Spink Smythe auction 302

The latest Spink Smythe stock and bond auction catalog arrived today. The sale will take place in Dallas on June 29, but lots may be viewed at the Memphis show on June 18, 19 and 20.

This sale is most welcomed and I hope collectors respond favorably. There are approximately 868 lots comprising probably a couple thousand certificates, all from the Americas. Contact Spink Smythe immediately at 800-556-7826 if you have not yet received your 88-page catalog.

As expected, offerings from railroad companies (178 lots), mining companies (155 lots) and automobile companies (90 lots) make up the bulk of the sale. Spink Smythe has improved its indexing which makes finding desireable certificates easier.

Less than half the offered lots are shown in the catalog, but all catalog images are in high-quality color. Additional single-item lots are shown online at http://www.spinksmythe.com, but still not all.

For price guidance, Spink Smythe has changed from a "price-range estimate" (eg. $125-250) to a "single-price estimate" (eg. $175). I personally think this is a better approach for the company. Having recorded thousands upon thousands of prices from NASCA, Smythe and Spink Smythe, I am convinced that the majority of bidders always interpreted the low estimate as the lowest acceptable bid. That was not true, of course, but prices realized still tended to cluster around the low estimate. It will be interesting to see how prices will behave with this sale.

In recent auctions, Spink Smythe continued the Smythe tradition of establishing its minimum acceptable bid at 60% of the lowest bid estimate. This time, the introductory letter by Mike Veissid and Jim Fitzgerald states that collectors can bid any amount they feel appropriate. I have always been comfortable bidding that way but no everybody is. It leaves the door wide open for the company to decide whether bids are made in good faith or not. I hope the experiment results in higher sales percentages like those from the early 1990s. On the other hand, I can imagine bidders heavily trained by absurdly low eBay prices might be scared away by the uncertainy.

I never enter auction lots into my database until after sales close, so I don't have precise counts. It looks to me that there are 178 lots related to railroading, counting US certificates, autographed certificates and related certificates from Panama, Mexico and Canada. Of that number, 137 lots are single-item lots and 41 lots are multi-item lots. I always advise multi-item for collectors who are also part-time sellers.

Spink Smythe's buyers' commission is 20% for the first $2000 PER LOT and 15% thereafter. With rare exception, the days of 10% commissions are gone, simply because sales percentages are so low and production costs so high. Always be sure to factor in the costs of commissions and shipping when calculating your bids. Do not wait until your invoice arrives before thinking about those added costs.

What's it worth?

Every collector wants the answer to the #1 question in collectibles. It is terribly hard to answer because values are only established at single, short-lived moments in time.

The value of every collectible is what the next person will pay you. It does not matter what you or I think something is worth. No opinion matters except that of the buyer. Period.

Oh, sure, I can estimate value for you and I can back up my opinion with almost a million price records. But so what? Unless I am the guy buying from you, my opinion is nothing more than an educated guess. Nothing more. Nothing less.

It also does not matter one tiny bit what you pay for a collectible. Your ownership can certainly detract from value if you mishandle your collectibles, but your ownership can rarely add value. The amount you paid for something has no relevence except to you, your family, and potentially your heirs. Once you’ve purchased a collectible, the meaning of your expenditure disappears like mist in the sun.

It is difficult for me to explain this point clearly, so let me give you a real-life example from this past Monday.

I retruned from a trip to southern Colorado and began recording prices from eBay sales that had occurred over the previous four days. I saw one person had willingly paid over $150 for an unissued certificate. That might have been a fair price for an issued certificate, but I would have estimated its value as under $30 in its stated condition.

Did the buyer make a mistake? Maybe he or she did not notice that the certificate had never been issued. Maybe the buyer thought that unissued certificates were worth more than issued examples. Perhaps the buyer purchased the item as a gift and did not care about its competitive value.

Either way, how can we estimate what the certificate is worth today? We make that estimation by predicting what amount the next buyer will pay.

I personally predict the next buyer will probably be unwilling to pay more than $30. (Even if the sale does not occur for thirty years, we merely back-calculate and remove the effects of inflation over that period.) Of course, I can be wrong. There are certainly greater fools out there, but I think it is highly improbable that the next person will pay $150 to the person who purchased over the weekend.

