By Harvey Stack – Co-Founder, Stack’s Bowers Galleries ……
Inflation & Numismatics
During the 1970-71 period, as inflation increased to over 4% per year, people started to invest more in precious metals than they had previously. Silver (especially from finding and selling coinage struck prior to 1964) and gold were being looked at as ways to cope with inflation.
Since the Gold Acts of 1933-4 limited the holding of gold by Americans to collector items (numismatics), there was a great surge in the buying of collector U.S. gold coins rather than bars or coins issued by foreign countries. A few foreign issues, such at the South African kruegerrand, the Canadian Maple Leaf, the Mexican 50 Peso, and the Austrian 100 Corona and 1 Ducat, did enter the U.S. market. However, a good number of buyers, fearful that one day the government would ban holding late-issue U.S. gold coins (or restrikes), decided to collect U.S. gold at a greater premium than the late foreign issues.
Many collectors gravitated to the $20 gold double eagle, for it had the lowest premium over face value and gold content value among the various denominations of United States gold coins.
It should be noted that years before restrictions developed on gold ownership in the United States, many double eagles were stored in foreign banks (arriving as payments for debts that the U.S. owed), as these governments cherished gold as a “store of value”. So whenever these banks had some for sale, American dealers and traders bought them. Since all were dated prior to 1933, the buyers believed there would be less of a chance of seizure or recall.
However, the premium on U.S. gold induced many counterfeiters to peddle their wares in Europe and Near East to sell to Americans. As many of the buyers had little or no numismatic knowledge (indeed, had possibly never even seen a real U.S. gold coin before), they were eager to pay smaller premiums for these “coins” than for “authentic” Mint coins and so the market was flooded.
Since most professional dealers in the United States had handled gold coins over decades in the business, they tended to know what they were doing. But the jewelry trade knew little to nothing, so they bought and sold the counterfeits; junk shops and flea markets did as well. Promoters and certain scammers advertised the coins at low prices, and it wasn’t until the buyer went to sell them to the professional dealer did they learn that they had been “ripped off”.
Just for the record, “copies, reproductions and making of the like” were also commonplace in the import market, for one could find (for example) silver dinnerware and dishes, glassware, jewelry, “antiques”, lithographs and other classic designs copied, reproduced and found in stores and advertisements throughout the country identified as what they imitated (not that they were copies) and sold at premiums.
Our government recognized that this type of “misrepresentation” was flooding the country and so they attempted to punish the “offenders”. But the size and scope of what was happening defied the government’s ability to comprehend, and so many a meeting was held in Washington, trying to find a way to “protect the U.S. Citizen” from buying imitations, copies and misrepresented items.
It wasn’t until 1973 that legislation was enacted.
Numismatic Values Go up Faster
The value of numismatic coins, because of the the appeal outlined above, attracted more collectors to become numismatists.
Keep in mind that collecting silver from change, (dimes, quarters and half dollars struck before 1965) became the first challenge, for the silver value in the coins exceeded their face value. Then silver certificates, paper money that could be used to acquire silver from the government at low price, was being both redeemed and collected. And gold ownership became easier as import restrictions were removed and people were looking for another “store of value”.
Not too many “old-time collections” were sold as collectors loved the hobby, and many only became available from estates. So supply and demand created a price increase in many rare coins. A number of new dealers opened shops, many of whom were also postage stamp dealers (the two hobbies seemed to compliment each other), so you found a goodly number of shops in major cities and even smaller “mom and pop” stores in small towns.
Many dealers, both large and small, who had the background and knowledge, not only grew in size but worked with the Secret Service to apprehend those who bought and sold “counterfeits and copies”. Several of the sellers of false material were apprehended. For example, the Professional Numismatists Guild (PNG) kept assembling qualified dealers as members, so that one who went shopping for a source could feel comfortable where he or she bought their coins. But the hobby grew faster that the Guild, and some of the offenders took more time to catch.
The American Numismatic Association (ANA) also provided a service to identify genuine coins from fake, but here again the offenders still fooled many people.
Record Sales at Auction
From the earliest part of the year 1970, Stack’s was awarded numerous collections to auction. We had enough great material to have 10 different auctions in the 12-month period.
