Q. David Bowers (edited and updated by Mike Sherman): Like dimes, quarter dollars were not minted until 1796, at which time the Draped Bust obverse style was employed. The obverse features Liberty facing right, with flowing hair and a ribbon behind her head, with drapery covering a plunging neckline. LIBERTY is above and the date 1796 is below. Eight stars are to the left and seven to the right. Around the border are prominent denticles. The reverse has an open wreath tied with a bow at the bottom, enclosing a small eagle perched on a cloud. UNITED STATES OF AMERICA surrounds. There is no indication of value or denomination.
Probably around 10% of the original mintage of 6,146 survives in some grade, though most are in the About Good to Fine range. Being a one-year type, and a scarce one at that, enough were saved in mid-grade so that VF to AU coins can be located, though at a mid five-figure price. Uncirculated pieces are also known, those these will typically set you back over $100K. A number of 1796 quarters were made with prooflike surfaces, such pieces occasionally being called Proof in earlier sale catalogs, although it is not known whether they were specifically made as such. Several dozen of these prooflike coins exist today. The sharpness of strike on most 1796 quarters is apt to be decent, much more so than on the following design type. An exception is the head of the eagle on the reverse, which is nearly always indistinct.
The 1796 quarter is considered to be a key issue in any grade, and is a landmark in the American coinage series.
Quarter dollars minted from 1804 through 1807 continue the Draped Bust obverse first used in 1796, though the star count was reduced from 15 stars to 13, with seven at the left and six to the right. The reverse is an adaptation of the Great Seal of the United States and features an eagle with a shield on its breast, E PLURIBUS UNUM on a scroll or ribbon in its beak, and its talons grasping a bundle of arrows and a branch. Above the eagle is an arc of clouds with stars below. UNITED STATES OF AMERICA and 25C. surrounds.
Examples of the 1804-1807 years are readily located in grades from About Good through Very Fine. Extremely Fine and AU pieces are elusive, and Uncirculated pieces are rare. As a date, the 1804 is quite rare, the 1805-07s are “common” for the type. Virtually without exception, issues of this design are lightly struck in one or more areas, with the obverse and reverse rims, the stars on the obverse, and the stars above the eagle on the reverse being typical areas of light impression. The same situation is shared with the half dimes, dimes and half dollars of this type.
-- Reprinted with permission from "United States Coins by Design Types - An Action Guide for the Collector and Investor" by Q. David Bowers