Every collector has overpaid for something. Get over the idea that you are somehow immune from making mistakes. The goal is not to avoid mistakes, but to make fewer mistakes. Try to be clear-headed when buying. And please, please, please remember: just because something SEEMS to underpriced does not mean it really is. No matter how low prices seem today, they CAN go lower. Value is not set by you but by the person who ultimately buys from you.

What does the word “rare” mean?

It’s getting harder and harder to know. Theoretically, “rare” describes items that are found very infrequently. Truly rare certificates appear for sale only once every five to ten years. If an experienced MAJOR certificate dealer describes a certificate as rare, then there are possibly fewer than ten examples known on the entire planet.

At the other end of the spectrum, I recently recorded a single variety of railroad bond offered for sale on eBay no fewer than ten times in three weeks. All were described as “rare.” No true collector would ever believe a rare certificate would appear for sale that frequently.

Now it IS true that, taken as a whole, certificates are much, much scarcer than many other collectibles. On the basis of numbers alone, the most common certificate varieties would be considered scarce in the coin and stamp hobbies.

But we’re not talking about the coin and stamp hobbies. We’re talking about certificates. If a certificate variety appears for sale ten times in three weeks, it is not the slightest bit rare. I have seen many certificates described as “rare” on eBay that can be purchased in quantities of hundreds, even thousands. That should warn all collectors that, depending on where it is used, the word “rare” can be nothing more than an overused marketing term.

To further illustrate my point, a search this morning shows that seven percent (!) of all eBay certificate offerings carry the word “rare.” That is absolutely ludicrous!

Please understand that “rare” is mostly used as a marketing term on eBay. That does not mean that it is always deceptive. In fact, some incredibly rare certificates appear for sale on eBay. Some certificates, whether described as “rare” or not, appear to be unique. Keep your eyes open, ignore the word “rare,” do your research and you’ll probably do okay. Believe the word “rare” automatically implies value and you’ll spend a lot of money needlessly.

Upcoming Spink sale in Fort Worth

The newest Spink catalog arrived a couple days ago and should be in the hands of most of my readers. If you have not received your copy, contact Spink immediately.

Spink will be offering a little over 1600 lots in a two-day sale in conjunction with the Texas Numismatic Association show in Fort Worth. As expected, the vast majority of the offerings are related to coins and currency with a significant percentage of the lots illustrated in terrific full color.

Sadly, the selection of stocks and bonds is limited to a mere 22 lots of which seven are related to railroads.

I heartily applaud a couple of Spink’s auction rules. First, mail bidders can rest assured their bids will only be executed at one bid increment above the next lowest bid. In other words, if a mail bidder is willing to pay $400 for an item, but the next lowest bid is $150, the bidder will win the bid at $160 exactly as if he'd been sitting in the room.

Secondly, Spink agrees to fully disclose any items that are repaired, restored, processes, cleaned, pressed and "conserved." I desperately wish more sellers would follow this example.

On the down-side, I see no mention of minimum acceptable bids.

The sale will take place Friday and Staurday evenings (May 14 and 15) at the Will Rogers Memorial Center in Fort Worth. Lots can be previewed Thursday, Friday and Saturday.

Bridges and tunnels will stay

Thanks to everyone who replied to my questions about keeping tunnel and bridge companies in the railroad database. I conducted a similar poll ten or twelve years ago and the answer was exactly the same. Most collectors want me to keep those kinds of companies in the catalog, so I will.

Collectors constantly send inquiries asking me to add all sorts of near-topic companies to the project. I completely understand their rationale, because that is why I started this project in the first place. Simply put, they have certificates that are not covered by any other price guide.

The problem is that adding new companies is a monstrous task and greatly dilutes my efforts at cataloging railroad certificates. Not to mention, that off-topic companies do not help the vast majority of collector who specialize strictly in railroad certificates. As a matter of policy, the only companies I now add to the project are railroad companies and manufacturers which were extremely close to railroading.

