly Column by Greg Reynolds
Last week’s column was about dealer recommendations for new collectors who seek coins valued at $250, more or less, with consideration of a few that are valued at more than $1000. Among the experts that I interviewed, no one suggested buying coins minted after 1934. This column is devoted to an exploration of the topic of the 1933 to 1935 time period being a dividing line between classic and modern U.S. coins. This is not my opinion; it is an objective reality. Conclusive evidence will be provided herein.
A review of coin related publications in the 1960s, ’70s, ’80s and ’90s would suggest this dividing line. Indeed, quite a few dealers in classic U.S. coins used to include a statement relating to the years ‘1793 to 1933’ in their ads and pricelists. Almost always, leading auction firms emphasized coins in the 1793 to 1933 time period and still do so.
Why discuss this dividing line now? I am concerned about the amounts paid for condition rarities of the post-1934 era. I do not have a problem with a collector paying a large sum of money for a condition rarity if the coin issue in general is at least moderately scarce. It is wonderful that someone paid $138,000 for the Duckor 1904-S half dollar, which is PCGS graded MS-67. (Please click to read my two part series on Dr. Duckor’s halves, part 1 or part 2.) A low grade 1904-S half could be obtained for less than one hundred dollars. The 1904-S date, though, is scarce in general. The PCGS and the NGC together have certified less than two hundred different 1904-S halves, and probably more than two thousand uncertified 1904-S halves exist. Certainly, there are fewer than five thousand in existence, in all grades. For post-1934 coins, however, people often spend vast amounts for superb gem quality coins when hundreds of thousands or literally millions exist of the same respective coin issue.
If millions of a coin issue exist overall or thousands in MS-65 grade, how much should a MS-67 or higher grade representative of the same coin issue be worth? There is not an easy answer to the question. Of course, supply and demand determine prices in relatively free markets. I am not challenging the truthfulness of current price levels for supergrade modern coins. I am wondering whether the buyers have thought carefully about their demands. I am also wondering whether many sellers of post-1934 coins are, sometimes implicitly, misleading buyers, or are ignorant themselves. Anyone who can afford an inventory may become a coin dealer. In any event, in order to understand the distinction between classic U.S. coins and modern issues, there is a need to learn about both and about the dividing line between classic coins and modern issues.
I. The 1793-1933 Tradition
Referring to U.S. coins minted from 1793 to 1933 as classic coin issues is not arbitrary and it is not an accidental tradition. When polling dealers and collectors, I became aware that everyone seemed to remember the tradition of referring to 1933 or 1934 as a dividing line, but no one recollected the origins or meaning of the tradition. The true reason is that pre-1934 coins (with few exceptions) are much scarcer than post-1934 coins.
I am not referring to mintages; I am referring to the number of coins that survive. Of course, no one can know precisely how many survive. It makes sense, however, to rely upon the forces of supply and demand and resulting price levels to demonstrate this point, which I will prove herein. Indeed, one leading dealer informs me that demand is actually greater for post-1934 coins than for pre-1934 coins. Furthermore, for Lincoln Cents, Buffalo Nickels, Mercury Dimes, and Walkers, I am assuming that a substantial percentage of the collectors who demand coins in these series are seeking to complete sets and would thus demand both pre-1934 and post-1934 coins of the same respective series. Therefore, showing that prices are substantially higher for pre-1934 coins clearly proves that many more post-1934 coins survive and are in the marketplace. I aim to carefully select pre-1934 and post-134 issues to provide fair and meaningful comparisons.
Yes, it is true, as John Albanese and Ira Goldberg emphasize, that coin albums often separated pre-1934 coins from those that came afterwards. Ira points out that “Lincoln Coin albums that were in two parts: 1909-1933 and 1934 and on.” John recollects Walker coin albums that considered 1916-33 the early set, 1934-40 the middle set, and 1941-47 the late set” and thus separated these into three distinct albums. I (this writer) maintain that such albums were designed because pre-1934 coins are scarcer than post-1934 coins.
Beginners could easily handle Lincolns minted from 1934 onwards because these are so common. Until recent years, there was no need to buy them from coin dealers, these could be found in change or from rolls obtained at many banks. For Walking Liberty Half Dollars, an “early set” from 1916 to 1933 was (and still is) a serious undertaking that requires considerable money and/or patience. A “middle set,” 1934-40, is much easier because most of the coins are extremely common. In terms of difficulty and sophistication, there is a very dramatic difference between collecting pre-1934 Walkers and those that were minted later.
“It seems to me that pre-Barber coinage is where coins really get scarce,” John Albanese asserts. It is true that pre-1892 coins are usually much scarcer than those dating from 1892 to 1933. Nonetheless, the difference between pre-1934 and post-1934 U.S. coins is of a much higher degree. Moreover, between 1892 and 1933, there are regular issue rarities and many condition rarities of coin issues that are scarce overall. Except for some Mint Errors and/or sharply unusual varieties, and maybe 1938-D halves, there are no scarce regular issue business strikes that were minted after 1934.
In regard to the 1933/34 dividing line, both Ira Goldberg and Doug Winter cite the issuance of an executive order in 1933 by President Franklin D. Roosevelt that required that gold bullion and common gold coins be “turned in” to the U.S. Treasury Dept. FDR also put an end to the production of U.S. gold coins.
