A *conservative* interpretation of grading that is used in 2003 is used CSAQ. There is a dichotomy of grading used by various people in the CSA currency community. I categorize the 2 general classes as follows:
Market-Oriented Grading - Used by many (not all) dealers and some collectors. Also fairly typical of eBay grading (which actually can be more liberal than market-oriented grading). Market-oriented grading is designed to maximize revenue of the seller. It generally plays to the best features of a note, downplaying a note's weakness. For example, a limp technical VG with good color and cut may be called F or even F+. A note with a lot of wrinkling due to handing in addition to many folds, but has strong crispness may be called VF, though it is technically Fine due to circulation to a strict grader. This style of grading will tend to push notes up the grading scale anywhere from 1/2 to 1 1/2 grades, though it also may yield the same grade as collector-oriented grading in some cases.
As it is oriented to the market, the definition of these grades may change over time. In particular, in slower periods, old market-oriented VFs become Fines and close to collector-oriented grading. Of course, this can result in substantial financial pain for the owners of notes purchased with market-oriented grading assumptions. This style of grading is also known as "commercial" grading.
Collector-Oriented Grading - Used by some dealers and most serious collectors. Collector-oriented grading is designed to differentiate notes, especially at the high end, so collectors get a clear picture of the note wholistically. This type of grading maximizes value for the buyer, even taking into account higher prices paid for a note of a given grade label vs. market-oriented grading. It also forms the basis for a true condition census due to its strong differentiation at the high end. This style of grading will tend to drive notes down the grading scale as problems are taken into account and the note is graded as a whole. This style of grading will stand the test of time. Owners of notes that used this style of grading are unlikely to experience grading deflation. The grade shouldn't change with the market...the prices do.
Let's look at another area of numismatics for an example. American Numismatic Association and the commercial grading services scales have ebbed and flowed up and down over the years and are viewed by early American copper collectors as commercial or market-oriented grading. EAC grading which is essentially 1940s-style grading modernized has withstood the test of time much better and is an example of collector-oriented grading.
CSA Quotes assumes collector-oriented grading. If you or a prospective seller is using market-oriented grading, you must make adjustments as described above to the scale described below. Failing to do so will be hazardous to your financial health!
It is possible to have a good relationship with a dealer or collector that uses market-oriented grading. Just don't argue about grading with them, remember what style they use and adjust in your mind each potential purchase before buying. There will always be some difference of opinion, at least in some cases, due to taste as grading remains a subjective endeavor. Typically, these differences of opinion are not greater than 1/2 of a grade if both parties are using the same style of grading. Finally, no one is perfect and all of us make mistakes or miss things on a note.
Some general descriptions of the grades:
Poor: Severely worn and damaged. May have more than 25% of the note missing.
Fair: Filler. Severely worn. Part of the note may be missing; e.g., no more than 25% and that may be crudely repaired with backing.
About Good: Heavily worn. Up to 10% of the note may be missing, but no more. May be crudely repaired. Earlier generations called this “Fair”.
Good: Heavily worn but intact or reasonably repaired with backing or archiver’s tape. May have edge splits and some tears not readily visible and obvious into the note.
G-VG: Can’t quite make VG due to problems or excessive wear.
Very Good: Heavily worn and intact. It may have heavy creases and will have lots of wrinkling from handling. Only relatively minor stains, edge splits and holes are permitted without net grade deduction. No crispness left – a limp note. Considered average circulated.
Fine: Worn but has at least some body or crispness left. It will have more than 8 folds and perhaps a good deal of wrinkling from circulation. Must deduct at least a half of grade for anything but minor stains and edge splits. A ½ grade deduction may be from a single tear that is not large and readily visible. Significant repairs and tears cost at least a whole grade and may drive the note towards SCUDZY depending on severity and visibility.
F-VF: Typical “commercial” VF or VF-XF found at many tables at a show. Too much wrinkling, too many folds (more than 8), or the folds are too heavy to be called VF, but a nice note and better than Fine.
