PCGS The Standard for the Rare Coin Industry

For a long time Dave Bowers has been gathering information for what is expected to be a two- or three-volume set of books, the likes of which have never been seen before. The working title is UNITED STATES GOLD COINS: A Comprehensive Encyclopedia, with the subtitle, A Catalogue Raisonné and Archive for the Numismatist. Assisting Dave are a number of consultants and rare coin firms and auctioneers, a contributor list that reads like Who’s Who in American Numismatics. In addition, the Bowers and Merena staff is deeply involved (of course!). On one recent day, seven people were busily seeking citations in 19th-century catalogues!

The work, when finished, will include information on each and every United States gold coin date and mintmark from the 1849 gold dollar to the 1933 double eagle, and everything in between. Each coin will be accompanied by historical information, die and striking data, rarity information (in circulated, Mint State, and, as appropriate, Proof formats), citations of interesting, significant, or important catalogue listings of the past (from old-timers such as W. Elliot Woodward and Edward Cogan to the highly-esteemed auctioneers of the present day), and more.

The following is from an early draft of the introductory material to Chapter 10. We hope you’ll find it interesting!

Quarter Eagles of the Early Years

The first $2.50 gold pieces, or quarter eagles, bear the date 1796 and were issued that year, following the introduction of the $5 and $10 denominations the year before, 1795. For many years afterward the quarter eagle remained the smallest denomination federal gold coin, a status it enjoyed until the advent of the gold dollar in 1849.

In America in the late 18th and early 19th centuries, most domestic commerce was conducted by credit, drafts, and currency. Gold coins seem to have played a relatively minor part, especially in districts away from the larger cities. Although foreign commerce was dominated by silver coins, especially Spanish-American eight-real "dollars," much trade, especially with Europe, was conducted with gold coins. Gold $10 eagles were the export coins of choice during the years 1794-1804, but after that time, when $10 mintage was suspended (not to resume until 1838), the $5 half eagle became the largest gold coin of the realm. These were produced to the extent of many hundreds of thousands of coins. Beginning in 1821 and continuing through the summer of 1834, no gold coins of any kind were seen in domestic circulation. Those that were distributed, such as in the pay of congressmen, were worth a premium, and were not exchanged at par. In American commerce, the quarter eagle denomination was betwixt and between. Too small for convenient use in the maritime and export trade (except in the early years through summer 1834), and not needed for everyday domestic transactions normally serviced by silver coins or paper obligations, the quarter eagle denomination was made intermittently and only in small quantities. Thus, we have coinage dated from 1796 to 1798 and again from 1802 to 1808, but never made in substantial numbers.

As a handy comparison, the largest-mintage early quarter eagle is the 1807, of which 6,812 were struck, containing $17,030 face value in gold. In the same year, the largest gold denomination currently being struck was the $5, of which 84,093 pieces were struck, amounting to $420,465, or over 24 times as much!

It is likely that most of the 1796-1808 quarter eagles were used stateside, for the larger $5 and $10 coins were more convenient for international trade. The reason was simple arithmetic: it would take twice as long to count $1,000 in $2.50 coins than in $5 coins, and four times as compared to counting $10 pieces.

The entire $2.50 coinage of 1796-1808 amounted to only 22,199 coins (no further $2.50 coins were made until years later in 1821). In 1810 the third federal census listed the population of the United States at 7,239,881, including 1,211,364 slaves, 186,746 free Negroes, and 60,000 persons designated as immigrants. By calculation, this amounted to one $2.50 coin for every 326 people! It is likely that there were many Americans who were born, grew to adulthood, and died without ever having seen a 1796-1808 quarter eagle.

The War of 1812, conducted against England, was perhaps the war that never should have been. Acomplicated dispute involving the maritime trade and British aggression toward American interests, combined with the tail-end of the Napoleonic Wars, created an encounter concerning which the average American citizen knew little. The situation changed dramatically when British troops set fire to Washington and threatened other cities. Which side won the war has been a matter of debate ever since. Most agree it was a draw. Peace was declared on December 24, 1814, but it took months before the settlement was generally known. The Battle of New Orleans, which eventually propelled Gen. Andrew Jackson into the White House, was fought with the British in January 1815, after the war had officially ended.

After the War of 1812 most coined money in American circulation was composed of copper cents and silver half dollars (silver dollars had not been struck since 1804) plus a large quantity of foreign silver issues, most notably Spanish-American issues such as the two-real or "two bits" coin worth 25¢. However, quantities of copper and silver coins paled into insignificance in relation to untold millions of dollars in paper notes issued by private banks. Mostly made in the denominations of $1, $3, $5, and $10, such currency circulated far and wide. While some notes were worth face value or close to it, many others were completely worthless.

