Will the Gross U.S. collection auction upend philately?

By Matthew Healey

For most of the past 25 years, the top of the market in United States philately has been dominated by one collector: William H. Gross. As first reported by Linn’s in the March 5 issue, he is now bowing out, and the resulting sale promises to be a once-in-a-generation event.

On Oct. 3, Robert A. Siegel Auction Galleries in New York, in association with Charles F. Shreve and Tracy L. Carey, will offer the first part of “United States Treasures: the William H. Gross Collection” at the Lotte New York Palace Hotel, in the form of a teaser sale of 106 selected lots.

Bring your millions. Presale estimates for this initial offering range from $8.4 million to $11.6 million, with many, many items having six-figure estimates. And those figures may prove to be conservative.

Bill Gross, as he prefers to be known among his stamp friends, has made billions as one of the world’s leading bond traders. In the early 2000s, he also began making headlines for some high-profile acquisitions of the philatelic kind.

With the famous 2005 swap of his unique Inverted Jenny plate block (price: $2.97 million) for the unique 1868 1¢ blue Franklin Z grill stamp then owned by Donald Sundman’s Mystic Stamp Co., he became the first modern collector to complete a 19th-century U.S. collection and, indeed, the only person ever to achieve completion as it is currently defined by the Scott catalogs.

The Gross collection has become a legend in its own time, the ne plus ultra of U.S. philately, overflowing with unique items, best examples, largest blocks and spectacular covers.

Gross also made headlines for his generous underwriting, to the tune of $10 million, of a glamorous new visitor gallery at the Smithsonian’s National Postal Museum in Washington, D.C., which opened in 2013.

Previous sales of Gross’ worldwide collections set a number of records, including for a single-day stamp sale — $9.1 million — attained for his Great Britain collection. He donated the entire amount to charity.

Gross tailed off building his U.S. collection about three years ago. Now, according to Shreve, the time had arrived to “let someone else have fun” with his stamps.

Shreve said that he and Scott Trepel, the president of Siegel, had appraised the entirety of the Gross collection at $42.5 million at the time of Gross’ recent divorce from his wife, Sue, although Shreve stressed that the sale has “nothing whatsoever to do” with the divorce.

There is such a wealth of exceptional material in the Gross collection, Shreve said, that it was difficult to know how to approach its dispersal.

He and Trepel decided that a major goal of the sale had to be to draw new collectors into the upper echelons of the hobby. To that end, they hand-picked some of the most spectacular items from across the broad range of the Gross collection to kick off an extended series of sales.

“A new collector is not going to be interested in pursuing a 15¢ Z grill,” Shreve said, referring to one of the more esoteric rarities of the 19th century. “But you can get them interested in iconic items with a story behind them.”

“The first sale is going to get all the publicity” from media and the collecting community, Shreve continued. Therefore, Siegel took pains to make a splash, with an extensive press campaign and luxurious 240-page sale catalog.

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Never mind lengthy descriptions: Each lot is accompanied by an entire scholarly article, lavishly illustrated with historical images, provenance listings, condition notes and census and literature references.

“Nobody, not even Sotheby’s or Christie’s, has ever put out a stamp auction catalog like this before,” Shreve said.

Hard copies are available from the auction house for $50 ($75 overseas), but a PDF version can be downloaded free of charge.

The now-famous 1¢ Z grill (Scott 85A), a unique survivor of an obscure experiment to press wafflelike patterns into stamp paper to prevent their reuse, is not included in the first sale.

Shreve said the Treasures sales will continue with a second installment in the spring of 2019 and probably one or two more after that. Later, there may be sales devoted to narrower areas such as postal history or plate blocks, he said.

Asked whether the withdrawal of a leading collector and the release of such a major philatelic holding onto the market might be expected to have a damping effect on prices, Shreve said the opposite was likely true.

“Bill has already not been an active buyer in three-four years,” he said. “His absence has emboldened some collectors to come back at it harder.”

Buyers who might previously have sat out the bidding rather than compete against such an aggressive and moneyed rival now feel they have a chance to get the goods.

“Those who are fearful don’t see the market we see,” Shreve added.

He said the Siegel firm is fortunate to deal with numerous million-dollar collectors who aren’t familiar faces at stamp shows or on the exhibit circuit,  but they do buy.

When asked to compare the Gross sale to past landmarks, Shreve didn’t hesitate to mention the Ryohei Ishikawa sale offered by Christie’s in 1993.

That was the occasion on which the Japanese investor sold his world-class collection of U.S. stamps for $9.5 million, and a novice collector named Bill Gross jumped into the hobby for the first time since childhood.

The Ishikawa sale presented his entire collection, amounting to hundreds of lots, in a single two-day event. Shreve hopes that the extended schedule for the Gross sale will prove more conducive to bidding.

“You have to give people a chance to catch their breath,” he laughed.

One of the highlights in the Gross sale was also a star item for Ishikawa: an 1851 cover bearing the first issues of both Canada and the United States. The letter traveled from Montreal to England via New York, and is franked with Canada’s 1851 3-penny Beaver (Scott 1) and a strip of five of the 1847 5¢ Franklin stamp (Scott 1).

Described as “one of the most outstanding covers in all of classic worldwide philately,” it is the most visually spectacular of three such covers known.

