 GSA Carson City Silver Dollars: A History as Tumultuous as That of the Morgan Silver Dollar Itself
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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
[email protected]
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