In the twentieth century the dollar became the global reserve currency when in 1944 the world’s developed countries met at Bretton Woods, New Hampshire and pegged the exchange rate of all their currencies to the U.S. dollar. Prior to that, most countries were on the gold standard which meant that, upon demand, they would redeem their paper currency for gold and kept enough gold in reserves to do so.

Eventually the United States abandoned the gold standard, when Richard Nixon completely untethered the value of the dollar to gold, but by then the U.S. had the most robust economy of any country in the world, so it remained the dominant reserve currency. Is there a country in the world where you cannot exchange dollars for the local currency?

Before the Morgan dollar, or even the pinetree shilling, metal coinage existed in the American colonies. Much of it was coinage that had been brought over with the early settlers from their home countries, but one particular coin originated in the Americas and could not, in fact, have existed as it did except for the wealth found in the New World. This is the Spanish piece of eight.

If you know your American history, you’ll know that the English were not the first to explore North America. They were simply the ones who settled most of what is now the United States and Canada. Many countries in Europe were interested in finding and claiming new territories. These include France, the Netherlands, Portugal, and, of course, Spain.

Previously we discussed the situation of coinage in the American colonies and how a shortage of coins led to the creation of the Pinetree Shilling by the Boston Mint. Here was a coin that came about because of necessity but was never officially accepted by the authorities in Great Britain. Political chaos caused by the English Civil War and its aftermath stalled any action, however, and the Pinetree Shilling continued to be minted in Massachusetts until 1682, long after Charles II became king. It was a highly useful coin.

Another colonial coin had the opposite story: it was conceived of not as a practical tool, but as a way to help the tin mining industry. It had at least the pending sanction of King James II, but it was very likely never in circulation due to yet another overthrow of the English Crown. This was the American Plantation Token of 1688.

Sponsored by Democratic Senator from Nevada, Key Pittman, the Pittman Act of 1918 “authorized the conversion of not exceeding 350,000,000 standard silver dollars into bullion and its sale, or use for subsidiary silver coinage, and directed purchase of domestic silver for recoinage of a like number of dollars.” 

The main reason for the passage of this act was the need to finance the Great War in Europe. Wars require troops, armaments, and munitions, and all of that requires money. Gold quickly became scarce as all money of intrinsic value does during war, but America had quite a lot of silver dollars in circulation. There were far more than were being used for commercial needs, although eventually America’s entrance into the war did create a demand for all coins. 

When people think about American money, they think about the coins and currency that are probably sitting in their wallets right now. It never occurs to many people that there weren’t always dollars and quarters, nickels and dimes. But, of course, American money has a history like every other tool out there, and before there was U.S. currency people still used money to buy and sell things. What did they use?

While every July 4th we celebrate Independence Day, it’s important to remember that the American colonies weren’t a country, per se, until after the Revolutionary War was well under way and delegates to the Second Continental Congress drafted the Articles of Confederation and Perpetual Union and then went back to their own colonies to see it ratified. This finally occurred in 1781. Remember, the war ended in 1783, and this needed to occur in order to manage military and monetary affairs, as well as to solicit the support from foreign countries needed to win the war.

Double eagles are another type of collectible coin rooted in a key period of American history - which makes collecting them interesting for both coin and history aficionados.

Would there have been a double eagle coin without the California Gold Rush? Very likely not. The double eagle, a $20 U.S. coin, was first minted in 1849, two coins in proof, after an Act of Congress authorized them. Prior to this there was neither gold in quantity to mint them or a practical necessity for a $20 coin. Double eagles began to be minted regularly the following year, in 1850, and continued to be until 1933. Before 1850, the largest coin denomination was the $10 eagle. Since the face value of the new coin was twice that of the eagle, it was called the double eagle.

The coining of the Morgan dollar followed the Fourth Coinage Act of 1873 which demonetized silver bullion. The “Free Silver” issue is something Americans might have a hard time understanding now, but prior to 1873, people could bring their silver (or gold) bullion to the mint and, for a small processing fee, have it made into coins which would be worth their face value and could be spent.

At that time the ratio of the value of gold to silver was 16:1, meaning that 16 ounces of silver was considered equal in value to one ounce of gold. The problem was that, with increased mining of silver in the west, the price of silver was dropping rapidly, which meant that savvy bullion owners could take their devalued silver to the mint and, by having it made into coin, make a profit.

