News and Analysis on scarce coins, markets, and the collecting community #63
A Weekly Column by Greg Reynolds
On July 20th, at the U.S. District Court in Philadelphia, the jury reached a verdict in the ten day trial regarding the title of ten 1933 Double Eagles ($20 gold coins). The coin collecting community was horrified that a jury unanimously ruled that these ten coins were stolen from the U.S. Mint and are thus the property of the U.S. Government. There is little, if any, evidence that these coins were stolen and some coin collectors are concerned that this case will set a precedent for the U.S. Treasury Department forcibly seizing famous rare coins from collectors, including coins that have been openly traded for generations. Please click to read last week’s article, in which I explain that unrecorded ‘coin for coin’ trades were considered legitimate in actuality and were a tradition at the Philadelphia Mint from the 1790s to the 1930s, and perhaps even later.
The judge in this case has yet to rule on an important motion by Barry Berke, the lead attorney for the Switt-Langbord family. Berke has asked that the jury’s verdict be set aside (overruled) because attorneys for the U.S. Treasury Department did not prove their case. The U.S. Treasury Department was required to prove that these ten 1933 Double Eagles were stolen from the Philadelphia Mint in the 1930s.
David Ganz suggests that attorneys for the Switt-Langbord family have a reasonable chance of successfully appealing a few of the evidentiary rulings by the judge in this case. While this judge has “a good reputation,” Ganz maintains that the judge made “crucial mistakes that probably affected the outcome of the case. The judge made it very difficult for the Switt-Langbord family to win,” Ganz declares. David is an attorney who has been involved in many legal cases that relate to rare coins. He is also a coin collector and an expert on the laws relating to U.S. coinage.
The Switt-Langbord family had possession of these Double Eagles for a long period of time. In 2004, the U.S. Treasury Department seized these ten coins and claimed ownership of them. Last week, a jury found that U.S. attorneys did, in fact, prove that these ten 1933 Double Eagles were stolen. For those who are unfamiliar with activities at the Philadelphia Mint in 1933 and pertinent historical aspects of this mint, please read last week’s article.
I. Was the jury wrong?
Although there is no clear evidence that any 1933 Double Eagles were stolen, why did the jury conclude that the Langbord family’s ten 1933 Double Eagles were stolen? Here are five likely reasons:
(1) The jury did not fully understand that unrecorded ‘coin for coin’ trades (or exchanges) were considered a legitimate practice at the Philadelphia Mint since the 1790s.
(2) The jury may have been misled into believing an illogical, unsubstantiated tale of Switt and Mint Cashier George McCann having conspired to steal 1933 Double Eagles. Numerous Mint employees, collectors, and dealers could have legitimately acquired 1933 Double Eagles. It would have been illogical for Switt and McCann to conspire to steal coins that could have been obtained by traditional means.
(3) The judge allowed the jury to be inflamed by misleading negative information regarding Izzy Switt and his daughter, Joan Langbord.
(4) The jury did not understand the political climate in the late 1930s and 1940s and the reasons why gold dealers in general, including law abiding dealers, had logical reasons to be scared of the U.S. Treasury Department and to not cooperate.
(5) The jury was allowed to hear about the Barnard case, which is not directly relevant and is misleading. L. G. Barnard was a collector who was forced to relinquish title to his 1933 Double Eagle in 1947. Attorney David Ganz emphasizes that the Barnard case is just way beside the thrust of the current Langbord case.
Barnard should have argued his 1933 Double Eagle was never stolen. Instead, he erred by saying only that he bought it in good faith. Now in 2011, the jury may have gotten the impression that Barnard really accepted the point that his 1933 Double Eagle was stolen. He did not have access to enough information about it to draw a conclusion on this point.
In the current era, collectors benefit from the work of sophisticated historical researchers, who know about coins and about history of coin collecting, especially R. W. Julian, Q. David Bowers and Roger Burdette. There were no equivalent researchers, and no analogous body of knowledge, available to Barnard and other collectors in the 1940s, as far as I know.
