The Certified Acceptance Corp. (CAC) is offering to pay the U.S. government $20 million for the 10 highly publicized 1933 Saint-Gaudens double eagles recently found to be government property.

The offer is “solid,” and could even be increased following closer inspection of the coins, said John Albanese, founder and president of the New Jersey-based firm.

“Considering all the trouble the government is having with the deficit and the debt limit, this would be an easy way to cut 20 million dollars from the deficit,” Albanese said. “We’ll pay 20 million dollars sight-unseen – and maybe even more after inspection.

“I’ve read that the average American is in debt for $40,000,” he added. “This would pay the debt for 500 people. We see this as a way to do our share to help reduce the nation’s deficit.”

The 1933 “Saints” were at the center of a legal dispute stretching back to 2004, when they were submitted to the U.S. Treasury, ostensibly for authentication, by the family of a Philadelphia woman named Joan Langbord. The family said the coins had been found in the effects of Langbord’s father, Israel Switt, who died in 1990 at the age of 95.

The government determined that the coins were genuine – then confiscated them, saying they must have been stolen from the Philadelphia Mint because it would have been illegal to own them under Depression-era edicts and legislation in effect at the time.

Switt, a Philadelphia jeweler, was known to have sold coins he obtained from the nearby Mint, including a number of 1933 double eagles, but claimed to have acquired them legally through exchanges at the Mint for other coins. The Philadelphia Mint struck 445,500 examples of the ’33 Saint in early 1933 before production of gold coinage was halted and Americans were ordered to surrender most of the gold coins in their possession. All but a handful of the Saints were melted, making the survivors rare – but also subject to seizure in Uncle Sam’s eyes.

The Langbord family filed a civil suit seeking return of the 10 coins seized by the government. But on July 21, a Philadelphia jury decided that the coins rightfully belonged to the government.

A single specimen of the 1933 Saint, seized in a government sting in 1996, was sold at auction in 2002 after it came to light that Egypt’s King Farouk had been granted a U.S. export license for the coin after buying it in 1944. The coin brought $7.59 million, still the highest price ever paid at auction for a single coin.

There is general agreement that the price per coin would be lower, at least initially, if 10 more examples came on the market. But Albanese is confident that CAC would be able to recoup the $20 million – or $2 million per coin – it is offering.

“Seven or eight already are spoken for,” he said. “I have at least that many buyers ready and willing to purchase these coins if my offer is accepted by the government. And I wouldn’t mind at all if we ended up with the other two or three in our inventory.”

Albanese said CAC’s offer also is motivated by concern over what might happen to the 10 rare Saints now that the government controls their fate.

“I’d hate to see them melted. That would be a mistake,” he declared. “These are an important part of our numismatic heritage, and they should be entrusted to people who value and respect our nation’s coinage tradition.”

Albanese said the $20-million offer comes with “minimal contingencies.”

“This is not a publicity stunt; this is a serious offer,” he said. “And given the state of the economy, we feel it’s an offer that deserves serious consideration from the government.”

Since its inception in late 2007, CAC has become widely known and highly respected for its evaluation program. CAC experts examine coins previously certified by either the Professional Coin Grading Service (PCGS) or the Numismatic Guaranty Corporation of America (NGC), then affix a distinctive green sticker to the holder of each coin which, in their judgment, fully merits the grade that was assigned.

Some dealers and collectors are not as familiar with CAC’s emergence as a major buyer and seller of rare coins. To date, the company has purchased more than $200 million worth of coins. It also has processed more than 200,000 evaluation submissions with declared insurance value totaling more than $1 billion.

Further information about the company can be found at its Web site, www.caccoin.com.

News and Analysis on scarce coins, markets, and the coin collecting community #62

A Weekly Column by Greg Reynolds

On July 7th, at the U.S. District Court in Philadelphia, a trial began regarding the fate of ten 1933 Double Eagles ($20 gold coins). The U.S. Treasury Department is pitted against the Switt-Langbord family. This trail has implications that go beyond the fate of these ten coins. In what circumstances should the Federal Government be enabled to seize rare coins from private citizens?

The Federal Government seized ten 1933 Double Eagles that the Switt-Langbord family held for many decades and had voluntarily shown to the U.S. Treasury Department in 2004. In 2006, the Switt-Langbord family sued the U.S. Treasury Department. They are demanding that these ten coins be returned. The trial is currently ‘in progress.’

