Truth can be stranger than fiction when it comes to facts relating
to coins, tokens, medals and paper money. One of my greatest pleasures
in numismatics is studying and enjoying the history of such pieces.
To me, an inexpensive Mint State 63 red and brown 1909 Lincoln,
v.d.b. cent costing $35 (per Coin World’s Coin Values) can be
every bit as interesting as, for example, an MS-63 1892-S Morgan
dollar costing $65,000. Of course, I love Mint State 1892-S dollars,
and these and other rarities are mainstays of our auction business.
However, if I were at a coin show and a speaker didn’t show up, in
an impromptu talk requiring no preparation I could talk for a half
hour about the Lincoln cent, but I would be hard pressed to find five
minutes’ worth of meaningful commentary on the dollar.
Back to the odd and curious, can you explain this scenario?
The time is December 1837, and two brothers, one living in Detroit
and the other in Portsmouth, N.H., plan to meet in New York City and
sail to England for a four-year grand tour. This involves spending a
week or two in the larger cities and absorbing the sights, sounds,
tradition and culture. Each closes a deal on some real estate, for
$1,000 per property.
It was in the midst of the Panic of 1837, and there were no silver
or gold coins in circulation, nor was any paper money issued by the
United States government. In view of financial uncertainty the public
hoarded coins and banks refused to pay them out.
Each brother was paid in $1,000 worth of regional bank bills and
put them in an envelope to store, to be spent upon returning from Europe.
In 1842, the brothers returned to America and went back to Detroit
and Portsmouth respectively. The Detroit brother took his bills to a
bank and was told they were completely worthless. How sad. The
Portsmouth brother did the same and received $1,000 in American gold
coins. How nice.
The explanation: In 1837 nearly all banks in Michigan were of the
“wildcat” type, with no assets.
There was absolutely no oversight when these banks were set up,
and fraudsters had a field day. By 1841, more than 90 percent had
failed, and their notes were worthless. In contrast, in New Hampshire,
the State Banking Commission was careful as was the state legislature.
Nearly all banks survived the Panic of 1837 and continued doing
business. By 1841, silver and gold coins were again seen in circulation.
Q. David Bowers is chairman emeritus of Stack’s Bowers Galleries
and numismatic director of Whitman Publishing LLC. He can be reached
at his private e-mail, firstname.lastname@example.org,
or at Q. David Bowers, LLC, Box 1804, Wolfeboro, NH 03894.