Seldom Seen Selections: The Finest Graded Plain 4 1834 Capped Head Five Dollar

Heritage Auctions

On June 28, 1834 Congress passed a law adjusting the weight and composition of the gold eagle (which had not been minted since 1804), half eagle, and quarter eagle. The so-called "old tenor" coinage, struck prior to this act, was .9167 gold (22 carats), which was based on the composition of British gold coins at the time. The new gold coins had a slightly reduced weight and fineness; 8.75 grams to 8.36 grams, and .9167 gold to .8992 gold.

In the early 1830s the question of bimetallism became an important issue with Congress and the Jackson administration. Since the Coinage Act of April 2, 1792 gold coins were slightly undervalued compared to silver coins based on the mandated weight and composition of each denomination. This promoted the circulation of silver coins within the United States but also caused the export of gold coins to Europe, where they were valued higher. Several proposals to Congress in the early 1830s sought to end the advantage that had been given to silver and create a policy of bimetallism: the coinage of gold and silver coins at a ratio on par with their relative values. The weights would be proportionate based on their actual values.

While there was strong support for bimetallism, President Jackson hoped that the gold standard would weaken the Bank of United States, which he opposed and whose charter extension he had vetoed in 1832. The Bank issued paper money, and Jackson believed that if gold coins were overvalued (relative to silver) they would drive paper money out of circulation. When passed, the Coinage Act of 1834 set the ratio of silver to gold at 16:1, which was a significant increase from the previous ratio of 15:1. The weight and composition of gold coins were reduced and therefore overvalued relative to silver coins.

The 1834 Capped Head half eagle was the final old tenor issue before the weight and composition change. Anticipating the law's passage, Mint Director Samuel Moore ordered the 24,568 half eagles still on hand to be melted, resulting in a net mintage of 50,141 pieces for the 1834. He also instructed Chief Engraver William Kneass to prepare a new design for the gold coins to distinguish the lighter-weight new tenor issues.

Demand for the new gold coins was twofold; first, people melted their old tenor to buy new tenor, instantly increasing the total value; second, gold coins were now overvalued relative to silver and therefore more popular. The increased demand is obvious from the mintages; the 1834 Capped Head half eagle (old tenor) had a net mintage of 50,141 pieces, while the 1834 Classic Head (new tenor) had a mintage of 657,460 pieces. Gold coin mintages from the 1834 Classic Head onward were many multiples of their earlier counterparts due to the Coinage Act of 1834.

Walter Breen (1988) writes, "The anticipated flood of older coins did materialize; it has been estimated that over 99% of the original pre-1834 mintage was melted, 1834-43, much of it being turned in Classic Head half eagles." Consequently, Capped Head half eagles are very rare today.

There are four varieties of 1834 Capped Head half eagles, struck with three obverse and three reverse dies. Two, BD-1 and BD-3, feature a Plain 4 date, while the other two are the Crosslet 4 variety. BD-3 and BD-4 are virtually unobtainable. The present coin is the Plain 4 BD-1 variety, which John Dannreuther (2006) estimates has a population of 30 to 40 specimens, slightly fewer than the population of the Crosslet 4 BD-2 variety.

We are offering one such specimen in our upcoming Beverly Hills Signature Auction, November 7-9. This remarkable Gem has bright semiprooflike fields with attractive yellow-gold patina. The high points of the cap and the curl to the left of the ear are softly defined, as are the margins, but the rest of the details are sharp. A few minor abrasions are indicative of the grade.

NGC and PCGS combined report 80 Capped Head 1834 half eagles, but this number undoubtedly includes some resubmissions. It is not clear how many are Plain 4 versus Crosslet 4 as NGC did not originally distinguish between the two, but it is likely that fewer than half that number are the Plain 4 variety. Not surprisingly, the 1834 Capped Head is extremely rare in Uncirculated grades. Only two MS65 specimens have been certified (both at NGC), one Plain 4 and one Crosslet 4, and none have been graded finer. This coin is therefore the finest known Plain 4 representative.

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