Coins and Coin Collecting

Coins and Coin Collecting

I

INTRODUCTION

Coins and Coin Collecting, metallic disks or small ingots, usually round, that are used as a medium of exchange and also acquired and saved as a hobby. Coins have been in use for more than 2,600 years, and people have collected them for nearly as long. The technical name for the practice of collecting coins is numismatics, a term derived from the Greek word nomisma, meaning “coin” or “currency.” Numismatics includes the study of coins, banknotes, medals, tokens, and primitive forms of money. Governments and other official agencies issue billions of coins annually, and collecting coins is a popular hobby around the world.

II

HISTORY OF COINAGE

People have sold and traded goods and services for thousands of years. An early obstacle was finding a common medium of exchange. Metal coins were developed to fill this need and eventually caught on worldwide. Coins continue to serve this purpose today.

A

Origins

Ancient Babylonians negotiated commercial transactions using gold and silver as a means of exchange as far back as 2000 bc, but the metals were not cast in a form suitable for easy circulation. Lack of standardization meant the weight and purity of the metal had to be tested every time a piece changed hands.

Between 620 and 600 bc, the people of Lydia in Asia Minor came upon the idea of shaping electrum, a natural alloy of gold and silver, into bean-shaped lumps of fixed weight and purity and stamping them with official symbols. These early coins soon became popular because of the way they facilitated trade. By 550 bc the practice of striking coins was established in all of the primary trading cities throughout the known world.

The first major improvement in coinage was to phase out the use of electrum. Because it is an unrefined alloy, electrum’s ratio of gold to silver can vary considerably. To achieve a higher degree of consistency, coin makers realized they would have to separate the gold from the silver and produce coins primarily of gold, primarily of silver, or of a controlled mixture of the two. Despite its unpopularity, natural electrum was still used sporadically into the Middle Ages.

Over the centuries, coin designs varied considerably in beauty and complexity. The first coins had a crude design on one side and nothing more than a simple punch mark on the other. Within a few hundred years, coins of great artistic beauty were being struck in Greece and then in Rome. As the Roman Empire declined in the 3rd and 4th centuries, so did the quality of its coins. In the Early Middle Ages, most coins struck throughout the Western world were crude and ugly. But by the 15th century, Europe had begun to produce beautiful coins and medals of outstanding workmanship and artistic design.

B

Coinage Problems

Some rulers compromised the integrity of the circulating coinage, issuing debased coins as a way to inflict a “hidden” tax on their subjects. Henry VIII, the king of England from 1509 to 1547, was often guilty of this practice. He caused great harm to his nation’s economy by reducing the purity of English gold and silver coins.

Prior to the 16th century, most coin makers produced coins by placing a round disk of metal between two dies and hitting it with a hammer. Hammered coins, as they were known, could be very beautiful—including some of the earliest that came from ancient Greece and Rome—but they tended to be somewhat crude and lacked well-formed edges. Because the edges were irregular, it was fairly simple to cut off thin slivers of gold or silver and then to spend the coins as if they were of full weight. Some coins were clipped so many times that the actual value of the metal they contained decreased considerably.

C

Minting Coins

A major change in the way coins were produced occurred during the 16th century, when heavy machinery was first used to mint coins. Many of these new mints were located in water-driven mills, thus these coins were referred to as milled coins. This technique was a quantum leap over hammering. Not only were milled coins attractive and much more uniform, but continuous small parallel cuts—known as a milled or reeded edge, as on the United States quarter—made it more difficult to shave off slivers of precious metal.

Spanish conquerors discovered huge amounts of gold and silver in the Americas. Turning these metals into coins made it easier to divide and transport them, and the Spaniards established the first mint in the New World in Mexico City in 1535. Spain soon built minting facilities throughout its Spanish-American empire.

The areas of the New World colonized by Britain did not yield nearly the quantities of gold and silver as the Spanish territories, and English-speaking America did not establish its own mints until much later. Although the colonists still used English pence and pounds, they also exchanged French, Dutch, and German money, as well as coins struck in Spanish America.

The United States established its first official mint in Philadelphia, Pennsylvania, in 1792. Regular coinage began the following year, based on a new unit of currency, the dollar. The word dollar was derived from the German thaler, or taler, a large silver coin first issued in Central Europe in the 16th century, and later adapted to daler. The dollar was the world’s first unit of currency divided into decimal subunits, which simplified the use of money. By the end of the 20th century, all developed countries had switched to a decimal system within their units of currency. In addition to the regular denominations in circulation today (cent, 5 cents, 10 cents, 25 cents, 50 cents, and dollar), the U.S. Mint has produced half-cent, 2-cent, 3-cent, and 20-cent pieces as well as gold coins ranging from $1 to $20. Canada issued its first coins in 1858, borrowing the “dollar” name for its unit of currency from the United States.