Very Fine: Obviously circulated, but not significantly so. Vertical and/or horizontal folds will be present, but will not be heavy. Some will use the benchmark that no more than 8 folds may be present. This note has a significant amount of body or crispness left. Little circulation wrinkling readily visible to the naked eye can be tolerated at this grade level – each wrinkle counts as a fold. Many Fine or Fine to Very Fine notes are called Very Fine in today’s (2002-3) hot market. Beware. Minor holes, tears, edge splits and repairs cost about ½ of a grade. Any single thing that stands out as a problem cost a whole grade. Anything more significant than a 1 grade deduction will drive the note to SCUDZY at the lower grade level.
Choice VF: VF note with great trim and/or color. May be worth as much as many VF-XF and even some XFs.
VF-XF: A couple more folds than can be tolerated for XF. No circulation wrinkling visible.
Extra Fine (XF): Very lightly circulated and nearly all of the crispness retained. Will have 3 light folds across the body of the note as seen on the typically blank reverse. May have a subtle corner fold or 2 as well. Any minor problem or repair on the note will cost ½ of a grade. A couple of minor repairs (no more than 0.25 inches) will cost 1 grade. Bad trim (into the design) will discount the note ½ of a grade or more if particularly severe into the design. Anything readily visible and obvious will cost a whole grade or more. XF notes cannot have significant problems to speak of. Very subtle variations in color due to aging or trivial staining is OK if not noticeable.
Choice XF: XF with exceptional color and/or trim. Better than AU in eye appeal and usually worth more. This is not the same as XF+ or XF-AU which has 2 folds and perhaps a corner fold.
About Uncirculated: Old XF. A corner fold. A single fold across the body. Counting handling that is readily discernable. An obvious smudge. Bad trim on an Unc note which cuts obviously into the design. Any one of these make a note AU. More than a couple drive the note to XF+ or XF. These are typically called Unc by many, especially on the Internet. A trivial repair (less than 1/8 inches) will cost ½ grade. A minor repair or 2 that are not distracting will cost a whole grade. More obvious tears, repairs and problems can quickly drive an AU note to VF and SCUDZY.
Choice AU: Better than Unc and worth more. May be a CU note with a minor circulation issue described under AU. “Gem” AU notes may be worth more than some CU notes.
Uncirculated: No circulation or problems. OK cut, may cut into the margin, but not a lot. Many of these are called “CU”, but are not.
Choice Uncirculated are notes with exceptional color and eye appeal, but may have a minor trim issue. Can’t quite make CU on trim. Worth more than Unc and some CU notes depending on taste and “Wow!” effect.
Crisp Uncirculated (CU): Unc but with good trim. Cannot be cut into the margin lines and must be quite straight.
Choice CU: CU with excellent trim and exceptional color.
The table above lists the grades and general descriptions about the CIRCULATION of the note. PROBLEMS (with the exception of cut cancellations) REDUCE the net grade.
CANCELLED NOTES
Many CSA notes have been cut-cancelled or cut-out-cancelled to indicate that they were paid and collected by the government. This is different than damage or repairs and these notes deserve their own pricing. These notes, especially clean cut-cancels, are attractive and desirable in their own right. Some varieties are extremely difficult if not impossible to get not cancelled. In general, cut-cancelled notes command a price of 2/3 that of an equivalent uncut note. While cut-out-cancels vary, on balance they are worth about 1/3 that of an equivalent uncut note. Some varieties with cut cancellation will be worth a bit more than these ratios. Some more common types perhaps a bit less.
There are those who say that clean cut-cancellations with no paper loss have little effect on value. My experience leads me to believe this is not true. I’ve not seen a cut-cancelled CSA note bring a similar price as an uncut example of the same note in the same grade in the past couple of years. I’ve also never been able to sell cut-cancelled notes for the same price as un-cut examples to the people who postulate that there is little difference in value. It may have been true in 1996 at Criswell’s 1996 prices, but it is not true today. Therefore, I use reasonable estimates in CSA Quotes based on real sales for cut and cut-out cancelled notes. I will change this when I find someone(s) who will by my cut-cancelled type notes at un-cut prices. NOTE: Some rare varieties are only available cut (or a cut cancelled example may be the only available for decades) and this guideline may not apply to R9 and better notes the same way it does for type examples.
