Monthly Archives: December 2016

For the last eighty years, the investment potential of fine collectable stamps has not been lost on the worldwide philatelic community. Numerous references to the elementals of supply and demand and their effect on the burgeoning stamp market are found in English journals in the 1890s, and in American journals not much later. For the last decade, stamps have been an excellent investment medium, with rare United States stamp prices increasing at an average compounded rate of 15 percent. In 1979 the rate was 40 percent. It is difficult to go back and evaluate prices of eighty years ago to see how stamps fared

There are both advantages and disadvantages to stamp investing. Many of the disadvantages are not readily apparent, so they will be discussed first.

Stamps are perishable: After all, they are made of paper. And unlike stock certificates, which are also engravings on paper, stamps do not represent or give title to an item of value. They are in fact, like art, the item of value themselves. Stamps can be affected by light, heat, and humidity, and must be stored in a proper place. Though one can, and should, insure stamps against destruction and theft, it is extremely difficult to insure them for wear and tear. Many investors place a stamp in their safe-deposit box immediately after it is purchased so that the handling danger may be mitigated. With proper skill and practice, though, anyone who can tie shoes can

Stamps could be a disorderly market: Because stamps have no intrinsic value other than their face value, which is usually quite negligible, there is a risk in an economic downturn of having a commodity for which there is no buyer. This is mentioned as it is a fear of investors, although it has never actually happened. During the Great Depression of 1929-39, stamps lost a percentage of their value, but never reached the depths of common stocks. A their nadir, most stamps sold for about 65 percent of the pre-Depression price, compared with the Dow Jones average reaching about 10 percent of its pre-Depression price. So while it may seem that stamps might be unmarketable in a depression, the one historical test indicated that virtually everything was unmarketable in the Depression, and stamps were better than nearly all conventional investment items.

All the desire in the world will not get you very far in stamp investing without the knowledge to go with it. And unfortunately, as with every field, there is no easy way to obtain knowledge. But there a few shortcuts.

Beware of price shopping. Price shopping is an excellent way of saving money when you are searching out a brand-name dishwasher, but it can be dangerous when you are buying a stamp. Suppose you see the same stamp graded the same way by two stamp dealers, but one is hypothetically priced at $500 and the other at $300. The novice's brain will be hearing, "I've got a bargain," whereas the more advanced collector-investor will only hear, "Danger..." In the highly competitive stamp business, it is unlikely (not impossible but unlikely) that two stamp dealers will have high-grade philatelic material at such widely varying prices.

Frederick Small was, like many others, a stamp collector during his childhood in Australia. But when he went off to fight in World War I, his parents gave his collection away during some general house cleaning. To Small, it was no matter; the collection was virtually worthless.

As an adult, Small had no interest in postage stamps, but he believed that they possessed investment potential. He remembered the catastrophic inflation of the 1920s, especially in Germany, where currency became almost worthless. Wheel barrels of money were required for food marketing, and inflation was so rapid that employees had their salaries renegotiated twice a day. The mark went from 3 to the dollar to 3 billion to the dollar in three years. That's inflation!

In 1940, Small turned to a philatelic

Rare stamps are truly rare: On an average day, 250,000 shares of Boeing are traded on the New York Stock Exchange, which represents about $10 million changing hands on a single day's trade of a single stock. Ten million dollars placed in the stock or bond markets means very little, but in the rare stamp market, $10 million is a huge amount of money. To buy nearly every United States tamp issued to 1890 (not one of each, but every one!) would cost but a few hundred million dollars (at 1980 prices), just 10 percent of the dollar amounts purchased on the New York Stock Exchange in a single day. Of course, as the buyer of the stamps came closer and closer to this goal, price rises would push the attainment beyond his reach. But even so, rare stamps are incredibly rare. Items of which only a few thousand exist often sell for a few hundred dollars and seldom for more than a few thousand. The stamp market, despite phenomenal rises over the last decade, is looked at by some investment

Financial theory, much like political or military theory, evolves over time. The past is usually quite clear, but the future is exceedingly difficult to hypothesize about, let alone predict. All of us are so involved in the current investment strategies that few are able to step away for long enough to see how the economy is changing.

For example, in England for decades before 1850, among the best investments were forms of interest-bearing bonds. In a non-inflationary economy, 5 percent per annum interest was not a bad return. And the English tax rate of that period was so low that the 5 percent netted the investor only a little less than that. For the individual investor, probably the greatest opportunity for a large-yielding investment return since the advent of insurance trading companies to ensure trade with the East was the invention

Christian missionaries probably had more success in Hawaii than anywhere else in the world. The first missionaries came to the islands in 1820, and by 1825, the Hawaiian king recognized the ten commandments as the basis of his legal system. Soon the Hawaiian language was formulated as a written discipline by the missionaries, and as further testimony to their zeal, in 1835 the islands outlawed public drunkenness.

The islanders were essentially an agricultural people, whose polytheistic religon was filled with idols and taboos. The early Hawaiian concept of an afterlife was peculiarly unpleasant: most Hawaiians believed that evil spirits slowly ate them after death. The missionaries, besides offering education and law, gave the Hawaiians a religion that would at least provide a pleasant afterlife for people who had been good. The new religion

In 1847, Mauritius was the fifth country in the world to issue stamps. The British had taken over the island only thirty-seven years before, in 1810, largely as a result of the fact that the French had used the island as a base to interrupt British shipments to and from India during wartime. The population of the colony was French, Creole, and Indian; English, though spoken by government officials, was not the language of the people.