Four of the collections we offered in 1970 were of great rarity and importance. Many pedigrees were extended from these sales and became reference coins in future collections.
Not that the other six sales were slackers, as they, too, had vast quantities of choice and rare coins, some seldom seen at sales or available over-the-counter at dealers.
The Gaston DiBello U.S. Gold Coin Auction
Catalogued and Sold May 1970
As mentioned in an earlier segment, Gaston DiBello was an avid collector whose fabulous world gold coin collection we had sold in 1969. As you may recall, I told of his dedication to collecting and how he surprised us in 1954 by going to Egypt to buy some of King Farouk’s coins (who had specimens that were not available anywhere else). His passion for collecting superseded his concern of getting there and back home again, for after the king abdicated in 1952 and a military government took power (the one holding the auction) and seized all of Farouk’s property, by 1954 going to Egypt was not recommended by our State Department. When I asked DiBello why he was going there, he answered “that’s where the coins I want for my collection are!”
Now that’s what I call devotion to one’s hobby.
The U.S. section of the DiBello collection, which was offered in May of 1970 during the Annual New York Numismatic Convention, contained 1,430 lots of U.S. gold, rare and exciting patterns, and a select group of silver coins.
He had minor sets from cents through five cent pieces, a selection of dimes, quarters, half dollars and dollars. Something for every purse!
U.S PATTERNS. Almost 250 specimens covering all denominations in various metals from the small cent to Barber’s $50 gold struck in copper, with most of the rarest examples ever seen in one collection.
GOLD DOLLARS. Mostly in Mint State, with many from the George Walton Collection.
QUARTER EAGLES ($2.50 GOLD). A comprehensive collection from 1796, containing most early dates and rarities, most C- and D-mints, and a number of Proofs up to 1915.
THREE DOLLAR. A comprehensive collection, with virtually all of the dates from 1876 in glistening PROOF.
FOUR DOLLAR ($4.00). Both the Flowing Hair and Coiled Hair of 1879.
HALF EAGLES ($5.OO GOLD). An extensive collection, especially rich in early dates before 1834, with numerous rare later dates.
EAGLES ($10.00 GOLD). An extensive offering from 1795 to 1933, with most dates of the early issues. Rare dates throughout the Liberty Head series boasting of a great number of Proofs, and in the Indian Head series, the 1907 Wire Edge and Rolled Edge in Mint State – plus a pair of patterns of the 1907 (attributed as St. Gaudens original strikes) both in matte proof.
DOUBLE EAGLES ($20.00 Gold). Here again Gaston was very selective, and favored when he could Proof gold and rare Mint State examples. In Proof he had 1862, 1863, 1869, 1870, 1887, 1888, 1889, 1897, 1901, 1905, 1907, 1907 Saint-Gaudens, Flat Edge, 1909, and most of the rare dates in the late 1920s and early 1930s. He no doubt would have bid on the 1933 if it were not withdrawn from the Farouk Sale
PIONEER AND TERRITORIAL GOLD. He assembled almost 50 different examples of these Westernm issues, including Bechtler, Assay office, Wass Molitor, Kellogg, Mormon and Clark Gruber gold.
DiBello’s collection presented a unique opportunity in 1970 to acquire many of the coins from famous old collections.
Three other important pedigree type collections we handled included the Frederic Knoblach Greek and Roman Collection, The famous Alto Collection of U.S. Gold, Silver and Copper (formed over 75 years before it was offered for sale), and the noteworthy collections of duplicates, including hundreds of Massachusetts silver, that were the property of the Massachusetts Historical Society, which was started by the famous Adams family of Colonial history and worked on by a number of the descendants for generations. It was a cornucopia of early American Colonial coins.
The above listed collections were sold during the year 1970, and were interspersed in various months by additional collections from different estates that added many more coins that had been collected in bygone years that first came to market in 1970 (others of great renown were offered in 1971).
It was a great time for learning and acquiring.
1971 – Coin Values Continue to Rise
1971 followed the inflation that was growing in 1970, with precious metals advancing in value each month.
Silver would continue to rise, and the search for silver coins in change intensified. The melting of silver coins was permitted, and the value of an ounce of silver advanced. Speculators entered the field along with investors, naturally increasing demand.
