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Title: Border guard
The story of the United States Customs Service
Author: Don Whitehead
Release date: January 12, 2024 [eBook #72689]
Language: English
Original publication: United States: McGraw-Hill Book Company, Inc, 1963
Credits: Brian Wilson, Tim Lindell and the Online Distributed Proofreading Team at https://www.pgdp.net (This book was produced from images made available by the HathiTrust Digital Library.)
*** START OF THE PROJECT GUTENBERG EBOOK BORDER GUARD ***
BORDER GUARD
_Also by Don Whitehead_:
THE FBI STORY
JOURNEY INTO CRIME
Don Whitehead
BORDER GUARD
THE STORY OF THE UNITED
STATES CUSTOMS SERVICE
_McGraw-Hill Book Company, Inc._
_New York_ _Toronto_ _London_
BORDER GUARD
Copyright © 1963 by Don Whitehead. All Rights Reserved. Printed in
the United States of America. This book or parts thereof may not be
reproduced in any form without written permission of the publishers.
Library of Congress Catalog Card Number: 63-12134
First Edition
69947
_For Ruth and Gene Neilsen_
CONTENTS
1. A Slight Case of Conscience 1
2. A Time of Crisis 21
3. A President is Bamboozled 32
4. The Pirates of New Orleans 44
5. The Dark Years 55
6. Booze and Bribes 69
7. The Enforcers 86
8. Test Tube Detectives 96
9. The Informers 107
10. The Violent Border 120
11. A Dirty Business 131
12. The Case of the Crooked Diplomat 147
13. A Strange Little Room 157
14. The Diamond Smugglers 166
15. A Fool’s Dream 184
16. The Chiselers 196
17. The Innocents 213
18. The Stormy World of Art 223
19. Sex and the Censor 234
20. Of Toy Canaries and Pirates 241
21. The Middle Men 255
22. The Restless American 265
1
A SLIGHT CASE OF CONSCIENCE
One of the most serious problems confronting the Customs Service in
this century is the control of the illegal importation of narcotics.
Some of the difficulties involved in handling dope smuggling can
be seen when it is realized that these drugs are being sent from
all over the world, by every means of international transportation.
The comparatively small number of Customs agents rely on patience,
diligence and intelligence, and they are doing a remarkable job. Since
this problem is so important, and so typical of the job the Service
does, we will begin with the story of one successful case.
On the night of May 17, 1955, seventeen-year-old Truls Arild Halvorsen
sat in an office in the Customs House in Boston, Massachusetts,
blinking back the unmanly tears that threatened to spill down his
face. He kept trying to swallow the dry lump of fear in his throat,
but it wouldn’t go away. And he had to concentrate hard to remember
the answers to all the questions being asked of him by the men sitting
about the room.
He was a tall, handsome youth. His blond hair was cropped in a crew
cut. His eyes were as blue as the waters in the fjords of his native
Norway which he had left for the first time only a little more than a
year before. That was when he had shipped out as a seaman aboard the MS
_Fernhill_.
He remembered the day he left home his father had said, “We are very
proud of you, son.” His mother had wept as she clung to him. His
friends had gathered to shake his hand and wish him good luck on his
first voyage. He had felt grown up and proud and excited--ready to cope
with anything the future might bring.
But now ... now he sat, a virtual prisoner, answering questions about
his role in the plot to smuggle narcotics into the United States. It
was a nightmare he wished he could forget, but he knew he never could.
The men around him were members of the U.S. Customs’ Special Racket
Squad out of New York City, whose job it was to run down smugglers.
He heard the big, soft-voiced man sitting across the desk from him--the
agent named Dave Cardoza--say, “Let’s go over the story again,
Halvorsen. This time it’s for the official record. Tell it just as you
did before--exactly what happened.”
Halvorsen swallowed once more and nodded. He didn’t need a translator
to understand what Cardoza was saying because he spoke excellent
English as well as German.
“Will you state your full name?”
The youth replied: “Truls Arild Halvorsen.” And the recording began.
Q--What is your position on the ship?
A--Ordinary seaman.
Q--What vessel are you on?
A--The name of the ship is the _Fernhill_.
Q--How long have you been employed aboard the _Fernhill_?
A--Three trips, about fifteen months.
Q--How old are you, Mr. Halvorsen?
A--I am seventeen and a half years old.
Was it possible this had begun only a few weeks ago? It had begun that
day in Hong Kong when he met the Chinese stranger aboard the _Fernhill_
and, like a fool, he had listened to the man’s talk about making easy
money. That was when he should have walked away.
But he hadn’t walked away. And that’s why he was now in this strange
room in Boston with these men who asked so many questions....
Q--Mr. Halvorsen, on the 15th of March, 1955, where was your ship,
the _Fernhill_?
A--It was in Hong Kong.
Q--And did you have any conversation with a visitor to the ship?
A--Yes, I was talking to him.
Q--Will you explain what conversation you had and with whom it was?
A--The man was a tailor and he said to me that he wanted to talk
about some business down in my cabin.
Q--Had you ever met him before?
A--No.
Halvorsen recalled that he had talked to the Chinese tailor about the
price of a suit. Several tailors had boarded the _Fernhill_ to solicit
orders as soon as the ship dropped anchor. Most of the ship’s crew had
placed orders for suits, but Halvorsen had decided the price was more
than he could afford. It was after this that the tailor--a well-dressed
man of medium height with a wart on the lobe of his left ear--whispered
to Halvorsen that he would like to talk to him alone in his cabin.
Q--What did he say when he talked about this other business of
smuggling?
A--He asked me if I wanted to make some money.
Q--What did you say?
A--Yes, I said.
Q--Then what did he say?
A--He said, “I can give you opium[A] if you will take the opium to
San Francisco.” He said that if I would do this for him he would
pay me $1,200 American.
Q--What did you say then?
A--I was not sure if I wanted to do it or not, but I did not say no.
[A] In the transcript of Halvorsen’s story, the young seaman
referred to the narcotics sometimes as opium and at other
times as cocaine and heroin. The narcotics in each case
was heroin, a derivative of opium highly favored by drug
addicts in the United States.
The tailor then wrote an address on a slip of paper--No. 54 Cameron
Road--and pressed it into Halvorsen’s hand. “If you decide you want the
money, come to this address at seven o’clock tonight.”
By six o’clock that evening, Halvorsen had reached a decision. The sum
of $1,200 sounded like a small fortune to the boy who had never in his
life had more than a few dollars at one time. It was more money than
he could save in many months at sea--enough to buy an interest in a
fishing boat back in Norway.
Halvorsen dressed in his best blue trousers and white shirt for the
trip ashore. When he left the _Fernhill_ he carried a briefcase which
the Chinese had suggested he bring along. He hailed a rickshaw at the
ferry slip near the Peninsula Hotel, and gave the address on Cameron
Road. Then he sat back to enjoy the gaudy, East-meets-West sights of
Kowloon as the coolie trotted through streets swarming with Chinese,
most of them refugees from Red China.
After he stepped from the rickshaw and paid the driver, he stood
uncertainly at the curb looking about for the number 54. A Chinese came
up to him and said, “You looking for Number Fifty-four?” Halvorsen said
he was, and the man said, “You follow me.”...
Q--Where did he take you?
A--He took me inside the house and into a corridor. We turned right
and there was a door. He knocked on the door.
Q--Was the house No. 54, Cameron Road, ground floor, Kowloon, Hong
Kong?
A--Yes.
Q--Was there any number or anything written on the door of the
corridor?
A--I don’t remember.
Q--Then what happened?
A--Somebody opened the door and said, “Please, come in.” He took my
hand as in welcome. He said, “I am glad to see you,” or something
like that and in the room was the Chinese tailor I saw on the ship
and another man....
Halvorsen remembered sitting with the three Chinese at a small, round
table. The room was dimly lit and dingy. One of the men offered him
whiskey but he refused and instead asked for a glass of beer. A woman
padded into the room and placed a bottle of beer on the table. And then
he was aware that a Chinese girl was standing near him. But when he
glanced at her, he was blinded momentarily by a flash of light and so
startled that he started to rise from his chair.
The wart-eared tailor laughed and said, “Don’t worry. It was only a
flash from a camera. We need a photograph to send to our man in San
Francisco so he will be able to recognize you when you arrive with the
packages.”
One of the Chinese, a short, fat man in shirt sleeves, took a slip of
paper from his pocket and scrawled on it the words, “San Francisco.”
He tore the paper in half, handing one part to Halvorsen. “You keep
this half,” he said, “and we will send the other to our man in San
Francisco. When you meet him, you give him your half of the paper and
he can match the two halves to make sure you are the right man.”
“Where will I meet him?” Halvorsen asked.
The man wrote on another slip of paper “Lew Gar Kung Saw, 854 Clay
Street, San Francisco.” He handed it to Halvorsen and said, “You
deliver the packages of heroin to this man at this address. When you
make the delivery, he will pay you twelve hundred dollars. Okay?”
Halvorsen nodded. “I guess it’s okay,” he said. Then he gave them the
itinerary of the _Fernhill_. He told them the ship was scheduled to
arrive in Boston on May 16. If possible, he would leave the ship there
or in New York and travel by bus to San Francisco to make the delivery,
after which he would return to Norway.
The fat Chinese left the room, and when he returned he was carrying
ten cotton bags filled with heroin, each of them weighing about half a
pound. He placed them in Halvorsen’s briefcase....
Q--What happened then?
A--Then he asked me if I saw the bags. I said, “Yes.” He said that
was what I was going to take ashore and he said, “You have to keep
it on your body.” And he showed me a white silk sash.
Q--Did he tell you how to use that white silk sash?
A--Yes. He said I was first to fold it double and put it around my
waist and then I could put the white bags down in the folds of the
sash. He said I should keep maybe two bags in front, two bags in
the back and the others strapped to my legs.
After the Chinese put the heroin in the briefcase, Halvorsen left the
house on Cameron Road. He returned to his ship and placed the briefcase
in a ship’s locker. He explained to the officer in charge that it
contained souvenirs.
From Hong Kong, the _Fernhill_ steamed to Djakarta, Indonesia, where
Halvorsen hurried ashore with several crew members for a look at the
city. After a time he wandered away from the others. He was alone,
sipping a glass of beer in a bar near the Hotel Des Indes, when a
Javanese approached and stood beside him.
“Have you got anything you would like to sell?” the Javanese said. “Any
clothes or shoes? I can get you a good price.”
Halvorsen looked at the man, a middle-aged Javanese with a jagged scar
running from his left eyebrow to his chin. He said stiffly, “I’m not
interested in small stuff.”
The Javanese slid into a chair beside the youth. “You mean you’ve got
something else you would like to sell?” he asked.
Halvorsen nodded, trying to appear casual and matter-of-fact.
“Maybe we can do business,” Scar Face said. “What have you got to sell?”
Halvorsen said, “What would you pay for a pound of heroin?”
The Javanese was impressed. “You can get heroin? You are not fooling
me?”
“I’m not telling a lie,” Halvorsen said. “How much for a pound?”
Scar Face said, “If it’s pure stuff, I’ll take two pounds and pay you
ten thousand dollars American money.”
$10,000 for two pounds of heroin! Halvorsen was so startled that he
blurted: “That’s too much. Five thousand would be enough. I’ll have to
get the stuff from the ship.”
Scar Face said, “You wait here. I’ll be back.” And he hurried from the
bar.
In less than five minutes he was back with two other men, one of them
dressed in a police uniform. They took Halvorsen to the dock, where
they boarded a police launch which carried them to the _Fernhill_.
Halvorsen took Scar Face to his cabin and told him to wait there.
Then he went to the ship’s locker and removed two bags of heroin and
brought them back to his quarters. The Javanese opened one of them. He
took a pinch of the white powder and tasted it. “It looks and tastes
like it’s pure stuff, but I don’t know. I’ll have to get a doctor to
make a test.”
This precaution seemed reasonable enough to Halvorsen. He handed the
two bags to the Javanese, who concealed them under his coat. They
returned to the police boat which carried them back to the pier. And
then he and Scar Face got into a car and drove to the outskirts of the
city, where the car swung into a driveway beside a white frame house.
“This is the doctor’s house,” Scar Face said. “You wait in the car.” He
carried the two bags into the house.
In a few minutes Scar Face came back to the car. “The doctor says it
will take time to test the heroin. I can’t get the money until he makes
the test. I’ll bring it to you tomorrow.”
With appalling innocence, Halvorsen said, “I guess that’s okay.” And as
Scar Face drove him back to the waterfront, they agreed to meet on the
pier the following morning.
The next day Halvorsen went ashore to meet Scar Face. He waited at the
agreed meeting place for more than two hours. Slowly it dawned on him
that he would never see Scar Face again. He had been duped. It was
then that young Halvorsen felt more than chagrin. He felt enormously
ashamed. He wondered why he had ever permitted himself to become
involved in something so dishonorable as smuggling narcotics.
He felt, too, a growing, bitter anger toward the wart-eared tailor and
his friends in Hong Kong and the scar-faced Javanese. He wondered how
he could atone for this sin. And after a while he decided the best
thing to do was to seek advice from someone older.
When the _Fernhill_ reached Singapore, Halvorsen hurried to the home
of a Norwegian minister whom he had once met in Baltimore. The youth
poured out his story to the churchman. “What shall I do?” he asked.
“It is a bad business, my son,” the minister said. “Let me go to the
American Consulate and ask their advice. Perhaps they can help us.”
When the minister returned from the Consulate, he shook his head.
“They can do nothing,” he said, “because the matter is out of their
jurisdiction. They said it would be best if you would take your story
to the police agency called the FBI when you reach the United States.”
But when Halvorsen reached his ship, he thought of his friend in New
York City, the Rev. Leif Aagaard, pastor of the Norwegian Seamen’s
Church, 33 First Place, Brooklyn, in whose home he had spent the
previous Christmas. On April 11, 1955, he wrote the Reverend Aagaard a
long letter:
Dear Aagaard:
Let me get right to the matter. When we were in port in Hong Kong
(March 15) I chanced to get in conversation with a tailor who came
aboard to take orders. After the usual talk about everyday things
he asked if he could get a word with me in private in my cabin. It
proved he wanted me to smuggle four pounds of cocaine from Hong
Kong to Frisco. I was to get $1,200 from the man I was to deliver
the goods to in Frisco. I said Yes!
He gave me an address in Hong Kong where I should come the same
evening. There I was to get the necessary information as well
as the cocaine. I arrived at the specified time. There a flash
photo was taken of me in order that the contact in Frisco could
identify me. I also received one half of a letter that was torn in
two parts. The photo and the other half was to be sent to Frisco.
The half which I retained was to serve as my pass in order to get
in contact with these men. I also was given the name and address
of the man I was to deliver the cocaine to in Frisco. Afterwards
I received eight[B] small sack-like bags made of cotton, each
containing one-half pound. They were placed in a brief case which
I should bring them aboard in. I did everything they instructed me
to do and locked it in my cabin, later to hide it in a safe place.
I had, at that time, all intention of doing this rotten job. Later,
however, when I had had the time to think more clearly about these
things I cursed myself for having wanted to take part in such
dirty things. I came to the conclusion that I would throw it all
overboard, but at the same time a thought struck me that perhaps
I could be of help to the American authorities by getting these
people jailed in Frisco. When we arrived in Singapore I contacted
Rossebo whom I knew from the time I was ashore in Baltimore. I told
him the whole story and he promised to get in contact with the
American Consulate there, and in a discreet manner try to find out
about same. Now it was found, however, that they could not give any
direct answer as to what the American authorities might do to me as
a smuggler. They were very much interested, but said that that type
of smuggling was something that came under FBI.
Will you now be so kind as to do me the favor of presenting the
entire matter before the FBI in New York and say that I am placing
myself entirely at their disposal in the case. Let as few as
possible in on this. I am afraid that the persons I am dealing with
on this are no small fry. I will now seal the goods and declare it
on the manifest as four pounds of camphor. This I am doing so as
not to have the ship and the captain mixed up in this affair, if it
should get that bad. Now I ask that you or the authorities who will
handle this matter send me a discreet telegram before May 10, which
will assure me that I can safely count on avoiding any trouble from
the authorities as a result of my smuggling. If I do not receive
the telegram within the specified date, I will throw everything
overboard and remove every trace of everything that might implicate
me. In case you do not want to have anything to do with the matter,
please advise me as soon as possible. _Fernhill_ is scheduled to
arrive in Boston May 16th.
Well, now I hope that you will not judge me too harshly and that
all will be well again.
Warmest regards to you and your family.
_Truls Arild Halvorsen_
[B] Actually, Halvorsen received ten sacks--but he could not
bring himself to admit to Aagaard that he had been swindled
of two of the bags in Djakarta.
When the Reverend Aagaard received the letter, he was shocked and
dismayed. He remembered young Halvorsen well because the youth had come
to his church in Brooklyn when his ship made port there. Aagaard had
become so fond of the boy that he had invited him to his home the past
Christmas for dinner with his family. He knew he was an intelligent
youth and had never before been involved in wrongdoing.
The pastor got in touch with the Norwegian Consul General, Thor
Brodtkorb, and the two men arranged a meeting with Supervising Customs
Agent Lawrence Fleishman at his office at 21 Varick Street. At this
meeting Aagaard and Brodtkorb reviewed the entire case as it had been
told to them in the letter by Halvorsen.
After a further discussion with the U.S. District Attorney, it was
agreed that if Halvorsen would turn over the narcotics to the master of
the _Fernhill_ while the vessel was still on the high seas, then young
Halvorsen would avoid prosecution for possession of narcotics--simply
because the narcotics would not be in his possession. It was agreed
also that if Halvorsen were cooperative there would be no prosecution
for conspiracy to smuggle narcotics into the country. The master of
the vessel was to be held blameless in this case, since he had known
nothing whatever of the smuggling plot, and there were to be no
penalties assessed against either him or his vessel once the narcotics
were turned over to the Customs officers.
As soon as it was learned that the _Fernhill_ had cleared from Suez on
its way through the Canal to the Mediterranean, a cable was dispatched
to Halvorsen: ALL IN ORDER HERE. GIVE IT TO THE CAPTAIN.
A representative of the steamship company dispatched a message in
international code to the captain of the _Fernhill_ saying:
International signal book code only for the Captain. Confidential.
Halvorsen will hand over packages. Keep them safe until arrival
Boston. Cooperating with authorities here. Everything in order.
Immunity on condition that you handle in accordance herewith. You
must not discuss this with anybody else. Wire us following message
in code to me: Have acted as per your instructions.
On May 5 the _Fernhill’s_ skipper radioed:
The packages have been placed for safekeeping in the safe until
arrival Boston according your instructions. Receiver has photograph
of Halvorsen and first half of papers of introduction. Receiver’s
address Lew Gar Kung Saw, 854 Clay Street, San Francisco. Consignor
Shing Kee and Co., 54 Cameron Road, ground floor, Kowloon, Hong
Kong. Signed, Captain Carlson.
Eleven days later Customs Agents Dave Cardoza, Oscar Polcuch and Edward
Finnegan boarded a launch on the Boston waterfront and were carried
into the harbor to meet the _Fernhill_. They were greeted by Captain
Carlson, who took them to his cabin and handed over to them the sacks
of heroin. Then he summoned Halvorsen to his cabin and introduced him
to the agents.
Cardoza said, “I understand, Halvorsen, that you are willing to
cooperate with us in breaking up this smuggling ring.”
“I’ll do anything I can to help, sir,” Halvorsen said. “I’m sorry I
ever got mixed up in this.”
“We need your help,” Cardoza said, “and you have nothing to worry
about if you do as we say.” He warned Halvorsen that a member of the
smuggling ring might approach him when he went ashore in Boston--and he
must do nothing to create any suspicion.
Cardoza drew a rough map of the waterfront and showed it to the youth.
“You will get off the ship at this point,” he explained. “Walk over to
this corner and wait for a bus. When the bus comes along, get aboard
and take a seat as near the driver as possible. If anyone approaches
you about the heroin, tell them it is still aboard the ship and make
arrangements to meet them later. But don’t worry. Finnegan and I will
be on the bus with you. Get off the bus at this street and you’ll see
a restaurant on the corner. Go in and order a glass of milk--and sit
there until we come for you. Is this clear to you?”
“I understand,” Halvorsen said. “I’ll do as you say.”
Cardoza instructed Agent Polcuch to hide the sacks of heroin under his
jacket when leaving the ship and to take them to the Customs Bureau’s
laboratory at 408 Atlantic Avenue for an analysis. “Tell them it’s
a rush job, Oscar, and we would like to know the results as soon as
possible. They can reach us at the Customs House this afternoon.”
It was almost noon when Halvorsen walked down the gangway alone and
strolled over to the bus stop. The youth boarded the bus and did not
even glance at Cardoza and Finnegan when they brushed by him. No one
spoke to him on the bus nor did anyone approach him as he sat in the
restaurant sipping a glass of milk.
Cardoza and Finnegan lounged in the doorway of a building opposite the
restaurant, from where they could see Halvorsen seated at a table. When
it seemed apparent that no one had followed him from the waterfront,
they took Halvorsen to the Customs House for questioning. The longer
they talked to him, the more certain they were that he was telling the
truth.
During the afternoon, Cardoza received a telephone call from Acting
Chief Chemist Melvin Lerner at the Bureau’s laboratory. “The stuff is
heroin, all right,” Lerner said. “It’s a very high grade. What do you
want us to do with it?”
“Make the usual report,” Cardoza said, “and hang onto those sacks until
we decide what to do next. We may need them in making a case against
the buyer. And thanks.”
The questioning of Halvorsen continued until after midnight. When
the session was over, the penitent young man knew that his personal
nightmare was nearing an end and that there was a way to atone for what
he had done. The whole sorry mess could be washed out by helping the
Customs agents trap the receiver in San Francisco--the man named Lew
Gar Kung Saw.
Agent Finnegan accompanied Halvorsen from the Customs building to the
_Fernhill_ and left him. It was agreed he would remain aboard the ship
until it reached New York harbor. By that time a decision would be made
on the next move.
On May 23, one week after the arrival of the _Fernhill_ in Boston
harbor, Agents Cardoza, Polcuch and Finnegan met with their chief,
Lawrence Fleishman, at their headquarters at 21 Varick Street in
New York City. Fleishman was a lean man with graying hair who had
been doing battle with gangs of smugglers, crooked importers, and
international con men for almost thirty years. Long ago he had lost
count of the number of crooks he had helped send to prison, and the
millions of dollars involved in these cases. But he had never lost his
enthusiasm for matching wits with those he called “the bastards.”
At this moment, Halvorsen was seeing the sights of New York in company
with a young Customs agent. He had been taken from the _Fernhill_ when
the ship reached New York harbor and he had registered in a midtown
hotel to wait for the next move in the game.
Fleishman said of Halvorsen: “The kid can never make the delivery in
San Francisco alone. He’s too nervous and it is too risky. Polcuch had
better go with him. We’ll rig up a story that Polcuch is Halvorsen’s
shipmate and that they have been working together on the deal.”
Fleishman told them it wasn’t practical to use the original eight sacks
of heroin as a decoy in trapping the receiver in San Francisco. He
agreed with officials in Washington that there was too much danger of
the heroin being lost or stolen and being put back into the illicit
market. Also there was the difficulty of obtaining legal clearances for
transporting that amount of heroin across the continent.
“We’ll have to ask the laboratory to find a substitute to put in those
bags,” Fleishman said. “It will have to be something that looks, feels
and tastes like heroin. We can blow this whole case if we’re not
careful.”
Fleishman knew the San Francisco receiver would become suspicious
if Halvorsen didn’t show up soon. He picked up the telephone and
asked his secretary to call the chief chemist in the Bureau’s Boston
laboratory....
When Acting Chief Chemist Melvin Lerner put down the telephone after
talking to Fleishman, he sent word to the laboratory that he wished to
see Chemist Paul Leavitt. Lerner was a tall, brown-haired young man who
had been with the Bureau for fourteen years.
Lerner called for Paul Leavitt because this remarkable man had an
uncanny sense of taste--and if anyone could find a material which
tasted like heroin, it was he. Leavitt could identify accurately an
enormous number of materials simply by tasting them, an odd sort of
sensory skill which he had had since childhood. It had been a valuable
asset in the laboratory, where he had spent almost forty years as a
chemist.
The problem was to find a light, white, powdery substance with the
same bulk and weight as heroin and the same bitter taste. The taste
was particularly important because it was characteristic of narcotics
buyers to taste heroin before accepting it in any large amount.
When Leavitt came into the office, Lerner outlined the problem that
had been dumped into their laps and he gave him the details of the
Halvorsen case.
“How much time do I have?” Leavitt asked.
Lerner said, “It’s a rush job, Paul. They want it in New York on the
first plane tomorrow--in the same cotton bags which are out there in
the vault. We’ll have to remove the heroin from the bags and refill
them with a substitute material.”
Leavitt knew that sacks filled with milk sugar or ordinary sugar would
never fool a veteran trafficker in narcotics because the sugar would
weigh ten times more than heroin. The substitute had to have the same
bulk density as heroin.
For hours the chemist worked on the problem, testing different
materials, but each of them was either too dense or did not meet the
specifications in appearance or taste. It seemed that the agents in
New York had tossed the laboratory a problem that simply could not be
solved in so short a time.
Leavitt was still in the laboratory late in the evening pondering the
problem when he remembered that several months earlier the laboratory
had made a routine test of a white, light, powdery, silica compound
produced by the Johns-Manville Company as a filter agent. Somewhere in
the laboratory there was a sample of this product.
Leavitt found the sample in a storage room. He also found the product
had the bulk density, weight and appearance of heroin. The remaining
step was to make the stuff taste like the narcotic--give it the same
bitter flavor.
At last Leavitt found the solution in a mixture of quinine and
strychnine added to the filter powder in just the proper proportions.
The amount of strychnine he used was in safe limits, even if a man
should swallow a large amount of the stuff.
The following morning, Lerner supervised the job of emptying the sacks
of heroin and filling them with the harmless substitute. He took the
sacks to his secretary, Miss Alfhilde Norrman. “I’ve got a job for
you, Alfy,” he said. “Can you re-sew these bags so no one can tell
they’ve been tampered with?”
“I think so,” Miss Norrman said. Using the same threads with which the
bags had been sewn in Hong Kong, Miss Norrman stitched them shut. She
was careful to insert the needle in the old thread-holes left in the
material. When the job was finished, the eight sacks appeared exactly
as they were when young Halvorsen accepted them from the fat Chinese.
Less than twenty-four hours after Fleishman’s call to Lerner, the
sacks of phony heroin were on their way to New York by plane. The
following day, Agent Polcuch and Halvorsen flew to San Francisco, where
they checked into a seaman’s hotel near the waterfront. After dinner,
they carried the brief case containing the heroin substitute to the
Greyhound bus station and checked it in a locker.
That same evening they met with agents from the San Francisco Customs
office to make plans for the delivery of the sacks to Lew Gar Kung
Saw--a name that meant nothing to the San Francisco agents, who knew
every suspected narcotics trafficker on the West Coast. Very likely the
name was an alias.
It was agreed Polcuch should carry a concealed radio transmitting
device to the building on Clay Street. Two agents would be hidden in a
small delivery truck parked on the street to record the conversation
with the receiver. They would come to help Polcuch and Halvorsen if
trouble should develop.
If possible, the receiver was to be lured to Polcuch’s room at the
seaman’s hotel to accept delivery of the sacks. Two agents would be
concealed in an adjoining room to help with the arrest in case more
than one man were involved.
At 10 A.M. the following day, May 27, Polcuch and Halvorsen left their
hotel and took a taxi to San Francisco’s Chinatown. They stepped out in
front of a four-story building which appeared to be a Chinese rooming
house. They walked up three flights of stairs without encountering
anyone. On the fourth floor they saw a Chinese man walking down the
hallway.
Halvorsen said, “Can you help us?” He showed the Chinese the note
bearing the name of Lew Gar Kung Saw. The Chinese pointed to the end of
the hallway. The room appeared to be a clubroom. There were lounging
chairs, a large sofa, and several tables with chairs. At one of the
tables sat an elderly Chinese reading a Chinese-language newspaper. The
man looked up as Halvorsen and Polcuch entered.
Halvorsen handed him the slip of paper and said, “We’re trying to find
this man. We were told to meet him here.” The Chinese glanced at the
name and nodded. He told them to sit down and then he went to a wall
telephone, where he began dialing several numbers. He seemed to be
having trouble locating Lew Gar Kung Saw.
Polcuch glanced at Halvorsen and winked. “Nervous?” he said in a low
voice. Halvorsen grinned for the first time in days. “Yes,” he said,
“aren’t you?”
Polcuch nodded and lit a cigarette. “You’re doing fine. Just keep it up
and everything will be all right.”
Polcuch knew how the kid felt. No matter how many times you played this
game, you never knew what was going to happen next. One false move
and you blew the whole case, often without knowing why. Halvorsen was
old enough to know the dangers. Now that the pressure was on, he was
handling himself even better than Polcuch had reason to expect. His
hands trembled a bit, but that was the only sign of inner excitement
and fear. He hoped the boy would be as steady later as he was now. He
had been coached on what to say and what to do under every possible
contingency--but this was tricky business even for a veteran agent.
Perhaps the best of the agents were good because they had something
of the ham actor in them. Day after day they were called on to assume
false identities and to act the part of an underworld character in the
drama of the hunters and the hunted. The only difference between this
sort of acting and the theater was that this was not to amuse or to
entertain the audience. A part was played to protect the people and the
Treasury of the United States from thieves, looters, corrupters and
chiselers. If you made one false move or spoke one unconvincing line,
then the curtain came down. The play was over.
There was the time when one veteran Customs undercover agent worked
his way into the confidence of a gang of big-time narcotics dealers
whose operation was a multi-million-dollar business. He gave up his
own identity and his own life to play the role of a narcotics dealer.
He played his part so well that he gained the confidence of the man
suspected of being the mastermind of the operation in New York.
Then came the day when it looked as though the weeks of acting would
pay off. The man who was Mr. Big agreed to sell the agent a large
supply of heroin. That evening they met in an East Side bar and had
a few drinks before going to the place where the delivery was to be
made. The agent insisted on paying for the drinks and then they walked
outside to hail a taxi. Suddenly Mr. Big mumbled something about having
forgotten an important date.
“We can’t get the stuff tonight,” he said. “I’ll see you later.” Mr.
Big ducked into a taxi and that was the last time the agent was ever
able to get within shouting distance of his man.
What had happened? What had gone wrong? Where had the agent made the
false move that blew the case? He reviewed every word that had been
said and every move he had made without finding a clue. He never knew
the answer until months later when Mr. Big finally was trapped by
other agents. He was asked why it was that he had walked out on the
undercover agent that night at the East Side bar.
Mr. Big said, “We had two or three drinks at the bar that night and
everything was fixed to get the stuff. Then this guy insisted on
picking up the tab. He gives the bartender a sawbuck and when he gets
the change he leaves a two-bit tip. Hell, I know right then he’s a
government man because only a government man would leave a lousy
two-bit tip. That’s when I checked out.”
Polcuch knew as small a slip by him or Halvorsen could wreck the case.
While the Chinese was making the telephone calls, he left the table and
strolled over to the window looking out on Clay Street. He saw a panel
truck parked near the entrance and knew the agents were inside.
At last the elderly Chinese hung up the receiver and came to the table.
He said, “You come back at twelve o’clock.”
Polcuch and Halvorsen left the building and whiled away the time
looking in shop windows. When they returned to the clubroom the Chinese
man was still engrossed in his newspaper. He saw them enter the room,
and went immediately to the telephone and dialed a number. There was a
brief conversation in Chinese, after which the old man said, “In five
minutes he come. You wait.”
They sat at the table waiting, and at 12:35 a well-dressed Chinese
entered the room. He wore a neat brown suit and a figured brown tie. He
looked to be a man about fifty years old, and on one pudgy finger he
wore a diamond ring. He smiled as he walked over to shake hands with
Polcuch and Halvorsen.
Halvorsen held out the slip of paper bearing the name Lew Gar Kung Saw.
“Are you this man?” he asked. The Chinese glanced at it and said, “Yes,
yes. That’s my name.” But actually, agents learned later, his real name
was Lew Doo--long suspected of being a trafficker in narcotics.
Lew Doo produced the photograph of Halvorsen and after that the half of
a torn slip of paper bearing the words “San Francisco.” He matched his
half with the half handed to him by Halvorsen.
“Have you got the stuff with you?” he said.
“No,” Halvorsen said. “It’s in a locker at the bus station. Have you
got the money?”
The Chinese showed them a wallet stuffed with currency. Halvorsen said,
“You come to my hotel and bring the money. We’ll get the opium and do
business there.”
Lew Doo exclaimed, “No! No! This place is safe. I do business here all
the time. The hotel room is no good.”
Halvorsen said, “We can’t go walking around the street carrying that
stuff. We might get caught.”
“Don’t worry,” Lew Doo said. “It’s safer here.”
Polcuch sensed it would be a mistake to insist on going to the hotel
room. He said, “Maybe the guy’s right, Truls. This place looks safe
enough. Let’s do what he says.”
Halvorsen agreed with apparent reluctance. And then the youth said, “I
want the money we spent for bus fares, too.” He explained to Lew Doo
that it had cost $138 to come from New York by bus and he thought this
money should be repaid.
Lew Doo made no protest. He agreed to pay the extra money. Halvorsen
and Polcuch left the place and headed for the waterfront in a taxi.
When Polcuch was certain they were not being followed, he gave the
driver the name of their hotel.
Polcuch explained the situation to the agents at the hotel. It was
agreed they would go to Clay Street and conceal themselves near the
entrance to No. 854, where they could see the clubroom windows. They
were not to make a move until Polcuch signalled from the windows or
called for help over the concealed radio transmitter. While it appeared
Lew Doo was working alone, he might have confederates with him when
they returned to the clubroom. It was best to have help near in case
there was trouble.
From the hotel, Polcuch and Halvorsen went to the Greyhound bus station
and took the brief case from the locker. They returned to No. 854 at
approximately 2 P.M., and Halvorsen was carrying the brief case when
they walked into the clubroom where Lew Doo was sitting alone.
The Chinese said, “Let me see the stuff.” He took out a sack and
examined it closely, even to the stitching. He pulled a penknife from
his pocket and slit a small hole in the bag. He poured out a pinch of
the powder and tasted it--and then he nodded in satisfaction.
Lew Doo lifted the other sacks from the brief case and said, “I paid
for ten bags and you have only eight. Where are the others?”
Polcuch tensed. This was a critical moment--and the question he had
been waiting for the Chinese to ask. He glanced at Halvorsen.
“I’m sorry,” Halvorsen said evenly, “but two of the bags got wet on the
ship and we had to throw them overboard. The stuff was ruined.”
For several seconds Lew Doo stood and looked first at Halvorsen and
then at Polcuch as though trying to read their minds. Polcuch, the
veteran, knew the entire case was hanging by a thread. If Lew Doo
backed out now, the mission was a failure. If he didn’t take the final
step and hand over the money, there wouldn’t be enough solid evidence
to hold him for twenty-four hours. It was now--or perhaps never.
Suddenly the Chinese shrugged and the muscles around his eyes relaxed.
He reached into his pocket and pulled out his wallet. He counted out
$1,338 onto the top of the table and then began placing the sacks into
the briefcase.
Polcuch picked up the money and counted it. His hand darted beneath
his jacket and he pulled a snub-nosed revolver from a shoulder holster
to cover the startled Lew Doo. “Don’t move,” Polcuch ordered. “I’m an
agent of the U.S. Treasury Department. You are under arrest.” Slowly
he backed to the window overlooking Clay Street and signalled to the
agents below. Within a few seconds they came pounding up the stairs
and into the room. But there was no fight in Lew Doo.
Lew Doo was charged with conspiracy to violate the narcotics laws of
the United States. He pleaded not guilty, but he was convicted and
sentenced to four years in prison. In Hong Kong, British police raided
the room on Cameron Road and smashed the ring operating from the Crown
Colony.
This was the end of the ordeal for Halvorsen, the young man who had
brought himself to a halt on the edge of a chasm of crime. But it was a
happy and prosperous ending because the U.S. Customs Bureau awarded him
a check for $1,000 for his role in helping smash the smuggling ring.
* * * * *
The case of Truls Arild Halvorsen is only one of countless thousands
of smuggling cases recorded in files which now are gathering dust in
the archives of the Customs Bureau, the oldest agency in the Federal
government.
The Bureau of Customs--or the Customs Service, as it is often
called--is the nation’s border guard. For more than 170 years it
has had the primary responsibility for policing the foreign trade,
collecting tariff duties on imports, and exposing conspiracies which
would defraud the Treasury of the United States.
The Customs Service was organized hurriedly in the first days of the
Republic, when the original Thirteen Colonies voluntarily surrendered
certain rights to the Federal government in order to “form a more
perfect Union.” One of the most important of these rights was the
collection of duties--for without this income the new-born government
could not have existed.
The need for revenue was so great in the nation’s beginning that
Congress rushed through legislation authorizing a Customs Service even
before the organization of the Treasury Department. And when Alexander
Hamilton assumed his duties as the first Secretary of the Treasury,
he found the month-old Customs Service already at work collecting
revenues. The Service was incorporated into the Treasury Department as
a division of the Secretary’s office, and it continued as a division
until 1927 when it was given the status of a bureau, directed by a
commissioner appointed by the President.
Since the day in July, 1789, when George Washington submitted to the
Senate the first list of Customs collectors, the nation’s overseas
trade has grown from a mere trickle to a multi-billion-dollar flood.
The administration of the Bureau has become more complicated and its
operations more diverse as the commercial intercourse between nations
has grown.
In size, the Customs Bureau is one of the smaller Federal agencies,
having approximately 8,500 employees. But being the senior service in
the Federal government, its past is a mirror of the nation’s history.
It is a history tinged with violence and intrigue, because there
has never been a time when its agents were not engaged in a running
war with smugglers--from Jean Laffite and his band of cutthroats
in the bayous of Louisiana to the criminals who direct today’s
multi-million-dollar traffic in contraband.
Because it deals with commerce and travel, the operations of Customs
touch every man, woman and child and every item of merchandise entering
this country--from the tourist returning from Zamboanga to the aardvark
headed for a zoo.
Customs has been damned as a nuisance and a bumble-headed bureaucracy.
It has been praised as one of the most efficient and necessary units in
the Federal government. Despite its long history, few Americans know
anything about Customs beyond the fact that they must submit to an
irritating baggage examination by an inspector upon arriving home from
abroad.
What is Customs? Why was it organized? What are its duties? And why is
it necessary?
Customs is a slender, dark-haired expert sitting in a small room in New
York appraising the value of a treasure in diamonds. It is a chemist in
a laboratory checking the quality of a foreign import--and its dutiable
value--and arriving at a decision which may mean life or death for an
American business in a highly competitive market. It is an inspector at
an airport or on a pier examining the luggage of passengers to be sure
they have complied with the law.
Customs is a tall man with a wind-burned face lying in the mesquite
above the Rio Grande, watching patiently for the smuggler of heroin
or marijuana he knows is coming his way. It is a burly man lowering
himself into the dark hold of a ship to check the cargo and to search
for contraband. It is a man giving an expert appraisal of the antiquity
of a tapestry or the authenticity of a painting to be certain an
importer is not being defrauded. It is a man checking the contents of
a mountain of parcels arriving from overseas.
Customs is a man explaining to a tourist what he can do to save time
and avoid trouble in his travels. It is volumes of complex rulings by
the courts and laws passed by Congress governing the huge import-export
trade. It is a lawyer standing in a courtroom arguing that an import is
subject to much higher duties than its importer claims.
In the long years past, Customs was James Madison standing in Congress
and urging his fellows to adopt a tariff act quickly in order to save
the government from financial ruin. It was a band of men slipping
through the bayous in search of Jean Laffite and the mountain of loot
he was smuggling into New Orleans.
Customs was a small army of men whose collection of duties symbolized
an issue which threatened to touch off a civil war long before Abraham
Lincoln entered the White House. More recently it was an angry maid
exposing a distinguished judge and Hollywood stars caught in a tangled
web of intrigue. It was, unfortunately, also a thief who rocked the
country with a scandal, and weak-willed men who could not resist the
temptation of an underworld bribe.
The Customs Service is and was a thing of many parts, involving the
lives and fortunes of many people. And that is the reason for this
story.
2
A TIME OF CRISIS
The problem of tariffs is one with which governments have contended
from the beginning of recorded history.
The Old Testament mentions customs duties and indicates that in those
ancient times a well-established system of duties existed. In the
early chapters of Ezra is to be found the story of Cyrus, a king of
Persia, who permitted the captive Israelites to return to Jerusalem
from Babylon in order to rebuild the city and their temples. But there
were those who opposed the return of the Israelites. The scriptures
say these opponents “weakened the hands of the people of Judah, and
troubled them in building, and hired counsellors against them, to
frustrate their purpose.”
This dispute carried over into the reign of King Artaxerxes, who
succeeded Cyrus. Those who opposed the Israelites returning to
Jerusalem wrote the king a letter in which they said, “Be it known now
unto the King, that, if this city is builded and the walls finished,
they will not pay tribute, custom, or toll....” But the king searched
the records and found that there was precedent for imposing a tribute
or a customs toll. He replied to the letter, “And I decreed, and search
hath been made, and it is found that ... there have been mighty kings
also over Jerusalem, who have ruled over all the country beyond the
river; and tribute, customs, and toll was paid unto them.”
The New Testament indicates that Matthew was a collector of customs
at the city of Galilee. It says that Jesus called Matthew from “the
receipt of customs.”
The first recorded history of customs being collected in England is
found in the code of laws enacted by King Ethelred in 979 A.D. The law
read, “Every small vessel arriving at Billingsgate shall pay to the
tax gatherer one obolus; if of greater tonnage and mast rigged, one
denarius. If a ship shall arrive and anchor there, four denarii shall
be paid to the tax gatherer. Vessels laden with timber shall pay one
log to the tax gatherer.”
In the Magna Charta is found the following: “Cap. XXX. All Merchants,
if they are not openly prohibited before, shall have safe and sure
Conduct to depart out of England, to come into England, to tarry in
and go through England, as well by land as by water, to sell and buy,
without any manner of evil tolts, by the old and rightful customs,
except in time of war. xxx”
The collection of customs on the North American continent was first
made by the Dutch in 1651 when the governor ordered that all imports
from foreign countries entering the harbor at New York should pay a
duty. The method of collecting was later outlined in a document which
reads as follows:
Instructions for Mr. Cornelius Van Ruyven, collector of the
customes in ye City of New York, by order of Colonell Francis
Lovelace, governour, May 24, 1668.
You or your clerk are to be daily at ye Custome House from nyne
untill twelve at noone. There to receive ye customes both in and
out, as the Merchants shall come and enter, ye Merchant is to
make foure Bills and sign them with his hand, writing his name on
them, and ye same time, when you have signed ye Warrant, or one of
ye Bills, you are to demand ye Custome, either in kinde at 10 P
Cent inwards or double ye vallue of its first Cost in Holland, in
Beaver. And likewise outwards for Peltry you are to receive 10½ P
Cent according to ye vallue in Beaver, for Tobacco one half penny
for Per pound which is noe more than all Englishmen doe pay. xxx
You to tell ye Merchante you are not to give credit. xxx If they do
not like your propositions, you are not to pass their Bills. xxx
And Lastly pray lett ye Books be kept all in English and all
Factoryes and Papers, that when I have occasion to satisfy myself I
may better understand them.
When the city came under British rule in 1664, the system of tariffs
set up by the Dutch was continued. Almost one hundred years before
the Boston Tea Party and the beginning of the Revolution, there was
an uprising in New York against the British collection of customs.
Religion played a role in this rebellion, which was touched off when
England’s Catholic King James II was succeeded by the Protestant
William of Orange and his wife Mary.
When the news of King James’ overthrow reached New York, a Captain
Jacob Leisler, who had lived in New York for about thirty years and
was a deacon in the Reformed Dutch Church, decided that he would
not pay customs duties to a king’s representative who was himself a
Catholic. Leisler was in the business of importing liquors and other
merchandise into New York. One of his vessels came into the harbor on
April 29, 1689, loaded with wine from Europe. Leisler refused to pay
the $100 customs duties. He argued that the collector, named Plowman,
was a Catholic and was not qualified to receive the customs under the
new Protestant regime in Britain. Leister’s stand threw the city and
military officials into a dither. There was a hastily called meeting of
the counsellors, alderman and military officials in the city to discuss
this development. The majority ruling was that the system of collecting
duties would continue as it had in the past until other orders were
received from William of Orange.
Leisler would have no part of this ruling. He told the assembly he
would not pay the tax and he stalked out of the meeting room to
discover he was not alone in his opposition to the customs duties.
Other merchants saw an opportunity in this situation and joined his
side. The result was that Captain Leisler and his friends organized an
uprising against Lieutenant Governor Nicholson.
Leisler reached such a position of power that he drove out those in
charge of the Customs service and appointed his own man, Peter DeLansy,
as a collector. The British finally hanged Captain Leisler for his role
in this revolt and in April, 1696, appointed the Earl of Bellomont as
Governor General over New York and New England.
The Earl was not a man to brook any nonsense such as the nonpayment of
customs to the royal treasury. He restricted the Colonies’ trade with
New York and Albany and forbade the shipment of merchandise up the
Hudson River unless duties were paid at New York.
The collectors appointed by the Earl of Bellomont had a rather
difficult time of it. The merchants of New York were, to be charitable,
unreliable when it came to the payment of customs duties. In fact,
smuggling was a popular practice. In one instance a cargo of
merchandise from the East Indies was ordered seized but the officers
who went to make the seizure simply disappeared. Then it was learned
that the sheriff himself was hiding the merchandise in his own home.
From the viewpoint of King George III’s counsellors, the actions of the
Americans in smuggling and otherwise evading the payment of the customs
duties were no less than thievery from the treasury of Great Britain.
Such nonsense had to be stopped. And so it was that, after Canada came
under British control in 1763, the British adopted a tougher policy
toward the Colonies. In 1764 the Parliament passed the Sugar Act, which
called for the payment of duties on lumber, food stuffs, molasses and
rum brought into the Colonies. This in itself was enough to enrage the
American merchants, but then the Sugar Act was followed by the Stamp
Act in the same year. This act required revenue stamps to be purchased
on all imports. The receipts were to be used to help defer the cost of
British troops stationed in the Colonies. In short, the Americans were
to pay to have British troops quartered in their towns and cities. When
news of the passage of the Stamp Act reached New York, more than 200
merchants gathered for a protest meeting at Burn’s Tavern. They signed
an agreement not to import goods from England.
Judge Robert R. Livingston wrote at the time: “England will suffer
more by it in one year than the Stamp Act, or any other, could ever
recompense. Merchants have resolved to send for no more British
manufactures, shopkeepers will buy none, gentlemen will wear none; our
own are encouraged, all pride in dress seems to be laid aside, and he
that does not appear in homespun, or at least a turned coat, is looked
upon with an evil eye.”
The U.S. Customs Service came into being on July 31, 1789, in a time of
crisis. It was an organization put together by Congress and President
George Washington to save the struggling young central government from
financial collapse through the collection of duties on imports.
The formation of Customs thus became the first step to be taken by the
original thirteen states toward a practical, working partnership after
the adoption of the Constitution. For in agreeing to a uniform tariff,
to be collected by the central government through its Customs Service,
the states voluntarily gave up an important state’s right which each
had guarded jealously--the right to collect and retain its own customs
duties.
For this reason, August 5, 1789, is an important though little-known
date in history. On this day Captain James Weeks sailed his
brigantine, _Persis_, into New York Harbor with a miscellaneous cargo
of merchandise from Leghorn, Italy. The cargo was assigned to Mr.
William Seton, who paid the Collector of Customs a total of $774.71 in
duties--the first payment of duties destined for the Treasury of the
United States.
Captain Weeks’ payment was a modest one, but at least it was a prop
under the financially shaky young government. And for the next 124
years--until the income tax amendment to the Constitution was adopted
in 1913--the Federal government’s primary source of revenue was to be
the money collected by Customs on merchandise and materials brought
into the United States from abroad.
Until they were bound together by the Constitution, the thirteen states
were not a nation. They had fought for more than six years for freedom
from political, economic and military domination. They had struggled
through incredible hardships, physical and financial. They had won
their victory. But they were not a nation.
Throughout the struggle, they were linked together in a loose
confederation in which each state was entirely independent of the
others. The move toward confederation came on September 5, 1774, when
state delegates gathered in Philadelphia to organize the congress
known as the Continental Congress. Each state was represented by one
delegate, and each delegate had one vote. Peyton Randolph of Virginia
was elected president of the Congress--and it is to be noted that he
was not referred to officially or unofficially as the President of the
United States.
The members of this Congress hammered out the Declaration of
Independence and signed it on July 4, 1776. But not until two years
later were the Colonies joined together by a formal agreement, the
Articles of Confederation and Perpetual Union Between the States. In
these Articles the Colonies called themselves the United States of
America, but they remained a union of independent states. Having gone
to war to free themselves from a strong central government with an
autocratic ruler, the Colonies distrusted centralized authority and
each was jealous of its sovereignty.
The result was that the central government was reduced to the status of
a pleader for money. It had no power to levy taxes directly. It could
only appeal to the states to contribute to the expenses of the central
government in proportion to the assessed value of their land. As a
matter of fact, whenever the central government did ask the states for
funds, as likely as not the states simply ignored the request.
In 1781, during the final months of the exhausting revolution and while
the outcome still was in doubt, the central government was in need of
$9 million for operating expenses. The Congress thought it possible to
raise this amount by borrowing $4 million and then asking the states to
contribute the additional $5 million. But the states responded to the
urgent appeal with only $442,000. North and South Carolina, Georgia and
Delaware contributed nothing. At times it seemed that if the British
didn’t defeat the Revolution, an empty treasury would.
During and after the American Revolution, the tariff situation was an
unholy mess. Each state had its own tariff laws, with the exception of
New Jersey, which had none. The states often set up tariff barriers
against each other, sometimes for protection and sometimes for
reprisal. The dickering amongst them was continual and the maneuvering
for advantage fierce.
On one occasion, New York, Connecticut and New Jersey plunged into a
three-way fight that to later generations might seem little more than
hilarious comedy--but there was nothing comic about it at the time for
those involved. It began when the New York legislature reached the
conclusion that the Connecticut Yankees and the New Jerseyites were
taking too many dollars out of New York City, and giving too little in
return.
It was true that Connecticut merchants supplied most of New York’s
firewood, for a tidy profit. And the farmers of New Jersey were sending
boatloads of chickens, eggs, vegetables and fruit across the river,
selling them, and taking back dollars. The imports from Connecticut
and New Jersey were running ahead of the exports to these two states
by too great a margin--or so the gentlemen in the New York legislature
figured. The legislature passed a tariff law which imposed a tax on
every stick of Connecticut wood and each New Jersey egg, chicken, duck,
goose and cabbage brought into the city. The chicken peddlers from New
Jersey had to get clearance papers and pay taxes on each pullet or
hen, each basket of eggs and each head of cabbage. Stovewood had to be
measured and counted at the Customs House and taxes paid on the spot.
Naturally this state of affairs irked the New Jersey folk, whose
legislature promptly looked around for a means of retaliation and, in
so doing, spotted the City of New York’s lighthouse standing on Sandy
Hook. It was solemnly agreed by a majority that this lighthouse should
not stand out there flashing an untaxed warning to ships headed for the
New York Harbor. And so the legislature voted to place an $1,800-a-year
tax on the lighthouse.
In Connecticut, the merchants were no less aroused than the farmers
of New Jersey. It was agreed that a boycott of New York products
was justified. Whereupon the merchants formed themselves into an
association dedicated to the proposition that no loyal Connecticut
merchant would either buy or sell anything in the City of New York.
Any member who violated the agreement was subject to a fine.
Again, the British in 1783 decided that only British vessels would be
permitted to handle cargoes in the West Indian trade. This proclamation
so enraged New Yorkers that they retaliated by laying a double duty on
all cargoes arriving in British vessels. New Hampshire, Rhode Island
and Massachusetts were equally incensed--and declared that no cargoes
could leave their harbors if carried in a British ship.
But these tremors of righteous outrage did not stir the Connecticut
Yankees. They saw the situation as holding the promise of fat profits.
The ships of Great Britain were invited to use Connecticut ports, duty
free. And then Connecticut further enraged its neighbors by imposing a
tariff on goods coming into the state from Massachusetts.
Virginia and Maryland also were having their troubles. Virginia owned
the lighthouses on both sides of the Chesapeake Bay entrance and
demanded fees from every vessel entering the bay. Maryland, on the
other hand, claimed the entire width of the Potomac River, citing old
land charters to the effect that even if a vessel were tied to the
Virginia shore, it still was in Maryland waters.
Connecticut, on the basis of a royal charter of 1662, laid claim to
the Wyoming Valley, which Pennsylvania regarded as her own. The two
states were on the verge of open war before cool heads prevailed and
Pennsylvania’s claim was recognized as the more valid.
With such discord between the states, even in time of war, the winning
of the Revolution and the survival of the Union approached the
miraculous.
Merchants in Philadelphia and then in Boston decided to follow the lead
of the New York merchants. Orders went out to English shippers not to
ship more goods to America as long as the Stamp Act was in effect.
In this tempest the seeds of revolution were broadcast, and it was a
tempest that would not subside until the Colonies had won their freedom
from Great Britain.
Despite the jealousies and the conflicts between the Colonies during
and after the war, the people realized that only in unity could there
be any real hope for survival. This realization moved leaders among
the thirteen states to call the Constitutional Convention of 1787. And
here it was they hammered out the Constitution which was to become the
foundation for the United States of America and a blueprint for freedom.
The Convention met in New York City on May 14, 1787. The delegates
chose George Washington as presiding officer of the Convention. The
document produced at this convention by no means won the unanimous
approval of the representatives from the various states. There were
disagreements and reservations to the Constitution. A total of
sixty-five qualified delegates were certified by the states to attend
the Convention but ten of these did not attend. When the document
was completed there were only thirty-nine who actually signed on
September 17, 1787. Sixteen failed to sign, and some of those who did
sign had reservations. This document was sent by George Washington to
Congress, and Congress sent it to the various legislatures for their
consideration.
The greatest fear at the time was that a central government would
become too powerful. Having thrown off the yoke of one oppressive
government, the Colonies wanted no part of another.