American history has frequently been one of fads and extremes, and the fifth decade of the nineteenth century gives us another fine example: the California Gold Rush. While Americans had been moving westward almost since they put foot on Plymouth Rock, on January 24, 1848, at the time gold was discovered at Sutter’s Mill, what we know today as California was a part of Alta California, a Mexican territory. San Francisco was tiny; only 200 people lived there in 1846.

That changed almost overnight. Despite the fact that there was at the time no straightforward or fast way to get to the West Coast from the East, a flood of Americans and immigrants set off by ship traveling either all the way around the tip of South America or down to Panama, overland, then up the coast via the Pacific Ocean. Others drove wagons west on the California Trail. The influx of 300,000 people from all around the world created a number of problems, and one of them was currency.

People who have grown up using a universal United States currency are often surprised to learn how diverse historical American coinage and currency is. Local and state banks issued their own money, backed by reserve currency, and did business for hundreds of years this way. It wasn’t until 1863 that President Lincoln signed the National Bank Act into law. This created the United States National Banking System, a prototype of what we use today:

“The National Banking Act (ch. 58, 12 Stat. 665; February 25, 1863), originally known as the National Currency Act, and was passed in the Senate by a narrow 23–21 vote. The main goal of this act was to create a single national currency and to eradicate the problem of notes from multiple banks circulating all at once. The Act established national banks that could issue notes which were backed by the United States Treasury and printed by the government itself. The quantity of notes that a bank was allowed to issue was proportional to the bank's level of capital deposited with the Comptroller of the Currency at the Treasury. To further control the currency, the Act taxed notes issued by state and local banks, essentially pushing non-federally issued paper out of circulation.”

Those unfamiliar with the ins and outs of coin collecting may be surprised to learn that coin errors - mistakes made when coins are minted - often enhance rather than detract from the value of said coin. While flaws that decrease a coin’s attractiveness can also decrease its value, error coins, or flawed coins made in the mint during the coin-making process, are also rare. This is because minting defects happen rarely, particularly with the advent of modern technology. Additionally, most error coins are detected before they are issued into the coinage, and they are recycled and remade in their proper form.

In order to understand why errors occur, it’s useful to understand how coin minting has been done historically and is done now. Here’s a fun primer from the U.S. Mint. A problem in each step of the minting results in a different type of coin error. Here are some of the most common types:

As with any hobby, any good coin collector wants to find other people who share his passion and are willing to participate in exploring it with him. There are many groups, local, state, national, and international, dedicated to bringing coin collectors together, but another way to make this goal happen is to convert the people around you to your hobby.

Who should you start with? Well, cross off the people you know have no interest in collecting, paying attention to value and detail, or exploring history. Those are prerequisites for this hobby. To quote a famous book, “Cast not your pearls before swine.” Instead, look around your circle of acquaintance for like-minded souls, and, if they are few and far between, look younger. While you may have coworkers or friends with similar interest, people get set in their ways as they age. The great thing about younger people is that they have so much world to be introduced to, and they are still excited about that introduction. So if you have kids or nieces and nephews, they may the ideal audience to share your coins with.

Amazing coin finds have been all over the news in the past several months. At SUNY Buffalo, faculty member Philip Kiernan recently hunted down a “lost” collection of Greek and Roman coins, both gold and silver, that had only been a rumor for decades. The coins’ previous owner, Thomas Lockwood, donated the coins, some of which date back to the fifth century B.C., as part of a larger donation of literature and relics. Twelve of the coins are a collection of Roman coins, one from the reign of the first twelve Roman Emperors, including a very rare coin featuring the Emperor Otho. He ruled only three months.

These coins had remained in archival storage for decades until Kiernan tracked them down. He is now planning a graduate level course around them so that students can use the coins as tangible aids to their study of history - the same purpose Lockwood originally purchased them. Fortunately for these students and the university, the coins did not show damage, despite the fact that the were not properly stored.

As a Grand Rapids coin dealer, we at Mullen Coins have an especially strong interest in the detection of counterfeit and altered coins. In point of fact, anyone who deals with rare coins will develop a basic understanding of how to detect counterfeits, whether out of interest or necessity. If you are considering purchasing a rare date coin, or if you are looking to sell your coins, you may need to pay special attention to authenticity.