When it sold in 1993, The New York Times reported that its anonymous Italian buyer paid what was then a record price for a piece of U.S. postal history.

That buyer, identified in the Gross catalog as a “jubilant” Guido Craveri, later sold the cover to the Israeli businessman and collector Joseph Hackmey, who in turn sold it privately to Gross in 2010.

Siegel has estimated the cover at $600,000 to $800,000. All items in the sale will be subject to Siegel’s standard 18 percent buyer’s premium added to the hammer price.

Another amazing piece of postal history in the sale is an 1851 cover bearing a strip of four of the 1847 10¢ Washington stamp (Scott 2), sent from San Francisco to New York. It is the only known cover with that stamp to have originated on the West Coast and traveled east.

The U.S. post office did not distribute the nation’s first stamp issue — which appeared two years before the California Gold Rush — in the West, and the stamps must have been taken or sent there privately.

The letter traveled down the Pacific coast on a ship called the Carolina to the Isthmus of Panama, then part of Colombia. It made the short overland crossing to Chagres on the Caribbean side, and then by boat up the east coast of the United States. The journey took six to eight weeks.

The cover does not seem to have been offered at public auction until 1992, when it was sold by Siegel as part of Leonard Kapiloff’s collection. It was sold by Siegel again in 2005 to Hackmey, and acquired from him by Gross in 2010. Its estimate is $150,000 to $200,000.

One of the most iconic stamps in the sale is the sole unused 2¢ Hawaiian Missionary in existence. Printed in 1851 at a newspaper office in Honolulu for use by Hawaii’s first white settlers, these crude early stamps are as fragile as they are rare. Just 15 genuine examples survive of the 2¢ (Scott 1), which paid the local rate. Five are in museums and only one is unused.

The unused 2¢ stamp, which is completely sound, was featured in the famous 1995 Honolulu Advertiser sale of Hawaiian stamps belonging to Thurston Twigg-Smith, a descendant of the missionaries. Two years later, at the Pacific 97 international stamp show, Gross acquired it from Greg Manning.

Siegel expects it to fetch $500,000 to $750,000.

The legendary Pony Express service, which ran for just 18 months in 1860 and 1861, is represented by four covers, including an astonishing one sent to Prince Edward Island, Canada’s smallest province. It is franked with a $2 red Horse and Rider stamp of the first Pony Express issue (Scott 143L1) and a U.S. 1860 5¢ brown Jefferson, type II (30A) and 10¢ green Washington, type V (35).

The sale catalog notes this cover is unique in three respects: It is the only Pony Express cover to that destination, the only $2 red on a cover to a foreign destination, and the only combination of the 1860 5¢ with a Pony Express stamp.

The cover was bought by Gross at the 2004 sale by H.R. Harmer of one of the last parts of the famous Dale-Lichtenstein collection. That marked the first time the “Prince Edward Pony” had been offered publicly, and indeed the first time it had ever been seen by most collectors.

It is not known how or when Alfred F. Lichtenstein, who died in 1947, acquired it. He bought several Pony Express collections intact over the years, and the cover could have been in any one of them. Its existence had been rumored for decades, and its eventual appearance caused a stir.

It is estimated to bring $300,000 to $400,000.

Not every item in the Gross sale is a mega-bucks trophy. A Lincoln-Johnson campaign cover from the election of 1864 is estimated at “just” $2,000 to $3,000. This rare piece of election memorabilia, printed by Louis Prang in Boston and mailed to Minnesota franked with two 3¢ rose stamps (Scott 65), is one of several Lincoln-related pieces offered.

A run of stamps and covers with hand-carved fancy cancels from Waterbury, Conn., and other towns are estimated in some cases at $1,000 or $2,000 apiece.

One of the more surprising items in the sale is a somewhat scrappy first-day cover from 1918. Although the 6¢ orange Jenny was the third stamp issued for airmail service that year, the Scott catalogs list it first because of its low denomination, assigning it the Scott catalog number C1.

Incredibly, no other genuine first-day-of-issue covers exist for this stamp — several fake ones are around — and the one owned by Gross was unknown to the philatelic world until 2007, when it showed up in a collection consigned to Siegel and was bought by Gross.

The reason for its rarity is that although the stamp was issued on Dec. 10, 1918, the reduced airmail rate for which it was prepared didn’t come into effect until nearly a week later.

In those days, new stamps did not have elaborate first-day ceremonies or publicity launches to get the attention of collectors. It is likely that few noticed the arrival of the new 6¢ Jenny.

One who did was a “government philatelist” named Joseph B. Leavy, who curated the Smithsonian’s philatelic collection from 1913 to 1921. Evidently privy to knowledge of the new release, he put a pair of the 6¢ stamps on a letter to himself, paying the regular 2¢ postage plus 10¢ special delivery fee.

Leavy’s insider trading did not make him wealthy; the only record of the cover’s prior sale is a penciled note on the back stating it sold in 1943 for $125.

This time, the FDC of Scott C1 carries an estimate of $30,000 to $40,000.

Those wishing to attend the sale will find further details on the Siegel website.

Note that advance reservations are required to attend. As always, bidders should read the terms and conditions carefully.