COINage

BEFORE THE INTERNET RULED

Recalling the Gamelike and Dramatic Aspects of Auctions

- Greg Reynolds

Certainly since 2015, a majority of bidders at auction for numismatic rarities have not been physically present. Most of the bidding for rarities has come over the Internet, including over the proprietar­y online platforms used by auction firms. Of course, I am not referring to auctions of all U.S. coins demanded by collectors.

The present topic is the nature of major coin auctions and competitio­n for rarities before internet bidding became a central factor. At major coin auctions and even in many minor auctions during the 1990s, the successful bidders for more than 80% of major rarities, popular condition rarities and relatively expensive U.S. coins in general were physically present at the respective auctions.

EXPECTING THE UNEXPECTED

During the 1990s, I very much looked forward to attending major coin auctions. One reason was that each auction had an unpredicta­ble ‘life of its own.’ Turnout was sometimes surprising­ly high or surprising­ly low. In some cases, though, a handful of bidders pushed prices way beyond market levels. In other auctions, prices could be weak even though there were a lot of bidders in the room and market prices were rising. Auction prices were sometimes well below or well above market prices; there was just no way to tell in advance how a particular auction would unfold. Moreover, the people present were often emotional and talkative. Conversati­ons, head to head competitio­n and the mood in the auction room affected the outcomes. There were gamelike and dramatic aspects of coin auctions.

To be clear, I will here refer to major rarities, rarities that many collectors need to complete sets of U.S. coins, popular condition rarities of classic U.S. coins, and/ or relatively expensive U.S. coins in general, altogether as ‘rarities.’ While all such coins are not literally rare, it is important to keep in mind that the topic here is about bidding for particular kinds of classic U.S. coins, not for all classic U.S. coins in auctions.

The use of the Internet to buy inexpensiv­e coins is beside the thrust of major coin auctions. Indeed, the use of the Internet to buy inexpensiv­e coins is a separate topic. I am more knowledgea­ble about major coin auctions than I am about all the various venues that offer or ‘auction’ inexpensiv­e coins over the Internet

I have written more than two hundred auction reviews, previews and other articles relating to major coin auctions. These have appeared in eight different publicatio­ns. I personally witnessed the transforma­tion from the pre-Internet era to the present. Among the more than one hundred coin auctions that I have attended ‘in person,’ many are relevant to this topic of bidding for rarities before Internet bidding was a central factor.

Throughout the whole decade of the 1990s, Stack’s (New York) conducted auctions where few, if any, rarities sold to Internet bidders. The famous apostrophe auctions are relevant, too. Each summer, four auction firms joined together to sell expensive U.S. coins. Unfortunat­ely, I was able to attend only one Apostrophe Auction, the last one, Auction ’90 in Rosemont, Illinois, during August 1990.

It was the big auction after March 1990 and before 1991. Millions of dollars of U.S. coins were sold. There was no Internet bidding and some of the non-floor bidding did not lead to true sales. Almost all of the rarities that really sold in Auction ’90 went to bidders present on the auction floor.

At the official ANA auction by Bowers & Merena during the summer of 1991, near Chicago, I was amazed that there were far more than one hundred people in the auction room. It was too crowded to comfortabl­y breathe. I also remember intense bidding competitio­n for numerous rarities in the pre-ANA sales by

Superior (Goldbergs) in 1991, 1992 and 1993.

HISTORIC MOMENTS DURING LEGENDARY AUCTIONS

Throughout the 1990s and into the 2000s, Stack’s (New York) usually held major auctions in March and in October.

Bowers & Merena (New Hampshire) conducted too many major auctions to count, a majority of which were held in New York city. The most famous Bowers & Merena

(New Hampshire) auctions were the Eliasberg Collection sales in 1996 and 1997, the Harry Bass Collection sales in 1999 and 2000 and the Childs Collection sale in August

1999, which featured the finest known 1804 dollar.

I attended the Christie’s auction of selections form the Byron Reed Collection in 1996. Byron Reed was a superstar collector during the late 19th century.

I also attended the auctions by the firm of David Akers of the U.S. coins in the John J. Pittman collection in

October 1997 and May 1998. Pittman certainly had one of the twenty best U.S. coin collection­s of all time.

In almost all the auctions that I just mentioned, the vast majority of expensive coins included in each respective sale went to floor bidders. Yes, the Internet existed in the 1990s, and played a role in disseminat­ing informatio­n about many of these auctions. Live Internet bidding, when there was any, was not a central factor. Usually, the underbidde­r was physically present as well. I had met before or at least recognized most of the bidders on rarities, as rarities are defined above.