Washington reflected these fears when he sent the newly drafted
Constitution to Congress. He was sensitive to the fact that the states
would have to surrender some rights if they hoped to have an effective
central government. In a letter to the president of the Congress, dated
September 17, 1787, he said in part:
... It is obviously impractical in the Federal government of these
States to secure all rights of independent sovereignty to each,
and yet provide for the interest and safety of all. Individuals
entering into society must give up a share of liberty to preserve
the rest....
The Constitution went into effect on March 4, 1789, and Congress acted
with remarkable swiftness on measures which would insure the financial
stability of the young government. On April 8, 1789, James Madison
arose in the House of Representatives and said:
I take the liberty, Mr. Chairman, at this early state of the
business, to introduce to the committee a subject which appears to
me to be of the greatest magnitude; a subject, sir, that requires
our first attention, and our united exertions....
The deficiency in our treasury has been too notorious to make it
necessary for me to animadvert upon that subject. Let us content
ourselves with endeavoring to remedy the evil. To do this a
national revenue must be obtained; but the system must be such a
one, that, while it secures the object of revenue, it shall not
be oppressive to our constitutents. Happy it is for us that such
a system is within our powers; for I apprehend that both these
objects may be obtained from an impost on objects imported to the
United States.
After some discussion Madison proposed a resolution to impose a flat
fixed duty on rum, liquors, wines, molasses, tea, pepper, sugar, coffee
and cocoa, with a percentage tax on all other imported articles, the
tax to be based on the value of the imports at their time and place
of importation. The resolution also recommended a tonnage tax on all
vessels doing business at American ports.
Madison’s resolution touched off a fight between those who favored
free trade and those who favored heavy duties to protect the interests
of their particular region. There were those who wanted a heavy
tonnage tax on vessels so that the American shippers would be given
an advantage over foreign vessels. There were those who wanted to
protect industries in their own states from the European competition.
Congressmen from the agricultural states leaned heavily toward free
trade.
Thomas Fitzsimons of Pennsylvania came forward with an amendment to
the Madison resolution in which he asked that the duties be placed not
only on the imports suggested by Madison but also on beer, ale, porter,
beef, pork, butter, candles, cheese, soap, cider, boots, steel, cables,
cordage, twine, malt, nails, spikes, tacks, salt, tobacco, snuff,
blank books, writing, printing and wrapping paper, pasteboard and
cabinet ware, buttons, saddles, gloves, hats, millinery, castings of
iron, leather, shoes, slippers, coaches, chariots, carriages, nutmeg,
cinnamon, cloves, raisins, figs, currants, and almonds.
Madison argued that his proposal was only a temporary one and that
as far as possible the trade should be free. He said, “If my general
principle is a good one, the term commerce ought to be free, and labor
and industry left at large to find its proper object, the only thing
which remains will be to discover the exceptions which did not come
within the rule that I have laid down....”
It was Madison’s belief that the cheapness of land in the United
States, compared with the cost of land in other nations, gave this
country a great advantage in agricultural trade. He said that so far as
manufacturing was concerned, “Other countries may and do rival us.” But
then he added, “We may be said to have a monopoly in agriculture; the
possession of the soil, and the lowness of its price, give us as much a
monopoly in this case, as any other nation or other parts of the world
have in the monopoly in any article whatever; but with this advantage
to us, that it cannot be shared nor injured by rivalship.”
Nevertheless, while favoring free trade, Madison conceded that if
America did leave her ports entirely free then the country would
suffer. He said, “If America was to leave her ports perfectly free, and
make no discrimination between vessels owned by her citizens and those
owned by foreigners, while other nations make this discrimination,
it is obvious that such policy would go to exclude American shipping
altogether from foreign ports, and she would be materially affected in
one of the most important interests.”
Despite sharp and often bitter differences, the young Congress was
aware that sectional interests were secondary to the absolute necessity
for action in collecting revenue. Within a short time it had put
together the first Tariff Act. It was titled “An Act for laying a duty
on goods, wares and merchandise imported into the United States.” And
on July 4, the thirteenth anniversary of the signing of the Declaration
of Independence, President Washington signed into law the act which was
the second to be passed by the Congress.
Then Congress quickly set up the machinery for the collection of the
tariff. This was done in the Fifth Act, “To regulate the collection
of the duties....” The bill was sent to President Washington for his
signature on July 31, which fell on Friday. On the following Monday the
President sent to the Senate a list of about one hundred appointments
to Customs offices. The Senate advised and consented to about half this
list but on the following day gave the President an unexpected jolt.
The Senate, without warning, refused to consent to the appointment of
Colonel Benjamin Fishbourn to be Naval Officer (auditor) at the Port
of Savannah. Fishbourn had served with distinction in Washington’s
command during the Revolution and apparently had a spotless reputation
in civilian life.
Washington did not make a fight over Fishbourn’s rejection even though
the Senate action no doubt seemed to him to be a petty and totally
unwarranted assertion of veto power. He did send a message to the
Senate which called to mind later clashes between Chief Executives and
Congress, pointing out that at least the Senate might have done him the
courtesy of inquiring into his reasons for appointing Fishbourn.
Perhaps under different circumstances Washington would not have
been so mild in his reaction to the Senate veto. But the need to
establish an organization for collecting revenue was imperative, and
Washington perhaps felt this was no time for a fight over executive
and legislative prerogatives. The most pressing need was unity in the
government.
And so was the Customs Service created to help bring financial
stability to the nation at a critical time. Despite all the trials and
difficulties, the Customs Service collected more than $2 million for
the Treasury in its first year of operation.
3
A PRESIDENT IS BAMBOOZLED
There was little cause for gaiety in any part of the nation in the
summer of 1808. Gloom hung over the country and particularly over
Washington, where even the new capital building had not been completed
and the problems of getting the young government firmly established
sometimes seemed insurmountable.
The reason for the gloom was the worsening relations between the United
States and Great Britain and the threat of American involvement in the
brawling affairs of Europe, where the British were at war with the
French.
In a desperate move to avoid being drawn into the conflict, President
Thomas Jefferson had called the previous year for an embargo on all
overseas shipping. He felt such drastic action necessary because
British warships had been seizing American vessels headed for France.
Even worse, the British had been forcing American sailors from the
ships on the high seas and impressing them into British naval service
by the hundreds.
Under these circumstances, Jefferson decided it would be better to
withdraw American shipping from the seas and deny American supplies to
the combatants, rather than risk plunging the nation into another war.
His proposed embargo had been fought over bitterly in Congress. But in
December, 1807, the Embargo Act had been passed and shipping had come
to a halt. Even trade with Canada would be stopped with the enforcement
of a land embargo--except for the commerce carried on by smugglers
defying Federal Customs officers.
Now, seven months after the start of the embargo, the nation was in
deep trouble. New England was practically paralyzed. Ships which had
engaged so busily in world commerce a few months earlier stood rotting
at the wharves. The number of unemployed was alarming. Businessmen who
depended on overseas trade were going bankrupt. There was scarcely
anyone in the country who did not feel the depressing effects of the
embargo. The nation’s economy had sunk to its lowest point since the
Revolution.
President Wilson was to say of this period: “The States themselves
suffered from the Act more than the nations whose trade they struck at.
America’s own trade was ruined.”
Onto this gloomy stage in mid-July, 1808, strode the so-called Chinese
mandarin, Punqua Wingchong, and before two months had passed this
Oriental fraud had half the country hooting with derisive laughter and
the other half red-faced with rage.
Punqua Wingchong. It’s a name to remember in American history because
he helped to bamboozle a President of the United States in one of
the gamiest confidence games ever pulled against a trusting Chief
Executive. But he was only the puppet; the man who pulled the strings
behind the scenery was John Jacob Astor, the merchant prince.
The hoax began to unfold in June, 1808, when Astor and the Boston firm
of J. & T. H. Perkins applied to the government for permission to send
a ship to Canton to bring back certain property allegedly owned by the
applicants. The government refused to lift the embargo for such a
venture and as a matter of policy rejected the application.
The rejection would have discouraged the average merchant, but John
Jacob Astor did not build his fortune by being an average man. Soon
after the application was refused, Senator Samuel L. Mitchill of New
York was told a disturbing story. An anonymous informant advised him
that a distinguished Chinese mandarin, who divided his time between New
York City and Nantucket, was the unfortunate victim of the shipping
embargo. It was said that the mandarin, Punqua Wingchong, had made the
long and arduous voyage from Canton to collect several large debts
owing to his grandfather’s estate. Then he had been caught by the
embargo and had been unable to return to his homeland to participate in
mourning rites for his venerable grandfather, who had died suddenly.
It was suggested to Mitchill that the situation was one which quite
possibly could create ill feeling between the governments of the
United States and China if Wingchong chose to blame the Jefferson
administration for the predicament he found himself in, being a virtual
prisoner in a foreign land. Wingchong was reputed to have considerable
influence among the government class of China, and this influence could
be used against American traders in the future if he were not permitted
to return home.
The journals of the time were not clear as to whether the Senator
ever met Wingchong face to face. In all likelihood he did not. But
he was moved to such sympathy by the pictured plight of the hapless
mandarin that he penned a personal appeal asking President Jefferson
to intervene. The Senator had a distinguished background in science
and literature and was a professor of natural history in the College
of Physicians and Surgeons in New York City. It was later to be said
that Senator Mitchill was “strangely deficient in that useful commodity
called common sense,” but his motives seemed sincere enough when he
wrote to the President on July 12, saying:
Sir:
Punqua Wingchong, a Chinese merchant, will be the bearer of this
note of introduction. He came to New York about nine months ago,
on business of a commercial nature, and has resided during that
time, part time, partly here and partly in Nantucket. Having
completed the object of his visit to the United States, he is
desirous of returning to Canton, where the affairs of his family,
and particularly funeral obsequies of his grandfather, require his
solemn attention.
This stranger is represented to me as a man of respectability and
good standing in his country; and is consequently entitled to a
corresponding regard and treatment in ours.
The chief object of his visit to Washington is to solicit the means
of departure, in some way or other to China, but he feels at the
same time a strong desire to see the chief executive officer of the
United States. He will be accompanied by Mr. Palmer, an inhabitant
of New York, who will aid him in stating his request and explaining
his meaning. This gentleman, in addition to many other valuable
qualities, possesses admirable skill in acquiring languages; and he
is perhaps already master of more living tongues than any person
among us--as an evidence of which he has already made considerable
progress in China.
While I recommend these two persons to the notice of the President
I beg leave to accompany the recommendation, with the highest
expression of my high and respectful consideration.
_Sam’l L. Mitchill._
Armed with the Mitchill letter and dressed in the finest of silks and
brocades, Punqua Wingchong journeyed to Washington and no doubt created
a stir of excitement throughout the city, where visitors from the
Orient were not a common sight. Unfortunately, or perhaps otherwise,
Wingchong and his companion, Mr. Palmer, found they could not deliver
the letter to the President in person. Mr. Jefferson had left the city
for a rest at Monticello.
The Mitchill letter was then forwarded to Monticello along with a note
signed by Punqua Wingchong “praying permission to depart” from the
United States with his retinue and his belongings in a vessel of his
own choosing.
President Jefferson was moved by Wingchong’s appeal. Not only did he
feel sympathy, but he felt the situation presented an opportunity to
establish better relations between his government and the rulers of
China, which was becoming an increasingly important customer in foreign
commerce. On July 25, the President wrote to Secretary of the Treasury
Albert Gallatin saying:
Dear Sir:
... Punqua Wingchong, the Chinese Mandarin, has, I believe, his
headquarters at New York, and therefore his case is probably known
to you. He came to Washington just as I had left it and therefore
wrote to me praying permission to depart for his own country with
his property in a vessel to be engaged by himself.... I consider
it as a case of national comity, and coming within the views of
the first section of the first Embargo Act. The departure of this
individual with good disposition may be the means of our making
our nation known advantageously as a source of power in China to
which it is otherwise difficult to convey information. It may be
a sensible advantage to our merchants in that country. I cannot
therefore but consider that a chance of obtaining a permanent
national good should outweigh the effect of a single case taken out
of the great field of the embargo. The case too is so singular that
it can lead to no embarrassment as a precedent....
(signed) Th. Jefferson.
Gallatin detected an odor of intrigue in the situation because
Wingchong requested permission to make the trip to China in the
_Beaver_, a “full-bottomed ship of 427 tons with a capacity for 1,100
tons of cargo,” and the _Beaver_ had been constructed especially for
John Jacob Astor. Gallatin was well aware of the fact that scarcely a
month had passed since Astor had been denied permission for a Canton
voyage. But Jefferson had issued his instructions and Gallatin was a
loyal lieutenant.
On August 3, 1808, Gallatin wrote to David Gelston, Collector of
Customs in New York City, ordering him to make an exception and lift
the embargo. His letter said in part:
Sir,
Punqua Wingchong, a respectable Chinese, who had with the leave
of his government come to the United States for the purpose of
collecting debts due to his father’s estate, having obtained
the special permission of the President of the United States to
engage a vessel to carry himself together with his attendants and
property to his native country, and having made arrangements for
that purpose with the owner of the ship _Beaver_ of 427 tons or
thereabouts; you would be pleased to permit that vessel to depart
for Canton on the following terms and instructions....
The conditions, previously outlined by Jefferson, were that the vessel
could sail with equipment and provisions for crew and passengers.
Punqua Wingchong was to be permitted to be accompanied by his
“attendants” along with their baggage and personal effects and also
about $45,000 ... “either in specie or in furs, cochineal, ginsang, or
any other specie of merchandise of his choice.”
After giving these instructions to Gelston, Gallatin wrote a cautious
letter to Jefferson saying that he had carried out his orders and
Wingchong “has engaged Astor’s vessel to which we had on general
grounds refused permission.” Then he added: “Had I had any discretion
as to the application itself I would have hesitated; for I apprehend
that there is some speculation at bottom; and every deviation from
general rules is considered a favoritism and excites dissatisfaction.”
He also warned Jefferson that to lift the embargo for one vessel would
open the way for others to make direct appeals to the President for
special treatment. Jefferson did not agree with his Secretary. He
insisted that important diplomatic and commercial benefits might accrue
from the courtesies shown Wingchong and they were “likely to bring
lasting advantage to our merchants.”
Gallatin was right. The uproar came when Collector Gelston authorized
the voyage and workmen began swarming over the _Beaver_ to prepare
her for the long sea voyage. With other vessels standing idle and
deserted, such a burst of activity could hardly be kept secret along
the waterfront. In all the United States, this lone ship was the only
one being prepared for a voyage.
The first protest came from a group of Philadelphia merchants who
wrote to Secretary Gallatin on August 10 suggesting that “avarice and
perjury” were being used to obtain the special dispensation for the
voyage of the _Beaver_. As for Punqua Wingchong, the merchants said
they were satisfied he was an impostor “and an insignificant instrument
in the hands of others.” He was unknown to Philadelphia traders who
had been stationed in Canton as agents for years. At best he was only
a petty shopkeeper without credit and not a wealthy member of the
mandarin class, they insisted. It was pointed out to the President that
the mandarins of China never left their own country.
New York newspapers, getting wind of the _Beaver_’s voyage, described
Wingchong as “a Chinaman picked up in the port,” “a common Chinese dock
loafer,” “a Lascar sailor,” and even as “an Indian who had been dressed
up in Astor’s China silks and coached to play his role in the affair.”
The New York _Commercial Advertiser_ on August 13 said in a page-one
story:
A first rate merchants’ ship, which will be navigated by about
30 seamen, is preparing for sea, and is expected to proceed on a
voyage to Canton, in a few days, under special permission from the
President of the United States.
The ostensible object of this voyage is to carry home a person who
is said to be a Mandarin of China.
It is, however, well known that the person for whom permission has
been obtained, is no Mandarin; is not even a licensed or security
merchant;--that his departure from China was contrary to the laws
of that country; that if he arrives in China he will be put on
shore privately, and that the obscurity of his condition in life
affords him the only chance he has of avoiding punishment.
It is also believed that the owner of the ship would not accept all
the property of all the Chinese in this country as a compensation
for the voyage, and it is known that he has offered to contract for
bringing home goods or freight....
Neither Gallatin nor the President retreated before this barrage.
Gallatin wrote the Philadelphia merchants that their plea had come too
late and besides he had no authority to detain the _Beaver_. He delayed
his reply until September 17--the same day on which the _Beaver_ sailed.
Six days later, Jefferson admitted that he had no means of judging
whether the charges by the Philadelphia merchants were true or false.
He said he acted as he did because of “the application having come to
me grounded on his character as a settled fact.” He added “nor are the
jeers of the Federalists any proof of the contrary.” Then he made the
rather lame statement that if the _Beaver_ had not yet sailed perhaps
“she should be detained till the facts ... are inquired into.”
But the _Beaver_ was gone. She was to return a year later with a cargo
of teas, silks, and other valuable merchandise which allegedly brought
Astor a net profit of $200,000.
* * * * *
The December embargo on shipping had been followed in March by the Land
Embargo, which became effective just before Lake Champlain was free of
ice and open for normal navigation. The Land Embargo came as a shock
for the people of northern and northeastern Vermont. Over the years
they had developed a brisk trade with Canada, shipping timber, potash,
coal ashes, and other exports into Canada in return for Canadian
merchandise. The embargo had the effect of shutting off this lucrative
trade for the Vermonters.
The Act was not popular with the citizens or with most Customs
officials along the border and as a result there was lax enforcement.
Smuggling operations reached such proportions that Customs Collector
Jabez Penniman wrote to Secretary of the Treasury Gallatin, complaining
that he could not enforce the law unless the Federal government
supplied troops.
Penniman’s communication spread alarm in Washington. Gallatin
personally carried the letter to the White House to discuss emergency
steps with the President. Jefferson called in Senator Robinson and
Congressman Witherell of Vermont to obtain their advice. The Vermonters
told him that the smuggling could not last for long, probably no longer
than early May. Then the Richelieu river would subside from its spring
flood stage and would not be navigable for the big rafts used to carry
smuggled timber and other products.
Despite the assurances from Robinson and Witherell, Jefferson was
convinced that strong Federal action had to be taken immediately, to
set a precedent if for no other reason. The President directed Gallatin
to authorize Collector Penniman to equip and arm “such vessels as might
be necessary” to put down the smuggling. Penniman also was authorized
to engage crews for these vessels “voluntarily, by force of arms, or
otherwise, to enforce the law.” Then if further aid were necessary, the
Secretary of State was to authorize the United States Marshal to form a
posse to “aid in suppressing the insurrection or combination.”
These measures would seem sufficient to discourage any normal smuggler.
But, apparently caught up in the enthusiasm of stamping out the evasion
of the Embargo and the payment of Customs duties, the President went
even further. He declared that in case the armed vessels and the posses
should not be able to do the job, then the Secretary of War was to move
Federal armed forces to the scene. The Secretary himself was asked to
go to Vermont “and lend the aid of his counsel and authority.” Also the
aroused President informed Secretary Gallatin that he was going to
have two gunboats built at Skenesborough (Whitehall), New York, to halt
the flow of illegal traffic between Vermont and northern New York and
Canada.
Many Vermonters were surprised and indignant at the President’s use of
the word “insurrection” to describe the situation. But in May, 1808,
the good citizens of Vermont (and those not so good) were thrown into
further uproar by a Presidential proclamation which appeared without
warning in _Spooner’s Vermont Journal_. It said information had been
received by the White House that “sundry persons are combined or are
combining and confederating together on Lake Champlain and the country
thereto adjacent, for the purpose of forming insurrections against the
authority of the laws of the United States, for opposing the same and
obstructing their execution.” The President sternly warned against
any person engaging directly or indirectly “in any insurrection” and
he ordered “such insurgents and all concerned in such combinations,
instantly and without delay to disperse themselves and retire peaceably
to their respective abodes.”
The citizens of St. Albans for some reason must have felt that the
President was aiming his shafts at them. At any rate, a town meeting
was held in St. Albans at which it was “positively and unequivocally”
the consensus that the conduct of the citizens of the district had
never given President Jefferson cause to issue such a proclamation.
It was the sense of the assembly that the President’s proclamation
“must have been issued in consequence of erroneous and unfounded
representations, made and transmitted to the executive department of
the United States by some evil minded person or persons.” Then the
citizens let their personal sympathies leak into the matter when they
added that even if individuals “finding themselves and their families
on the verge of ruin and wretchedness” had tried successfully to
evade the embargo, nevertheless this did not justify the President in
proclaiming to the world that the district was guilty of insurrection
and rebellion.
People living along the Canadian border, whose livelihood depended on
the trade with Canada, did not regard this trade as being the evil
which Jefferson declared it to be. For them it was a matter of economic
survival. Soon after the Land Embargo became a law, smuggling rings had
begun operations along the border. Dress goods and other merchandise
were carried to the border on the Canadian side, where it was picked up
by men and transported through the woods into the United States. The
contraband was hidden until such time as it could be taken by wagons or
boats to the merchandising centers.
It was openly rumored that the merchants in Troy and Albany were
hiring gangs to bring foreign goods into the country in this fashion.
Some Customs officers tried to stop the traffic, though most were in
sympathy with the smugglers. In one case a Customs officer leaped
aboard a smuggling craft to seize the cargo and arrest the crew. He
was carried across the boundary line, and then dumped unceremoniously
overboard in water which, fortunately, reached only to his chin.
One method of getting Vermont goods across the border into Canada was
this: dozens of wagons or sleds would be loaded with barrels of pork,
flour, and other commodities. They would be driven to a hillside point
on the American side of the border. A hut would be built in such a
way that, when a stone was kicked from the foundation, the hut would
collapse, the floor would tilt and the contents would roll down the
slope of the hill into Canada, where men were waiting to receive it.
Who was guilty of smuggling if barrels of merchandise, of their own
momentum, suddenly rolled across the border into Canada?
Many Vermonters, however, applauded the action of the President and
supported Customs Collector Penniman in his efforts to halt the illegal
trade across the border. A group of citizens in Franklin County
publicly applauded the action of the President and the Collector. They
said that the lumber and potash merchants were determined to carry on
their “nefarious schemes” of smuggling by armed force if necessary and
that threats had been made to kill the Collector if he attempted to
enforce the laws. There were hints also of a citizens’ agreement for
an uprising if any troops should kill anyone in the process of law
enforcement.
Soldiers were stationed along the border at Windmill Point on the
western shore of Alburg under the command of Major Charles K. Williams,
who later was to become Governor of Vermont. The Customs officers
themselves had a twelve-oared cutter called _The Fly_, which they used
near the outlet of the lake to intercept smuggling operations.
One of the most famous of the boats used by the smugglers was known
throughout the area as the _Black Snake_. This boat was originally
built for ferry service between Charlotte and Essex, New York. It was
40 feet long, 17 feet wide, and had seven oars on each side in addition
to a sail. After being smeared with tar, the boat was almost invisible
at night. It was said to have a capacity of 100 barrels of ashes, and
for a single run across the border the owners received $5,000 to $6,000.
The _Black Snake_ would sneak into St. Albans Bay at night, take on a
cargo of potash, and then slip through various creeks and inlets into
Missisquoi Bay, across Cook’s Bay, and into Canada at a point about one
mile north of Alburg Springs.
Customs officers tried without success for months to halt the
operations of the _Black Snake_. At last, in August, 1808, government
officials detailed Lt. Daniel Farrington, Sgt. David D. Johnson, and
twelve infantry privates to board the Customs boat, _The Fly_. Their
orders were to pursue the _Black Snake_ until its capture.
On the night of August 2, the _Black Snake_ moved into the Onion River
to take on a cargo of potash. The commander of the craft was Truman
Mudgett of Highgate, a burly, thick-chested man whose defiance of the
Customs officers had made his craft famous.
Mudgett knew that _The Fly_ was in the area seeking his hiding place,
and throughout the night he and his crew oiled and tested their rifles
at their camp site on the bank of the river. They also test-fired their
small artillery piece, a gun 8 feet long with a bore of 1¼ inches which
fired fifteen 16-ounce slugs of lead. They had long poles for fending
off a boarding party, 3-foot-long clubs, and baskets filled with stones
the size of a man’s fist.
The poles were to be used first to prevent anyone boarding the _Black
Snake_. If this did not succeed, then the crew were to use the clubs
and stones. As a last resort, they were to defend themselves with the
guns.
At daybreak on August 3, a lookout came racing to the camp to warn the
smugglers that _The Fly_ was moving up the Onion River. Within a few
minutes the revenue cutter came into view and closed on the _Black
Snake_.
Mudgett shouted at Lieutenant Farrington: “I’ll blow the first man
through who lays his hand on the _Snake_!”
Farrington coolly ignored the warning. He leaped from _The Fly_ onto
the _Black Snake_ and ordered Sergeant Johnson to come aboard with six
men and commandeer the outlaw craft.
“You’ll never get out of this river alive,” shouted Mudgett as he
turned and ran back into the woods to rejoin his men.
Farrington sent four soldiers ashore to search for the crew of the
_Black Snake_ and then he returned to the helm of the cutter and
started downstream with his prize. They had gone about half a mile when
the smugglers opened fire from behind an embankment above the river.
Farrington ordered Pvt. Elias Drake to take the helm of the cutter, but
as Drake reached for the helm a bullet tore through his head and killed
him instantly.
As gunfire raked the cutter, Farrington ordered his men to lie flat in
the boat. He grabbed an oar and maneuvered the craft ashore below the
smugglers’ hiding place. Then he and his men leaped ashore and started
to move against the smugglers.
They had advanced only a few yards when the attackers fired the
blunderbuss artillery piece. Two men fell dead under the hail of lead,
and Farrington was badly wounded. Sergeant Johnson rallied the men and
succeeded in capturing all but two of the _Black Snake_’s crew. They
were lodged in jail at Burlington, and later the two smugglers who
escaped were rounded up.
Cyrus B. Dean, one of the smugglers, was convicted of murder and
sentenced to be hanged. A crowd of ten thousand gathered in Burlington
to witness the execution, and some historians say that Dean was the
first man to die of capital punishment in Vermont. Others of the gang,
including Mudgett, were convicted of manslaughter and sentenced to
prison.
The smuggling did not stop when the United States went to war with
Great Britain in 1812. The British army in Canada was willing to pay
high prices for cattle and other provisions at that time. The Customs
officers were almost helpless in trying to halt the traffic across the
border. Huge herds of fat oxen and cattle were driven through the woods
to the border and turned over to Canadians. The militia were called out
to halt the traffic in cattle, but even the militia were unable to man
all the crossing points along the border.
Customs officers seized cattle, horses, provisions of all kinds,
merchandise, furs, and other articles from the smugglers. It also was
found that some Vermonters were making contracts with the British to
supply them with masts and spars for their naval vessels. And it was
whispered that a prominent Vermont businessman was the backer of a
smuggling gang which was selling materials to the British navy. There
were gun battles between Customs men and the smugglers.
The War of 1812 had been underway for two years when Sir George
Prevost, Governor General of Canada, wrote to Lord Bathurst in the
British Foreign Office reporting that “two-thirds of the army in Canada
are at this moment eating beef provided by American contractors, drawn
principally from the States of Vermont and New York.”
Secretary of War Armstrong was informed by one of his generals that the
only way that intercourse with the enemy could be halted was to line
the border with troops--which obviously was impossible. The General
reported: “Like herds of buffaloes they pressed through the forest,
making paths for themselves. Were it not for these supplies, the
British forces in Canada would soon be suffering from famine, or their
government be subjected to enormous expense for their maintenance.”
The young Customs Service now had fought gun battles on land and “at
sea” in an effort to enforce the law. This was a fight that still would
be going on a century and a half later.
4
THE PIRATES OF NEW ORLEANS
On November 24, 1813, most citizens of New Orleans were chuckling over
a new proclamation, bearing the signature of Gov. W. C. C. Claiborne,
which had been posted on bulletin boards throughout the city. They
were not so much amused because the Governor had accused a pirate of
attacking a U.S. Customs officer (although this was amusing enough
to many), but because Claiborne actually expected someone to take
seriously his offer of a $500 reward for the capture of the pirate Jean
Laffite.
Invade the pirate hideout in the swamps and capture Jean Laffite--or
even his brother Pierre--for a mere $500? And Claiborne was naive if
he thought that most of Louisiana’s politicians and merchants had any
desire to halt the smuggling of pirated merchandise while a war was
being fought against Great Britain. Any kind of merchandise was hard to
obtain.
Two days after the posting of the proclamation, a wave of raucous
laughter sounded in the coffee houses, taverns and drawing rooms of New
Orleans. The laughter exploded over a proclamation posted throughout
the city which was a parody of the Claiborne document. It offered a
reward of $1,500 for the arrest of Governor Claiborne and his delivery
to the pirate hideout at Grande Terre in the bayou country south of New
Orleans. The proclamation was signed by Jean Laffite.
Laffite’s arrogance was no laughing matter to government officials in
Louisiana and Washington. Not only were the pirates openly defying
Federal and state authority, but a legitimate merchant had little
chance to compete against those who purchased their goods at the
pirates’ auctions. The auctions were held regularly on islands in the
swamps near New Orleans. Hundreds of thousands of dollars’ worth of
merchandise--captured on the high seas--could be bought cheaply and
with no payment of Customs duties.
The enemies of the Laffites and their cutthroat crew were in the
minority. Everyone knew--including Claiborne--that a majority of the
people were sympathetic to the Laffites. The general view was that the
pirates actually were performing a patriotic service when they attacked
ships of the enemy countries, England and Spain, and then made their
booty available to Louisiana citizens at ridiculously reduced prices.
Before Claiborne issued his proclamation, the general attitude of the
citizenry was fairly summed up in a letter received by the _Louisiana
Gazette_ and signed “The Agent of the Freebooters.” There had been
a complaint against piracy and smuggling in the newspaper, and the
freebooter (perhaps it was Jean Laffite) wrote a reply saying:
Gentlemen:
Your paper of Wednesday contained a letter written by some idiot
... (who) makes a great outcry against a few honest fellows of us,
who are using extraordinary exertions to punish the common enemy,
the British and their allies, the Spaniards.... Does he wish to
discourage our profession and put an end to trade altogether?...
Cannot the booby perceive that without us there would not be a
bale of goods at market; and does he not see, by the open manner
in which our business is done, that the government of the United
States has no objection either to the fitting out of our prizes
and the sale of their cargoes, without troubling ourselves about
the payment of duties; which I assure you we would find extremely
inconvenient when we sell so low for real cash in these hard
times....
The legislature paid little attention to Governor Claiborne’s appeals
for help in suppressing piracy and smuggling because too many of its
members were profiting from the operations of the smugglers or were
close friends of Jean and Pierre Laffite.
Honest merchants, competing at great disadvantage against those who
bought their goods from the pirates’ stores, were the first to raise a
clamor for Claiborne to do something to halt the smuggling. As a result
of these demands, Customs Officer Walker Gilbert invaded the pirate
country with a company of armed men. As they moved through the marshes
south of New Orleans, they encountered Laffite convoying a shipload
of contraband goods toward New Orleans. Gilbert and his men attacked
the pirates and there was a brief, savage skirmish. Laffite and his
group fled from the ship, leaving Gilbert in possession. But before
Gilbert could reorganize his forces the pirates counterattacked. One of
Gilbert’s men was badly wounded. The Federal officers were driven off.
The pirates took over the ship and resumed their journey to New Orleans
to sell their booty. It was this episode which caused Claiborne to
issue his proclamation that stirred so much amusement.
Piracy and smuggling, after the turn of the century, had become
profitable for two prime reasons. The first of these was the worsening
relations between the United States and Great Britain, which brought
about the embargo on shipping in 1807 and later the War of 1812.
Any kind of merchandise was hard to come by and could be sold for a
handsome profit. The second reason was the U.S. government’s efforts to
outlaw the traffic in slaves.
With the passage of the embargo on slave trade in 1808, the price
of Negro slaves in the United States skyrocketed. Slaves could be
bought in Cuba for about $300 each and sold for three or four times
that amount on the illegal markets in the United States. But then the
pirates found it more profitable simply to bypass Cuba and waylay the
slave ships at sea. They found a ready market for the slaves in the
lower Mississippi Valley, where huge cotton and sugar plantations were
being developed and where plantation owners were willing to bid against
each other for this cheap labor.
The pirates found Barataria Bay near New Orleans an ideal place
from which to operate. In this maze of canals, marshes, bayous and
meandering waterways at the mouth of the Mississippi were many hiding
places. In addition, the location furnished easy access to the markets
of New Orleans.
The Baratarians had a loose organization headed by an Italian named
Gamby. The outlaws were forever quarrelling among themselves and Gamby
was not strong enough to control them, an internal weakness which was
more serious for the pirates than the opposition of Governor Claiborne.
At this time (1810) Jean and Pierre Laffite were living in New Orleans
with their younger brother, Antoine, whose name was never to figure in
any of their piratical exploits of later years. The elder brothers, all
reports agree, were striking-looking men with great personal charm and
wit.
Pierre was of medium height, well-built, and handsome, although an
illness had affected the muscles in the left side of his face and one
of his eyes was slightly crossed. Jean stood 6 feet 2 inches tall, had
blue eyes, and black hair. Like his brother, he was shrewd and fearless.
The brothers operated a blacksmith shop in the very heart of the
city on St. Philips Street, not far from Bourbon Street. Even on the
sultriest, hottest days of summer they kept the bellows blowing on the
red-hot coals of the smithy fire. The anvil rang with the blows of
their hammers beating lengths of iron into light, strong chains--chains
to which slaves would be manacled before being brought to the auctions
in the city.
Almost always there were groups of Baratarians lounging in the smithy,
rough men with cutlasses at their waists and pistols stuck into their
belts. They advised the Laffites on how they wished the chains to be
made. And they also talked of their raids on English and Spanish ships,
the booty they had brought to their hiding places in the swamps, and
the wild parties they had after seizing a ship’s stores of rum, wines
and liquors.
For years, the Laffites acted as the “fences” for the pirates, handling
slaves as well as other merchandise. It can only be assumed they
listened to the tales of adventure, excitement and stolen riches--and
became envious of the wealth acquired with such ease by men who were
not as intelligent as they. At any rate, Jean Laffite left the smithy
regularly to make trips to the pirates’ hideout at Barataria, where he
studied their operation.
After a time, Jean won the confidence of the ruffians to such a degree
that he was invited to become their leader--despite the mumbling
of Gamby. But this gentleman proved to be no problem whatever. He
abdicated without a fight after he saw Laffite coldly shoot down one
man who questioned his authority.
Laffite had exceptional executive abilities, along with a bold courage.
Under his command the pirates of Barataria reached new heights in
prosperity and arrogance. Men flocked from New Orleans to his pirate
hideout to enlist their services. The stores of stolen goods sometimes
were worth hundreds of thousands of dollars. Regular auctions were held
on islands near New Orleans.
While he brought piracy to a new height in the Gulf, Laffite perhaps
organized it too well. He made it so efficient that some historians
believe he was responsible for its downfall sooner than otherwise might
have been. This may well be true, because the pirates achieved such
great power under Laffite that the government of the United States
could not forever condone their brazen disregard of revenue laws, the
slave trade embargo, and the authority of government.
At one period, Laffite had from 800 to 1,000 men under his command--an
outlaw army which was equipped with the best artillery and huge stores
of powder and ammunition. His artillerymen had no peers in any army
in the world. His storehouses were filled with stolen merchandise. On
one day 400 Negroes were sold during an auction--which meant a gross
business of approximately $500,000 in slaves alone.
Laffite had his choice of the best wines of the Old World. He dined on
silverplate. In New Orleans, he and Pierre were seen on the streets,
in the coffee houses, and in the taverns in the company of many of the
city’s leading businessmen, merchants and lawyers.
Jean Laffite did not like the name of pirate. He called himself a
privateer. But in the New Orleans of that day his occupation did not
bar him from the society of the leading citizens of the city.
In the summer of 1812, Capt. Andrew Hunter Holmes was sworn in as a
Customs officer and led an expedition against Laffite and his men.
Captain Holmes took a group of thirty or forty men in small boats and
proceeded toward Barataria. But Jean Laffite was forewarned of the
expedition by his brother Pierre. According to the records of the times
Jean Laffite laughed uproariously when he learned that Holmes was
heading for Barataria with such a small company. Laffite took his boats
loaded with merchandise through devious waterways and avoided Holmes
and his men rather than get involved in a skirmish which could end only
in disaster for Holmes.
But Holmes was not to be outwitted so easily. In the fall, Holmes
returned with a larger force, surprised Jean and Pierre Laffite with
contraband merchandise and took them to New Orleans as prisoners. The
brothers were released on bail and neither showed up for trial. Six
writs of arrest were issued for Jean and Pierre but all were returned
with the notation “Not found in New Orleans.” It seemed reasonable to
assume that no one seriously wanted to find them.
The acceptance of piracy and smuggling as elements of legitimate
trade in New Orleans was not so astonishing as it might seem because
Louisiana commerce for many years prior to this time had been built
on such a foundation. Smuggling to avoid tariffs and then selling at
cheap prices, as one historian said, “had become a part of the habits
of life there.” The people were satisfied for the most part because the
smuggled goods were cheaper than they would have been had duties been
paid. Merchants were satisfied because they were able to obtain scarce
merchandise and make a good profit. Men such as Laffite were regarded
as performing a necessary function for the community at no little
personal risk--and only a minority attached any moral stigma to the
trade.
The confidential and intimate relationship between the pirates and
their customers reached its peak on New Year’s Day, 1814. Handbills
were boldly scattered in public places and prominently displayed
throughout New Orleans announcing that the brothers Laffite, on January
20, would offer at auction at “The Temple” a quantity of slaves and
merchandise.
The Temple was a favorite market place for the Laffites. It was an
ancient Indian mound of white shells where, legend had it, Indians of
the area had gathered to give human sacrifices to appease their gods.
The pirates had built a platform at the edge of the water, onto which
they could unload their boats. There they spread their merchandise for
all to see who came from New Orleans. Since it was easily accessible,
there was never any lack of buyers when the auctioneer went to work.
Claiborne was infuriated by the distribution of handbills announcing
the auction. The pirates were offering for sale 415 slaves in addition
to a supply of “fine foreign merchandise.” Claiborne called in the
U.S. Collector of Customs to discuss what could be done about this
outrageous disregard of the laws of the United States. Both must have
known that there was not much that could be done. Nevertheless the
Collector ordered a small force to proceed to The Temple to “defeat the
purpose of the law infractors.”
Jean Laffite and his companions attacked the Customs men, killing one
man and wounding two others fatally. Nine of the officers were held as
prisoners by the pirates while they proceeded with their auction as
planned. It was reported that buyers came from many parts of Louisiana.
They bought all the slaves that were put on the block. And the Laffites
considered the auction a great success.
The Collector wrote to Governor Claiborne: “It is high time that the
contrabandists, dispersed throughout the State, should be taught to
respect our laws, and I hold it my duty to call on your excellency for
a force adequate to the exigency of the case.”
Claiborne could have dispatched a state militia against the pirate
gang, but he hesitated to do this because he already had had one
embarrassing experience with the militia. He had ordered a company of
troops to move against the Baratarians, but Jean Laffite had met this
problem by the simple expedient of bribing the entire expeditionary
force. It has been recorded that “the brave leaders of the Baratarians
had spared their lives, loaded them with costly presents and had
allowed them to return safely to New Orleans.”
Again Claiborne pleaded in a letter to the legislature for action,
saying: “The evil requires a strong corrective. Force must be resorted
to. These lawless men can alone be operated upon by their fears and
the certainty of punishment. I have not been able to ascertain their
numbers ... but they are represented to be from 300 to 500, perhaps
more.... So numerous and bold are the followers of Laffite, and,
I grieve to say it, such is the countenance afforded him by some
of our citizens, to me unknown, that all efforts to apprehend this
high offender have hitherto been baffled.” As is the history of many
complaints to legislatures, the matter was referred to a committee,
where it died quietly.
Failing again to get any action from the legislature, Claiborne
resorted to another course. He arranged to have a grand jury, friendly
to his views, chosen from the city’s merchants and bankers. Witnesses
were called who, in the strictest secrecy, swore to knowledge of
piratical acts by the Laffites and their men. Before the news of this
grand jury’s meeting spread through the city, Pierre Laffite was
arrested. He was taken to jail and bail was denied. Jean Laffite, when
he heard of Pierre’s arrest, hurried secretly to the city to talk with
friends about releasing his brother. But this time nothing could be
done.
It was while Pierre was in jail, on September 3, 1814, that His
Britannic Majesty’s brig _Sophie_ sailed into the narrow strait off the
island of Grande Terre and dropped anchor. A small boat was lowered
and two officers were rowed ashore by sailors. The British were met
on the beach by a tall, dark-haired man whom they asked to lead them
to Monsieur Laffite. Their guide led them across the beach onto the
porch of a breeze-swept house. And then the guide turned and said,
“Messieurs, I myself am Laffite.” The visitors were Captain Lockyer
from the _Sophie_ and Captain McWilliams of the Royal Colonial Marines.
They had brought a most unusual offer.
Laffite refused to discuss business until lunch had been served.
They ate their lunch from silverplate. It was an excellent meal, the
officers recalled, with fine wines and good conversation. When the
meal was finished, the men lit cigars and then Laffite was ready to
hear what they had to say. Captain Lockyer disclosed that he brought
an offer from Admiral Sir William H. Percy, commanding the British
squadron at Pensacola. In brief, the British were offering Laffite
$30,000 if he would bring his ships, guns and men to the side of
Britain in the war against the United States. Laffite asked them to
leave the Admiral’s letters with him and to give him fifteen days in
which to study the proposition. Then, he said, “I will be entirely at
your disposal.”
But Jean Laffite, pirate and cutthroat though he was, had no intention
of betraying the United States. He hastily wrote a letter to his
friend Jean Blanque, in New Orleans. He enclosed the letters handed
to him by the British, together with a personal message for Governor
Claiborne. Laffite said in his letter to Blanque: “Our enemies exerted
on my integrity a motive which few men would have resisted. They have
represented to me a brother in irons, a brother who to me is very dear!
of whom I can become the deliverer ... from your enlightenment will you
aid me in a circumstance so grave.”
And then he enclosed this letter to be delivered to the Governor:
MonSieur:
... I offer to return to this State many citizens who perhaps have
lost to your eyes that sacred title. I offer ... their efforts for
the defense of the country.
This point of Louisiana that occupies great importance in the
present situation, I offer myself to defend it ... I am the lost
sheep who desires to return to the flock ... for you to see through
my faults such as they are....
In case, MonSieur Le Gouverneur, your reply should not be favorable
in my ardent wishes I declare to you that I leave immediately so
not to be held to have cooperated with an invasion.... This cannot
fail to take place, and puts me entirely on the judgment of my
conscience.
I have the honor to be, MonSieur Le Gouverneur,
_Laffite_.
Jean Laffite had put loyalty to the United States before profit in this
time of peril. But even as Captain Lockyer conferred with Laffite,
Claiborne was going forward with plans for a land-sea operation against
the pirate stronghold.
After receiving Laffite’s letter, Claiborne called his military
advisers into conference. These were Major General Jaques Villere,
Commodore Patterson of the U.S. Navy, and Colonel Ross of the regular
U.S. Army. The questions they discussed were whether the documents
sent by Laffite were genuine and whether the governor should enter into
correspondence with Laffite. Villere thought the documents genuine
and that the Governor should reply immediately to the Laffite letter.
However, Ross and Patterson voted against Villere. The majority favored
an attack on the pirate stronghold.
Peculiarly enough, the morning after this meeting at the Governor’s
mansion, newspapers carried notices that Pierre Laffite had
mysteriously escaped from jail. A notice was posted offering $1,000
reward for his capture.
Eight days after Laffite wrote to Claiborne, the Ross-Patterson
expedition set out for Barataria. Three barges were loaded with men and
ammunition. It left the levee at New Orleans before dawn and drifted
silently downstream with the current. Near the mouth of the river, the
barges joined forces with Colonel Ross’ fleet of six gunboats and the
schooner _Carolina_. The pirate hideout on the islands of Grande Terre
and Grande Isle was sighted on the early morning of September 16.
There were indications at first that the Baratarians were going
to resist. They began placing cannon into position and arming
themselves. But then apparently they saw the American flag on the
approaching ships. They broke ranks and ran. Without firing a shot,
the expeditionary force captured the pirate fleet, guns, and stores of
merchandise valued at more than $500,000.
When news of the attack on Barataria was received in New Orleans,
there was much criticism of the expedition. And there was even more
indignation when it was learned that the expedition was launched after
Laffite had offered his services and those of his companions to the
government in the defense of New Orleans against the expected attack by
the British.
The British bribe offer to Laffite came as General Andrew Jackson
arrived in New Orleans to arrange for the defense of the city.
Claiborne sent copies of Laffite’s documents to Jackson on the chance
that they were genuine and contained military information which would
be important. Jackson made it quite clear he wanted no traffic with
“this hellish banditti” and he rebuked Claiborne for having permitted
Laffite and his men in the past to visit the city.
At last Jean Laffite made a secret trip to see Jackson himself. There
is no record of what went on between the two men and what was said
in that conference. It became known that Laffite offered to put in
Jackson’s hands a supply of 750,000 pistol flints and some of the most
skilled artillerymen in the world, including Laffite’s lieutenants,
Dominique You and Beluche.
Jackson relented and accepted Laffite’s offer of help. The General made
You and Beluche captains and they were given command of batteries on
the right side of the American line.
On January 8, 1815, the decisive battle of New Orleans was fought. As
dawn was breaking, Jackson visited the troops along the front lines and
stopped at a battery where the Baratarians were making coffee in an old
iron pot.
“That smells good,” Jackson said. “It’s better coffee than we get.
Where did it come from? Did you smuggle it in?”
Dominique You grinned. “That may be,” he said, and he ordered a cup
filled for the General. As Jackson sat on his horse sipping the strong,
black coffee, he remarked to an aide, “I wish I had fifty such guns on
this line, with five hundred devils such as those fellows behind them.”
The British advanced on the American positions to be mowed down by
withering fire. At the height of the battle, Jackson again visited
Dominique You’s battery to see how things were going.
“Ah, we do not make much damage,” You said.
“Why is that?” Jackson demanded.
“The powder!” You replied. “It is not good. The cannon balls, they fall
short.”
Jackson said, “I’ll remedy that!” He ordered an aide to see to it that
the Baratarians received the best ammunition possible. The General was
heard to say later, “Were I ordered to storm the very gates of hell
with Dominique You as my lieutenant, I would have no misgivings as to
the outcome.”
Jean and Pierre Laffite acquitted themselves with honor in the battle
for New Orleans. They and their men were given Presidential pardons,
clearing the slate of past crimes, and for some time after the city
was saved, they were great heroes. They were wined, dined, and cheered
wherever they went.
Perhaps the brothers became bored with respectability. At any rate
they drifted back into piracy. They pulled out of their old haunts and
moved to Galveston to set up operations, and for several years they
carried on business in the slave trade. In 1820, Jean Laffite boarded
his favorite boat, _The Pride_, and sailed away into legend. There
were stories that he died in Yucatan. Some claimed that he carried on
his piracy in the Mediterranean. Still others said that he settled in
France and lived to be an old man. All recorded history of Jean Laffite
ended when he sailed from Galveston. Pierre Laffite was said to have
lived in Louisiana to an old age and to have died a poor man.
The quality and the quantity of piracy subsided along with the fortunes
of the brothers Laffite. But not smuggling. Smuggling was to continue
to plague the Customs Service, and some of the smuggling would make the
Laffites look like amateurs.
5
THE DARK YEARS
Slavery was the issue which exploded into the Civil War in 1861, but
twenty-eight years before the first shot was fired on Fort Sumter, the
nation was on the edge of open war over a dispute involving the Federal
government’s right to force the collection of customs duties.
The spirit of revolt flamed high in South Carolina in 1832–1833. It was
fed, too, by sympathy in Virginia and Georgia and other agricultural
states which bitterly opposed the system of protective tariffs as being
oppressive to the farm states.
Did the central government have the Constitutional right to force the
collection of duties in a state which opposed such collections? No!
said the “Nullifiers,” who favored striking down the Federal tariff
laws. They insisted that any state had the right to withdraw from the
Union if it so desired.
The Nullifiers gained control of the government of South Carolina and
a call was issued for a convention to meet and abolish by formal state
action the collection of duties. There also were loud demands from some
state leaders for mobilization of South Carolina troops to oppose any
Federal intervention. Customs officers, more sympathetic to the state
of South Carolina than to the Union, refused to collect duties. This
convention call was the aftermath of a previous convention at which a
grim resolution was adopted saying in part: “The state looks to her
sons to defend her in whatever form she may proclaim to _Resist_.”
The tariff collection issue became so divisive that reports reached
President Jackson in August and September, 1832, that the loyalty of
army officers in command of Federal troops at Charleston was suspect.
It was reported to Jackson that in event of Federal “aggression”
against South Carolina to enforce tariff collection and oppose
secession, these officers were ready to surrender their troops to the
state rather than fight to protect the Charleston forts. These same
reports said overtures had been made “perhaps not without success” to
switch the allegiance of the naval officer in command at Charleston, in
order to prevent a Federal blockade of the port.
Jackson advised his Secretary of State, Edward Livingston, that “the
Union must be preserved, without blood if this be possible, but it
must be preserved at all hazards and at any price.” He changed the
garrison at Charleston and sent Maj. Gen. Winfield Scott to take over
the command. He warned Secretary of War Lewis Cass that a surprise
attack would be made on the Charleston forts by South Carolina militia
and directed that such an attack must be “repelled with prompt and
exemplary punishment.”
While taking these precautions, Jackson argued that if the doctrine of
nullification of customs duties by the states were ever established,
then every Federal law for raising revenue could be annulled by the
states. He denied the right of secession, declaring that “to say that
any state may at pleasure secede from the Union is to say that the
United States is not a nation.”
The controversial tariff laws had been a national issue long before
Jackson entered the White House in 1828. The major issue in the
Presidential campaign of 1823–1824 revolved around tariffs and the use
of Federal funds for such internal improvements as roads, harbors, and
like projects. The leading candidates for the Presidency that year
were John C. Calhoun of South Carolina, Henry Clay of Kentucky, John Q.
Adams of Massachusetts, William H. Crawford of Georgia, and finally,
Andrew Jackson--with Jackson and Adams emerging as the showdown
antagonists.
Adams won the election when Henry Clay threw his support to the
New Englander. Under the leadership of Clay and Daniel Webster a
high-duty system of tariffs was adopted, which was termed the “Act of
Abominations” by its opponents.
When Jackson entered the White House in 1828 the tariff issue was
still the most important and also the most divisive issue of the day.
In January, 1830, Senator Robert Y. Hayne of South Carolina launched
a strong attack in the Senate against the excessively high tariffs.
The young Senator sought a coalition between the West and the South,
the agricultural areas, to oppose the duties favored by the industrial
states.
Hayne’s argument rested on the states’ rights questions which were to
plague the nation for many years to come. Hayne contended that “no evil
was more to be deprecated than the consolidation of this government.”
He argued for the right of any state to set aside “oppressive” Federal
legislation, including tariffs.
Daniel Webster picked up the argument against Hayne. He contended that
“the Constitution is not the creature of the state government. The
very chief end, the main design, for which the whole constitution was
framed and adopted was to establish a government that should not ...
depend on the state opinion and state discretion.” He said it was folly
to support a doctrine of “liberty first and union afterwards,” and he
spoke the famous line: “Liberty and union, now and forever, one and
inseparable.”
By 1832, the South Carolina Nullifiers were openly led by Vice
President Calhoun. The extremists were in control in South Carolina
to push events toward the crisis which forced Jackson to rush back to
Washington from Nashville. The state’s legislature proclaimed that any
effort by Federal authorities to collect the duties after February 1,
1833, would cause South Carolina to secede from the Union.
When news of this proclamation reached Jackson, he ordered seven
revenue cutters and a warship dispatched to Charleston. Maj. Gen.
Winfield Scott set his men to work preparing harbor defenses against
attack from the land. The situation was at the stage where only
recklessness was needed to set off a conflict. At this time Jackson
wrote a friend that “no state or states has the right to secede ...
nullification therefore means insurrection and war; and other states
have a right to put it down....”
Jackson issued a proclamation warning the citizens of South Carolina
not to follow the Nullifiers, whose “object is disunion.” He warned
that “disunion by armed force is treason” and that those who followed
this path must suffer the “dreadful consequences.” The proclamation
spread excitement throughout the country. Many men volunteered for
military duty in case of a conflict. Several state legislatures met to
denounce nullification. But in South Carolina Robert Y. Hayne--who had
resigned from his Senate seat to become governor of the state--issued
his own proclamation in which he vowed to maintain South Carolina’s
sovereignty or else to perish “beneath its ruins.” Hayne called for the
organization of “Mounted Minute Men,” which, he said, would permit him
to place “2,500 of the elite of the whole state upon a given point in
three or four days....”
The only concession held forth by Jackson in this cold war was his
approval of a bill for introduction in the House which would call for
a reduction of tariff rates. His willingness to go along with this
measure did not eliminate the threat of a shooting conflict.
While holding an olive twig of compromise in one hand, Jackson held a
sword in the other. He sent a request to Congress asking authority to
use Federal troops if necessary to collect the customs. Even as the
cheers and curses sounded over this move, Jackson sent a letter to
Gerald R. Poinsett, a Unionist leader in South Carolina, outlining his
plans to use strong measures to enforce Federal authority. No doubt he
intended his letter to reach the hands of the Nullificationists. He
said should Congress fail to act on his request for authority to use
military force, and should South Carolina oppose with armed force the
collection of the customs duties, then “I stand prepared to issue my
proclamation warning them to disperse. Should they fail to comply I
will ... in ten or fifteen days at fartherest have in Charleston ten
to fifteen thousand well organized troops well equipped for the field,
and twenty or thirty thousand more in their interior. I have a tender
of volunteers from every state in the Union. I can if need be, which
God forbid, march 200,000 men in forty days to quell any and every
insurrection that might arise....”
Not only would he take these measures against South Carolina, Jackson
added, but if the governor of Virginia should make any move to prevent
Federal troops from moving through the state against South Carolina
then “I would arrest him....” The President also was prepared to call
on Pennsylvania, New York, Virginia, North Carolina, Ohio, Tennessee,
Alabama, Georgia and South Carolina to furnish 35,000 troops to carry
out his orders.
Jackson’s request of Congress for authority to use troops in forcing
the collection of customs was immediately called the “Force Bill.”