In time, the economic situation became chaotic. Certainly, if any citizen had a gold coin or two, he or she would hold on to it tightly and would not dream of exchanging it for a paper note. Gold coins traded at more than face value domestically, and were not obtainable at par at banks in exchange for paper money or bank drafts. They could be purchased from specie dealers, who made markets in gold and silver coins of the United States and various European, Central American, and South American nations. Silver and gold coins traded by weight. For this reason, it was not found necessary to put the denomination on the first United States gold and silver coins struck in the 1790s. On the quarter eagle there was no mark of value until 1808, when "2 1/2 D." was incorporated into the reverse design.

Today, many of the quarter eagles minted during the 1796-1808 years still exist, perhaps 3% to 6% of the original mintages. Quite a few of these in existence today show signs of mounting or use for jewelry, as quarter eagles were especially popular in this regard. Decades later, the gold dollar, introduced in 1849, became the denomination of choice for use in stick pins, bracelets, and brooches.

After 1808, quarter eagles were not made for a long time. Then from 1821 through the first half of 1834, a small number of coins were made, amounting to 42,065 pieces totally, not enough that anyone had a realistic chance of seeing one, as not a single coin was used in circulation. It seems that all were hoarded or exported. During this period, Senator Thomas Hart Benton, from Missouri, and certain of his fellow legislators insisted on receiving their salaries in gold coins. One can imagine Benton having a little bag of quarter eagles and half eagles. Other quarter eagles were exported, primarily to England. However, the larger part of the needs of international commerce were taken care of neatly by immense mintages of $5 gold coins, which remained the largest current denomination.

As gold coins were not available for everyday trade, the burden fell upon silver coins of various types, including Spanish-American silver reals and their parts, and the Capped Bust half dollar. Many commercial contracts of the 1820s and 1830s were drawn to be payable in silver.

An early text, History of Paper Money and Banking in the United States, by William M. Gouge, 1833, gives an exposition of problems surrounding the ratio of silver and gold at the time (excerpts): The money unit of the United States is the [silver] dollar, consisting of 416 grains of standard silver, or 371p grains of pure silver and 34q grains of alloy. All our contracts are to pay and receive dollars; all our accounts are kept in dollars. The dollar is thus our money of both account and contract, and its legal value is fixed by our having a coin of the same name, containing the quantity of pure silver and alloy which has just been mentioned.

Gold is, in the spirit of our laws, a subsidiary currency, its value being computed in silver dollars. At the United States Mint it is rated as 15 to one— that is to say, one ounce of gold is considered as worth 15 ounces of silver; or, what is the same thing, as many grains of pure gold as are equal to the number of grains of pure silver contained in a dollar, are coined into an eagle1 and a half eagle, and estimated at the mint as worth $15.

The market rate of gold to silver, as determined by sales of gold bullion and silver bullion, in a series of years past, is about 15.8 to 1. Consequently, if the Mint rate corresponded with the market rate, the quantity of pure gold contained in an eagle and a half eagle ought to be estimated at the Mint at about $15.80. The undervaluation of gold at the Mint is not the reason that it has disappeared from circulation. Eagles have disappeared for the same reason that dollars have disappeared. Whenever bank notes are used, no more specie is retained in a country than is necessary for transactions of a smaller amount than the least denomination of paper, and is necessary for meeting the few stray notes that may be presented to the banks for payment. It has been found impossible in England to make sovereigns and one pound notes circulate currently; and we all know that small notes in the United States have not only driven away gold coins, but also such silver coins as are of a higher denomination than a half dollar. If bank notes had never been introduced, eagles, half eagles, and quarter eagles would have continued in circulation, notwithstanding the undervaluation of gold at the Mint. The eagle would not have been current at the rate of $10.00; but at the rate of $10.50, $10.75—or whatever else it would have been worth [indication of gold coins being worth more than face value, in exchange for silver coins]. The calculation of the fraction would have been productive of some inconvenience; but the utility of gold coins, in large transactions, would have made them current at a rate probably a little above that which they have borne in the bullion market.

Anew gold coinage is desirable; but the proposition to coin eagles of a lesser weight than the eagles of former times, is not entirely free from objection. As all our contracts are to pay in dollars, and as there is no gold at present in circulation, an issue of a new coin, called an eagle, which should be of the exact value of ten dollars, would cause no practical injustice. But the issue of a new coin of different weight from the old, and yet bearing the same name, might give countenance to the idea that money is something which owes its value to the authority of government, and lead, perhaps, at some future time, to an alteration in the dollar—an alteration in our true standard of value.