II. Unrecorded ‘Coin for Coin’ Exchanges
Those who argue that all privately owned 1933 Double Eagles were stolen put forth two main points. They have introduced a conspiracy theory and they point to the fact that there are not surviving records that explicitly indicate that 1933 Double Eagles left the U.S. Mint, except for two that were sent to the Smithsonian. Last week, I explained that it has been a longstanding tradition at the Philadelphia Mint from the 1790s to the 1930s for people to exchange similar coins for other coins; such as common dates for better dates. One $20 gold coin was often exchanged for another $20 gold coin, of a different date, and U.S. Mint personnel did not hold that were was a need to record such trades, though they sometimes did record them. Therefore, many scarce and rare coins have legally left the Philadelphia Mint without being recorded as being sold or shipped.
Q. David Bowers (QDB) fully agrees with my position regarding the traditional legitimacy of ‘coin for coin trades,’ including the point that these need not be recorded. QDB adds that such unrecorded sales, trades, exchanges occurred for copper, nickel and silver coins to the extent of tens of thousands of coins in the 19th century, and on occasional instances since” the 1930s.
QDB points to relatively recent examples of coins or patterns legitimately leaving the Philadelphia Mint without being recorded as being part of transactions. In a deposition for the Switt-Langbord family, on Oct. 2, 2008, QDB mentions that, “Mrs. Brooks, for example, [obtained] 1974 aluminum cents [and] Frank Gasparro, the chief engraver, [was] exchanging coins and spending them” in the 1970s. Mary Brooks was the Director of the U.S. Mint from Sept. 1969 to Feb. 1977.
QDB goes on to say, “If the janitor of the Mint showed up outside the Mint with a new Susan Anthony dollar that had been struck, then I would say hey, there’s nothing wrong with this [provided he had exchanged face value in coins for it.] That was the situation with the Sacagawea mulings,” famous errors that left the U.S. Mint in the early 2000s.
Generally, in this sworn deposition, QDB asserts that “conventional Mint practice shows that the chief engraver, the Director of the Mint, and [many other Mint employees] have in the past taken coins from the Mint. When I say taken, I don’t mean stolen. … [Such coins] were legally obtained without stealing from the Mint,” QDB emphasizes.
QDB suggests that not much has changed in this regard during the history of the Philadelphia Mint. In this deposition, QDB explains that he “can discuss with equal facility Mint records dating back to 1792 and those of the 1930s. I have spent my professional life” studying U.S. Mint records, QDB declares, “and, equally important, the everyday reality of what Mint officers and employees did.”
QDB has frequently written about “secret sales and swaps, of thousands of coins, from spring 1859 to summer of 1885. It was common practice for Mint employees to trade other coins for ones they found interesting. I had a 1936 Elgin half dollar that Chief Engraver John Sinnock swapped out,” QDB reveals, “and sent to the designer, Trygve Rovelstad. No records at all kept.”
I questioned QDB at length. He adds that “many employees of the Mint and Treasury Department switched common dates for dates in the early 1930s and took [these gold coins] to NYC coin dealers, Abe Kosoff among them, who had more than they could easily sell! Earlier, these had been rarities. No single Treasury or Mint employee of the 1930s was even questioned about this,” according to QDB.
“A steady stream of Mint employees went to New York City from 1937 to 1939 to sell previously rare Double Eagles to coin dealers.” Further, QDB explains that “these employees substituted other coins of equal intrinsic” gold value. As “the coins [obtained] were destined to be melted anyway,” the U.S. Treasury Department did not regard such a practice “as illegal” or harmful, QDB explains. The same quantity of gold coins that was planned to be melted was, in fact, melted. It just did not matter if a 1928 Double Eagle, which is a common date, was substituted for any Double Eagle of the 1930s.
Admittedly, I emphasized last week that such trades (or “unit exchanges” in David Ganz’s terminology) were perfectly legal before April 12, 1933. Regarding the late 1930s, this information from QDB is ‘news’ to me. While I realized that such activities occurred in the early 1930s, I was surprised that QDB has knowledge of similar events in the late 1930s. QDB “reviewed thousands of documents” in preparation for his deposition relating to the Switt-Langbord case, which QDB gave in Oct. 2008.