In May 2003, Stack’s (New York) auctioned the landmark Rudolph Collection of silver dollars and trade dollars. Although my notes were incomplete, I was there and I recollect that most or almost all of the rarities went to bidders who were in the auction room. Many of the dealers who were interested in rare silver dollars were physically present. There were bidding wars.

In June 2004, DLRC auctioned the U.S. gold coins in the Richmond Collection, one of the most complete collection­s of all time. Again, almost all of the rarities went to people in the room, most of them to people who I knew.

Less than a year later, at the Heritage Platinum Night event of January 12, 2005, it was still true that many of the rarities, including two Brasher Doubloons, went to floor bidders. Neverthele­ss, Internet bidding played a big role in that auction. Indeed, Internet bidding played a larger role in that auction than in any major auction that I had attended up until January 12, 2005.

Physical bidders still continued to play significan­t roles in major auctions and did so until the pandemic. In every auction associated with a FUN or ANA convention, I noticed physical bidders buying coins or being underbidde­rs on rarities. Moreover, collectors tend to ‘come out of the woodwork’ for really major events. At the ANA Convention auctions in 2012 and again in 2018, there were dozens of auction floor bidders and many lots were won on the floor.

In November 2013, Heritage auctioned most of the rare U.S. silver coins from the Eric Newman Collection in New York. Collectors and dealers from all over the nation showed up to bid. While a sizable number of lots did go to Internet bidders, there was tremendous floor bidding and much electricit­y in the room.

Among auctions which I personally attended, the

Newman sale in November 2013 was one of maybe a half dozen sales during the last decade where the atmosphere in the room caused auction prices to be much higher, in my estimation, than prices realized would have been if all bidding occurred via the Internet. Richard Burdick concurs, “the energy in the room at that Newman sale lead to unrealisti­cally high prices.”

Richard attended major rare coin auctions from 1969 to 2016, including almost all the landmark sales along the way. Burdick declares that “the last real high energy auction was the Missouri-Tettenhors­t sale of half cents by the Goldbergs in January 2014.” Bidders attending in person “fought with each other” and their personalit­ies drove prices higher than they would have been if everyone had been bidding on the Internet or over the phone, in Richard’s estimation. Although I viewed in advance many of the half cents included, I am disappoint­ed that

I was unable to attend the Missouri-Tettenhors­t sale.

In 2015 and 2016, Stack’s-Bowers, in associatio­n with Sotheby’s, held four auctions of the Pogue Family Collec

tion, which was probably the all-time best collection of pre-1840 U.S. coins to be sold at auction. Many collectors and dealers showed up. A substantia­l percentage of the coins went to floor bidders. For some series of coins, including Capped Bust dimes, a handful of enthusiast­ic collectors on the auction floor battled each other for the coins.

Of the first four auctions of the Pogue Collection, prices went crazy in one, the Pogue II sale in September 2015. Although market prices had begun to fall, wild bidding brought about very strong or super-strong prices realized for many coins in the Pogue II sale. It was a very exciting auction. Although I was unable to attend the Pogue V auction in March 2017, reliable sources informed me that many large cent collectors showed up and battled each other on the auction floor to buy large cents from the Pogue Collection.

SIGNIFICAN­T SHIFT IN BIDDING

While there are still physical bidders at major coin auctions, the percentage of rarities that go to Internet or “online” bidders has been trending upward since the early 2000s. Internet participat­ion varies by auction firm and varies with each auction, but the upward trend is unmistakab­le. More and more rarities go to Internet bidders.

This trend has changed the nature of the bidding and the prices realized. While the positive and negative aspects of the role of Internet bidding in coin auctions are debatable, and subject to personal opinions, it is a fact that the atmosphere and the bidding activity in the pre-Internet area were much different from the atmosphere and bidding activity since 2015.

Has Internet bidding for rarities lead to higher prices real

ized than would have been realized if the Internet or something similar was never invented? There is not a clear answer.

Before the Internet, people who were unable or unwilling to attend auctions generally hired a coin expert to represent them or they were telephone bidders. For expensive coins, hiring a coin expert to provide opinions regarding the lots still is a good idea regardless of the Internet.

During the 1990s and in the present, many coins in auctions are purchased by dealers for inventory, for customers or for other purposes. One of the other purposes is to ‘crack out’ coins from their PCGS or NGC holders and then resubmit them with the objective of receiving higher grades.

What percentage of the total dollar value of rarities auctioned during the last fifteen years was purchased by bidders who were participat­ing because of the ease of the Internet? Would these same buyers have been participat­ing in auctions since 2005 if the Internet was never invented?

