Good morning,
Great chat last night. Had a record number of
participants I think and some of the regulars still
were not there!

Here is the text of my comments on condition for the
forthcoming replacemeent book. I would very much like
to have your comments via email or at chat. Fax would
be ok as would voice call if you like.

Typo corrections etc are fine, but more interested in
serious concept comments.

Thanks, see you tonight.

Fred


Condition

That condition is important to collectors is so well
understood that it does not require mentioning. Why it
is important and its particular application to MPC
replacements are not nearly as well understood.
We are not concerned here with the technical aspects
of grading. What does it take for a note to graded as
extremely fine and the like. Instead we are interested
in the philosophies of why is grade important and what
effect does that have on collecting replacements.
First let me say that by grade we are talking about
evaluating the "state of preservation" of a given
note. It is quite easy to understand why beautiful
original notes are more desirable than worn, dirty
notes. The same concept applies to art, automobiles,
and just about any other commodity. If it is dirty or
damaged, or both, it is less attractive, interesting,
and therefore desirable. For a given note it is
assumed that the number of available examples gets
smaller the higher one looks on the condition
continuum. This concept adds elitism to the reasons
that an uncirculated note is more desirable than a
worn note.
This last concept of  rarity increasing while moving
up the condition continuum is based upon the idea that
examples survived at random. With this assumption it
is easy to fit the concept of normal distribution to
available grade distribution and it is basically
correct.
The well known exceptions in numismatics in general
and military payment certificates in particular are
exceptions because the survival was not random.
Basically we are talking about hoards. The notable
exceptions are when a group of high grade (usually
uncirculated) examples survived.
In coins the 1950 Denver five cent piece is far more
common than its very fine counterpart. Among regular
issue military payment certificates, Series 472 5 cent
and Series 661 $5 certificates are examples where far
higher than normal proportions of uncirculated notes
remain. Among replacements a disproportionate number
of uncirculated Series 611 5 and 10 cent notes were
saved.
These are all cases of hoards. A statistician might
argue with me and say that the survival of a hoard of
uncirculated notes was a random activity. This theory
goes that among the countless possibilities, survival
of groups of uncirculated examples was simply one of
the possibilities and was bound to occur.
Furthermore, the survival of disproportionate numbers
of uncirculated notes had a much greater likelihood
than the survival of a group of good or poor notes.
This is because huge numbers of hoards of uncirculated
notes existed (each pack of 100 notes was a hoard
waiting to happen) whereas corresponding hoards of
heavily-circulated notes seldom existed. A soldier who
wanted to keep a group of 100 notes could have easily
obtained a pack of new notes, but would have had
difficulty obtaining 100 notes uniformly in any other
condition!
The one exception to this was at the time of
conversion. At that time hoards of notes
disproportionately in circulated conditions were
created and some of them survived. Some of these
circulated hoards survived just as their uncirculated
counterparts, but there is one additional fascinating
aspect to circulated hoards. By their very nature, the
serial numbers will be mixed whereas hoards of
uncirculated notes which will have grouped if not
consecutive serial numbers. This allows the easy
tracking of uncirculated hoards thus calling attention
to them.
Finally, hoards of circulated notes simply reinforce
our predisposition that uncirculated notes are more
scarce than worn notes so little attention is called
to the circulated hoard.
This may sound as though I am trying to make the case
that when a hoard of uncirculated notes exists, the
lower grades are more rare, hence more desirable, and
worth more money! This is not the true because the
other factors of desirability will outweigh the
scarcity. However, there is a little truth to this
idea. Some collectors include the much scarcer worn
Series 611 5 and 10 cent replacements in their
collections along with the uncirculated hoard notes!
When the survey of replacements began, we gathered
information on condition, but it was not central to
the study. It was almost an afterthought. Eventually
in the days before micro computers as the amount of
data grew, we even lost some of the condition and
other data that had been collected and simultaneously
stopped gathering condition data. Even after micro
computers [mostly] solved the space and bookkeeping
problems, some data was corrupted and lost with
computer crashes and the like. This lack of data
hinders some of our research but it also adds a
beautiful element of uncertainty and intrigue to help
keep us interested!
In the third edition of Military Payment Certificates,
we included the condition of the reported replacements
in the appendix listing of all replacements.
Furthermore, we summarized in tabular format the
number of uncirculated examples reported. The
availability of these data is just now beginning to
effect the market for replacements.
Here we have greatly expanded the study of condition.
In addition to inclusion of the reported grade for
each replacement, we have summarized the distribution
of grades in tabular and graphical format.
It is not surprising that there are some condition
rarities among issues which are otherwise more or less
common as replacements. But, frankly, even I was
surprised at the number of the issues that are
extremely rare in uncirculated condition. 
There are some factors that must be kept in mind when
evaluating the relative rarity of replacements by
condition. First, this is a new aspect of the study so
conclusions must be tentative. Next, for most of the
issues, there is a substantial number of notes with no
reported condition. 
Grading is an art or at least a skill and as such
different people do it differently. For that matter
the same person will do it differently at different
times. Most of the recorded grades were reported by
the owners of the notes, but some were evaluated by
impartial observers and many were made by me. Here is
a real interesting twist. Initially I limited the
recording of grades to only two characters. F- was an
acceptable but VG+ was not. Even though I have lifted
this restriction, I still limit the grade to three
characters.


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please respond to this address or to fred@papermoneyworld.com

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