D

Modern Coins

Historically, coins of higher value have been made of gold or silver, and minor coins were struck from copper alloys. In the second half of the 20th century gold became relegated almost exclusively to noncirculating commemorative or bullion coins. Silver was replaced with nickel or nickel alloys to make coins known as token coinage, because they do not contain precious metals nor can they be exchanged for gold or silver. All current United States coins fall under the category of token coinage.

In the Western world, coins traditionally portray the likenesses of living monarchs, deceased presidents, or other key historical figures. Queen Elizabeth II of Great Britain has appeared on more coin types than any other human being. Her portrait has also appeared on the paper money of dozens of nations, many of them Commonwealth countries that historically recognize the British monarch as the leader of the Commonwealth of Nations.

From 1793 until the middle of the 20th century, most regular-issue U.S. coins portrayed a female personification of Liberty. The principal exception was the Indian Head Cent, struck from 1859 to 1909. The model for this coin was actually the daughter of its designer, James Longacre. The practice of picturing deceased presidents on U.S. coins dates from 1909, when the first Lincoln Cents appeared during the centennial of Abraham Lincoln’s birth. George Washington’s profile was used on the quarter-dollar of 1932, a coin originally intended as a one-year commemorative to honor the 200th anniversary of his birth. The design quickly became so popular that it was retained for regular-issue quarters and is still being used today. Thomas Jefferson, Franklin D. Roosevelt, John F. Kennedy, and Dwight D. Eisenhower are the other American presidents who have appeared on regular-issue U.S. coinage. In 2006 the U.S. Mint announced plans to issue a series of dollar coins with images of the American presidents. Starting in 2007, four coins were to be issued each year in the order that the presidents served. In February 2007 the U.S. Mint released into circulation the George Washington dollar coin just in advance of Presidents’ Day.

Other historical figures have also been featured on U.S. coins. Statesman and scientist Benjamin Franklin was shown on the half-dollars of 1948 through 1963. Susan B. Anthony, the noted feminist and suffragette, was featured on the first small-size dollar coins, struck from 1979 to 1981 and again in 1999. Representations of Native Americans have been popular on U.S. coins and paper money, but most designs have been abstractions or composites, such as the obverse (“heads” side) of the Buffalo Nickels (1913-1938). In 2000, the United States issued the first “golden” dollar coins honoring Sacagawea, the young Native American woman who guided Meriwether Lewis and William Clark in their exploration of the West (see Lewis and Clark Expedition).

In 1892 and 1893 the United States issued its first commemorative coins, a set of two half-dollars and a quarter-dollar. The coins were intended to mark the 400th anniversary of Christopher Columbus’s first voyage to the New World. From 1892 until 1954, the United States struck silver and gold commemorative coins honoring such famous Americans as explorer Daniel Boone, composer Stephen Foster, and showman P. T. Barnum. No other commemorative coins were issued until 1982, when a silver dollar was struck in honor of George Washington’s 250th birthday. Commemoratives are now being produced on a regular basis.

Some commemorative coins are intended to take the place of regular coin designs for one or two years. Canada changed the design on all its coins in 1969 to mark the 100th anniversary of its confederation. The United States changed its quarter, half-dollar, and dollar designs in 1975 and 1976 to honor the American Bicentennial. All of these coins are dated 1976 even though many were struck the previous year. The reverse (“tails” side) of the quarter-dollar was also changed beginning in 1999 for a special State Quarters program.

Radical changes in the world of coins and circulating money have emerged in recent years. Having one unified currency for many European countries (the euro) is making money more international. This change has made many monetary denominations—such as the French franc and the German deutsche mark—obsolete, reducing the variety of coins being produced.

Another change is the increasingly widespread use of debit and credit cards. These cards reduce the need for coins and paper money. If these types of electronic payments become standardized and universally accepted, coins may no longer be needed by the 22nd century.

III

COIN COLLECTING

Coins old and new have a special attraction for many hobbyists as well as professional dealers and investors. Estimates of the number of active collectors worldwide range into the millions.