While reading books by David Tripp and Alison Frankel, my impression was that Tripp and Frankel were considering 1933 Double Eagles in isolation, rather than in the context of the history of coin collecting in the U.S. It may be true that the jury at the trial last week was also considering 1933 Double Eagles ‘out of context.’ To understand the legitimacy and routine nature of switches, swaps or unit exchanges, there is a need to know about the interactions between Mint employees, dealers and collectors over a period of decades.
III. No evidence of any conspiracy
While I am not sure about all the evidence admitted at the trial, books by David Tripp and Alison Frankel, which I cited last week, put forth an illogical, shallow, unsubstantiated, conspiracy theory to show that all privately owned 1933 Double Eagles were stolen. At the trial, David Tripp was the lead witness for the U.S. Treasury Department.
Put simply, it is a fact that more than sixteen 1933 Double Eagles have been traced to Izzy Switt. It is also a fact that former Mint Cashier George McCann later became a convicted thief. This theory holds that that Switt and McCann conspired to steal 1933 Double Eagles.
There is no evidence that Switt and McCann ever had a conversation and there is no evidence that McCann was ever in Switt’s store. Moreover, as it was legitimate and acceptable to trade common date Double Eagles, such as 1928s, for 1933 Double Eagles, Switt could have acquired more than twenty 1933 Double Eagles without having to steal anything or to talk to McCann. Switt and his associates were active and very knowledgeable gold traders in Philadelphia.
It is not logical to assert that Switt would have stolen coins that he could probably have easily obtained for face value. It is also very plausible that others who had obtained 1933 Double Eagles for face value knew that Switt was one of the wealthier and more successful scrap metal, jewelry and antiques dealers in Philadelphia. It was known that Switt could afford to speculate in rare gold coins, while most of his competitors could not afford to do so. After all, these events occurred during the Great Depression.
Switt could have bought 1933 Double Eagles from U.S. Mint employees, dealers, OR collectors who walked into his shop. There is no reason to assume that any 1933 Double Eagles left the U.S. Mint after April 12, 1933. Indeed, one or a few people who obtained 1933 Double Eagles before April 12, 1933 may have later learned that Switt was willing to pay a premium over face value ($20) for each 1933 Double Eagle and thus sold them to Switt.
Twenty dollars was a significant sum in the mid 1930s. Even affluent people often had friends, relatives or neighbors who were barely surviving during this harsh period. Twenty dollars could then be used to purchase large amounts of food and fuel. There is a fair chance that a collector or a dealer legally obtained 1933 Double Eagles in March 1933 and, weeks, months, or years later, sold them to Switt for a profit.
Switt was smart and very financially successful. He was probably aware that George McCann was a problematic individual and Switt probably avoided having conversations with McCann. The theory that Switt and McCann definitely conspired is not logical.
Yes, McCann mysteriously obtained money in the 1930s and invested some or all of in stocks. According to Tripp and Frankel, in 1936, McCann had substantial income in addition to his salary. Frankel points towards a “$10,000” deposit in a brokerage account (Alison Frankel, Double Eagle, NY, 2006, p. 61), and Tripp refers to $9837.50 in “unexplained income” (Tripp’s book, NY, 2004, p. 183.)
McCann could have acquired such funds by stealing common gold coins or scrap gold at the Philadelphia Mint. It does not make sense to conclude, or even to theorize, that McCann’s extra income relates to 1933 Double Eagles. If McCann did steal many gold coins, he probably stole other coins. Stealing 1928 Double Eagles would be much less likely to draw attention as hundreds of thousands of 1928 Double Eagles were released and a few thousand more would not be significant.
I just do not perceive a strong argument that any 1933 Double Eagles were stolen. Of course, it is possible. It is probably true that McCann was a thief. Moreover, he may have made money gambling or from unreported part-time jobs. The fact that he had unexplained income in 1936 does not indicate that he stole 1933 Double Eagles.
