March, 1964. Day after day, long lines of anxious coin buyers form outside the Federal Reserve Building in Washington, D.C. Each is hoping that his $1,000 purchase of an unopened bag of 1,000 U.S. Silver Dollars will result in what amounts to a modern day treasure trove worth many thousands of dollars.
The outpouring of silver dollars from the U.S. Treasury continues at a staggering pace until it is finally brought to a halt on March 26, 1964. On that day, the Secretary of the Treasury, C. Douglas Dillon, suspends the exchange of silver dollars for silver certificates. Americans can no longer use their greenbacks for the one-to-one purchase of silver dollars from the Treasury!
What had brought us to this important event in the history of the U.S. Silver Dollar?
From its beginning, the U.S. Silver Dollar was the focus of fierce battles between politicians representing western silver mining interests and those promoting gold as our monetary standard. Throughout its checkered history massive production of the coins was interspersed with the melting of millions of pieces to finance war efforts or for international silver sales to our allies. For its part, the general public had little interest in using the coin in daily commerce due to its size and weight. In fact, after their mintage, most silver dollars were simply bagged and shipped to Washington for storage. At times, the stock of silver dollars sitting in Treasury vaults reached into the hundreds of millions.
Despite a decided lack of interest in the coins on the part of the general public, there were those who enjoyed collecting silver dollars. The coins were also popular as Christmas gifts and were therefore often released in bag quantities to banks around the country in the months leading up to the holiday. It was the result of one of these pre-Christmas releases that the history of the Morgan Dollar was changed forever.
During the late 1950’s and early 1960’s, most mint state Morgan Silver Dollars traded among collectors for a small premium over face value. However, there were a few rare dates thought to have been mostly lost in the silver melts of previous decades and these traded at prices of several hundred dollars or more. One date, the 1903-O, was considered to be a major rarity and if one was lucky enough to ever have an opportunity to buy one, he could expect to pay a whooping $1500 for a mint state example! Most major coin dealers of the day had never even seen a mint state example of this date much less had the opportunity to own or handle one.
In November of 1962, the U.S. rare coin market was rocked by almost unbelievable news. Several dates previously considered exceedingly rare were discovered in bag quantities during the annual pre-Christmas release by the Treasury. Among those dates was the much-desired 1903-O! Obviously, after the release of this key date in bag quantities, its lofty price adjusted quickly to the new market realities. However, the die was cast.
Overall interest in Morgan Dollars skyrocketed, and with the publication of the news that important rare date coins were being released from the Treasury vaults, the rush was on. Now, after putting a stop to the unprecedented run on the Treasury’s holdings, auditors would soon discover that the remaining stock consisted of only about 3,000 bags of uncirculated coins, mostly from the Carson City Mint.
While the rare coin market digested the many thousands of bags of newly-released silver dollars, the politicians set about trying to decide how to liquidate the remaining Treasury holdings of nearly 3 million silver dollars. Almost every idea imaginable was discussed including the melting of the coins for sale as bullion! Fortunately, this outrageous idea was scrapped. After many years of debate, it was decided to sell the coins to the general public through a series of mail-bid sales to be conducted by the General Services Administration, or GSA. It was believed that this would be a fair and equitable manner in which to distribute the coins to U.S. citizens.
President Richard M. Nixon signed a bill on December 31, 1970 authorizing the sale of the Treasury’s holdings of silver dollars and on December 6, 1971, official custody of the coins was finally transferred to the U.S. Bullion Depository at West Point, NY where the GSA accepted trusteeship. After nearly a year of counting, sorting, and packaging of the coins by the GSA staff, the details of the first mail-bid sale were finally released on October 31, 1972.
A series of five sales of the Carson City Silver Dollars were held with the final sale closing on June 30, 1974. Despite a massive advertising campaign on the part of the GSA, the silver dollar sales were definitely met with lukewarm interest and poor results. Anticipating much greater demand than actually realized, the GSA had stipulated that each customer could purchase only one example of each date represented in the sale. While dates such as the 1879-CC, 1890-CC, and 1891-CC quickly sold out, most others went begging.
When the dust finally settled on that last sale of 1974, nearly one million of the Carson City silver dollars remained unsold!
As one might expect with a governmental promotion the size of the GSA sale, critics were numerous and quite outspoken. Many coin dealers were angered with the notion that the U.S. government was “now in the coin business”. Some complained that the coins were being promoted to buyers with limited numismatic experience and that with the minimum bid prices offered by the GSA, most buyers would be ‘buried’ in the coins. One prominent New York City coin dealer even petitioned the Securities & Exchange Commission to investigate claims in GSA sales literature that the coins represented ‘a sound investment’. At that time, coin dealers were discouraged from using such claims in their promotional literature.
The issue of the remaining coins lay dormant for a number of years until it was again brought before the U.S. Congress in early 1977. Finally, in March of 1979, legislation was signed into law by President Jimmy Carter authorizing the GSA to sell the remaining Carson City silver dollars still in its possession.
