Q. David Bowers (edited and updated by Mike Sherman): The design of the 1796-97 dime parallels that of the contemporary half dime. The obverse depicts Liberty with flowing hair, a ribbon behind her head, and drapery covering her neckline. LIBERTY is above and the date is below. Thirteen obverse stars are found on the 1796, while the 1797 features either 13 or 16 obverse stars. The reverse consists of an open wreath, tied with a bow at the bottom, enclosing a small eagle perched on a cloud, with UNITED STATES OF AMERICA surrounding. No indication of denomination or value appears.
Examples of the Draped Bust, Small Eagle type are most often encountered in lower grades from About Good to Fine. Very Fine and Extremely Fine pieces are progressively more difficult. Occasionally an AU or Uncirculated 1796 dime will be found, but very few pieces dated 1797 exist in Mint State or close to it. Mint-caused adjustment marks are often seen, as are areas of normal light striking. These pieces were meant strictly for utilitarian use, and no thought was given to producing pieces for collectors.
The dimes minted from 1798 through 1807 display the Draped Bust obverse as preceding, except that the star count is now fixed at 13, with seven to the left and six to the right. The reverse is new, and is designated as the Heraldic Eagle style. Patterned after the Great Seal of the United States, it features an eagle with a shield on its breast, holding in its beak a ribbon inscribed E PLURIBUS UNUM and grasping in its talon a bundle of arrows and an olive branch. Above is an arc of clouds under which is a group of stars. UNITED STATES OF AMERICA surrounds. There is no indication of denomination or value on the coin. A number of different die varieties exist within this range, including the overdates 1798/7 and examples with different numbers of stars above the eagle on the reverse.
In keeping with other early silver coins, examples of the Draped Bust, Heraldic Eagle type most often seen are in grades from About Good through Fine. Availability decreases as the grade increases. There are however, a number of Uncirculated pieces of 1805 and 1807 known. Many of this type show Mint-caused adjustment marks. Areas of light striking are the rule, not the exception, and nearly all pieces have some flatness of stars or other details. This tendency towards poor strikes increased as the series progressed, so that by the end of the period, most pieces displayed some weakness.
-- Reprinted with permission from "United States Coins by Design Types - An Action Guide for the Collector and Investor" by Q. David Bowers