Can investing and collecting go hand-in-hand? Yes -- especially if you are collecting coins, stock certificates, bank notes, or other rare items of value. Larry Schutts, an expert in investment-related collectibles, will periodically review items of interest from his collection and answer your questions here.
In the summer of 1862, the rising costs of the Civil War prompted the U.S. Congress to enact a broad new tax program. The Revenue Act of 1862 created the office of the Commissioner of Internal Revenue and introduced Americans to their first progressive rate income tax. The Act also required that taxes be paid on documented business transactions and on the sale of certain proprietary retail goods. In order to prove payment, citizens and businesses bought government-issued revenue stamps and applied them to their documents and merchandise. On the documentary side, the inconvenience of dealing with stamps led many to order such paper goods as checks and stock certificates with government-approved stamp designs already printed on them. Retailers, on the other hand, quickly saw the advertising possibilities and were ultimately granted permission to obtain stamps bearing their own private labels.
By the time the stamp tax was repealed in 1883, some 7.8 billion* documentary and proprietary stamps had been issued. More than two-thirds of those were private label proprietaries. These were termed "private die" stamps, because manufacturers hired printing firms to engrave the exclusive dies used to print them. Although private die proprietaries were applied to a variety of goods, about half were used on patent medicine containers. That created a rich field of acquisition possibilities for present day collectors, who actively seek interesting examples. Despite the large numbers originally used, some of the private die medicals are hard to find. That's because so many were torn apart when the packages were opened. The rarity factor attracts investment-minded collectors and those who have owned uncommon issues have done well recently. Compare three-year price gains of the specimens discussed below with advances in the Dow Jones Industrial Average (-16%) and the S&P 500 Index (-21%) over the same period.
The first scan shows a four-cent tax stamp used by Demas Barnes & Company of New York. Barnes was an active businessman, who also served as a U.S. Congressman, a trustee of the Brooklyn Bridge and a director of the Long Island Railroad. His drug business was based on proprietary medicine patents acquired from a variety of developers. Products included toothpaste, balms, liniments, bitters, hair dyes and a "magnetic powder" insecticide. Most of the Barnes stamps of this kind were black. The example in the scan was the result of a short-lived attempt (1863-64) to use tricky vermilion inks. The vermilion pieces are rare and price points have been on the rise. Three years ago, the industry standard Scott catalogue listed the four-cent issue at $500. Now, it goes for $1,400. That's a 180% gain.
The next scan features a revenue stamp that graced packages of J.W. Campion's Pine Tree Tar Cordial, a remedy said to be effective in curing coughs, sore throats and consumption of the lungs. Campion, a former furniture maker, bought the rights to the preparation from fellow Philadelphian L.Q.C. Wishart, in 1874. Wishart had used government-issue tax stamps, but Campion went the private die route and had four-cent proprietaries printed on silk-bearing, pink and watermarked paper (1875-1882). The pink stamp illustrated has been the most elusive of the three and prices reflect that condition. Three years ago, you could have picked one up for $250. Now, it'll cost you $550.00 (+120%).
The third scan shows a stamp used by New York physician Stewart D. Howe, on his boxes of Duponco's Golden Periodical Pills. These were intended to relieve suffering from any of the "complaints peculiar to females, both single and married." Howe acquired the rights to the pills in 1866, but only used private die stamps with them between 1870 and 1873. The black design was printed on both "old" brittle paper and on porous silk-bearing sheets. The scan features one of the rarely encountered silk issues. These are up 111% ($190 to $400), in three years.
The most successful proprietary medicine manufactured by B.A. Fahnestock of Pittsburgh was a vermifuge preparation, intended to rid the body of intestinal worms. It was the mainstay of the business for 38 years, so apparently it was an effective medication. After Fahnestock's death in 1868, the rights to his vermifuge passed to Pittsburgh druggists Schwartz & Hazlett. Fahnestock had been using a private die stamp much like the one pictured here and the new owners left the design unchanged. When Hazlett died in 1875, however, Schwartz had his name added to the stamp and received copies on both silk and watermarked paper (1875-82). The variety featured in the scan came from a very small third printing on pink paper. Since 2006, copies of the pink issue are up 267% ($300 to $1100).
Investors interested in private die stamps should become familiar with the census of known issues. Specialty publications indicate that there are now only 25-35 surviving specimens of each of the four stamps discussed above. That keeps them in demand and pushes prices higher. Easily obtained issues can also be popular with collectors, but prices tend to be sedentary. Those hunting for bargains with potential might be attracted by samples that are uncommon, but not altogether rare. The stamps in the final scan fall into that category. They were used on products manufactured by New England chemist James Cook Ayer and represent printings on "old" (top), silk (middle) and watermarked (bottom) paper. Over the past three years, the group has gone from $140.00 to $377.50. That's a moderate price, but still a solid gain (170%). There was also a printing on pink paper, but those stamps are mighty hard to find (22 known). I wish I had one to show you. They are up 206% ($900 to $2,750), in three years.
* Imprinted checks and other "pre-stamped" documents are excluded from the total.
Larry Schutts has invested in high grade collectibles for over twenty years and recently opened an online Collectible Investment Store.
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