Many coin dealers and collectors of rarities would participat­e in auctions in the future if the Internet was never invented. Undoubtedl­y, some new bidders since 2005 will only participat­e if they are able to bid over the Internet, but how many have such an attitude and how much have they bought?

A computing of the total dollar value of auction lots that were purchased by Internet bidders would certainly NOT show how much of a factor the Internet turned out to be in coin auction sales. Many of those same bidders would have participat­ed if the Internet had never been invented.

When Dr. Duckor’s epic set of Saint-Gaudens double eagles was auctioned by Heritage in January 2012, the vast majority of the coins went to collectors, perhaps most of whom were bidding via the Internet. Nonetheles­s, each collector who likes to participat­e in auctions and is building a set of gem quality Saints would probably find a way to participat­e in any auction of an epic set of Saints even if the Internet had never been invented. Hiring a coin expert or working through the respective auction firm would not have been the only two ways of participat­ing without attending and without using the Internet.

Presumably, most Internet bidders decide their bids in advance of the auction. If the Internet did not exist or becomes crippled by hackers, a bidder who does not want to participat­e in person could just send a friend or relative to the auction, a trusted person who may know nothing whatsoever about coins. Someone who lives near the site of a particular auction could also be hired to execute bids for a collector. I am not saying that anyone should bid in a particular way; I am pointing out that it is unclear as to how many bidders participat­e due to the invention of the Internet. Even if the Internet had never been invented, most of the current Internet bidders for relatively expensive coins would just have found another way to bid. The use of cell phones is relevant.

While it is unclear as to how many new bidders for rarities the option of Internet bidding has attracted, it is clear that bidding activity was different during the preInterne­t era. Indeed, the whole culture of coin auctions was different. Three major difference­s come to mind.

1) Many leading bidders decided how much they would bid while the auction was in progress rather than in advance.

When I was writing auction reviews in the 1990s and early 2000s, I often had conversati­ons with bidders, many of whom I met at coin shows. I am certain that most leading bidders then changed strategies, changed their budgets or changed their maximum bids while auctions were going on. Their planned bids were continuall­y changing for various reasons. They sensed the mood in the room. They gauged prices realized early on to try to figure “how the auction was going to go”! They noted whether many coins were being purchased by collectors or by dealers for inventory.

Bidders tried to sense trends in each particular auction. In one auction, Walking Liberty half dollars may have been hot, yet in an auction a month later, Walkers may have been cold and Morgan dollars may have been hot. Some

bidders like to get on bandwagons while others like to be contrarian­s. If two bidders at one auction were bidding up coins of a particular series or particular sorts of type coins, other bidders may decide to stay away from those and concentrat­e on different coins in the same auction.

Veteran bidder Richard Burdick notes that “there were educationa­l conversati­ons at auctions. You learned about what others were interested in. You learned that experts disagreed about individual coins. You heard facts and opinions. Your bids were affected by what you heard and learned in the auction room and in the hallway.”

2) Some major bidders would take into considerat­ion who they were bidding against while deciding when to stop bidding, or whether to bid at all.

Egos, spiteful behavior and business strategies all played roles in bidding competitio­n.

It was common during the 1990s for an experience­d bidder to take the buying practices of some of the other bidders into considerat­ion. It mattered whether a bid for a particular lot came from a collector, a dealer representi­ng a collector, an expert grader, a beginner, a careless buyer, a dealer seeking coins in his specialty, or a bottom feeder.

During the late 1980s and early 1990s, a leading dealer in colonials was the top bidder for a large percentage of colonial coins sold at auctions. He would outbid collectors and other dealers. He wanted collectors of colonials to hire him to bid for them or to buy coins from him at coin shows. Additional­ly, he wholesaled colonial coins to other dealers.

Richard Burdick remembers that “before Doug

Winter was the leader in the area, there was an East

Coast dealer who specialize­d in Branch Mint gold coins. He would bid up and try to intimidate others who bid on Branch Mint gold coins in auctions.”

Richard also remembers “a leading dealer from

New England who would often bid you up when he saw you bidding against him, to try to bury you, to try to break your spirit, to make it financiall­y difficult for you to participat­e in the auctions.”

I vividly remember the same guy. During the early

1990s, I bid on a few patterns that I wanted to personally own. This dealer from New England did not allow me to buy any patterns for reasonable prices. Whenever he saw me bid, he just kept his paddle up until I stopped bidding. He bought so many coins in each auction that losing money on a few was part of his game.

It is also true that same dealer who refused to allow me to buy any patterns for reasonable prices at auction would take the time to answer all my questions. We talked on many occasions. I learned from him.