To the extremists it was known as the “Bloody Bill.” Vice President
John Calhoun said darkly that if the bill should pass then “it will be
resisted at every hazard, even that of death.”
It was at this point that the Great Compromiser, Henry Clay, moved
to seek the solution which would avoid bloodshed and perhaps civil
war. He introduced in the House his own bill to lower tariffs by 20
per cent over a period of ten years. The Clay bill was pushed through
Congress along with the Jackson Force Bill and both were sent to the
President for his signature. Jackson won his demand for authority to
send troops to South Carolina to put down any move toward secession
or nullification of the tariff laws, and he signed the compromise
tariff bill even though it was, in a measure, appeasement of the
Nullificationists. Clay’s tariff bill was a face-saving measure for
South Carolina. The head-on conflict between Federal and state forces
was averted--at least for the time being.
In Jackson’s administration there was one man whose name appears
mostly in the footnotes of that turbulent period, but it is a name
that deserves special mention in this chronicle. The man was Samuel
Swartwout, Collector of Customs in New York City during Jackson’s two
terms in the White House. He rates special mention and a shadowy niche
in American history because he was the first and only man to steal a
million dollars from the Treasury of the United States. In fact, he
stole $1,250,000.
Swartwout was a young man when he plunged into New York politics. He
was a dark-haired, personable man who made himself useful by running
errands for the political bosses until he reached a position of
backroom fixer and schemer with no small amount of influence. He was
the bluff, hearty type who made friends easily. And while he never was
a central figure in the making of history, he was one of those men
whose names continually cropped up in the affairs of the men who did
make history in his time.
Swartwout was a protege and confidante of Aaron Burr during the period
of Burr’s shady adventure in the West when he was accused of treason
in an alleged plot to establish an empire in the southwestern United
States. And when Jackson’s star began to rise as a Presidential
candidate, Swartwout attached himself to the cause of the Tennessean.
Many of Jackson’s friends and followers resented Swartwout’s close
association with Jackson because they regarded him as a doubtful
character smeared by the tar of the Burr affair. But when Jackson
entered the White House in 1828, Swartwout was among the honored guests
at the celebrations.
Jackson’s friends were concerned when it became known that the
New Yorker had easy access to the office of the President and was
seen coming and going as though he were one of Jackson’s intimate
advisers--which he wasn’t. The concern became dismay when rumors spread
that Swartwout had come to town seeking from Jackson the nomination as
Collector of Customs for New York City, a post of no little prestige
and political influence in those days. Jackson’s Secretary of State,
Martin Van Buren, was so upset by the reports that he refused to admit
Swartwout to his office or to enter into correspondence with him.
Jackson must have felt he owed a political debt to Swartwout because
on April 25, 1829, during a recess of Congress, he handed the New
Yorker the political plum he had been seeking. Swartwout continued in
the office until March 29, 1838, with never any public suspicion that
he was involved in thefts of money collected by the Customs House in
New York. Only when the records were checked by his successor was the
discovery made that his accounts were short by $1,250,000.
The scandal which followed broke like a storm over the young Customs
Service. Demands were made in Congress for safeguards to prevent any
such future looting of the Treasury. Enemies of Jackson attacked the
“spoils system” of appointments and centered much of their assault on
Customs.
As for Swartwout, he had foreseen the storm that was to come. He had
bade his friends farewell and boarded a ship for Europe several weeks
before the shortages in his accounts were discovered. He was in France,
safely out of reach of the law, when the scandal broke--and he didn’t
bother to return.
By 1849, the Customs Service spanned the continent. It reached the
coast of California in the person of John Collier, who was appointed
as the first Collector of Customs for San Francisco just as the state
was clearing the way for entry into the Union. Collier reached San
Francisco on November 13, 1849, after a perilous trip across the
country. He arrived at the beginning of the gold rush to find the city
and the customs situation in a state of disorganization and confusion.
Collier was overwhelmed by the amount of business being carried on
in San Francisco, by the number of vessels arriving and leaving the
harbor, by the smuggling which was going on, and by the high prices he
found in the city. He advised Secretary of the Treasury W. M. Meredith
in a long, rambling letter: “I am perfectly astounded at the amount
of business in this office.... The amount of tonnage ... on the 10th
instance in port, was 120,317 tons; of which 87,494 were American, and
32,823 were foreign. Number of vessels in the harbor on that day, 10th
instance, 312, and the whole number of arrivals since the first of
April, 697; of which 401 were American, and 296 foreign. This state of
things, so unexpected, has greatly surprised me....”
He found that Customs clerks were being paid from $1800 to $3000 per
annum but that the salaries were not particularly attractive in a
city gripped by the get-rich-quick fever. Flour was selling for $40
per barrel and pork for $60. Board was $5 a day and a room with a
single bed was $150 a month. Wood was $40 a cord and prices for other
necessities were equally shocking to a man as obviously thrifty as
Collier.
Collier moved into the Old Spanish Custom House to set up shop. It
was a dark and gloomy building. The roof leaked. Some of the doors
were off the hinges. There was no vault in which to place the money he
collected. He confided to the Secretary that “owing to the rates for
rents, I am afraid to lease a building. One for myself, containing four
rooms, two below and two above, without fireplaces, was offered to me
on yesterday at $2400 a month....”
He continued: “To enforce the revenue laws in this district, and to cut
up and prevent smuggling, which has been and is now carried on to a
great extent, it seems to be necessary that an additional cutter should
be sent out or that the _Ewing_, now in this port, should be assigned
to that duty.”
In a later letter to the Secretary, Collier wrote: “... San Francisco
... must become to the nation what New York is to the Atlantic.... It
is impossible to estimate the extent to which her commerce may reach.
It is now large and it will be constantly on the increase. These facts
are stated for the double purpose of putting you in position of what
may be anticipated from duties, and of impressing upon Congress the
necessity of doing something--doing much for California, and that
without delay. The responsibilities that rest upon the Collector, in
the absence of any legal tribunal, any legal adviser, to which he might
resort for redress or advice weigh heavily upon me.”
The troubles experienced by Collier and other early-day collectors
along the borders of the growing nation were soon to be submerged in
the conflict between the states. At the outbreak of the Civil War most
Southern Customs officers simply resigned and accepted appointments to
similar posts in the Confederate government.
President Lincoln ordered a blockade of the South on April 19, 1861.
At that time the United States naval fleet consisted of only 42 ships
carrying some 555 guns. Of this total many were tenders and store ships
and among them were old fashioned sailing ships and frigates. For a
time, business went on as usual in the Southern ports.
Many in the South laughed at the idea of a blockade. One Southerner
in a letter from Charleston, South Carolina, printed in the New York
_Illustrated News_ on June 15, 1861, said:
We are now in the enjoyment of a very pleasant spring, and are now
as quiet as a brood of chicks under the parent’s wing. For all
that, however, our head men are not asleep. Everything is going
nicely. You have heard, no doubt, old Abe has blockaded our port.
A nice blockade indeed. On the second day a British ship, the _A
& A_ ran the gauntlet and got in safe. She leaves in a few days
with a snug freight of $30,000. Today two vessels passed safely in,
both British, I understand. A captain told me that one of them can
carry more cotton than the _A & A_ and that she is engaged at 5¢ a
pound, which will give a freight of $35,000 to $40,000....
Under the guns of Admiral Farragut and the troops of General Butler,
New Orleans remained securely in the hands of the Northern forces,
shutting off this port to the Southern cause. After a short while
Galveston fell to the Union and the flow of cotton and smuggled goods
from this area was sharply reduced.
In England, the Liverpool firm represented by Thomas E. Taylor owned
some fifteen ships which were engaged in blockade running. Among
Taylor’s swiftest and most elusive runners was a steel vessel called
the _Banshee_, one of the first--if not the first--ship built for
the express purpose of evading the Union blockade for the Southern
ports. Nassau, in the Bahamas, was the primary staging point where the
blockade runners fueled and stocked for the run to the American coast.
The blockade had been underway for two years when Taylor brought the
_Banshee_ into Nassau. Workers removed everything aloft except the two
lower masts, and the ship was painted an off shade of white which the
blockade runners had found made their ships almost invisible at night,
even from a distance of only a few yards.
Moving cautiously out of Nassau, the _Banshee_ sailed along the Bahama
shores and then began the run toward Charleston. From a crosstree in
the masts, a lookout was rewarded with a dollar each time he sighted a
sail on the horizon before it was seen from the deck. If someone on the
deck spotted the sail first, then the lookout was fined five dollars.
It was a system that encouraged alertness by the lookouts. As soon as
a ship was sighted, the _Banshee_ turned its stern to the stranger and
waited quietly until the vessel was out of sight.
On the fourth day the _Banshee_ reached the American coast some fifteen
miles north of Cape Fear and the mouth of the Charleston River. When
darkness came she began easing cautiously toward the blockading Union
ships, running as close to the pounding surf as the skipper dared. No
lights were permitted, not even the glow of a lighted cigar. Tarpaulins
covered the engine-room hatchways. And the _Banshee_ was a gray ghost
slipping silently through the water while the men aboard talked only in
whispers. Occasionally the ship stopped for a seaman to take soundings.
Taylor later recalled one tense moment in these words: “... Suddenly
Burruss (the pilot) gripped my arm--‘There is one of them, Mr. Taylor,
on the starboard bow.’... A moment afterwards I could make out a long,
low, black object on our starboard side, lying perfectly still. Would
she see us? That was the question: but no, though we passed within a
hundred yards of her, we were not discovered and I breathed again.
‘Steamer on the port bow,’ and another cruiser was made out close to
us. Still unobserved, we crept quietly along, when all at once a third
cruiser shaped herself out of the gloom straight ahead and steaming
slowly across our bow.
“Burruss was now of the opinion that we must be inside the squadron and
advocated making the land. So ‘ahead slow’ we went again, until the
low-lying coast and the surf line became dimly visible.... It was a big
relief when we suddenly heard Burruss saying, ‘It’s all right, I see
the big hill!’...”
The Big Hill was near the Confederate-held Fort Fisher at the mouth
of the Charleston River. As dawn came, the _Banshee_ was sighted by
the Union blockaders and they moved against her with guns blazing. But
then the _Banshee_ slipped under the protecting guns of Fort Fisher and
safety.
The owners of the _Banshee_ made 700 per cent on their investment
before the ship was captured on her ninth round trip between Nassau and
Charleston.
The blockade runners, British and Confederate, supplied the armies
of Gen. Robert E. Lee with desperately needed arms, clothing and
food supplies in the early years of the war. For a time the blockade
appeared impotent, while Southern privateers harassed the shipping of
the North and captured much booty at sea.
While Lee was winning battles on the land, the Confederates could never
gain mastery of the sea. The Union blockade could not be broken, and
slowly the superior sea forces of the North strangled the commerce
of the South, shutting off her armies from vital sources of supplies
overseas.
Soon after the war began, it became evident to President Lincoln, to
his Cabinet, and to members of Congress that the revenues collected
by the Customs Service were not enough to finance the mounting costs
of the massive conflict. The loss of tariff revenues in the Southern
states, the South’s raids on the shipping of the North, and the
breakdown of normal commerce had reduced Treasury receipts drastically.
The President was forced to seek new sources of revenue.
In this emergency, the administration turned for the first time to
an income tax. Congress passed a law imposing a tax of 3 per cent on
incomes between $600 and $10,000, and a tax of 5 per cent on incomes
above $10,000. Later, the taxes on those two income brackets were
raised to 5 per cent and 10 per cent.
The income tax collected throughout the struggle--and until the law
expired in 1872--helped carry the nation through its money crisis. Then
the collection of duties by the Customs Service once more became the
country’s primary source of revenue.
But during most of the war and for many years afterward, the venerable
Customs Service’s cloak of respectability was at best a tattered and
stained garment. It had become, particularly in New York City, the
symbol of the political spoils system which had been encouraged by that
partisan old fighter, Andrew Jackson.
The office of the Collector of Customs at the Port of New York had
become a prize second only in political prestige and influence to a
Cabinet appointment. The man receiving this office was in a position to
dole out lucrative jobs to hundreds of the party faithful, to collect
tribute for his party’s campaign chest, and to use his influence in
shaping the affairs of his city, county and state. To a lesser degree,
the same situation existed across the country.
Under such blatantly political management, it was hardly surprising
that the Customs Service in New York should become the target of
bitter charges of graft and corruption. The charges became so loud and
persistent in 1863 that the administration ordered an investigation
into the management of the New York Customs House.
A report from the Treasury’s solicitor said in part: “As to the
accessibility of many of those employed in the Customhouse to corrupt
influences, the evidence is conclusive and startling.... The statements
herewith submitted seem to justify the belief that the entire body
of subordinate officers, in and about the Customhouse, in one way or
another, are in habitual receipt of emoluments from importers or their
agents.... It is shown that a bond clerk, with a salary of $1,000 per
annum, enters upon a term of eight years with nothing, and leaves it
with a fortune of $30,000....”
Until Congress slammed the door on such practices in a reform move
generated in the 1870s, Customs officers were legally permitted to
receive half of any fines and forfeitures resulting from the seizure of
imports which had been undervalued or underweighed by an importer, even
though the methods of determining dutiable value were complicated and
subject to dispute.
However, the law encouraged collectors, appraisers and inspectors to
seek out discrepancies in values and weights and to give themselves the
benefit of any doubt. In one case, the great Phelps, Dodge & Co., metal
importers, was charged with an attempt to evade duties by undervaluing
a shipment worth $1,750,000.
The company’s attorneys argued in vain that there had been no attempt
to defraud the government; that if a mistake had been made it was an
honest error, and that even with the benefit of a doubt, the most that
the government could fairly claim in unpaid duties was $1,600.
With the entire shipment subject to forfeiture, the company finally
agreed to settle for $271,017.23--50 per cent of which was divided
among the Customs officers. Records of the time showed that one of
the Customs officials who received an award of $56,120 was Chester A.
Arthur, who later would become President of the United States.
Arthur was active for years in Republican politics in New York City,
working his way up through the ranks until he became a member of the
New York State Republican Executive Committee. He was rewarded for his
labors in 1871 with an appointment as Collector of Customs in New York
City.
Under Arthur, the Customs House became the center of such open and
partisan political activity that it eventually led to conflict between
Arthur and President Rutherford B. Hayes. Hayes championed a strong
civil service with appointment of Federal employees on a basis of merit
rather than political allegiance. The President asked Arthur to resign,
and when he refused Hayes removed him from office in 1879.
But this Presidential rebuke by no means dimmed Arthur’s political
star. Two years after his removal, he was elected Vice President of
the United States, running with James A. Garfield. Garfield was fatally
wounded by a disgruntled office-seeker, Charles J. Guiteau, only four
months after his inauguration. He died on September 19, 1881, and
Arthur took the oath as President. Ironically, once he was in the White
House, Arthur became a supporter of a stronger civil service.
Reforms came slowly to the Customs Service in the years that followed
the Civil War. But they came, spurred by the efforts of Hayes and then
of President Grover Cleveland to establish a civil service and to break
up a spoils system in which the “rascals” were thrown out of their jobs
with every change in administration.
The demands for further Customs Service reforms were particularly loud
in the early years of the twentieth century. One of these resulted
in the formation in 1909 of the Customs Court of Appeals, to bring
uniformity to the legal decisions governing the huge import trade and
to speed up the hearing of Customs cases.
From the earliest days of the Republic, disputes over the appraising
of imports had been carried to the U.S. Circuit Courts. The result
was a continual conflict in judicial opinions which left importers
and Customs officers confused. In 1908, the Secretary of the Treasury
reported that the law had made “each of at least 120 judges a
possible final judge of Customs appeals, a condition which experience
has demonstrated will inevitably result in numerous irreconcilable
conflicts of authority.”
In addition to the legal conflicts, the U.S. Circuit Courts had become
jammed with Customs cases. It was not unusual for importers to have to
wait almost five years to get a judicial settlement of their cases. But
the creation of the Customs Court of Appeals by the 1909 Tariff Act
removed most of the inequities and brought order out of the judicial
chaos.
In this period, the reformers also centered their attention on the
system which had permitted pork-barrel legislators to have their towns
and cities designated as ports of entry with almost total disregard of
the need for such services.
At Saco, Maine, the port’s receipts for fiscal 1910 amounted to $15,
while expenses totalled $662--a cost of more than $41 to collect $1. At
St. Mary’s, Georgia, the cost of collecting $1 in duties was more than
$45. At Annapolis, Maryland, the government paid $309 to collect $3.09.
And there were dozens of similar examples throughout the country. The
major function of many ports of entry, it was evident, was to give jobs
to the workers in the political vineyard.
Congressional investigators also found that the system of paying
collectors, surveyors and other Customs officials was a fiscal
nightmare--in which thirty-five different methods were used for
compensating employees. For example, collectors along the Canadian
border were permitted to charge ten cents for each entry blank they
executed. Some of them were pocketing, legally, as much as $17,000 a
year.
In 1912, Congress authorized the President to overhaul the Customs
operation. The day before he stepped out of office, President William
Howard Taft issued an executive order establishing 49 Customs
districts to replace the existing 126 districts and 36 independent
ports. Collectors were placed on a salary basis. Many of the political
appointees were dropped from the government payroll.
It was during the early years in this century, too, that the Customs
Service relinquished to the Internal Revenue Service its role as the
prime collector of revenue in the Federal government.
This change was foreshadowed on December 19, 1907, when a tall,
gangling Democratic Congressman from Tennessee arose from his seat in
the House of Representatives in Washington, D. C., and called for the
attention of Speaker Joe Cannon, the thin, wiry political leader who
ruled the House with iron-fisted discipline.
“The gentleman from Tennessee is recognized,” the Speaker intoned dryly.
Then it was that Cordell Hull, a freshman Representative from the
foothills of the Cumberland mountains, boldly introduced a bill calling
for a Federal tax on all incomes. He long had felt that tariff duties
bore too heavily on the consumers of the country and that the wealthy
were not paying a fair share of the cost of their government.
Bold though it was, the Tennessean’s move created scarcely a ripple
in the capital. The House droned on with its business. The newspapers
hardly made mention of the bill or of the new Congressman. It was as
though a rock had been tossed into a lonely mountain pool to sink
rapidly from sight, leaving no trace after the first plop on the quiet
surface.
But Cordell Hull’s action on that cold December day marked the
beginning of a long and bitter fight which would end six years later
with an amendment to the Constitution authorizing Congress to enact
an income tax law. With the passage of this law, the Customs Service
became a secondary producer of Federal revenue.
The reforms of these years, together with those which came in the
Tariff Act of 1922, established Customs on its present base. It was
a leaner and more efficient service which shouldered the increased
burdens imposed by the outbreak of World War I.
During the war years, the Customs Service was responsible for the
enforcement of the neutrality laws in shipping. Its officers acted also
as local agents for the Bureau of War Risk Insurance, insuring vessels,
cargoes and seamen against the hazards of war at sea.
When the United States entered the war on April 6, 1917, Customs
agents moved quickly to seize seventy-nine German and Austrian ships
in American ports. Customs officers enforced the import and export
licenses issued by the War Trade Board.
Two years after the Armistice in 1918, the country was swept by the
nostalgic longing for a “return to normalcy”--and Warren G. Harding was
installed in the White House. But there was nothing normal about the
1920s for the Customs Service. Its agents were to become involved in
fighting the greatest wave of smuggling the nation had known since the
days of Jean Laffite.
6
BOOZE AND BRIBES
Lawrence Fleishman had gone to sea at the age of sixteen, when most
youths his age hadn’t yet put on long pants. He had enlisted in the
Navy and served in convoy duty on the Atlantic in the final months of
World War I. When the armistice was signed between the Allies and
Germany, he had decided to remain in the Navy and he had achieved the
rating of Chief Petty Officer. Still, he had no desire to spend the
rest of his life at sea. When the opportunity had come, he had applied
for a job with the Customs Service. He had been accepted after passing
the Civil Service examinations.
Sodus Point had seemed a quiet enough haven. It was a resort center
and coal shipping port on Lake Ontario, only a few miles removed from
Rochester. The people were friendly and the work was pleasant. He had
expected to remain for some time undisturbed, getting accustomed to the
idea that his roving days were over.
Then an official-looking letter had arrived--marked “Confidential”--and
within a few hours Fleishman was enroute to New York City under orders
to tell no one of his destination. He was to report to Customs Agent
Gregory O’Keefe in Room 501 at the Prince George Hotel.
Fleishman checked into his room at the hotel and then called O’Keefe.
“Come to my room as soon as you can,” O’Keefe said. “We’re waiting for
you.”
When Fleishman went to the room, he was introduced by O’Keefe to a
deputy collector of customs and to another young employee named Frank
Gallagher.
“We called you two down here,” O’Keefe said, “because you are new in
the Service and no one around here knows you--not even the Customs
people.”
O’Keefe explained that the Customs Service was under fire in Congress.
Rep. Fiorello La Guardia had charged that the Port of New York was so
“wide open” that a circus could be smuggled past Customs officers and
New York City port authorities. He claimed that bribery and corruption
were rampant in the administration of the debonair Mayor “Jimmy”
Walker, and that illicit whiskey was pouring into the city. He demanded
that something be done about a scandalous situation.
La Guardia’s charges had stirred Secretary of the Treasury Andrew W.
Mellon to order an immediate inquiry. Customs officials had denied
that conditions were as bad as La Guardia said they were. Nevertheless
O’Keefe was directed by his superiors to undertake an investigation.
Fleishman got the impression in this meeting that the Customs people
honestly believed that an investigation would clear the Service’s
skirts and prove La Guardia to be wrong. Many apparently felt that the
accusations were based more on political inspiration than on facts.
O’Keefe said, “You two are being assigned to the Special Agency
Service. Everything is arranged for you to report for duty day after
tomorrow as Customs guards on the North River piers. When you get your
uniforms, badges, buttons and insignia, I’ll give you more specific
instructions.”
Fleishman and Gallagher were assigned to work as partners on the
piers handling the cargoes of the trans-Atlantic liners. In less than
a week each was accepted as “one of the boys” and they listened to
Customs guards, inspectors, stevedores, seamen and other waterfront
employees openly discussing their success in smuggling liquor and other
merchandise from incoming ships. The standard pay-off for permitting a
case of whiskey to cross the pier unmolested was $1 per bottle.
They sat in on smuggling plans and watched the pay-offs being made.
They accepted their share of the money--and then met in secrecy to mark
the bills to be used as evidence in court. In only eighteen working
days these two alone had gathered evidence of corruption involving
twenty-three Customs and city waterfront employees.
Instead of proving La Guardia wrong, they found that his charges
only touched the surface of a serious breakdown in law enforcement.
They found that many waterfront workers were merely the tools of the
mobsters. Whiskey smuggling was big business and the pay-offs were
tempting to government employees whose average pay in the 1920s was
less than $100 a month. Customs inspectors were earning only $4 a
day and pier guards $75 a month. The Bureau of Labor Statistics had
reported that the minimum salary on which a family could live decently
was $2,260 a year--or $1,124 more than the average government wage.
Forty per cent of the Customs employees in New York worked at night at
whatever they could find to supplement their pay. The conditions were
ripe for corrupting influences to flourish.
One night Fleishman and Gallagher were standing guard at Pier 57 aboard
the French lineship _DeGrasse_. An underworld tipster had reported
that the ship carried 1,500 cases of liquor which were to be smuggled
ashore that evening. As they stood on the stern deck of the ship, a man
dressed as a longshoreman walked up to Gallagher and asked for a light.
Gallagher handed him a match and as the man touched the flame to his
cigarette, the two agents saw well-manicured fingers and the gleam of
a large diamond ring. Then they recognized their visitor as a hoodlum
known as “Mike the Barber.” Whenever there was a waterfront murder at
that time, the name of Mike the Barber was certain to be mentioned
sooner or later in the police list of those to be questioned.
Mike the Barber had said suddenly to Gallagher, “You’re a new man,
aren’t you?”
Gallagher said that he was, and the hoodlum said, “Where do you come
from?”
Gallagher replied, “I’ve been working as a subclerk at the post office
over in Paterson, New Jersey.”
Mike the Barber nodded. “Is that so? I happen to have a good friend
over at Paterson. He is the assistant postmaster over there. You know
his name, don’t you?”
Gallagher was evasive. He began to make excuses for not being able to
recall the assistant postmaster’s name. Mike the Barber growled, “Oh,
yeah? Look, you son-of-a-bitch, you forget everything you see here
tonight or you’re liable to get killed.” And with that the hoodlum
walked off into the darkness.
Fleishman and Gallagher knew their usefulness was over. Within minutes
every member of the gang on the pier would know they were officers.
Fleishman said to Gallagher, “You walk down the pier and walk down
the middle of it--don’t get to the side where there is any cargo or
anything else. Walk right down the middle in clear sight. I’m going
after a taxi.”
Fleishman luckily was able to hail a cab, and he and Gallagher jumped
in. As the cab wheeled from the pier a black sedan roared from the
shadows to give chase. The frightened taxi driver finally shook off
their pursuers and Fleishman and Gallagher returned to their rooming
house.
The information they had gathered was turned over to the Department of
Justice and prosecutions were begun. The crackdown didn’t halt the
smuggling by any means, but it was a jolt to the underworld.
Then, on August 30, 1928, Lawrence Fleishman sat at his desk fingering
a letter which the mailman had left at his office a few minutes
earlier. The letter was postmarked Washington, D. C., and across the
front was written the word “Confidential.”
Slowly he tore open the letter and began reading:
Sir:
You will report at the earliest date possible to Detroit, Michigan.
As soon as you arrive in Detroit, you will register at the Barlum
Hotel.... You are to work strictly undercover and you are to report
to me daily by mail as to your findings.
You will report any dishonesty or irregularity on the part of any
Customs employee, securing wherever possible such evidence as is
obtainable....
(Signed) _Elmer J. Lewis_
Fleishman tossed the letter onto his desk and felt the excitement
building up inside. The order really came as no great surprise,
although he knew that it would be something of a shock for his wife
to learn they were leaving immediately for Detroit. Their plans for
the future hadn’t included any sudden, mysterious journeys to a city
neither of them had ever visited before.
Fleishman knew the assignment would be dangerous. Yet he saw no reason
why he shouldn’t take his bride along. He could rent an apartment and
the stay in Detroit could be pleasant for both of them as long as
business was separated from their home life.
This wasn’t an era for Fleishman or anyone else to be surprised over
reports of graft and corruption in law enforcement. The papers were
full of stories of prohibition agents and other officers being involved
with gangsters in liquor smuggling. If Congress wasn’t ordering
an investigation of a breakdown in law enforcement, others were.
Bootlegging and racketeering had grown to be a multi-million-dollar
industry. It was hardly surprising that an underpaid police officer was
tempted when he could make $100 merely by looking the other way while a
cargo of liquor was being unloaded.
There were times when Fleishman and his fellow agents were not
proud of their agency. But the Customs Service was by no means the
only enforcement agency tainted by crooks and weaklings. There was
corruption rampant throughout the United States. The Federal government
itself was only beginning to recover from the shocking scandals in
the administration of President Harding. It was all a part of the
revolution in manners and morals which had swept the country after the
close of World War I. It seemed after the war that the vast majority of
the citizens of the United States were eager for prohibition. Congress
had voted overwhelmingly for the Nineteenth Amendment to establish
prohibition throughout the United States. The dry forces had easily won
ratification of the amendment when it was placed before the various
states.
Then came the revolt. As soon as Congress passed the Volstead Act, to
enforce the prohibition amendment, the country developed a prodigious
thirst. Bootlegging became one of the country’s major industries.
Revenue from the sale of illegal whiskey provided mobsters with
unbelievably rich treasuries. It made millionaires out of bums. The
gangsters were better armed, better disciplined, and better organized
than the average law enforcement agency throughout the country. The
cynicism of the period was summed up by Franklin P. Adams, who wrote in
the New York _World_:
Prohibition is an awful flop.
We like it.
It can’t stop what it’s meant to stop.
We like it.
It’s left a trail of graft and slime,
It’s filled our land with vice and crime.
It don’t prohibit worth a dime,
Nevertheless we’re for it.
In Chicago, the pudgy gangster named Al Capone fashioned a crime
empire from the profits made on smuggled booze, prostitution and other
rackets. At one time he and his mob controlled--literally--the city of
Cicero outside of Chicago. They elected its officials, controlled the
appointment of police officers, and dictated the affairs of the entire
community, with the threat of the Thompson submachine gun to enforce
their rulings. City governments--and even the Federal government at
times--seemed powerless to cope with the marauders.
In Detroit the Purple Gang came to power, and among the major hoodlums
was a man named Pete Licovoli, whose name usually cropped up whenever
there was a gangland murder, violence, or a report of widespread
corruption. He was a man whom Lawrence Fleishman would get to know well.
This was the state of affairs in September, 1928, when Fleishman and
his wife loaded their belongings into their shiny new Model A Ford
sedan and set out for Detroit.
On arriving in Detroit, they registered at the Barlum Hotel as
Supervising Agent Elmer Lewis had instructed. The following morning
Fleishman went to Lewis’ room in the hotel to be briefed on his
mission. He was eager to meet Lewis, who was one of the Bureau’s
veteran agents with a reputation for being tough, honest and efficient.
Lewis answered Fleishman’s knock on his door. He took Fleishman’s
hand and Fleishman felt like a schoolboy as he looked at the big,
broad-shouldered, sandy-haired man who towered above him. Lewis was 6
feet 4 inches of bone and muscle.
Lewis introduced Fleishman to Sumner C. Sleeper, the chief of the
Detroit Customs Patrol. He was a man of medium height who had spent
many years in the Service. The glasses he wore gave him the look of a
schoolteacher.
Quickly Lewis got down to business and sketched the assignment
Fleishman was to undertake: There were rumors, true beyond doubt,
that some members of the Customs Patrol were deeply involved with
the gangsters in smuggling whiskey into Detroit. The situation had
reached the point where something had to be done to check the bribery
and corruption, but there could be no effective prosecution until the
Bureau had solid evidence that bribes were being offered and accepted.
Lewis explained that arrangements had been made for Fleishman to join
the Patrol as a rookie. If offered bribes, he was to accept them and
make a record of the serial numbers of the bills. He was to report
daily in writing to Lewis, detailing everything that happened, along
with the names of those involved in any wrongdoing. Only four men knew
of his assignment--and he was to discuss his activities only with
them. The four were Lewis, Sleeper and two assistant collectors.
“We hope,” Lewis said, “that within three months you can get enough
evidence to break this thing wide open.”
It was agreed that as a “cover” Fleishman would tell anyone who was
curious that after leaving the Navy he had found a job as bookkeeper
for a large New York State gambling syndicate but the syndicate had
been broken up by police, forcing him to find another job. The story
sounded reasonable enough, because the newspapers had carried stories
that summer of a big gambling combine which had been smashed by New
York State police.
At the close of the conference, Lewis gave Fleishman a final bit of
advice: “If you ever think they are suspicious of you, get to a safe
place fast--and call me.”
Within a few days, Fleishman and his wife were settled in a modest
apartment on Van Dyke Street not far from Detroit’s main downtown
section. And on September 22, 1928, Fleishman reported for duty at the
Customs Patrol headquarters at the foot of DuBois Street on the Detroit
River. The Patrol offices were in an old wooden building enclosed by
a high wire fence. There was an adjoining garage and a slip for the
patrol boats alongside a boat repair shop. In addition to the office,
there was a squad room for the patrolmen, where each of them had a
locker.
During his first week on the job, Fleishman knew he was being watched
with suspicion. He was never given an assignment with any of the night
patrols. Each morning he was assigned to headquarters duty--which meant
sweeping out the offices, tending the coal fires, carrying out ashes,
filling cars with gas and oil, and sprinkling water on the sand pile in
the front yard to prevent the sand from blowing into the offices.
At odd moments, Fleishman sat around watching the older men shoot
craps in the locker room and joining in their talk. Slowly the wall of
suspicion began to crumble, and during the second week he was assigned
to a 12 midnight to 8 A.M. patrol with a senior officer named Raleigh
Hampshire, a big, flabby man who looked as though he slept in his
uniform.
In the first hours of the night they drove aimlessly along Woodward
Avenue, parking occasionally to get a cup of coffee at an all-night
restaurant, or just to sit and watch the traffic. From time to time,
Hampshire questioned Fleishman about his background. Fleishman told him
of his years in the Navy and his experiences in strange ports of the
world. He even confided to Hampshire that he had been a bookkeeper for
the New York State gambling syndicate--but this job had blown up when
the police smashed the operation.
“Maybe you heard about it,” Fleishman said. “It was in all the papers.”
Hampshire obviously was impressed. “Yeah,” he said, “I read about that.”
This conversation apparently resolved any doubts that Hampshire had
about his companion. After a time he said, “Let’s go see what we can
find.” He wheeled the car from the curb and drove to a residential
area which Fleishman later learned was the Lake St. Clair section, a
respectable neighborhood of attractive homes.
Hampshire drove into the driveway of a large house with a tree-shaded
lawn, and Fleishman assumed they were going to visit one of Hampshire’s
friends. He followed Hampshire to the door, and when he knocked a man’s
voice said, “Come in.”
They stepped through the door into a scene that Fleishman would always
remember as one of the strangest he had ever witnessed. Stacked to
the ceiling in what should have been the living room were cases of
whiskey and sacks of ale. On an overturned beer keg sat a man cleaning
a pistol. Six other men, using an overturned crate for a table, were
playing blackjack. A young woman stood watching the gamblers while
sipping from a bottle of ale.
No one showed any surprise at the appearance of the two uniformed
officers. They only glanced at Fleishman and nodded when Hampshire
introduced him as a new man on the job.
“Have a drink?” their host said.
“I’ll take a bottle of ale,” Hampshire said.
Fleishman nodded. “I’ll take the same.”
The hoodlum took a knife from his pocket and flipped open a blade. He
ripped one of the sacks and took out two bottles. When he opened them,
the warm ale spewed out on the floor. They sat and chatted for several
minutes and then Hampshire signalled it was time to go. They bid
everyone goodnight and returned to their car. As they drove from the
house, Hampshire said, “It isn’t everybody that would give a new guy a
break like this.”
“What do you mean, a break?” Fleishman asked.
“I mean introducing you to the guys back there,” Hampshire said. “You
never can tell when you might be working with a special agent. But I
figure you’re all right.”
“Thanks,” Fleishman said dryly. “I appreciate it more than you know.”
This was the break Fleishman had been waiting for. He knew that he had
passed the first test and he figured that Hampshire now would pass the
word to others that he was “okay.” When he returned home that morning
he wrote a long report of the night’s events and mailed it to Elmer
Lewis at the Barlum Hotel.
And then his reports became more and more interesting....
October 1, 1928. (Fleishman reported that he had made friends with
a patrolman named Bill Tompkins, who lived only a few streets
beyond his apartment. He became friendly by giving Tompkins a ride
home after work.) Tompkins opened up wide this morning. He said:
“Don’t let any of these guys give you the runaround. If you see
them talking to bootleggers and they don’t let you in on it, or if
they leave their boats or cars or act suspicious in any manner, you
can be sure they are getting theirs and you are not. Just don’t let
them put anything over on you. Every time they make a run it is
good for a hundred each.”...
October 10, 1928. I reported for duty at base at 1 A.M. Detailed
to land patrol with Inspector G. Slater.... Our first stop was at
the foot of Orange Street in Wyandotte where the picket boat was
tied up ... Slater talked to O’Rourke while I drove to a restaurant
at Slater’s request. When I returned ... Slater said, “Well, it’s
all fixed. We ought to be good for $125 apiece tonight.”... We
drove down to the foot of 23rd Street and parked the car and went
to sleep.... We woke up at 6:15 and a bootlegger named Hamilton
came along. He said, “Is it all right to work?” Slater said,
“Yes.”... He then told us he would see us around 8:30. We then
left from the foot of 23rd Street and went to a restaurant on West
Fort Street and had coffee. Left and drove over to the foot of
Orange Street and Wyandotte. We were there about 7 o’clock. Bill
O’Rourke ... handed Slater a roll of bills. Slater walked over
to the picket boat and another boat was tied up there having a
propeller fixed.... All I saw of this transaction was O’Rourke
giving Slater a roll of bills. We then drove down to the River
Rouge. In the car Slater gave me a roll of bills and said, “Count
it.” I did and found $50. At the River Rouge we went to Peajack’s.
We met his lieutenant who got out of a car, came over, and dropped
a roll of bills in Slater’s lap.... After driving away Slater gave
me another roll of bills containing $50. Slater said, “I bet you
feel funny going into the base carrying $100.” I admitted that I
did feel uncomfortable. Slater gave me quite a bit of interesting
data. The night’s pay-off when they work the River Rouge is $970.
They all work at once and the boat crews and the land crews must
all be fixed. In addition Border Patrol must occasionally be
fixed, nightwatchmen and policemen must be fixed, and recently
the prohibition agents have to be paid off to discontinue their
activities on the river. Slater also told me a number of fellows
were very suspicious of me.... I said, “Why are they so suspicious
of a new man every time?” Slater said, “Because every new man
might be a special agent or a DJ (Department of Justice) man. But
even if you are a special agent you are as guilty as I am because
you have taken money too.”... Near 23rd Street Slater turned up a
side street.... Then I saw Hamilton rounding the corner. He came
over to the car and dropped a roll of bills in my lap. I handed
it to Slater when we drove off.... This made $115 for my share of
the evening’s profit. (Each bill Fleishman received he listed in
his report giving the denomination and serial number of each.)...
Returned to base at 10 A.M. and made out report: “No activities
noted.” Slater made out a similar report....
By mid-November, Fleishman had been admitted to membership in the
Patrol’s crooked inner circle. He was automatically included in the
pay-offs made by the mobsters. He had found many of the patrolmen were
honest men--but they were helpless with so many avenues for rumrunning
left open around them.
Occasionally, Fleishman slipped at night into the Barlum Hotel to
discuss the progress of the investigation with Elmer Lewis. The
evidence of graft and corruption was piling up daily, yet Fleishman was
troubled because he hadn’t been able to link the pay-offs to any of the
higher-ups in the rumrunning syndicates.
“You’re doing all right,” Lewis assured him. “Just be sure you don’t
get into any trouble.”
Fleishman said, “There’s one guy in this racket I would like to
nail--Pete Licavoli. He’s responsible for a big part of this mess.”
Lewis nodded. “You’re not likely to get close to Licavoli. He plays it
smart.”
Then one night Fleishman was detailed to the land patrol with Patrolmen
James Mack and Shell Miller. They climbed into a Buick coach with
Miller at the wheel and Miller headed the car out Fort Street to
Military Road.
“Where are we going?” Mack asked.
Miller said, “I’ve found something worthwhile that I want to show you.”
He turned onto Jefferson Avenue and after a time he drove slowly by a
lumber yard beside a railroad track. “That’s it,” he said. “I got a tip
they’re handling booze in there by the carload. But they don’t ship it
until it’s watered down. We’ll come back later and pay them a visit.”
The three men rode aimlessly around Ecorse until mid-morning and then
Mack drove back to the lumber yard. They walked into a building where
several men were making boxes. Suddenly Mack said, “Here comes a friend
of mine.”
Fleishman saw a big, handsome man emerge from an office. He recognized
him instantly from his pictures. He was Pete Licavoli, and very plainly
Licavoli was upset.
“For God’s sake,” the hoodlum said in disgust, “where did you come
from?”
“We just thought we’d pay you a visit,” Mack said. “Nice place you’ve
got here.”
“Beat it,” Licavoli snarled. “Beat it and I’ll fix you later.”
Mack said, “Okay, boys, let’s get out of here.”
As they drove from the lumber yard, Mack said, “This thing is too good
to put off. I’ll arrange for us to see Pete tonight.”
* * * * *
It was 5:40 when Mack and Miller picked up Fleishman at his apartment.
They drove to Jefferson Avenue, where Mack parked the car. They walked
down a long alley and Mack knocked on a door. They were admitted into
an elaborately furnished restaurant which proved to be the private
restaurant and hangout of Licavoli and his mob. The furnishings were
in excellent taste. There were leather lounging chairs, a bar and the
general atmosphere of a country club. Licavoli was seated at a table
with one of his lieutenants, Sam Georges. He waved his visitors into
seats.
Fleishman left the talking to Mack and Miller as they discussed how
much Licavoli should pay to operate unmolested at the lumber yard
shipping plant.
“This is the first time we’ve worked in a week,” Georges complained,
“and we’re losing money.”
Miller said, “Do you expect me to cry for you?”
The discussion continued through dinner and several rounds of drinks.
Finally it was agreed Licavoli should pay $400 a week to be left alone.
The mobster pulled out a fat wallet, counted out the money, and handed
it to Mack. He stood up and put his hand on Fleishman’s shoulder. “You
boys come around any time,” he said. “The drinks are on the house.” And
then he left.
In dividing the $400 pay-off, it was agreed that Fleishman would
receive $110 and Mack and Miller $120 each, with $50 to be paid to the
tipster who had pointed out the Licavoli operation to Mack. The money
was divided as the men sat at the table.
In the days that followed, Fleishman’s letters to Lewis were filled
with reports of gangster pay-offs. The evidence piled up so rapidly
that officials of the Treasury and Justice Departments, Customs
Service, and the Prohibition Bureau met in Washington to discuss when
and how a crackdown should be made. Elmer Lewis was called from Detroit
to take part in the conference.
Lewis urged the conference to keep a tight lid of secrecy on the
meeting. He warned that any disclosure that a Customs agent was working
undercover in Detroit would be certain to endanger Fleishman’s life.
Sooner or later the hoodlums would discover he was an undercover
man--and the Purple Gang gunmen would be after him.
But such news is difficult to keep bottled up in Washington. Part of
the story, at least, was leaked to reporters. The following morning
newspapers were carrying reports that a “big case” was expected to
break soon over bribery and whiskey smuggling in Detroit. There was
speculation, too, that a shakeup was coming in the Customs Patrol.
When Lewis read these reports, he arranged to take a train back to
Detroit. He knew the news stories would be telegraphed to the Detroit
newspapers.
At midnight on November 18, Fleishman reported for duty as usual. He
was assigned to a patrol with two inspectors to cover the customary run
along the River Rouge and the Wyandotte area. They visited the usual
haunts, looking for any of the hoodlums who might be seeking an “all
clear” signal for moving their whiskey across the river. None of them
at the time had read the dispatches from Washington printed in the
Detroit newspaper.
Shortly before dawn, the three men stopped in a Wyandotte restaurant
for a bowl of soup and a sandwich. The restaurant was operated by Joe
Rosen, one of the mobsters, and after a while Rosen came to the table.
He whispered into the ear of one of the patrolmen and then hurried from
the room.
“What’s going on?” Fleishman asked. “Are we going to get some action?”
The inspector said, “Finish your sandwich and let’s get out of here.”
When they returned to the car, the inspector said, “Joe says at least
three undercover men are working on the force and they’ve put the
finger on about forty men. The mob is trying to find out who the stool
pigeons are. Nothing’s going to move until they do.”
For the next two hours, Fleishman’s companions talked of little else
except the bribes they had turned down, and how honest they had been.
Fleishman knew their talk was solely for his benefit. They were not
good enough actors to conceal their anxiety.
When they finally stopped at a restaurant for a cup of coffee,
Fleishman excused himself on the pretext that he had to call his wife.
Instead he called the Barlum Hotel and asked for Elmer Lewis.
Lewis answered the phone. Fleishman explained what had happened. “This
doesn’t look good to me, Mr. Lewis,” he said.
Lewis said, “Your job’s finished. Now go home and pack your things. Get
over here with your wife as fast as you can. You’ll both be safer here.”
Fleishman moved with his wife into the Barlum Hotel and only then did
she learn of the role her husband had been playing for more than two
months. A few days later, they slipped from the hotel and headed back
East in their Model A Ford.
On November 30, eighteen hoodlums were arrested, along with nineteen
patrolmen. Two-score other patrolmen resigned. The cleanup was a
newspaper sensation.
Pete Licavoli was among those sentenced to prison. The mob leader over
the years had escaped conviction on charges ranging from sluggings to
murders. But this time he pleaded guilty to bribing a Federal officer.
He was fined $1,000 and sentenced to two years in Leavenworth prison.
While Fleishman was uncovering the evidence to convict Licavoli and the
others in Detroit, another young agent--Chester A. Emerick--was making
some interesting discoveries on the West Coast. A big, easy-going man,
Emerick had developed sources which disclosed to him that much of the
liquor bootlegged on the Pacific Coast was being shipped by a combine
of Canadian liquor interests. Emerick learned that the Canadian liquor
interests had formed the Pacific Forwarding Company of British Columbia
to exploit the American liquor market. The company loaded its whiskey
on ships at Vancouver for shipment ostensibly to Papeete, Tahiti. Once
the liquor arrived in Tahiti, the Tahitian customs bond was cancelled
and the shippers were not required to pay taxes on the liquor exported.
Then the liquor was moved from Papeete to Rum Row off Southern
California, off Long Beach and off the Washington coast. Rum Row was
the nickname given by newspapers to the line of ships which stood at
anchor in international waters, three miles offshore and just out of
reach of U.S. maritime jurisdiction.
The Canadians did not merely bring the liquor to Rum Row. They had
a well-organized force of salesmen operating in San Francisco, Los
Angeles and Seattle, selling whiskey to bootleggers and guaranteeing
delivery on a wholesale basis. The money collected by these salesmen
was deposited in several banks along the Pacific Coast to the credit of
the “Gulf Investment Company”--a company owned and controlled by the
Canadian liquor interest. No one knows how many hundreds of millions of
dollars in profit was realized by the Canadian conspiracy.
Emerick doggedly followed up the original leads obtained during
prohibition and pressed for Federal action against the Canadian
liquor dealers. In the spring of 1934--two years after the repeal of
prohibition--two officers of the Canadian interests, Henry and George
Reifel, arrived in Seattle. They were placed under arrest. The warrants
had been issued secretly, and only four or five Customs officials knew
of the action that had been taken. Service was obtained on warrants
against the corporation which they represented, and a Federal action
was brought in the District Court at Seattle, Washington. Before the
case was concluded the Canadian interests had agreed to settle all
liabilities by paying the U.S. government $3 million. This payment was
accepted by the government and the case was closed.
There never were and perhaps there never will be again smuggling
operations of such a magnitude as those which developed during the days
of prohibition. Booze leaked across the borders from Canada and Mexico
in streams. High-powered speedboats brought cases of liquor from supply
ships riding at anchor in international waters. The Coast Guard and
Customs were engaged at times in a shooting war with the rumrunners,
and in the Detroit area alone, Customs had thirty speedboats engaged in
around-the-clock blockade operations.
No authoritative study is available on how many ships and boats were
engaged in rumrunning during the Twenties. But it was a formidable
fleet, and there had been nothing quite like it since the blockade
runners assembled their fleet to challenge the Union’s blockade of the
South during the Civil War.
One of the largest hauls of bootleg alcohol made by Customs came in
1926 with the seizure of the freighter _Cretan_, which was found to be
carrying more than 70,000 gallons of Belgian alcohol easily worth $4
million on the retail bootleg market.
The _Cretan_ was purchased by a “front” man for a group of Philadelphia
and New York racketeers. Early in 1926, the _Cretan_ steamed to the
Bay of Fundy, where it made a rendezvous with the British ship the
_Herald_. The _Herald_’s cargo of alcohol, a total of seven hundred
100-gallon drums, was transferred to the hold of the _Cretan_. Then
several tons of baled waste paper were piled on top of the drums to
conceal them in case the ship was boarded by Coast Guard or Customs
officers.
The _Cretan_ headed for Philadelphia with its valuable cargo of
190-proof spirits, but the mobsters weren’t satisfied with the
arrangements for unloading the cargo in Philadelphia. A message was
sent to the _Cretan_’s captain ordering him to proceed to Boston and
take on more baled waste paper. A decision would be made later on where
to unload the alcohol.
The _Cretan_ steamed into Boston harbor on schedule and tied up at
an isolated pier. It began to take on more waste paper, with no one
suspecting its true cargo. But a Customs officer observed several
well-dressed men coming and going from the ship. He also noticed that
two strange automobiles, both bearing New York license plates, were
parked nearby. And he began to wonder what it was aboard the vessel
that would bring the strangers all the way from New York to Boston--men
who didn’t seem to be seafaring types.
He reported his suspicion to Deputy Collector of Customs Thomas F.
Finnegan. Finnegan decided to send a special duty squad aboard the
ship to determine the nature of the ship’s cargo. The squad boarded
the _Cretan_ but found they could not get into the holds. However,
when they entered a coal bunker next to the holds, they detected the
unmistakable odor of alcohol.
Finnegan ordered an immediate halt to the loading of waste paper. He
posted guards at the gangway to prevent anyone from leaving the ship,
and arranged for a lightering firm to unload the bales of waste paper
from one hold. When the paper was removed, the drums of alcohol were
uncovered. The _Cretan_ and its cargo were forfeited to the government
and sold at public auction. The alcohol was sold to drug companies
which had Federal permits to dispense alcohol.
Some of the rumrunning craft were equipped with armor plate and
bullet-proof glass around the pilot house area. They had underwater
exhaust mufflers installed in order to slide silently through the
water at night and evade the Coast Guard and Customs patrols. Most of
them had two high-speed motors, each with a shaft and propeller. The
conversion work on the boats was done by the rumrunners themselves or
by small boat builders.
The _Whatzis_, operating out of Rhode Island, was believed to be the
first rumrunning speedboat with four high-speed motors--two in tandem
in each engine bed with a reduction gear between the motors. Each set
of motors had one shaft and one propeller. This powerful craft was
seized by the Coast Guard off the Massachusetts coast and later was
inspected by several naval architects interested in its unusual power
plant. Some insist to this day that the _Whatzis_ was the craft that
gave naval designers their idea for the rugged crash boats used at
seaplane bases, and later for the PT boats which won renown in World
War II.
The Twenties was a time of violence and turmoil for all the nation.
And no agency of the government was more actively involved than the
Customs Service, which, with other agencies, had the impossible task
of trying to throw up a dike against the flow of illegal whiskey into
the United States. Many good men tried, honestly and diligently, to
enforce the law. But the great majority of the people simply didn’t
want prohibition.
In this period, Customs developed a tough and experienced corps of law
enforcement agents and supervisors who were to serve the country well
in future years.
7
THE ENFORCERS
Customs now has 240 special agents who police the Atlantic, Pacific,
and Gulf of Mexico coastlines and the borders between Mexico and
Canada. Their work is supported by 487 Customs enforcement officers
(port patrolmen) and 2,551 Customs inspectors and supervisors.
Pressures for a special investigative force to combat smuggling and
fraud developed after the Civil War, when normal trade was resumed
between the United States and other nations of the world. Violations
of the Tariff Act and a loose morality in administrative offices
became so flagrant in those postwar years that in May, 1870, Congress
passed a law providing: “The Secretary of the Treasury may appoint
special agents, not exceeding 53 in number, for the purpose of making
examinations of the books, papers and accounts of Collectors and other
officers of the Customs, and to be employed generally under the
direction of the Secretary, in the prevention and detection of frauds
on the Customs revenue....”
With this act, the Secretary of the Treasury gathered under his
direction for the first time a special police force to combat smuggling
and frauds.
The need for such a force actually dated back to the first days of the
Republic. But over the years, the enforcement work had been handled by
inspectors, guards and other untrained personnel. In 1922 Secretary of
the Treasury Andrew W. Mellon transferred the Special Agency Service
from his personal direction to the Customs Administration, which was
then a division of the Treasury Department. In 1927, the Customs
Division was given the status of a bureau by Congress, with direct
control over its own investigative force.
This force now operates under a Division of Investigations, headed by
the veteran enforcement officer Chester A. Emerick, former Collector
of Internal Revenue in Tacoma, Washington, who joined the Customs
Service in 1920. Emerick has the title of Deputy Commissioner, and he
is responsible to the Commissioner of Customs in the operation of his
division.
The responsibilities of the Customs agents were not clearly defined in
the early days of their operation. But a clear directive was issued in
1933 to dispel any lingering doubts. This directive read: “(a) Customs
agents shall be employed generally in the prevention and detection
of frauds on the Customs revenue and all matters involving such
frauds requiring investigation shall be referred to them. They shall
investigate and report upon all matters brought to their attention by
the Commissioner of Customs, Collectors, Appraisers, Comptrollers, and
others relating to drawback, undervaluation, smuggling, personnel,
Customs procedure, and any other Customs matters.
“(b) undivided responsibility for the investigation and reporting to
the proper authority of all irregularities concerning any phase of
Customs administration or misconduct on the part of Customs employees,
by whatever means brought to its attention, rests with the Customs
Agency Service. This injunction, however, is not to be construed as
abridging or modifying the responsibility of the principal field
officers to maintain discipline and efficiency in the Customs
personnel. There shall be no differentiation in the treatment of chief
administrative officers of Customs and their subordinates in the matter
of investigating accusations of alleged official misconduct. Collectors
and other chief officers of the Customs shall cooperate in making this
policy effective.”
* * * * *
Jerome Dolan is a handsome, black-haired young Irishman. It was,
literally, a swift and embarrassing kick in the pants which started him
on the road to becoming a Treasury agent.
It began for Dolan when he was a twelve-year-old living on Selby Avenue
in the Lexington Parkway area of St. Paul, Minnesota. The street was a
quiet, comfortable, tree-shaded thoroughfare lined with the homes of
middle-income families. The Dolan home was near a shopping center and
only a brisk walk from the neighborhood school.
There were playgrounds not far distant and vacant lots where youngsters
could play baseball after school and during vacations. But in the
perverse way of small boys, Dolan and his pals found it more fun to
play ball on the streets, much to the annoyance of the residents and
Officer “Red” Schwartz, who frequently cruised through the area in
Patrol Car 309.
Schwartz was a large, muscular man standing 6 feet 2. He was forever
breaking up the ball games with gruff commands for the boys to get off
the streets. If there was any backtalk, Schwartz was likely to box the
ears of the impertinent rebel, or to boot him in the behind. Then he
would growl that he wasn’t going to have anyone killed by an automobile
on his beat if he could help it.
Dolan and his friends usually kept a sharp lookout for Schwartz, the
enemy. But one day they were careless and Car 309 came rolling down the
street into the midst of a noisy game. Officer Schwartz came boiling
from behind the wheel of the car. He laid two heavy hands on Dolan and
another youth who hadn’t been nimble enough to escape. He shook them
until their teeth rattled and then he booted them in the backsides with
the broadside of a large shoe--just hard enough to give emphasis to his
words.
