Monday, October 19, 2009

Coin Monday at Heritage Auctions: One Coin for One Stamp

Oct. 19, 2009
Written by John Dale

I don’t buy too many stamps anymore. Most of my bill-paying happens online, and e-mail has largely replaced physical letters (emphasis on largely — greeting cards and thank-you notes are the main exceptions).

That said, I do need to buy at least one stamp a month, so I do have a degree of firsthand experience with the increases in price for first-class stamps that have been a yearly experience since 2006.

By contrast, the first major change in the price of a federally authorized first-class stamp was a step down, from the rate of five cents authorized in 1845 (two years before the first nationally distributed stamps were actually printed) to three cents in 1851. In the same year, the first U.S. three cent silver coin came out.

In the words of many ironic hipsters and assorted less pitiable people: “Coincidence? I think not!”

In actuality, three cents was merely a denomination of convenience for a Congress that was trying to solve an entirely different problem. The ongoing California Gold Rush brought the United States vast quantities of wealth, but it also wreaked havoc on the relative prices of gold and silver. Briefly, the U.S. coinage at the time was set up to recognize a specific ratio in the value of silver to gold. When the supply of gold shot up, thanks to the California discoveries, gold’s relative worth went down, and that of silver went up. Suddenly, the silver content in coins like quarters and dimes was worth more than the face value.

With silver coins hoarded for their metal content and thus not circulating, commerce that involved making change became dicey. Stopgaps like fractional currency (paper money in denominations less than a dollar) were unsatisfactory. Congress had to come up with a way to get silver back in circulation, but doing so by reducing the silver content of existing denominations (thus making their face values greater than their worth as silver bullion) was politically unpopular. Creating a new denomination bypassed that sticking-point; while the earliest three cent coins were only 75% silver, as opposed to 90% silver for other denominations, the new denomination could not be called debased, because there was no prior higher standard for its composition.

In early 1851, Congress was also considering a bill to lower postage rates, as noted above. This provided the necessary cover, and the Post Office Act of March 3, 1851 included a section authorizing the three cent silver coin and specifying its weight and metal content.

Through the 1850s, one three cent silver coin, like lot 193 in the October Dallas U.S. Coin Auction, could buy one stamp, like this three cent stamp in an upcoming Internet Rare Stamp Auction.

The tiny three cent silver coins were not enough to alleviate the nation’s coin shortage, and in February 1853, all silver coins smaller than a dollar, including the three cent silver, had their weights reduced. At the same time, the three cent silver coins had their composition changed to 90% silver, in line with the other denominations. The three cent silver denomination lost its original role as the nation’s sole subsidiary silver coin, and its pretext — the purchase of postage stamps — became its sole reason for being.

Despite this, the three cent silver denomination was produced in quantity until the Civil War, which drove virtually all silver and gold coinage out of circulation and into personal hoards. From 1863 on, coinage of three cent silver pieces never exceeded token amounts, and the introduction of a three cent coin in copper-nickel was a further blow to the same denomination in silver. Still, production limped along until 1873.

Even in 1873, the cost of a stamp remained three cents; in fact, the price would not rise above three cents until 1958!

It’s hard to imagine a coin being made to pay for stamps these days, though, and I’m glad for it. I’m not sure I could handle having a 39-cent coin, a 41-cent coin, a 42-cent coin, and a 44-cent coin all jingling in my pocket at once!

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-John Dale Beety

1 comment:

  1. i love any and every thing about this coin
    any thing that is alone on any list
    only 3 coins have no people or animals on either
    side this one is a silver coin.oh the smallest also