ON THE MINT'S MANUFACTURED RARITIES

Many thanks for forwarding Patrick Heller’s excellent summary of the proceedings of the United States Mint’s Third Annual Forum on October 17th.

The new director of the United States Mint, Mr. David Ryder, has generated considerable excitement in the hobby by proposing to issue a rare circulating coin in 2019, without specifying what it might be. But serious doubts have arisen about the feasibility of the proposal, as expressed by Coin World Editor Bill Gibbs and two CW letter-writers in that publication’s latest digital edition. They worry that most coins in the rarity-release program will end up in the hands of big dealers gaming the system rather than of “the little guys” who have always loved the hobby but think that now the coin distribution system at the Mint is rigged against them.

But Mr. Ryder’s proposal is about making business-strike coins intended for immediate release into the mass of circulating coinage. It’s not about announced, timed-release uncirculated, proof, commemorative or bullion products. The good thing about Mr. Ryder’s proposal is that it recognizes that the romance and beauty of coin collecting that got most of us hooked early on have always centered on unexpected discoveries in pocket change. It was the thrill of the hunt. That’s how most of us grew up as little kids, searching passionately for scarce and rare coins already in circulation.

In the early 1950s in Detroit, for example, I could find oodles of Lincoln wheat cents, Liberty Head and Buffalo nickels, Mercury dimes, Standing Liberty quarters, Walking Liberty and Franklin halves, many Barber dimes, quarters and halves, and even 19th and early 20th century Canadian copper, nickel and silver coins (then valued at parity with American coins) in circulation. In those days, it was not uncommon to find coins with greater than face value, as based on the prices published in the Blue Book and the Red Book. That likelihood quickly fell, 40 or 50 years ago, as production numbers for coins of all denominations soared and especially after all silver coinage disappeared in the mid-1960s.

Now many see the hobby and the industry at a crossroads. Rick Amos, CEO of Amos Media – in a panel discussion (entitled: “Coin World: Open Forum Discussion on Our Hobby Moving Forward”) at the World’s Fair of Money of the American Numismatic Association last August in Philadelphia – quoted a dealer who said, “In ten years, 70 per cent of those dealers (in the bourse upstairs) won’t be there.” The implication was that, as the hobby and the industry keep “graying,” those dealers won’t be replaced. Others have written recently about the steady decline in the ANA’s membership, in coin shops around the country and in coin clubs in many areas.

I noted in my CW Guest Editorial this week that it’s too bad the Mint did not think last year about making between 500,000 and one million Lincoln cents in Philadelphia without the P mint mark. The Mint, thinking bureaucratically, assumed collectors would be excited by the novel manufacture of over four billion 2017 pennies at the Philadelphia Mint with the P mint mark for the first time ever. Had the Philadelphia Mint deliberately dropped the P from a few dies, sharp-eyed collectors nationwide would soon have thrown the coin-collecting community and the country into “a frenzy” of searching for the “rarities,” which would likely have generated three- and perhaps even four-figure premiums in dealer auctions or on eBay.

In 2017, the Mint made 8.634 billion pennies for circulation, roughly half each at the Philadelphia and Denver Mints. One million cents minted last year without the P or D mint mark would have constituted less than one in every 8600 coins produced – for collectors, perhaps akin to looking for a needle in a haystack, but a lot better odds than winning the recent Power Ball lottery. If 500,000 had been produced, the odds would have been one in around 17,000 pennies made last year. (Remember that the mintage of the iconic 1909-S VBD Lincoln cent was 484,000.) And this year, the Philadelphia Mint could have done the opposite, producing half a million to a million pennies with the P mint mark hiding in the coinage. Over the past 18 months, up to two million American kids could have been happily searching their families’ change, notifying coin publications of their finds, showing the coins to classmates and to coin club members, and reluctantly putting up their coins for auction to earn money for holiday season gift-buying.

But how to get from here to there? I suggest in my CW Guest Editorial this week that the main stakeholders (as the Europeans would call them) in the American numismatic community take the lead in forming a public-private partnership (PPP) to help the United States Congress – which a century ago gave the ANA a very special charter to encourage coin collecting in American society – and the US Department of the Treasury, which oversees the Mint, with good “bottom-up” suggestions for new approaches to imaginatively designing, producing and distributing the planned scarce and rare coins for circulation. Included among those stakeholders must certainly be: (1) the Treasury Department, led by the Mint; (2) the ANA, led by the Professional Numismatists’ Guild (PNG), to ensure the highest standards of ethics, integrity and probity in the overall running and oversight of the program; (3) the leading third-party authenticating and grading services: PCGS, NGC, and ANACS, whose operational by- word must always be trust; and (4) the numismatic publishing community, led by The Numismatist, Coin World and their leading counterparts.