“Maybe that will teach you a lesson,” Officer Schwartz called to the
retreating youths. “And don’t let me catch you again.”
It never occurred to Schwartz to complain to the youths’ parents. This
was his beat. It was his responsibility to maintain law and order, and
to protect the lives of those in his charge. He also felt it was his
duty to discipline the youths who showed a lack of proper respect for
authority.
“I’ll get even with that red-headed cop,” Dolan vowed. “Just you wait
and see.”
“How are you goin’ to get even?” his friend asked.
Dolan considered the problem. At last he said, “Well, I’m going to be a
policeman and when I’m his boss, I’ll fix him.”
As a sophomore in high school, Dolan had forgotten his vow to “fix”
Schwartz, even though he often looked from the window of his classroom
to see Car 309 cruising by the schoolyard. But he had not lost his
determination to become a law enforcement officer. In writing down his
ambition for the class yearbook, he wrote: “I want to be a Federal law
enforcement officer.”
One reason Dolan had fixed his sights on a career in Federal law
enforcement was the fact that the father of his friend, Sam Hardy,
Jr., was an FBI agent. Sam Hardy occasionally came to the school and
talked to the students about the work of the FBI. These talks only
strengthened his desire to become a Federal agent.
After graduating from high school in the spring of 1950, Dolan entered
the Army. He was assigned to the Army’s security section and he
travelled throughout the Far East as a courier. When he was mustered
out of the service, he enrolled in St. Thomas College in St. Paul and
worked part time as an investigator for business firms.
He was graduated from St. Thomas in 1958 and became chief security
officer for the Golden Rule Department Store in St. Paul. Then he
joined the city’s police department.
One morning Dolan reported for roll call at the main police
headquarters in the Public Safety Building. After inspection the
lieutenant read off the list of assignments for the day. He said,
“Dolan, you will work Car 309 with Officer Schwartz.”
Dolan climbed into the car beside Schwartz and all the old memories
came flooding back of how he once hated this gruff policeman who had
booted him in the pants. He remembered wryly his vow to one day get
revenge.
Now “Red” Schwartz’s hair was sprinkled with gray. He was heavier and
the lines on his face were deeper. His hands, though, were just as big
and powerful as Dolan had remembered, and he had the same stern air of
authority about him.
Dolan said nothing about the remembered indignities, and the older man
apparently did not recognize the rookie as one of the youngsters who
had given him such a bad time out on Selby Avenue. He could not know,
either, that he had had such a strong influence on the youth who sat
beside him.
They made their rounds without incident that day until late in the
afternoon when the car radio said: “Car 309 ... Hague and Dunlap ... a
child has been struck by a car....”
Schwartz picked up the transmitter and said: “309 to Hague and Dunlap
... 4:05.” He swung the car toward the scene of the accident. A little
girl lay beside the curb, and her weeping mother was wiping blood from
her daughter’s face with a cloth. The child had darted from the curb
into the path of an automobile. There had been a screech of brakes and
the girl had been hurled to the curb, unconscious.
As Dolan recalled the scene later in talking to me: “Schwartz, as big
as he was, was out of the car ahead of me. He went straight to the
little girl and her mother and I never would have believed those big
hands could be so gentle. He soothed the mother with a few words, and
when he saw the girl wasn’t seriously hurt, he picked her up in his
arms and carried her into her home as though she were his own daughter.”
Then Dolan added, “I was very proud of Schwartz that day and of being
his partner in Car 309.”
Twelve years after receiving the kick in the pants from Schwartz, Dolan
was among the students selected to attend the Treasury Department’s Law
Enforcement School at 711 12th Street in downtown Washington, D. C. He
finally had decided to become a Secret Service agent, and now he was
receiving basic training with rookie agents from the Customs Bureau,
the Narcotics Bureau, the Secret Service, the Coast Guard, and units of
the Internal Revenue Service.
Watching these young men in training, you wondered what it was that
moved each of them to choose Federal law enforcement as a career. The
work is difficult and demanding, calling for stern self-discipline. The
hours are long, irregular and often filled with danger. No agent ever
knows when he may be called from his home on an emergency assignment
which may last for weeks. The pay, ranging from $5,355 per year for a
rookie to a high of $10,255 for a veteran agent (only the supervising
agents receive higher pay) is not exactly an economic bonanza for a
college graduate. Salary is not the primary inducement; many of the
youths have wanted to be in law enforcement since childhood.
One youth told me, “My father was shot and killed by a bootlegger when
I was just a boy. I grew up in a tough neighborhood. I’ve always wanted
to be in law enforcement to help fight crime.”
“I like the excitement of the work,” another said, “never knowing from
one day to the next what the problem will be or how it will be solved.”
“I didn’t have much chance for advancement as a city policeman, but
it’s different as a Federal agent.”
“There’s no politics in Federal law enforcement--not like you find in
local law enforcement. You don’t have to worry about the politicians.”
A good many of the rookie agents who come to the school studied police
administration in college and then worked on city police forces before
taking the Civil Service examination required of candidates for Federal
law enforcement jobs.
When an applicant passes the examination, his name goes on the Federal
Registry, and it is from this registry that most of the new agents are
chosen. Regional boards composed of representatives from the various
Treasury divisions interview the applicants as openings occur from
time to time in the agents’ ranks. Customs may need a Spanish-speaking
agent for duty on the Mexican border. Narcotics may be looking for a
man of Italian ancestry who speaks Sicilian fluently. Or Revenue may be
searching for an investigator with a knowledge of accounting.
If an applicant wins approval on the regional board, his background is
investigated and he is given a physical examination. If all goes well,
he is sworn into the service of his choice.
The rookie agents spend their first months in service receiving
on-the-job training by working with experienced officers. Then they are
sent to the Treasury’s Law Enforcement School for six weeks of study in
basic courses such as how to make searches and seizures, how to conduct
a surveillance, how to plan a raid, how to photograph the scene of a
crime, how to take latent fingerprints, how to interview witnesses
and interrogate suspects, and how to conduct themselves in a courtroom
under cross-examination.
The Treasury school was established permanently in Washington in 1951
and has now graduated more than 15,000 agents. It is headed by Director
Patrick O’Carroll, a forty-two-year-old former Narcotics agent who
was reared in New York City. O’Carroll was graduated from Fordham
University in 1944, where he majored in psychology. Dark-haired,
handsome Pat O’Carroll guides a staff of fifty instructors, who give
the basic training to rookies and also instruct veteran agents in
specialized courses involving administrative duties. At present the
school is conducting six 6-week courses a year for rookies, with an
average of eighty students in each class. There also are a scattering
of foreign students, sent by their governments to study American police
methods.
O’Carroll and his aides strive to make the instruction as realistic
as possible by providing problems which simulate actual situations
the young agents will face in their everyday work. In the 9 A.M. to 5
P.M. classes, held five days a week, the men spend about half their
time working on practical law enforcement problems. The other half
is spent in listening to lectures by agents, police administrators,
college professors and attorneys. The lectures cover such subjects as
constitutional law, civil rights and rules of criminal law procedure.
Toward the end of the course, the students are divided into squads
of five men and given the problem of arresting a suspected criminal,
searching his apartment for evidence, preparing the case for
presentation to a grand jury, and appearing in court as witnesses.
On the fourth floor of the school building is a furnished room in which
have been hidden narcotics, counterfeit money, betting slips, jewels
and other incriminating evidence. The room is occupied by a veteran
agent posing as “Richard Roe,” the suspected criminal.
Roe gives them a rough time. He complains of a serious heart condition
and asks to be given medicine from a bottle on a table. He accuses the
agents of stealing money and a diamond ring from a desk drawer. He
continually demands to see his lawyer. A postman delivers a registered
letter and Roe challenges the right of the agents to open the letter
after he has signed for it. He tries everything short of violence to
impede the search.
Sometimes the young agents refuse to give Roe his medicine. They ignore
his accusations of theft. Or they accept his argument that they have no
right to seize the registered letter.
If the searching party fails to find at least 80 per cent of the
items concealed in the room, they do not obtain a “conviction.” Then
experienced agents carefully explain where they made mistakes in the
handling of the suspect.
When Roe claimed he was ill, the agents should have called his doctor
to determine the truth. Upon their entering the room, Roe should have
been advised to collect any valuables so that an inventory could have
been made on the spot to be signed by him. When Roe signed for the
registered letter, then it legally could be seized with no invasion of
his privacy. Roe’s rights were not violated when his requests for an
attorney were ignored during the search, prior to his arrest.
In a mock courtroom scene, an agent who formerly was a U.S. attorney
acts as the defense counsel. He grills the rookies on every move made
in Roe’s apartment, seeking to confuse them while driving home the
point that months of careful police work may be wasted by an inept or
careless presentation of facts in court.
The school has proved to be such a success that it is now supported
enthusiastically by all the Treasury agencies, which prorate the cost
and make their best men available as instructors. But for many years a
few men struggled to keep the school going in the face of apathy and
even active opposition.
The man who perhaps contributed most to keeping alive the idea of
a professionally directed school for Treasury agents was Harry M.
Dengler, a retired Internal Revenue agent who now lives in Washington,
D. C. A short, plump man of enormous energy, Dengler joined the
Internal Revenue Service in 1918 after a dozen years of teaching in
high schools in southeast Virginia and Montana. He was thirty-six at
the time he was assigned to the IRS’s Intelligence Division, working on
internal police problems and on tax conspiracy cases.
The Treasury school stemmed from the fact that in 1927 the Bureau of
Prohibition’s enforcement of the Volstead Act was a mess. Part of the
mess was due to the lack of trained enforcement officers. Illegal
searches and seizures by Bureau agents aroused public indignation.
Also, they created a serious problem in obtaining convictions of
rumrunners and bootleggers.
L. C. Andrews, the Assistant Secretary of the Treasury, became so
concerned over the situation that he persuaded Dengler to join the
Bureau of Prohibition and to start an enforcement school for the
Bureau’s agents. Dengler had argued for years that Federal law
enforcement officers should be schooled in their work to be effective
and to deserve public confidence.
Dengler selected a few aides and they put together a course of
instruction to be given to some 2,500 prohibition agents. Two men were
chosen from each of the Treasury’s eighteen districts throughout the
country to come to Washington for four weeks of intensive schooling in
proper law enforcement procedures.
The theory was that these thirty-six men would qualify themselves as
instructors and then return to their home districts to teach what they
had learned to other prohibition agents. But the system soon broke down
because the district supervisors sabotaged the school.
“I know how to enforce the law without any help from Washington,” one
supervisor announced. He had the support of other supervisors.
The truth was that the supervisors were jealous of the men who had been
brought to Washington for special training. They also were fearful that
they would lose their jobs to the men with superior backgrounds in law
enforcement. The result was that the schools were doomed even before
they started. By the end of the year, the schools had been discontinued.
Dengler clung stubbornly to his belief that every Federal law
enforcement officer should be trained for his job. He persuaded his
superiors to let him organize a correspondence course, with the study
to be voluntary. Hundreds of agents applied, convincing Dengler that
the agents themselves were eager to know more about professional law
enforcement.
The idea of a school was resurrected in 1930 by Amos W. W. Woodcock,
when he became head of the Prohibition agency. Dengler again went to
work to set up a course of study. But when Woodcock left office a few
months later, his successor broke up the schools with the remark:
“If a man is smart enough to get a job with us, he doesn’t need any
training.”
Dengler confided to a friend later, “That was one of the low points
of my life. These schools were badly needed by the government to
improve the quality of Federal law enforcement. Hardly anyone seemed
interested.”
Indeed, for several years it seemed that no one was interested except
Dengler and a few of his friends. But in 1937 Secretary of the Treasury
Henry Morgenthau recognized that a major weakness in his department was
the lack of organized training for new agents. He issued an order for
all agencies within the Treasury to participate in a school program.
The first Dengler heard of the order was when Harold N. Graves,
assistant to the Secretary, called him to his office. Graves said,
“Harry, how long will it take you to get a course of instruction
underway for our agents?”
“I can do it within sixty days,” Dengler said.
Graves was dubious. “I don’t think you can do it within that time,” he
said.
“I can do it,” Dengler replied. “I’ve kept a group of instructors
together. We’ve been giving some training to new men in our spare time.
We’ve got a course of instruction already outlined. It won’t take much
work to bring it up to date.”
Graves said, “Then get going. Bring your men in here this afternoon and
we’ll decide on the next move.”
The decision was to open a pilot school in Boston. The first class
met on March 15, 1937, and the course of instruction ran for four
weeks. When it was ended, Graves was satisfied. He ordered a schedule
of instruction for each of the Treasury districts. Attendance was not
voluntary this time. Each man was required to attend classes, and
to pass a written examination. Instructors were drawn from all the
Treasury agencies.
In those early years, the instructors travelled from district to
district to hold their classes. The classrooms were jury rooms,
schoolrooms, banks, courthouses and Customs buildings.
Dengler argued that the school should be located permanently in
Washington. Instead of having instructors moving from place to place,
he insisted it would be far better to have the students come to
Washington to get their training at a school housed in its own building
and having the proper equipment.
Dengler’s persistence won. In 1950, Treasury officials decided to see
how his plan would work. It worked so well that when Dengler retired in
December, 1952, the Treasury Law Enforcement School was an established
institution receiving all-out support from all the Treasury agencies.
The Treasury school, however, is only a phase of instruction in law
enforcement for the young Customs agents (as it is for all Treasury
agents). The intensive training comes when the men are assigned to work
regularly with older agents.
The turnover among Customs agents is surprisingly small and is among
the lowest within the government. Few of them leave the Service
voluntarily once they have launched into their careers. The reason
for this stability was summed up by one veteran agent in this manner:
“Every man likes to feel he is doing something worthwhile--and you get
that kind of satisfaction from this work. That’s why I’ll never leave
it.”
8
TEST TUBE DETECTIVES
Shortly before World War II, a rusted old freighter slid into its
berth at a Baltimore pier, completing its long voyage from the Orient.
Customs officers boarded the vessel to check the manifest, verify the
cargo, and search for contraband. The search was the routine sort of
thing that occurred every day at every major port in the United States.
An inspector hurried to the quarters of the crew members and began his
rounds. He encountered nothing unusual until he reached one crewman’s
cabin and found the door locked. He knocked on the door and a muffled
voice said, “Who is it?”
“This is the Customs inspector,” the officer said. “Open up.”
The door opened and a seaman said gruffly, “There’s nothing in
here. You’ll find everything on my declaration.” He was a slender,
middle-aged man with thinning hair and tattoos on his forearms.
“It’s a routine check,” the inspector said. “You’ve got nothing to
worry about.”
The seaman made no move to stand aside. “I told you there’s nothing in
here,” he insisted.
“Look, Mac,” the inspector snapped, “you’ve been through this sort of
thing before and you know it’s got to be done. So let me get at it.” He
pushed his way into the cabin.
On a table he saw a hypodermic needle. He picked it up and turned to
the seaman. “Are you a junkie?” he asked. “Have you got any narcotics?”
The seaman’s face reddened with anger. “Hell, no! I wouldn’t touch the
stuff.”
The inspector wasn’t impressed with the denial. That’s what they all
said until you found their supply of narcotics.
When he started to open a locker, the crewman said, “It’s empty. I’ve
already taken everything out.”
The inspector looked at the man’s hands shake as he lit a cigarette.
“Why don’t you sit down and take it easy, mister?” he said. “I’ve just
decided to take a good look around.”
Slowly he went over the cabin. At last he pulled the locker away from
the bulkhead and saw a small cotton bag taped to the back of the
locker. He yanked it loose and held it out toward the seaman. “What is
this?”
The seaman made a grab for the bag. “Give that to me!” he said. “It’s
nothing that interests you.”
The inspector opened the bag and saw that it contained a white powder
which looked suspiciously like heroin. He said, “Mister, if this is
heroin, you are in trouble.”
“It’s not heroin,” the seaman said sullenly.
“If it isn’t heroin,” the inspector said, “then what is it? Why did you
hide it behind the locker? What are you trying to hide?” But the seaman
remained silent.
The inspector said, “You are not to leave this ship until I have an
analysis made of this powder. Do you understand?”
The seaman nodded. The inspector left the cabin and went to the
captain to explain the situation. He requested the seaman be detained
on the freighter pending a chemical test of the powder.
“It looks like heroin,” the inspector said. “If it is, we’ll have to
take him into custody.”
“How long will it take to make the test?” the skipper asked. “We’re
sailing tomorrow afternoon. If this man is in trouble, I’ll have to
take on another seaman.”
“We should know the results before you sail,” the inspector said. “I’ll
be in touch with you.”
The sack of powder was sent to the Baltimore Customs laboratory with
an urgent request for a quick test. It was turned over to tall,
lanky Edward Kenney, who had received his training as a chemist at
the University of Maine, Massachusetts Institute of Technology and
Johns Hopkins University. Kenney was among the small group of men and
women who had found the Customs laboratories to be a daily adventure
in solving riddles posed by the legal necessity of identifying and
classifying a bewildering variety of imports which poured into the
United States daily from all parts of the world.
The analysis of the powder taken from the seaman was one of the routine
chores which posed no problem for Kenney. The test for heroin was
negative--and he sent his findings to the chief chemist to be relayed
to the inspector on the case.
A few minutes later, Kenney received a telephone call from the
inspector. “Mr. Kenney,” he said, “I just can’t believe that report you
made on the powder I seized from the seaman. If ever I saw a guilty
man, this one is guilty. Would you mind running another test?”
“I’m sure the report was correct,” Kenney said, “but if it will make
you feel better, I’ll make another test. Would you like to come over
and watch?”
“I certainly would,” the inspector said.
When the inspector arrived at the laboratory, Kenney took a sampling
from the powder and placed it in a glass container. Then he picked up a
bottle of liquid from a cabinet.
“This liquid is a mixture of sulphuric acid and formaldehyde,” he
explained. “I’m going to make a Marquis test. It’s named after the man
who invented it long before either you or I were born. Nobody seems to
know much about Marquis, but he knew what he was doing. He found that
when you add this liquid to an opium narcotic powder, the powder will
show purple discoloration. Now watch.”
Kenney poured a few drops of the liquid onto the powder to dissolve it.
But there was no indication of a purple color.
“Is that test conclusive?” the inspector asked.
“No, not necessarily,” Kenney said. “There are some impurities which
could produce a purple discoloration. Let’s see if we can isolate any
opium with another test.” But when an effort was made to extract opium
from the powder with an infallible procedure, the result was negative.
The powder beyond doubt did not contain narcotics.
“Well,” Kenney said, “that’s it. Your seamen wasn’t smuggling
narcotics.”
The inspector said, “I know you’re right but I was certain I had
grabbed a sack of heroin. What is the stuff in the sack?”
Kenney said, “I don’t know, but I’ve got a pretty good hunch. I’ll run
another test and let you know the results.”
When Kenney completed his testing the following morning, he called the
inspector. “Your man was carrying saccharine,” he said.
The inspector returned to the ship to have the seaman freed from
detention and to question him further. “The powder wasn’t heroin,” he
said. “It was saccharine. I’d like to know one thing. Why did you make
such a big mystery of it?”
The seaman at last disclosed that he was a diabetic--and that for
months he had kept this fact from his shipmates and from the ship’s
officers. He gave himself insulin shots secretly and used saccharine
instead of sugar in his coffee. He had been fearful that if anyone
aboard the ship learned he was a diabetic, he would be barred from
going to sea--a fear which he was to learn was entirely groundless.
When the inspector met Kenney later, he said, “I’m sorry I put you to
so much trouble for nothing. The whole thing was a waste of time.”
Kenney shook his head in disagreement. “I don’t think it was a waste of
time at all,” he said. “We proved the seaman was innocent of smuggling
narcotics and we helped him get rid of an unreasonable fear. As I see
it, the results were pretty good.”
The case of the diabetic seaman is only one of many strange cases
which find their way to the Customs Bureau’s laboratories located in
New York, Boston, Baltimore, Philadelphia, Savannah, New Orleans, Los
Angeles, San Francisco, Chicago, and San Juan, Puerto Rico. Thousands
of items, from yak hair to heroin, come to the chemists to be sampled,
tested and identified.
In the course of a day, a laboratory may be called on to identify
and determine the amount of grease and dirt that is in a shipment of
Australian wool; report the percentage of tungsten in a shipment of
ore; determine the antiquity of a diamond-studded tiara; test the
alcoholic content of Scotch whiskey; examine a rosary case made in
Japan, in order to establish its chief component; and analyze a sample
of powdered milk from Holland to measure its butter fat.
Or the laboratory may be called on to analyze a shipment of mica
to determine whether the mica splittings measure more or less
than .0012 inches in thickness. The measurement of the mica has a
dollars-and-cents importance to the shipper, the importer and the
government because the duty is based on the thickness of the mica
splittings, which in turn affects the market value of the import.
No laboratories in all the world have a more varied job to do than
those of Customs. Every article that is known to commerce reaches
these laboratories at one time or another. The examinations are
necessary because only by a precise determination of the contents of
many shipments are the appraiser and the collector able to establish
value and thus determine the rate of duty which is to be paid into the
Treasury of the United States.
The scientists never know when one of their analyses will touch off a
court battle which will involve an entire industry and which may mean a
difference of millions of dollars to businessmen.
Such a case occurred several years ago when one of the Bureau’s
laboratories received for analysis a sample of a product imported from
Canada under the trade name “Lioxin.” This product had a great many
industrial uses and was competitive with vanillin, which is derived
from the vanilla bean and also from coal tar. The imported product
was being offered on the market at a price considerably below that of
the competing vanillin product--at a price so low, in fact, that it
threatened to upset the entire vanillin trade.
The discovery of Lioxin had been one of those accidents of science in
which a waste product is found to be extremely valuable. A wood pulp
company was dumping waste matter into a nearby stream, and sportsmen
complained that it was killing all the fish. The complaints became
so numerous that the company called in a scientist to see what could
be done about correcting the situation. The scientist found while
experimenting with certain chemical compounds that he could convert the
waste matter into a substance that was 96 to 97 per cent vanillin. And
it could be done much more cheaply than extracting vanillin from the
vanilla bean or from coal tar.
When Customs chemists analyzed the product, they found that it
contained impurities--but the impurities could be removed quite easily
and cheaply. The end product was almost pure vanillin, meeting all the
rigid standards set up by the U.S. Pharmacopoeia Act.
The result of the laboratory findings was a decision to classify Lioxin
as vanillin, dutiable at $2.25 per pound based on the American selling
price. The duty brought the price of the import into line with the
competing American product.
The Bureau’s decision was protested by the importer. The claim was made
that the compound was not vanillin under the terms of the Tariff Act.
It was argued that when Congress passed the law setting the duty on
vanillin, the lawmakers had in mind the vanillin which came from the
vanilla bean and from coal tar.
However, the courts held that the import was only “one step short of
the finished product” and that when the impurities were removed in a
very simple process, then the end product was a vanillin conforming to
the standards of the U.S.P. As such, it was held to be subject to the
same tariff payment as other vanillin imports.
The case of the synthetic vanillin explains in a large measure why the
turnover among scientists and technicians in the Customs laboratories
is among the lowest in the entire Federal government. A day rarely
passes in which they are not presented with a new and challenging
problem--not unlike the solving of a mystery. There simply is no time
to become bored.
Frequently these men must devise their own methods of examination and
establish their own standards for a product simply because there is
nothing in the book which they can use as a guide. Many new products
have come into the markets in the past few years--particularly in the
field of chemicals--which are not provided for in the law except in a
vague, catch-all phrase “and not specially provided for.”
The laboratories never know what to expect next. This was the case when
the New York laboratory received a sample of a shipment of artificial
Christmas trees resembling small pine trees. The examiners at the
pier who first inspected the trees were baffled as to how they should
be classified and what the rate of duty on them should be. The trees
were made from materials which the examiners could not identify. And
identification had to be made before a rate of duty could be fixed.
One of the trees was sent to the Customs laboratory on Varick Street,
where it was taken apart piece by piece. It was found that the base
was made from pasteboard. The trunk was fashioned of wire and the bark
from paper. But the artificial pine needles were discovered to be dyed
goose feathers. Since the law holds that the duty must be paid on the
“component material of chief value”--then the Christmas tree’s actual
chief value was in the dyed goose feathers. Dyed goose feathers called
for a duty of 20 per cent of their value on the market.
Frequently the laboratory workers find themselves in the role of a
Sherlock Holmes--using their test tubes and their spectrometers and
their diffractometers as tools to help track down criminals.
One day an employee on the New York piers noticed that an automobile
which was to be loaded aboard a ship for Europe seemed to be heavier
in the rear than in the front. The car was setting too low on its rear
springs, although there was nothing in the trunk of the car to put any
undue weight on the springs.
This fact was called to the attention of Customs officers, and they
decided to examine the car. They went over it carefully and finally
discovered a section behind the rear seat which appeared to have been
tampered with. There were scratches on the metal which seemed to have
been made only recently. A further examination disclosed a secret
compartment built into the car, and when this was pried open, it was
found to contain about $30,000 worth of gold bars. They were being
smuggled out of the country.
The bars were taken to the New York laboratory for examination. There
seemed to be no way to identify them because the serial numbers--which
are stamped into each bar of gold and recorded by the government--had
been hacked and gouged from the soft metal. But the laboratory
discovered a method--still secret--by which they were able to read the
numbers on each of the bars. This information was turned over to the
Secret Service, and Secret Service agents were able to track down the
man who had made the original purchase of the bars.
Part of the laboratories’ job is to watch for improper classification
of imports by shippers who hope to slip them into the country under
a lower rate of duty than the Tariff Act provides for. As aids in
this work the chemists have spectrographs (used for the most part
in analyzing metals), X-ray diffractometers, electrolytic machines
and other instruments enabling them to break down and identify the
component parts of materials brought into the country.
By use of the diffractometer and X-ray, the laboratories have been able
to determine in innumerable cases that shipments have been improperly
classified by the shippers either intentionally or unintentionally.
At any rate, the shipments have been uniformly reclassified at higher
rates of duty, saving the U.S. Treasury many thousands of dollars.
There is one case on record in which a diffractometer was credited with
reversing a court decision. Before the diffractometer was installed
in the New York laboratory, an importer brought into the country a
shipment of material which he listed as duty-free zirconium oxide. A
chemical analysis, while not very convincing, showed that the material
was not zirconium oxide. But the method of testing was such that the
importer successfully challenged the Customs finding and the Customs
court ruled that the material should be admitted as zirconium oxide,
free of duty.
However, the laboratory was not finished with this case. Soon after
this decision a diffractometer was installed in the laboratory. Another
analysis of the material was made. And the diffractometer revealed
beyond the shadow of doubt that the material was not what the importer
claimed. The crystals in the material showed that it was stabilized
zirconium oxide, dutiable at 15 per cent of its value, rather than
ordinary zirconium oxide, free of any duty. The result was that the
diffractometer’s findings were accepted by the court and the original
ruling in favor of the importer was reversed.
Sometimes the secretiveness of shippers poses an unusual problem. Such
was the case when a Swedish manufacturer of homogenized ham-and-cheese
spread decided to send his product into the American market. He would
not disclose to Customs the recipe for this spread--obviously feeling
that his trade secret might fall into the hands of a competitor.
Customs chemists were given the job of determining which of the
materials in the spread was the major dutiable material. It was a
tricky problem because both ham and cheese are of animal origin and
consist of protein and fats. After two weeks the laboratory was able to
report that the Swedish manufacturer’s product was primarily ham. Then
there was no problem in fixing the tariff rate.
New York is the largest of the laboratories and tests about one-fourth
of more than 120,000 samples which are examined each year. Boston is
the next largest, and then comes New Orleans. Over the years each
laboratory has become a specialist in certain examinations. Most of the
wool entering the United States is examined in Boston. Chicago leads
in the examinations of samples of ore, grain, and metals. New York
does the great majority of testing of dyestuffs; and New Orleans has
become a major center in the examination of narcotics, because of its
geographic location near the Mexican border.
The laboratories are constantly seeking new and better ways of
testing materials. A notable achievement in this field was made by
Melvin Lerner, now the chief chemist in the Baltimore laboratory,
when he developed an entirely new method for determining, easily
and accurately, the opium content of any materials, in addition to
identifying prohibited synthetic narcotics.
The process involves dissolving a small amount of the suspected powder
in a mixture of trichloroethane, chloroform, nitric acid and phosphoric
acid. If no heroin is present, the liquid will be colorless or have an
apple-green hue. But if heroin is present, the liquid will range in
color from light yellow to yellowish brown--the darker color indicating
the powder is almost 100 per cent pure heroin. Distinctive coloring is
produced also by the synthetics.
The Lerner test for identifying prohibited synthetic narcotics has
created world-wide interest. Virtually every country in the world has
written to the Customs Bureau requesting information on this process
and asking for one of the small field kits with which the tests can be
made.
Frequently the laboratories are able to give invaluable help to
importers in protecting them from fraud and sometimes saving them
from embarrassment. There was one case in which a curator of a museum
vouched for the antiquity of a tapestry which he had imported for the
museum from Europe. As an antiquity--that is, an article made before
1830--it would not have been subject to any tariff duty. The curator
was quite insistent about the age of the tapestry. But laboratory
experts discovered that the tapestry’s threads had been stained with
coal tar dyes. Since coal tar dyes were not used before 1857, the
tapestry obviously was not an antiquity. The curator was embarrassed
over being proved wrong, but nevertheless he was grateful that the
discovery had been made before the tapestry was hung in the museum.
In another case the laboratory experts were able to set at ease the
mind of an importer of an extremely valuable gold, diamond, and ruby
tiara which had been purchased as a museum piece. Even though the tiara
was known to be very old, it was suspected that the piece had undergone
major repairs. If this were true, it meant that duty would have to be
paid on any substantial repairs to the import.
The tiara was taken to the New York laboratory. A chemist rubbed the
tiara lightly with a very fine sandpaper to remove a few flecks of
gold. These flecks were then analyzed by a spectrograph, which revealed
that the gold contained the impurities commonly found in gold refined
by antique methods. There was no need for the payment of any duty on
the tiara.
The laboratory experts work in close cooperation with the Bureau’s
enforcement division, and they never know when they may be called
upon to don their detective hats. There was one case in which it was
suspected that cattle were being smuggled from Canada into upper New
York State. The laboratory supplied agents with a certain chemical
which they took into Canada and, with the cooperation of Canadian law
enforcement officers, secretly smeared on herds of cattle in the area
where the smuggling had been taking place. When the chemical dried on
the cattle, it left no visible trace.
Later the agents smeared a second chemical on cattle which were
suspected of having been smuggled into New York State. No sooner was
this done than large red blotches appeared on the cattle--irrefutable
evidence that these animals had been smuggled in from Canada. This
may have been the first time that science got into the business of
combatting cattle rustling.
The Customs laboratories trace their beginning to 1848, when Congress
wrote into law a requirement that Customs should examine all drugs,
medicines, medicinal preparations, and chemical preparations used as
medicine to determine their quality and purity. Standards of strength
and purity were established. The analyzing was farmed out to chemists
in commercial firms or to pharmacists and physicians.
Although this law was passed in 1848, it was not until 1880 that the
Customs Bureau was authorized to employ its own chemist. By this time
there was imperative need for more laboratory work to aid the Customs
appraisers.
In the early 1880s the Bureau first began using instruments such as the
polariscope to determine the actual strength of sugar being imported.
Old records show that chemists were added to the Customs staff at New
York and San Francisco between 1880 and 1890. A Customs laboratory
was established in Philadelphia in 1892 and in San Francisco in 1899.
Despite the obvious value of their work, the chemists were not regarded
very highly in the government service, and until 1910 their salaries
were $1,200 a year--the same as that received by an ordinary clerk.
As the tariff laws became more complex, the work in the laboratories
increased correspondingly. For example, the Tariff Act of 1922 fixed
duties on the components of certain imports, such as the amount of
calcium fluoride in fluorspar and the amount of silica in glass sand
and ferro alloys. Congress also defined in the Tariff Act items such
as vinegar, cellulose compounds, hardened and vegetable oils, molasses
and sirups. Other laws called for duties on copper, fatty acids, soaps
and petroleum. The passage of the laws required scientific analyses of
shipments to obtain a precise determination of their dutiable contents.
Until 1936 the laboratories throughout the country operated more
or less independently of each other with only a loose system of
cooperation between them. But in 1936 a Division of Laboratories was
established within the Bureau to direct operations and to fix uniform
procedures throughout the service.
In 1953, the then Commissioner of Customs, Ralph Kelly, expanded the
duties of the Division of Laboratories and changed its name to the
Division of Technical Services. The Division, now located at the
Customs Bureau headquarters in Washington, directs the operations of
Customs laboratories; furnishes to the Commissioner information on
engineering, chemical, statistical, and other scientific and technical
developments; plans and standardizes sampling, weighing, and testing
standards and procedures; inspects the laboratories; and furnishes any
needed engineering services.
This division, under the direction of Dr. George Vlasses, is the
smallest of the seven administrative divisions in the Customs Bureau,
with only seven employees. In all, the laboratories have a total of 136
employees, of which 76 are chemists. The balance are physical science
aides, laboratory helpers, and administrative and clerical employees.
Even though these men and women cannot take people’s motives apart and
test them, the relative purity of their motives often is revealed quite
clearly to these test-tube detectives.
9
THE INFORMERS
The giant luxury liner, the SS _Ile de France_, slid by the Statue of
Liberty in New York harbor on October 7, 1938, with her passengers
crowding the rail for a view of the skyline of New York. It was a gay
crowd, most of them returning from European vacations. But among them
were those to whom the arrival meant more than gaiety--it meant life
itself. These were the refugees from Hitler’s Germany.
As the tugs shouldered the liner into its berth on Manhattan Island,
there was confusion ashore. Scores of people had gathered to greet
returning friends and relatives. Customs officers were busy preparing
for the rush of passengers to the pier, the inspection of baggage and
all the little details that are required when a ship brings its cargo
from across the sea.
Among those who came ashore on this day was a dark-haired man of medium
build, about 5 feet 7 inches tall and hardly looking his forty-five
years of age. He was accompanied by a handsome, beautifully groomed
woman wearing a smartly tailored suit. These two obviously were
experienced travellers. They waited patiently under the huge sign
marked with the letter “C” until their baggage arrived from the ship,
and then they sought a Customs inspector to present their baggage
declaration.
The Customs inspector took the declaration and glanced at it. He said,
“Mr. and Mrs. Nathaniel Chaperau?”
“That is correct,” replied the dark-haired man. “I believe all of our
baggage is in this group.”
The inspector read the declaration and noted that Mr. Chaperau had
signed it as a commercial attaché for the Nicaraguan government--which
meant that he and his wife were entitled to pass through customs
without the formality of a baggage inspection. Mr. Chaperau handed
the inspector Nicaraguan passports and a letter signed by the Consul
General of Nicaragua in New York authenticating the endorsement on the
customs declaration.
“Everything seems to be in order, Mr. Chaperau,” the Customs inspector
said, handing back the letter. He quickly placed stamps on the luggage,
indicating that the baggage had been cleared to be taken from the pier.
The formalities at the pier required only a few minutes. Then the
Chaperaus had their luggage loaded into a taxi and they were driven to
the Hotel Pierre at the corner of 63rd Street and Fifth Avenue, where
they made their home.
The following day Chaperau left the hotel carrying a black suitcase
and a hat box. He took a cab to 570 Park Avenue, entered the building,
and rang the bell of the apartment occupied by New York State Supreme
Court Justice and Mrs. Edward J. Lauer. A maid admitted Chaperau to the
apartment and he said, “Please tell Mrs. Lauer that Mr. Chaperau is
here. She is expecting me.”
Mrs. Lauer greeted her visitor warmly and exclaimed, “Nat, it is
wonderful to see you! Please do come in.” And then Mrs. Lauer turned
to the maid and said, “Rosa, take this suitcase and hat box to my
room, please. There are some of my things from Paris I told you I was
expecting.”
The maid, Rosa Weber, carried the bag and box to Mrs. Lauer’s bedroom.
She knew they contained purchases which her employer had made when she
and the Judge were in Europe during the summer. They had returned to
New York aboard the SS _Normandie_ on September 12, and Rosa remembered
the beautiful clothing Mrs. Lauer brought with her. Rosa had helped
her unpack, exclaiming over the beauty of the new styles. And Rosa
remembered Mrs. Lauer saying, “That’s not all, Rosa. Some lovely things
are coming later. They weren’t finished when I left Paris.” Mrs. Lauer
also left Rosa with the definite impression that one of the nicest
things of all was that she had brought back gowns, hats, and jewelry
without paying duty to Customs.
A few days after Chaperau’s visit to the apartment, both Mr. and Mrs.
Chaperau were guests of the Lauers at a cocktail party. Among other
guests was the famous international financier and playboy--somewhat of
a mystery man about New York--Serge Rubenstein.
And then on October 21 Rosa helped Mrs. Lauer prepare for a dinner
party in the apartment. Rosa brought her sister along to help with the
affair, and again the Chaperaus were among the guests. It was a gay
gathering, and after drinks the guests were seated in the dining room.
Rosa could not help but hear everything said by the guests as she
served the table. And there was much for them to talk about. At this
time war clouds were gathering in Europe.
As the conversation grew more animated, there were loud and bitter
denunciations of Adolph Hitler and his treatment of the Jews.
Rosa Weber listened to the denunciations of Hitler with mounting
fury. No one noticed that her face was flushed with anger until she
crashed a plate of meat onto the table. The guests looked at the maid
in open-mouthed astonishment. Into this silence Rosa Weber shouted:
“Ladies and gentlemen, I am a real German! If you don’t stop talking
about Herr Hitler while I am in this house, I am through here!” And
then the maid glared at Mrs. Lauer and said, “Madam, it is up to you.”
For a full thirty seconds there was no sound, and then a babble of
protest broke out. Judge and Mrs. Lauer were on their feet shouting.
Rosa Weber stalked into the pantry followed by Judge Lauer, who
demanded, “Get out of this house immediately!”
Rosa said to the Judge, “All right, Judge, I’ll go.” And she went to
her room with her sister to pack her belongings. Chaperau and another
guest followed the maid to her room and stood at the door while she was
packing. Chaperau snapped, “Hurry up; how long does it take you?”
Judge Lauer came to the room, and Chaperau said to the Judge, “You had
better watch when she goes. She might take some of your valuables with
her.” With this insult sounding in her ears, the maid hurried from the
apartment and slammed the door behind her.
Four days after the dinner party on Park Avenue, a woman entered the
Customs building at 21 Varick Street in New York and asked to see
the Supervising Customs Agent. She was shown into his office. And it
was there that Rosa Weber, in the role of informer, got her revenge.
She told what had happened at the dinner. She accused Mrs. Lauer of
smuggling Paris gowns and other finery into the United States without
paying customs duties. She told agents of the conversation she had
overheard between Mrs. Lauer and Chaperau, of remarks that had been
made by Mrs. Lauer. She described how she had helped Mrs. Lauer unpack
the dresses, and of Chaperau’s visit to the apartment with the black
suitcase and the hat box.
While she was packing to leave the Lauer apartment, she said, Chaperau
had cursed her and said, “I’m just thinking it over--whether I should
arrest you, because I’m from the police department.” She added, “They
threatened to have me deported to Germany, and also said that there was
no concentration camp here but that I would be put in jail.”
When the maid left the Customs agent’s office that day, agents began
a routine check on Nathaniel Chaperau. Rosa Weber was an angry,
vindictive woman whose story might have been motivated solely by spite
as far as the Customs agents knew. But all such stories were checked,
even if the source were a pro-Hitler maid. Each report of a customs
violation was handled in the same manner, regardless of the prominence
of the accused, when an informant gave such minute details of smuggling
as did Rosa Weber.
Agents quickly found that Chaperau conducted a film business from an
office at 30 Rockefeller Plaza with the cable address “Chapfilm.” He
had prominent connections in the movie world in New York and Hollywood
and he boasted of his close friendship with several stars of the
entertainment world. On the surface, his business looked legitimate.
There was no record that he had ever been engaged in smuggling.
But in checking into Chaperau’s travels outside the country, the
agents were curious as to why Chaperau had used a Nicaraguan passport
on his return from Europe early in October. A visit to the Nicaraguan
Consulate turned up some interesting information. The Consul General
disclosed that he had given a letter to Chaperau intended only as an
aid to Chaperau in making a film in Nicaragua. Chaperau had called on
the Consul General and told him that he hoped he could go to Nicaragua
and take pictures of the country’s beautiful lakes and other natural
scenery for advertising purposes--without expense to the Nicaraguan
government.
The idea appealed to the Consul General. Chaperau’s credentials
appeared to be excellent, his business address implied a firm of
financial integrity, and Chaperau obviously was well-connected in the
film world.
It seemed like an attractive proposition to the consular chief and,
quite naturally, he had asked what aid he could give in the project.
Chaperau had said it would be helpful if he carried a letter from the
Consul General explaining his mission in Nicaragua and stating that the
commercial enterprise had the approval of the Consul General.
The diplomat had furnished Chaperau with the letter and, to be helpful
further, with Nicaraguan passports. However, the Consul General
insisted to the agents that the documents were intended for use solely
in connection with the movie-making trip to Nicaragua. Under no
circumstances had they been intended for use in connection with trips
to any other country. He added that the letter had not been given
with any authorization from his government and that no diplomatic
privileges had been extended with these documents.
A query was sent to the State Department in Washington asking if
Chaperau had ever been registered as the representative of the
Nicaraguan government. The State Department reported promptly that
there was no record of his being attached to the Nicaraguan diplomatic
service--or to any other agency registered with the State Department.
In short, he had not been entitled to the diplomatic courtesies
extended by Customs.
After these disclosures, the agents discovered that Nathaniel Chaperau
had a truly interesting background. An inquiry sent to the FBI
uncovered a criminal record. Chaperau had several aliases, among them
Albert Chaperau, Albert Chippero, Harry Schwarz, and Nathan Wise. As
Nathan Wise he had been sent to the New York City Reformatory on a
petty larceny charge. He also had been involved in a mail fraud case
in Wisconsin and had been sentenced to the Federal penitentiary at
Leavenworth to serve a year and six months.
But Chaperau had not confined his activities to the United States.
Reports came from France, Belgium and England. In 1927, Chaperau
had been refused admittance to England, and his passport had been
cancelled. Later, Scotland Yard reported Chaperau had a long criminal
record and was wanted by them under the name of “White” in connection
with a swindling transaction in May, 1935. The report from Scotland
Yard said Albert Nathaniel Chaperau, alias R. L. Werner, was wanted by
London police for conspiracy and fraudulent conversion of worthless
shares of stock, that he was internationally known and that he had been
connected “with large-scale fraudulent activities in England and on
the continent.” The French police record showed that Chaperau had been
involved in passing bad checks and in something irregular which the
French called _abus de confiance_.
Armed with this information, Customs decided the smuggling story told
by Rosa Weber was more than the spiteful babbling of an angry woman.
Search warrants were obtained. One agent called at the apartment of
Justice and Mrs. Lauer. When he knocked on the door, the Justice
himself opened the door to inquire sternly what it was the caller
wanted. The agent identified himself, showed the Justice the search
warrant, and said, “I don’t have to explain to you, Mr. Justice, that
you can do this one of two ways. You can do this the easy way, or we
can do it the hard way.”
Then the agent couldn’t resist a sudden impulse. He added, “I would
suggest that you cough up the loot.” The language was inelegant, but
the Justice got the point. He invited the agent in and closed the door
behind him.
At this moment, other agents were entering the apartment of the
Chaperaus in the Hotel Pierre. One article in the apartment which
caught their attention was a photograph of the radio team of George
Burns and Gracie Allen inscribed to “June, Nat, and Paula, you charming
people, sincerely, George and Gracie.”
Papers in the apartment indicated that on his trip to Europe ending
October 7, Chaperau had brought back with him jewelry for George Burns.
And there was a letter, written in friendly terms, in which Burns
thanked Chaperau for bringing the jewelry over from France. Further
search disclosed correspondence and documents which also indicated
Chaperau had brought back jewelry for comedian Jack Benny. There was
no Customs record that such jewelry had been declared or that duty had
been paid.
The information obtained in New York was sent to Customs agents in Los
Angeles. As a result Burns handed over to agents a ring and bracelet
valued at approximately $30,000. Jewelry was also obtained by the
agents from Jack Benny. The case was a minor sensation in the daily
press and particularly in the Hollywood community.
Nathaniel Chaperau hoodwinked many of the stars in the film colony
with his front of the affable, worldly-wise man ready any time to do a
favor for a friend. He met most of them in Paris. He and his wife were
attractive and interesting people who seemed to have good connections
because they could buy almost anything at wholesale prices. Chaperau
let his friends know that he not only could help them buy at wholesale
prices, but that he would be glad to do them a favor and bring the
purchases through Customs himself.
George Burns and Jack Benny protested any intent of wrongdoing. But
they were charged with smuggling and both pleaded guilty when brought
into court. Burns was sentenced to a year and a day on each of nine
counts and fined $8,000. However, the execution of the sentence was
suspended and he was placed on probation for a year and a day. Jack
Benny was also sentenced to a year and a day in prison, his sentence
was suspended, and he was placed on probation for a year. He was
required to pay fines totalling $10,000.
The tattling of Rosa Weber brought tragedy to the Lauers. Justice Lauer
resigned from the court in the uproar which followed the smuggling
exposé. Mrs. Lauer was sentenced to three months in prison.
The dapper Chaperau confessed to the smuggling. He was fined $5,000 and
sentenced to five years in prison, but because of his cooperation in
the case, President Roosevelt ordered his release from prison in April,
1940.
The story of Rosa Weber is not a new one to Customs officers or, for
that matter, to any of the Federal and local police agencies, because
the informer has always played an important role in law enforcement’s
never-ending battle against the criminal world.
In 1944, FBI Director J. Edgar Hoover wrote in the _FBI Law Enforcement
Bulletin_:
The objective of the investigator must be to ferret out the truth.
It is fundamental that the search include the most logical source
of information--those persons with immediate access to necessary
facts who are willing to cooperate in the interest of the common
good. Their services contribute greatly to the ultimate goal
of justice--convicting the guilty and clearing the innocent.
Necessarily unheralded in their daily efforts, they not only
uncover crimes but also furnish the intelligence data so vital in
preventing serious violations of law and national intelligence.
The Customs Bureau--along with other enforcement agencies--has
developed a network of informers who aid in combatting smuggling and
other violations of the tariff laws. Information comes from maids,
disgruntled employees, ship’s officers and stewards, shop girls,
bartenders, narcotics addicts, businessmen, racketeers, and jealous
mistresses--each with his own motive for passing information to the
agents.
Some informers are motivated by a momentary fit of anger--as was Rosa
Weber. Some report smuggling activities to settle an old grudge against
an enemy. Some inform through fear of the law--fear of deportation,
fear of a severe prison sentence, or fear that unless they get the law
on their side, their underworld enemies will destroy them. Then there
is the information which comes from citizens who have no other motive
than the desire to see the law upheld.
There are petty criminals who turn informer because it gives them
a feeling of holding the whip-hand over the “big shots” of the
underworld. Others inform because of a sincere desire to break with
their criminal past and to start a new life with a clean slate.
But a sizable number of Customs informers are those who seek a money
reward. Among these are professional informers, who make a regular
business of checking on the sales of jewelry, clothing and other
merchandise in Europe, and learning whether the buyers intend to
declare their purchases to customs on arrival in the United States.
Most of the large seizures of heroin, diamonds, gold and other
contraband have been discovered because some one gave advance
information. Customs agents readily concede that most smuggling rings
are broken up because of the tips that come from informers who often
play a deadly and dangerous game.
Federal agents are taught the art of developing contacts with
informers--and the absolute necessity for acquiring information from
those with first-hand knowledge of a criminal operation.
The agents cannot often disclose the full story of how an informer was
enlisted, and how he aided them in breaking up a criminal combine,
because the disclosure could be fatal to the informer. But the story of
how Narcotics Agent Pat O’Carroll, a handsome, black-haired Irishman,
recruited one informer can now be told.
Shortly after World War II, O’Carroll was assigned to the Bureau of
Narcotics’ International Squad in New York City to help with the
investigations being made into the narcotics traffic. Two of the
squad’s prime targets were Benny Bellanca, who lived in Jersey City,
and Pietro Beddia, who resided in Westchester.
Both men were suspected of being involved deeply in the international
narcotics traffic--with connections in France and Italy--but agents
were unable to make a case against them and they remained untouchable.
Perhaps they would have continued their operations for years, except
that O’Carroll played a hunch.
The case began to take shape when Agent Angelo Zurlo, tailing a
suspected narcotics pusher on New York’s Lower East Side, saw his
man enter a small olive oil and cheese shop on Christie Street near
Delancey. He noted the name and address of the shop in his notebook and
later made a memorandum of the incident which went into the Bureau’s
cross-indexed file. Some months later, Narcotics agents following
another suspect saw him enter the olive oil and cheese shop on Christie
Street. They made a memorandum, also, which went into the files.
In the summer of 1952, O’Carroll was checking the files when he
noted the two memos mentioning the small shop on Christie. Further
investigation revealed it had been owned by Alphonse Attardi before
he was sentenced to serve an eight-year prison term for a narcotics
violation in Galveston, Texas, in the early 1940s. Attardi had
completed the sentence, but Immigration authorities were studying the
possibility of extradition proceedings, inasmuch as Attardi was Italian
by birth.
Attardi at this time was sixty years old, 5 feet 3, and weighed
about 140 pounds. He had the appearance of a meek and humble little
shoemaker, and he scarcely fitted the part of an underworld character.
He had an engaging, warm personality, and he was known in the Mafia as
“The Peacemaker” because of his knack for compromising disputes--but
that was before he had served time in prison.
O’Carroll decided to pay a call on Attardi, who he learned was living
in a cheap, transient rooming house on 16th Street just off Third
Avenue. It was after midnight one warm night when he strolled down
Third Avenue in the shadows of the old El to 16th Street. Even the
softness of the night could not hide the shabbiness and the squalor of
the area.
O’Carroll entered the rooming house and climbed two flights of stairs.
He knocked on the door and then tried the doorknob. The door swung
open, and at that moment the agent knew that Attardi was in a bad way
financially. If he had had a bankroll, he wouldn’t have left the door
unbolted--not in this dive.
He saw Attardi sitting up in bed, a skinny gnome of a man wearing only
undershirt and shorts.
“Who is it?” Attardi said. “What do you want?”
“Take it easy,” O’Carroll said. “I’m a U.S. Treasury agent. I just want
to talk to you.”
Attardi switched on a light over the bed. “What do you want to see me
about?” he said. “I’m clean.”
“Have you got any narcotics in this room?” O’Carroll asked him.
Attardi shook his head. “No. You can search the room if you like. I’m
out of the business.”
O’Carroll pulled up a chair beside the bed and sat down. He began to
talk about Attardi’s connections with well-known underworld figures,
asking him why it was that he had been convicted in Houston while
others in the mob had gone free.
As they talked, bitterness began to creep into Attardi’s voice. He had
taken the rap in Houston--and then his pals had deserted him. They
didn’t even try to communicate with him while he was in prison. His
wife had become ill and no one had come forward to help her. She had
died. He had even lost the little olive oil and cheese shop on Christie
Street.
“Now I have nothing,” he said.
“Maybe we can help you,” O’Carroll said. “I can’t make any promises,
but if you help us we may be able to help you when your deportation
case comes up.”
Attardi shook his head. “I can’t do it. I’d be dead if I worked for
you.”
O’Carroll continued talking of the injustices done to Attardi by his
old pals, insisting that he owed them nothing since they had deserted
him. But Attardi continued to say no.
At last O’Carroll said, “Well, I’ll leave my name and telephone number.
If you ever need help--I’ll be glad to talk to you.” He wrote his name
and telephone number on a slip of paper and handed it to Attardi.
For six months O’Carroll heard nothing from Attardi. He made no move to
see the man again. He had planted the seed, and whether it took root
depended on what went on in the mind of the skinny little ex-convict.
But in early December Attardi called the Narcotics Bureau office and
Agent George O’Connor took the call. He explained that he wanted to
talk to O’Carroll and he would be waiting for him on Delancey Street
near Christie.
That afternoon O’Carroll and O’Connor drove to Delancey and parked
near the street number mentioned by Attardi. A few minutes later the
hoodlum walked from a doorway and ducked into the car with them.
The agents had assumed that Attardi had made the call because he
was frightened over the prospect of being deported to Italy. But it
wasn’t deportation that was on Attardi’s mind. He had fallen in love.
He had met a twenty-two-year-old waitress in one of the mean little
restaurants on the Lower East Side--and this girl had become the most
important thing in his life. They wanted to get married, but he had no
money.
Attardi said he was willing to put the agents onto some Puerto Ricans
living in Brooklyn who were dealing in narcotics. If the price were
right, Attardi would help knock off the gang.
The agents listened to Attardi’s story and then O’Carroll shook his
head. “It’s no deal,” he said. “We want better cases than that. We want
to go to the top.”
Attardi was frightened but he also was in love. And so he began asking
how the agents could protect him if he did agree to work with them. He
flatly refused to do any buying of narcotics himself.
At last it was agreed that Attardi would introduce an undercover agent
to some of his friends who were in the peddling business. Then it would
be up to the agent to handle the deals, Attardi’s role being to vouch
for the agent as “one of the boys.”
Undercover Agent Joe Tremoglie, a big, curly-haired man, was chosen to
work with Attardi. Tremoglie’s parents had come to the United States
from Sicily and Joe spoke fluent Italian. He knew the underworld,
its mannerisms, superstitions, and nuances. He had about him a
conspiratorial air that seemed to appeal to criminals and to disarm
them.
Attardi’s first assignment was to introduce Tremoglie to a cafe cook on
Newberry Street who was pushing narcotics on the side. The agent made
a small purchase and then let himself be seen in the right places with
Attardi--who began to introduce him as a distant cousin.
As the weeks passed, Tremoglie met narcotics pushers and wholesalers.
He played poker with them. Slowly he moved up the ladder until one day
he was introduced to Benny Bellanca, who took an immediate liking to
him after Tremoglie had given the right answers to all the questions.
He liked him so well, in fact, that they discussed the possibility of
Tremoglie going to Europe as a courier to bring back a load of heroin.
He met Pietro Beddia, too, and an intensive surveillance by Narcotics
agents disclosed a link between Bellanco and Beddia.