One of the most poorly reasoned arguments put forth is that Switt’s sales of 1933 Double Eagles after the melting of 1933 Double Eagles began early in 1937 suggests that Switt was involved in stealing 1933 Double Eagles in 1936. There are two explanations that are each far more likely to be true than any conspiracy theory.
First, Switt could have acquired 1933 Double Eagles well before 1936. These were ‘rare and unusual’ gold coins and thus coin collectors would think of them as being exempt from the 1934 Gold Reserve Act that required private citizens to ‘give up’ their respective gold bullion holdings. Besides, for a while, Switt had a license to be a trader in gold. Clearly, Switt had a lot of money and a large inventory. So, sellers of 1933 Double Eagles may have been likely to go to Switt’s store, without prompting.
Secondly, Switt, probably through one of his associates, could have traded ‘common date’ Double Eagles for 1933 Double Eagles in March 1933, at the Philadelphia Mint. It is likely that Switt knew that 1932 Double Eagles and 1931 Double Eagles are very rare.
In a peculiar and misleading passage, Tripp talks of Switt’s “unfamiliarity with current coin market prices” (Tripp, p. 184). Switt sold 1931 and 1932 Double Eagles for $40 each, according to Tripp, though a leading price guide of the time listed them at $75 each. Tripp should know that price guides are not always precisely accurate and that coins are often wholesaled at well below retail prices, especially by a ‘behind the scenes’ dealer who handles quantities of rare coins. Besides, in 1935, the editors of the price guide in question may not have been able to gauge the supply and demand of 1931 and 1932 Double Eagles, as more were probably surfacing each year.
At some point from 1933 to 1936, Switt was likely to have figured that there was a good chance that 1933 Double Eagles may become rare. Speculating in 1933 Double Eagles was a legitimate activity.
There were not many collectors or dealers who were willing and able to speculate in 1933 Double Eagles. Not many people had money to risk during the Great Depression. Furthermore, if the U.S. Mint had released 200,000 of them, anyone speculating in 1933 Double Eagles would fail to make a profit. Switt could afford to take risks; most of his competitors could not afford to take such risks.
Yes, Switt sold a 1933 Double Eagle on February 15, 1937 (Tripp, p. 105), “nine days after the meltdown commenced” (Frankel, p. 64; Tripp, p. 72). While this is not a coincidence, Frankel illogically theorizes that Switt’s 1933 Double Eagles came from the Mint via McCann in 1936 or earlier in 1937, and Tripp suggests that McCann took them in 1934. Switt’s 1933 Double Eagles could have left the Mint in March 1933 or at other times. It is very plausible that he purchased them from different sources, as he said when interviewed.
Hundred of thousands of 1933 Double Eagles were minted. There was no reason to conclude that McCann was involved in the distribution of the few that ended up Switt.
Switt waited to sell his 1933 Double Eagles. After the melting of Double Eagles began, he could then command a higher price for a 1933 Double Eagle than he could while there still were hundreds of thousands of 1933 Double Eagles at the Philadelphia Mint. As Switt was keeping 1933 Double Eagles in inventory, it was logical and legitimate for him to wait, until the Philadelphia Mint’s gold coin melting project commenced, before selling his 1933 Double Eagles. The fact that Switt started selling them in 1937 does not shed light as to when he acquired 1933 Double Eagles.
IV. Attacking Switt and his daughter
The judge allowed attorneys for the U.S. Treasury Department to introduce evidence that gives the impression, without proof, that Switt and his daughter, Joan Langbord, were not honest. David Ganz maintains that the judge made “a serious mistake” by allowing such evidence to be admitted and David believes that this evidence may have significantly contributed to the jury’s verdict. Ganz points out that, if the judge’s rulings on these matters are to be appealed, “we will know in thirty days.”