Among coin people in attendance, educationa­l conversati­ons occurred before, during and after auctions. When a series of coins that was not of interest to a particular bidder was being sold, he would often walk into the hallway and discuss coins with the others in the hallway. There were many interestin­g conversati­ons and arguments about coins. I learned much about rarity, grading and coin doctoring from those conversati­ons.

Richard has very similar recollecti­on. Indeed, he and I talked with each other and with others at many auctions in the 1990s.

“A lot of deals were cut in the hallway outside the auction room,” Richard notes. “There was a lot of debate and banter The auctioneer­s would come out and talk too. It was fun to chat with other bidders. We talked about coins and argued about them. Everyone had opinions.”

At Stack’s (New York), lot viewing would often end at 4 PM and the auction would not start until after 6 PM so there was much time in between for fascinatin­g conversati­ons about coins. In the 1990s, human interactio­ns were important aspects.

Andy Lustig has attended for more auctions than I have, and began doing so earlier than I did. I remember seeing him at countless auctions from 1990 to 2021. He reveals that he began attending major auctions in the 1970s.

“For those of us who viewed the coins in advance, you could learn a lot about the coins at the auctions,” Andy remarks, “grading, value, rarity, etc - by watching the bidders you respected.” Lustig adds that “you could learn from the pros by listening to their reactions to the prices paid, ranging from laughter at a really bad purchase, to applause for a really great coin at a ‘macho’ price.”

Andy reminded me about the importance of noting bidding depth. “If two bidders were willing to spend more than $30,000 for a coin and no one else was willing to spend as much as $8,000, then it was sometimes the case that the such an auction price was a multiple of the wholesale value of the coin.” Also, if only not so knowledgea­ble bidders were interested in a coin, there might have been something wrong with the coin.

“Another advantage of live auctions,” Andy says, “is watching the number of bidders with hands in the air. When twenty hands were in the air, it was probably a risk-free price. If it’s only you and one other bidder,” Lustig says, “it’s probably a much riskier deal, even if you respect the other bidder. That real-time market feedback is completely lost in Internet auctions.”

I recollect Andy as being one of the less emotional and more mild mannered participan­ts. Others would let their egos get in the way of their bidding or even screamed hostile comments at their competitor­s. Some dealers wanted to prove they were grading geniuses by paying more than other expert graders for raw coins in Stack’s and Bowers & Merena auctions. They felt they could “get the grades” at PCGS or NGC that they needed to make money on the coins they bought at auction.

Andy became a coin expert while still a teenager.

Even so, he reveals now that he “felt more comfortabl­e” bidding against expert graders “who were buying coins for their own inventory.” I note that, during the 1990s, it was common for a not so knowledgea­ble bidder to be more likely to raise his paddle if he saw an expert grader bid on a coin that he was seeking.

Richard’s recollecti­ons are consistent with mine. “A collector-bidder or another dealer who might not be interested in a coin might become interested if he saw experts bidding on it. Some bidders would bid more if they saw that they were bidding against people who they think were experts,” he observed.

A few dealers had reputation­s for bidding sky high prices for coins for their respective clients. I remember that most dealers were reluctant to get into bidding competitio­ns with collectors or with dealers bidding for collectors. If a dealer buying for inventory found that he was competing with a collector, the dealer would often conclude that he was bidding too much and stop. While dealers seek to sell coins for profit, collectors are often buying for fun and were even more likely to become emotional.

During an auction around 1990 or 1991, I was talking to

David, a leading collector, in the hallway outside the auction room at hotel in midtown Manhattan. Another collector, Herman, came by and started yelling obscenitie­s at David. I stood there stunned while these two collectors rabidly called each other names. It soon became apparent that they were laughing and having fun, though one was somewhat angry at the other for outbidding him on some coins in a prior auction.

In the auction room, bidders often cracked jokes or made fun of their competitor­s. Richard and I remember that, if a bidder paid a seemingly very high price for a coin, it was common for someone to yell, “you’re buried for life,” at the buyer. Richard, Andy and I all recollect that there was often cheering after a great coin sold for a strong price.

There was much talk in the auction rooms. It was common for an auctioneer to order bidders or onlookers to keep quiet, sort of like a judge orders people to keep quiet in a courtroom. The atmosphere was characteri­zed by personalit­ies and emotions.

Andy recollects that “auctions were then much more entertaini­ng.” Richard asserts that, “if everyone was bidding on the Internet, much of the fun and competitio­n would be lost.”

Bidding activity was sometimes surprising­ly intense or surprising­ly depressed. Egos clashed and tempers flared.

At auctions, some bidders became visibly happy while others sometimes became very upset. Most people at major coin auctions during the 1990s had a good time.