Coins, medals, and paper money touch on every aspect of the human condition: history, geography, philosophy, politics, economics, the arts, and all areas of science. Coins are mirrors of history. Numismatic scholars study coin portraits of monarchs—some famous, others scarcely known except from coins—and the inscriptions and designs on coins that often refer to important events. Even analyzing the purity of the metal from which a coin was made can provide an insight into the conditions of its time. Other people examine and collect coins for their artistic beauty or for their connection to literature or religion. For example, the tiny ancient Judaic lepton (or half-prutah) has become a numismatic curiosity because it is probably the coin referred to in the Bible as the “widow’s mite,” the offering made by a poor woman that Jesus declared was worth more than the gold given by the wealthy (Mark 22: 41-44).

A

Types of Collecting

Many numismatists start with collecting coins from their own country because of easy availability. Every date, mint mark, and variation in design is counted as a different coin. A typical beginner method is to acquire one of each piece within a series; then a collector may continually attempt to find better quality specimens of the coins already acquired. The number of collectible coins found in circulation has become very limited, so a collector must usually resort to trading or buying to complete or upgrade a top-condition modern series.

Another popular form of collecting is to assemble a type set of coins from a specific country. The word type refers to a classification of coins by their metal, denomination, nationality, and principal designs. For example, instead of acquiring a specimen of every date and mint from a series of dimes, the collector obtains a single coin to represent this series. Every coin is distinct and has its own history in this kind of collection.

Many collectors prefer topical or thematic collecting. The coins are related to one another on the basis of their design or because of the people or objects shown. Animals, plants, ships, maps, buildings, and religious motifs are well represented on coins. Some topical collections can be difficult to assemble. A British Commonwealth set that includes one of each type portraying Queen Elizabeth II would encompass hundreds of coins and probably take many years to acquire.

Some mints have bolstered coin collecting through various programs and efforts over the years, such as special commemorative issues, collectible sets, and by altering the designs of regular-circulation coins. One initiative of the U.S. Mint is the 50 State Quarters Program, which began in 1999. Under this program, the mint issues five new state quarters each year for ten years—each coin featuring a special design that recalls something from that state’s history or heritage. The effort has been very successful, attracting many new collectors, especially children.

Beginning in 2004 the mint introduced a new series of nickels commemorating the 200th anniversary of the Lewis and Clark Expedition. Part of the five-coin series included a nickel introduced in 2006 that featured a forward-facing Thomas Jefferson, the first circulating American coin to depict a U.S. president facing forward rather than in profile.

B

Coin Values

The market value of any coin—the price a dealer can actually receive for it—is determined by supply and demand. Some exotic coins are quite scarce, but their prices remain low because there is no great demand for them. Yet many fairly recent British, Canadian, and American coins, as well as coins from other times and places, are more available, but their prices are relatively high because there are far more numismatists who collect them. As with any collectible, the condition of a coin is a major factor in determining its value.

When deciding on the purchase of expensive coins or notes, collectors must do the same kind of research necessary for any other major investment. The collector must assess the current market value of the item, its current resale value, and its potential appreciation. Above all, the collector must be knowledgeable enough to know if a coin is genuine and properly graded (assessed as to condition) or must have confidence that the dealer does.

Coin catalogs give some idea of the current prices for various coins. However, dealer advertisements in coin magazines and newspapers are usually more up to date. Coin auctions are an important feature of major coin collecting conventions. Catalogs of the items to be sold are issued ahead of time, and lists of the prices that the items sold for can often be obtained afterward. Coin conventions usually have tables where numismatists can consider the offerings of many dealers, and coin shops also often provide a wide selection. Web sites are a good source for information on the value and availability of coins.

IV

ORGANIZATIONS AND MUSEUMS

The largest numismatic organization in the world is the American Numismatic Association. Founded in 1891 and chartered by the Congress of the United States in 1912, the group has the world’s largest circulating library of numismatic material. Its headquarters includes the World Money Museum, one of the top three numismatic museums in America.

A separate organization, the American Numismatic Society, is the most active and respected nonprofit numismatic publisher in the world. The organization has a museum containing more than a million objects and a library noted as the world’s most comprehensive repository of numismatic literature. The Smithsonian Institution in Washington, D.C., houses the National Numismatic Collection, one of the largest of its type in the world.

The largest numismatic organization in Mexico is the Sociedad Numismática de México (Numismatic Society of Mexico). Founded in 1952, the society holds monthly meetings, publishes a quarterly journal, maintains a numismatic library, and sponsors an annual convention. Canada’s leading coin organization is the Canadian Numismatic Association, founded in 1950. 

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