Overvalued forms of money circulate in preference to undervalued. The public has always preferred to hoard specie [silver and gold coins] and spend paper; the latter was often traded at a sharp discount in terms of specie. Two equivalent values of money, one of silver and of full weight of a dollar and the other of paper and of no intrinsic value, could not each circulate at par.

In 1833 the idea of a fiduciary coinage—coins worth less than intrinsic value than the face value stamped upon them—was not acceptable in the silver and gold series. And, yet, to mint coins of full weight and value meant that the slightest upward change in the market value of either gold or silver would result in the withdrawal from circulation and the melting of coins made of the metal affected. The Mint could not at the same time serve these two conflicting considerations: coins of full value and coins with the ability to remain in circulation over a protracted period of time despite bullion fluctuations.

To remedy the situation of melting and exporting current gold coins, Congress passed the Act of June 28, 1834, which reduced the authorized weight of American gold coins. The leading exponent of the legislation was Senator Thomas Hart Benton, nicknamed "Old Bullion"— the previously mentioned legislator who insisted that his salary be paid in gold coins.

Gold coins made after August 1, 1834—the effective date of implementation of the act—were of lighter weight and thus stayed in circulation. To enable quick visual differentiation of the new from the old, the obverse and reverse designs were modified, and the motto E PLURIBUS UNUM was deleted from the reverse. The motif, by Chief Engraver William Kneass, is known today as the Classic Head design and is a modification of the Classic Head created by John Reich for use on half cents 1809-1836 and cents 1808-1814. Quarter eagles of this type were made from 1834 to 1839. In financial and banking circles, the earlier, heavier gold coins were often called old tenor, and the lighter ones, new tenor. For many years after 1834, old-style gold coins were listed with bid and ask prices in bullion exchanges and always sold at a premium.

For all of its efforts with the Coinage Act of 1834, the United States Government did not achieve success with the monetary system. Immediately, silver coins became especially desirable, and soon they were preferred to gold! To remedy this, the authorized weights of silver coins were reduced by the Coinage Act of January 18, 1837. From that time until the end of 1861, silver and gold were at par.

Classic economic theory held that a country should have silver as the monetary standard, or it should have gold instead, but if it tried to have both simultaneously there would be problems if each were minted to full value of the bullion contained. Despite the best intention of the United States Government as well as foreign entities, the values of these precious metals could not be regulated effectively. Thus, worldwide the prices of gold and silver, usually computed in London, rose and fell constantly, a veritable see-saw. During the 1830s, and continuing through the Civil War, bullion traders, securities houses, and bankers did an active business in buying and selling gold and silver coins by weight, American issues as well as the multitudinous varieties from foreign countries. Because of their premium value, any stray old tenor gold coin that came to light in the 1840s or 1850s was apt to be taken to a bullion dealer and melted. It is no wonder that all were scarce and many were very rare by the time that numismatics became popular in a significant way in America, beginning circa 1857, following widespread public interest when the old "large" copper cent was discontinued.

However, many thousands of old tenor gold coins remained in the hands of the public. Each year, many would be sold to bullion dealers or redeemed at the Mint or other depositories. As the interest in numismatics spread, bullion dealers sold old tenor coins to collectors and dealers. In this way many were saved that might have been melted otherwise. W. Elliot Woodward told of an 1815 half eagle—today one of America’s most famous gold coin rarities—that was found in a bag of old gold coins in the mid-19th century. Harlan P. Smith told of a precious 1822 half eagle, of which just three are known today, being purchased for a nominal premium from a bullion dealer. Reminiscing in 1867, old-time collector William Sumner Appleton related that dealers in silver and gold were his prime source of supply for desired specimens in the early dates. As an example of the premium paid for old gold coins, The Financial Register reported that on January 4, 1837, American gold coins minted prior to August 1, 1834, traded in New York City at a 6m% premium in terms of current (August 1, 1834 and later) gold. This meant that to buy $100 face value of early gold coins, it took $106.50 worth of the new lighter-weight Classic Head pieces. By June 16, 1838, the premium on old tenor U.S. gold coins increased to 7%. The Classic Head gold coinage, consisting of $2.50 and $5 coins, was an immediate commercial success. From summer 1834 through 1839, the unprecedented quantity of 968,228 $2.50 pieces was made for circulation, a figure nearly 15 times greater than the combined total of all previous quarter eagle coinage 1796-1834!

