CoinWeek Podcast #159: The Infamous 1933 Double Eagle (with David Tripp)

CoinWeek Podcast #159: The Infamous 1933 Double Eagle (with David Tripp)

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This week on the CoinWeek Podcast, numismatic researcher and author David Tripp joins us to talk about the 1933 Double Eagle. You know that the 1933 Saint-Gaudens Double Eagle is the most notorious coin in the U.S. series, but do you really know the coin that the FBI spent more than 60 years pursuing? We talk to David about the one example of this notorious coin that the government couldn’t keep.

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The following is a transcript of Charles and Chris’ conversation with David Tripp:
 

Charles Morgan: Hi, everybody. This is Charles Morgan, Editor of CoinWeek. Today, we’re lucky to be joined by David Tripp. David is a numismatic writer, researcher, and cataloger, who has enjoyed a long relationship with Sotheby’s and the coin that we’re going to talk about today, the infamous 1933 Double Eagle Gold Coin. It was a coin that David researched in great detail in preparation for the coin’s historic 2002 sale for his award-winning 2004 book titled Illegal Tender: Gold, Greed, and the Mystery of the Lost 1933 Double Eagle, and most recently for its upcoming appearance at Sotheby’s sale of three objects from the Stuart Weitzman Collection. David knows his coin like no one else, and has even served as the government’s key witness in a landmark case involving 10 examples of the 1933 Double Eagle that were held in secret by the family of Philadelphia jeweler Israel Switt. Today, we’re going to let David tell the story of the ’33 in a way that only he can.

Hi, David, thank you so much for coming onto our show.

David Tripp: It’s a delight to be here, Charles, and welcome everybody, to what I hope will be a good tale.

Charles: Well, it’s certainly a great tale. Almost reads like a fish tale if it wasn’t all true. The 1933 Double Eagle is probably the most notorious coin in all of numismatics. Why is it so rare? Why did the government care that a few dozen examples of this coin were released into the wild?

David: That’s a lot of questions, simply worded. Why is it so important? Why is it so rare? If we go back to when it was being produced in the early days of 1933, I think as we all know the economy was in tatters. We were in what they call the interregnum. Franklin Roosevelt had been elected president but had not yet assumed office. As they were going through this period, we saw the economy hemorrhaging. All lost faith in money, people started to withdraw their money from the banks, and the only thing that seemed to appeal to them was gold. There was not only a run on the banks, and banks for failing, left, right, and center, there was no FDIC, there was no protection for investors, and depositors. They put their faith in gold.

So much gold exited the system that the Federal Reserve Bank which had to have “X” amount to back gold currency, hit the minimum required by law. Against this backdrop, with 25% of the workforce out of work, 500 banks closing, FDR took office and he needed to do something and do it quickly. He took office on March 4th, 1933. One of his first acts was to call Congress into special session. His next act was an executive order, I think it was number 2039, to ban the payout of gold. So gold, on that day, and is still– It’s very interesting. To many people, economists, that really marked the end of the gold standard.

As we all know, the government on a political level does one thing and on a practical level does something else. Even though Roosevelt was banning the payout of gold and starting the recall of gold, the Philadelphia Mint went on doing what it did and was striking gold. These are coins that were legally made but they were never supposed to be distributed. That’s where it all gets started and that’s where it all gets interesting. 445,500, the last one delivered to the cashier on May 19, 1933, but none of them were supposed to be released into the wild.

The second part of your question, why did the government go after them? $20 wasn’t a minor thing. It wasn’t a dinner at McDonald’s. It was a lot of money. People made, if they were lucky, two or three Double Eagles a week. If you put it into that context, you realize that it was a good sum of money. It was also gold, and gold backed the economy. When the government suddenly saw its repositories– you’ve got to, there was no Fort Knox yet. So, the mints and the assay offices around the country were where the wealth of the nation was stored. When you discover that you’ve got gold walking out the door, it’s embarrassing, and that is what launched it all.

Chris Bulfinch: A number of 1933 double eagles began to trickle into the market in 1937, and ended up in the hands of some of the period’s most prominent numismatists. What was the first clue that any of those involved in the distribution or collecting of these coins was out of the ordinary regarding the coin’s title?

David: In terms of what did the government find out something–[crosstalk]

Chris: Yes.