Patrick Heller wrote in his valuable summary in last week’s E-Sylum that, at the Third Annual Forum of the Mint in Washington, DC, on October 17th : “Going forward, Ryder said that Mint staff would become more proactive at helping to write [coin-production] legislation so as to incorporate ideas that would be of higher appeal to coin collectors.” This is crucial. So is the necessity of keeping the program transparently honest. Four years ago, we saw how easily the program to produce and issue the US Federal Marshals Service commemorative coins was tarnished, when top leaders at that agency were revealed in late 2014 to have received early releases of the sets produced to honor the history of that service – but dated 2015, the Congressionally-mandated year of issue! The recipients were forced to return those coins to the Mint. [And much of the controversial news about that agency since then has suggested widespread improprieties in its leadership, both at the Washington, DC, headquarters and around the country (which anyone can see by googling references to that agency).]

I believe the Federal Government, aided by the PPP-led commission created to help administer and regulate this special program, can run the rare-coins program as efficiently as the 50 states run their lotteries, even given the much greater complexity of this rare-coin proposal. The 50 states learned years ago from the Massachusetts lottery how easily insiders can undermine trust in a government system. (The same person won that state’s lottery twice within a relatively short time. He hasn’t won since.)

I suggest in my CW Guest Editorial that it is essential that the coins of any new circulating rarity be thoroughly mixed into the general population of coins at a central gathering place in a completely anonymous, random fashion. In that way, the odds of two of the coins ending up in the same roll would be infinitely small. And the commission would need to ensure that the bagged or rolled coins have a demonstrably equal statistical chance of ending up in banks in every region of the country and in small- town as well as large-city banks nationwide.

The Mint should never announce what the forthcoming rarity, or rarities, are in advance, or how many it plans to produce of each. Let sharp-eyed collectors discover them from their unexpected finds in circulation. That would produce a veritable flood of interesting articles and announcements in the numismatic press all year round. I would expect to see a revival of coin shops and clubs nationwide. (The same approach can be taken with all denominations of coinage involved in this program: cents, nickels, dimes, quarters, halves and dollars.)

Once the rarities in circulation start to be identified by collectors, the usual suspects (as in China) will hurry to counterfeit them, so I hope that the PPP’s commission will anticipate that problem with innovative design features aimed at thwarting the crooks. One example is to create alloys with microscopic trace levels of secret ingredients that only the US Treasury’s metallurgists would know about. That, of course, would make the job of the third-party grading services a bit more difficult than in the past in determining the authenticity of submitted coins – but, I think, essential.

Multiple varieties could be produced with any and all the coinage, as we saw with the 2004-D Washington [Wisconsin] “illegal” extra-leaf quarters and the year-2000 Sacagawea “legal” dollar coins with the enhanced eagle tail feathers and with the “wounded eagles.” And there needn’t be just two varieties. Variations in design could also be carried out on the paper bills. And why not with the postage stamps, to help revive stamp collecting?)

Finally, one of my principal motivations in advancing these ideas in support of Mr. Ryder’s proposal is to buttress the value of that huge inventory of common, less-common, scarce and rare US coins “out there” languishing from lack of demand (due to lack of buyers and interest among the American people). Without that interest in common coinage types going back to the founding of the republic, demand for many valuable, hard-to-find key dates is falling. (I know; I closely watch the price tables as on the valuable PCGS Coin Facts web site.) Coin collecting in this country is a wonderful activity. But most of the country’s citizens don’t know that. If they can get kids and their parents back into their shops, dealers should show them all the different denominations (and varieties) of coins that have been produced by this country – and give away or sell very cheaply raw coins, including “problem coins” (with disclaimers in writing and with clear explanations about the implications of re-selling), to help them fill up blue books or their equivalents. Make them knowledgeable because they are showing interest, in the same way that coin collecting apparently first really took off in the mid-19th century. It took off because people inexpensively wanted one example of everything, preferably coming from pocket change -- not expensively buying rarities at auctions or putting together costly registry sets. Let’s remember where the romance of coin collecting came from and where it needs to return to thrive: in the hearts of little kids.

To read the earlier E-Sylum article, see:
2018 U.S MINT FORUM REPORTS (http://www.coinbooks.org/v21/esylum_v21n43a12.html)

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