In 1996, the U.S. Treasury Department seized a 1933 Double Eagle from Stephen Fenton, a British dealer. In 2001 or early 2002, the Treasury Department and Fenton, through their respective lawyers, negotiated. The ‘deal’ stipulated that this 1933 Double Eagle was to be auctioned, and after deducting a commission for an auction firm, the proceeds would be split between the U.S. Treasury and Fenton. On July 30, 2002, Sotheby’s, in partnership with Stack’s, sold the Fenton 1933 Double Eagle for $7,590,020, which remains an auction record for a coin. (Please see my article on coins that are worth more than $2 million each.)

During much of the 20th century, Switt was a dealer in Philadelphia. At the auction on July 30, 2002, bidders were unaware that Izzy Switt’s family had ten 1933 Double Eagles. Such a possibility, though, could very apparently be inferred from David Tripp‘s book, which was published in 2005. Another privately held 1933 Double Eagle is mentioned in Tripp’s book, and is pictured. In 2002, Armen Vartian, a well known lawyer for coin dealers, wrote that he had heard rumors from reliable sources of other privately held 1933 Double Eagles existing. Furthermore, QDB has written about reports of others existing. No one really knows how many are around. Two 1933 Double Eagles are in the Smithsonian.

In the 1940s, the U.S. Treasury Department seized or successfully demanded the forfeiture of several 1933 Double Eagles from collectors and dealers. Secret Service agents and other government employees devoted a considerable amount of time to pursuing 1933 Double Eagles.

“It is unbelievable to me how much the government has spent on this,” exclaims Dr. Steven Duckor. “It is ludicrous for the government to be spending this much time, effort and money in the 1940s, from 1996 to 2002, and now in the Langbord case. The government should spend money on more important priorities,” in Duckor’s view. “It would be okay to make a deal like they did last time. I would not mind some type of deal.” Dr. Duckor is an expert in Saint Gaudens Double Eagles. Among living collectors who reveal their names, he is probably the most sophisticated and widely respected.

Suppose that the U.S. Government prevails in this case. Will other coins or patterns be seized as well? Should owners of 19th century U.S. coins be worried? Should the U.S. Treasury Department have the option of seizing coins that are decades old, and widely accepted, from collectors? What are the implications of this trial for the coin collecting community?

I will address such questions in the future. Now, I review issues relating to the distribution and legitimacy of 1933 Double Eagles.

I. Radical Changes in March 1933

Those who argue that all currently existing 1933 Double Eagles were stolen point to the fact that there are not surviving records that specify formal releases of 1933 Double Eagles in specific shipments or to particular individuals ‘over the counter’ at the Philadelphia Mint. Indeed, surviving Mint Cashier’s records do not include entries for transactions of 1933 Double Eagles. Before discussing this point, it makes sense to briefly review the circumstances surrounding the production of 1933 Double Eagles.

The policies of President Franklin Roosevelt are pertinent to 1933 Double Eagles. During most of U.S. history, a newly elected or re-elected President was inaugurated in March, not January. Franklin D. Roosevelt was inaugurated on March 4, 1933. Afterwards, the U.S. Constitution was amended to require that inaugurations occur on Jan. 20th.

“On March 6, 1933, President Roosevelt issued Proclamation 2039, an order which closed all banks on this day,” Q. David Bowers writes in his book on Double Eagles. “Many institutions went into receivership or were acquired at bargain sales by their competitors” (QDB, “Double Eagle Gold Coins,” Whitman, 2004, p. 277). There was a banking crisis.

In her book on the Fenton 1933 Double Eagle, Alison Frankel mentions that “emergency banking legislation passed three days later [on March 9th]” which prevented banks from ‘paying out’ or exporting gold (Double Eagle, W. W. Norton, NY, 2006, p. 46). The use of paper money was encouraged. Robert W. Julian notes, though, that “the Federal Reserve System was given the authority, about March 13th, to pay out gold to banks under their jurisdiction” (ANS, Groves Lecture, 2002).