David: Well, in 1944, Stack’s had an auction, and it was the collection of James Flanagan, Colonel Flanagan, who was reputed to be a friend of Roosevelt’s and so forth, and it was a fabulous collection. Don’t forget, this is only 1944, Stack’s has only been in business for a decade or so. They’re still the young guys on the block, and this was a spectacular collection. The last lot of the sale, if I’m not mistaken, was a 1933 Double Eagle, which they cataloged being excessively rare. I think they said only six or eight known. They even went so far as to say that no unlimited bids would be taken on this coin. And for those of us who are of a certain age, we remember that you would take an unlimited bid on certain pieces when you knew the coin extremely well. That meant the sky was the limit. However, they know this could take off and they didn’t want to be on the hook.

In any event, a man called Ernest Kehr, who was the stamp and coin editor for The New York Herald Tribune, remember when they still had reporters for newspapers in those categories. But in any event, here, who was primarily a stamp man, and in fact, I think is in the Philatelic Hall of Fame was curious, by seeing this catalog description, and he shot off a note or called the event said, “Is this true? Are there only six to eight of these known? Or, is this nothing more than a typical coin dealer bombast?” Well, it landed on the desk of Leland Howard, who was the Assistant Director of the Mint, and he started doing some checking. He sent a telegram to the Philadelphia Mint asking them to check on this, because there was one coming up for sale, and he wanted it done posthaste.

He received a multiple-page document from the Philadelphia superintendent’s office, which indicated that according to all the records that the Philadelphia mint had, none of the coins had ever been released. All according to their records were accounted for, two in the Smithsonian and the rest of them officially destroyed. Therefore, what Stack’s had was either a fake or was it possibly stolen property, and therein started things. Howard went to the Secret Service. You’ve got to remember back in those days, it was all in the Treasury building. The Secret Service headquarters were in the same building as the main headquarters. It was just down the hall, up the stairs, down the stairs. It was put on the desk of a man called Frank Wilson, who was the chief of the Secret Service.

He had cut his teeth in the IRS Investigation Division, and during his time was responsible for putting Al Capone behind bars, which was based on numbers as we all know. This is despite the fact that Capone had a contract out on Wilson’s head. Wilson also was responsible for getting the banknotes used in the Lindbergh baby’s kidnapping recorded so that they ultimately were able to capture Bruno Hauptmann, which led him to the electric chair.

Anyway, Wilson was a pretty remarkable man. He has actually been called by some to be the “Father of Forensic Accounting”, and he took it seriously. He then assigned a couple of agents to the job, and they went to Stack’s. They looked at the coin, and they seized it as potentially stolen property. Stack’s could not have been happy, but they immediately put the Secret Service agents onto the name of someone else they knew had a coin, which was a man called Max Berenstein, who was a couple of blocks away. The agents [unintelligible [00:10:58] at this point, marched over there. Berenstein unhappily surrendered his 1933 Double Eagle and then rattled off the name of yet more people. It was kind of like the door was cracked, suddenly, everybody who’s involved in it knew.

The next day, the Secret Service turned up at Stack’s, more names turned up, more interviews were taken. The investigation started. If we think of it, it was March 1944, the government got wind that these coins are out there. They authenticated them almost immediately. It was a case of finding out if they were stolen property, who had them, and where had they come from? This led them to Philadelphia. The investigation continued down there.

It cracked open, I would say, pretty fast. They ended up interviewing any number of people, from Stephen Nagy to, most remarkably, James Macallister, who was a very, very talented– anybody who was looked at the old Morgan $5 catalogs and large cents, has seen some of his great cataloguing in the early days. Macallister said very bluntly, yeah, he had them and he bought five of them, all in 1937 and he bought them all from a guy called Israel Switt, who was an old gold dealer. Switt, according to Macallister, had a reputation. Macallister didn’t believe all the stories of where Switt said he had got them, and before the end of the year, gave up buying them because he said they were too many of them for him to represent as rare. The Secret Service then found Israel Switt and his offices over on Jeweler’s Row in Philadelphia, and they took a sworn statement from Switt, who indicated that he had first got 1933 Double Eagles and started selling them in early February 1937. And then, he sold five to Macallister, two to Abe Kosoff, and two to Ira Reed.