At the end of ten months of work by Tremoglie, the trap was set.
Arrangements were made for Tremoglie to make a series of purchases
during one afternoon and night on a timetable that was worked out to
the minute. For twelve hours, Tremoglie raced from one meeting place
to another, making the prearranged purchases of narcotics. And at 3
o’clock in the morning twenty of the leading narcotics dealers in the
New York area--including Bellanca and Beddia--had been rounded up.
Alphonse Attardi wasn’t around for the trials. He took his $5,000
reward money plus expenses--plus his bride--and faded from the scene.
All he would tell agents was that he planned to buy a little place in
the country and settle down to make an honest living.
The underworld finally figured out that it was Attardi who had sprung
the trap on them, and defense counsel for the accused men demanded that
he be produced by the government for questioning. But Narcotics agents
could honestly say they knew nothing of Attardi’s whereabouts. They
didn’t want to know.
Informers have given valuable aid to the Customs Service in its drive
against smuggling, and there are many Alphonse Attardis--each with his
own motive--who work with the agents.
Under the law, the Customs Service is permitted to pay up to $50,000
for information leading to the seizure of smuggled goods. The system
provides that the informer may receive 25 per cent of the net recovery
in any case in which he provides the original information leading to
arrest and conviction for smuggling or fraud. Net recovery means the
amount which goes into the Treasury of the United States as a result
of a disclosure. For example, suppose Customs agents seize from a
smuggler a diamond necklace that is worth $10,000, the appraisal being
based on the American selling price. The necklace is forfeited and sold
at public auction for $8,000. Assuming expenses of $400 involved in
the case, then the net recovery is $7,600, of which the informant is
entitled to $1,900.
The theory behind such payments is that the government has made a good
bargain when it can pay an informer $1 and then have $3 left over for
the Treasury--money which would have been lost without the cooperation
of the informant.
There was one Customs informer working in Europe who received the top
reward of $50,000 three times by uncovering the smuggling of huge
shipments of diamonds into the United States. He refused to accept
payment in Europe--but waited until he had $150,000 in credits with the
U.S. Treasury. Then he came to the United States, received the money,
and settled down to live the life of a country gentleman in the West.
And the rewards were tax free--as are all payments made to informers.
10
THE VIOLENT BORDER
Customs agents in the Laredo Tenth Customs Agency District--which
includes the 2,000 miles of border and Gulf coastline from New Mexico
into part of Louisiana--spend much of their time battling the smuggling
of narcotics and marihuana from Mexico.
Federal officers estimate that the business of peddling narcotics
to addicts grosses at least a half billion dollars a year for the
underworld, and the total may be much more. No one actually knows the
amount of narcotics which is smuggled successfully into the United
States. Some Customs agents estimate that law enforcement officers
seize less than 10 per cent of the total. One agent said, “If I thought
that I was getting ten per cent of the total being smuggled, then I
could sleep well at night.”
Even though the size of the narcotics traffic is unknown, there is no
doubt about the tremendous profits to be made from the illegal sale
of drugs. Addicts will beg, borrow, steal and kill to obtain money
with which to satisfy the terrible craving for narcotics once they are
“hooked.”
Unofficial estimates place the number of narcotic addicts in the United
States at about 50,000. The average heroin addict requires something
like ten grains per day to satisfy his needs. This means that over a
period of a year the average heroin addict will use about 7.6 ounces
of the drug--or a total for all addicts of about 380,000 ounces of
heroin or a substitute drug. In their best years, Federal and state law
enforcement officers have been able to seize only a fraction of this
estimated total.
Several years ago the Mexican marihuana dealers took no responsibility
for delivery into the United States; all arrangements for smuggling
across the border had to be made by the purchasers who came from the
States. But in recent years there has been a change, and the Mexican
operators have been willing to make deliveries to New York, Chicago,
Detroit and other cities. Jack Givens, Supervising Agent for the Laredo
district, believes this change in delivery method is an indication that
the supply of marihuana in Mexico has outgrown the demand. This has put
the pressure on the Mexican operators to give their customers better
service, resulting in the delivery system.
In recent years some of the United States marihuana operators have
begun to bypass border operators. They have been driving to the
interior of Mexico, making their own deals with the growers and
bringing the stuff back into the United States themselves. Customs
inspectors are always on guard against marihuana being smuggled in
automobiles--hidden in upholstery, in luggage compartments, in door
panels, or in secret compartments built into the cars.
Customs agents believe that most of the heroin and other narcotics
smuggled into the United States come by way of Europe from the Middle
East and Far East. But Mexico still is one of the favorite routes for
the narcotics syndicates seeking to reach the American addicts. In
addition, Mexico remains the major exporter of marihuana. The Mexican
government has been cooperating with the United States in seeking to
suppress the traffic, and there is a close working relationship between
the American agents and the Mexican police. But the long and rugged
boundary between the two countries makes it impossible to cover every
smuggling point on the border.
Supervisor Givens has only thirty-nine agents and seventeen Customs
enforcement officers assigned to him for the entire territory. The
enforcement officers are a police force used primarily for guard duty
and surveillance work under the agents’ direction.
This small force, despite the geographic difficulties, has a high
esprit de corps. Each man works many hours overtime each month with
no expectation of compensation. The records show that the agents
average approximately 120 hours of overtime each month in excess of the
overtime required of them and for which they are paid. Often the men
find themselves working overtime knowing that their extra effort will
be rewarded with pay averaging 19 cents an hour.
Why do they do it? One agent explained it in this way: “There’s more
than money in this work once you become involved in it. Once you start
working on a case, you simply cannot walk away from it at the end of
eight hours. You have a feeling of achievement when you do break up a
marihuana ring or pick up someone who is dealing in heroin.”
Patrolling the Mexican border has been a major problem for Customs
since the frontier days. In 1853 the Customs Mounted Patrol was
organized, and horsemen rode across the deserts and through the
mountains on lonely patrols to intercept cattle rustlers, smugglers
and aliens trying to slip across the border. The mounted guard
inevitably gave way to the automobile. But the horsemen rarely had
more hair-raising experiences than those of the modern agents mounted
on wheels. Such an incident occurred on August 7, 1960, in one of the
wildest chases in the memory of Customs agents along the Texas-Mexico
border.
It began when Agent Fred Rody, Jr., received a tip that an American was
in the red-light district of Nuevo Laredo, trying to arrange for the
purchase of 20 pounds of marihuana--obviously to be smuggled into the
United States.
Further checking disclosed that the man was John Vaccaro, a known
narcotics dealer working out of New Orleans. Vaccaro had been convicted
of a marihuana violation in New Orleans and been placed under
surveillance earlier in the year when he had visited Laredo. At that
time agents had tried to intercept Vaccaro, suspected of smuggling
marihuana, but in a wild chase on the highway Vaccaro pulled away from
their car, even though their speedometer was registering 120 miles an
hour. He also succeeded in eluding the police roadblocks which had been
thrown up in front of him.
Agents kept a close watch on Vaccaro’s car after Rody received his
report. Finally they saw someone approach his automobile and place a
suitcase in the front seat of his car. Then they saw Vaccaro, his wife,
and their fourteen-year-old daughter enter the car.
When Vaccaro drove down San Bernardo Avenue and then onto U.S. Highway
59, he was followed by agents in three automobiles. When the Vaccaro
car slowed in heavy traffic, the agents bracketed his car with one car
in front, one behind, and the other alongside. Agent T. S. Simpson
leaned out of his car and shouted, “Stop! We are Customs agents.”
Vaccaro pulled his car to the side of the road and slowed down as
though to stop. Suddenly he slammed his foot on the accelerator. His
car leaped forward between two of the agents’ vehicles and roared off
on the left side of the highway, forcing terrified drivers to swerve
into the ditch to avoid a collision. The agents gunned their cars in
pursuit.
Simpson and Rody watched the speed indicator on their automobile reach
110 miles an hour, but Vaccaro’s car still pulled away from them.
Agent Grady Grazner in a 1957 police interceptor-model Chevrolet moved
past the Rody-Simpson car and slowly began gaining on the Vaccaro
vehicle. His speedometer was reading 130 miles an hour when he moved up
behind Vaccaro’s automobile with his siren screaming. Grazner nudged
Vaccaro’s automobile with his bumper and signalled for Vaccaro to pull
over and stop. The woman and girl in the car were looking out the rear
window, screaming and motioning Grazner to pull away from their car.
For several miles the cars raced along at well over 100 miles an hour.
Grazner fired four warning shots into the air trying to force Vaccaro
to stop. He was afraid to fire directly into the vehicle because of the
women inside.
Gradually Grazner’s car moved up on the fleeing automobile. As the
front wheels of Grazner’s car reached the left rear wheels of Vaccaro’s
car, the marihuana dealer suddenly swerved. The blow of his car knocked
Grazner’s vehicle to the side of the road. The car rolled over six
times and bounced a distance of 471 feet. The only thing that saved
Grazner’s life was the fact that he was strapped into the seat by a
safety belt.
Police had been alerted ahead by radio. In the little town of Ferret,
Texas, Vaccaro saw the roadblock ahead. He tried to bypass it by
darting down a dirt road, but he was overtaken and brought to a halt.
Police found only fragments of marihuana in the Vaccaro car. When a
search of the highway was later made by a helicopter, the pilot spotted
a suitcase lying beside the road. Vaccaro had left his fingerprints on
the suitcase when he tossed it out of his speeding automobile. It was
stuffed with marihuana.
When Customs agents took Vaccaro into custody, Grazner said, “Why did
you try to kill me? You might have killed your wife and little girl
too.”
Vaccaro spat on the agent and said insolently, “What in the hell are
you talking about?”
Vaccaro was sentenced to twenty-five years in prison for this venture
into violence.
* * * * *
The city of Laredo, Texas, dozed in the blazing noonday sun on an
August day in 1957. Not many people were on the sun-baked streets at
this hour, and even the Rio Grande had slowed to a lazy trickle. The
only visible activity was at the Customs stations at the International
Bridge spanning the river between Laredo and its twin city, Nuevo
Laredo, on the Mexican bank of the river. The bridge was one of the
major communications links between the United States and Mexico, but
with the sun high in the heavens even the traffic across the bridge was
moving at a listless pace.
At this hour, Dave Ellis, agent in charge, walked from his office in
the old courthouse and sauntered to a battered automobile parked on a
side street. He slipped behind the wheel and drove at a leisurely pace
to the eastern edge of the city, where he turned off the street and
parked beside the loading platform of a vacant warehouse. He switched
off the engine, lit a cigarette and sat waiting.
When Ellis arrived at the office that morning he had found a cryptic
note on his desk which said: “Meet me at the usual place.” It was
signed with the code name of one of the most reliable informers in all
of northern Mexico.
Ellis hardly looked the part of an experienced Customs agent. He
was nearing forty, but he looked ten years younger. The horn-rimmed
spectacles he wore gave him an appearance of grave studiousness.
What few people knew was that Ellis’ boyish face was deceiving. He had
been toughened in a hard school of experience. He had survived a bullet
through his chest leading a platoon into battle on Okinawa in World War
II, and he had been with the first contingent going into Korea at the
end of the war when no one was quite certain whether the Japanese were
going to surrender or make a fight for it. He had returned home in 1946
to pick up his interrupted career as a Customs agent and had earned a
reputation as one of the hardest-driving men in the field.
One lesson he had learned well was that no agent could operate
successfully without reliable sources of information. That was why he
waited patiently on this hot day to hear what it was that his tipster
had on his mind. He had been at the rendezvous point only a few minutes
when a car drove up beside his own and a Mexican got out, entered his
car and began talking rapidly.
The Mexican was one of the key figures in a network of informers which
the Customs agents had organized south of the border to help combat the
smuggling of heroin and marihuana. The informers were a part, or on the
fringe, of the Mexican underworld. They cooperated with the American
agents for one reason only--U.S. dollars. If the information they
provided resulted in the arrest and conviction of a smuggler, along
with the seizure of the contraband, they were paid for the information
from a special Customs contingency fund. In the case of marihuana, the
payment was $5 for each pound of the weed, _cannabis sativa_, which was
seized.
Ellis talked with his informant for perhaps thirty minutes. After
the man returned to his car and drove away, Ellis headed back to the
courthouse.
As he entered his office, an agent asked, “What was it all about?”
Ellis said, “My man tells me Muno Pena has a big marihuana deal
going--one of the biggest. He’s getting ready to send a million
dollars’ worth of the weed across the border--and we’ve got to stop it.”
The agent gave a low whistle. “So Muno Pena’s at it again. I thought he
had had enough.”
“His kind never give up,” Ellis said.
At the end of World War II, Pancho Trevino had been the kingpin in the
Mexican marihuana and narcotics traffic, operating out of Nuevo Laredo.
Muno Pena was a competitor but on a fairly small scale until, in 1952,
the Mexican government got on Trevino’s trail and threw him in jail.
With Trevino behind bars, Muno Pena moved to the top. Pena remained on
his home grounds in Mexico and never ventured north of the border. He
had a highly organized syndicate and lieutenants who carried out his
orders in the United States.
Ellis first ran into the Pena syndicate’s operations in 1955 when
he was transferred to Houston, Texas, and went to work to break up
a marihuana smuggling ring which included a former Houston police
officer. After weeks of collecting evidence during days and nights of
tailing suspects and checking records of tourist courts, hotels and
telephone calls, Ellis and his colleagues had pieced together a case
against the smuggling ring. In a Christmas-night raid they seized 75
grams of heroin, and in two other raids seized 250 pounds of marihuana.
Eleven men and women were arrested and convicted in this operation,
which was one of the biggest roundups ever made by Customs officers in
the Southwest.
The Houston raids had hurt Pena badly, but now he was back on the scene
with a scheme to make a quick fortune--if the tipster who had called
Ellis knew what he was talking about. Ellis was reasonably certain the
information was correct.
According to the Mexican informant, Pena had gone to the farmers in the
Monterey district south of Nuevo Laredo and purchased their entire crop
of marihuana, a ton of the stuff. He had brought it to his ranch near
Nuevo Laredo and processed it in one of the adobe sheds on the place.
Trusted workers had placed armfuls of the dry weed on fine-mesh screens
and rubbed it by hand. The fragments of leaves filtered through the
screens onto sheets, leaving on the screens only the rough stems
which later were burned. The fragmented leaves, as fine as cigarette
tobacco, were carefully weighed into one-pound lots. Each lot was
placed in a paper bag, which in turn was placed inside a plastic
container and sealed with strips of adhesive tape. Then the plastic
bags, in lots of thirty, were placed in cotton sugar sacks and stacked
in a shed to await shipment. Now Pena was working on a deal to ship the
entire lot to a distributor somewhere in the vicinity of Chicago. He
had decided not to parcel out the processed marihuana in small amounts
to buyers from the United States. Instead, he was going to bypass the
middlemen and take the lion’s share of the profits himself.
Ellis knew that a ton of “wheat” (the underworld term for marihuana)
would produce about 1,000 pounds of the narcotic weed suitable for
rolling into cigarettes. A pound of marihuana would make approximately
1,000 cigarettes. This meant that the retail value of Pena’s shipment
would run somewhere in the neighborhood of a million dollars. Never
before had so bold a scheme been attempted in marihuana smuggling.
The important element missing in the informant’s information was how
and when Pena planned to move the marihuana. Ellis had sent his man
back to Nuevo Laredo to get this information if possible. Without these
facts, Pena held the upper hand. Ellis had only fifteen agents to cover
the 400 miles of border in his district--and there were thousands of
places where marihuana might be smuggled across the river.
This time the tipster ran into a blank wall. He learned that the sacks
of marihuana were still stacked in the shed on Pena’s ranch. But that
was all he could learn, except that in the past Pena had smuggled
shipments of marihuana across the Rio Grande at a bend in the river
about five miles upstream from the little West Texas town of San
Ygnacio. When the water was low, the carriers were able to walk across
the stream. If the river rose from sudden rainfalls, the marihuana was
floated across the river on inflated inner tubes or on inflated rubber
boats. In each case, an automobile was waiting at a designated spot to
receive the contraband.
Ellis ordered a continuous surveillance of the river bend. For more
than three months agents kept watch in relays, hiding in the mesquite
near a small roadside park on top of a hill overlooking the sweep of
the river. But the watches were fruitless. Each time Ellis inquired
about the sacks of marihuana at Pena’s ranch, he was told they were
still there.
In December, Ellis was reading the routine reports from New York of
marihuana seizures that had been made in the city. These reports were
circulated periodically to all agents-in-charge throughout the United
States. There seemed to be nothing unusual in this particular batch
of reports until Ellis came across an account of the arrest of one
Wilfredo Fernandez, who had been caught with 16 pounds of marihuana
in his possession. The line which drew his attention said that the
marihuana was packed in one-pound lots in paper sacks which had been
enclosed in plastic and sealed with adhesive tape. Ellis sensed that,
somehow, Muno Pena had outwitted him, and the very thought enraged him.
He sent a message to New York for more information on the arrest of
Fernandez and where he had obtained the marihuana.
Fernandez, it developed, had been arrested in November for possession
of cocaine. When his apartment was searched, agents came across the
packaged marihuana. Fernandez sullenly admitted that he had bought it
in Chicago from a dealer he knew only as “The Lawyer.” The Lawyer had
taken him out on Lawrence Avenue, where they had met a man who appeared
to be a Mexican, driving a stake truck with a green body. The Mexican
had taken the marihuana from a large cotton sack--and then driven away.
He had never seen the Mexican before and didn’t know where he lived.
“He was a skinny fellow about five feet eight tall, and he had black
hair and a pale complexion,” Fernandez said. “That’s all I know.”
Ellis knew in his heart that this marihuana had come from Pena. And
later he was to learn how cleverly Pena had outwitted him. Pena had
stacked the sacks of processed marihuana in the shed on his ranch where
any of the workers could see them as they passed by. But what the
workers didn’t know was that one night Pena had removed the marihuana
to a hiding place known only to himself and substituted other sugar
sacks which looked identical.
One night Pena had taken the sacks to the river, where he met a
confederate. They had carried the sacks across the river to the highway
where the confederate had hidden his automobile, to which was attached
a U-Drive-It trailer. The marihuana was stacked in the trailer and
then covered with a mattress, a set of bed springs and a few household
articles. These were lashed down with a tarpaulin over them--and then
the driver headed north. To all outward appearances, he was a worker
moving with his household goods from one job to another.
Ellis asked Chicago Customs agents to check on long distance telephone
calls made in November by The Lawyer. And within a few days he received
a list of names ranging from barkeeps to uncles, aunts, and cousins,
horse track bookies, and pool parlor operators.
Meanwhile, agents in Laredo had been checking on Pena’s associates
and on his family. They made a list of everyone known to have any
connection, even casually, with Muno Pena.
It was when Ellis checked these two lists of names that he found
there was one name which appeared on both lists. The name was Isuaro
Garza. The agents’ information was that Garza was married to Muno
Pena’s sister. Mrs. Garza and her three children lived in Laredo and
maintained a home there. But Garza, for some months, had been living on
the outskirts of Kenosha, Wisconsin. Occasionally Mrs. Garza and the
children would drive north to spend a few days with Garza. They never
stayed for long and always returned to their Laredo home. No one seemed
to know what Garza was doing in Kenosha.
Ellis thought he knew what Garza was doing there. He was certain that
Garza was the man from whom The Lawyer had obtained the marihuana--and
that Garza was Pena’s man, making deliveries in Chicago from the 1,000
pounds of marihuana smuggled across the Rio Grande.
Ellis was so positive of this connection that he appealed to Washington
for permission to take six agents from the Laredo office--men long
accustomed to working on this type of case--for an investigation of
Garza. But headquarters was in the midst of an economy wave. Ellis was
told that funds were tight and that it would be impossible for him to
take six men from Laredo on an uncertain mission. However, he was given
authority to go to Kenosha himself and to take along one aide. If he
could make a case against Garza within ten days, well and good. But at
the end of ten days he must return at once to his post in Laredo.
Ellis chose Agent G. L. Latimer to accompany him. The two set out for
Kenosha, driving day and night, through a snow storm which was sweeping
the Middle West. They located Garza’s home. He was living in a small
white frame house just outside the northern edge of the town.
“There were two or three feet of snow on the ground,” Ellis recalls,
“and it looked like we were going to have to stake out the place by
living in sleeping bags. But there was a motel nearby which was closed
for the winter. We got permission from the owner to slip into the court
from which we could see Garza’s house. We were sure he was our man--but
we wanted to know who was calling for the marihuana and where it was
hidden. We wanted to catch the whole apparatus if possible. So day and
night we watched Garza’s house.”
Occasionally Garza would leave the house for a trip to the grocery
store, to go to a movie, or to visit in the city. The agents were
unable to detect him making any deliveries. But on the tenth day--the
last day of grace for Ellis and Latimer to be away from their Laredo
posts--a car drove up to the white frame house. A man entered and
shortly came out carrying a package which he stowed in his automobile.
When he had driven a short distance from Garza’s home, he was halted.
Ellis found the package filled with marihuana. It was in a paper sack
enclosed in plastic and taped with adhesive.
With this evidence, a search warrant was obtained and the agents
advanced on Garza’s house. It was nearing midnight when Ellis knocked
at the door. A light came on and then the door was opened and a voice
said, “Who is it? What do you want?”
Ellis shoved the door open, revealing a skinny Mexican standing in his
long-handled underwear, shivering from the cold.
“We are U.S. Customs agents,” Ellis said. “We have a warrant to search
this place.”
Isauro Garza submitted meekly. A loaded pistol lay on a table near his
bed, but he gave no resistance. The agents found 720 one-pound sacks
of marihuana hidden in closets and in the attic--the largest haul of
marihuana ever to be made in the United States. Its retail value was
$720,000.
Garza feigned surprise over the discovery of the marihuana. He told
officers he “had no idea what was in the sacks.” He said a man named
Tony called at his home one day and left a truckload of sacks. Tony
asked him to keep them for him. Another fellow named Pepe came from
Chicago three or four times. “He picked up some of the stuff and gave
me $600 for rent and expenses--but I didn’t know what it was all
about,” Garza said.
A jury thought otherwise. Garza was sent to prison for five years. And
Muno Pena? He had lost another round to Dave Ellis, but he continued
his operations on a smaller scale. Customs agents are waiting for the
day when he places one foot across the border--and then he’ll be out of
circulation for quite a while.
11
A DIRTY BUSINESS
A cunning and ruthless hoodlum, two crooked Customs employees, two
Greek narcotics peddlers in Shanghai and a supporting cast of killers,
goons and dupes formed one of the greatest narcotics syndicates the
United States has ever known. Over a span of less than two years in
1936–1937, this gang smuggled into the country narcotics believed by
Customs agents to have had a retail value of at least $10 million.
Their system was so simple that it was almost foolproof. Almost ... but
not quite.
The prime mover in this profitable operation was Louis “Lepke”
Buchalter--a name which perhaps doesn’t mean much to the younger
generation. But in the prohibition era and the years of the depression,
Lepke built a fantastic financial empire on a foundation of terror,
violence and murder combined with a genius for organizing. He was,
in many respects, more powerful and more successful than “Scarface”
Al Capone and dozens of other hoodlums of the times who were more
publicized in the nation’s press.
Louis Lepke Buchalter rose to power in the shadow of the Jazz Age,
the era which evokes sentimental memories for so many Americans. But
Lepke’s world was about as sentimental as a tommygun.
He was a small, slender man--5 feet 7--with a dark complexion and black
hair which he parted on the side. He was soft-spoken and seemingly
humble in manner. He had large brown eyes that appeared as soft and
gentle as the eyes of a fawn. But his eyes only masked the evil in this
man who schemed and killed until he ranked at the top of the list of
U.S. criminals.
By all odds, Lepke was the most brilliant--and the most dangerous--of
the criminals. It was Lepke who showed the underworld how to infiltrate
and take over control of labor unions, and how to become silent
partners in the management of industries. It was Lepke who put murder
on a wholesale basis with an organization that became known as Murder,
Inc. It was Lepke who found the chink in the U.S. Customs Bureau’s
defenses against narcotics smuggling--and who made narcotics smuggling
almost a pleasant pastime.
Lepke is worth at least a footnote in any history of our times because
he symbolized an era of graft, corruption and violence the likes of
which the nation had never known before. He was born on February
6, 1897, in Manhattan’s Lower East Side, one of a family of eleven
children. The family lived in shattering confusion in a small, crowded
apartment over the hardware store owned by the father, Barnet Buchalter.
Lepke’s mother called him “Lepkeleh,” the Jewish diminutive for “Little
Louis,” and his friends shortened the nickname to Lepke. He was not a
bad student in grade school. But he quit school after finishing the
eighth grade and for a time worked as a delivery boy at $3 a week.
His father died when he was thirteen. The family broke up and
scattered. The other ten children went on to become respectable, useful
citizens. But not “Little Louis.” He rented a furnished room on the
East Side and turned to crime. He organized raids on pushcart peddlers,
stole from lofts, picked pockets, and lived by his wits. He was sent
to the reformatory and to prison for short terms for larceny, but he
always returned to the old life. He had ambitions to become a big shot
in New York’s underworld.
In the early 1920s, Lepke joined an East Side mob headed by “Little
Augie” Orgen. But while most of the underworld scrambled to satisfy
the country’s unquenchable thirst for bootleg whiskey, Lepke convinced
Little Augie that it was safer, smarter and more profitable to
specialize in labor racketeering and in selling “protection” to
businessmen.
If an employer was having trouble with strikers, Lepke would see to
it that the recalcitrant workers were beaten up by his goons and that
peace was restored at no increase in wages. If union leaders were
having trouble with rank-and-file members, Lepke’s strong-arm squad
would bring the rebels back into line with beatings and threats against
the men’s families.
Other mobs sold such services on a flat-fee basis. But not Lepke. When
his men were hired to put down a union revolt, they remained as members
and then slowly muscled their way into the management of the union. The
members’ dues were increased to pay for the services rendered.
Businessmen who hired Lepke’s strike-breaking services were ordered to
buy the protection on a continuing basis. If they refused, a bomb would
be hurled through a window to wreck a plant or a shop. Acid would be
thrown onto merchandise, or someone’s face would be splashed with acid
as he walked from his place of business to his home.
Those who capitulated--and most of them did--soon found Lepke’s men
demanding a voice in management, even to the dictation of contracts
(from which they received a kickback) and the placement of a man in the
business office to keep a check on the money.
Little Augie was pleased with Lepke’s organizing brilliance and the
profits that were rolling in. But the word got around that he didn’t
like Lepke’s growing strength in the organization, where he was known
as “The Judge” and “Judge Louis.”
Little Augie’s irritation was short-lived. On October 16, 1927, as
he stood in a doorway at 103 Norfolk Street talking with his young
bodyguard, a sedan suddenly swerved to the curb. A voice called, “Hey,
Little Augie!” As the gang chief turned, a burst of machinegun fire
cut him down. His wounded bodyguard was identified by police as John
Diamond--later to become better known as Jack “Legs” Diamond.
The underworld hummed with the story that Little Augie had fallen
victim to Lepke’s ambition. On the basis of an informer’s tip, police
picked up Lepke, “Gurrah Jake” Shapiro and “Little Hymie” Holtz and
charged them with murder. But no one could prove anything and the case
soon was dropped.
With Little Augie out of the way, Lepke set to work to consolidate
his empire. He moved more solidly into the leather, baking, garment,
fur and transportation industries. At the peak of his power, Lepke
personally directed some 250 criminal operations. He rode about New
York in a limousine with a liveried chauffeur. He had a staff of 300
men looking after his affairs, plus an assortment of accountants,
bookkeepers, gunmen, strong-arm men, and experts in such matters as
acid-throwing.
He also put murder on a cash-and-carry basis. If a member of the
mob became careless or talked too much, he was executed summarily.
Dangerous witnesses were ordered to leave the state under the threat of
death--and if they refused to obey, they were killed.
Oddly enough, even at the height of his power, Lepke was virtually
an unknown in New York and throughout the country. While other
hoodlums gained the headlines, Lepke remained in the shadows with few
people realizing the extent of his empire, whose earnings have been
estimated at more than $50 million a year. Nor was it known for twelve
years--1927 until 1939--that Lepke alone had ordered the deaths of from
sixty to eighty men whom he considered a threat to his own safety and
prosperity.
By 1933, however, the operations of Lepke and other racketeers had
aroused such popular indignation that the U.S. government moved against
them. In November of that year a Federal grand jury indicted Lepke on
two counts of violating the antitrust laws through his domination of
the rabbit-fur-dressing industry. He was arrested and released on bail.
He returned home to his wife and adopted son to continue operations as
usual while the wheels of justice turned slowly.
It was during this period that another opportunity came to Lepke quite
unexpectedly. Three hoodlums--Jack Katzenberg, Jake Lvovsky, and Sam
Gross--were allied with other gangsters in the operation of an illicit
chemical plant in Newark, New Jersey. The gang was smuggling opium
into the country, taking it to the plant and extracting morphine from
the opium, to be sold at wholesale across the country. This business
was wiped out on February 25, 1935, when an explosion destroyed the
chemical plant.
Katzenberg, Lvovsky, and Gross had found the narcotics business too
profitable to give up. They began looking around for other ways to get
back into the business, and they decided to talk the problem over with
Lepke. A mutual friend brought them together in his apartment, where
they discussed setting up an international organization which would
obtain narcotics in Shanghai and smuggle them into the United States.
The sale of narcotics was to be put on the same efficient basis as the
sale of murder.
The major stumbling block to the plan was the U.S. Customs. It would
be relatively simple to obtain heroin in Shanghai and to bring it as
far as the port of New York. The problem was how to smuggle it past the
Customs inspectors on a continuing basis that would guarantee a steady
supply with a minimum risk.
Lepke was a firm believer in the adage that every man has his
price--and he was certain he would have no difficulty in finding
someone whose price was reasonable and who would cooperate with the
syndicate. This direct approach had always worked in the past and Lepke
had no reason to change tactics now.
One of Lepke’s first moves was to investigate the Customs procedures at
the New York pier. He found that when vessels arrived at the Port of
New York, the passengers’ baggage and trunks were brought to the pier
for examination. And when they had been examined, a Customs inspector
affixed a colored stamp on each piece of luggage. Once the stamps were
affixed, the luggage could be removed from the pier and placed in a
taxi or in a truck to be carted away.
Lepke saw that the stamps were the key to his problem. If he could find
a Customs employee who would furnish him with the colored stickers,
then a sticker could be affixed to a trunk or a suitcase containing
narcotics and it would pass through Customs without an actual
inspection.
Carefully, Lepke’s lieutenants made inquiries along the waterfront. At
last they found their men, two guards who were willing--for a price of
$1,000 a trip--to furnish Lepke and his men with the necessary stickers
on the day that the narcotics carriers arrived. The price was cheaper
than Lepke had expected.
With easy entry for the narcotics assured, Lepke arranged to obtain
heroin from two Greek dealers in Shanghai.
This was the state of affairs when Jack Katzenberg made a trip to
Brooklyn for a visit with his brother-in-law, Ben Schisoff, a balding,
sad-eyed man with the face of a ferret. Ben and his wife Bella operated
a Coney Island hot dog concession. They cleared about $1,500 to $2,000
in profit each season, enough to live on through the winter and to take
care of the concession rental for the next season.
Katzenberg generously offered to send Ben on an all-expenses-paid trip
around the world by luxury liner. All he asked in return was that
Schisoff bring back two trunks from Shanghai. “You won’t even have
to bother about looking after the trunks,” Katzenberg said, “because
there’ll be somebody to do that for you. And when you get back I’ll
have some money for you.”
Schisoff was confused. (At least that was the story he would tell
Customs agents later.) Why would his brother-in-law suddenly wish to
send him around the world with all expenses paid--and then give him
money at the end of the trip? He knew his brother-in-law was in the
rackets. He knew his reputation as a hoodlum. He also had heard all
the rumors that Katzenberg was connected with the narcotics traffic
even though he had managed to elude Federal officers. Schisoff told
Katzenberg to give him a few days to think it over.
Schisoff finally sat down with his wife and said, “Listen, Bella, I
want to go on a trip by myself. You go to Miami. You’ve worked hard and
now you are entitled to share the money we have. I want to go alone.
You know I am a nervous type of man and I want to go for a couple of
months to recuperate. You can stay home or you can go to Miami or do
whatever you please. How about it?”
But Bella was having none of this business of her husband taking
a vacation alone. She loudly insisted that if he were going on a
trip, then she was going with him. She wasn’t going to let him go
gallivanting off by himself to get into God knows what sort of trouble.
Her answer was “no!”
Schisoff reluctantly told Katzenberg that his sister insisted on going
along. He expected his brother-in-law to call off the deal. But instead
Katzenberg amiably agreed that both of them could go and that he would
pay their expenses. And so on November 15, 1935, the couple boarded the
SS _President Lincoln_ in San Francisco and set sail that day on their
voyage around the world by way of Shanghai.
When the _President Lincoln_ arrived in Shanghai, Sam Gross was
waiting at the pier to meet them. He introduced them to his two Greek
companions and then took them to the Metropole Hotel, where he had
made reservations for them. Sam said, “Now you two get a good rest.
Everything is going all right.”
As Schisoff told the story later: “A few days later, Sam Gross tells
me that he is going away for a week. He said to us, ‘Don’t walk too
often in the street because it is not so good.’ I said, ‘All right.
But what will I do if anything happens? Maybe I’ll get sick. I don’t
know anybody around here.’ So he gave me an address. In case anything
went wrong I should call that telephone number. I don’t remember the
address and the number. It was a Greek fellow, named Jay, and his wife.
Finally Sammy Gross puts a scare into me and tells me not to go into
the streets.
“And so we stayed in the hotel until we got blue in the face. And so my
wife finally says, ‘We have money. Why sit in the hotel? I want to do
some shopping. Everything is so cheap here.’
“So we were sitting there about three days and then I called that
number that Sam gives me and the wife answered. I told her about us.
She answered, ‘All right, I’m going to send my chauffeur to bring you
over....’ She treated us to a meal and we spent the afternoon there and
then went home.
“Gross finally returned and said, ‘Listen, the ship is going to be here
in a day or two. I’ll have two trunks for you to take with you. You
don’t have to do anything. We will put the trunks on board for you and
I will show you what to do when you are on the boat. You forget about
the trunks. When you are about three days out of Marseilles, go to the
purser and say that you want to have the trunks shipped across France
to Cherbourg in transit. Then when you get to Marseilles, there’ll be
somebody waiting for you to take care of everything. That way they
don’t have to open the trunks when they go through France.’”
The Schisoffs had a gay Christmas party at the home of the Greeks,
and four days later they boarded their ship and sailed from Shanghai.
They were met in Marseilles by one of Lepke’s henchmen, who handled
the trans-shipment of the trunks. Then the Schisoffs left the ship at
Marseilles and went by train to Cherbourg to catch the SS _Majestic_
for New York.
Lepke’s man told them, “Don’t put those two trunks on your baggage
declaration.”
Schisoff said, “How am I going to do it then?”
The hoodlum said, “You’ve got eight pieces of luggage of your own. You
put down everything on the declaration that you bought but leave these
two trunks out. They will be taken care of. Don’t you worry about that.”
Schisoff replied, “All right. Whatever you say is all right with me.”
On the night of February 4, 1936, the night before the _Majestic_ was
to dock in New York, Jake Lvovsky and Jack Katzenberg registered at
the Luxor Hotel in New York. A short time after they went to their
rooms they were joined by two Customs guards, John McAdams and Al
Hoffman. It was agreed that Lvovsky would meet McAdams and Hoffman at
the pier the next morning before the _Majestic_ docked and they would
turn over to him the stickers to be placed on the trunks brought in
by the Schisoffs. The stickers were issued to the guards each morning
and a new color was used each day. For that reason the delivery of the
stickers had to be made at the pier.
Lvovsky arrived at the pier as the _Majestic_ was docking. He stopped
and chatted casually with McAdams, who slipped him the stickers. When
the baggage was unloaded, the Schisoffs’ trunks were sent to the
section marked with the initial “S.” Schisoff pointed out the two
trunks to Lvovsky, who walked over casually and sat down on a trunk
to smoke a cigarette, as though waiting for an inspector to check the
luggage. Unobtrusively he took one of the stickers and pasted it to the
trunk. He moved to the other trunk, sat down, and pasted a sticker on
that trunk. And then he strolled away.
A Customs inspector examined the Schisoffs’ suitcases, but he noted
the trunks already had the inspection stickers on them so he permitted
them to be carted off. They were loaded into taxis by Lvovsky and
Katzenberg and hustled off to an unknown destination.
The system worked like a charm. Each time that Lvovsky notified the
two Customs guards of an arrival of a “world traveller” the guards
would arrange to be on duty at those hours so that they could obtain
stickers and pass them on to Lvovsky. Six times the confederates of the
gang made the trip safely from Shanghai without any inspection of the
heroin-loaded trunks.
But Treasury agents were closing in on the gang. Narcotics agents,
with aid from Customs agents, had opened an investigation of Lepke’s
narcotics smuggling ring after an informant had squealed to Narcotics
Commissioner Harry Anslinger. The informant--whose name has never been
disclosed--was a woman with revenge in her heart. Her boy friend--one
of the Lepke mob--had been playing around with another woman and she
wanted to get even with him for his infidelity. She gave Anslinger
enough information, with facts that could be verified, to start the
ball rolling. Bit by bit, the agents closed in on the gangsters. And
they discovered by a close check of the stickers issued to all pier
personnel that there was an irregularity in the stickers which had been
issued to the guards McAdams and Hoffman.
As the agents began to put on the heat, underworld characters started
to talk. Those “world travellers” who had helped bring narcotics into
the country began to confess. Evidence mounted against the gang, and
when the crackdown finally came, a total of thirty-one persons were
involved. Lepke was indicted on ten counts of a conspiracy to smuggle
narcotics into the United States.
At this time--December, 1937--Lepke was a fugitive. A little more than
a year earlier he and Gurrah Jake Shapiro had been convicted on the
antitrust charges brought against them four years earlier. They had
been sentenced to two years in prison and fined $10,000. But Lepke
appealed. He was released under $3,000 bail and immediately went into
hiding.
For almost two years Lepke’s pals hid him from the law. He lived for
a time in the old Oriental Dance Hall on Coney Island. Then, twenty
pounds heavier and wearing a mustache, he moved to a flat in Brooklyn.
Later he occupied a house in Flatbush, posing as the paralyzed husband
of a Mrs. Walker. All this time he continued directing the affairs of
his criminal organization.
But now, in 1939, the search for Lepke had become the most intense
manhunt the country had seen in years. The Federal government wanted
him on the narcotics charges growing out of his syndicate operations.
And he was the No. 1 man on the most-wanted list of New York’s District
Attorney Thomas E. Dewey, who then was opening his first bid for the
Republican Presidential nomination. Among other things, Dewey was
certain he could pin a murder charge on Lepke--who now had “dead or
alive” rewards on his head totalling $50,000.
As the pressures mounted, the hunted man became desperate. And
desperately he tried to wreck the cases against him by sending
witnesses out of the state, by intimidation, and by murder. The heat
was on the underworld as it had never been before. The rumor spread
that if Lepke did not surrender to the authorities, he would be
killed by one of his own kind. Lepke had at last become too much of a
liability even to his old pals.
Hunted and frightened, with every day holding the threat of sudden
death, Lepke began negotiations to surrender to New York Columnist
Walter Winchell--on the condition that he would be turned over to the
FBI rather than New York State authorities.
During the evening of August 5, Winchell received a telephone call from
a man who refused to identify himself. “Lepke wants to come in,” he
said. “But he’s heard so many different stories about what will happen
to him. He can’t trust anybody, he says. If he can find someone he can
trust, he will give himself up to that person. The talk around town is
that Lepke would be shot while supposedly escaping.”
Winchell called FBI Director John Edgar Hoover in Washington and told
him of the mysterious call and Lepke’s willingness to surrender if he
could be assured of protection.
Hoover told Winchell: “You are authorized to state that the FBI will
guarantee it.”
For almost three weeks the dickering continued between Winchell and his
mysterious callers until Hoover finally said, “This is a lot of bunk,
Walter. You are being made a fool of, and so are we. If you contact
those people again, tell them the time limit is up! I will instruct my
agents to shoot Lepke on sight.”
Winchell relayed this information to the intermediary. Then it was that
arrangements were made for Hoover to be waiting in his automobile on
28th Street near Fifth Avenue at 10:15 on the evening of August 24.
Winchell was parked in his car at Madison Square when Lepke came out of
the shadows and stepped into the car beside him. “Hello,” Lepke said.
“Thanks very much.”
Quickly, the columnist drove to 28th Street, where he pulled up behind
Hoover’s car. Lepke quickly moved into the automobile beside Hoover.
Winchell said, “Mr. Hoover, this is Lepke.”
“How do you do,” Lepke replied. “Let’s go.”
And so ended one of the greatest manhunts in American criminal history.
Four months later, Lepke went on trial in the Federal district court
in New York City. He sat in silence, his brown eyes expressionless, as
his former henchmen paraded to the stand to tell the details of their
narcotics smuggling.
Among the government witnesses, many of them pale from sunless days
in prison, were Jack Katzenberg, Ben Schisoff and John McAdams, the
Customs employee. No longer were they afraid of the little man who sat
there staring at them.
The trial dragged through fifteen days, but in the end Lepke was
convicted. He was sentenced to serve fourteen years in prison and was
fined $2,500 on ten narcotics charges. Two weeks later in General
Sessions Court, Lepke was convicted on thirty-six counts of extortion
and sentenced to an additional thirty years in prison.
Among the others involved in the smuggling ring, Lvovsky received seven
years in prison and was fined $15,000. Sam Gross was sentenced to six
years and fined $15,000, while Katzenberg was given ten years and a
$10,000 fine. Both the Customs employees, McAdams and Hoffman, also
received prison sentences.
But the final ordeal for Lepke was yet to come. In October, 1941, Lepke
was taken from prison and returned to New York to stand trial for his
role as mastermind in the operations of Murder, Inc. Specifically, he
was charged with ordering the murder of a former garment industry truck
driver, Joseph Rosen, who had ignored his warnings to get out of town
and out of reach of questioning by District Attorney Dewey at the time
Dewey was investigating the rackets in New York.
Manuel “Mendy” Weiss was named by the state as the actual triggerman
in the slaying, and a small-time hood named Louis Capone (no kin to Al
Capone) was accused of being the man who assisted Weiss in his getaway.
Rosen had been found shot to death on the morning of September 13,
1936, lying on the floor of his small candy shop in Brooklyn.
One of the witnesses against Lepke was Max Ruben, whose death Lepke
had ordered when Ruben refused to stay out of New York. One of Lepke’s
henchmen had shot Ruben through the neck and left him lying near death.
But he had recovered to tell his story to Prosecutor Burton Turkus.
Ruben testified that Lepke--two days before Rosen was killed--told him:
“That bastard Rosen is going around Brownsville shooting his mouth off
that he’s going downtown. He and nobody else are going down anyplace or
do any more talking ... or any talking at all.”
Allie Tannenbaum, another of Lepke’s triggermen, supported Ruben’s
testimony. He said he had heard Lepke say of Rosen: “There’s one
son-of-a-bitch who’ll never go downtown.” By downtown, Lepke meant the
office of the district attorney.
Tannenbaum also told of hearing Mendy Weiss describe how he had shot
Rosen--after which his pal, “Pittsburgh Phil” Strauss, had pumped
bullets into the body just for kicks.
When Lepke was advised that Rosen was dead, Tannenbaum said his boss
replied, “What’s the difference as long as everyone is clean and got
away all right.”
A battery of nine attorneys defended Lepke. But this time the king of
the underworld couldn’t squeeze out of the trap. Too many of his old
gang had decided to talk. They had lived too long in fear that Lepke
would order their own deaths in his effort to remove anyone who might
be dangerous to him. Now they wanted Lepke out of the way.
Lepke, Weiss and Capone were convicted of murder and sentenced to die
in the electric chair. They went to their deaths on December 2, 1941.
* * * * *
Control of the narcotics traffic in the United States is primarily the
responsibility of the Narcotics Bureau. But Customs agents also have
a direct responsibility in the government’s efforts to throttle the
illicit trade. For this reason Customs agents frequently are teamed
with Narcotics agents in investigations which often are international
in scope.
It is not unusual for Customs agents to work for as much as two years
in tracking down a single narcotics smuggler and removing him from
circulation. These cases require endless hours of surveillance and
hunting for the one bit of information which will trap the quarry.
Such a case was dropped in the laps of Customs agents in San Francisco
and Seattle on August 2, 1954, when an informant tipped Customs agents
at Seattle that $30,000 worth of heroin was to be smuggled into the
United States aboard the SS _M. N. Patrick_ by a Negro seaman named
Robert King. He described King as tall, jug-eared and middle-aged, with
a taste for conservative clothes and gaudy night spots. The tipster
said King planned to take the heroin ashore in San Francisco when the
_Patrick_ completed her run from Hong Kong.
Seattle forwarded a teletype message to San Francisco saying:
“Information considered to be very reliable received today that ship
_M. N. Patrick_ arriving San Francisco between August 4 and August 8
from India via Hong Kong has heroin valued at about $30,000 on board.
Vessel supposed to be in Seattle today but not verified. The suspect,
Robert King, in steward’s department, is owner and will try to bring
ashore at San Francisco.”
Alerted by this message, San Francisco agents began checking on
the probable arrival time of the _Patrick_ only to discover that
the ship had changed its sailing schedule and would not touch San
Francisco on that trip. A message was forwarded to Seattle saying:
“We have just checked here and find that _Patrick_ is not coming to
San Francisco this trip. She is due in Seattle today (August 6) and
will make two trips from Seattle to Alaska and then back to Far East.
Under circumstances consider probable that King will try to unload at
Seattle....”
The _Patrick_ had already docked in Seattle when this message was
received. Agents rushed to the waterfront. But as the agents were
walking aboard the ship, King was walking off undetected, apparently
carrying the heroin with him.
A few hours later it was learned that King had contacted a known
narcotics peddler in Los Angeles and had arranged for a $30,000
“loan.” It was suspected by agents that King had made his contact
successfully and disposed of the narcotics before agents could get on
his trail.
Agents began checking on King’s background and on his movements as far
as possible in previous years. They discovered that while he had no
known source of income, he owned an apartment building in San Francisco
valued at $135,000. He maintained a bank account which showed heavy
deposits and withdrawals. It was discovered also that in past years he
had made frequent trips to Hong Kong and Japan. On occasions he had
shipped as a seaman, and at other times he had gone abroad as a tourist.
Treasury agents in Japan found that King often frequented the Port Hole
Bar in Yokohama, which was a known meeting place of narcotics peddlers
when they were trying to contact seamen to use as carriers.
For more than a year and a half agents kept a periodic check on
King’s movements in an effort to trap him in an act of smuggling
or trafficking in narcotics. They had no success until a seemingly
unrelated incident occurred in Japan.
On February 9, 1956, Japanese postal inspectors at Yokohama seized a
shipment of narcotics which proved to be of special interest to Customs
agents in San Francisco and Seattle. While making a routine examination
of a package mailed by international air mail, they found 167 grams of
heroin and 217 capsules of cocaine hidden in the folds of a pair of
woman’s pajamas and slippers. The package was addressed to a Mrs. Hazel
Scott in Seattle, Washington. The Customs declaration tag gave the name
of the sender as W. M. Scott and listed an address in Yokohama. The
addresses were written by typewriter. The narcotics were in a manila
envelope bearing the words “For Walker.” The Japanese turned this
information over to the U.S. Embassy.
During the years of the Allied Occupation of Japan after World War
II, American and Japanese authorities had achieved close cooperation
in combatting the traffic in narcotics and other contraband. This
cooperation was continued after the signing of the Peace Treaty in 1952
formally ending the occupation.
The United Nations made the control of narcotics traffic one of its
important objectives soon after its formation, resulting in a combined
effort by many nations to strangle the illicit trade by joint efforts
which were unknown in the years prior to the war.
Treasury agents were stationed in Tokyo as liaison officers to work
with Japanese authorities on any cases involving American interests.
And it was a routine matter for the Japanese police to give Treasury
agents the information on the seizure of the package addressed to Mrs.
Scott. This information was relayed from the U.S. Embassy to Customs
agents in San Francisco.
The agents found there had been a seaman named Walter Scott aboard
an American naval vessel in Yokohama at the time the package was
sent--but Scott had not mailed a package while his ship was in
Yokohama. Obviously whoever had sent the package containing narcotics
had used Scott’s name without his knowledge. As for the envelope marked
“For Walker,” agents suspected that it was probably intended for a
known narcotics dealer named Roosevelt Walker, who first came to the
attention of Customs in 1940 when he was arrested in Nogales, Arizona,
and was charged with smuggling a quantity of marihuana into the country.
And agents found another interesting fact: Walker was a companion of
Robert L. King. King had been in Tokyo at the time the package was
mailed, but there apparently was no way to link him with this smuggling
effort.
And so the surveillance of King was continued. On July 16, 1956, agents
trailed King to the International Airport at San Francisco. He had
booked passage on Pan American Flight 831 for Tokyo by way of Honolulu
and Manila. King was nattily dressed in a brown business suit and he
wore a rakish straw hat as he boarded the plane. The agents watched his
plane leave San Francisco at 10 A.M., making no effort to stop him.
Honolulu and Tokyo were alerted to the fact that King was aboard the
plane and that his movements should be watched.
King was permitted to enter Japan unmolested. He also was allowed
to leave Japan for a trip to Hong Kong, where he spent several days
shopping before returning to Tokyo.
The return to Tokyo was a mistake for King. For months Japanese police
had been trying to trace the typewriter which had written the addresses
on the package containing the narcotics. They found that King, at the
time the package was mailed, had been living in Yokohama at the Tomo
Yei Hotel. They also found that King had rented a typewriter--two days
before the parcel was mailed--from a Mr. Ono who ran a shop near the
hotel. And then they matched a sample of typing from this machine with
the typed address on the package containing narcotics. The comparison
left no doubt that this was the machine which had been used by the
would-be smuggler.
When King returned from Hong Kong on September 20, he was arrested by
Japanese police at the Tokyo International Airport and lodged in jail
at Yokohama, charged with narcotics smuggling. Unable to raise money
for a bail bond, King remained in jail for six months while authorities
in Japan and the United States investigated his case. But at last he
obtained money from friends in the United States and made bond. He was
released, pending a trial. The Japanese held on to his passport as
insurance that he would not leave the country.
Passport or no passport, King was determined to get out of Japan before
his trial. He went to the Yokohama waterfront and found an old friend
who agreed to smuggle him aboard the military transport _General C. G.
Morton_. The ship docked at Pier 5 at Oakland on April 14, 1957, and
King slipped ashore.
Within a matter of hours, Customs agents were on his trail. FBI agents
were called in on the case because King had returned to the country
without a passport, which was in the hands of Japanese police. The
agents found a seaman who testified he had seen King aboard the _C. G.
Morton_. The seaman told agents: “About two days before we got to San
Francisco, a friend came to me and said, ‘How would you like to make
some money?’ I asked him how and he said, ‘Take a package off the ship
for me in San Francisco.’ He showed me the package and it contained
ten rubbers filled with heroin. About two days after we got to San
Francisco I took the narcotics off at Pier 5, Oakland Army Terminal. My
friend walked off just ahead of me. I had the package of heroin under
my coat. We got in my car and went to a motel somewhere in the Richmond
district and registered. We stashed the package of heroin in our room.
I don’t know who picked up the heroin. The next night my friend gave me
King’s address and told me to go and see him. I went to the hotel and
King gave me $500.”
King denied that he had re-entered the United States illegally and
claimed that he had returned on a Pan American flight from Tokyo. But
agents were able to prove that King had not been booked aboard the
plane which he claimed he had been on. They broke down his alibis and
at last King entered a plea of guilty to a charge of conspiracy to
smuggle narcotics into the United States and to entering the United
States without a passport. He was convicted, fined $13,000 and sent to
prison for five years.
But it seems that whenever the Kings and the Lepkes are taken out of
circulation, there is someone new to take their place. That is why
there is a U.S. Customs force.
12
THE CASE OF THE CROOKED DIPLOMAT
The Case of the Crooked Diplomat had its beginning when an Arab
informer whispered a warning to a U.S. Bureau of Narcotics agent
in faraway Beirut, Lebanon. And before it was closed, agents of
the Customs Bureau, the Bureau of Narcotics and the French Sûreté
had teamed up in a cooperative drive to smash a ring of criminals
attempting to smuggle $20 million worth of heroin into the United
States.
They were an oddly assorted lot, the members of this ring. There were
only four known members, but in early 1960 their operations had begun
to stir alarm across the country among law enforcement agencies seeking
the mysterious source of heroin which at intervals had begun to appear
in large lots on the underworld market.
The quartet was composed of:
Mauricio Rosal, forty-seven, Guatemala’s ambassador to Belgium and the
Netherlands, and the son of a respected Central American diplomat; a
small, portly, balding man known favorably in many countries as a witty
conversationalist and shrewd politician of seeming integrity; something
of a dandy, he usually wore dark homburg hats, expensively tailored
dark blue suits and maroon ties; he affected an air of aristocratic
elegance both in dress and manners.
Etienne Tarditi, fifty-five, a short, heavy-jowled, paunchy, gross
figure of the Parisian underworld with a cloudy background; addicted
to trench coats, pork-pie hats and the notion that he resembled
Alfred Hitchcock (which he did); a gambler who played for big stakes
in narcotics, with connections in many countries; a manipulator who
usually remained in the background.
Charles Bourbonnais, thirty-nine, a slender, dapper steward for Trans
World Airways, who had an eye for a pretty girl when his wife was not
looking; often seen in the company of Tarditi when in Paris, and a
liberal spender for a salaried man; the messenger and fixer for the
ring.
Nicholas Calamaris, forty-seven, a powerful man with a huge nose, jug
ears, skull-like face and long arms which reached almost to his knees;
employed as a New York longshoreman, but this job was merely the front
for his nighttime operations as a big-time dealer in narcotics; a
cautious, secretive man with few close friends.
In the winter and spring of 1960, Federal, state and city police
agencies were at a loss to explain the source of heroin which was at
times available in almost any quantity desired. Agents canvassed their
underworld tipsters with little luck. The informers knew only that at
intervals the word would spread that another large load of heroin had
arrived in New York and was available. Where it came from and how it
entered the country none could--or would--say.
