James Castagnera: The Battle Over the Double Eagle Gold Coins
The Sotheby’s Double Eagle, and its ten counterparts in what likely will go down in the law books as Langbord v. the U.S. Mint, aren’t just any Double Eagles. They were all minted in Philadelphia in 1933. It’s the year that makes them special… 1933 was when FDR and the New Deal Congress took America off the Gold Standard.
In 1871, following the Franco-Prussian War, a newly-unified Germany secured the soundness of its currency by backing it with South African gold bullion. During the next three decades most of the world’s major powers followed suit, including the United States. The twenty-dollar gold piece known affectionately as the Double Eagle, however, actually predated America’s official adoption of the gold standard in 1900 by half a century. The gold bullion shipped back east from the California rush of the 1840s inspired the striking of the first Double Eagles in 1850.
In 1907, FDR’s distant cousin Teddy commissioned America’s top sculptor, Augustus Saint-Gaudens, to redesign the popular coin. Some numismatic scholars and collectors consider the result to be the most beautiful coin in the world. The 1933 edition certainly is the most controversial. The reasons why are rather complicated. John Maynard Keynes, the English economist who figured out that governments going into debt could pump money into their depressed economies and jump-start capitalism again, needed a whole book to explain why. Suffice to say that expanding the money supply at the expense of inflation by borrowing and spending was one way the New Deal administration helped Americas begin to claw their way out of the Great Depression. Freeing the Yankee dollar from a specified mountain of gold down in Fort Knox, Kentucky, was a part of that plan.
By the time FDR finalized the decision, 445,500 Double Eagles had been minted. One immediate consequence of the government’s abandonment of gold-backed bucks was an order to eventually melt down all but two of the 1933 Double Eagles. Human nature being what it is, more than the two coins in the Smithsonian Institution survived the cauldrons.
The provenance of the specimen auctioned by Sotheby’s in July 2002 is the stuff of legends. The coin was a part of the collection of King Farouk of Egypt. When he was deposed and exiled, he hired Sotheby’s in 1954 to auction off his numismatic hoard. Uncle Sam got wind of what was coming up on the auction block and demanded return of the Eagle. He didn’t get it.
Instead, the coin submerged into art’s underworld of wealthy private collectors and black market dealers. It resurfaced four decades later, when a prominent British coin dealer named Stephen Fenton tried to put it on the market. A legal wrangle with good ‘ol Uncle Sammy resulted in a settlement under which Steve and Sam would share the proceeds of the sale. On that basis Sotheby’s sold the rarity in ’02 at its record price.
The ten Double Eagles at issue in the current Philadelphia case were possessed by Ms Langbord’s father, the late Israel Switt, who dealt in gold at his antique-jewelry store on South 8th Street for some 70 years. Langbord now operates her dad’s business. Way back in 1944 Israel Switt admitted selling nine Eagles (the first probably in 1937), but he was never charged with any crime. All the same, when his daughter and her own son, Roy, found a cache of ten more and reported the discovery to the Philly Mint last September, officials there first asked to authenticate and then confiscated the trove.
New York attorney Barry H. Berke, the seasoned litigator who represented Fenton and now represents Ms Langbord, told the Associated Press on August 24th that Mint officials couldn’t prove the coins had been stolen, and therefore they’re not subject to forfeiture. The Mint contends there was no legal way the coins could have been taken 72 years ago.
Whether the result of this controversy is a lengthy lawsuit or a settlement along the lines of the 2002 deal, Langbord’s case will never overshadow the most famous trial to ever come out of the U.S. decision to abandon the gold standard. That distinction is securely held for all time by Bruno Richard Hauptmann, the German immigrant electrocuted for kidnapping and killing Charles Lindbergh’s baby.
The Lindbergh baby disappeared from the famous flyer’s Hopewell (NJ) estate on March 1, 1932. On May 12 the baby’s body was recovered from a shallow grave just a short drive from the Lindbergh home. Meanwhile, America’s hero, who had made the first solo flight across the Atlantic almost exactly five years earlier, paid a $50,000 ransom to mysterious kidnappers. The ransom was paid in small-denomination bills backed by gold. The police recorded all the serial numbers and circulated them to banks all across the country.
After the U.S. went off the gold standard in 1933, everyone was required to turn in their so-called “gold certificates” or risk holding worthless paper money after a specified deadline. By September 1934, with that deadline fast approaching, bills backed by gold had become relatively rare. Consequently, when Bruno Hauptmann used a ten-dollar bill backed by gold to buy a tank of gas, the attendant took the trouble of writing down the car’s license number. Thinking the bill might be counterfeit, he turned it over to a bank teller in the Bronx, who in turn matched up the ten-spot’s serial number with one on the ransom list. The next step was to track the car to Hauptmann’s garage, where another $1830 of the Lindbergh ransom was recovered from behind a board and $11,930 turned up in an empty shellac can.
Although Hauptmann proclaimed his innocence to the bitter end --- in Trenton state prison’s electric chair --- no one to this day has been able to resolve whether he was part of a kidnap gang or merely the recipient of a stash of cash from a friend. Hauptmann’s alibi was that one Isidor Fisch, a German compatriot, had left the money in his safekeeping when Fisch sailed for home in December 1933. Unfortunately for Hauptmann, Fisch died of tuberculosis before the yarn could be confirmed or denied. The upshot has been a seven-decade controversy in which some commentators have even accused Charles Lindbergh of kidnapping his own child.
While Joan Langbord’s saga can’t top that, she will write a new chapter in what I think of as “The Golden Curse of 1933.”