The judge ruled that the Treasury Department may introduce as evidence the point that these ten 1933 Double Eagles were not reported by Joan Langbord as being part of her father’s estate when her father (Switt) died in 1990. Switt had a four story store full of objects and I wonder if he had numerous safe deposit boxes. In my opinion, this lapse in reporting in the 1990s is not relevant to whether 1933 Double Eagles were stolen in the 1930s.
It really was not until the Fenton case got started in 1996 that leading researchers in the coin collecting community, especially Q. David Bowers and R. W. Julian, learned that there was not strong evidence that any 1933 Double Eagles were ever stolen. Did the Secret Service agents who seized 1933 Double Eagles in the 1940s have an understanding of the overall history and traditions of the Philadelphia Mint?
The jury was also allowed to hear that Izzy Switt had been arrested on Aug. 22, 1934, just a few months after the Gold Reserve Act had been passed, a law that probably not been extensively tested in the courts by then, if ever. According to Tripp, “Switt had been lugging an unusually heavy briefcase in the Thirtieth Street Train Station [a major hub] in August 1934, when wary policemen had stopped him. They found over a hundred gold coins, mainly Double Eagles from the nineteenth century. Switt was arrested and prosecuted under the 1934 Gold Reserve Act and lost his license to deal in gold. The case dragged through the courts for four years, and ultimately Switt was ordered to forfeit the coins as a fine,” which was estimated to be $2000 (David Tripp, 2004, p. 112).
David Ganz has extensively researched legal cases relating to gold bullion and gold coins. According to Ganz, there was no set standard as to which coins were exempt from the prohibition of private ownership of gold. Coins that were seized and forfeited in one case might be allowed in another. The term “rare and unusual coin” was not widely understood by policemen, Secret Service agents, prosecutors and judges.
A small number of people were then experts in the culture of U.S. coin collecting. Did any of them work for the U.S. Treasury Department?
It is not clear to me that any of the coins in Switt’s suitcase should be referred to as bullion. Could it be that all these were coins that serious collectors demand to complete sets?
Would policemen at a train station in Philadelphia know that a 1931 Double Eagle is very rare and a 1928 Double Eagle is very common? More importantly, most of the coins were 19th century Double Eagles, almost all of which are much scarcer than 1904, 1924 or 1928 Double Eagles. Among 19th century Double Eagles, most dates fall into the category, broadly defined, of ‘rare coins.’ These are not generics. It is not clear to me that Switt actually did anything wrong by transporting these gold coins. Besides, a few months after the Gold Reserve Act was passed, it was probably not clear to gold traders how it would be interpreted. Certainly, most coin experts would agree that 19th century Double Eagles fall into the category of coins that have a ‘recognized and special value’ to collectors and are thus exempt from the Gold Reserve Act.
Why was Switt singled out by police officers anyway? Few people flew in the 1930s. So, trains were a primary mode of long distance travel. Police officers could not have apprehended and searched every person who was lugging a heavy briefcase or suitcase through a major train station.
V. Closing Thoughts
Did the judge in this trial allow U.S. attorneys to tell the jury that two people conspired to steal 1933 Double Eagles? Consider that there is no evidence that the two ever had a conversation and either of them could have easily and legitimately obtained such coins for face value.
I am a little puzzled as why there were not additional expert witnesses testifying that it cannot be proven that these ten, or any other, 1933 Double Eagles were ever stolen. Indisputably, Roger Burdette has done a tremendous amount of research relating to the Philadelphia Mint, and he is well qualified to be an expert witness in this case. In my opinion, it would have made sense for R. W. Julian and Q. David Bowers to testify as well. I cite Julian on pertinent points in last week’s article.
Q. David Bowers is certainly an expert on the relationships between collectors, dealers and Philadelphia Mint employees from the mid 19th century to the present. If QDB was a witness at this trial, he could, I hope, have explained that many rare coins, over a period of decades, legitimately left the Philadelphia Mint without being recorded as having been shipped, traded or sold. A jury with an understanding of the history of the Philadelphia Mint, especially its culture, would realize that it is unlikely that any 1933 Double Eagles were ever stolen.
©2011 Greg Reynolds
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