The Sheldon Scale of coin grading was developed by Dr. William Sheldon, an American born in Rhone Island in 1898. He was a psychologist and numismatist. His coin collections were copper coins which were large cents. These coins became models for a system of grading which he decided to develop.
The system he developed is now in use today, particularly by the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation (NGC).It uses a scale of 1-70 The numbers 1-59 are used for grading gold coins that had been circulated and the numbers 60-70 for gold coins classified as uncirculated.
Before the advent of the Sheldon scale coin grading consisted merely of three descriptions which were broad imprecise: 1) Good: Details visible but surface worn out; 2) Fine: Details less worn out and a bit of mint luster visible; and 3) Uncirculated: Details sharp, luster approaching state of the coin at mint.
The system developed by Sheldon eliminated the guesswork. The lowest grade is Poor-1 or P-1, for a coin that is badly damaged or worn out, the type barely discernable. The highest grade is AU-59 (Choice About Uncirculated), virtually uncirculated except for minor wear marks on high points. .
In between are grades like G-8 (Very Good) for a coin with full rim and clearly discernible devices but coin significantly worn. VF-20 (Very Fine) for a coin with clearly readable but lightly worn legends. XF-40 (Extremely Fine) for a coin whose legends are sharp, devices are clear with slight wear.AU-55 (Good About Uncirculated) for a coin with sharp legends that show only a hint of wear on the high points.
For the uncirculated coins the grades from MS-60 to MS-70 (Mint State coins), as well as the proof designations, are all based primarily on eye appeal, quality of luster and/or toning, and the presence or absence of contact marks, hairlines, etc.