Winter says, “For most collectors/dealers [Winter’s] age, the 1933 cut-off has to do specifically with the end of gold coinage. But ‘modern’ coins could just as well be 1941 and on, 1950 and on [due to] the re-introduction of Proof coins, or even 1964 and on, the end of silver. The cut-off has more to do with the age of the person you ask.” I (this writer) strongly believe that Winter’s point here is wrong.
The age of the coin enthusiast asked has nothing to do with the reason why 1933/34 is the dividing line. Likewise, the age of currently active coin enthusiasts is not related to the longstanding popularity of all types of 1793 large cents, of Flowing Hair silver dollars, of Morgan dollars, of 1796 quarters, or of 1856 Flying Eagle cents.
I agree with Winter’s points that the ending of gold coin production in 1933 and the ending of silver dollar production in 1935 are significant reasons for a dividing line circa 1933/34. These reasons, though, are secondary to the primary reason that the 1933-34 ‘cut-off’ has to with the difference between coins that are at least scarce and those that are very common. The ratio of still existing pre-1934 coins to surviving U.S. coins that came later is very small.
II. Mercury Dimes
The point of 1933/34 being the dividing line may be illustrated with any coin type that was minted prior to 1934 and afterwards. There are four such types, Lincoln Cents, Buffalo Nickels, Mercury Dimes, and Walking Liberty Half Dollars. I am excluding silver dollars from consideration here, as these ended in 1935 and thus were minted for just one year after 1934. As Ira and Doug emphasize, regular issue gold coinage ended in 1933. The U.S. never again minted gold coins for circulation. Plus, ‘90% silver’ dollars were never minted AND released at face value, after 1935.
As a collecting kid, John Albanese recollects, “1933 always seemed like an ‘early’ Lincoln and 1934 seemed modern, same with Walkers, the 1933 is classified as ‘early’ and 1934 is not.” To John when he was a kid, “1934 Washington Quarters were no big deal, but 1932s were always a find. [Similar points were] true with Mercs and Buffalo nickels.”
Mercury Dimes were minted from 1916 to 1945, though not in each Mint during each year. As common dates in Good to Very Fine grades are or may be affected by the recent, tremendous increase in the price of silver bullion, I am avoiding these here. Also, the market for choice and gem uncirculated Mercs is complicated and beside the current objective.
Please see my estimates for prices of Philadelphia Mint Mercury dimes from 1928 to 1937 in four grades, Extremely Fine-40, Almost Uncirculated-50, AU-53 and MS-60. No Philadelphia Mercury Dimes were dated 1932 or 1933. It is clear that the dimes minted before 1934 are worth substantially more than those minted in 1934 or later. Considering still earlier and still later dates would further prove this point.
No 1930-D, 1932-D, or 1933-D dimes were minted. All pre-1934 Denver Mint dimes are worth substantially more than all 1934 and later Denver Mint Mercs. As all these are needed to complete a set of Mercs, it follows that the number of 1934-45 Denver dimes in existence must be much higher than the number of pre-1934 Denver Mint Mercury Dimes in existence. An anomaly is that a 1929-D in MS-60 grade is worth less than a 1935-D in MS-60 grade.
San Francisco Mint dimes that were minted prior to 1934 are worth much more than those minted after 1934. None were minted in 1934. I am almost certain that all widely accepted price guides would substantiate my point that in Very Fine and higher grades, pre-1934 Mercury Dimes are worth much more than post-1934 Mercury Dimes, not including overdates or Mint Errors. In terms of scarcity, 1933/34 is a clear dividing line.
III. Lincoln Cents
There is just no doubt that Philadelphia Mint Lincoln cents dating from 1928 to 1933, and earlier, are each worth considerably more than Philadelphia Mint Lincolns that were minted from 1934 onwards, in each respective grade. (Mint Errors and other unusual varieties are a different topic.) In EF-40 grade, for example, 1928 to 1933 Lincolns range in value from $1.50 to $5.00. In the same grade, no regular Philadelphia Mint Lincoln from 1934 to date has a retail value of even one dollar in EF-40 grade.
I compared prices for Denver Mint Lincolns from 1925-D to 1933-D to the respective values of 1934-D, ’35-D, ’36-D, ’37-D and ’38-D Lincolns. Not one post-1934 Denver Mint issue in the later group is worth anywhere near as much, percentage-wise, as a pre-1934 Denver Mint Lincoln, assuming the grade is the same. The 1934-D, though, is an exception in that it is worth more than the 1930-D in several grade ranges and more than the 1929-D in one or two grades. When researching the 1933/34 dividing line, I found that coins of the year 1934 can sometimes be exceptions, or transitional issues from classic to modern.
In another words, for any grade chosen, a pre-1934 Denver Mint Lincoln will be worth more than a post-1934 Denver Mint Lincoln. Post-1934 Lincolns are much, much more common than pre-1934 Lincolns. The differences in value are just as dramatic, or more so, for San Francisco Mint Lincoln Cents, with one exception. Generally, in comparison to pre-1934 Lincolns, post-1934 Lincolns are incredibly common.
Part Two of this article will be Posted on 10-21-10 – Click Here to View