On April 5, President Roosevelt issued an executive order requiring private citizens to ‘turn in’ their respective gold by May 1st. Coins that were valued by collectors were exempt from this order. The exemption of collector coins was reinforced in 1934 with terms that made clear that gold coins that are “of recognized special value to collectors” could be legally held. Indeed, these could be bought, sold or otherwise traded.

By the end of March 1933, more than 100,000 1933 Double Eagles were minted. In April, more than 200,000 were minted.

Frankel writes, “An Assistant Treasury Secretary telegraphed to the Mint on March 7 that it was, in fact, ‘authorized to exchange gold coins or bars in exchange for bullion received.’” Earlier in the trial, David Tripp, a paid witness for the U.S. Treasury Department, stated that this telegram is an “orphan.” Later, under cross-examination, Tripp admitted that Tripp himself assigned the term “orphan” to this document. It does make clear that gold coins could be legally exchanged, and thus released from the U.S. Mint, after March 7th and before as well.

II. Trading of Regular Coins

Last week at the trial, Barry Berke, the primary attorney for the Switt-Langbord family, pointed out that there are no surviving records of gold for gold exchanges in the 1930s, though these were perfectly allowable and almost certainly did occur. (See Steve Roach’s report on Tripp’s testimony.) Moreover, Berke emphasized that there is no evidence that the Treasury Department was banning the U.S. Mint from exchanging gold coins for other gold coins. Indeed, none of the Presidential Orders, or Treasury Department commands before April 12th, prohibited ‘coin for coin’ trades. It would seem that trades of uncirculated $20 gold coins for other uncirculated $20 gold coins were legal even after the ‘paying out’ of gold was stopped.

Tripp testified that some contemporary requests for 1933 Double Eagles were denied. Ordering a coin from a distance is not the same as traveling to Philadelphia and implementing a trade ‘in person.’ More importantly, my impression is that the requests to which Tripp was referring occurred after April 12, 1933, perhaps some in 1934. By April 1933, the political climate had dramatically changed, and, by the summer of 1933, William Woodin was unable to serve as Secretary of the Treasury, due to an illness.

Treasury Department officials had to contend with a nationwide economic crisis and establishing guidelines for processing mail orders for 1933 Double Eagles was not on anyone’s mind at the Treasury Department. The point here is that in March, and very early April 1933, ‘coin for coin’ trades for 1933 Double Eagles probably occurred and such trades were considered a legitimate practice at the time.

Roger Burdette testified on July 18th. As I discussed in my Dec. 28th column, The Ten Leading Topics of 2010, Burdette discovered documents that show that the “first 1933 Double Eagles were struck March 2nd, during the Hoover administration.” Additionally, documents discovered by Burdette indicate that the Mint Cashier was provided with forty-three 1933 Double Eagles on March 4. According to Burdette, these “balanced” the accounting of the production of 1932 Double Eagles as some of the already counted 1932 Double Eagles were determined to be defective and thus replaced with 1933 Double Eagles.

So, there may have been 1933 Double Eagles available on March 4 at the ‘Cashier’s counter’ for collectors or dealers to obtain. If 1933 Double Eagles left the Mint in a situation where recordkeepers at the U.S. Mint listed them as being 1932 Double Eagles, would it make sense to assume that these were stolen?

Collectors and lawyers now seem to forget that, in the 1930s, only a few collectors and coin dealers cared about the dates on recently minted gold coins. To almost everyone else, a $20 gold coin was worth just that, twenty dollars. Few government officials and even fewer bankers cared whether a Saint Gaudens Double Eagle was dated 1924, 1928, 1929, 1931, 1932 or 1933. Twenty dollars was a significant amount of money in the 1930s, a sum that bought much more food and fuel than twenty dollars could be used to acquire in 2011. Most U.S. Mint officials at the time did not feel a need to keep specific track of the dates of each coin.

In David Tripp’s book on Fenton’s 1933 Double Eagle, Tripp provides an example of a private citizen trading an old Eagle ($10 gold coin) for a new 1933 Eagle ($10 gold coin) on March 1, 1933. Tripp notes that a record was kept of this trade. Because a record was kept of this trade, however, it does not follow that records were kept of all such trades or that it was policy to require records to be kept of all such trades. Indeed, it was established at the trial that there are records of four 1933 Eagles ($10 coins) being released, yet many more, at least eighteen in my estimation, are currently owned by collectors.

