Interesting thread ATS concerning the 1866 report on the SF Mint

[DaveG]

For those of you who don't get ATS, here's a link to an interesting thread that refers to John Jay Knox's 1866 report on the San Francisco Mint, including a discussion of a $20,000 theft by a cashier.

 

The thread includes a link to a copy of the 1866 Mint Annual Report.

 

For those who are interested, most of the 19th century Mint Annual Reports are readily available on the Internet.

 

 

Link to thread ATS

[Nutmeg Coin]

I don't know how many thefts there were from the SF mint, apparently considerably more than than the other mints.

 

Huge amounts of gold were coming out of Alaska after the CA gold rush, it must have been quite a temptation to the workers in SF!

[RWB]

A section in the book "From Mine to Mint" lists quite a few losses from several of the US Mints. The largest was likely from the Philadelphia Mint in the early 1850s and might have amounted to several million dollars. See the book for details.

 

Also, it appears that most thefts were of relatively small amounts. When discovered, the employee made restitution and was fired. No formal reports were made. This maintained the mint's public perception of security and infalability.

[Kurtdog]

It's amazing what some of those guys ATS know. Very interesting, Dave. (thumbs u

[Nutmeg Coin]

Incidentally, I would never use a technically correct though rarely used term like "defalcation" for mint malfeasance. It sounds like a medical term.

[DaveG]

Actually, I love using "defalcation" - it sounds so 19th century!

 

 

It also reminds me of "defenestration" - one of my all-time favorite words!

[RWB]

"Defalcation" occurred when an employee violated their oath of trust.

A "fraud" was when an employee misrepresented one thing as another or accepted payment they were not entitled to.

"Robbery" was theft by someone outside the mint organization.

 

Employees who certified accounts, money and bullion had to buy surety bonds. Following the Dimmick defalcation, the cost of a bond doubled for most employees. Also, the amount of the bond was raised, so the total cost was often four times the pre-1901 level.

 

 

Here is the bond file card for Andrew Mason, Superintendent of the NY Assay Office. His bond for the previous year was $25,000, but doubled to $50,000 after the Dimmick incident. The cost tripled to $300 per year.

 

[DaveG]

Roger,

 

Any idea if specific companies specialized in offering these types of bonds?

 

I presume that bank employees and other people who handled money would have needed bonds, too.

 

 

Also,

 

Dictionary.com (authoritative, I know) says "defalcation" means: "misappropriation of money or funds held by an official, trustee, or other fiduciary" which separates the act from embezzlement, which means "to appropriate fraudulently to one's own use, as money or property entrusted to one's care."

 

So anyone can embezzle, but if an official, trustee or other fiduciary does it, it becomes defalcation. Also, it looks like embezzlement involves fraud, whereas defalcation may just involve theft.

[Nutmeg Coin]

"Defalcation" occurred when an employee violated their oath of trust.

A "fraud" was when an employee misrepresented one thing as another or accepted payment they were not entitled to.

"Robbery" was theft by someone outside the mint organization.

 

Employees who certified accounts, money and bullion had to buy surety bonds. Following the Dimmick defalcation, the cost of a bond doubled for most employees. Also, the amount of the bond was raised, so the total cost was often four times the pre-1901 level.

 

 

Here is the bond file card for Andrew Mason, Superintendent of the NY Assay Office. His bond for the previous year was $25,000, but doubled to $50,000 after the Dimmick incident. The cost tripled to $300 per year.

 

And they tried to get people up the chain of command to be responsible for losses; if I remember the SF director Leach ended up covering some of the losses around the turn of the century.

[RWB]

Deposit Company of Maryland, with a local office in the Mills Building, San Francisco, issued surety bonds for most of the bonded employees of the San Francisco Mint. Frank Leach paid $100 per year for $25,000 coverage, but after July 1901 was charged $200 for each $25,000.

 

Bonding policies and rules were not uniform across the mint or treasury and there were occasional problems, such as the one Leach encountered. In the Dimmick matter the government (treasury) was demanding payment from the bond company within a week of the discovery.

 

The mint used fraud in the sense of embezzlement.

[Nutmeg Coin]

I was just looking at the 1903 record and how the government tried to sue Cole for the Dimmick theft:

 

SAN FRANCISCO, March 15—"United States District Judge Morrow today decided that "William K. Cole, cashier of the United States«mint in this city, is not responsible for the defalcation of former cashier Walter N. Dimmick, who is now serving a seven years sentence for embezzlement. The government sued Cole for $30,000, the amount taken by Dimmick. An answer was filed to the complaint on the ground that Cole was not an officer of the United States, as he was employed by the superintendent of the mint and accountable to him only. Judge Morrow held that the point was well taken and sustained the objection." Cole was relieved of his job though as cashier.

 

Previous to that Dimmick denied guilt on the missing $30K:

 

San Francisco Call, Volume 93, Number 115, 25 March 1903

"Upon direct examination Dimmick swore he never had a dress suit case. He also, by his answers, tried to show that Cashier Cole was his enemy and was anxious to sacrifice him in order that no blame might attach to himself. Seven witnesses also swore positively that the reputation of Night Watchman Cyrus E. Ellis, the man who swore he saw Dimmick with bags of gold in his hand at night, was bad, and they would not believe him under oath.