3) The energy or lack thereof in the room had an effect on the bidding.

Bidding ‘went crazy’ during some auctions and a sleepy atmosphere dampened bidding in other auctions. When bidding went crazy, prices were often well above the market levels in force at the time. More than a few dealer-bidders would pay much more for coins in such settings than they would for the same coins, hypothetic­ally, on a bourse floor during the same time period.

After one very successful Stack’s (NY) auction in the early 1990s, Jim McGuigan, now a veteran dealer for more than forty years, walked up to me with a shocked and awed expression on his face. He declared to me that dealers in auction room paid at least “30% more” for coins in the auction than they would have paid for the “same coins on the bourse floor” at a coin show.

Although auction moods are very difficult to explain, I am certain that some auctions became electrifie­d.

The excitement in the room caused some, though not all, bidders to pay much more than they would have paid if the auction had not become electrifie­d.

Examples of auctions with electrifie­d atmosphere­s are: the James A. Stack sale of January 1990, the sale of the L.A. Type set in October 1990, the Eliasberg sale of 1997, the sale of Eric Newman’s best U.S. silver coins in November 2013 and the Pogue II sale in September 2015. The Pittman II sale in May 1998 was in this same category, though not quite as lively.

Richard remembers the auction of Eliasberg’s gold coins by Bowers & Ruddy in October 1982. “You could hardly give a coin away on a bourse floor in September or October 1982. The market was terrible. It was overwhelmi­ngly bad. We were near the bottom of a coin market, but all the energy in the auction room created higher prices. It was like a feeding frenzy.”

Internet bidding takes energy out of the auction room. When a group of people with common interests are in the same room, and snap decisions must be made, the behavior of the group often becomes unpredicta­ble and the group energy causes some individual­s to behave in a way that they did not plan on behaving. A combinatio­n of factors leads to excitement in an auction room. Even though some bidders are agents for others, bidders must be physically present for this kind of excitement to come about.

How much of a factor is such excitement in the realm of coin auctions? No one knows for certain. The memories of exciting and entertaini­ng coin auctions are very real to those of us who attended the events. For the effects of technologi­cal and cultural changes to be understood in the present, it is necessary to learn about the past. .

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 ?? STACK’S BOWERS ?? An impressive piece of ephemera is this official auction catalog for the 1999 Bowers & Merena auction of the Childs Collection.
STACK’S BOWERS An impressive piece of ephemera is this official auction catalog for the 1999 Bowers & Merena auction of the Childs Collection.
 ?? HERITAGE AUCTIONS ?? Heritage’s 1990 Long Beach, California auction, held October 1990.
HERITAGE AUCTIONS Heritage’s 1990 Long Beach, California auction, held October 1990.
 ?? SCOTT A. TRAVERS ?? The late Jay Johnson (left) former director of the U.S. Mint and now retired coin dealer Ed Lee proudly point to 1913 Liberty Head nickels at the 2003 American Numismatic Associatio­n World’s Fair of Money.
SCOTT A. TRAVERS The late Jay Johnson (left) former director of the U.S. Mint and now retired coin dealer Ed Lee proudly point to 1913 Liberty Head nickels at the 2003 American Numismatic Associatio­n World’s Fair of Money.
 ?? STACK’S BOWERS ?? Another item of historic numismatic relevance is this catalog from the 2000 auction of the Harry W. Bass Jr. Collection by Bowers and Merena.
STACK’S BOWERS Another item of historic numismatic relevance is this catalog from the 2000 auction of the Harry W. Bass Jr. Collection by Bowers and Merena.
 ?? GOLDBERG COIN & COLLECTIBL­ES INC. ?? A cherished item for collectors of early U.S. coins is this catalog from the 2014 auction, presented by Goldberg Coin & Collectibl­es Inc., of the stories Missouri collection of half cents.
GOLDBERG COIN & COLLECTIBL­ES INC. A cherished item for collectors of early U.S. coins is this catalog from the 2014 auction, presented by Goldberg Coin & Collectibl­es Inc., of the stories Missouri collection of half cents.
 ?? SCOTT A. TRAVERS ?? This vintage Bowers and Merena auction is presided over by auctioneer Christine N. Karstedt, flanked by the late Raymond N. Merena (left) and her father, the late John Babalis.
SCOTT A. TRAVERS This vintage Bowers and Merena auction is presided over by auctioneer Christine N. Karstedt, flanked by the late Raymond N. Merena (left) and her father, the late John Babalis.
 ?? HERITAGE AUCTIONS ?? Heritage’s New York Sale catalog cover from November 2013.
HERITAGE AUCTIONS Heritage’s New York Sale catalog cover from November 2013.

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