It was not until June that Narcotics Agent Paul Knight picked up the
first clue of substance in Beirut, which had become an important
listening post for the Narcotics Bureau.
A tipster whispered to Knight that heroin processed in Beirut from a
morphine base had been sent to a smuggling ring in Paris. The reputed
leader of the ring was a man named Etienne Tarditi. He had, the tipster
said, smuggled as much as 40 to 60 kilograms of heroin from Beirut
to France, and, according to rumors, it had gone from France to the
United States. The carrier was said to be a Spanish-speaking diplomat.
This was the first break. The information from Beirut was passed on to
the French Sûreté Nationale with a request that the Narcotics Bureau be
informed of Tarditi’s movements and his associates.
In August, the Sûreté informed the Bureau that Tarditi had returned to
Paris from a trip to New York. His plane companion on the trip, and
on several previous trips, had been the Spanish-speaking Guatemalan
ambassador, Mauricio Rosal. The Sûreté added that Tarditi also had been
seen in Paris in the company of a TWA steward named Charles Bourbonnais.
From this time forward, Tarditi, Rosal and Bourbonnais were under
almost constant police surveillance on the Continent. When Bourbonnais
returned to the United States on August 24 he was placed under
surveillance by Narcotics and Customs agents.
Bourbonnais, the agents found, was married to a TWA hostess. He lived
on Long Island and in recent months had sold a residence for $40,000.
He always seemed to have plenty of money, and he was something of a
playboy when his wife was away from home or when he was in Paris.
Agents trailed Bourbonnais when he drove from the airport. He drove a
devious route to an apartment house in Queens. He stood at the entrance
of the building looking furtively about before entering.
“That guy is really jumpy,” an agent remarked to another. “Do you think
he knows we are on his tail?”
“I don’t know,” was the answer, “but we’d better drop the surveillance.
He’s suspicious of something. He could have spotted us.”
The surveillance was called off temporarily. It wasn’t until later that
the agents learned that Bourbonnais’ wariness had nothing to do with
narcotics peddling. On this particular occasion he was on his way to a
rendezvous with a girl friend--and he merely wanted to be certain that
he wasn’t being followed by private detectives hired by his wife.
At the same time, Customs agents began checking into the background
of Mauricio Rosal, who they found had been a frequent visitor to the
United States. Leafing through old files one day, Agent Mario Cozzi
found a report showing that almost twenty years earlier Rosal had been
under investigation for alleged smuggling, although nothing had ever
been proved against him.
He had arrived in New York City aboard the SS _Nyassa_ on August 9,
1941, carrying papers which identified him as a Guatemalan chargé
d’affaires. He had claimed--and been granted--diplomatic courtesies
when passing through Customs with his wife. His declaration showed that
he was enroute from Lisbon to Mexico City on his way to Honduras.
The Rosals had remained in New York only a few days and then had
departed with their seventeen pieces of luggage, none of which was
subjected to Customs examination.
A few days after their departure, Customs agents were informed by
a tipster that Rosal had carried essential oils worth $40,000 and
diamonds worth $37,000 into the city. A diamond dealer was found who
admitted that Rosal had brought the diamonds to him and offered to sell
them.
“I refused to buy unless Rosal could produce receipts showing he had
paid the customs duty,” the dealer said. “When he could not show me a
proper clearance from Customs, I turned down his offer.”
Customs, however, had reason to believe that Rosal had disposed of the
essential oils and the diamonds before he left the city. Months later,
Customs Agent Salvador Pena had interviewed Rosal in Mexico City,
inquiring about his reported failure to list the dutiable imports on
his declaration.
Rosal blandly admitted he had carried the oils with him in a wooden
box. “I brought them over from Vichy for a friend,” he said, “and
delivered them to his brother at the Waldorf-Astoria. I was assured the
duty had been paid and I never dreamed, of course, there was anything
irregular.”
As for the diamonds, Rosal admitted he had approached a dealer and
offered to sell him several diamonds. But he insisted that when no
agreement was reached, he had taken the gems on to Venezuela, where he
had disposed of them. Had he made the sale in New York, he added with a
shrug, he would naturally have paid the required customs duty.
There was nothing further that Customs could do about the matter and
the case was closed. The report was filed away to gather dust until
Rosal’s name was linked with that of Tarditi.
On September 30, six weeks after Cozzi had found the old report,
the Sûreté advised the Narcotics Bureau that Rosal and Tarditi had
purchased tickets for a flight to New York and it was suspected they
would be carrying narcotics. Tarditi was booked to arrive at Idlewild
International Airport on October 1, and Rosal was due to arrive a day
later. Bourbonnais was scheduled to leave Paris a short time after
Tarditi as the steward aboard TWA’s Flight 801.
As the original tip on the case had come to the Narcotics Bureau, the
investigation was in the hands of District Director George H. Gaffney,
a veteran agent, with Customs playing a supporting role.
Thus began one of the most remarkable cases of Federal agency
cooperation in the war against smuggling. Gaffney laid his plans well,
and when TWA’s Flight 801 touched down at Idlewild at 5 P.M. on October
1, a squad of Narcotics and Customs agents was waiting to place Tarditi
under surveillance. Customs inspectors had been alerted to signal an
identification when Tarditi handed over his baggage declaration, and to
make only a cursory examination of a single piece of his luggage.
Tarditi stepped from the plane wearing a trench coat and a pork-pie
hat set jauntily at an angle. He seemed unconcerned when the inspector
asked him to open the single bag he carried to the inspection station.
The inspector noted on his declaration that his destination was the
Sherry Netherlands Hotel.
And so it was that Tarditi passed through Customs with no hint given
that several pairs of eyes were watching every move he made. A porter
carried Tarditi’s luggage to a waiting taxi while a radio message
was flashed from Idlewild to a squad of agents in midtown Manhattan
that the suspect was enroute to the Sherry Netherlands. Agents were
instructed to keep him under surveillance when he reached the hotel.
The taxi driver stowed Tarditi’s bag into the trunk of his cab and slid
behind the wheel. He said, “Where to, sir?”
Tarditi replied, “To the Savoy Hilton.”
The driver noted the destination on his trip sheet. He also scribbled
the words “Savoy Hilton” on a piece of paper which he wadded into the
palm of his left hand. The driver was Narcotics Agent Francis Waters.
As Waters drove from the loading platform, he placed his left hand
carelessly on the doorframe and dropped the piece of paper from the car
window. He noted with satisfaction in the rear-view mirror that the car
behind him stopped suddenly and a man jumped out to pick up the note.
At the Savoy Hilton, Tarditi was given Room 1337. The guest in 1339 was
a Narcotics Bureau agent.
Bourbonnais arrived on schedule about an hour after Tarditi.
The next afternoon, Sunday, agents were stationed at strategic points
when Rosal walked from the Pan American jet and made his way to the
Customs barrier where Inspector Pasquale Cammello had been assigned to
weigh and clear his luggage.
Discreet inquiries at the State Department in Washington had disclosed
that Rosal was not accredited in any way as a diplomat to the United
States, and, further, that the Guatemalan embassy knew nothing of his
trip to this country.
Under these circumstances, Rosal was travelling as a private citizen
with no legitimate right to the courtesies usually accorded visiting
diplomats. Nevertheless, he boldly claimed the privilege of immunity
for the four suitcases which accompanied him and Inspector Cammello
gave no hint that the claim was anything but routine.
Cammello noted that the bags weighed 19, 25, 50 and 52 pounds when he
placed them on the scales. He chatted pleasantly with the diplomat and
then waved Rosal on his way. A Pan American passenger representative
was waiting to drive the Ambassador to the Plaza Hotel near the Savoy
Hilton.
Rosal registered into Room 1205 at the Plaza, where agents had arranged
to occupy an adjoining room. He had a leisurely dinner in the hotel
dining room and then he strolled to the nearby Savoy, where he met
Tarditi in the lobby. The men kissed each other on the cheek and then
sat in a secluded corner in animated conversation. It was almost
midnight when they parted and went to their rooms.
The following morning, Tarditi left his hotel and took a cab to an
apartment building on East 79th Street. He remained in the building
only a few minutes, and when he emerged he was carrying a parcel
wrapped in brown paper. He went directly back to his hotel.
About 11 A.M., Tarditi left the Savoy Hilton, carrying in his hand the
brown parcel, and he walked to the Plaza Hotel.
Customs Agent Mario Cozzi was one of those watching Tarditi. Cozzi
never knew what it was that drew his attention to a battered 1957 Ford
station wagon parked at the northeast corner of Central Park South.
Perhaps it was the driver. He was a huge man with a skull-like face
and large ears who seemed to be interested in Tarditi, too. From long
habit, Cozzi made a mental note of the license number, New York LK8935.
Tarditi went directly to Rosal’s room, and left the brown parcel with
the diplomat. Then he returned to his own hotel.
Narcotics Supervisor George Gaffney and Customs Agent-in-Charge Carl
Esposita sat in a parked radio car near the Plaza Hotel entrance.
They were reasonably certain that if heroin were being smuggled, then
the contraband would be in Rosal’s luggage, for which he had claimed
diplomatic immunity. If their suspicions were correct, the question
was: Where would the delivery take place and to whom?
A dozen agents were dispersed throughout the area in radio cars,
receiving their orders by radio from Gaffney. At noon an alert was
flashed when Rosal called for a bellman to take his bags from his room
to a taxi. He checked out of the hotel and the bellman placed his four
suitcases in the trunk of a taxi.
Only a few minutes earlier, Tarditi had left his hotel. Agents reported
by radio that he had gone to the corner of 72nd Street and Lexington
Avenue, where he was met by Charles Bourbonnais, the TWA steward, and
by a tall, gangling man with a skull-like face. The three men were
still standing on the corner talking when Rosal’s taxi pulled away from
the Plaza Hotel.
“This must be it,” Gaffney said to Esposita. The command car followed
a discreet distance behind Rosal’s cab, which went directly across
town to the corner of 72nd Street and Lexington Avenue. There the
diplomat stepped from the taxi to be joined by Tarditi and Bourbonnais.
Gaffney’s radio car continued on down the street to a vacant parking
space.
From the shadow of a doorway across the street, Mario Cozzi snapped a
picture of Rosal, Tarditi and Bourbonnais as they stood talking beside
the taxi. Then he noticed a familiar-looking Ford station wagon parked
nearby. The man at the wheel was the jug-eared driver he had seen
parked earlier in the day near the Plaza Hotel, watching Tarditi. The
driver was Nicholas Calamaris.
Rosal spoke to the taxi driver, who opened the trunk of the car. The
three men looked into the trunk and for a moment it appeared they were
going to transfer the luggage from the cab to the station wagon. But
Bourbonnais suddenly strode toward the station wagon, while Tarditi and
Rosal entered the taxi after the driver had closed the lid of the trunk.
In that interval of a few seconds, a dozen agents were prepared to rush
the men if the luggage had been transferred to the station wagon. When
nothing happened, Gaffney withheld his order.
Bourbonnais slid into the seat beside Calamaris, who drove toward
Third Avenue with Rosal and Tarditi following closely behind in the
taxi. At Third Avenue the two cars swung north and still the occupants
were totally unaware that their cars were bracketed by the automobiles
carrying Narcotics and Customs agents.
At 75th Street, the taxi was halted by a stop light while the station
wagon continued on. Gaffney made a sudden decision. “Let’s not tail
them any farther,” he snapped into the microphone. “Let’s get them
now.” The control car quickly shot forward and swerved in front of the
cab. Other cars closed in to block the station wagon.
Mike Cozzi leaped from his car to the taxi, jerked open the door and
flashed his agent’s badge. “We’re Treasury agents,” he said. “Don’t
make a move.”
“What is this?” Rosal exclaimed.
Tarditi protested, “Do you know who this man is? He is a diplomat! He
is entitled to diplomatic immunity!”
The agents began firing questions at the two men.
“A diplomat to what country?”
“I am the Guatemalan ambassador to Brussels.”
“Are you on a diplomatic mission to the United States?”
“No.”
“Does your government know you are in the United States?”
“Well, no....”
At the station wagon, Calamaris was protesting, too. “Why are you
stopping us? What’s going on?”
“Don’t worry,” an agent said, “just get moving. Drive off the Avenue
onto 76th Street. Over there!”
“I don’t know nothing....”
“Get the car moving. You’re blocking traffic.”
Passersby gawked curiously as the four men were taken from the
automobiles with a swarm of agents around them.
“What’s in the trunk of the cab?” Rosal was asked.
“Four suitcases,” he said. “One is mine but the other three don’t
belong to me.”
“You brought them into the country, didn’t you?”
“Yes, but they are not mine....”
The cab driver, unable to comprehend what was taking place, was
ordered to open the trunk of the taxi. An agent broke open one of the
suitcases. It was packed with plastic bags containing a white powder
which laboratory tests would later prove to be almost pure heroin.
Rosal himself opened the small case which he insisted was the only bag
which belonged to him. Inside was a package wrapped in brown paper--the
parcel which the agents had seen Tarditi carry into his room at the
Plaza Hotel that morning. It contained $26,000 in U.S. currency.
The men were placed in the agents’ cars along with the heroin-filled
suitcases, and taken to the Narcotics Bureau headquarters for
questioning.
Agent Frederick Cornetta said to Mike Cozzi, “I’ve got to drive the
station wagon to headquarters. Why don’t you ride with me?”
Mike climbed into the front seat of the station wagon beside Cornetta,
who took the wheel.
As they moved down Third Avenue, Cozzi looked into the glove
compartment and examined its contents. Then he ran his hand into the
space beneath the seat and pulled out a paper sack.
“Hey!” he said to Cornetta, “I think I’ve got two more kilos of the
stuff.”
He looked inside and exclaimed, “Money! It’s full of money.”
The sack contained $41,949, which Calamaris and Bourbonnais intended to
hand over to Tarditi.
At headquarters, Rosal talked freely. He claimed that he first met
Tarditi in Paris in the summer of 1959 through a mutual friend. During
one conversation, he had told Tarditi that his mother owed $35,000 on
some property in Central America and was in danger of losing it if he
could not raise the money.
A short time later, he continued, Tarditi had contacted him in Brussels
and asked him to carry narcotics into the United States under a cloak
of diplomatic immunity. Twice he had made deliveries successfully. The
$26,000 found in his suitcase was his commission for the three trips.
Bourbonnais claimed he was only an errand boy for the syndicate. He
rambled on vaguely about a mysterious Madame Simone, the wife of a
doctor or dentist, whom he had met in Paris in the winter of 1960.
Simone had asked him to collect $250,000 from a debtor in New York and
to bring the money to her in Paris. He had made the delivery and she
had paid him a commission of 1 per cent. Then Simone had asked him to
meet a man in New York who would be standing on Fifth Avenue across
from St. Patrick’s Cathedral at 3 P.M. on October 2. This man would be
wearing a gray suit and brown hat. He would hand Bourbonnais a package
which he was to deliver to Tarditi, who would be in New York at this
time.
Bourbonnais said he had met the stranger, received the package, and had
arranged to have the package delivered to Tarditi, who passed it on to
Rosal. Even if the story were fiction, at least it was one explanation
of where the money came from to pay Rosal for the use of his diplomatic
immunity.
The heroin in Rosal’s luggage weighed 49.25 kilos. And four days later,
agents located another 51.89 kilos of heroin which Tarditi had cached
in a trunk on Long Island. It was the largest seizure of heroin ever
made in the United States, and Narcotics officials estimated it was
worth $20 million on the underworld market.
The Guatemalan ambassador to the United States announced that his
government had disavowed Rosal. His trip to the United States had
not been authorized, nor had it been sanctioned in any official
manner--therefore he was not entitled to the diplomatic immunity which
he had claimed.
Rosal was indicted along with Tarditi, Bourbonnais and Calamaris on
charges of violating the narcotics laws of the United States. The four
pleaded guilty. Rosal and Calamaris were sentenced to fifteen years
in prison. Bourbonnais and Tarditi were given nine years each. And in
passing sentence, the Federal judge said:
“... I think the death sentence would not be an inappropriate sentence.
Under the statute, I can imprison them for up to twenty years. If it
had not been for pleas of guilty, I think I would have done so....”
It was only then that the Customs Bureau closed its files on The Case
of the Crooked Diplomat.
13
A STRANGE LITTLE ROOM
On a hot July day in 1941, gray-haired Adrian Grasseley sat at a small
table in a room whose window overlooked Fifth Avenue, peering intently
through a microscope at a large diamond.
Crowds strolled the streets below. Traffic rumbled along the Avenue.
Pigeons sailed about the spires of St. Patrick’s Cathedral. Grasseley
saw and heard none of this. All of his attention was concentrated on
the diamond lying on the table before him--a fabulous stone the likes
of which few men had ever seen.
This was the Vargas diamond, discovered two years earlier in Brazil.
The stone weighed 726.6 carats. It was Grasseley’s job to divide it
into twenty-three smaller stones which would be worth $2 million if he
did his job well. The Vargas was one of the largest and most valuable
diamonds ever to pass through Customs.
For forty years, Adrian Grasseley had cut, sawed and cleaved diamonds
in Antwerp and in New York City. But this slender man with the thin,
tapering fingers had never had the responsibility of splitting a
Vargas. Few men ever had.
Diamond Merchant Harry Winston had purchased the stone for $700,000.
He had turned it over to Grasseley to divide, and the cutter’s first
important move would be to split the giant stone with a blow on the
blade of a knife. If the diamond split smoothly, then the rest of the
job would be relatively simple.
For weeks, hour after hour, Grasseley studied the Vargas, searching for
the “grain” of the diamond. He looked for a hidden flaw which might
cause the stone to burst into fragments, but he could find none.
At last Adrian Grasseley knew what had to be done. He would cut a small
V-shaped notch at the precise point at which he intended to split
the stone. Into this notch he would place a dull-edged knife. If his
calculations were correct, a blow on the knife would cleave the diamond
as truly as a piece of fine wood splits along its grain. If the blow
were too heavy, or if he had misread the diamond’s structure, then the
Vargas might shatter and a fortune would be lost.
On the night before the blow was to be struck, Grasseley did not feel
any undue nervousness. His hands were steady and he congratulated
himself on being relaxed. But he could not sleep. He turned and twisted
in his bed, and he listened to the grandfather clock in the hallway
toll the quarter hours.
“What is the matter with me?” he muttered irritably. “I am not nervous
and I have not been worrying about the Vargas.” It was almost dawn
before he dropped off to sleep.
The diamond cutter slept for only two hours. Then he hurried to the
small room at Rockefeller Center where the diamond waited. All morning
he worked to cut the small notch. He had lunch. And at 2 P.M. he was
ready.
Only Harry Winston and a diamond polisher were in the room with
Grasseley when he placed the diamond on the table. He carefully
inserted the edge of the knife into the notch and, holding his breath,
he rapped the knife with an iron bar. The only sound was the ring of
the bar on the knife.
The Vargas didn’t split. In that instant Adrian Grasseley felt only
numbness. His calculations had been wrong.
Winston grabbed the stone and examined it under a magnifying glass.
He saw at the point of the V-notch a small fracture in the stone. It
wasn’t deep. But it was straight and true along the grain as Grasseley
had planned.
Winston handed the stone back to Grasseley. “Strike it harder,” he
said. “It’s all right.” It was a decision which could cost him a
fortune but he had confidence in the gray-haired man beside him.
Winston had seen Grasseley involuntarily soften the blow when he struck
the knife with the iron bar and he could understand the fear that must
have gripped him.
Again Grasseley placed the knife in the V and struck it with the rod.
The fracture deepened. And when he struck the third blow, the Vargas
split cleanly without even the loss of a fragment of the stone.
Winston heaved a sigh of relief, and when he looked at Adrian Grasseley
he saw that the little diamond cutter was crying. The reaction to the
weeks of strain had been too much.
The story of the Vargas diamond is only one among thousands of stories
of suspense, excitement, glamor and intrigue in the world where
diamonds fire the imagination of men and women and form the basis for
a giant industry. And because the diamond trade is big business, it
becomes the concern of the Customs Bureau.
The Vargas entered the country through one of the most unusual
workshops in all the country, located in the nondescript, sprawling
Customs building on Varick Street in lower Manhattan. The door to this
room is never left unlocked. No one is permitted to enter the room
unless he carries a pass or has special permission.
The reason for the extraordinary security is that the room is one of
the most important clearing points for diamonds in all the world. It
is the workshop of the Customs experts whose job it is to appraise the
value--and determine the duty--on the diamonds, rubies, sapphires, and
other precious and semi-precious stones which are brought into the
United States.
Approximately $75 million worth of cut and polished diamonds enter the
United States each year, along with $75 million to $100 million worth
of rough diamonds and other precious stones. Each shipment of cut and
polished diamonds--with few exceptions--must pass through the obscure
little room presided over by Chief Examiner Leroy N. Pipino, a slender,
dark-haired, young-looking man who maintains a remarkably detached
view toward the treasures that are spread before him each week. In
the past ten years, Pipino has appraised diamonds worth more than $1
billion.
Soon after joining the Customs Service in the mid-Thirties, Pipino was
assigned as an under clerk to the diamond office. As he watched the
flow of gems arrive from abroad and as he listened to the discussions
of their good and bad points, he became fascinated with the trade in
precious stones.
Pipino began to read all he could about gems in New York City’s
libraries. He learned much from the Customs Bureau’s own experts and
each day’s work was an education in itself. At night he attended
Columbia University to take courses on gems and gemology, and often he
talked to some of the country’s leading experts, learning from them.
Pipino advanced to the post of assistant appraiser during the war
years, and then in 1949 he was appointed chief examiner. In the
handling of so impressive a fortune in jewels, one might expect to find
him in the elegant surroundings of a Tiffany showroom. But in Pipino’s
rather drab-looking workshop, the gems are spread irreverently on a
battered table for examination. Around the room are laboratory aids
commonly used by gemologists--the diamondscope, a binocular microscope
with a special attachment for controlling light source; a dichroscope
which reveals color variances in stones; a refractometer for measuring
light rays; equipment to test the hardness of stone; and the most-used
instrument of all, a ten-power microscope.
Ninety-five per cent of all the diamonds coming into the United States
pass through the port of New York and are brought to Pipino’s office
for examination. Most of them come from Europe, South Africa, Israel or
Brazil. They are weighed and their value is appraised. If there is no
discrepancy between the weights and the values listed on the importer’s
invoices, the gems are released to Customs brokers for delivery to the
persons or firms to which they were shipped.
In this small room also are made the examinations of the modern gold
and platinum jewelry and all the antique jewelry. The cut and polished
diamonds are subject to a 10 per cent duty. Rough diamonds arrive
duty-free. Diamonds which have been incorporated into industrial tools
or processed for industrial use are dutiable at 15 per cent of their
value. There is no duty required on antique jewelry.
Antwerp is the largest diamond-cutting center in the world, and has
been for many years. Most of the cutting of small diamonds is done by
the Antwerp craftsmen, although in recent years Israel has developed
into an important diamond-cutting center.
The birth of the Israeli diamond industry was part of the chain
reaction of the Nazi invasion of the Lowlands in World War II. Many of
the best diamond cutters in Europe were Jews. When the invasion came,
they fled from Belgium and from Holland. As Hitler’s persecution of the
Jews became more and more oppressive, reaching further and further,
they scattered across the world to places of asylum. Many of these
wanderers later went to the new state of Israel and with their skills
they founded an industry that has been growing steadily in importance.
Diamonds--like gold--are sensitive to economic and political
instability. There is a constant shifting of these treasures about the
world, seeking havens of safety or places of the greatest profits.
Leroy Pipino and his associates didn’t even have to read the newspaper
headlines back in 1938–1939 to know that trouble was brewing in Europe.
They could read the warnings in the increasing volume of diamonds
and other precious stones which were being imported into the United
States. The flight of jewelry from Europe was a measure of the fears of
millions of people.
Most of the jewels arriving in New York at that time were carried by
refugees fleeing before the threat of the Nazis. Families brought with
them their treasured and often priceless heirlooms. Many had converted
their property and life savings to the currency of diamonds.
As non-residents, the alien refugees were permitted by law to bring all
of their personal jewelry into the country without paying a customs
duty. But if they intended to sell any of the jewelry within a period
of three years from the date of their arrival, then the jewelry had to
be declared and duty paid on it.
There was, and still is, a provision in the law which allowed these
people to manipulate their jewelry and to take advantage of the lowest
customs rate in cases where they intended to sell the gems. They could
do this by removing the stones from their settings.
Gems imported in their settings automatically become subject to a 30
per cent duty, based on the total value of the gems and the settings.
But if the stones were separated from the mountings, then the importer
paid only a 10 per cent tax on the stones and a 30 per cent tax on
the mountings. Since most of the value of jewelry was in the stones,
the refugees were able to reduce the duty roughly 20 per cent by this
manipulation.
Americans travelling abroad today may take advantage of this law when
they bring home a fine piece of jewelry. They are permitted to separate
gems from setting and then have them appraised separately.
The flight of jewelry to the United States from Europe was great before
the war, but it was even greater in the years immediately following the
conflict. Pipino’s office handled a record-breaking 10,000 packages of
gems in 1947. And the rise in diamond shipments was a gauge of Europe’s
economic desperation.
In the postwar years, Europe’s economy was shattered. Factories were
in ruins. People were digging out of the debris of war to repair the
ravages of the long struggle. They needed money not only to rebuild,
but to survive.
Men and women took their gems from vaults, cupboards, and from secret
burial places and forwarded them to the United States to exchange them
for U.S. dollars. The demand for diamonds and other precious stones
was strong in the United States and prices were high. The flow of gems
became a flood.
The weakness of Britain’s pound sterling in the postwar years also had
a strong influence on the movement of diamonds. Countries with a large
accumulation of sterling were willing to give discounts of up to 10 per
cent on diamonds if the purchasers agreed to pay for them in dollars.
And in this juggling of currencies and discounts, diamonds were moving
about the world in strange patterns.
Diamond shipments would leave South Africa and go to Holland, for
example. There they would be re-addressed and shipped to the United
States so that payment could be made to Holland. Holland would accept
dollars in payment and transfer pounds sterling to South Africa. The
same thing was happening in Japan and other countries in the Far East
where the currencies were weak.
Black market operators also found ways to evade currency controls.
Some of them shipped their diamonds to Switzerland and then used that
country as their base of operations to take advantage of Switzerland’s
total secrecy in banking operations. In this manner they were able to
mask the origin of the diamonds.
Through the postwar years, the United States was the financial magnet
drawing jewels from all parts of the world. But as the economies of the
European countries improved with the support of American foreign aid
programs, the tide began to turn in the 1950s. The purchasing power
of the West Germans, British, French and Italians had improved to the
point where the flight of jewelry was from the United States to Europe.
The time had come when the baubles were more important to the buyers
than American dollars.
Despite the ebb and flow of the diamond trade, diamonds remain
one of the most tightly controlled commodities in the world. Each
diamond-producing country tries to police the production to maintain
price stability--since diamonds are an important means of earning
dollar exchange.
The Diamond Syndicate, based in London, each month allots the rough
diamond material to buyers in Belgium, Holland, Israel and the United
States. Each country’s share depends on the Syndicate’s appraisal
of what the world market will absorb without disturbing the price
structure. The list of dealers permitted to purchase the rough stones
remains relatively constant and there is rarely room for new members.
The tight monopoly held by the Syndicate has created a black market
supported by dealers who look to sources other than the Syndicate for
their merchandise. This market is called, in polite terms, the “open
market.” It also is the market of the underworld, operating illicitly
and in defiance of the Syndicate controls.
Liberia in recent years has become an important source of diamonds
for the “open market.” It is whispered in the diamond trade that all
of the diamonds which come from Liberia actually were stolen from
the neighboring diamond-producing country of Sierra Leone where the
production is controlled by the Syndicate. There are some who claim
these diamonds were mined on Liberian soil near the Sierra Leone border.
One enterprising European dealer years ago started a mail-order
business with individual diamond miners who would smuggle diamonds
from the mines and mail them to him at various post office boxes. From
a small beginning, these shipments reached the point where a $50,000
shipment was not uncommon.
This flow of bootleg diamonds has created a problem for Customs. The
illicit material cannot be officially acknowledged by the merchants
and no record can be made by the cutters in those countries where the
production is carefully policed. The result is that these diamonds find
their way into the hands of smugglers, who constantly are seeking ways
to slip them past Customs without payment of duty.
With the rise in popularity of the marquise and teardrop diamonds, the
demand for the emerald-cut diamond has waned. Cutters look for rough
material which can be shaped into the marquise, teardrop, or the round
diamond. The round stone has never lost its popularity and continued
year after year among the fashion leaders. The oval diamond fell from
popularity for a period of time but it, also, has staged a comeback.
Determining the value of a gem is often a controversial task for
Pipino and his aides, who must study such factors as size, the quality
of the cutting, the color of the stones, their cleanliness, and the
imperfections left by nature. A diamond may be “ice white” or it may
be any shade of yellow from “top silver cape” to “canary” or any one
of several hues of brown. The colors may vary with the location of the
window through which the light falls on the stone. The imperfections
may range from a speck smaller than a fleck of dust to sizable
fissures, crystals or carbon spots. It may be slightly off-color or the
color may lack a clear definition.
Basically, the value of a diamond is determined by what is known in
the trade as the Four Cs--color, cleanliness, cutting and caratage. As
far as Pipino is concerned, the most important of all of these is the
color, even though color often can be extremely deceptive in certain
diamonds. Stones which come from the Premier mine in South Africa have
a bluish cast in daylight, but when placed under an artificial light
they have a yellowish glow. However, the Customs experts usually can
look at a diamond and make an educated guess as to its origin--whether
it came from Brazil, South Africa or French Equatorial Africa. Very
seldom are these guesses wrong.
The standards used in judging the value of a diamond are the same as
those used in determining the value of other precious stones. The
finest of the rubies, sapphires, emeralds and many of the semi-precious
stones have a deep, rich, velvety color instantly recognizable by the
expert. In addition, the better stones have a glow which comes from
within the stone itself.
Most of the fine gems imported into the United States in recent years
have been those which came from famous jewel collections of the past. A
tiara which Napoleon I reputedly presented to Empress Marie Louise was
brought into the country as an artistic antiquity--free of duty. Then
the jeweler, quite legally, removed the gems from the tiara and placed
them in pieces of modern jewelry. Other fine stones have come from the
collections of Indian maharajas.
To qualify as an artistic antiquity--free of duty--a piece of jewelry
(or any other object) must have been produced prior to 1830. This
arbitrary date for determining antiquity is a sensitive point in the
import trade. As Pipino explained it to one puzzled inquirer: “Anything
that was produced before 1830 is permitted into the country free of
duty as an artistic antiquity--and not as an antique. We don’t presume
to tell a dealer or a curator what is to be considered antique and what
is not. But an antique is not necessarily an artistic antiquity. To
qualify for this legal description, it must have been produced prior to
1830--the date fixed by Congress for determining which cultural objects
shall be free of duty and which shall not.”
Many in the import-export trade angrily take exception to the law,
passed in 1930, which refuses to recognize any object under 100 years
old as being an artistic antiquity. But most will agree that the date
1830 marked the beginning of industry’s mechanization, which permitted
mass production of many items. Mechanization came to the jewelry trade
around 1850 in the Victorian era, and a great deal of mass-produced
jewelry was made in this period of prosperity in England. Customs does
not permit its importation as an artistic antiquity--and it cannot do
so unless Congress changes the date which controls the legal definition.
To the casual observer, Customs’ little diamond room on Varick Street
would appear to be far removed from anything but the dollars and cents
value of precious stones arriving from abroad. But to Leroy Pipino it
is a place where an adventure story unfolds every day for those who can
read the meaning behind the ebb and flow of jewels.
14
THE DIAMOND SMUGGLERS
Richard X, an American dealer in diamonds, sat at the desk in his hotel
room in Antwerp, Belgium, in June, 1953, scribbling figures on a sheet
of paper. Even allowing for an unexpected drop in prices on the diamond
market, his figures showed that this day’s work eventually should
bring him a net profit in the neighborhood of $100,000--a pleasing 50
per cent on his investment and no taxes on profits to be paid to the
Internal Revenue Service.
Long before this, Mr. X had decided it was foolish to bring $200,000
worth of cut diamonds into the United States, to declare the gems on
his customs declaration, to pay the government the required 10 per cent
duty, to pay the Federal luxury tax on retail sales, and then to pay
another tax on the profits from the sale of the diamonds.
He had learned there was a more profitable way to do business. True, it
had its risks--but no one ever made money without risks. The trick was
to buy insurance which guaranteed duty-free delivery of the diamonds
in New York City. The risks were minimized. The system was about as
foolproof as any system could be because you dealt with a reliable
syndicate. By buying and selling secretly the profits were enormous.
Three years earlier Mr. X had arrived in Antwerp on his first buying
trip, carrying a letter of credit for $200,000 from his bank in New
York, and had fully expected to carry his diamond purchases home with
him on his return.
Soon after his arrival, he had called a business acquaintance in the
Antwerp diamond trade and asked him to dinner at his hotel. He had
met the Belgian in New York City and the Belgian had insisted that
they should get together on his first trip to Antwerp. The friend had
arrived at the hotel and they had enjoyed an excellent dinner that
evening. Over a brandy, they had discussed business. Mr. X had confided
that the next day he intended to purchase $200,000 worth of diamonds in
the market. And then he had complained of the customs duties and the
taxes that he would have to pay on the profits.
After several more brandies, his friend had said to him: “Listen to
me. It is silly for you to pay such taxes when it is unnecessary.
Let me tell you how you can avoid the taxes. Tomorrow, go to any of
the regular diamond houses, any that you prefer, and make discreet
purchases. After you have selected the stones, go to the coffeehouse on
the corner of (and he named the street). Order a cup of coffee and then
tell the waiter that you wish to speak to the manager. When the manager
comes to your table, ask him to have a cup of coffee with you. Tell
him that you have purchased some merchandise and you wish to contact
someone who will deliver the merchandise to you in New York City. The
manager, quite naturally, will say he knows nothing of such affairs,
but in a short time you will be approached by a stranger. This man will
say he understands you wish the delivery of certain merchandise to the
United States. He will ask you, ‘How do you wish to pay for this?’ And
you say, ‘By cash.’”
Mr. X had interrupted to say, “Can you give me the name of this man who
will approach me?”
His friend had shaken his head. “No. You will never know his name--and
you will never know the names of anyone with whom you deal. You must
trust these men because they are reliable. They have to be reliable to
stay in business.”
“Now,” he had continued, “the man who approaches you will take you to
an appraiser’s office somewhere in the city. You carry your diamonds
with you to be appraised. When the value of the stones is confirmed,
you will be asked for a cash payment of six or seven per cent of the
stones’ value as insurance which guarantees their safe delivery to
you in New York. The insurance rate varies from six to ten per cent
depending on circumstances. I think it now is about six or seven. After
you pay the fee, you leave the diamonds with the gentlemen. They will
tell you when to expect delivery.”
Mr. X remembered his amazement. He had exclaimed, “Do they give me a
receipt for the diamonds? Do I just walk out the door with nothing--not
even knowing the names of the men I’m dealing with?”
His friend had said, “You get nothing. Believe me, this is the way the
syndicates operate. It is done every week. You understand they cannot
have a record of these transactions.”
Then his friend had explained the syndicates. In Antwerp there
were many wealthy businessmen who could not break into the tightly
controlled, legitimate diamond business, which was in the hands of five
old-line diamond clubs. Closed out of this market, they had turned
to the only diamond business open to them--the insuring of diamonds
smuggled into the United States and other countries. They had formed
loose syndicates and had organized rings of men and women to act as
carriers.
Members of these shadowy syndicates frequented certain coffeehouses in
and near the diamond market. When advised that someone had prepared a
shipment of diamonds, and wished insurance, the group would meet to
prorate the risk. One man would take $20,000, another $30,000, and so
on, until the full value of the diamonds was covered. They would agree
to pay the appraised value of the stones if the stones were lost,
stolen, or seized by Customs officers.
Mr. X had lain awake for hours after the conversation with his friend,
trying to decide whether he should make such a gamble. He had decided
finally that the risk was worth it. The next day he had gone to the
diamond market, purchased the stones, and then gone to the coffeehouse
as his friend had suggested. He had talked to the manager. The stranger
had approached him. He had been taken to an office in a part of the
city which he could never find again. His gems had been appraised. He
had paid the insurance fee--seven per cent of the appraised value--and
had walked out of the office with nothing to show for any of the
transaction.
Before he left the office one of the men had asked him, “When are you
leaving for the United States?” He had said that he intended to leave
the next day, which was Saturday. Then the man had said, “We will
deliver the stones to you on Tuesday night next. You will receive a
phone call at your home and be given further instructions.”
Mr. X had returned to New York City and had waited at his home for the
expected call on Tuesday night. The call came, finally, at 10 P.M. A
voice had said, “Mr. X? Were you expecting delivery of a package?” Mr.
X had eagerly assured the caller that he was expecting a delivery. The
voice had said, “Can you be on the corner of 57th Street and Third
Avenue at 11 P.M.?” Mr. X had told the caller that he would be there.
Then the voice had said, “So that I will not make any mistakes, please
stand on the southwest corner of the street and have a copy of the
_Chicago Tribune_ under your left arm.”
Mr. X had taken a cab to the corner of 57th Street and Third Avenue. He
had purchased a copy of the _Chicago Tribune_ at a newsstand selling
out-of-town papers, and he folded it under his left arm. As he stood
on the corner, a man walked up and said, “Mr. X?” And he had replied,
“Yes, I am Mr. X.” The man had said, “Here is your package.” Then he
had walked away.
Mr. X had taken the diamonds back to his apartment. He had ripped the
paper from the box and had opened it to find every gem that he had
purchased in Antwerp and turned over to the syndicate representatives.
It was as simple as that. There was not a scrap of paper on record
anywhere showing that he was liable for taxes.
The second time he had made the trip to Antwerp he had followed the
same procedure, although he had dealt with different men. The second
delivery had been made safely also. And now he was ready for the
syndicate to make its third delivery. All he had to do was wait....
After Mr. X’s return from his third trip to Antwerp--on July 12,
1953--a Belgian Sabena Airlines plane glided to a landing at Idlewild
International Airport in New York City with Capt. Robert Edmund Deppe
at the controls.
The passengers debarked. Members of the plane’s crew came down the
gangway with Deppe bringing up the rear. Deppe carried in his hand a
shoe box tied with a string. He saw one of the airline clerks near the
ship and he tossed the box to him.
“Hold this for me, Joe,” he said. “It’s a little gift I brought over
for a friend. He’ll be calling for it.”
The clerk said, “Sure, Captain. I’ll put it in the crews’ baggage
room.” No one paid any attention to the incident nor did anyone later
give a second look at the shoe box when the clerk tossed it onto a
shelf in the baggage room.
There was considerable excitement in the terminal when the crew checked
in. “What’s going on?” Captain Deppe asked. An airline employee
replied, “The Customs people are searching everyone again. You might as
well get in line yourself.”
Deppe got in line. He watched the agents and inspectors go through his
luggage and then one of them ran his hands lightly over his clothing.
“What is it all about this time?” he asked.
The inspector grinned. “Just another one of those routine checks,
Captain. I’ll admit it’s getting monotonous.”
But it was more than merely another routine check. Several weeks
earlier Tom Duncan, chief of the Customs Service’s Racket Squad, had
received a tip from an informer in Antwerp that diamonds were being
smuggled into the United States by crew members of a trans-Atlantic
airline. The informer didn’t know which airline was involved. All he
knew was that the carriers were airline employees. The chances were,
however, that the carriers were employees of the Belgian airline,
Sabena.
Duncan called in several agents and told them the story. “Let’s start
shaking down the crew members on those Sabena planes,” he said. “We
can’t search them on every flight. But we can make it so rough maybe
somebody will crack.”
The searches had been underway for more than a month when Duncan
received a telephone call from a Sabena representative.
“What can I do for you?” Duncan asked.
“We’re pretty upset about these searches,” the caller said. “One of our
crew members is in my office now. He wants to talk to you. He believes
he has some information that may be helpful. Will you see him?”
“Of course I’ll see him,” Duncan said.
“He’ll be at the Henry Hudson Hotel in one hour,” the Sabena
representative said. “Room 301. He’s one of our radio operators.”
Duncan went to the hotel with Agent Harold Smith, another veteran
investigator with whom he had worked on scores of cases. The Sabena
radio operator was waiting for them in his room.
“You have some information for us?” Duncan asked.
“I think so,” the operator said. “I want you to understand why I’m
giving you this information. I’m damned tired of being under suspicion
every time I come into New York. I’m fed up with being searched and
questioned and delayed. I want to see this thing cleared up.”
“We don’t like it any more than you do,” Duncan said. “We’ll let up on
the pressure as soon as we can.”
The operator said that earlier in the year he had been approached in
Belgium by a pilot with whom he had flown as a member of the Belgian
air force. This man had told him he could earn a large sum of money if
he would merely wear a pair of specially made shoes into the United
States and then turn the shoes over to a man who would call for them.
It was obvious to the operator that he was being asked to smuggle
diamonds into the United States.
“I turned them down,” he said to Duncan. “I didn’t want to get mixed up
in anything like that.”
“Do you know anyone who is carrying diamonds?” Duncan asked.
“No,” the operator said, “I don’t. But I presume the same offer was
made to someone else. Probably another Sabena crew member with whom
this man had flown in the past.” He gave them the pilot’s name.
The conversation tended to support Duncan’s suspicion that the
smuggling was being done by a person connected with Sabena. He sent
a cable to the Treasury representative in Antwerp, Bill Beers, a
gregarious, bilingual agent with a remarkable talent for cultivating
sources of information in Europe. He asked Beers to furnish a list of
the names of Sabena employees who once had been fliers in the Belgian
air force. He got the list, but at the time it wasn’t much help, even
though one of the names was Robert Edmund Deppe.
When the search of Deppe’s luggage was completed at the airport, an
agent said, “That’s all. You may go now.”
Deppe collected his luggage and walked outside to hail a cab. He was
driven to the Henry Hudson Hotel on 57th Street between Eighth and
Ninth Avenues, where Sabena Airlines personnel were quartered on their
stopovers in New York.
When he reached his room, he tried to make a phone call, but no one
answered. For the next few hours, he tried again and again to get an
answer from the number. At last he took a shower, changed into light
sports clothes and left the hotel to get a late dinner.
The telephone which Deppe heard ringing was in the apartment of Julius
Falkenstein at 58 West 72nd St. The reason Falkenstein didn’t answer at
the time was that he and his wife were being detained and searched by
Customs agents at the Canadian border.
As far as Falkenstein’s friends knew, he was merely a hard-working
employee of a New York furrier whose place of business was in the
Manhattan garment district. He was a quiet chap who minded his own
business. Customs agents had never heard his name until Friday, July
10--two days before Deppe’s plane landed at Idlewild--when Duncan
received an urgent trans-Atlantic call from Beers in Antwerp.
“Tom,” Beers said, “I’ve got a good line on a smuggling ring. My
informant here tells me that their New York contact is Julius
Falkenstein. He has a brother in the business in Antwerp.”
“Maybe this is what we’ve been looking for,” Duncan said. “We’ll get
right on it.”
Two agents called at the furrier’s shop where Falkenstein worked but
were told that he had left for the weekend. This news was relayed to
Agents Harold F. Smith and John Moseley, who had been sent by Duncan
to watch the Falkenstein apartment building. The agents had obtained a
description of their man from an apartment employee.
At 6 P.M. on that muggy afternoon, Falkenstein and his wife Ann came
out of the building carrying suitcases. They walked around the corner
and climbed into a car. Then they headed across town to the elevated
West Side Highway and turned north. The agents followed them for
several miles but finally lost them in the heavy weekend traffic. When
the agents reported by radio to Duncan that they had lost contact,
Duncan said, “Let ’em go. They are probably headed for the Catskills.
We’ll pick them up again Monday.”
That night Duncan had another call from Antwerp. He was told that an
informant had reported two shipments of diamonds were enroute to New
York, one by way of Canada.
Duncan played a hunch. He called Agent Abe Eisenberg, the Customs’
representative in Montreal. Eisenberg was about sixty years old, a
chunky man with graying hair who had been matching wits with smugglers
for almost forty years. He was one of the best undercover men in the
Service; he had an actor’s ability to look like a dignified banker or
a bum. A man of meticulous honesty, he had one obsession: he hated
crooked Jews. Being Jewish himself, he regarded every dishonest Jew as
a disgrace to his race.
When Eisenberg answered the call, Duncan told him of the tip from
Antwerp and the suspicion that Falkenstein was involved. He explained
that the Falkensteins had left Manhattan that afternoon and had headed
north.
“Keep a check on the hotels, Abe,” Duncan said. “They may be headed
your way to pick up the diamonds.”
“Remember, I’m up here all alone,” Eisenberg said. “I can’t do my job
and watch them too.”
Duncan laughed. “Don’t worry. You’ll get reinforcements. I’ll send
Harold Smith up on the next plane. Julius Zamosky and I will come up by
car. We may need the car to tail them when they start back this way.”
Duncan called Smith and told him to get to Montreal by plane as quickly
as possible to give Eisenberg a helping hand. Then he called Zamosky,
another of the veterans on the Racket Squad, and at dawn they were
headed out of Manhattan for the Canadian border.
All day Saturday and Saturday night the agents, working with Canadian
police, kept Falkenstein and his wife under surveillance. Falkenstein
made several telephone calls to friends and visited them in their
offices. Then at 9 A.M. on Sunday, he and his wife checked out of the
hotel. They stowed their luggage in the car trunk and headed south.
Duncan, Smith and Zamosky followed the Falkenstein car out of Montreal.
When it was evident the couple intended to cross the border at
Champlain, New York, Duncan radioed a request to the Champlain Customs
station asking that the Falkensteins be detained.
Julius and Ann Falkenstein were seated in an inspector’s office when
Duncan and his aides walked in and closed the door.
Falkenstein came out of his chair with a display of outraged innocence.
“What is the meaning of this?” he shouted. “Why are we being held here?”
Duncan said, “We happen to think you went to Montreal to pick up a
shipment of diamonds.”
“We have no diamonds,” Falkenstein said. “Go ahead and search us.”
“That’s what we intend to do, Mr. Falkenstein,” Duncan said.
A search of their persons revealed nothing. Duncan ordered their
automobile and luggage searched. Nothing was found.
Duncan felt certain that Falkenstein had gone to Montreal to pick up
the diamonds. There must have been a hitch which prevented delivery.
He questioned the couple at length. And then reluctantly, late in the
afternoon, he told them they could go.
It was during this questioning that Captain Deppe was sitting in his
room at the Henry Hudson Hotel listening to the telephone ring in the
apartment of the Falkensteins.
* * * * *
When Duncan returned to his office the next morning, he found a cable
from Beers congratulating him on the “seizure” of the diamonds.
A telephone call to Antwerp cleared up the mystery of the cable:
rumors were afloat in the diamond market underworld that a shipment
of diamonds to the United States had not been acknowledged--and the
diamonds were presumed to have been seized by Customs agents. There
were reports, too, that Falkenstein was “in trouble.”
The following day, Beers advised New York that Falkenstein was supposed
to have received one shipment of diamonds in Montreal on July 11 and
another shipment in New York on July 12. The shipment to Montreal had
been delayed--but the shipment had arrived in New York and presumably
was “safe.”
Duncan could not know that the New York shipment at that moment was
lying in a shoe box on a shelf at the Sabena Airlines baggage room. On
the day of Captain Deppe’s arrival, the room had been turned upside
down in a search for contraband, with no one noticing the box. Duncan
later said ruefully, “The box was in plain view, just sitting there. I
suppose that’s why it was never opened. It was too obvious.”
A few days later another Sabena pilot would casually enter the baggage
room, pick up the box, and deliver it to Mr. X--completing the job
which Deppe had started.
At this point Duncan decided to drop the searches at the airport and to
take another tack. A good starting point seemed to be the Henry Hudson
Hotel. Agents Smith and Moseley were ordered to obtain from the hotel
all records of outgoing telephone calls made by Sabena personnel over a
period of several months. Hotels normally keep such records for as long
as four or five years--or until there is no further need for them in
verifying accounts.
The checking of the telephone calls was slow, tedious work. At last one
of the agents came up with the record of two interesting calls--both
made to Trafalgar 3-8682, the telephone of Julius Falkenstein. The
calls had been placed from the room occupied at the time by Capt.
Robert Edmund Deppe. “I think we had better keep a check on this
gentleman,” Duncan said.
From that day forward, each time Captain Deppe arrived in New York he
was under surveillance by Customs agents. They checked him in and out
of the hotel, in and out of restaurants, and in and out of movies, cabs
and subways. Wherever he went, he had an agent as a shadow.
It was a boring surveillance. Captain Deppe was a methodical and
unimaginative man who stayed pretty much to himself. He made few
outside calls, and the incoming calls usually were those from the
airline’s flight operations office relaying routine instructions.
At last Deppe strayed from his normal routine. After bringing his plane
into Idlewild International Airport on September 27 he left the airport
and headed for the Henry Hudson Hotel, followed as usual by the Customs
agents. When he arrived at the hotel he did not go directly to his room
as he customarily did. He slipped into a lobby telephone booth and made
a brief call. Then he went to his room to change into civilian dress.
A short time later, Deppe left the hotel. He walked to the subway and
took a train to Columbus Circle. He changed trains and rode into the
Bronx, where he left the subway and strolled to an apartment building
on Bennett Avenue. He was reaching for the pushbutton at the door of
Apartment 1A when the agents closed in on him.
“We are U.S. Treasury agents,” Smith said. “We want to talk to you.” He
asked Deppe why he had come to this particular apartment.
Deppe made no pretense of innocence or outrage. He said calmly, “I came
here to deliver a package.” He reached into his pockets and pulled out
two envelopes. Inside each of them was a package containing dozens of
diamonds whose value was later appraised at $233,230.
“Go ahead and ring the bell,” Smith said. “Give this package to the
person who opens the door and don’t try any tricks.”
The agents stepped to one side and Deppe rang the doorbell. The door
was opened by Mrs. Julia Michelson, a dark-haired, plump woman whose
husband operated two neighborhood grocery stores.
“Here is the package I was to deliver to you,” Deppe said.
Mrs. Michelson accepted the package with a nod of thanks and started to
close the door. At this moment the agents moved quickly to block the
closing of the door.
“We’re Treasury agents, ma’am,” Smith said. “We would like to talk to
you about this package.”
While Deppe was being taken to headquarters for questioning, Mrs.
Michelson explained that her brother-in-law in Paris had written to her
asking that she accept a package from a friend who would deliver it to
her apartment. She was to hold it until someone else called for it.
“What is this all about?” she asked. “What is in the package?”
“Diamonds,” Smith said. “Smuggled diamonds. I’m afraid you are in
trouble.”
Mrs. Michelson was permitted to call her husband, and when he arrived,
the agents explained the situation. The couple readily agreed to
cooperate in helping trap the receiver who would call for the gems.
For two days, Agents Abe Eisenberg and Harold Smith remained at the
Michelson apartment, waiting for the telephone call from the receiver.
But no call came and no one knocked at the door asking for the package.
Late in the third day the telephone rang and Mrs. Michelson answered.
The caller asked if she were holding a package for him and she replied
that she was. “I’ll be around for it tomorrow morning,” he said.
At 10 A.M. the Michelson doorbell rang. Mrs. Michelson went to the door
and admitted a short, plump, well-manicured man dressed in conservative
clothes. As he entered the living room he must have sensed the
nervousness of Mrs. Michelson because he suddenly turned and started
toward the door. But Eisenberg and Smith stepped from a bedroom doorway
and halted him. He was Samuel Liberman, a Fifth Avenue dealer in
diamonds.
Julius Falkenstein was arrested at his place of business and taken
to headquarters on Varick Street to be questioned. He confessed his
smuggling role. He admitted he had gone to Canada in July to receive a
shipment of diamonds. Something had gone wrong and the diamonds were
never delivered to him. He had been hurrying back to New York to meet
Captain Deppe when he was halted at the border. It was this delay which
had prevented him from meeting Deppe and reporting to Antwerp the safe
arrival of the diamonds. After the experience at the border, he had
been afraid to try to get in touch with Deppe.
Deppe also confessed. He told agents he had carried diamonds into the
United States on six occasions. He told them of the diamonds hidden
in the shoe box which he had left in the Sabena baggage room. He was
supposed to have delivered it to Falkenstein as he had the others--but
when he found the Customs agents searching crew members he made no
effort to retrieve the box. Later, he said, he had asked another Sabena
pilot to pick up the box and make the delivery to Mr. X.
Deppe was deported for his role in the smuggling operation and turned
over to Belgian authorities who were investigating the smuggling ring.
Julius Falkenstein and Samuel Liberman were fined $2,500 each and
sentenced to one year in prison. The sentences were suspended because
of their cooperation with Customs agents.
Before the investigation ended, others involved in the United States
and Belgium included a chauffeur with the French Consulate in New York,
a French Diplomatic courier, an employee in the French Foreign Office,
and an officer in the Belgian air force.
As for Mr. X, Customs agents know that he was successful in smuggling
three shipments of diamonds into the United States even though they
have no proof other than the word of informers. Mr. X is on their list,
and one day, they are certain, he will make a false move that will land
him in prison.
* * * * *
Diamond smuggling is one of the most lucrative of the illicit
operations because diamonds are so easy to dispose of and so easy to
conceal. Diamonds are found hidden in hollowed-out heels of shoes, in
the running boards of automobiles, in rubber contraceptives inserted
into body cavities, in false bottoms of suitcases, in fountain pens,
in hollowed-out books, in women’s corsets and brassieres, and in toy
animals. They come by plane and they come by ship. Communications
between the contact man in the United States and the syndicate in
Europe is so swift that often the syndicate knows within minutes what
has happened to a shipment.
Such was the case when the Racket Squad began a surveillance of
Reginald John Morfett of Rainham, England, who was the purser and chief
steward of the liner _Assyria_. Morfett was fifty-eight years old and
looked more like a Bond Street merchant than an inveterate smuggler. He
was a slender man with thin, black, wavy hair brushed back from a high
forehead. He wore his clothes well.
Agents were watching Morfett when he left the _Assyria_ early in
the evening of October 16, 1955, and stepped onto the North River
pier at 95th Street. An informer in London had reported that Morfett
was carrying eighteen pieces of platinum and gold jewelry, set with
diamonds, rubies, sapphires and jade, in addition to 34.41 carats of
cut and polished diamonds. The jewelry had a total value of $48,135.