Now, the thing to remember is that February 1937, coincides exactly with the period that the US Mint shipped the last batch of 1933 double eagles into the crucibles to be melted. They open the cage, and 445,000 were destroyed during that month. There’s an interesting coincidence in when they first appeared and when they were supposedly officially destroyed. That opened it up, and then from Switt was the conduit to Macallister who was interviewed. He told the Secret Service agents to who he had sold them, they then started tracking it down, and effectively created a family tree of where each of the coins had gone. They interviewed various people, really some of the most eminent collectors of the day. Fred Boyd, for example, said, “I’m not giving you my coin until you can prove to me that it was stolen.” He actually went down to the Treasury Department and met with them personally, and kept in touch with them.

The investigation continued in this manner, and ultimately, as it went through the year, the Secret Service came and went, and the interesting thing about this is that Switt claimed in his report that he never got the coins from the mint, or from any employee or through any employee of the mint, but he was a regular depositor at the mint through all gold, which was what he did, although he had lost his license for having been found to be smuggling or carrying that you shall say, a bag full of gold coins, and had to forfeit him. I think it was $2,000 face value. His gold license was stripped, but his partner, Ed Silver, continued in the trade. He was a regular at the mint and he knew everybody there.

The Secret Service simply did what they did. As I said, was Frank Wilson was a forensics’ guy. The Secret Service agents went through people’s tax returns. Israel Switt’s tax returns, his partner’s tax returns, they went through McCann’s material. McCann who appeared to be the conduit Switt have obtained the coins, and they found an interesting overlay of deposits of $1,000 a month from the Switt-Silver account and into a simpler pattern of payments into McCann’s account, $1,000 a month. Think about that, that’s a lot of money.

McCann was making just shy of $60 a week. So, he suddenly had an influx of $10,000 in income matched and overlaid the calls from Switt account lead the agents to the belief that the two were inextricably tied. McCann, when interviewed, refused to divulge the source of the income. Of course, McCann, by the time they interviewed him in 1944, was no longer a mint employee, having been arrested for embezzling uncurrent silver coin in 1940. In 1941, he was convicted and sent to Lewisburg Penitentiary, and it was a year and a day, was his sentence.

It all started to come together. The point was that by the end of the year, the Secret Service agents had interviewed a raft of people who had been employees of the mint during the period ever said to them, these are gone out through normal channels. Everybody seemed to want to deflect the responsibility. McCann’s former boss, Ralph Roland, said that the 1933 Double Eagles could not have circulated without McCann knowing about it and having something to do with it because he had the only 1933 double eagles that were under his control. These probably were in either his safe upstairs or in the cashiers working vault in the basement, which by regulation was the only role that an individual could work in alone.

By the end of 1945, the Secret Service had essentially tied it up and they had discussed it with Nellie Tayloe Ross, who was the Director of the Mint at that point. The decision was and she felt that the coins were in illegal circulation. The Secret Service then put a summary report together, which was sent to the US Attorney asking if charges could be bought against Switt, Silver, and McCann. The charges were not brought specifically, the statute of limitations had run out. Having said that, the government having determined that these were stolen, did go after the individuals, the collectors who had them, telling them that they were in possession of stolen property. They had two choices, a Secret Service agent would come and collect it, or they could be prosecuted for knowingly owning stolen property.

Charles: Under the collectors themselves, the ones who are initially interviewed, in your research, did you ever turn up anything that gave you an indication whether they knew before they were interviewed by the Secret Service that there might be something illicit about these coins or maybe the title wasn’t so cut and dry? I mean, do you have any evidence that Macallister or Abe Kosoff or any of these guys had any idea that these coins may be problematic?

David: In terms of the dealers, it’s hard to say. I mean, Macallister, I think, shall we say jumping ship, when he found out how many were potentially out there. I mean, he was on record with the Secret Service and saying that Switt or his partner, Ed Silver said that we had 25, only sold 14. By the end of 1937, Macallister had left the dock and wasn’t buying any more. As I said, don’t forget wholesale price on these coins was $500. That is a pile of money for a four-year-old coin, realize that we’re in the depths of the Depression. Macallister bought the first one for $500 and sold it the next day for 1600 bucks. He then immediately went back to Switt, bought the second one for $500, and sold that to Fred Boyd with two 1933 Eagles, all from the same source. [laughs]

Charles: He gets to upgrade a set of wheels in the process of dealing with this coin.

David: Macallister I get the feeling was uncomfortable at that point and got off it. Kosoff initially– Switt had said that Kosoff had bought two. Kosoff, when he was interviewed by the Secret Service, said he not only sold the coin but he sold it twice. Then later in life in the 80s, when he wrote one of his columns, he indicated that four. He was clearly aware that the Secret Service was investigating, and yet in the same breath, knowing that the Secret Service was already seizing 1933 Double Eagles as potentially stolen property, he blithely sold one for 1,000 bucks to Louis Eliasberg.

