In the mid-1980s the coin market was plagued by a big problem with product mis-representation. To put it bluntly, a lot of people were getting ripped off. There were a lot of blatantly overgraded coins being sold to unsuspecting coin buyers. The Federal Trade Commission had even investigated several coin telemarketing firms. It was very bad for our market.
I was selling a lot of coins at the time and I was very concerned about the health of the coin market. I was also doing a lot of appraisals at the time and saw hundreds and hundreds of portfolios of overgraded and misrepresented coins. I got together with a group of other concerned dealers... and my long-time friends... Gordon Wrubel, John Dannreuther, Bruce Amspacher, and my partner, Van Simmons... and we discussed the issue at length. Actually, Gordy, JD, Bruce, and I were getting together at coin shows at night and working on a "book"... the ultimate coin encyclopedia... but we always got side-tracked on the grading issue.
I had also, with advice from my friend Hugh Sconyers, been doing stuff with guaranteed bid/ask markets for coins... something that Van and I did very successfully from 1983 to 1985. But my markets were only for coins that I had previously sold. The expansion of the idea was what if there was a "sight unseen" market for all coins. This could only be accomplished by third-party grading and encapsulation. The brain trust was all of the people mentioned above. We came up with the idea of having a grading service that did a lot more than what the then most prominent service, ANACS, did. Rather then offer a certificate with each coin, we would encapsulate the coins in a tamper evident holder and then guarantee the grade of each coin.
We thought the idea would be embraced by a small group of high integrity dealers... the good guys. We knew it was a big project and we each had our own coin companies to run. We figured we needed some grading help, so we brought in Steve Cyrkin and Sil DiGenova. We had a lot of meetings and developed a "grading set."
At the 1985 Summer ANA, late at night inside one of our hotel rooms, we presented the idea to a few prominent dealers in high end coins... Fred Sweeney, Joe Flynn, Bob Harwell, Jay Miller and a few others. Everyone was blown away by the idea and wanted to be initial authorized dealers.
We decided to form a company. Our initial funding was $100,000. Bruce, JD, Gordy, Sil, and Steve each took 10% for $10,000 and Van and I took 50% for $50,000. It obviously turned out to be the best investment any of us ever made... God bless America. We formed a company and Bruce Amspacher came up with the name, Professional Coin Grading Service.
Word of the "new deal" got out very quickly and, much to our surprise, many more dealers clamored to be involved. We launched in February, 1986, with 32 authorized dealers.
The interesting thing is that we never expected the idea to be so overwhelmingly successful. We thought that just a few of the high end specialists and high integrity dealers -- i.e.: the few conservative graders -- would use our service. We expected to do 3,000 coins a month. But the first month we received 18,000 coins and the second month we received 35,000 coins. It was all pretty amazing. It was definitely an idea the appeared at exactly the right time.
For the first few years I always described it as having a tiger by the tail... but the tiger was really big... and it was definitely pulling us in its own direction. The idea really had a life of its own... a train coming down the track that no one could stop, and even the engineers couldn't control.
Our biggest hope was that we could stop the blatant overgrading and rip-offs... and I think we have been successful in making it much harder for that to happen. In my opinion, our biggest success is in making the market available for many who wouldn't even consider buying coins... and several huge collectors have told me this... if it weren't for third-party grading.
A lot of things have happened since then... some of them we certainly didn't foresee. We never envisioned crack-outs, NGC, crossovers, etc. The bottom line is we changed the way coins are bought and sold. And I guess with the Set Registry and other innovations we're still influencing the market. It's been a lot of fun and a lot of work. We love what we do and want to do it for many years to come... grading and innovating. Today, 17 years later, most of the PCGS founders are still involved with the company. I'm still overseeing the operations. Gordon Wrubel is still a Senior Grader. John Dannreuther is an active consultant. Steve Cyrkin and Van Simmons also are still owners and still provide market advice. We all still love the coin grading "business" and enjoy our involvement with PCGS.