 

BLAMES CASHIER COLE.

"When the session opened yesterday morning Dimmick resumed his place on the witness stand. He denied he ever took any money from the vaults of the Mint. He swore that he was home on the evening he was supposed to have taken the two bags of gold from the Mint. The witness told of Cole's negligence as cashier. He enumerated instances where Cole was short in his accounts. He said Cole was careless in his work and frequently paid out sums of money in excess of the amounts called for. Dimmick said he saw Cole go into the vault at the close of business and take $20 from the exchange fund and add it to his counter cash. Dimmick testified he told Cole this would not do, and Cole replied, "But I must balance my cash." "I told him," said Dimmick, "he had no right to do this, arid I would report him to Mr. Leach. This exasperated Cole, and he told me to keep away from his office, as he would run it to suit himself. I told him I was directed by Superintendent L.each to look after things and if he (Cole) did not like it he could appeal to Leach." The witness stated that there was enmity between Cashier Cole and himself. This statement was made in order that the jury might take cognizance of the charges made by Attorney Collins that Colo and Leach were conspiring to undo Dimmick. Attorney Dunne made some sharp objections to this line of questioning."

 

 

[RWB]

FYI -- a "dress suit case" is not the kind of rectangular luggage that we normally think of. It could be described as a valise, carryall, or soft-sided triangular bag. The bottom was wide and the sides were clasped at the top. It was used to carry a man’s suit for overnight travel, or office papers. Physicians used a similar bag for carrying utensils and drugs when making house calls (remember those?)

[DaveG]

You know, "someone" could write a really interesting article about this particular defalcation, especially since so much primary material exists - trial transcript, reports in the Mint archives, articles in the contemporary press (it would be fun to point out where the articles departed from the truth).

 

I would particularly enjoy reading that article!

[RWB]

The 2nd trial transcript is over 800 pages....

[physics-fan3.14]

The 2nd trial transcript is over 800 pages....

 

Plenty of materials to work with then! Enough for a book!

 

And that book would also make for a far more interesting movie adaptation than your WWII patterns book

[RWB]

There were two trials for embezzlement, both of which resulted in convictions.

There were also three trials on the $30,000 defalcation charge. Two hung juries (9-3 for conviction in both instances) and one conviction. The government spent about $20,000 to prosecute.

Dimmick also appealed his incarceration on one of the embezzlement charges to the US Supreme Court, claiming wrongful imprisonment. His total time in jail was 8 years on all of the convictions.

 

I have all of the transcripts, SS reports, newspaper articles, etc.

 

It might make an interesting article, but there's no "hook" for a book.

[Nutmeg Coin]

Jack Trout has surfaced on another forum to argue his position: http://forums.collectors.com/messageview.cfm?catid=26&threadid=912788&STARTPAGE=1

 

There was this article today on the Dimmick case: http://mashable.com/2014/03/06/saddle-ridge-gold-dimmick-stolen/

[DaveG]

Roger,

 

Your article could be a summary of the story - the theft, the various trials, etc.

 

The "hook for the book" is, of course, that Dimmick didn't do it - after all, he was convicted on circumstantial evidence and lived quietly after he got out of prison.

 

If he had access to $30,000, why didn't he leave the country (or at least California)?

 

The book should focus on the other Mint personnel who could have taken the money and point fingers at them (without being either definitive or libelous).

 

Maybe Leach did it? Maybe Cole did it?

 

Why did the detective focus on Dimmick so single-mindedly?

[RWB]

Yes, I saw Mr. Trout's comments. Sounds kind of fishy to me. He obviously swallowed tall tales hook, line and sinker. Although the newspaper reporter certainly tangled things further, almost nothing Mr. Trout said was true. A reasonable collector would have referred the media to some knowledgeable numismatist or organization, or at least avoided repeating Grandpa's stories.

 

I expect the hobby of fly fishing would be perturbed if the situation was reversed and someone found a 300 lb bass buried in their yard..... and….it was stolen from a fishmonger…or marina……or the Coast Guard….or….well it's not the same, I guess.

 

Ultimately, responsibility lies with the "journalists" who researched and wrote the story. Presumably, they had some sort of training, but it seems questionable if it was in journalism, and certainly not in logic.

 

Just a thought.

 

[RWB]

PS: It took several days to clean up most of the mess he left....tangled lines, twisted shafts, scales all over the place, and a general stench of rot as the truth was drowned in ignorance.

[Nutmeg Coin]

It's going to be interesting how this plays out. "Coin World" had a fairly weak discussion of the issue in their online and print issue that came out online today.

 

As long as a story is out there with a professional looking news copy, most people will believe it. A friend recently asked me if this story about the Dalai Lama moving into the Playboy mansion was true? He actually thought it was and shared it on Facebook!

 

This is one of the most complicated stories in numismatics that has come down the pike in a long time.