Delivery was to be made to two brothers in a hotel room in New York
City.
Morfett rode buses from 95th Street to Seventh Avenue and 50th Street,
where he left the bus and walked to the Taft Hotel. He went into a drug
store to a public telephone booth and made a telephone call.
A short time later, Morfett was joined in the lobby of the Taft by an
attractive, black-haired woman who greeted him warmly. He took her into
a bar where they had a drink, and then they left the Taft and began
strolling up Seventh Avenue.
Agent John Rainey, a ten-year veteran with Customs, was in charge of
the surveillance. It had become apparent to him that Morfett did not
intend to make delivery of the diamonds on this night. He would not be
walking around the streets carrying gems worth more than $48,000. He
reasoned that the jewelry was still aboard the _Assyria_.
“Let’s grab him,” he said, and he signalled to other agents nearby.
Morfett’s frightened companion was released when agents were satisfied
that she was only his date for the night. Morfett was taken back to
the _Assyria_, where the agents began a search of his quarters and the
other places aboard the vessel to which he had easy access.
Throughout the night the agents searched without finding the gems. The
next day a fresh squad took over the search, which was continued in
relays until a short time before the _Assyria_ sailed for Baltimore in
the early morning hours of October 18.
The _Assyria_ was hardly three hours out when the New York Customs
office received a trans-Atlantic call from London. The Customs
representative in London said his undercover source had advised him
that the search of the _Assyria_ had failed--and that the gems were
still aboard the vessel.
The _Assyria_ returned to New York on October 27 and docked at Pier 90
on the North River. Racket Squad Chief Tom Duncan led a squad of agents
aboard to continue the search--they knew this was their last chance
because the ship was due to sail at 7 o’clock that evening.
The search was continued until late in the afternoon. Duncan finally
said wearily, “It’s no use. We might as well knock it off.” He
asked one of the agents to call Tom Rainey and tell him to drop the
surveillance of the brothers to whom Morfett was supposed to deliver
the jewels.
“Tell Rainey we’ll wait for him here,” Duncan said. “Then we’ll all go
to dinner together.”
It was 6:30 P.M. when Rainey walked into Morfett’s quarters. Morfett
sat in a chair looking bored with the whole proceedings. Duncan said,
“The ship sails in thirty minutes. Let’s go and get something to eat.”
Rainey said, “Mind if I take just one more look around?”
“No,” Duncan said. “Go ahead, if it will make you feel better.”
Rainey walked into Morfett’s office and stood studying the room. He and
the others had gone over the place thoroughly. But somehow he had the
feeling that this was the room that held the secret of the jewels--if
there were a secret.
Almost without thinking, he began to measure with his hands a small
safe that sat in a bulkhead cabinet. Then he realized there was a space
of about two inches between the top of the safe and the shelf of the
cabinet, concealed by a strip of molding.
He pried loose the molding and discovered a package. When he opened it,
he saw the sparkle of diamonds.
Rainey walked to the door and as Duncan looked up he tossed the package
to him. “Here are your diamonds,” he said.
Within the next few minutes, the agents found other gems tucked into
envelopes in the hiding place. And then they confronted Morfett. He
shrugged. “That’s it,” he said. “That’s what you have been looking
for.” He lit a cigarette as calmly as though the agents had called on
him to have tea.
As John Reginald Morfett was led from the _Assyria_, Tom Duncan looked
at his watch. It was 6:56 P.M. Four minutes later the ship began to
ease away from the pier.
Morfett was sentenced to three years in prison for his role in the
smuggling effort.
Within a period of three days in 1951--on January 21, 22 and
23--Customs agents and inspectors seized smuggled diamonds worth more
than $1 million. A traveller from Antwerp named Elijah Whiteman was
discovered carrying $300,000 worth of gems in the false bottom of
a suitcase. Lesser seizures totalled $200,000. And then more than
$500,000 worth of diamonds were discovered in a strange scene enacted
at Idlewild airport.
Over the years, many Customs inspectors develop a sixth sense for
spotting travellers who are trying to conceal valuables they do not
want to declare. Perhaps it is the way a man or woman walks, or the
nervous manner in which a cigarette is lit. It may be slight hesitancy
in answering a particular question--or nothing more than a general
impression which the inspector himself cannot explain.
Inspector Joseph Koehler did not know at first what it was that
drew his attention to Etta Hoffman. Koehler was a dark-haired,
studious-looking, middle-aged officer who had joined the Service as a
young man. He had watched travellers by the tens of thousands pass his
inspection post. There was no reason why he should have paid special
attention to Etta Hoffman when she approached his station along with
other passengers arriving from Brussels.
Etta was a tall, neatly dressed, round-faced young woman who waited
placidly in line for her baggage to be examined. A perky hat sat on her
dark hair and there were touches of fur on her dark cloth coat.
Her baggage declaration showed she was alone. Her baggage consisted of
a handbag and two suitcases of inexpensive make. The woman answered all
of Koehler’s questions calmly and without nervousness. She gave no sign
of apprehension when her bags were opened for examination. Yet Koehler
simply could not shake a feeling that there was something wrong.
Something about this woman triggered a small alarm in his subconscious.
Suddenly, Koehler realized what was bothering him. Etta Hoffman was too
tall. Many tall women came through his inspection lane day after day.
But Etta Hoffman’s tallness was unnatural. Her tallness was emphasized
by the extraordinarily thick-soled shoes she was wearing. It simply
wasn’t reasonable for a woman trying to look attractive to deliberately
make herself unattractive.
Koehler quietly signalled a woman inspector, Mathilda Clark. Miss
Hoffman was taken to a room set aside for questioning passengers. The
soles of her shoes were hollow. When the inspectress pried them open,
a handful of diamonds spilled out on the floor. Other gems were found
in a false bottom of a suitcase. The diamonds weighed 3,377 carats, and
were one of the largest diamond hauls ever made by Customs.
Etta Hoffman broke down in tears and poured out her story. She had
dreamed for years (so she said) of coming to the United States and
obtaining citizenship. She had come to Belgium as a refugee from
Czechoslovakia and had succeeded at last in getting her name on the
immigration quota.
After months of waiting and suspense, Etta received the necessary
papers from the American Consulate. Then a strange man called at her
apartment and offered to pay her fare to the United States and give
her $100 in cash if she would smuggle the diamonds past Customs. He
provided her with the trick shoes, the suitcase with the false bottom,
and a plane ticket. Before she boarded the plane, he had given her a
sealed envelope which he said contained the $100 which he had promised
her.
Etta Hoffman handed the envelope, still sealed, to a Customs inspector.
He tore it open and found that it contained only $80. She had been
shortchanged by $20, and, to pile injury on insult, she was sentenced
to eighteen months in prison.
Abraham Winnik was another of the more successful diamond and gold
smugglers. This thin-faced Belgian was an expert procurer of carriers
for an Antwerp syndicate. He arranged for diamonds to be brought
into the United States, and after they were sold he engineered the
smuggling of gold to Europe. The gold was carried in the false bottoms
of suitcases fashioned by an expert leather worker in Brooklyn--who
received $30 for each suitcase he altered.
One of those enlisted into Winnik’s ring of carriers was Mrs. Adele
Meppen, a stocky Brooklyn housewife who gave Customs agents this story:
“I first met Abraham Winnik sometime in 1949 when he was visiting in
Brooklyn. My husband and I became friendly with him, and whenever he
visited this country he would come to see us at our home.
“Late in 1949 Marion Strokowski, a friend of Winnik’s, visited us. He
asked me how I would like to make a trip to Europe. I told him I didn’t
have the money. ‘Don’t worry about expenses,’ he said. ‘If you will
do me a favor, I’ll pay your expenses. All you have to do is take two
suitcases to a friend of mine.’
“I agreed and Mr. Strokowski bought my ticket. He brought two suitcases
to my home which I packed with clothes. I left New York from Idlewild
airport by KLM Airlines, sometime in May, 1950. When the plane reached
Amsterdam, Mr. Winnik met me at the airport and drove me in his
automobile to his home in Brussels.
“I stayed there for about three weeks. I met Mr. Winnik’s wife, Anna,
and Mr. Strokowski’s wife, Janka. I brought back two suitcases they
gave me, and a couple of days after I got home Mr. Strokowski called
for them and took them away. He gave me my plane fare both ways and
expenses....”
Five months after her return from this trip, Mrs. Meppen received a
call from Winnik asking her to meet him in Montreal. He wanted her to
“bring something into the country” for him. He said he would pay her
expenses--and a little extra.
Mrs. Meppen flew to Montreal and went to the Laurentian Hotel, where
she found Winnik and Janka Strokowski. They told her they wanted her
to carry diamonds into the United States--and there would be no risk
whatever.
Mrs. Meppen protested she didn’t want to get involved and, besides, she
was scared. They convinced her there was no danger. Janka Strokowski
helped her insert two rubber-covered packages into her anus.
This smuggling effort perhaps would have gone as smoothly as the others
engineered by Winnik except that somewhere along the line an informer
had tipped Canadian Customs officers that Winnik had entered Canada
carrying a small fortune in diamonds.
Winnik had been searched when he arrived at the Gander airport in
Newfoundland and Customs officers there had found nothing. But the
Canadians continued to keep Winnik under surveillance and they notified
the U.S. Customs of the information they had received. The American
agents joined in the surveillance in Montreal.
U.S. Agents were watching when Winnik and Mrs. Strokowski placed Mrs.
Meppen aboard a train enroute to New York--and two agents were on the
train when it pulled from the station. At Rouses Point, on the Canadian
border, Mrs. Meppen was taken from the train and searched--but the
search revealed nothing.
That night Mrs. Meppen obtained a room at the Holland Hotel. The
following morning when she came from her room she saw several Customs
agents lounging in the lobby. They, too, were waiting for the next
train to New York--no longer interested in Mrs. Meppen because the
previous day’s search had been futile.
But Mrs. Meppen was frightened. She hurried to the public toilet near
her room....
A few minutes after Mrs. Meppen boarded the train for New York the
manager of the Holland Hotel called in a plumber to unstop a toilet in
the ladies’ room. He found in the trap a rubber-covered packet stuffed
with diamonds. Three days later the same toilet became stopped again.
Again the plumber found a package of diamonds blocking the drain, a
coincidence so unusual that the plumber became a local celebrity.
The hotel manager turned the diamonds over to Customs agents, and Mrs.
Meppen was soon taken into custody for questioning. She confessed her
role in the abortive smuggling effort, and a few days later Winnik was
arrested as he was trying to board a plane for Amsterdam. He broke down
and confessed, too.
Mrs. Meppen pleaded guilty and as a cooperative witness against Winnik
was placed on probation for five years. Winnik was sent to prison
for two years. Marion and Janka Strokowski were indicted, but since
both were outside the jurisdiction of the United States courts, the
indictments were dismissed.
The diamonds which Mrs. Meppen tried to flush down the toilet were
worth $121,000.
15
A FOOL’S DREAM
From long experience U.S. Customs agents and inspectors know the
methods of professional smugglers. But the non-professional smuggler
is a problem, too. One of the more bizarre cases of jewelry smuggling
in Customs history, involving the fabulous crown jewels of Hesse,
was engineered by non-professionals. They were two lovers and their
accomplice, who looked at the sparkling gems and were overwhelmed by
avarice.
This plot began to unfold one cold November day in 1945 in the gray
old Kronberg Castle at Wiesbaden, Germany, near Frankfurt. The castle
was the home of Prince Wolfgang and the Countess Margarethe of Hesse,
a daughter of Emperor Frederic of Germany and granddaughter of Queen
Victoria of Britain. Now it was requisitioned as a recreation and rest
center for the men and women of the U.S. Armed Forces.
The hostess in this royal setting was trim, attractive WAC Captain
Kathleen Nash of Hudson, Wisconsin, a divorcee who told friends that
she had gone into the WACs to “get away from it all.”
One evening there was a knock at Captain Nash’s door and Mess Sgt. Roy
Carlton stepped into her room, his eyes wide with excitement.
“Captain,” the sergeant said, “there’s something I think you ought to
know about. You know the old German janitor? Well, he told me a few
minutes ago that when the war began, the old lady of the castle came to
his house late one night and told him to come with her and to tell no
one where he had gone. She took him into the basement of the castle,
that little room that is used for coal storage, and told him to dig a
hole in the floor. He broke through the concrete and dug a big hole
in the floor and then she sent him away. But when he came back to the
room several days later he found the hole had been covered with new
concrete. He figures that something was buried there by the old lady.”
Captain Nash told the sergeant to bring the janitor and they would go
to the basement room and investigate. They made their way down the
winding stairs into the subterranean rooms of the castle to the coal
room. The old janitor pointed out the spot where he had dug the hole.
Captain Nash ordered him to dig into the floor and see if anything had
been hidden there.
The German broke the concrete with a sledge and then began digging. He
uncovered a wooden box. The box was lifted out of the hole and when the
top was ripped off they saw a lead box inside. The lead box contained
several packages, carefully wrapped in heavy paper, weighing about 10
pounds each.
“You had better take them to my quarters,” Captain Nash told the
sergeant.
When Captain Nash opened the packages in the privacy of her quarters
her eyes must have glittered with excitement. She was gazing on one of
the fabulous treasures of Europe--jewelry worth at least $1,500,000, if
in fact a money value could be placed on the historic items at all.
Part of the jewelry belonged to the House of the Kurfursts and to the
Kurhessen Foundation. Most of it belonged to the Countess Margarethe
and to Prince Wolfgang. Some of it was the personal property of
Princess Christoph and Prince Richard of Hesse. The owners, who lived
in less pretentious quarters at this time, rarely visited the old
castle, and none was aware that the treasure had been discovered.
Captain Nash was enchanted. She took from the boxes diadems and
necklaces of diamonds, pearls and amethysts; rings of diamonds and
other precious stones; a diamond-studded onyx badge, made in the
eighteenth century: the badge of the Order of the Garter, which had
been presented by King George II to his son-in-law; necklaces of gold
and platinum; bracelets of diamonds and emeralds and pearls and topaz;
buckles studded with diamonds; large and small brooches studded with
diamonds and other stones; pendants with large and small diamonds;
earrings made of diamonds and emeralds and pearls; tiaras delicately
fashioned of gold and studded with diamonds and other gems; a large
necklace of gray pearls and diamonds; an English decoration of the
Victoria and Albert Order, including a cameo with portrait of Queen
Victoria and her Prince Consort, surrounded by small diamonds; diamond
stick pins; diamond earrings; diamond-studded watches; diamond studded
cases; and golden chains studded with large stones.
This, then, was the treasure which the girl from Wisconsin picked up,
piece by piece. At some period as she looked at the glittering jewels,
the idea was born that she would not give them up.
One of the most frequent visitors to Kronberg Castle was slender,
handsome Air Force Colonel Jack Durant, who was Kathleen Nash’s boy
friend and constant companion. Colonel Durant had been an attorney
in the U.S. government’s Interior Department before he went into the
Air Force at the outbreak of the war. He was attached to the Adjutant
General’s office and therefore was not unaware of the rules governing
the conduct of the armed forces.
Captain Nash invited Colonel Durant and her friend, Major David Watson,
to her quarters. She showed them the treasure which had been dug from
the coal room in the basement of the castle. And then it was they began
to talk of stealing the Hesse jewels.
These three sat behind the closed and locked door of Captain Nash’s
quarters and pried the jewels from their settings. They decided it
would be much easier to smuggle the loose jewels into the United States
rather than leave them in their settings.
Why they thought they could escape undetected with one of the great
treasures of Europe remains a mystery. It was a monstrous game of
“losers weepers, finders keepers.” In their greed they began to look
upon the Hesse jewels as legitimate loot. Because they were on the
winning team in the war, they reasoned they were entitled to share in
the spoils. If their share happened to be a fortune in gems, then that
was merely their good luck.
Colonel Durant casually made inquiries among his fellow officers about
the customs procedures in the United States and whether or not the
inspectors of military personnel were very thorough in going through
luggage.
One officer who had returned from a recent trip home said, “There’s no
sweat. The inspectors clear you as fast as they can. They didn’t even
look into my baggage. I guess they figure a guy who has been fighting a
war should not be delayed in getting home.”
Durant persuaded a former secretary to carry home for him several
pieces of the jewelry. She innocently believed they were nothing more
valuable than costume jewelry which he had picked up in Europe.
Captain Nash turned over her share of the loot to Major Watson, who
packed it in an ordinary wooden box and then mailed it to her in care
of her sister, Mrs. Eileen Lonergan, in Hudson, Wisconsin. The box
arrived in New York along with several thousands of other shipments
from Europe. A Customs examiner accepted the statement on the box that
it contained only personal belongings and nothing of dutiable value.
And so the box went on its way to the house in Wisconsin.
Colonel Durant arrived at Westover Field by plane on March 12, 1946,
aboard ATC Flight 9076, which had originated in Paris. He wrote on his
customs declaration that he carried one watch worth $60, perfume worth
$83, a $2.50 purse, and two cigarette lighters worth $17. He stated he
had no other articles on which he should pay duty.
No one questioned the colonel’s declaration and within a short time he
was on his way to Washington, D. C., to visit his brother, James E.
Durant, who lived in Falls Church, Virginia.
Colonel Durant showed his brother a good many of the unset stones and
articles which he had brought back from overseas, and his brother
helped him remove several diamonds from two tubes of shaving cream.
Durant explained that while travelling to Italy a German had sold him
more than one hundred diamonds for 3,000 German marks.
Durant gave one of the diamonds to a Washington, D. C., automobile
dealer--a diamond appraised at $500--as part payment for a Hudson
automobile. Another automobile dealer in Falls Church, Virginia,
purchased two of the diamonds for $400, and Durant--using the assumed
name of J. W. Gable--disposed of three of the diamonds to a jewelry
firm in Washington for $357. Then he drove to Chicago to meet Kathleen
Nash.
A few days after arriving in Chicago, Colonel Durant put in a call
for his friend, Dr. Reuben Mark, at the Embassy Hotel. Dr. Mark was a
dentist who had struck up a friendship with Durant a few years earlier
in Washington, D. C. As Dr. Mark related the story of their meeting
later:
“It was around April of this year. One evening he called and he said,
‘Ruby, this is Jack.’ I said, ‘When did you get in?’ He said, ‘Just
today.’ I asked him how long he was going to be in town and he said he
did not know. He was on thirty days leave and he had already spent a
few days.
“Then he asked when we would get together. That was on Saturday night.
He said something about a girl friend of his coming in from the coast.
He said it was a girl that had been overseas with him and she was a
divorcee. He said she was pretty and had been married to a wealthy man
in Arizona and had just joined the WACs to get away.
“We arranged to meet in a day or so. A couple of days later we met
after office hours at Isbell’s restaurant on Diversey. That was the
night I first met his girl. Katy, as I began to call her, was a nice
girl. Nothing unusual.
“It was there that Jack asked me, ‘Ruby, do you know any jewelers?’ I
said, ‘Sure, I know some jewelers.’ Just about that time he pulled out
a tissue paper. He opened it up and I saw three stones. I asked, ‘Where
did you get them?’ He said he picked them up overseas in Frankfurt.
“At that time nothing occurred to me about anything being wrong. I
know lots of boys who brought things from overseas and I felt, well, so
what, he was overseas. I said, ‘Yes, I know some jewelers.’ And he said
he would like to call them. I told him I would call the following day.
“I called a Mr. Horwitz, whom I had known for some time, and I asked if
he was interested in buying some diamonds. He said yes....”
Dr. Mark accompanied Durant to the jeweler’s place of business and
introduced him. Durant took a small cloth sack from his pocket and when
he upended it, a shower of diamonds cascaded onto the desk. There were
102 stones in the lot.
Horwitz looked at the stones under a magnifying glass, examining each
of them carefully. Finally he said, “These are fine stones, Colonel. We
don’t see diamonds like these very often. They’re beautifully cut.”
Durant explained he had been able to get them at a bargain price from a
German badly in need of cash. “How much do you figure they are worth?”
he asked.
“I’ll pay you $125 a carat,” Horwitz said. “It’s a fair price.”
“That’s okay,” Durant said. “But there’s just one thing. The deal can’t
be made in my name. I’m in the Army and I’m not supposed to transact
any outside business. It will have to be a cash transaction.”
Horwitz shook his head. “I’m sorry,” he said. “We only make purchases
by check. In buying outside the regular channels I would have to call
the police to make certain there is no violation of regulations.”
“That’s all right,” Durant said quickly. “Go ahead and call.”
Horwitz made a telephone call and then said, “The police say there’s
nothing wrong with making a purchase from an Army man who has returned
from overseas--provided the customs duty has been paid. Has the duty
been paid on these stones?”
“I mailed them into the country,” Durant said. “All the boys were
mailing stuff back and I did too.” Then Durant added, “But, look, I’m
not here for business particularly. I’m going to take a trip to Mexico.
If it’s only a question of duty, I’ll stop off someplace and take care
of the duty part of it and I’ll see you when I get back.”
Horwitz then said to Mark, “Why don’t we make out the check in your
name, Doctor? You can cash it and give the money to the colonel.”
Mark hesitated. “I suppose the check could be made out to me on a
tentative basis,” he said. “But I’ll have to call my auditors and see
that I don’t get fouled up with them.”
Horwitz had his secretary draw a check for the purchase of the
diamonds. When Durant and the doctor had left his office, he called his
lawyer. He explained the situation and asked his advice.
“There’s nothing wrong about buying diamonds from a member of the armed
forces,” the lawyer said, “but you’d better be certain the diamonds
were declared and duty paid on them when they were brought into the
country. If they were not declared, it is not a proper transaction and
I’d advise you to stop payment on the check.”
Horwitz immediately called his bank and stopped payment on the check.
The following morning he called Dr. Mark and advised him of what he
had done on the advice of his attorney. “I can’t go through with the
transaction,” he said, “unless the colonel will produce a customs
receipt showing the diamonds were declared and the duty was satisfied.”
Mark and Durant returned to Horwitz’s place of business to retrieve the
diamonds and to hand back the check.
Horwitz suggested, “Why don’t you go to see Mr. Meiners at the customs
house? He’s assistant collector of customs and he could clear this
thing up for you. I’d even be willing to pay half of the duty.”
Durant mumbled something about having to hurry to the airport to make
a flight. He said he would be back in Chicago in about ten days and he
certainly would go and see Mr. Meiners at the first opportunity.
After the collapse of this deal, Durant and Captain Nash left Chicago
by automobile for a vacation in the Southwest and Mexico. But even as
they were leaving Chicago, Federal agents were on their trail.
The theft of the gems had been discovered by the Countess Margarethe
in Germany. She had gone to the basement to check on the safety of the
jewels. She had found the hole in the basement floor. The conspirators
had not even refilled the hole or re-covered it with concrete. The
theft was reported to Army authorities and the matter was turned over
to the Army’s criminal investigation division.
The Army’s agents began questioning everyone who had been employed in
any capacity at Kronberg Castle. Finally they came to the old janitor
who told them of digging up the boxes in the basement coal room. He
didn’t know what was in the boxes. He only knew they had been taken to
Captain Nash’s quarters. He had never heard any mention of them again.
Customs agents were called in to help with the case. They traced
Captain Nash’s movements from the time of her arrival in New York
until she left Chicago accompanied by Colonel Durant. They learned of
Durant’s visit with Dr. Mark to the jeweler, Horwitz, and the collapse
of the diamond deal--because the customs duties had not been paid on
the gems. But no one knew the destination of the couple when they left
Chicago.
Through calls to friends and relatives, Dr. Mark located Durant
in Texas--and advised him he was wanted by the Customs people for
questioning. On April 19, 1946, Durant appeared at the office of the
Supervising Customs Agent in Chicago with the air of an innocent man
who was shocked that anyone should question his integrity.
“You did bring diamonds into the country without declaring them and
without paying duty on them, didn’t you, Colonel?” an agent asked.
“Yes,” Durant said, “but I was doing only what everybody else in the
armed services was doing. I didn’t know a declaration was required.”
“Where did you get the diamonds?”
“I bought them from a German civilian. I gave him my Elgin wrist watch
and 3,000 German marks.”
The agent said, “How did you get them into the country?”
“I put them in a cigar box and mailed the box to myself in care of my
brother in Falls Church,” Durant replied.
“Where are the diamonds now?”
Durant reached into his pocket and pulled out the sack of diamonds.
“There they are,” he said, tossing the sack onto the desk. “That’s all
of them.”
“We’re going to have to hold these diamonds until our investigation is
completed, Colonel,” an agent said. “But of course you have the right
under law to petition for a return of the diamonds and for remission or
mitigation of any penalties.”
“I certainly do want to petition for their return,” Durant said angrily.
He was handed a blank petition. And he wrote: “I am the sole owner of
said diamonds.... At the time I mailed these diamonds into the United
States I assumed that it was not necessary for me to declare them to
any governmental agency.... At no time did I intend to import into the
United States and thereafter make any disposition of said diamonds in
violation of any statute of the United States.... Therefore, I petition
for (their return)....”
Immediately after this meeting with Customs agents, Durant and Captain
Nash drove from Chicago to Washington, D. C. Durant hurried to the home
of his brother in Falls Church. After nightfall, the brothers drove to
a spot on a country road halfway between Lee Highway and Route 50.
They parked the car and walked into a woods to a large oak tree. At the
base of the tree, Durant buried an ink bottle which contained fifty
small diamonds and two large emerald-cut diamonds--together with a roll
of gold wire which weighed 8 ounces.
“For God’s sake, don’t forget where we buried this stuff,” Durant said
to his brother. And then the two returned to the car and headed back to
Falls Church. A few days later, Colonel Durant began his terminal leave
prior to being mustered out of the armed services.
Less than a month later, on May 18, Colonel Durant drove into
Washington accompanied by Kathleen Nash. They went to a hotel and that
night Durant again visited his brother James in Falls Church. Again the
brothers drove to the woods on Lee Highway, where they walked to the
big oak tree. Durant took a large jar from a leather handbag and buried
it at the base of the tree. The jar contained loose amethysts and white
envelopes which Durant told his brother contained loose diamonds.
As they drove from the woods, Durant said, “Don’t forget where we
buried the jars. There’s enough in them to set us up for life. If
anything happens, I want you to have what’s there.” The next day,
Durant and Captain Nash left Washington and headed for Chicago.
Now the net was tightening and Durant sensed it. He had heard the
disturbing news in Washington that his terminal leave might be
cancelled--and this could mean only one thing: the Army didn’t want to
lose its hold on him. Then he and Kathleen learned that she, too, might
have difficulty in getting out of the Army.
Two weeks after burying the large jar in the woods, Durant telephoned
his brother from Chicago.
“Listen, Jim,” he said. “Go to the big tree and get the large glass
jar. Bring it to me in Chicago. It’s urgent.”
James Durant went to the woods and searched for the tree. But this
night they all looked alike. He called his brother. “I can’t find it,”
he said. “I can’t even find the tree.”
Jack Durant cursed softly. “I’ve got to have that jar,” he said. “I’ll
have to get it myself.”
Durant caught a late plane from Chicago, arriving at the Washington
International Airport at 4 A.M. He took a taxi to his brother’s home,
awakened him, and they drove to the woods, where the colonel walked
unerringly to the tree and unearthed the jar. Then he returned to the
airport and bought a ticket for the 8 A.M. flight to Chicago. But
before he left, he gave his brother two small packages containing
$28,000 in cash--with instructions to place the money in a sealed jar
and bury it at a place he wouldn’t forget. The brother buried the money
that same afternoon.
During this frantic activity, the War Department cancelled the
unexpired part of the colonel’s terminal leave and ordered him back on
active duty. Similar orders went forth for Kathleen Nash.
It was after they received these orders that Colonel Durant and Captain
Nash were married. Some cynics suggested later that the colonel married
her because once the marriage vows were said, she could not be made to
testify against him. But there was nothing in the record to indicate
that the two were not in love and had not planned marriage all along.
Early in June, Army and Customs agents began questioning the couple in
Chicago. For several days Durant maintained a stubborn silence, but
finally he broke. He told of the gems and the money hidden near Falls
Church--and he took full responsibility, clearing his brother of any
complicity.
Agents found the hiding place in the woods. They dug up the money
and the gems--but these were only a part of the treasure taken from
Kronberg Castle. Durant was pressed to tell what had happened to the
other gems.
“The situation is complicated,” he parried. “I might be able to get the
stuff back if you will let me make some telephone calls--in private.”
Durant was permitted to make the calls. After each call he made excuses
and talked vaguely of “complications.” He refused to disclose with whom
he had talked.
On Friday, June 7, the agents permitted Durant to see his bride alone.
What they discussed no one except themselves ever knew. When Durant
came from this meeting he told the agents, “I’m sorry. I haven’t been
trying to get the jewels. I’ve been stalling for time. But now I’ll try
to get them for you.”
“Where are the jewels,” he was asked.
“They are in the hands of a fence. I think I can get them--but it will
take some more telephoning. This time I’m not fooling.” He continued to
insist that the calls had to be unmonitored.
Durant was permitted to make telephone calls from a public pay
station--and to wait for a return call. The return call came within
a few minutes, and when he had hung up the receiver, Durant said,
“Everything looks all right. I think we can get the stuff this evening.”
That evening the colonel’s mysterious contact called for him at the
pay station. This time Durant said, “We can get the jewels any time we
wish. They’re at the Illinois Railroad Station.”
Two agents accompanied Durant to the station. He walked to an electric
wall fixture near the luggage lockers, reached up, and removed a key
from the fixture. He opened a nearby locker and removed a package which
he handed over to the agents. The package contained a large number of
emeralds, sapphires, pearls, rubies and other stones.
Durant counted the gems carefully and then exclaimed, “Some of the
stuff is missing. Let me make another telephone call.” Again he called
his contact and this time he reported, “We can’t get the stuff until
Monday.”
On the following Monday, June 10, Durant again called his unknown
contact. This time he told agents the remainder of the jewels were
checked at the North Western Railroad and the claim check was hidden
in a telephone booth across from the parcel room.
When Durant and the agents reached the station, Durant searched the
telephone booths without finding a claim check. “It doesn’t matter,”
Durant said. “I got the number of the check in case anything should go
wrong. It’s number 110.”
But there was no parcel numbered 110 at the North Western Station.
Durant hurried to a phone booth and placed another call to his contact
man. When he completed the call, he said, “I misunderstood the
instructions. We should have gone to the LaSalle Street Station.”
At the LaSalle Street Station, Durant went to the sixth telephone booth
and took from behind the instrument panel a slip of paper. He read it
and handed it over to the agents. On the paper was a handwritten note
which said: “Too bad. My hat knocked your ticket off. Guess I have a
right to keep the baggage.”
An inquiry at the check room disclosed that a parcel had been left
there the day before under the number 110--but it had been removed that
morning by a man who had presented the proper claim check.
“I don’t remember what the guy looked like,” the attendant said. “I
didn’t pay any attention. All I know is the guy had the right check and
I gave him the package.”
At this point, Durant refused any further cooperation. He insisted that
his mysterious contact had nothing to do with the missing jewels--and
he refused to disclose the name of the contact or to make any further
effort to locate the jewels.
The investigators had better luck with Kathleen Nash Durant. She
admitted to officers the agreement in Germany between herself, Colonel
Durant and Major Watson. She told of removing the numerous stones from
their settings and sending a large number of them to her sister’s
home in Wisconsin, concealed in boxes. Her sister was instructed not
to release the boxes to anyone unless she heard or read the code word
“Cemetery.” She turned over to Army officers the following note:
June 3, 1946
To Eileen, Jack, or David,
I have confessed to having the box of jewels, Bibles and fan that I
hid in the attic. Will you please give same to officer presenting
you this note, Major John D. Salb, our code “cemetery”--goes--sorry
to cause you so much grief and I don’t deserve you to worry over
me anymore.
Love,
_Vonie_ (_Kathleen B. Durant_)
When agents flew to Hudson, Wisconsin, and presented the note to Mrs.
Lonergan, she readily turned over the boxes hidden in the attic.
Kathleen Nash Durant and her husband were sentenced by a military court
martial to fifteen years in prison. Major Watson was sentenced to three
years for his smaller role in the conspiracy.
Most all the jewels of the Hesse treasury found in old Kronberg Castle
were returned to their rightful owners. But some of the priceless
pieces still are missing. The settings--many of them fashioned by
Europe’s greatest artisans--were lost forever. They had been cut to
pieces and melted into gold wire.
16
THE CHISELERS
Chiselers are constantly seeking ways to avoid paying customs duties.
And the female of the species is just as clever and persistent as
the male--or, as is more often the case, just as dumb. In the early
1930s, the chiselers found it extremely profitable to smuggle watch
movements into the United States from Switzerland. Smuggling reached
such proportions that it helped to virtually destroy the American watch
industry. The situation became so grave that the Federal government
appealed to the Swiss government to cooperate in a program to control
the illegal traffic in watch parts. An agreement finally was reached
on a treaty whereby the Swiss devised a system of numbering the
watch parts and assigning code numbers to importers as a means of
discouraging illegal imports.
The treaty helped to wipe out much of the commercial smuggling of watch
parts. Despite these efforts the traffic continued through the years
to be a profitable venture for smuggling gangs who often persuaded
housewives, businessmen, and tourists to act as carriers.
Mrs. Elizabeth Schmidbauer, the plump, middle-aged wife of a restaurant
owner in Munich, Germany, was one of those who became a dupe for a
watch smuggling gang in 1954. And her trip to the United States to
visit a relative--a trip for which she had planned so eagerly and for
so long--became a nightmare for her and her family.
The nightmare began in Munich when Mrs. Schmidbauer told friends at her
husband’s restaurant that she was going to America with an aunt, Mrs.
Anna Obermaier, who was then visiting in Germany. She talked of the
clothes she would need and her intention of buying two new suitcases
for the trip. Among those in the restaurant who listened with interest
to Mrs. Schmidbauer’s excited chatter was a regular customer named
Moritz, with whom the Schmidbauers had been on friendly terms for many
years.
Two days before her departure from Munich, Mrs. Schmidbauer answered
a knock at her door and found that the caller was Moritz, who was
carrying two new suitcases. “I heard you say you needed luggage for
your trip,” he said, “and here it is.”
Mrs. Schmidbauer invited Moritz into the living room. Over coffee and
cakes he told her that he was willing to pay her fare to the United
States if she would do him a favor: deliver the suitcases to a friend
in New York along with a small parcel.
“What is in the parcel?” Mrs. Schmidbauer asked.
“Watch movements,” Mortiz said. “If you will take them through customs
it will save quite a bit of money. I am ready to pay your fare to the
United States if you will do this favor for me.”
“But what about the police and the American Customs?” Mrs. Schmidbauer
exclaimed. “I may get into trouble if I do this thing.”
“Nonsense,” Mortiz said. “Nothing can happen to you. All you have to do
is sew the watch parts into your corset and no one will be the wiser.”
The lure of free passage to the United States was too great a
temptation. Mrs. Schmidbauer agreed to the scheme. That night she
obtained strips of cloth and sewed most of the watch movements into her
corset. The others she placed in her large handbag.
Mrs. Schmidbauer felt that Moritz was telling the truth when he said
that she would have no difficulty. If he thought there would be any
trouble, then he would not take such a risk himself.
The plan was very simple. When she arrived in New York and was safely
through customs, she was to send a cable to her husband saying, “Gut
angekommen,” indicating that all was well. Mortiz would keep in touch
with her husband. After the receipt of the message, he would cable his
friend in New York and instruct him to pick up the suitcases and the
watch movements. Once the delivery was made, then she would receive
payment for her fare to New York.
Mrs. Schmidbauer left Munich with her aunt, Mrs. Obermaier, and
travelled to Southhampton, England, where she boarded the SS _Queen
Elizabeth_ for the Atlantic crossing. The big liner reached New York
harbor on December 14, 1954, and docked at Pier 90 on the North River
at 8:15 A.M.
On the pier everything seemed to go as smoothly as Moritz said it
would. The Customs people were courteous. Mrs. Schmidbauer’s luggage
was examined by Inspector Abe Pokress. He did not ask to see the
contents of her handbag after she told him it contained only personal
belongings. And he inquired amiably about her voyage.
“It was a wonderful trip,” Mrs. Schmidbauer said, watching Pokress’
hands move swiftly through her belongings.
She was immensely relieved when Pokress told her she could close her
luggage. She quickly strapped the bags shut. The luggage was placed on
a handcart by a porter and Mrs. Schmidbauer thanked Inspector Pokress
for his courtesy.
But when the handcart was rolled beside an electronic detection device,
Pokress saw a warning light begin to blink. The light indicated
the luggage contained a quantity of metal--and Mrs. Schmidbauer’s
declaration did not list any metal objects, nor had the casual
examination revealed any.
Pokress ordered the luggage returned to his station. He asked Mrs.
Schmidbauer to open the bags once more.
“What is wrong?” Mrs. Schmidbauer demanded. “You have inspected the
suitcases. Why am I being detained like this?”
“You aren’t being detained,” Pokress said. “But I’m afraid we must take
another look at your luggage.”
Pokress began to make a thorough examination of the contents of the
smaller of the two suitcases. He was unable to find anything which
could have caused the electronic device to trigger the alarm signal.
Mrs. Schmidbauer stood watching the search with tears welling in her
eyes. She made no further protest as Pokress removed the clothing
from the bag and began to measure the inside depth of the suitcase
against its outside depth. The measurement disclosed a discrepancy of
approximately three-quarters of an inch.
Pokress was reasonably certain the suitcase had a false bottom. He
placed the suitcase on a small platform between two metal cabinets
standing nearby. The cabinets housed an X-ray device called an
inspectroscope, which Customs inspectors and agents frequently used in
peering into luggage and boxes suspected of containing contraband made
of metal.
Pokress opened the door of one of the cabinets and squeezed into a seat
before a small screen similar to a fluoroscope. He turned a few dials
and switched on the X-ray. And then on the screen appeared in clear
outline the metal fastenings, screws and other hardware used in the
construction of the suitcase. In addition the screen showed several
rectangular metal objects in the bottom of the suitcase.
Pokress switched off the inspectroscope and emerged from the cabinet.
He had Mrs. Schmidbauer taken to an inspection room. And there
inspectors discovered that both her suitcases had false bottoms which
concealed several thin tin containers. The containers were packed with
759 Swiss watch movements.
A woman inspector led the weeping Mrs. Schmidbauer into a room where
she was searched. It was found that she had 167 watch movements
sewn into her corset and 26 movements in her handbag. The 952 watch
movements were estimated to have a wholesale value of more than $10,000.
Mrs. Schmidbauer tearfully told Customs agents of being approached by
Moritz in Munich. She told them of his offer to pay her fare to the
United States if she would bring the watch parts through Customs hidden
on her person. She said that he told her he had put something in the
suitcases but he did not tell her what it was and she did not know that
there were watch movements hidden in false bottoms of the luggage. She
also told of the arrangement whereby she was to send a message to her
husband if all went well.
It was obvious to agents that Mrs. Schmidbauer was only a dupe in the
smuggling plot. Mrs. Schmidbauer was asked to cooperate in trapping
Moritz’s accomplice. She quickly agreed.
Mrs. Schmidbauer dispatched a cable to her husband saying, “Gut
angekommen.” Then two agents, Harold F. Smith and Abraham Eisenberg,
accompanied Mrs. Schmidbauer and Mrs. Obermaier to Mrs. Obermaier’s
apartment to await the call from Moritz’s accomplice.
They did not have to wait long. Mrs. Obermaier received a call from a
man who identified himself as Hans Berger. Berger said, “I understand
Mrs. Schmidbauer is visiting you and that she has something for me.”
Mrs. Obermaier said that Mrs. Schmidbauer was ill and could not talk to
the caller herself. She added that she did have something for him if he
would call at the apartment the next morning at ten o’clock.
The agents were hidden in the apartment the following morning when a
knock came on the Obermaiers’ door. Mrs. Obermaier opened the door and
a man stepped in.
“You are Hans Berger? You called yesterday?” she asked.
The caller said, “Yes. May I see Mrs. Schmidbauer?”
Mrs. Obermaier invited him into the living room. She asked him what he
came for and who had sent him.
Berger said he was sent by “Moritz.” He handed her a slip of paper
which said, “Dear Mrs. Schmidbauer--I hope you arrive safely in New
York. I beg you to be kind enough when you receive this piece of paper
to turn over the things. Best regards, Your Moritz.”
At this point the agents stepped from hiding. Questioning of Berger
convinced the agents that he had called to pick up two suitcases and a
package from Mrs. Schmidbauer without any knowledge that he was getting
involved in a smuggling plot. He thought he was merely doing a favor
for his friend, Moritz, who would show up later to claim them.
But Moritz never showed up in New York. Berger was not prosecuted, and
Mrs. Schmidbauer was given a six-months suspended sentence.
* * * * *
One of the largest smuggling rings dealing in Swiss watch movements
was broken up by customs agents in 1956 on a tip received from customs
officials in Germany. This ring involved a foreign shipping firm
working with an American importer, an American shipping official, and a
dishonest customs broker in New York.
This case began to develop when four packing cases of roughly the
same dimensions arrived in the foreign trade zone in Germany from
Switzerland. Two of the cases, documented as containing camera tripods,
were consigned to a firm in the United States. The other two cases were
documented as containing 4,488 Swiss watch movements.
A German customs officer became suspicious when he saw two men
transferring the watch movements from their original cases into the
cases marked as camera tripods. The Customs officer made no move at
that time to interfere with the transfer of the merchandise, but he
notified his superiors and an investigation was begun. The Germans at
that time believed that it was an effort to avoid payment of German
customs. When they realized that the transfer was being made as part
of a scheme to violate American customs laws, the U.S. Customs agent
stationed in Bremen was informed of the facts in the case. These facts
were forwarded to agents in New York, who were alerted to be on the
lookout for the arrival of the boxes labelled as carrying “camera
tripods.” Several days later a German customs official advised the
Customs agent in Bremen that the two suspect boxes, marked IH74 and
IH75, were being shipped aboard the SS _Black Falcon_ manifested as
camera tripods valued at $200.
The SS _Black Falcon_ arrived at the port of New York on January 23,
1956, and docked at the Smith Street Pier in Brooklyn. Customs agents
kept the two boxes under surveillance. They were watching as the boxes
were moved from the pier by a trucker to a warehouse. Agents hidden in
the warehouse saw the trucker and the broker switch the watches from
the cases and replace them with camera tripods.
Had this scheme succeeded, the chiselers would have paid duty on camera
tripods valued at $200 rather than on watch movements valued at more
than $50,000.
* * * * *
Stephen Schrieber of New York City was one of the cleverest of the
chiselers. He was a tall, thin, balding man in his middle years who was
engaged in the import-export business. Customs had no reason to suspect
Schrieber of wrongdoing until agents got a tip that he was smuggling
gold out of the United States, selling it on Europe’s black market, and
then smuggling diamonds into this country.
On April 29, 1952, Customs agents learned that Schrieber was preparing
to make another trip outside the country and that he had booked passage
for Cherbourg, France, aboard the SS _Queen Mary_. Schrieber also had
arranged to export a car on the _Queen Mary_ as “accompanying baggage.”
After Schrieber delivered his car to the pier to be taken aboard the
liner, agents made arrangements to examine the vehicle, a 1949 Pontiac.
The examination began at approximately 4 P.M. They searched the car for
ninety minutes without finding any contraband.
At last one of the agents said, “Why don’t we weigh the car and
check its weight against the Blue Book weight that is listed by the
manufacturer.”
With the cooperation of Customs inspectors and Cunard Line officials,
the car was removed from Pier 90 to the scale house at Pier 84. The
automobile Blue Book listed the Pontiac as weighing 3375 pounds. But
when it was put on the scales, it registered 3840 pounds. There was
a discrepancy between the listed weight and the actual weight of 465
pounds. It was obvious that something was concealed somewhere on the
vehicle and that the hiding place had not been discovered.
The car was then moved back to Pier 90 and driven to a service station
at the corner of 51st Street and Eleventh Avenue. It was run over a
grease pit in order that the searchers could take a better look at
the underside. One of the searchers began tapping the gas tank of the
Pontiac and then tapping gas tanks on other automobiles in the station
to compare the sound. He called to an agent, “There’s something wrong
with this gas tank. It doesn’t sound like these other gas tanks when I
tap on it.”
With the help of service station personnel, the searchers removed the
gas tank. As soon as it was loosened from its fastenings, they knew
that they had discovered hidden contraband: the gas tank was so heavy
that it took the combined efforts of four men to lift it out of the
grease pit. It was specially built of heavy steel.
Inside the gas tank, the searchers found a cleverly concealed
compartment which contained thirty-three individually wrapped packages
of gold bullion, valued at $110,000.
Apparently Schrieber became suspicious that he was suspect or he was
tipped that the gold hoard had been discovered. At any rate, he did not
show up as a passenger before the Cunard liner sailed. He was reported
to have fled from the United States on a phony passport. After that, he
was reported variously in Canada, in South America, and in Europe.
* * * * *
Saul Chabot of New York City was also one of the chiselers. Chabot was
a slender, middle-aged man with graying sandy hair and bushy eyebrows
who had built up a large-scale business in used rags. But the profits
from his rag business weren’t enough for Chabot--and he decided to
expand his operations into gold smuggling.
Chabot might well have smuggled a fortune in gold from the country had
it not been for the alertness of Matthew Jake Berckman of Jersey City,
New Jersey. Berckman had joined the Cunard Line’s police force in 1937
and he had remained on this job until 1947, when he was employed as a
pier checker, checking automobiles to be shipped abroad.
On February 15, 1951, a 1950 Buick sedan bearing a New York license
drove up to the pier where Berckman was checking the cars to be taken
aboard the _Queen Elizabeth_, which was sailing for Cherbourg. The
driver of the car identified himself as Saul Chabot. He showed Berckman
his contract receipt for shipment of the car aboard the liner. He
turned over his keys to Berckman, who assured him that the automobile
would be handled carefully.
Berckman told Chabot to remove the cigarette lighter and the contents
of the glove compartment and to lock the articles in the automobile’s
luggage compartment. When Chabot opened the compartment, Berckman saw
there was nothing inside except tools and a spare tire.
He also noticed that although the compartment was virtually empty, the
car looked as though it were heavily loaded because it sat low in the
rear.
As they were talking, there was a banging from underneath the car. A
longshoreman was having difficulty removing the tap from the gasoline
tank. Chabot seemed extremely nervous and said, “What’s the matter?
What is he doing?”
Berckman replied, “He’s loosening the tap on the gas tank. We can’t
take a car aboard the ship until the gas tank is empty.” Then he added,
“This is a very heavy car, isn’t it?”
Chabot said, “Yes, these Buicks are very heavy.”
Berckman gave Chabot his receipt. He told him that he would look after
his car and he need have no further worry. But Chabot said, “Well, I’ll
stay and see that he gets the gas out all right.”
Chabot remained until the gas had been drained from the car and then
he walked across the street. Berckman noticed that Chabot hung around
for another fifteen or twenty minutes watching his automobile. It was
Chabot’s nervousness which aroused Berckman’s suspicions. He decided to
inspect the other cars and to show no further interest in Chabot’s car
as long as he was around.
After lunch, Berckman went back to Chabot’s automobile to look at it
more closely. He saw what appeared to him to be a new welding on the
inside of the trunk near the rear fenders. The welding was odd because
the car did not look as though it had been in a collision. There was
no sign of any damage to the front or rear of the car and the original
paint was unmarred.
Berckman went to the office of Customs Inspector Howard Walter and
reported his suspicion that the car had been tampered with and that it
might be loaded with contraband. Inspector Walter dispatched Inspector
Mario Cozzi and James P. Dalton, along with three port patrol officers,
to investigate.
The preliminary examination revealed nothing unusual about the car
except that it did seem to sag heavily on the rear springs and there
was no apparent explanation for the welding near the rear fenders.
Cozzi began rapping on the sides of the car with his knuckles. It
seemed solid enough until he rapped on the body just above the rear
fenders--and then the rapping gave forth a hollow sound.
“Let’s unbolt one of these fenders and take a look,” Cozzi said.
Three bolts were loosened near the left rear door post. The fender
was pried away from the body far enough to reveal a piece of gray
cardboard. When Cozzi poked into the cardboard with a screwdriver, he
could see it covered a package wrapped in heavy black cloth.
The fender was removed and the searchers found that it concealed a
secret compartment containing several parcels--all of them packed with
sheets of gold. Two secret compartments yielded eighty-two packages of
gold valued at $171,197.
Customs agents were alerted. They kept Chabot’s apartment under
surveillance. They were following when he and Mrs. Chabot left the
apartment at 9:30 A.M. enroute to Pier 90. The couple boarded the
_Queen Elizabeth_ and went to their cabin, D291. And it was there that
agents questioned Chabot.
Chabot protested that he knew nothing of any gold hidden in the
automobile. He claimed that two weeks earlier a man he knew only as
“Carl” had given him $1,900 and told him to go to a used car lot and
buy a certain automobile. Chabot said he bought the car for $1,750 and
that he turned it over to Carl. Then Carl had brought the car back to
him and he had delivered it to the steamship line without any knowledge
that the gold had been hidden behind the fenders.
Chabot’s story was not very convincing. He was tried and found guilty
on a charge of smuggling and was sentenced to five years in prison.
As for Matthew Jake Berckman, the car checker whose suspicions led to
the gold seizure, he was given a reward of $16,119 by the government
for his alertness.
* * * * *
Unfortunately, the chiselers sometimes have been found in the
ranks of Customs employees. The bad ones have been the exception,
but occasionally there have been those who were tempted to make a
racket of their places of trust. In one such case an importer of
Italian-made men’s wear built up a booming business with smuggled
merchandise--acting on the advice and with the connivance of Customs
inspectors who drifted into a conspiracy which wrecked their careers.
Giuseppe Battaglia, an enterprising merchant of Milan, Italy, had not
the slightest intention of entering into a smuggling operation when he
first arrived in the United States in 1952 seeking a market for silk
ties, robes, sweaters, pajamas, shirts, scarves, and other men’s wear
and accessories.
Battaglia operated a retail haberdashery in Milan which was popular
with American tourists, Hollywood movie celebrities, and businessmen
who liked the distinctive and expensive Italian styling. Business was
so good that the darkly handsome Battaglia decided the time was ripe to
develop outlets for Italian-made merchandise in the United States.
He arrived in New York in February, 1952, after making arrangements
to act as sales agent for three firms manufacturing ties, gloves and
scarves. He was to pay all expenses and receive a straight 15 per cent
commission on sales in the United States.
Battaglia had no difficulty in finding a market for his merchandise.
Sales of Italian-made clothing and accessories were increasing
throughout the country. Business was so promising, in fact, that he
expanded his line of men’s wear and became agent for such respected
and well-known Italian houses as Galliene, Ratti, Salterio, Longhi and
Caelli. He opened an office in the Empire State Building (later moved
to 15 West 37th Street) and took a partner, Domenico Guarna, into the
business. The partnership arrangement permitted Battaglia to travel
throughout the country calling on retail outlets. He also was able to
return to Italy on buying trips while Guarna looked after the New York
end of the business.
On each return trip from Italy, Battaglia listed on his declaration the
samples of silk materials and other merchandise he was carrying with
him. He paid the required duty without question.
The partnership of Battaglia and Guarna operated honestly and
aboveboard, Customs files show, until January 18, 1954. On that day,
Battaglia arrived in New York harbor aboard the SS _Vulcania_. He
handed over his declaration to Inspector Benjamin Danis, who was
a short, pudgy man who soon impressed Battaglia as an extremely
courteous and helpful officer. Danis made only a casual inspection
of Battaglia’s trunks and luggage, which was not unusual on this
particular day because the inspectors’ instructions were to make only a
spot check of travellers’ baggage.
After clearing all the baggage, Danis hinted amicably that if Battaglia
had not listed the samples of merchandise on his declaration, he could
very easily have overlooked them and there would have been no need to
pay the duty.
“Is that so?” Battaglia said in surprise. “I was told to list
everything.”
Danis grinned. “It’s simple if you know the right people.”
Battaglia reached into his pocket and pulled out a business card. “Take
this card and drop around to see me at my place of business,” he said
to Danis. “And would you give me your name and address? I would like to
send you a few Italian ties as a gift. You have been very courteous.”
Danis gave Battaglia his name and address. “I’ll be around to see you,”
he said. “I can give you some tips that will help you in clearing
Customs.”
A few days later, Danis visited the shop of Battaglia and Guarna and
chatted with the partners for several minutes about the problems of
Customs clearances. Battaglia asked him to take his choice of several
expensive Italian ties. But after Danis selected them Battaglia
realized that Danis expected more than a gift of ties. He handed him a
$20 bill, which Danis accepted.
As he stuffed the bill into his pocket, Danis said, “Let’s get down
to business. If you will let me know in advance when you or your
representatives are arriving from Europe, I can arrange to handle the
inspection of your baggage. I won’t ask any questions if all your
merchandise is not listed on the declarations.”
Battaglia said, “But what if we arrive and you are sick--or for some
reason can’t handle the inspection?”
“That’s no problem,” Danis said. “If I can’t handle the inspection
myself, then I’ll arrange for someone else to do it.”
“What if we’re caught bringing in merchandise which is not on the
declaration?” Battaglia asked.
Danis laughed. “The worst that will happen to you is that you’ll have
to pay the duty. So what have you got to lose?”
It seemed so simple to the partners that they decided to give it a
try on the next trip that Battaglia made to Italy. If Danis could
arrange the clearance of sample merchandise so easily, then it was
reasonable to assume he would have no difficulty with larger shipments
of merchandise as well. If they could save the payment of duties, then
the partnership’s profits would rise in spectacular fashion.
A few days after this conversation, Danis returned to the office of
Battaglia and Guarna, accompanied by Customs Inspector William Lev, a
tall, fat man with a swarthy complexion. Danis advised the partners
that Lev was a man they could trust. He said in the event one of them
should arrive in New York and he, Danis, was not available to help them
through Customs, then they could depend on Lev to help them just as
they could depend on him.
Battaglia returned to Italy in June, 1954, on another of his buying
trips. He remained there until January 17, 1955, when he returned to
the United States aboard the SS _Andrea Doria_. Prior to his arrival,
Guarna telephoned Inspector Danis and advised him of the time of
Battaglia’s arrival.
