NEW YORK (MainStreet) — Most people would rather sweep a penny into the dustbin instead of bothering to pick it up. But to pick up one particular cent going on auction later this March, you’ll need at least a six-figure check.
It’s known as the Birch cent, and it’s one of the first coins ever produced by our country. The coin was minted during the Revolutionary War era, when the Colonies were solidifying into the United States of America. It was an experimental coin that was a precursor to the penny. Only 12 were made.
The coin is “the second finest of the twelve,” says Brian Kendrella, president of Stack’s Bowers Galleries, a rare coin auction company.
The coin will be sold during the Whitman Expo in Baltimore, which will last from March 26 to March 29. Approximately $5 to $10 million worth of Colonial-era coins will be sold during the expo, and the Birch cent is one of several main attractions. Other attractions include a 1792 half disme piece (what would eventually be called the "dime"), a 1792 silver-center cent and an 1861 Confederate half-dollar.
High-rolling bidders competing for a unique bit of American history are expected to shell out at least six figures per coin. Each have their own unique story behind them – the half dollars, for example, were the only coins the Confederacy ever made.
“Only four were struck and they were handed to VIPs: Jefferson Davis got one,” says John Kraljevich, a senior numismatics consultant for Stack’s Bowers Galleries and independent rare coins business owner.
Confederate coin production didn’t get far, not because of the Civil War, but because the amount of silver it took to manufacture the coins ended up costing more than the coins were worth. Instead, the Confederacy opted to use Mexican coins instead, which were easy to come by, according to Kraljevich.
“They were the only coins ever produced by the South,” he says.
Those weren’t the only coins to have problems incorporating silver into their manufacture. The 1792 silver-center cent had a hole drilled into the middle, which was fitted with a silver bit. The idea for the silver plug can be traced back to correspondence between Thomas Jefferson and Thomas Paine.
“Paine came up with the suggestion that the coin should be three-fourths copper and a quarter of silver put together,” says Kraljevich.
The Founding Fathers and minters were afraid the coin wouldn’t be taken seriously, and they felt adding silver would give the coin some monetary weight, says Kendrella. But it also gave the coin more physical weight, and because of that and also because of technological difficulties in manufacturing it, it was discontinued.
Speaking of silver, the half-disme comes with its own slice of American lore. According to Kendrella, the legend goes something like this: George Washington, in an effort to speed up the coinage process after enacting the Mint Act, melted down his own silver cutleries to make those 1,500 silver half dismes of 1792.
It’s a good story, but the buck stops there. According to Kraljevich, the tale should be thoroughly filed under legend.
“It was actually Jefferson who recorded depositing silver at the U.S. mint in Philadelphia in 1792, then received 1,500 half dismes back from the mint just a few days later," says Kraljevich. "So either someone misremembered and confused Washington for Jefferson in the 1840s or it's just totally made up.”
The Birch cent, along with the silver cent piece, were precursors to the penny, which was first struck with 100% copper in 1793. In 1982, the penny was replaced with copper-plated zinc.
Unlike regular money, rare coins seem to outpace inflation. Take for example the Birch cent that’s up for auction, which Kendrella estimates sold for $25,000 during a private transaction in 1975. That equates to roughly $113,000 in today’s dollars, and Kendrella expects the coin to sell for at least $750,000. That calculates to an appreciation of $15,925 a year – a very, very conservative estimate, given the coin will may easily break the $1 million mark (another Birch cent sold for $2,585,000 at auction in January).
So what makes rare coins so special?
In Kraljevich’s view, it’s because many coin collectors started as kids, became successful and are now able to spend as much as they want on their collection.
“They recall those childhood memories of, ‘Wow it’d be really cool to own that,’" Kraljevich said. "It’s one of those things that some of those people are striving to own—it’s, ‘I’ve wanted to own these my whole life.'”
As long as people are interested in rare coins, there will be demand. And that demand has only increased – in 2013, an ultra-rare 1794 coin known as the “Flowing Hair” silver dollar sold for $10 million at auction.
Owning a coveted coin can make you one of coolest numismatics on the block - and when you have what others want, your coin will hold its value. “There’s an ego factor – ‘I have it and no one else does,'" says Kraljevich. "There are collectors who have done this their whole lives until they’re on top of their food chain. And you know, people appreciate it as a hard asset."
Plus, coins aren’t something you need to put in some kind of air-conditioned storage box. It’s not an item that needs particular maintenance, space and special conditions, like a rare oil painting or classic car. They’re simple.
“A coin, you can take in your bank deposit box and enjoy it whenever you want and sell it when you want," Kraljevich says. "It’s easy to own and easy for everyone to understand.”
--Written by Craig Donofrio for MainStreet.