The government order that called for stamps fixed the postage rates at 2 pence for internal letters and1 penny for intra-city letters. The stamps were crudely engraved, as the only person in the colony with any experience in engraving was a partially blind watchmaker who had never been a professional engraver. Five hundred of each value were ordered and, after some delay, delivered. In the left-hand panel,

In April of 1980 the unique One Cent Magenta sold at auction for $935,000 ($850,000 plus 10 percent buyer's commission). The first price that it traded for between philatelists was 6 shillings or about 50 cents. And the man who bought the stamp for that price only did so because the seller was a young boy and he wished to further the youngster's interest in philately. Neither of the two, the discoverer or the first buyer, knew its rarity or its story.

British Guiana, a small country that is now part of Guyana on the northeast coast of South America, had since 1853 ordered its stamps

When speaking about errors, collectors must keep in mind the difference between errors of execution, which are rare, and errors of design, which are not. Sometimes a designer improperly researches his subject and a person is shown in a setting that is historically incorrect. Such historical anacronisms abound on stamps, as do wrong names for places and pictures. But unless the stamp-issuing authority ceases production once the issue is discovered, and corrects it, the error of design in and of itself does not cause the stamp to be rare.

The Airmail invert is an error of execution, not of design. Its price, as America's most popular stamp, has been meteoric. By 1939, a copy had realized $4,100. During the war years, the stamp market was relatively quiescent as the country had more on its mind than hobbies, no matter how fascinating. By 1969,

Errors are made by the Bureau of Engraving and Printing every year. The most common of these are perforation errors, either adding an extra row of perfs where they shouldn't be (not an important error), or omitting a row where there should be one (an important error). Coil stamps, that is, stamps issued in rolls, are the stamps that are most often found with missing perforations. This is because their being wound in rolls makes it difficult for the quality inspectors to see whether they have been perforated. Imperforate coils sell for between $15 and $250 a pair, depending on the scarcity of the item. A collector must have a pair to prove that the coil is imperforate. This is insisted upon because a single stamp could just be clipped down to resemble an imperf. Color errors and inverts are far more scarce, but even modern color errors that are scarcer than the Airmail invert have trouble selling for more than about $1,000 per stamp. The Airmail invert has a history of desirability that

The 1918 Airmail invert was not the first inverted-center stamp that the government ever unintentionally produced. Three values of the 1869 issue and three values of the 1901 Pan American Exposition issue are known inverted, and most of the previous inverts are scarcer, in some cases far scarcer, than the 1918 Airmail invert. But there is something spectacular about this invert. It has an immediate appeal. And remember, most people in 1918 did not trust airplanes anyway.

Robey immediately announced his discovery, and was inundated with offers to buy the sheet. He wasn't shy about soliciting them, either. He took a trip from Washington to New York, stopping at stamp dealers along the way, and receiving offers for the sheet. Robey finally sold the sheet for $15,000, a fabulous sum in that day for an error of a stamp still in production. The

Rarities attract the most attention in the stamp world. They are really no more interesting than common stamps, but they receive more press. Dollar values are something that everyone can understand. Philatelic speakers who go before nonphilatelic groups to talk about philately and stamp investing usually find themselves ignored until dollar amounts are put on the items. Then the speaker finds an active interest: “$10,000 for that, wow!”

Probably the foremost popular rarities of philately are the 1918 United States Airmail Invert, the 1852 British Guiana One Cent Magenta, the two-cent Hawaiian Missionaries, and the Mauritius “Post Office.”

Few people

The year 1908 was the 300th anniversary of the founding of Quebec, the first permanent settlement in Canada. The post office issued a set of eight stamps called by collectors the Quebec Tercentenary. The set is beautifully engraved and has long been a favorite with collectors.

After 1908, the stamps of Canada are quite straightforward and are treated excellently by the general stamp catalogues. Canadian stamps have been among the most popular in the world during the decade of the seventies and into the eighties. This is due to a number of factors, not the least of which is their nearly uniform high standard of production. Add to that the great appeal of all British North American stamps in Great Britain as former members of the British Commonwealth; and further, there is a strong native Canadian market.

Queen Victoria died on January 29, 1901. When its next stamp was issued in 1903, Canada replaced Victoria's picture with King Edward VII's. The design characteristics of the Edward stamps are similar to the earlier Victoria ones, except that the maple leaves in the top corners have been replaced by Tudor crowns. The maple leaves are still show, but moved down behind the numerals of value. The high values of this set are extremely desirably in well-centered, mint condition; in recent years, collectors have begun to seek used examples of the twenty cent and fifty cent, as the prices of the mint stamps have risen too fast.

As a side point

In 1899, a group of three-cent stamps were surcharged "Two cents" when the first-class postage rates changed a penny downwards at the end of 1898. These overprinted stamps are not scarce. In 1898, the set was modified slightly, and numerals, indicating the value of the stamp, were placed in the bottom corners so as to make the values of the stamps easier to read for buys postal clerks and the French-speaking patrons of the Canadian post. The set was expanded to include a 20-cent value.

 In recent years, as topical or thematic collecting has become increasingly popular, so has one of Canada's most interesting stamps. It is the issue known as the Imperial Penny Postage, put out after the Imperial Postal Conference of 1898 when a

The 1897 issue of Canada is called the Maple Leaf issue. Victoria was on this stamp again, as she was to be alive for four more years. She reigned all told for sixty-four years, and had the distinction of having been on more postage stamps from more countries than anyone at that time. In recent times, it seems likely that Queen Elizabeth II has or shortly will surpass Victoria in this postage stamp derby and become the person who has had her face on more stamps than any other. (Elizabeth's reign has not been nearly as long as Queen Victoria's, but countries issue so many more stamps now than they did then.) The Maple Leaf issue contained eight values and was extremely well printed. (At this time, the United States had just taken the printing contract away from the American Bank Note Company, and the Bureau of Engraving and Printing was having much difficulty producing well-centered stamps whereas the American Bank Note Company had really mastered the stamp production process.) Almost all