I strongly doubt that records were kept of most ‘gold coin for gold coin’ trades. By tradition, the trading of old coins for new coins, or the trading of common dates for better dates, was considered a legitimate practice and was not considered a ‘pay out’ of gold. Exchanges of gold bullion (metal in other forms) for gold coins, or gold certificates for gold coins were different matters.

“Historically, trading an old, worn coin for a bright new coin has been an integral part of a Mint tour, and whoever was manning the Cashier’s window would have thought nothing of it,” Tripp acknowledges (2004, NY, Simon & Shuster, p. 56). Note the phrase, “part of a Mint tour,” as Mint employees would be more likely to give receipts to people on a tour. A receipt could amount to another souvenir for a tourist. Besides, tourists often enjoy providing their names or even signing forms.

When I visited the CN Tower in Toronto, long ago, I found it curious that most of the other tourists enjoyed signing a log book in the observation area near the top. I watched several tourists read the names and comments left by other tourists. For many, such writing, reading and leaving ‘a record’ was part of the fun of visiting an historic place.

While a tourist may wish to announce his name at the Mint Cashier’s window, perhaps in front of other tourists, a serious collector may not wish to do so. Furthermore, a few collectors and dealers were ‘regulars’ at the Philadelphia Mint and were known to Mint Employees. It was no secret that such regulars wished to trade relatively common dates for better dates and/or obtain choice uncirculated representatives of new issues. Collectors of U.S. coins like to complete sets, and 1933 Double Eagles were then thought of as being needed to complete sets of Saint Gaudens Double Eagles.

During the history of the Philadelphia Mint, ‘coin for coin’ trades were not usually entered in the Cashier’s ledger or in other accounting books. My guess is that no one thought that there was a compelling reason to do so. Such trades were routine for many types of copper, nickel, silver and gold coins. Only a few collectors and dealers came to trade for new Double Eagles.

A 1928 Double Eagle and a 1933 Double contain the same amount of gold. If a collector or dealer came to the U.S. Mint in March and wanted to trade a 1928 Double Eagle for a 1933 Double Eagle, it is likely that such a trade would have been welcomed with a smile and probably no record would have been kept. It was such a routine, simple event that there would be no need to keep a record.

In the minds of most Mint Employees, Double Eagles were Double Eagles. As long as the total number of Double Eagles remained the same, the time and hassle of doing paperwork could be avoided to the satisfaction of everyone involved. My hunch is that they would have thought of it as ridiculous that investigators and lawyers, decades later, would obsess about the lack of records regarding each surviving Double Eagle.

III. Distribution and Melting

Attorneys for the Federal Government suggest that the U.S. Treasury Department never planned to release 1933 Double Eagles. I admit that I have not personally researched government records relating to 1933 Double Eagles. I am relying upon the writings of R.W. Julian, David Tripp, Alison Frankel, Roger Burdette and Q. David Bowers, plus conversations with Jay Parrino and David Krassner.

My analysis suggests that almost all U.S. Treasury Department officials did not care one way or the other whether 1933 Double Eagles were released. As long as it was still legal to ‘pay out’ gold coins, which it was until April 5th, U.S. Mint personnel did not care whether the Double Eagles ‘paid out’ were dated 1928, 1931, 1932 or 1933. It mattered only to collectors of then contemporary Double Eagles and to dealers who sold coins to such collectors. Few others cared.

In March 1933, high level U.S. Treasury Department officials were debating among themselves, with directions from the president, a radical, revolutionary new monetary policy. They probably did not have the time or inclination to even think about the dates on Double Eagles that collectors and dealers received in ‘coin for coin’ trades. They were concerned about the banking crisis and the Great Depression, which was devastating. It is not logical to conclude that they had an objection to a few 1933 Double Eagles being released, especially in ‘coin for coin’ trades.

In the mid 1930s, the Double Eagles that were still in the possession of the Philadelphia Mint were melted. “In addition to the 445,000 1933 Double Eagles, there were more than 900,000 other Double Eagles, most of them struck in 1928 or 1929,” melted, Tripp says (on page 72 of his book).