Chris: Had the Secret Service ever investigated a case like the stolen 1933 Double Eagles before? Was there any kind of procedure for how to approach an issue like this?

David: There was constant pilfering from the mint. That’s going on for years. There was another investigation a few years earlier to an entire bag of 1928 Double Eagles missing. I think also from to Wilson in particular, he’s a fascinating guy, really tightened things up, and because he was, I think at heart, an accountant, he really took the forensic attitude to a different degree. Thing is that the case number was C010468. Well, CO means Chief’s Office. It means that this particular investigation was being led by Wilson himself.

Charles: Somehow in the fog of all of this, almost serendipitously, I guess, the Farouk coin somehow evades scrutiny when it’s presented to the State Department, by an agent of the Egyptian government who’s looking for an export license. In your book, you suggest that this may have been a case of one hand of the government bureaucracy not being aware of what the other hand is doing, although I think the investigation into the coin was probably in its nascent period at this point. This is the thing that I wonder about when in regard to the 2002 sale, and the case surrounding that. How is it that the decision the State Department made to authorize the export of this coin without knowing anything about its title? How is it that this precedent held up as definitive proof that the coin could be legally held?

David: Timing is everything. This was about two or three weeks before the investigation even began. Secondly, it was not the State Department that signed off, it was in fact the Treasury itself. The laws at that period demanded that any gold coins being sent out of the country had to have a license. TGL170, Treasury Gold License. The representative of the government took the coin to the Treasury to make sure it ticked off all the boxes and got it a license. It was taken to the Smithsonian and one of the boxes basically said was this coin rare and unusual prior to April 5, 1933.

Now, it’s pretty hard for something to be rare and unusual, while it is still in production, particularly in the hundreds of thousands. signed off on that basis, and it was determined later unaware that none of the 1933 Double Eagles have even been issued. So, what happened is this all took place before the Stack’s sale. It received a license and, in all likelihood, was either on its way out of the country before the Secret Service investigation even began. The Treasury Department did get in touch with State Department, State Department effectively the whole thing saying, “This is World War II we’re in the middle of.” The Suez Canal was incredibly important to the Allies, not to mention entire campaign was going on, Farouk was a linchpin politically to the State Department, regardless of what the Treasury Department might think, a $20 gold piece was not high on their radar.

Charles: Yet this export license holds up as a key issue in the argument that the coin was legally held.

David: The point was the United States Government did issue the license. One of the arguments that when the first litigation was going by Steve Fenton, the existence of the licensed turned up, that was one of the government’s arguments. Simply having an export license for something that was stolen, but not discovered to have been stolen, didn’t necessarily make it legal in any event. There are all sorts of analogies they gave. The problem is, as it was explained to me, as a difficult thing for a jury to wrap its head around. It may have had something to do with the reason, there was ultimately the settlement.

Charles: Not explicitly mentioned in your book, or at least not completely spelled out, it’s alluded to, but there was very strong evidence to support the idea that mega collector, Ted Nafzger, no longer with us, owned not one, but possibly, four examples of the 1933 Double Eagle, and this would have been at the time that the Farouk coin would have still been in hiding even Europe or Africa, wherever it was. You show a photo in the book of a 1933 Double Eagle taken on Kodak film around 1980, I guess. How well known in the numismatic community was it that Nafzger may have owned these coins? And do you have any idea what happened to them?

David: I have no idea what happened to them. The information, which was alluded to in my book, it was information that was later in a deposition, this was after Ted Nafzger passed away, that said that he had four, that he had sold one off, this was the mystery coin, that I call it, and that deposition. The other ones were, and I quote, “long gone. The one that he sold off, the one that’s part of his– because he had great collection of Double Eagles sequence, Double Eagles in particular, and to Jeff Browning in Dallas. It was handled by the Liedmans, Stanley Kesselman, and Mike Brownlee. It went back to Browning. And he bought it in, I think, 1975, thereabouts. He died three years later, I think it was. I guess the estate must have been made aware of the cloud that hangs over 1933 Double Eagles, and Mike Brownlee wanted to take it off their hands basically, take the headache off their hands.