With regards to gold, it became necessary to first advance the value of an ounce of gold from the original value of $35.00 and as it got to $42.00 at the end of 1970, President Nixon “closed the gold window”, so that the Treasury Department could officially raise the value to $42.00 per ounce, and with the window closed no gold was sold by the United States any longer. Gold certificates, which were previously redeemable for an ounce of gold from the U.S. Assay Office, were no longer exchangeable.
All these inflation-motivated actions caused a temporary halt on the dollar and its redemption. Only in special cases did foreign government obligations receive gold for notes, bonds or certificates.
These actions, making gold and silver more valuable compared to the dollar, slowed for a short time the drain on the U.S. supply of gold.
Counterfeiters, especially those making fakes outside of the United States, found it easier to produce a one-ounce coin, or some other weight, by adding more gold to a weakened Carat of 24C and easily provided 18-20 Carat in each coin (an average drop in actual gold content), and this made their false coins more deceptive. We never got back to having import restrictions, but Customs examined more coins more carefully, and the flow of counterfeits was somewhat restricted.
Educated dealers, collectors, pawn brokers and precious metals dealers formed alliances to try to deter the false coins from the marketplace. The Professional Numismats Guild developed a service that would try to help buyers. But the market was too large for the relatively few dealers who were knowledgeable when dealing with precious metals.
Congress investigated the problem and had meetings to learn how to stop these counterfeits from continuously pouring into the market. It took them until 1973 to call a major meeting of all hobbyists as to remedies to the abuses that were plaquing all hobbies, not just numismatics. But I will discuss that meeting when I get to the of happenings in 1973.
More Auctions in 1971
Stack’s continued in 1971 to have a series of sales of specialized collections in the United States, as well as foreign and ancient coins. Most were smaller in scope but there were two larger ones.
The first major sale of 1971 was held in conjunction with the ANA Convention. This annual national show was held in Washington, D.C. and presented a wide range of numismatics for the national audience to examine, bid on and try to acquire. The Washington ANA convention drew one of the largest crowds of collectors.
The 1971 ANA Sale was a very comprehensive collection of some 2,595 lots of general interest to all collectors, beginning or advanced specialists. Whether you collected small cents or large $50.00 gold pieces, in superb or average condition, there was something in the sale for all.
We offered, along with the general offerings, a specialized collection of U.S. patterns (over 240 lots), from the cent to the $20.00 gold double eagle, with a unusual large collection of small cent patterns and a good selection of Pioneer and Territorial gold, including rare $50.00 gold. Also, for the collector of foreign coins we had a superb group of world crowns, with a specialized offering of English Crowns and Russian gold, silver and platinum pieces. It was indeed a wonderful offering!
In the fall of 1971 we offered an extensive collection, 1,269 lots of the collection initially formed by John Quincy Adams who, as Ambassador and representative of our early nation selected during his travels (mostly to Europe) a splendid collection of world coins that were circulating during the period of his visits abroad. The coins had been in this collection for well over a century or more before they were given to the Massachusetts Historical Society. The monies gained from the sale of the various parts of this collection helped preserve the famous Adams papers, and helped with the continued support of the Society.
The Nate S. Shapiro Collection
In the later part of 1971 we were asked to offer for sale the famous Nate S. Shapiro Collection, of coins from the ancient world to modern Europe and the other continents, together with a great selection of paper currency.
Nate, a native of Detroit, built his collection with the constant idea of showing it to school children as well as fellow collectors to advance the education of the observers. It was a perfect collection to build a lecture series about numismatics and monetary history. He gave his collection to the Detroit Museum, and since they did not have room to show it in its entirety, they selected coins of historical and monetary importance and built a display around them. The money from the sale went on to provide for a curator and other lectures about numismatics.
As you can see, museums do not always have room for showing and displaying all that is given to them, and also are limited in funds to provide for education resources. So in order to serve both the visitor and the student who views the collection, museums try to show the items that tell the story they wish to tell and will sell their duplicates or those coins that do not transmit the message they wish to provide.
Stack’s through the years has had the privilege not only to catalog classic collections in educational institutions, but also to help them have sufficient funds to continue their educational endeavors.
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Links to Earlier Parts:
PCGS-Certified Liberty Head $20 Double Eagle Gold Coins Currently Available on eBay