Certainly, before 1933, collectors and dealers traded Double Eagles of various dates for ones that they wanted. So, it is likely that the Philadelphia Mint must have had Double Eagles of a variety of dates, including some mintmarked Double Eagles that had been ‘trade-ins’! Regarding the 445,000 1933 Double Eagles that were stored at the Philadelphia Mint in the mid 1930s, “less various pieces that had strayed hither and yon,” QDB remarks, “not much care was paid to such things, and on occasion loose Double Eagles of unknown dates were seen strewn around the vault floors and, sometimes, no one knew where particular coins were being kept (QDB, 2004, p. 280).

Tripp is erroneously assuming that such records, in terms of the dates of the respective Double Eagles, should be taken literally. When the quantities of Double Eagles were verified, would Mint employees have taken the time to inspect the date on each one? My impression is that the accounting related to quantities of gold. “The columns in the ledgers balanced,” Tripp admits (p. 73). In my view, this indicates that no Double Eagles relevant to this case were stolen and that no one knows the precise ‘dates’ of all those that were melted.

“From the mid-1930s to 1944, the double eagles of 1933 were openly bought, sold, and displayed by collectors,” states R. W. Julian. “In The Numismatist [magazine] of the early 1940s, for example, the coins were even illustrated.” Julian adds, “On several occasions, [longtime U.S. Mint] Director Nellie Tayloe Ross wrote letters to the editor [of The Numismatist] correcting minor misstatements of one sort or another.” Officials at the U.S. Mint were aware of the trading of 1933 Double Eagles in the 1930s and early 1940s. No U.S. Mint official then openly stated that any of these were stolen.

IV. Destruction of Mint Records

Robert W. Julian has found that many of the Philadelphia Mint’s records from 1933 were destroyed in 1978. “The heavy destruction of records at the order of Stella Hackel in 1978 meant that perhaps five or ten percent of the original 1933 documents still exist,” asserts Julian.

To Bob’s “knowledge,” no researcher “had ever been through these papers looking for material on the 1933 Double Eagle” (ANS Groves Forum Speech, May 9, 2002). Julian asked to see the “1978 destruct lists,” which contained “perhaps fifty [to] one hundred pages of fine print.” So, U.S. Mint records relating to the acquisition of 1933 Double Eagles by dealers or collectors may have been destroyed.

V. Documentation of Transactions

William Woodin was the Secretary of the Treasury from March 1933 until he had to resign later in 1933 due to health issues. Undoubtedly, Woodin regarded it as legal for U.S. Mint personnel, or other U.S. Treasury Department officials, to trade coins and patterns with collectors. It seems likely that Woodin held that it was NOT necessary for such trades to be itemized in public records.

In 1910, William Woodin, then a famous and sophisticated collector, traded two Fifty Dollar gold denomination patterns to the U.S. Mint in return for multiple crates of other patterns. The patterns in the crates were not itemized in public records. Even so, this sale was authorized by high level U.S. Mint officials and the patterns then released have traded many times over the last century. Patterns are often included in collections of U.S. coins.

QDB reports that William Woodin and dealer Stephen Nagy knew “each other for decades.” R. W. Julian found that Nagy claimed that Woodin showed Nagy five 1933 Double Eagles in 1933, when Woodin was still the Secretary of the Treasury. (This claim by Nagy is discussed in an article by Julian that appeared in Numismatic News weekly in Oct. 2002 and QDB discusses this claim on page 282 of his book on “Double Eagle Gold Coins.”)

In regards to transactions involving Philadelphia Mint officials and Philadelphia area dealers, QDB states the indisputable point that “it was long-standing Mint practice to keep few records, not even on obvious items sold to collectors,” including famous rarities (p. 280).

R. W. Julian finds that releases of Proof half cents, cents, two cent pieces and nickels “dated prior to 1878 and pre-1860 gold and silver Proofs, with the exception of the Gobrecht dollars, were not” recorded in the sense that attorneys for the Federal Government are now claiming would have been necessary for 1933 Double Eagles to be legally released. Certainly, the thousands of such Proofs that were openly distributed were not stolen.

It could be fairly argued that records should have been kept for sales of rarities for amounts well over face value. From the 1790s to the 1930s, however, the consensus over time seems to have been that records were not needed when coins were exchanged with other coins, at face value, to suit collectors and dealers who visited the Philadelphia Mint.

©2011 Greg Reynolds