In 1835, Congress realized the need for branch mints to service the needs of the expanding American population and territory. In 1838, the New Orleans, Charlotte (North Carolina), and Dahlonega (Georgia) mints threw open their doors and started their coining presses. New Orleans was a maritime trading hub and the entrance to the Mississippi River Valley, while Charlotte and Dahlonega were situated close to native gold deposits, and were set up as a convenience to miners and tradesmen. Mintmarks "O," "C," and "D" were used to identify the coinage from these branches, while Philadelphia, known as the "mother mint," used no mint letter.

The 1834-1839 Classic Head quarter eagles remained a staple in circulation for a long time afterward, and although they disappeared from circulation for the interval 1862-1878 (subsequently explained), at the turn of the 20th century a sharp-eyed bank teller might spot an occasional piece in a cash drawer. By that time, most such coins were worn down to the grade of Very Fine.

In 1840 a new quarter eagle design was produced, the Coronet Head or Liberty Head style by Christian Gobrecht. For decades, Liberty Head was the preferred numismatic term, but in recent years Coronet Head has been viewed as being more descriptive, for any portrait of Miss Liberty could be called a Liberty Head. On the Coronet Head quarter eagle Miss Liberty is wearing a coronet—or a diadem.

At the Mint, Gobrecht, who had signed on as second (he did not like the term "assistant") engraver in 1835, had done nearly all of the creative work since that time, when Chief Engraver William Kneass suffered a debilitating stroke. After Kneass’ death in 1840, Gobrecht became chief engraver, a position he held until his passing in 1844 (at which time he was succeeded by James B. Longacre).

The Coronet Head was one of several portrait styles that Go-brecht had created during the general period 1837-1839 as part of experimentation that reached its zenith in the copper cent series in the latter year (when portraits included what collectors know today as the Head of 1838, Booby Head, Silly Head, and Head of 1840 styles). The Coronet Head was first used in the gold series on the revivified $10 gold denomination, which appeared in 1838, followed by the $5 in 1839. Thus, by 1840 the debut of the Coronet Head on the $2.50 was somewhat late.

During the 1840s, coinage of quarter eagles took place at the Philadelphia, Charlotte, Dahlonega, and New Orleans mints. Quantities were typically small in comparison to the $5 and $10 coins, but there were exceptions. As a rule, $2.50 coins were used domestically, while the larger denominations were popular in the export trade.

In January 1848 precious yellow flakes were discovered in the tail race at Sutter’s Mill on the American River in California, igniting the Gold Rush that would galvanize the world. Within several years, the borders of America extended from coast to coast. Vast quantities of gold were brought forth from the streams and earth, with the result that by 1850, the year when California achieved statehood, gold became "common" in relation to silver, and silver coins became worth more than face value, the latest variation in the gold-silver see-saw of prices.

By early 1851, silver was worth a 3m% premium in terms of gold. Silver was hoarded, a situation that stripped commercial and banking channels of half dimes, dimes, quarter dollars, half dollars, and silver dollars. Mintages of gold coins increased to take up the slack for the missing silver coins. The Act of February 21, 1853, reduced the authorized weight of new silver coins from the half dime to the half dollar, but left the silver dollar untouched. In one of those interesting footnotes in American financial history, silver dollars remained off the market and were no longer seen in circulation (until 1873, when the price of silver metal fell sharply), while half dimes, dimes, quarters, and halves circulated readily.

Mention is also made of the silver three-cent piece, officially called a trime, which contained less silver in relation to its face value than did other silver denominations. It was introduced in 1851, and circulated effectively until the summer of 1853, when its use was superseded by a flood of the new lighter-weight half dimes, dimes, quarter dollars, and half dollars. In 1854 the San Francisco Mint opened for business, making it possible to convert gold bullion into federal coins without having to ship it by sea to Philadelphia or one of the other distant mints. In the first year of operation a quarter eagle rarity was created when just 246 of this denomination were minted!

Q. David Bowers has been in the rare coin business since 1953 when he was a teenager. The author has served as president of the American Numismatic Association (1983-1985) and president of the Professional Numismatists Guild (1977-1979), is a recipient of the highest honor bestowed by the ANA (the Farran Zerbe Award), was the first ANA member to be named Numismatist of the Year (1995), has been inducted into the Numismatic Hall of Fame (at the ANA Headquarter in Colorado Springs), is a recipient of the highest honor bestowed by the Professional Numismatists Guild (The Founders' Award), and has received more "Book of the Year Award" and "Best Columnist" honors given by the Numismatic Literary Guild than any other writer. He has has written over 40 books, hundreds of auction and other catalogues, and several thousand articles.

1904 Liberty Head Quarter Eagle.

1910 Indian Head Quarter Eagle.