For those of you interested in my selection criteria, I ask you to visit my completely re-written page concerning Types of companies included in this guide. I have been fighting an exhausting battle against project expansion for fifteen years and this is the latest attempt at strengthening the lines.

 

(The picture at the top is from a stereo view card from around 1900. It shows a Pennsylvania Railroad bridge across the Potomac River at Washington DC.)

Savage's plea for more money

Here is an interesting page sent by a Mr. Corey Phelps, a long-time collector. It is a hand-typed letter on letterhead from the Minneapolis St Paul & Dubuque Electric Traction Co. This was the "Dan Patch Electric Line" tirelessly promoted by Marion Savage and named after his famous race horse. (The horse owned the world pacer record for either 32 or 54 years, depending on information source.)

Savage was one of the first promoters to attempt to sell railroad stock to average people. He advertised heavily in magazines, where he relied on the strength of the famous "Dan Patch" name to secure promises to buy stock in the railroad company.

The company was organized in 1907 and had 7,980 stockholders by 1914. Bob Kerstein of Scripophily.com cites the company had about 8,500 stockholders at its peak, an astounding number for a company of its size. Common stockholders had voting rights, but preferred stockholders did not. The company was only minimally profitable and was in receivership by 1918. The owner and I agree that this undated letter was probably written about 1914.

This letter, autographed by Savage, was a plea to the subscriber to pay for his or her stock. The letter is complete in itself, but is clearly labeled as page two. Page one is missing and I suspect it may have been some sort of flashier company promo. Obviously, whoever kept this letter over the decades thought the second page more important than the first.

"This is a personal letter that I am sending to you and I want you to write to me personally today -- use the enclosed envelope which I have stamped for your convenience. Your letter will then come directly to my desk. I will expect to find some money in it. Please Don't disappoint me.

"Send what you owe use and I promise I will personally attend to the immediate mailing of your certificates and I will also personally promise to bring our road to completion at once and won't have to again urge you for more money. Write me today and don't forget to send me the balance due on your contract. I will look for your immediate reply -- Remember the fulfillment of my plans depends upon you as one of my partners.

"Your very truly,
(signed M W Savage)
"President.

"P.S. I think I have showed you how it is to your interest to pay what you are owing on your contract, but in order to make it practically certain that you will send me the balance at once, I am going to allow you a liberal discount for your immediate payment. If you will send me the balance due at once you may deduct FIVE PER CENT from the amount. Now, this certainly makes it well worth you while to pay us at once. Even if you have to borrow the amount it will pay you to do this, so as to get this Extra liberal discount. It will be a benefit to you and your company -- let's complete our road and get it started to earn big money right away.

"Do this and I promise you I won't have to again urge you to send us more money. Send us your remittance, deduct FIVE PER CENT, and I will send your certificates at once, and I will bring our road to completion by January 1st.

"M. W. S."

When it's time to sell...

Collectors are well acquainted with the buying sides of their hobbies. I think most, however, would collect differently if they understood more about the realities of selling.

Unfortunately, it is hard to find good information about the selling side of collecting hobbies. I think that is why collectors so often misunderstand how much their collections will be worth when it comes time to sell.

Before my readers reach the ends of their collecting careers, I BEG them to spend time discovering what the reality might be. I first recommend they go to Stephen Goldsmith’s site at BestCoinsAndCurrency.com. There they will find well-labeled links with crucial answers about:

• I your collection suitable for auction?


• Determining the value of your collection.


• Who will catalog your auction lots?


• Setting auction reserves.


• No-sales, buy-backs and returns.

I am extremely serious about this warning. The more collectors know about where they’re going with their collections, the better their chances of profit. Stephen Goldsmith knows what he’s talking about because he was heavily involved in over 220 auctions while executive vice-president with R.M. Smythe & Co. He is now a numismatic consultant and president of Best Coins and Currency.

Another excellent source is Stephen Datz’s informative and easy-to-read series of books about the stamp hobby. Datz’s stories and advice about the reality of selling stamps is almost 100% applicable to our hobby. I don’t think certificate collectors can go wrong reading any of his books, but I particularly recommend Top Dollar Paid and On the Road. You may buy his books at philatelic outlets, from Amazon and from Stephen Datz himself.