Numismatics and the Panic of 2008
The first quarter of 2009 has only just ended and already we are hearing the current financial crisis being labeled as The Panic of 2008. Even Wikipedia already has an entry for it. So what does the latest financial crisis have to do with numismatics?
One thing history has shown, whether by accidental timing or as a direct result of the crisis, there always seems to be some major impact affecting our nation's coinage during times of financial crisis.
The Panic of 1837
Said to have been caused by the policies of President Andrew Jackson and his successor President Martin Van Buren, the Panic of 1837 resulted in a major financial crisis that the economy didn't recover from until around 1843.
The Panic of 1837 revealed the truth of the old adage "bad money chases good money out of circulation." People began to hoard coins and a severe coin shortage developed affecting merchants.
- Definitely a direct result of the crisis and resulting coin shortage, the production of hard times tokens opened up a whole new specialty in numismatics. From satirical and political to store card themed tokens, hard times tokens are one of my favorite areas of numismatics that is still affordable to the average collector.
- Half dime and dimes saw the Seated Liberty design introduced in 1837 with the quarter dollar following in 1838.
- Half dollars saw a two year type coin with the "50 cents" design in 1836 and 1837 followed by the "Half dol." reverse in 1838.
- After over 30 years since the last silver dollar was produced, 1836 saw the Gobrecht dollar introduced although legislation didn't authorize a return of the silver dollar until 1840.
- After over 30 years since the last $10 gold eagle was produced, 1838 saw the Liberty Head $10 gold eagle produced.
Excessive speculation in cotton and railroads were reaching a bubble and inflation was out of control as gold poured into the economy from the gold fields in California. What began as a recession in 1856 led to a panic in mid-1857 as railroads and banks began to fail. Losing confidence in banks, people began to convert their notes to specie. As gold reserves dropped, banks looked forward to gold shipments from California. Then disaster struck. The S.S. Central America with million of dollars of $20 gold double eagles sank in a hurricane in September 1857 and the recession became The Panic of 1857.
Again during a time of financial crisis, numismatics were forever being changed.
- 1857 is an unprecedented year to put together a type set. It would include: half cent, large cent, flying eagle cent, silver three cent (trime), half dime, dime, quarter dollar, half dollar, silver dollar, gold dollar, quarter eagle, three dollar gold, half eagle, eagle, and double eagle.
- 1857 was the last year for the half cent and large cent.
- Recovery of the S.S. Central America's treasure would result in thousands of mint state 1857-S $20 gold double eagles becoming available to collectors in grades as high as MS-67 and with designations of PL and DMPL.
The Panic of 1873During a time when the Industrial Revolution was transforming the lives of millions of Americans, the overexpansion of railroads helped to ignite the Panic of 1873. Record production from the silver mines out west, and the resulting decline in silver prices, led to an abundance of silver dollars redeemable in gold causing a serious drain on the gold supply. The resulting economic depression led to the passage of the Coinage Act of 1873. This act placed the United States on a gold standard and it eliminated production of the standard silver dollar.
And once again, a financial panic led to major changes affecting numismatics.
- The Coinage Act of 1873 led to that year being the last year of issue for the Seated Liberty silver dollar. Eventually, the Act became known as The Crime of '73.
- 1873 was also the last year of issue of the two cent piece, silver three cent piece (trime) and the half dime.
- A change to the metric system (grams) by the U.S. Mint in 1873 led to an increase in the amount of silver in the dime, quarter dollar, and half dollar. As a result, arrows were added around the date on the obverse in 1873 and 1874 to reflect this change in weight.
- Since the Mint Act of 1873 led to either an increase in the amount of silver in a coin or a discontinuation of the coin, it also mandated that all unissued coins prior to the changes be destroyed. As a result, some of the greatest rarities are 1873 silver coins without arrows. Examples are the unique 1873-CC dime, the 1873-CC quarter dollar of which only 5 are known, and the 1873-S half dollar of which 5,000 were minted yet none are known to be in any collection.
- The Silver Trade dollar was introduced in 1873 to compete with similar sized foreign silver coins in the Orient. Chop marked trade dollars are another collector specialty.
- From small cents to $20 gold double eagles, 1873 is a year where collectors seek what are known as "closed 3" and "open 3" varieties in the date.
The Panic of 1907
Also referred to as the Banker's Panic of 1907 and similar in some ways to the Panic of 2008, the Panic of 1907 also resulted in a stock market decline of more that 50% as many "runs on the bank" caused numerous banks to fail. However, instead of the huge government bailouts we see today, the 1907 crisis was bailed out by financier J.P. Morgan as he pledge large sums of his personal wealth to shore up banks, and convinced other bankers to do the same.
As during other financial panics, whether as a direct result of the panic or just coincidence, 19o7 also saw major changes in numismatics as President Theodore Roosevelt implemented his desire to improve on the nation's coinage.
- 1907 was the last year of issue for the $2.50 Liberty Head quarter eagle as the unusual Indian Head incuse design by Bela Lyon Pratt replaced it. 1908 was the last year of issue for the $5 Liberty Head half eagle for a similar Indian Head design.
- 1907 was the last year of issue for the $10 Liberty Head eagle as the Indian Head design by August St. Gaudens replaced it. Some problems with the new design led to a few varieties of the first year of issue such as wired edge, rolled edge, and no periods varieties.
- 1907 was the last year of issue for the $20 Liberty Head double eagle and the first year of issue of the new St. Gaudens design with a walking Liberty on the obverse. As with the eagle, the 1907 double eagle had a few major varieties such as the high relief flat rim, high relief wire rim, and low relief with arabic numerals varieties.
- Also, the "In God We Trust" motto was removed on the $10 eagle and $20 double eagle coins only to be reinstated in 1908.
The Panic of 2008
Although the history is still being written on this one, there are already a few major changes affecting numismatics. As in past panics, some are simply coincidental and others are more of a direct result of the crisis.
We have seen the end of the 10-year state quarters program in 2008, only to be followed by the D.C. and Territorial quarters in 2009 and a second state quarters program starting in 2010.
We have seen the end of the Lincoln Memorial reverse with the 2008 Lincoln cent. The four new bicentennial designs in 2009 will be followed by a new reverse beginning in 2010 (if the current financial crisis doesn't result in the demise of the cent completely).
Even the $1 Sacagawea coin saw an end to the eagle reverse in 2008 and the introduction of four new reverse designs in 2009.
Finally, we are already seeing some of the lowest mintages of our coins in decades. For example, the new 2009 Lincoln Birthplace cent is the lowest mintage of any cent in 40 years. Will we look back a century from now and consider it a key date? Probably not due to large savings of them by collectors.
However, we are still in the midst of this financial crisis. Maybe there are unforeseen changes to come. With unprecedented spending by our government, maybe there will be a call to cut costs that will lead to the demise of the dollar bill? . . . the cent? . . . the nickel? Or maybe a change in metal composition. We'll just have to wait and see.