NEWSWEEK’s Jennifer Barrett spoke with Harlan J. Berk, president of the Professional Numismatists Guild, a nonprofit international organization composed of top rare coin and paper money experts, about whether the old European currencies might be worth holding onto for more than sentimental reasons.
NEWSWEEK: How much of the old European currencies are still in circulation? What will happen to these European currencies when they are officially replaced by the euro in January?
Harlan Berk: There are currently 350,000 tons of coins in use in these countries. That’s about 500 billion coins in circulation in countries that are going to the euro. Most of these currencies, and these coins, you can still get euros for, but you have to take them to the central bank as of Jan. 1. For most people, the currencies won’t mean much. You can’t use them anywhere to buy anything. They’ll be demonetarized.
How long does it take for a currency that is demonetarized to become valuable? What other factors besides age determine its value?
Currencies can be 100 to 200 years old and still be worth next-to-nothing because the production methods are so advanced it’s impossible for some things to become rare anymore–unless they were rare from the beginning. For example, Berlin minted 10 million German 10-pfennig coins in 1901. At the time they were worth two cents. Today, a century later, they are worth 10 cents–basically nothing. An American Indian head cent from 1901 is worth about 75 cents or $1–that’s after 100 years as well.
The Greek drachma is the world’s longest surviving monetary denomination. How old is it?
In Athens, they issued drachmas starting in about 560 B.C. Generally they were known as tetra drachmas, weighing about 17 grams of pure silver. Coinage didn’t really begin until the 7th century B.C. in Ionia. In those days it was electrum, a natural mix of silver and gold, that the ancient Greeks created in certain weights so they could be exchanged. Then the cities started putting their own symbols on the front of the coin to guarantee it was a certain weight. Coinage until recently was real, not just representational. But the modern-day Greek drachma is just a modern manufactured coin that carries a time-honored name. It’s still just a brand-new coin.
How much of a country’s or culture’s identity is tied up with its currency?
A lot.
How might the demonetarization of their own currencies and the required use of one standard regional currency affect people in the various member countries? People in France, Portugal, and Ireland, for example, have very different identities.
The euros will have one side that represents the individual country and the other side is a unified side. The ancient Greeks did that once, too. They put an alliance-type image on one side and their own individual type on the other side. The euro is like that alliance coinage of ancient Greece. One side has the standard euro image, and the other side has something that represents that individual country. I think it would be hard for them all to go along with it without some of their own identities tied in. They have been killing each other for centuries over their flags and identities. I can’t see them just giving them up.
Will some currencies–say, the Greek drachma–become more valuable than others, like the Italian lira or the Spanish peseta?
Probably not. A currency’s value is determined by its rarity, artistic quality and supply and demand. A more successful design, a beautiful coin, may be more of a collectors’ item. Whereas if a coin is ugly, people may not want to collect it.
Does it pay to save them?
In terms of actual rarity, we’re talking about roughly 500 billion coins in the region. Now I can sell you a Byzantine coin from the Focas period of 602-610 A.D. for $400. This is a coin that is 1,500 years old and weighs 4.5 grams of pure gold, and it’s worth $400. Did it pay to save it? If you put something away for 20 years, that’s long for people but not for coins. We sell Roman coins for $20 and they are 2,000 years old. Coins that are rare when they are made are rare coins and common coins are common and usually don’t change in value for a long time. A lot of people say, ‘These [European] currencies aren’t going to be in circulation, they’re going to be rare, so I’m going to save them.’ But they aren’t experienced. In 1955, the United States made a one-cent coin in which the master die hit the working die twice so it doubled the image. This is the so-called 1955 double-die cent. Almost from the moment they were made, they were worth $400. In good shape they are worth more than that, from $400 to $800. Age does not determine the value of a coin. It’s condition and rarity and desirability.
What other currencies have recently gone out of circulation? What happened to their value?
What comes to mind is the 1,000-franc notes of Switzerland, which were demonetarized a couple years ago. If you get 60 cents for a Swiss franc then this is worth $600 in face value. But you also have to look at whatever the collector value is. It could be $100 or $200 or maybe more because it is a high denomination. They were printed up until a year or two ago. Now you get just what a collector might pay, but banks don’t want it. Some of these European currencies could end up being just paper–basically worthless.
Has the United States ever demonetarized its money?
The U.S. has never demonetarized any of its money–and it is probably the only country that hasn’t. You can take a 1793 cent–the first official coinage of the U.S. government–and you can still spend it as a penny, although I wouldn’t recommend it. It is actually worth maybe $5,000 or even $10,000, though it’s still a penny. You can take paper money from 1861–that’s when we started making it–and you can still spend it, and it would be the same denomination. You’d be stupid to spend it because it’s worth a lot more, but you could do it.
What would happen if the United States demonetarized the old $1 bills and $10 bills from the 1950s and back?
It would increase inflation tremendously. You can’t demonetarize unless you give a public warning. If we gave a warning that anything printed before 1950 wasn’t money anymore, all the eurodollars that are being used [dollars used outside of the U.S.]–and there is a huge black market that uses U.S. paper, some from the 1920s–imagine all the money that would flood into the United States to be exchanged for new money. It would really upset things. The amount of U.S. currency circulating would be more than the U.S. government counts. If we demonetarized it, we’d get a flood of currency.
So will the simultaneous demonetarization of so many currencies in the European Union “really upset things” as well?
The U.S. is such an incredibly large and powerful country and we produce all this paper money. European currencies are not big enough to be so widely used [outside their borders]. If people were going to use any currency like a eurodollar, it would probably be the Swiss franc. But Switzerland is a small country, and there are not enough francs. In the euro region, they’ll have to peg the exchange rate of what they’ll pay for marks and francs and other currencies when they’re brought in to be exchanged at the central banks. I don’t think that rate will fluctuate. They can’t have a fluctuating rate. But I wouldn’t be surprised if over the years the central banks don’t give less and less [euros] out for exchange.
Do you think all currency might one day become obsolete–that we might become a completely cashless society?
I think certainly in the near future it would be very difficult to get rid of coins and currency. Would you buy a 50 cent candy bar or a muffin with a credit card? Plus, I think a lot of people just like the feeling of money in their hands. But as time goes by and more and more people are raised with computers and have less attachment with old ways of using money, there is a chance that these currencies might go away. Still, it seems improbable.