I urge you to occasionally sell some of your coins—you will become a wiser, more educated collector. [You may also avoid unpleasant surprises when you do decide to sell some or all of your collection.]

Learn from my own story…I started collecting coins as a child.  Like most new collectors, my method was a trip to the bank to get rolls of Lincoln cents to search for better dates to put in my Whitman blue book.   It was a really fun treasure hunt.  I was buying valuable coins at face value!  But I did not sell any.

When it comes to rare coins Grand Rapids (as well as other places across the country) Mullen Coins has many collectors who specialize in early American commemoratives. Indeed, commemoratives have been popular with collectors and history buffs ever since their inception, as we describe in our recent post about “Why Collectors Enjoy Commemoratives.” As an example of what makes commemoratives an interesting specialty, we can take the mystery of the 1922 Grant with Star commemorative silver half.

As the story goes, the Grant commemorative was originally requested by the Ulysses S. Grant Centenary Memorial Association, with the idea of raising funds to erect monuments and coordinate special observances in Ohio for the 100^th anniversary of Grant’s birth. Originally, a bill was approved by Congress in 1922 to mint 10,000 gold dollars and up to 250,000 silver half dollars.

Would you love to own a treasure chest? Filled with coins and other treasures?

For Christmas, two of my Grand Rapids clients displayed a true creative streak! They gifted each of their four adult children with a full treasure chest--loaded with his divided coin collection and other little beads and chocolate gold coins. You could pull this idea off for Valentine’s Day or other celebration.

Depending on how you become interested in coin collecting, and where your interest leads you, you may someday find yourself talking to a Grand Rapids coin dealer about U.S. commemoratives. For those not familiar with the term, commemorative coins in the United States are issued to honor people, events, institutions, or places. Commemoratives have developed into a separate class of coins, intended as collector’s items or as an economic investment. They can be either circulating or non-circulating.

• Circulating: Technically, there are a few examples of circulating commemoratives that are intended to be used for commerce, and the U.S. Bicentennial Quarter (1975-1976) and the 50 State Quarter (1999-2009) programs serve as prime examples. For these programs, the designs were only issued for a limited time, and were intended to draw some attention to a specific event or person.
• Non-circulating: In most cases, commemoratives are non-circulating legal tender (NCLT), and are often produced in gold or silver.  The funds raised by the sale of commemoratives have been used to pay for monuments or fund a specific project, as an alternative to raising taxes. For example, the 1925 California Diamond Jubilee half dollar was issued to help fund the state’s celebration, and the famous 1893 Isabella Quarter was issued to help raise funds for the World’s Columbian Exposition in Chicago.

It’s easy to see how the history and provenance of any one rare coin can become a passion for any coin collector (and especially for this Grand Rapids coin dealer!).

But what makes a coin collection or its collector particularly famous? The reasons vary. Some collectors, like Wayne Gretzsky, are otherwise-famous people who have also become known as coin collectors. In other circumstances, a high-quality collection becomes famous because it is publicly accessible, such as the Smithsonian collection or the U.S. Mint collection, mentioned in “5 Best Places to See Rare Coins.”

One question I am sometimes asked (by people who know that I am a Grand Rapids coin dealer) is, “What are the trends in rare coin values?”

In general, over long periods of time, rare coin values tend to increase.  This has certainly been the case for rare coins over the past two years… but the key word is “rare.”   When a coin’s value is largely determined by rarity (along with condition and desirability) vs. bullion content, values tend to rise over time.  However, when a coin’s value is largely tied to the spot price of silver and gold, its value will rise and fall with the value of the metal.  Gold and silver prices have declined in the past two years; hence, bullion coin values have also declined.  

Whether you’re an avid rare coin collector or a Grand Rapids coin dealer, insuring your coin collection can be one of the best ways to protect your investment and give you peace of mind. With an annual cost that is often around 1% of the value of your collection, it may be worth considering for any collector. For professional collectors and dealers, the cost is even a deductible expense. 

Many beginning collectors assume that their homeowner’s or renter’s insurance policy covers their rare coin collection. It’s true that some homeowners’ policies will cover small coin theft, but many policies have exclusion clauses. Read your insurance policy carefully to find out what it does and doesn’t cover.