The coin was shown around the trade in the ’70s. I know, for example, Fred Weinberg sold it right around at that time Ken Goldman. They all just sort of looked at it with their eyes aglow. Kenny Goldman said to me, he said, “Here’s the coin you can’t even tell your mother about,” what Browning said to him. interested in it and had the photographs taken. But then, their counsel told them that it might not be the most prudent thing to do. At that point, somebody took the and off it went. People of my generation didn’t know it was around, and then it disappeared. Quite honestly, the coin Sotheby’s and Stack’s sold in 2002 Farouk’s in fact, were from a number of 30 odd years, but it wasn’t the same one. At that time, it was hard to tell, but once you look at the photograph, it didn’t have the same pattern of flaws or die scratches– not die scratches, but just plain scratches, so it was clear they were not one and the same.

Charles: Stuart Weitzman must have as impeccable timing as any collector I’ve ever seen. He must have the same talent for timing as he has with business and fashion because he couldn’t have picked a better time to put a coin like this up for sale, as we have probably the widest, hottest, rare coin market, especially for the high end that we’ve had in probably 10, 15 years. Of course, with COVID sort of turning the industry more into a virtual industry, which is a continuation of what’s been going on the last few years to begin with, most high roller bidders are bidding in their pajamas from their own homes as opposed to coming into the showroom. How do you see the sale? Do you think this 2002 sale is like a magical moment and a place in time never to be recreated? Or do you think a little bit of that magic is going to show up here at this 2021 offering where I expect this coin to, again, retain or take its position as the most valuable coin in all of American numismatics?

David: I think it will be different. The coin still has the magic, that hasn’t left. The funny thing is in many ways, I think the magic’s enhanced. I wrote a book, but I’m not the only one. There was Alison Frankel’s book, which was also nonfiction. Linda Fairstein wrote a New York Times bestseller called The Kills, which had the 1933 as a protagonist. There’s a book called Doble Aguila by James Twining, which is all about 1933 Double Eagles. The Closer on TV, which is based in LA, has long given 1933 Double Eagles a quest spot. There’s a documentary made about it. There was a tour in Europe of one of the Smithsonian examples. It’s sort of maturing into a superstar from having that starlight. I think that the buzz is there… To me, it’s a great ambassador of our world is really the New York Times article, just the announcement of it. When you get to a worldwide coverage on something like this, it makes people that are not normally collectors focus on something that the three of us here are passionate about. I think that’s a wonderful thing. I think when the 1933 was sold back in 2002, it was kind of the tide coming in and raising all the boats. Because if you look at it, the coin market really took off again there.

The fact that it’s the only one, it’s the great white whale, I think, in my mind, and anybody who can say, probably with some truth, I’m biased, I spent a good deal of my time looking at this coin. It’s fascinating and it’s beautiful, beautifully preserved. It was meant to be spent. It’s a real coin. It’s not a specimen, it was just meant to be a workhorse coin, and it’s historically as important coinage you’re ever going to find because not only does it mark America’s last gold coin, but it really, it’s the end of the gold standard. It’s all there in one little package. Yeah, I think just as compelling a thing for people to own if they’ve got a few million dollars in [unintelligible [00:34:30].

Charles: Well, the sale of the coin will go down in June. I think June 8th, right?

David: June 8th, 10 o’clock, with a couple of stamps.

Charles: A couple of very important stamps. Yeah, we will link the lot description for the 1933 Double Eagle, and it’ll be on offer at Sotheby’s [crosstalk] distribution.

David: Just the thing, Charles, as we speak, the online version of the catalog is going live today.

Charles: I see that. I’m actually on the page right now. [crosstalk] Yes, so a three-lot auction, two of the most important stamps you’ll ever encounter, and one of the most important coins in all of numismatics will be sold on June 8th. I highly recommend any coin collector who is so interested to check out David’s tremendous catalogue writing. You think a three-lot sale would be easy-peasy, but David’s work is voluminous, insightful, in-depth, and has over 90 footnotes. This is a coin that is researched more than any coin probably in all of numismatics, with actual documentary evidence. This is forensic science, not guessing and hagiography. These are the facts about one of the most notorious coins ever unintentionally released. David, thank you so much for coming on our podcast.

David: A pleasure indeed.

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1 COMMENT

  1. The quality of this podcast, from the David Tripp side, was terrible! It was a shame because the subject and David’s commentary (that I could understand) was fascinating.

    Maybe there’s a way to restore it and replublish?

    Thanks

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