Stamp dealer Brown priced mail bids at runner-up plus a step

Stamp collecting boomed in the 1870s-1890s and auctions had multiplied nationwide, but the serious buyers were scattered across the country while the sale rooms sat in New York. Dealers had already started waiving the old 10 percent fee for representing absentee bidders (Brown's own 1878 catalog was the first), yet the payment rule underneath was still first-price: whatever you wrote on your bid slip was what you paid if you won.

The theoretically clean fix already existed and everyone knew it: a live ascending auction, where bidding simply stops the instant your last rival quits, so the winner only ever pays one small step above the runner-up, never their own ceiling. But a live auction requires the parties to actually go back and forth in real time, and a sealed bid arriving once in an envelope cannot do that. Whatever rule a dealer wrote into the catalog had to fake the floor auction's stopping reflex on paper, with no live exchange to fake it in.

Priced mail bids at one increment above the second-highest offer, not the winner's own bid, so honest bidding became dominant and revenue rose toward true value.

Bidders no longer fear overpaying, so they reveal true maximums.

Honest bids raise revenue toward real value, not cautious guesses.

The rule works without live interaction, enabling remote participation.

Trust in the rule is essential; without it, bidders shade again.

In sealed-bid sales, price winners by the runner-up's bid to encourage honest maximums, and publish a worked example to build trust.

Bidders could now write their true maximum with nothing to lose — bidding high never cost more than the next-best offer plus a few cents, so Brown captured close to the lot's real value without a single bidder needing to physically attend or haggle. The mechanism spread through the mail-order stamp trade over the next three decades (B.L. Voorhees from 1906, Western Stamp Co. and Toledo Stamp Co. from 1907, Henry Wendt from 1920), and by the 1930s it was the majority rule for stamp mail sales, stated so routinely that dealers stopped bothering to explain it.