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Coin Collecting: Proof Coins

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( Published 1963 )

Familiar to every student of economics is the story of the great Dutch bulb mania which swept Europe a few centuries back.

No one appears to know for certain exactly how it started. Someone may have spread rumors that this particular tulip bulb was twice as rare as that; this one would produce a rare and exotic black tulip; another would flower into a fragile blossom which was unique in texture as well as color.

Almost immediately, intelligent persons who probably couldn't have distinguished a tulip from an aster started to buy these "rare" bulbs. Urged on by speculators and each other, the buyers saw the prices zoom skyward. A bulb that sold for a mere 900 guilders last week brought 1,000 this week-that lot of six exotic black tulip bulbs went for a mere 25,000 guilders-perhaps the price tomorrow would be nearer the 100,000 mark.

Then some doubting Thomas may have decided to plant the exotic bulb to see exactly what sort of a "rare" tulip would appear. Or perhaps some sane person merely stood back to take a long hard look at this Dutch bulb business. At any rate, the whole balloon of inflation suddenly collapsed-and tulip prices returned to their pre-mania level.

Present-day dealing in recent Proof sets may well be called the Dutch bulb era of numismatics. The rise and fall of fictitious values closely parallels the flower hysteria of a few centuries back.

Proof coins are those which are specially made at the United States Mint in Philadelphia for presentation or souvenir purposes. They're minted much more slowly and carefully than those in the regular production run. Perfect planchets are selected, the dies specially polished, greater pressure is used, and the entire process is more deliberate.

The result usually is a perfectly struck coin, with design and lettering full and sharp. The surface of a Proof coin is mirror-like and glitters distinctively.

The U. S. Mint has made such Proof coins for more than a hundred years, including them in the official mint reports from about 1860 for Indian cents and from 1863 for silver coins.

But it wasn't until 1936 that mint officials decided to issue them to the public as complete sets rather than individual coins. Such a set includes a cent, nickel, dime, quarter and half dollar-total face value, 91 cents. The price charged by the mint in 1936 was $1.81, with the extra 90 cents going to defray the additional costs of minting the Proof coins.

In that first year, 1936, there were 3,837 complete Proof sets minted and sold for $1.81 each. Coin collectors were far from numerous and the demand was definitely small. Fewer than 4,000 sets were deemed entirely adequate.

Through the years that followed, there developed something of a demand for the 1936 Proof set. Eleven years later, in 1947, sets were advertised for sale at $59.50. That price apparently was a little steep because, six years later, in 1953, the figure had slumped to $52.50 per set.

Starting about 1955, a large boom began to develop in the Proof set area. The 1936 set (smallest total output of the 1936-1942 period ) soared spectacularly in price, reaching a peak in the neighborhood of $750 about 1957 - Speculators and get-rich-quick experts were freely predicting that a price of $1,000 was not far off.

Then came the Moment of Truth, which closely resembled the Dutch bulb blowup, when someone got off to one side and took a long hard look at the situation. From a peak of around $900, the 1936 Proof set hit the skids and didn't slow up until it neared the $250 mark, where it leveled off as an approximation of true value. The speculator who'd laid out $900 found his investment had shrunk to less than a third. He definitely was not too happy.

Proof sets of the years igg6 through igqz are starting to climb back slowly in value, and the price for the 1936 set is in the neighborhood of $400 again. But it may be several years before it doubles to near its old-time high.

Minting of Proof sets was halted in 1942. After all, World Wall II was going full blast and "business as usual" was not the order of the day.

It should be remembered that the U. S. Mint is not in the business of money-making as a favor to coin collectors. To the mint, numismatists are just people, and occasionally somewhat difficult ones. The theory then was that Proof sets are made only if the mint is not behind on other business. Making of Proof sets can be discontinued at will-and has been on occasion.

The other chores performed by the U. S. Mint include the striking of medals for the services, medals of Presidents, Secretaries of the Treasury, and Directors of the Mint, as well as making coins for friendly governments.

Caught up an its work, the U. S. Mint resumed Proof set manufacture in igso. Then, with the price of everything considerably above the 1942 level, the mint decided to charge a bit more for the sets-$2.10 for the five coins with the gi cents face value. And the higher price is said to just cover the extra production costs.

In a few years, for reasons still obscure, the 1950 Proof sets zoomed upward in price. They were quoted at a higher price on the market than those of 1942, this despite the fact that there were 51,386 sets issued for the year 1950 as compared with a mere 21,120 in 1942.

It's quite true that the design of two coins had been changed; the so-called Mercury dime was replaced by the Roosevelt 10-cent piece, and the Walking Liberty half dollar had given away to the 50-cent piece bearing the portrait of Benjamin Franklin on one side and the Liberty Bell on the reverse.

But it is doubtful that these design changes improved the overall appearance of the Proof sets. In fact, there are those who consider both the dime and the half considerably inferior to the 1942 models.

An explanation occasionally advanced is that there are two stumbling blocks for the collector who'd complete the Proof series, 1936-1942, both 1936 and 1937 being priced beyond reach of the average collector. Yet the 1950 set goes merrily on its way toward the $100 mark, at which point it too may start to price itself beyond reach of Collector John Doe.

With the resumption of Proof coinage, sets which were issued in relatively modest quantities at the start showed surprising increases in value. From the original $2.10, the 1950 set advanced rapidly toward the $50 mark. Now, any item that can increase in value some 25 times in a few years is bound to attract attention. Even the stock market seldom offers stocks with such growth potential.

So, along about 1956, everyone decided to get into the act. Proof coinage totals had jumped from 51,386 in 1950 to 378,200 by 1955. The prices quoted for the 1955 sets didn't show the spectacular advances of the 1950, but they did double and triple the original cost Of $2.10.

In 1956, the total Proof coinage nearly doubled that of the previous year, going to 669,384. And just about everyone thought it was high time he climbed aboard the band wagon. Dealers, collectors, speculators, shoestring operators, and financial experts ordered Proof sets in 1957. They didn't just order 1 or 10 or 100-they shipped orders to the U. S. Mint running into the hundreds and thousands. These sets were tossed into safety deposit boxes by some, others were cached away in storage closets, and a few were actually bought by collectors who planned to display them.

Many dealers found that they had overbought. In the following year, the 1957 Proof sets were a glut on the market. The old economic law of supply and demand had gone into operation. Dealers who had tied up thousands of dollars in those glittering coins found they couldn't get their money out of them, much less make a profit. So, 1958 became the year of the Great Awakening-the apparent end of the Dutch bulb era of numismatics.

Dealers frantically sought to unload their surplus 1957 Proof sets. While they had put out $2.10, they sought buyers who'd pay as little as $1.75 for each 1957 set; dealers were content to take a loss just so their capital once more would be liquid and available.

The number of sets minted in 1958 (875,652) indicated a gradual return to near normalcy. The speculator, fingers burned, hesitated to go off the deep end that year.

The 1958 sets, being in relatively short supply, showed a surprising speculative rise in value. Illogical though it may appear, the 1958 set (with some 200,000 more minted) is actually quoted at a higher price than the 1956 set.

But the lure of the fast buck appears not to have been diminished to any great extent. In 1959, the total issue of Proof sets was 1,149,291; in 1960, the grand total was 1,691,602; in 1961, the issue reached an all-time high 3,028,244 sets.

Perhaps the Dutch bulb era isn't over yet.