In July of 1979, the GSA announced preliminary plans to offer the nearly one million remaining Carson City silver dollars in another round of mail-bid sales set to begin in early 1980. Along with this announcement, the GSA commented that over 25,000 requests for information had already been received from interested parties. A September press release noted that interest was running extremely high with over 130,000 post card requests from collectors to be added to the GSA mailing list.
All indications were that interest in the upcoming mail-bid sale would be unlike that of any other to date. Remember the sales of the 1970’s? Only 1 coin per date per customer had been allowed. How would the GSA allocate coins in this sale? Amazingly, despite the indications of strong bidder interest, the GSA set the minimum number of coins per bidder at 500!
During November of 1979, the GSA released formal sales literature and even included pre-sale minimum bid prices for the upcoming sale. For those of us who remember late 1979 and its relevance to the rare coin market, this period was represented by extreme price volatility in the silver market. Was it wise for the GSA to be publishing pre-sale minimum bid pricing so far in advance of the actual sale? Well, one can guess the outcome.
On January 2, slightly more than a month before the announced sale date of February 8, 1980, GSA Commissioner Ray Markon was forced to retract those pre-announced bid prices “due to volatility in the silver market”. Buyers were instead instructed to call a toll-free number that would be activated once the bid process opened in order to get an up-to-the-minute minimum bid price for the coins being offered. However, the damage had been done. Many bidders, using order forms with previously-published incorrect minimum bid prices, would later underbid on dates of their choice.
As if changing the published minimum bid price weren’t maddening enough, the GSA had yet another surprise in its bag of tricks. On February 21, thirteen days after the commencement of the bidding process, the GSA announced that it was going to change the minimum number of coins allowed per bidder. Due to unexpected demand, and in order to allow for a more equitable distribution of the remaining silver dollars, only 35 coins per customer, not 500 per customer as originally advertised, would be allotted to each bidder.
Many bidders ended up with no coins at all and I’ve often wondered if those who mailed their bids in early with a requested minimum greater than 35 coins were not excluded altogether. Reaction was swift, and predictable. Complaints poured into local and national newspapers, industry-related magazines and periodicals, and most importantly, into the U.S. Congress. Even before the final sale in July of 1980 disposed of the remaining Carson City silver dollars in the GSA’s possession, hearings before the U.S. Congress were already being planned in Washington. While the sales of the 1970’s were marked by a decided lack of interest on the part of the buying public, the GSA sales of 1980 can only be described as chaotic.
THE GREAT GSA CRACK-OUT
As quickly as the first GSA CC dollars were mailed to winning bidders, they began to appear at coins shows around the country. And if history does indeed repeat itself, then the GSA CC dollars were due for much more tumult.
I’ve asked numerous dealers about their experiences with GSA CC dollars in the years immediately following their release for public bidding. Many commented that they believed the coins, housed in their original GSA holders and boxes, were simply too bulky to transport to shows or to store easily at their shops. They preferred to carry their inventory in double-row boxes, each coin housed in a flexible plastic “flip” or in plastic tubes each holding twenty coins. And besides, so many of the coins were entering the marketplace that they carried no noticeable premium in their original GSA holders.
It was often said that the sound of the coins being “whacked out” of their GSA holders could be heard across the bourse floor at major shows as dealers prepared to pack their inventory. One dealer told me of seeing trash bins filled with discarded GSA cases at the end of major shows.
However, in my opinion, no single event since their release has had a greater impact on the population of GSA coins in their original holders than the introduction of third party grading and encapsulation.
When PCGS and NGC introduced their grading services during the mid 1980’s, the rare coin marketplace changed dramatically. Dealers and collectors alike quickly accepted the innovative ideas of the two companies. But, in order to receive their grade and other company-offered guarantees, both companies required that a coin be encapsulated in their tamper-resistant plastic holders. As if that weren’t bad enough news for GSA CC dollars, other, more subtle factors combined to put additional pressure on the remaining population of GSA coins.
Soon after PCGS introduced its encapsulation service, some dealers believed that CC dollars were being ‘rewarded’ with a grade that was as much as a full point higher than coins from other mints in comparable physical condition. Whether this was true or not, for many dealers it was worth the risk of cracking out every GSA CC dollar that had a ‘shot’ at a higher grade. And crack them out they did!
For its part, NGC gained a reputation as favoring beautifully toned coins. Again, the result was the same. Many beautifully toned GSA CC dollars are now lost forever to the GSA collector.
But all GSA news is not bad news. GSA CC dollars have recently gained remarkably in popularity and many dealers have begun to realize that the coins are often worth more in the original holder. I believe that the pace of GSA crack-outs has definitely subsided.
And there’s more good news. At this year’s FUN Show, NGC unveiled its new grading service for GSA CC dollars. The new service seems to be gaining in popularity, but only time will tell if it will ultimately become a marketing success. If nothing else, perhaps it will extend the life of a few more GSA CC dollars…
at least for a while.
Copyright 1993, Bryan Sonnier