Danis was on the pier when Battaglia walked from the ship, and he
handled the examination of his baggage. The examination and clearance
proceeded smoothly. None of the samples which Battaglia brought from
Italy was listed on his declaration. And there was no reason why Danis’
perfunctory inspection should have aroused the suspicion of any other
inspector because again that day the inspectors had orders to make only
a spot check of the travellers’ luggage. On some days, the inspectors
were required to inspect all luggage. On other days only spot checks
were ordered.
In testing the scheme proposed by Danis, Battaglia carried merchandise
valued at something over $1,000, on which the duty would not have
been more than $300 even had he declared the imports. He took the
merchandise from the pier to the office on West 37th Street, and
shortly thereafter Danis appeared to receive his payment. Battaglia
gave him $100 in cash.
Both Battaglia and Guarna were elated over the discovery that they
could bring merchandise into the country so simply without the payment
of duties. They began planning to bring even greater quantities of
merchandise from Italy on future trips.
In the months that followed, Battaglia and Guarna brought from Italy
trunks packed with expensive men’s wear which they were able to slip
through Customs without the payment of duty. When unable to make a trip
themselves, they arranged to have acquaintances and relatives bring the
merchandise. In each case, there were prearranged inspections, with Lev
having taken over the inspection end of the operation.
Inspector Theodore Rider, a tall, long-nosed, sallow-faced man, became
involved in the operation quite by accident. On one of his many
trips, Battaglia was standing on the pier waiting for Lev to make an
inspection of his baggage when Rider approached and asked if he could
help with his clearance.
“Thanks,” Battaglia said, “but Inspector William Lev is a good friend
of mine and I’m waiting for him to handle the clearance. He’ll be along
shortly.”
Rider said, “Whatever Lev can do, I can do.”
“Well,” Battaglia said, “go easy on the examination, will you?”
Rider took only a casual look at a couple of small suitcases and then
stamped all the baggage for clearance. For their cooperation in this
case, Rider received $100 and Lev was paid $300. Battaglia and Guarna
saved $6,185 in duties.
By midsummer of 1957, Battaglia and Guarna were convinced that the
U.S. Customs Service was riddled with corruption and that there was
no further need to worry. They were so certain that their system was
foolproof that Guarna went to Italy and arranged the purchase of
$41,000 worth of merchandise, which normally could be imported only
with the payment of $13,325 in duties. The partners were not worrying
about the duties because they had received a communication from Lev
that when Guarna returned “everything will be all right.”
But everything was not “all right.” Earlier in the year a dapper,
dark-haired man had called at the Varick Street headquarters of the
Customs Special Agency Service and asked to see Agent Dave Cardoza,
the big, amiable veteran of a thousand investigations, who headed the
Bureau’s New York Racket Squad.
This man, whose identity has never been disclosed by Customs, had an
interesting story to tell Cardoza. He was a competitor of Battaglia and
Guarna and he had become extremely curious about their sudden rise
in the merchandising field. He also was intrigued by their peculiar
ability to shave prices below a reasonable competitive level.
He had been making his own inquiries and observations over a period of
many months. He knew the names of some of the people who had carried
merchandise into the country for the partners. He had seen Customs
inspectors visit the partners’ place of business--and on one occasion
he had seen Battaglia pass money to an inspector whom he identified
from a picture as being Lev.
On the basis of this information, which was supported by names, places
and dates, the Service opened a formal investigation. Agents sifted
through thousands of declarations, seeking the names of the carriers
for Battaglia and Guarna, and the names of the inspectors who had
signed the suspect declarations.
A study of the declarations convinced the agents that Lev’s name
appeared far too frequently on the documents relating to the partners’
travels. And there were too few imports recorded for a firm as
obviously prosperous as Battaglia & Guarna, which dealt exclusively in
foreign haberdashery.
This investigation was underway when Guarna left for Europe in July.
By mid-August, Cardoza had decided the time had come to crack down on
the partners--and the best time would be when Guarna returned from the
Italian trip. He was reasonably certain that if Guarna were engaged in
smuggling, he would return from Italy with a load of merchandise which
he would try to slip through Customs. For this reason it was important
to know when and how Guarna planned to return to the United States.
The time of Guarna’s return was learned by a telephone call to the
office of Battaglia & Guarna, where a secretary--told that an old
friend from Chicago was calling--disclosed that Guarna was due to
return on October 1 aboard the Italian liner _Cristoforo Colombo_.
With more than a month in which to set his trap, Cardoza began making
plans to keep Guarna within sight of a Customs agent from the time he
set foot on the pier until he cleared his baggage with an inspector.
But this surveillance had to be done in such a manner that it would
not arouse the suspicion of Lev or any other inspector who might be
involved in the smuggling.
Finally, it was decided to use a “zone defense,” in which three
agents would be stationed at strategic points commanding a view of
the pier and the baggage examination area. No one was to leave his
post and follow Guarna or show any undue interest in his movements.
One out-of-town agent--unknown to any of the inspectors--was to be
stationed on the pier under the baggage collection point “G” in the
role of a visitor come to meet one of the passengers.
In September, the agents made a “dry run” of the zone defense to
acquaint themselves with their posts. On October 1, they put the plan
into operation.
Mario Cozzi, a chunky young man especially adept at surveillance, was
sent down the Bay with the Customs boarding party to seek out Guarna
in order that he could be pointed out to the other agents when he came
ashore. None of them knew him by sight.
Cozzi was wandering about the ship wondering how to locate Guarna
without arousing suspicion when he got an unexpected break. Cozzi saw
the Italian Line’s agent, Angelo Cappa, standing by the ship’s rail
talking to a well-dressed, middle-aged passenger. Cappa called him over
and said, “Mario, I want you to meet Mr. Guarna, who is returning from
Italy. Mr. Guarna, this is Mr. Cozzi.”
Cozzi shook hands with Guarna and then hastily excused himself, saying
he had work to do before the ship docked. From that moment he remained
close to Guarna, and when the merchant walked down the gangplank, Cozzi
discreetly pointed him out to the waiting agents.
Guarna hurried to the collection point “G” and paid little attention to
the man who was standing under the sign holding a visitor’s pass in his
hand. He would have been intensely interested had he known the stranger
was Agent Melvin Huffman.
Inspector Lev walked up and shook hands with Guarna. And then he turned
to Huffman and said brusquely, “Do you have permission to be on the
pier?”
Huffman handed over his pass and said amiably, “I’m waiting for a
friend--Mr. Gardiner. He’s supposed to be on the _Colombo_ and he asked
me to meet him here.”
Lev examined the pass and then handed it back, satisfied that Huffman
was only a visitor. He said, “It’s all right. Mr. Gardiner should be
along soon.”
Lev then called over another inspector and whispered in his ear. The
inspector nodded and shook hands with Guarna. He quickly examined four
small pieces of luggage and then he pasted clearance stickers on a
half-dozen large trunks without opening them.
This operation was witnessed by Huffman and also by Agent Carl
Esposito, who was watching from a nearby telephone booth. The
examination was in violation of orders, because the inspectors had been
instructed that morning to make a thorough examination of all baggage.
None was to be cleared without inspection.
As Guarna’s baggage was being taken to a platform to be loaded onto a
truck, Cardoza walked over to the telephone booth where Esposito sat.
“That’s a lot of baggage,” Cardoza said. “We’ll have to hire a truck to
get it to the office.”
Esposito grinned maliciously. “Why don’t we wait,” he said, “and let
Guarna hire his own truck. Then he’ll have to pay the bill.”
“Why not?” Cardoza said.
Porters were preparing to heave the trunks onto a truck at the loading
station when Cardoza and Esposito approached Guarna. They identified
themselves as Customs agents and asked to see the contents of the
trunks.
Guarna said nothing. Perhaps he was too frightened to speak. He merely
took several keys from his pocket and began unlocking the trunks.
When the agents raised the lids, they saw that each was packed with
expensive men’s haberdashery which had not been declared.
Guarna and Battaglia talked readily. They identified the inspectors
who had helped them in their smuggling. When agents completed their
examination of the partners’ books, they were able to prove that over
a period of two and a half years, the two men and their accomplices
had smuggled into the United States merchandise with a wholesale value
of $147,613--and they had avoided payment of duties totalling some
$56,600. They had paid out $6,000 to various inspectors, of which the
lion’s share--about $5,000--went to Lev.
Battaglia and Guarna were convicted and fined $10,000 and $5,000
respectively, and placed on five years’ probation. Inspector Lev
was fined $2,500 and sentenced to three years in prison, along with
Inspector Danis. Six other inspectors were dishonorably discharged from
the service.
17
THE INNOCENTS
Betty Warren and Harriet Davis--trim and attractive in their U.S. Army
nurses’ uniforms--were wide-eyed with excitement as they looked from
the window of the airliner and saw Hong Kong for the first time. The
clouds hung low over the peaks of the island jutting from the sea at
the edge of Red China. In the harbor they saw great luxury liners at
anchor alongside battered old freighters from the four corners of the
earth. The harbor was alive with Chinese junks and sampans.
Their excitement grew no less as the plane landed and a bus carried
them into the bustle of Kowloon to the Grand Hotel. The hotel would be
their headquarters for several days of sightseeing and shopping before
they returned to their posts at Yokosuka Army Hospital, and the end of
a vacation tour which had included Manila, Calcutta and Bangkok. It
was one of the standard tours arranged by the military for personnel
stationed in Japan and other Far Eastern bases. And Betty and Harriet,
both lieutenants, were only two among the hundreds who made the circuit
each year.
Before leaving Yokosuka, a fellow nurse had told them: “When you get
to Hong Kong, be sure to look up Mr. Chu in the Miramar Hotel arcade.
He’s terribly nice--and honest. He can tell you where to buy things at
the cheapest prices and he’ll show you around Hong Kong. He gets a
commission on anything you buy--but it’s worth it.”
The next morning after their arrival, blonde, blue-eyed Betty and
dark-haired, brown-eyed Harriet headed toward the Miramar Hotel arcade
to find Mr. Chu. They were window-shopping in the arcade when a voice
said politely, “Excuse me, please. I am Mr. Chu. Are you Miss Warren
and Miss Davis?”
The two women exclaimed in surprise. Betty said, “Yes. But how in the
world did you know who we are?”
Chu, a smiling, dapper, middle-aged man, said, “Lieutenant Bess and
Lieutenant Marge were here last week. They said you would be in Hong
Kong soon. So I have been watching for you. I would be happy to show
you around Hong Kong if you wish.”
The next morning, Chu called at the Grand Hotel with a chauffeur-driven
car. Obviously to make the girls feel more at ease, he had with him
his three-year-old son--a cute, button-eyed boy who stared at the two
American women as though they were creatures from another planet.
Soon the four of them were touring Kowloon and the New Territories,
the farm land stretching from Kowloon to the border of Red China. Chu
entertained them as they went along with a history of the countryside
and of the people. They even stood at one end of the bridge at the
border, looking into Red China and watching the impassive Red soldier
standing guard at the other end with a Russian-made machinegun slung
from his shoulder.
Before their Hong Kong stay had ended, Betty and Harriet were as much
impressed by Chu’s courtesy and helpfulness as other military personnel
had been in years past. Chu had concentrated on building good will
among the American military people, with the result that he knew scores
of Army, Navy and Air Force men and women throughout the Far East. He
carried on a lively correspondence with them, acting as their agent in
buying gifts to be shipped to friends and relatives in all parts of the
United States. His reputation for fair dealing was impeccable.
On the last day of their stay, Chu called at the Grand Hotel to bid the
nurses goodbye. They thanked him profusely for his kindnesses and asked
if there was anything that they could do for him.
“If you would be so kind,” Chu said, “I would like for you to deliver
some gifts to a relative in Japan.”
He explained that he would have a seaman deliver two suitcases to
them at Yokosuka. The cases, which they would be free to open if they
wished, would contain a few shirts, some dolls for his relative’s
children, and a few other inexpensive gifts. The nurses would not have
to bother about delivering them, because his relative would call for
them at their quarters. The nurses said they would be delighted to do
him a favor. And they bid one another goodbye.
Betty and Harriet were not the only Americans who had sought the
services of Mr. Chu that week of February, 1958. Air Force Captain Bob
Hampton, a tall, slim young jet fighter pilot, also was one of his
customers. Hampton had hitched a ride from Japan to Hong Kong aboard an
Air Force transport. He had called on Chu to help him purchase several
tailored suits and shirts, a camera, a watch and other gifts.
Before they parted Chu also asked Hampton if he would mind carrying a
suitcase back to Japan for his relative, a Mr. Lee. The captain said he
would be glad to do him a favor, whereupon Chu brought out a suitcase
from the shop where he worked. He opened it to show his friend that it
contained only a few dolls, several shirts, ties, and other inexpensive
small gifts. Hampton bid Chu goodbye, carrying the suitcase with him as
he hurried to catch his plane back to Tokyo.
Soon afterward, Chu once more ran into a friend, Seaman Leslie Brown, a
broad-shouldered young native of Los Angeles who had come ashore from
the SS _President Cleveland_ when the big liner docked with its load
of ’round-the-world tourists. Chu had met Brown on a previous visit,
introducing himself to the lonely sailor he had noticed wandering
through the streets of Kowloon and inviting him on a tour of the
colony. Brown had repaid Chu by introducing him to other crew members
on shopping expeditions.
When they met once again, Chu invited Brown to lunch at a restaurant
where waiters brought to the table the most bewildering variety of
Chinese food Brown had ever eaten. “This is the best and cheapest food
in all Hong Kong,” Chu said.
During the meal, Chu asked Brown if he would do him the favor of
delivering a suitcase to a relative, Mr. Lee, in Los Angeles. He
explained, as he had to the other Americans, that the suitcase
contained only a few gifts.
“Sure,” Brown said, “if there is nothing in it to cause me any trouble.”
Chu assured Brown there would be no trouble. He took him to the home of
a friend, Ting Ching-Tsoi, where Mrs. Ting brought out a suitcase. Chu
opened it to show Brown that it contained nothing but the gifts he had
described. And then he gave Brown $20 for his trouble in delivering the
luggage.
That night, Chu also delivered two suitcases to a seaman aboard the USS
_Kearsarge_, to be taken to Betty Warren and Harriet Davis in Yokosuka.
Unknowingly, these Americans were innocents in a plot to smuggle
millions of dollars worth of narcotics into the United States, either
directly or by way of Japan. Each of the suitcases contained a false
bottom in which packets of heroin were concealed.
As American and British agents later pieced together the story, Chu
himself was unaware that the luggage contained heroin, or that he was
being used as a pawn merely because he had so many friends among the
military people and seamen who visited Hong Kong.
The plot had its beginning when Chu’s friend, Ting Ching-Tsoi,
conceived the idea of using Chu as an unwitting agent in a
heroin-smuggling ring. Ting approached Chu with a proposition that they
could make a big profit by sending watch parts to the United States,
hidden in the false bottoms of suitcases carried by Chu’s American
friends. Ting knew that Chu would have nothing to do with narcotics
but that his code of ethics would not be violated if he thought he was
having his friends smuggle a few watch parts.
Chu agreed to a deal. Ting sent a confederate, Kung Kee-Sun, to nearby
Macao, where anything can be bought if one has the cash--and where
heroin can be purchased by the pound as easily as a woman can be bought
for the night.
Kung smuggled the heroin past the British customs patrol. Then Ting
bought several good-quality leather suitcases. He took them to a friend
in Kowloon, who inserted false bottoms, fashioned of thin plywood
covered with leather. The packages of heroin literally were built into
the luggage. The job was so well done that only a careful inspection by
an expert would disclose anything wrong.
Then, quite by chance, the system broke down because an Air Force wife
became suspicious. When Captain Hampton returned to his home near the
Tachikawa air base outside Tokyo, he found that his wife was on a
shopping trip into town. He put the suitcase Chu had given him in a
closet and promptly forgot about it. He also forgot to inform his wife
that a Chinese would be calling for the suitcase later. Then he was
suddenly called away from home on a training mission.
While he was gone, a Chinese called at the Hampton home. When Mrs.
Hampton opened the door, the Chinese introduced himself as Mr. Ling. He
inquired about the gifts which Captain Hampton had brought from Hong
Kong from his relative, Mr. Chu. He said he had come for them and would
appreciate it if Mrs. Hampton would give him the suitcase.
But Mrs. Hampton knew nothing about gifts in a suitcase. She knew
nothing about a Mr. Ling and nothing about a Mr. Chu. “I’m very sorry,”
she said, “but you will have to return when my husband is home. He has
said nothing to me about it.”
Mr. Ling was visibly upset and seemed not to understand why Mrs.
Hampton would not give him the suitcase. But he left, promising to
return.
When Hampton returned home, his wife told him of the strange Chinese
who had called and how upset he had been when she had refused to turn
over a suitcase to him.
“I’m sorry,” Hampton laughed. “I put the suitcase in the closet and
forgot all about it.” He explained he had brought it home and was to
deliver it to Ling as a favor to Chu. “There’s nothing in it except a
few cheap gifts,” he said.
But Mrs. Hampton remembered the sudden distress she had seen in Ling’s
eyes when she disclaimed any knowledge of a suitcase. “I don’t like the
looks of this at all,” she said. “That man Ling was actually frightened
when I wouldn’t give him the suitcase. The loss of a few cheap gifts
shouldn’t upset him like that.”
Captain Hampton began to worry that perhaps something was wrong. He
checked the contents of the case but saw nothing to get alarmed about.
Nevertheless he decided to report the matter to Air Force intelligence
officers. When the agents examined the suitcase carefully, they found
the hidden narcotics.
The Air Force investigators turned the case over to Japanese police.
Ling was arrested and finally broke down. He confessed the smuggling
plot. He also told investigators about the shipment of narcotics
in the suitcases destined for the two Army nurses. These bags were
intercepted, and when the bottoms were pried loose, the investigators
found that each contained heroin valued at $50,000 on the retail market.
The news of Ling’s arrest reached Chu in Hong Kong. He was appalled
that he was being used as a tool in the smuggling of narcotics. He
wrote a frantic note to Lieutenants Warren and Davis, urging them to
destroy the two suitcases as soon as they arrived, in order to avoid
trouble. He apologized to them for causing them any embarrassment or
trouble.
And then he wrote a letter to Seaman Leslie Brown. He mailed one copy
to Honolulu and another copy to Brown’s home in Los Angeles. He said:
Dear Leslie:
I hope this letter will catch you up in Honolulu or Los Angeles. If
in San Francisco too late. I want to tell you about the story of
the suitcase. It is a very dangerous thing. Please do not take it
back to your house. Please keep it board ship and return it to me
in Hong Kong, otherwise you will have big troubles. If you already
took them home, and have no trouble, please keep it. If some
Chinese people try to get it, please do not let any people have it.
The best thing is to return to Hong Kong. It is a very dangerous
suitcase. Be careful of yourself. You have family and I also have
family. I don’t want you and me to have troubles.
I am very sorry for everything. Please take my word. Please return
me a mail. I am looking forward to hearing from you in the very
very soonest.
Sincerely yours,
_Chu_
The letter was waiting for Brown when the _President Cleveland_ arrived
at Honolulu. Again he examined the suitcase closely, and everything
that was in it. But he could find nothing that was suspicious. He
decided that the best thing to do was to keep the case in his cabin and
to take it back to Hong Kong on his next trip.
Brown wrote to Chu, saying:
Dear Chu:
Received your letter in Honolulu. Was quite surprised and hurt
to know you put me in such a spot after I asked you if there was
anything in the suitcase. We arrive in San Francisco today. I have
the suitcase on the ship and will return it to you next trip when
I come. That is if nothing happens to me. I have spent every night
since then worrying about the spot you put me on.
Well, I will close for now. Hope you write and that your children
are well.
Sincerely yours,
_Leslie Brown_
When the _President Cleveland_ reached Los Angeles, Brown left the
suitcase in his cabin and hurried ashore to his apartment. He was told
that a Mr. Lee, a Chinese, had made several calls inquiring about his
return. And within a few minutes after his arrival, there was a knock
on his door. Brown opened the door and found that his caller was a
Chinese about fifty-five or sixty years of age. He had thin, sharp
features and a dark complexion. His hair was turning gray. He was
wearing a brown suit and a topcoat.
“I am Mr. Chu’s relative, Mr. Lee,” the visitor said. He asked if Brown
had brought the suitcase from Mr. Chu.
“I can’t give it to you,” Brown said. “I got a letter from Chu and he
told me to hang on to that suitcase or I’d get in trouble.”
Lee angrily accused Brown of trying to keep the suitcase in order to
sell it. He demanded to know where it was.
To prove he still had it as he claimed, Brown took Lee with him aboard
the _Cleveland_ and showed him the suitcase in his cabin. But he
refused to give it to him. Brown had the bag in his cabin when the
_President Cleveland_ sailed from Los Angeles on the return trip to
Hong Kong.
The U.S. Customs agents in San Francisco and Los Angeles were informed
by the Customs representative in Tokyo of the developments at that end
of the line. By this time they had learned that Brown was involved in
the smuggling operation and that he was to make delivery to a Chinese
known only as Mr. Lee. But the message from Tokyo arrived after the
_Cleveland_ had put to sea.
When the _Cleveland_ arrived in Yokohama, Treasury agents in Japan
boarded the vessel and asked Brown if he still had the suitcase which
had been given to him by the Chinese in Hong Kong. Brown said, “Yes. I
know which one you are talking about.” He took them to his cabin and
showed them the case. “I have looked it over,” he said, “and I can’t
find anything wrong.”
A customs agent went over the suitcase carefully, discovered the false
bottom, pried out the piece of plywood, and uncovered the cache of
heroin. It was estimated to be worth $500,000 at retail prices.
Brown agreed to work with Customs agents when he returned to the United
States and to help trap the Chinese who had called on him for the
narcotics. The narcotics were turned over to the ship’s captain and
Brown was confined to the ship. When the vessel docked in San Francisco
the heroin was turned over to Customs agents. Brown was taken in tow by
Customs Agent Paul Samaduroff, a blond-haired, broad-shouldered man who
had specialized in tracking down West Coast narcotics smugglers.
Samaduroff and other agents in San Francisco suspected that the “Mr.
Lee” who had called on Brown in Los Angeles was actually Li Sheung,
also known as Shin Lee. He fitted the description which Brown had given
the agents when he was questioned in Japan. Li had been on the agents’
wanted list for months--but they had never been able to trap him while
he was buying or selling narcotics. Now the chance had come.
The agents placed fake packages of heroin in the false bottom of the
suitcase and went with Brown to the bus depot, where the bag was
checked in a locker. Then Brown was taken to a telephone, where he
placed a call to Li Sheung’s hangout at a shirt shop on Grand Avenue
in Chinatown. The shop owner answered the phone and Brown asked if he
could talk to Li Sheung. The shop owner said, “You call later, and I’ll
see if I can contact him.”
Several times Brown called the shirt shop only to be told to call
again. Late that evening the contact was made. A man who identified
himself as Li Sheung got on the phone and talked to Brown. Brown
identified himself as a seaman aboard the _President Cleveland_ and
said he had something which he was supposed to deliver to Li Sheung.
“Yes,” Li said, “I remember you in Los Angeles. Why didn’t you give me
the suitcase when I was in Los Angeles?”
Brown said that he would explain the whole thing to him when they met.
He added, “I have the suitcase here now and I’m supposed to give it to
you.”
They agreed to meet in a restaurant in Chinatown. Li Sheung was waiting
for Brown when he arrived at the restaurant. Customs agents had placed
themselves at strategic points outside the restaurant, and one was
seated at a table in the rear of the room when the two men sat down
together.
Li Sheung kept referring to the fact that Brown would not give him
the suitcase in Los Angeles. He said he could not understand why the
delivery had not been made.
Brown said, “That time you came to my house, I thought there was
something hidden in the suitcase but I didn’t know what it was. Now I
know, and I want some money for my trouble.”
Li Sheung agreed to go with Brown to the bus station to pick up the
heroin and to pay him $100. They left the restaurant and got into a cab.
Customs agents, keeping contact with each other by radio, trailed the
cab from the restaurant to the bus station, where other agents waited,
lounging about the place as though they were travellers. They were
watching as Brown went to a baggage locker, took out the bag, and
handed it to Li Sheung. The Chinese then counted out $100 and handed it
to the seaman. At this point Samaduroff and the other agents moved in
and arrested Li Sheung. He was convicted and sentenced to five years in
prison.
And Mr. Chu--the amiable, friendly little man in Hong Kong? The British
were lenient with him because he was, after all, only the dupe, and he
had cooperated in rounding up the smuggling gang. By now, he may have
returned to his old job of being helpful to touring Americans.
The Customs files are fat with such cases, in which smuggling rings
and individual smugglers have used innocent victims to help them bring
jewels, heroin, watch parts, and other small but valuable items into
the United States.
One of the innocents in such a plot was dark-eyed, attractive
Countess Kyra Kapnist, who arrived in the United States aboard the SS
_Champlain_ on September 2, 1937, to join the exclusive fashion house
of Marcel Rochas, Inc., of New York City as a model and saleswoman.
Before she left Paris, an official of the firm had informed her that
two trunks and a hat box would be added to her baggage when it was
delivered to the liner. It was nothing she was to worry about. She
would be met on the pier in New York by Mr. Guy Fonte-Joyeuse, vice
president of the firm and manager of its New York branch. He would take
care of her customs declaration and the baggage inspection. All the
countess had to do was to be her charming self and not worry her pretty
head about such small details.
And so the countess arrived in New York. On the pier, she was met by
Fonte-Joyeuse, a distinguished-looking man accompanied by a fashionably
dressed woman. Everything seemed to go as she had been told it would in
Paris. Fonte-Joyeuse was extremely solicitous about his new employee.
“Give me your customs declaration,” he said, “and I’ll take care of
everything.”
He hurried away to find an inspector to examine her baggage. Within
a matter of minutes an inspector appeared and peeked into one piece
of the countess’ luggage. Then he stamped all the baggage for
clearance and the countess was whisked from the pier with her friends.
Fonte-Joyeuse seemed unduly elated over her arrival.
Fonte-Joyeuse would not have been so happy had he known that a member
of his own firm was an informer for the U.S. Customs Service--and that
a letter was even then on its way to the Service advising them that
Countess Kapnist’s luggage included two trunks and a hat box containing
seventy original gowns and hats valued at approximately $40,000.
Agents opened an investigation and found that Countess Kapnist’s
declaration made no mention of dutiable imports. They questioned
the inspector who had handled the examination and found that--for a
price--he had agreed to feign an examination of trunks and luggage
brought into the country by the models and employees designated by
Fonte-Joyeuse.
When agents confronted the countess, she willingly told them the whole
story. She told them of the instructions given her in Paris, of being
met by Fonte-Joyeuse on the pier in New York, and of her surprise when
an inspector took the trouble to look at only one small suitcase among
all the luggage which she carried with her.
Agents found in the house of Marcel Rochas 104 gowns of French origin,
valued at about $60,000, which had been smuggled into the United States
by models and others employed by the firm.
Fonte-Joyeuse was indicted on two charges of smuggling and conspiracy.
He was sentenced to one year and a day in prison and fined $1,000. He
served six months of his sentence and then was released on parole and
deported to France. The Parisian fashions seized from the house of
Marcel Rochas were sold at auction. They brought about $9,000 into the
U.S. Treasury--of which $2,250 was paid to the Paris informer.
18
THE STORMY WORLD OF ART
The Korean War was still raging in April, 1951, when Sgt. Elverne
Giltner left the American Army’s Tenth Corps Headquarters for a stroll
about the war-battered streets of Seoul. Four times in less than
one year fighting had washed through the city as the United Nations
forces battled the North Korean and Chinese Communist troops across
the mountains and through the valleys of this unhappy land. Sergeant
Giltner was only one of thousands of American soldiers in Seoul at this
time.
Like most Americans overseas, the sergeant was a collector of
souvenirs. Whenever he had the chance to get away from headquarters,
he enjoyed poking about in the little shops in Seoul, searching for
interesting knickknacks to send back to his parents, Mr. and Mrs. Hugh
V. Giltner, in Pueblo, Colorado.
Not far from the parliament building--a gaunt structure bearing the
scars of war--Sergeant Giltner halted to examine the wares of a street
peddler. “I have nice rug you will like,” the peddler said. He pulled
back the edge of a bundle, revealing part of a leopard skin. “This rug
was made from leopard skins. It is very valuable,” the peddler said.
“How big is the rug?” the sergeant asked.
The peddler replied, “Very big.” He indicated by stepping off several
paces that the rug was probably 18 feet long by 8 feet wide. “In your
country,” the peddler said, “this rug would be worth several hundred
dollars.”
The peddler unrolled the bundle to give the sergeant a better look at
this bargain he was offering. Giltner saw that it was, indeed, a large
rug of leopard skins. It appeared to him as though it were not in the
best of condition, but he liked the idea of surprising his folks in
Pueblo with a genuine leopard-skin rug. “How much do you want?”
The peddler said he would sell the rug for 150,000 won, the equivalent
at that time of about $25 in U.S. money. Then the peddler tugged at
Giltner’s sleeve and whispered, “This rug is from the old queen’s
palace. She was the last queen of Korea. It is worth $2,000 in United
States.”
Sergeant Giltner was impressed. He agreed to pay 150,000 won. He picked
up his new souvenir and lugged it back to the barracks, where he tossed
it into a corner. He would send it home later by mail, as he had such
gifts as a black lacquer chest, a lamp fashioned from a beer can, and
other souvenirs of his stay in Korea.
But Giltner’s plans for shipping the rug were postponed. A lieutenant
took a fancy to the rug and, pulling rank, persuaded the reluctant
sergeant to part with his souvenir for the purchase price. That same
evening, the lieutenant lost the rug in a poker game to Lieutenant No.
2, who sold it to Lieutenant No. 3 for $50. Lieutenant No. 3 was going
to send the rug to his parents, but then he decided it was too much
trouble. He sold it to Sergeant Giltner for $25.
The sergeant stuffed the rug into a carton and mailed it home. He wrote
a note to his mother: “... I figure you won’t have much use for this
rug even after it gets there. But you can always sell it.... The rug
like I said before is made of leopard skin--the real thing, and is
mounted on red felt or something.... Just where you would put it beats
me....”
The rug was a sensation in Pueblo. Neighbors dropped by to see it.
It was so large that it could not be used in any of the rooms in the
Giltner home. For the best viewing, Mrs. Giltner had the rug hauled
out into the back yard and strung over a clothes line. The exact
measurements of the rug were 18 feet 11 inches by 8 feet. It was
embroidered at the four corners and had a red felt backing.
Mrs. Giltner told neighbors, “It’s too pretty to walk on and too big
for my living room. I don’t know what in the world we’ll do with it.”
The Giltners sent the rug to a local firm for cleaning and storage.
They valued the rug at $25,000 and had it insured for $16,000. The
Pueblo _Star-Journal_ carried a picture of the rug with a pretty girl
seated on it. The accompanying story said: “Owners of the rug are
contacting museums and big-game hunters, with a view to selling it,
since they feel it is too valuable for their use, and their home will
not accommodate it.”
Denver’s Collector of Customs Harry A. Zinn saw the news story in the
Pueblo paper. He thought it odd that an American sergeant should be
sending back a $25,000 rug to the United States. He forwarded a copy
of the clipping to the Supervising Customs Agent in Chicago, saying,
“Enclosed is a newspaper clipping, the subject of which you may
consider warrants some investigation.” The Customs agency certainly was
interested in investigating the importation of a rug of such value.
At the same time, the Korean Consul General in New York, David
Namkoong, was displaying interest in the report of the rug shipped from
Seoul. Namkoong realized that the rug was one of the national treasures
which had been stolen from the palace in Seoul at the outbreak of the
Korean War. The rug had hung in the Chang Duk palace, the home of Queen
Min. The palace had been made into a national museum where the Koreans
displayed historical treasures of the ancient kingdom. Many of these
treasures had been among the loot taken by Communists and civilians
during the first invasion of Seoul. Mr. Namkoong told a reporter for
_The New York Times_, “The rug is worth about $100,000, if such a
priceless national treasure can have a price tag.”
The Korean government and the United States government took the view
that young Giltner was an innocent purchaser of the rug and that he
had knowingly violated no law in sending the rug home. A Customs agent
hurried to Pueblo from Chicago to impound the rug. It was placed in
storage for safekeeping in Denver pending its return to Korea. The
Korean government reimbursed the Giltners for all the expenses involved
in the shipment, cleaning, storage, and insuring of the rug. And thus
the case of the souvenir-hunting sergeant and the leopard-skin rug
ended on a note of international good will.
The case of the leopard-skin rug presented no difficulty for Customs
in establishing the historic and artistic authenticity of the rug.
But classification in the field of fine art is not always so simple.
Customs has become embroiled in some hilarious and notable cases of
this sort.
Early in this century, Congress decided in the interest of promoting
culture to permit, free of duty, the importation of paintings,
sculptures, and other art objects which could be classified as “fine
arts.” It was when Congress began defining fine arts in legal language
that the trouble began. For example, a sculpture was defined as
something which is representative of an animate object in nature that
is in its true proportion of length, breadth, and thickness. When this
definition was written, members of Congress did not take into account
the abstractionists and the modernists, who hardly view their subjects
in their “true proportion of length, breadth, and thickness.”
With the passage of this law, Congress automatically converted every
Customs appraiser in the United States into an active critic and judge
of the arts. This was so because--whether the appraisers liked it or
not--they had to decide whether an import was a work of fine art and
thus free of duty. No shilly-shallying about it. It was or it was not
subject to duty. Juries of eminent art critics might enjoy the luxury
of disagreement; the Customs appraiser had to say yes or no.
This was the situation in 1927 when the distinguished sculptor
Constantin Brancusi sent from Europe a highly polished bronze figure
called “Bird in Flight.” The bronze was about 4 feet 6 inches high and
stood on a cylindrical base about 6 inches in diameter and 6 inches in
height.
In his effort to describe the sculpture, Justice Waite of the Customs
Appeals Court would write: “The importation ... terminates at the top
in a point which might be caused by the cutting of the piece diagonally
across and upward until it terminates in an edge. It increases in size
as it descends with a slight curve to the middle, from which point it
decreases and terminates about ten inches from the pedestal, where it
is cylindrical, and from that point it increases in size on a conical
shaped base which rests upon a pedestal....
“The piece is characterized ... as a bird. Without the exercise of
rather a vivid imagination, it bears no resemblance to a bird except,
perchance, with such imagination it may be likened to the shape of the
body of a bird. It has neither head nor feet nor feathers portrayed
in the piece.... It is extremely smooth on its exterior which is a
polished and burnished surface....”
When a Customs examiner first saw this objet d’art, he decided that it
could not, from his viewpoint, be called even a reasonable facsimile
of a bird. As he studied it further, he was unable to detect the “true
proportions” which were necessary to meet the requirements of the law
laid down by Congress for duty-free statuary.
His ruling that the famed “Bird in Flight” was not a work of fine
art touched off a storm in the art world, with much derisive comment
aimed at Customs. Edward Steichen, the importer of the Brancusi work,
appealed the examiner’s ruling, and when the case came to trial in
1928, he was flanked by an imposing list of witnesses ready to testify
that Brancusi had indeed produced a work of fine art in “Bird in
Flight.”
The witnesses who came to the defense of Brancusi were Sculptor
Jacob Epstein, Forbes Watson, editor of the _Arts_ magazine, Frank
Crowninshield, editor of _Vanity Fair_ magazine, and William Henry Fox,
director of the Brooklyn Museum of Art.
After hearing all the evidence, the court conceded that “under the
earlier (court) decisions, this importation would have been rejected
as a work of art, or, to be more accurate, as a work within the
classification of high art.” However, it noted that opinions of what
constituted high art had undergone changes under the influence of
modern schools of art.
Finally the court said of the statue: “It is beautiful and symmetrical
in outline, and while some difficulty might be encountered in
associating it with a bird, it is nevertheless pleasing to look at and
highly ornamental, and as we hold under the evidence that it is the
original production of a professional sculptor and is in fact a piece
of sculpture and a work of art according to the authorities above
referred to, we sustain the protest and find that it is entitled to
free entry....”
The storm kicked up over the Brancusi bird created little more uproar
than the arrival in New York in May, 1955, of an abstract painting by
the European artist Dr. Alberto Burri. It was a most unusual work of
art, as it consisted of several pieces of burlap sewn together and
affixed to a board, stencilled with letters, and decorated with birds
painted in oils. The artist said the effect of the whole was to convey
a spiritual sense of the order in life. He valued his work at $450.
However the Customs examiner, failing to perceive the artist’s message,
ruled that the importation was not a work of art. He held that it was
a manufactured object whose chief value was in the vegetable fiber, or
burlap sacking. Under this ruling, the import was dutiable at 20 per
cent of the value placed upon it by the artist.
The examiner’s ruling posed an unusual problem. Art experts agreed
that Dr. Burri’s work was not a painting--but a collage. And Congress
had failed to mention collages in the categories of art held to be
duty free, an oversight thought by some to reflect no credit on the
Congressional artistic sense.
Alfred H. Barr, Jr., director of museum collections of the Museum of
Modern Art, and Leo Castelli, owner of a New York art gallery, were
among those who came to Dr. Burri’s defense in court. They agreed his
collage was an original work of free fine art and they described Dr.
Burri as one of the first half-dozen artists to emerge in postwar Italy
with a world-wide reputation. His works had been exhibited in the New
York Museum of Modern Art, the Carnegie Museum in Pittsburgh, the
Allbright Gallery in Buffalo and other well-known museums.
The court reluctantly held, however, that since Congress had failed to
include collages in the free fine arts, an import duty of 20 per cent
would have to be paid--a ruling which later led to Congress amending
the law to permit collages to be imported free of duty.
These cases and others moved leaders in the world of art to petition
Congress to change the tariff laws governing the entry of works of
art, and to remove the absurdly restrictive language which had caused
so much embarrassment not only to the artists and to museums, but also
to Customs and the government itself. As a result of these petitions,
Senators Jacob Javits of New York and Paul Douglas of Illinois
introduced in 1959 a bill to amend the tariff laws to permit free duty
for all fine art and to eliminate the old definitions which had bemused
Customs examiners. The bill was passed by Congress.
Actually, the slings and arrows hurled at the Bureau in the disputes
over abstract art obscured the fact that over the years the Bureau had
developed a good many experts whose opinions were valued highly by
museums and leaders in the world of art. The Bureau also has some of
the country’s leading experts on appraisals of a wide range of imports.
It even boasts that it has a man who can look at a hog’s bristle and
tell whether the hog was raised on the China slope of the Himalayas
or the Indian side of the mountain, a bit of esoteric knowledge which
is not as useless as it might seem. Little is heard of the fact that
almost daily these men protect American dealers, collectors, and the
buying public from forgeries, fraud, and unfair trade practices.
Thirty years ago the country was being flooded with fake antique
silverware from England. In many cases an old hallmark--authentic in
itself and perhaps 200 years old--would appear on a beautiful teapot.
To all outward appearances the teapot was an authentic antique 200
years old. But what had happened was that an expert silversmith had
lifted the hallmark from an inexpensive spoon and then soldered it into
the teapot so smoothly that only an expert could detect the fakery.
There is little chance for such fraud today, even though dealers and
collectors import each year more than $2 million worth of antique
silver and old Sheffield, largely from England. Much of the credit for
this protection is due to a dapper little man named Nathan Nathanson,
who is one of the world’s leading experts on silverware. Nathanson is a
small, bouncing man with a bristling black moustache and an infectious
enthusiasm for his work. He was reared in Brooklyn and as a boy served
as a jeweler’s apprentice. He became fascinated with metals and gems.
The youth haunted museums, art galleries, antique dealers’ showrooms,
and libraries, studying everything he could find on the subject of
silver and old jewelry. He pursued his interests with study at Columbia
University and then joined the Customs Bureau, where he quickly became
recognized as an authority in his field. As a result of these years of
study, Nathanson usually can tell within five years when an antique
piece of silverware was made, the name of the artisan who made it, the
city in which it was made, and the original owner of the piece. This he
is able to do through his knowledge of the hallmarks on the silver--the
symbols which were first stamped into silver pieces by the ancient
guilds of England during the reign of King Edward I in the year 1300.
During the last 200 years, hallmarks have been an important guide to
those versed in the lore of old silver. But of equal importance is a
knowledge of the patina of old silver--that mellow coloration which
is given to silver only by time and which no one yet has been able to
duplicate. The expert must also know the distinctive designs from each
period.
Unscrupulous silversmiths have several methods of faking antique
silver. The most commonly used fraud is the transfer of a famous
hallmark from a small piece of silver to a large tray, coffee pot or
teapot, a process known as “sweating.”
One simple method to detect such a graft is to breathe on the hallmark.
The warm breath in most cases will make the graft lines show up. The
infallible method is to heat the silver--and this can only be done
safely by an expert. Under strong heat the graft lines come into view.
Another method of forgery is to take a valuable and authentically old
piece of silver, make a cast of it, and from the casting create a
duplicate. The new silver piece is “aged” with an artificial patina.
But no matter how good this job might be, the forgers always leave
after casting tiny marks and other imperfections which the expert is
able to spot by close study. Nathanson insists that even if the job
were so well done that an expert missed the telltale marks, he could
not be fooled by a phony patina.
Nathanson and his colleagues have their own quiet moments of triumph
when they pit their knowledge against that of well-known importers. In
one case a New York importer objected to paying duty on a loving cup
which obviously was much more than a century old and qualified in his
opinion for free entry. He argued that this loving cup was absolutely
authentic and that all Nathanson had to do was look at the patina of
the silver and also at the hallmarks. “Anyone can recognize those
hallmarks and see that they are legitimate,” the importer said.
But Nathanson was quite sure there was something wrong with this piece
of silver. The design was not quite right for its period. The hallmarks
were genuine. There was no evidence that they had been tampered with.
The patina, without doubt, was that of a very old piece of silver, and
the sheen could not have been imparted by any chicanery.
Finally he suggested to the importer that they take the loving cup to
the workshop of the importer, where his own silversmith could heat
it to a near-melting point without doing damage. As they watched the
silversmith carefully heat the silver, Nathanson saw that his suspicion
was justified. The heat showed up definite lines where a spout had been
removed from the “loving cup” and the hole patched over very expertly
with silver to change the shape of a teapot and convert it to a loving
cup.
Under the law, this piece of silver--even though it was far more than
a century old--could not meet the requirements for free importation
because it had been changed from its original form.
Many antique dealers are upset by the fact that they import what
appears to be a legitimate antique only to find that it does not
qualify for free entry because it has been tampered with at some time
in the past. For example, one importer brought into the country a very
old Oriental panel which had been made into a modern coffee table. He
declared the table was entitled to free entry because the panel was
an antique. Customs did not agree with the dealer’s viewpoint. While
the panel alone would have been permitted to enter free of duty, once
it became a part of a modern piece of furniture then it no longer met
the legal requirements. This meant that the importer not only had to
pay the regular rate of duty but also a penalty of 25 per cent--a
penalty which is used by the government to discourage the practice of
mislabelling imports.
In the eighteenth century in England it was common practice to use a
pole screen while sitting in front of an open fire. The pole screen,
sometimes made of painted wood and sometimes of fabric, stood on a
tripod base and was placed in front of a person to shield his face from
the fire. The top part was adjustable and could be raised or lowered as
the person wished while toasting his legs.
Dealers in later years got the idea of converting the pole screens to
other uses. They cut the screen from the pole and used the tripod as a
base so that the old pole screen became a coffee table. While all the
parts actually were antiques in themselves, Customs held that it did
not qualify for free entry because the character of the article had
been changed over the years. It was not being imported in the same form
in which it originated and for which it was primarily intended. The
fact that the parts were antique did not qualify it for free entry any
more than the table fashioned from an Oriental panel.
Even the best and most reputable of dealers sometimes make mistakes
in judging the age of art objects. There was one case in which such a
misjudgment cost the dealer $6,300 in duties. A New York art gallery
in 1953 paid $4,300 for porcelain vases which it believed to be early
eighteenth-century Chinese. They were purchased from importers, who
had bought them from a corporation which was disposing of several art
objects for an estate. The vases originally had been owned by the royal
family of Russia and had been brought to this country after the Russian
revolution.
The gallery sold the vases for $9,000 to a woman who maintained her
residence in Paris. One evening she boasted to her dinner guests that
the vases were early eighteenth-century discoveries which once had
reposed in the palace of the late Czar of Russia. One of her guests,
an antiquarian, suggested discreetly to her later that possibly her
purchases were not eighteenth-century Chinese but were from the
nineteenth century.
The woman indignantly demanded an explanation from the gallery,
which replied that they would gladly refund her money if she were
dissatisfied, but they could not admit that a mistake had been made
in dating the vases. The woman shipped the vases back to the United
States labelled as antiques, free of duty, and valued at $9,000.
When the vases arrived at Customs in New York, one of the Bureau’s
experts studied them and declared that the vases were not Chinese
eighteenth-century vases, but in fact had been made in France in the
nineteenth century.
The Customs examiner’s judgment was upheld by other authorities in
this field. The gallery was required to pay duty of $6,300. The tariff
law states “if any article ... is detected as unauthentic in ... the
antiquity claimed as a basis for free entry, there shall be imposed,
collected, and paid ... a duty of 25 per cent of the value ... in
addition to any other duty.” And in this case the “other duty” amounted
to 45 per cent of the value.
Cultural growth can hardly be reduced to statistics, but Customs’
statistics are at least persuasive in support of the argument that
the United States is now enjoying a cultural boom. Ten years ago
American collectors were purchasing original paintings at the rate of
$8.5 million a year. The purchases have increased to $33 million a
year, with indications that the country is on a prolonged art-buying
binge. It has been a profitable investment for many, as the values of
the modernists’ paintings--particularly popular in this country--have
spiralled.
The increase of interest in art has created a problem for Customs
because--with the huge sums of money involved--there have emerged
in Europe several “factories” producing bogus paintings in Paris,
Amsterdam and Rome.
The appearance of the forgeries moved the Customs Bureau to issue this
warning in its monthly bulletin:
Dealers and experts must approach all shipments with extreme
caution and employ modern scientific testing methods because of the
skill that has developed in the forging of scenes and signatures.
A recent purchase of a Modigliani, described merely as a “Portrait
of a Woman,” as so many of his works are, demanded much time and
research. A well-known American collector obtained the picture for
$25,000--a bargain, considering the quality of the painting. Our
appraisers and examiners set to work. They delved into the very
elaborate history of the painting and discovered that the canvas
actually was 2 inches smaller than the original--also there were
color differences. To the dismay of the importer, this import was
appraised at $150 and returned for duty as a copy.
Many of the fakes are discovered through the use of X-ray and infrared
and ultraviolet lights, which reveal overpainting, restorations, and
flaws not visible to the naked eye. Chemical analysis of the paints and
varnishes used by the artists often give a clue to the period in which
the work was done.
Over the years, the Customs examiners have learned that any decision
they make on a work of art is potentially explosive. They have learned,
too, that on some days they can expect to appear very dumb--and on
other days very smart. And that very few people seem to hear of the
smart days.
19
SEX AND THE CENSOR
Censors are unloved creatures. They are damned by writers, artists,
and liberal thinkers wherever men cherish free expression. They are
regarded generally as crude conformists who wear their righteousness as
proudly as a Boy Scout wears his merit badge.
Every rule is likely to have its exception. The exceptional censor
in the United States is a tall, good-natured, erudite lawyer named
Huntington Cairns, who might justifiably be called the nation’s
watchdog against the importation of obscene books, pictures, and other
items of a questionable moral character. It would be too much to call
Cairns “the beloved censor.” But if a department of the government were
capable of affection, then the Treasury Department (and the Customs
Bureau) at least should feel this warm emotion for the man who has kept
them remarkably free from foot-in-mouth embarrassment for more than a
quarter of a century.
Since 1934, Cairns has advised the Treasury and the Customs Bureau in
their decisions as to what constitutes obscenity in foreign imports.
Since his arrival on the scene there has been no significant public
controversy over his decisions, even though the dividing line between
genuine art and pornography is often no more than one man’s prejudice.
Officially, Cairns is secretary, treasurer, and general counsel of the
National Gallery of Art. His headquarters is a large, secluded and
attractive office in a wing of the National Gallery on Constitution
Avenue in Washington, D. C. It is from these improbable surroundings
that Cairns advises Treasury and Customs on what is obscene and what
isn’t, what should be refused entry into this country as plain trash,
and what should be permitted to enter. The Treasury is under no
obligation to follow his advice, but it does.
Cairns is a big, dark-haired, distinguished-looking man in his early
sixties who is far more interested in Plato than in pornography.
He is convinced that the ancient Greeks were the greatest people,
intellectually, who ever trod the earth. Even their pornography, in his
view, was superior to the modern product.
Cairns assumed the role of censor because of a curious chain of events,
which began when he successfully opposed government censorship banning
George Moore’s translation of _Daphnis and Chloe_--a book which shocked
the sensibilities of many people, including the Customs collector who
read it and ordered it banned.
A Baltimore book dealer had imported Moore’s translation with high
hopes for a large and lucrative sale in Baltimore and in other cities.
But Customs ruled the book was obscene under Section 305 of the Tariff
Act of 1930. This act says: “(a) Prohibition of importation--all
persons are prohibited from importing into the United States from
any foreign country any book, pamphlet, paper, writing, advertising,
circular, print, picture, drawing, or other representation, figure,
or image on or of paper or other material, or any cast, instrument or
other article which is obscene or immoral.... No such article, whether
imported separately or contained in packages with other goods entitled
to entry, shall be admitted to entry.... Upon the appearance of any
such book or matter at any Customs office, the same shall be seized
and held by the Collector to await the judgment of the District Court
as hereinafter provided; and no protest shall be taken to the United
States Customs Court from the decision of the Collector.”
Thwarted by this formidable language, the book dealer took his problem
to Cairns, who was then practicing law in Baltimore. Cairns appealed
the ruling by Customs to the Customs Court of Appeals. Then he cannily
persuaded the judge to hear the case without a jury--and to hear the
testimony of expert witnesses, including a psychiatrist, a professor
of English, and a newspaper editorial writer then with the Baltimore
_Sun_. Cairns tried to persuade a classics scholar from Johns Hopkins
University to testify for him, but the professor replied, “No, I will
not testify in defense of such a worthless book as George Moore’s
translation of _Daphnis and Chloe_.”
The trial procedure broke legal precedent. Previously the rule had been
that expert witnesses could not testify because they would usurp the
function of a jury. But Cairns was permitted to put his witnesses on
the stand.
Cairns wasn’t too sure of his psychiatrist and how he would react
to cross-examination by the government attorney on the question of
what effect the book would have on immature adults and children. The
psychiatrist handled himself very well under direct questioning, but
then the prosecuting attorney at the close of his cross-examination
said to the psychiatrist, “Would you recommend this book to be read by
everybody?”
At this point Cairns literally held his breath waiting for the reply of
the psychiatrist. His heart sank when the psychiatrist replied, “No, I
would not.”
The prosecuting attorney turned triumphantly and said, “That’s all,
your honor.”
Cairns simply could not leave his case in that precarious position. He
said to his witness, “Well, Doctor, would you recommend that everyone
read the Bible?” The psychiatrist replied, “No, I would not.”
Cairns won this case. The book ban was lifted. The result of the trial,
headlined in the daily newspapers, did not go unnoticed in Washington.
Soon after this case had been decided, Secretary of the Treasury Henry
Morgenthau decided something had to be done about the adverse publicity
received over the years by the Treasury Department and by Customs
because of disputed rulings being made on books, art and other items
being imported into the country. One of the most publicized cases
had involved the attempt by an importer to bring into the country
copies of James Joyce’s controversial _Ulysses_. The book had created
a tremendous stir in literary circles in Europe and among those in
the United States who could get their hands on a copy. Joyce’s use of
four-letter words and his then-shocking treatment of sex brought howls
of protest from many. There were outcries against any importation of
the book into the United States. Likewise, there was an outcry against
censorship among those who regarded Joyce’s work as an outstanding work
of literature, written in a style and with a realism which they said
raised it to a high level of art.
Joyce’s book went on Customs’ banned list. The case was taken to court
and the judge wrote a blistering opinion against censorship. The court
held that the book had to be viewed as a whole, and that one could not
judge it by picking out isolated passages from the text; when the book
was viewed in its entirety, it was not obscene.
About this time, also, Customs found itself in hot water because an
examiner refused entry for a shipment of photographs of sculptures of
nude men and women. The examiner took one look at the photographs and
ruled that they were pornographic. The trouble was that the pictures
were photographs of sculpture in the Vatican--a point which did not
seem to impress the examiner but which was noted acidly in the protest
against his ruling.
This combination of events, among others, persuaded Secretary
Morgenthau to look for someone who could bring the situation under
reasonable control. As Cairns tells the story: “Of course, I don’t know
what went on in the Treasury or why they turned to me, except that I
had beaten the government in the Baltimore case. I had been writing on
books for the Baltimore papers for a number of years and Eli Frank,
the chief counsel of Customs, knew about my work and my interests. The
story I heard was that after the chain of adverse publicity, Secretary
Morgenthau called on his counsel, Herman Oliphant, and said, ‘Find me
a lawyer who has read a book.’ So Oliphant called up the chief counsel
of Customs and passed on the word, ‘Find a lawyer who has read a book.’
That is how I got into it.”
Before “getting into it” Cairns decided to make a trip to New York to
interview those who had had a voice in banning the controversial works.
He wanted to know the Customs procedures and how those involved arrived
at their decisions. He decided the best starting point would be to
interview one of the Customs employees engaged in opening and examining
packages from overseas.
Cairns opened the interview by saying, “Tell me on what grounds you act
when you refuse entry for an item.”
The clerk replied, “Well, if I see a book with a naked woman in it, a
photograph, I hold it up.”
“I can understand that,” Cairns said, “but tell me about some other
cases that are not so clear-cut as a book having a picture of a nude in
it.”
“Well, did you ever hear of this _Ulysses_ case?”
“Yes,” Cairns said, “I have heard of that case. Did you handle the book
when it arrived?”
The man nodded. “Yes, I did. What happened was that when the book
came in I admitted it. There was another shipment and I admitted it.
There was a third shipment which I admitted, too. Then I began to get
suspicious. Here’s a book bound in paper and it was selling for fifteen
dollars. So I said to myself, it must be a dirty book. So I got my
knife and cut the pages. I cut the pages and when I got to the end of
the book, I saw the dirtiest words I had ever seen in my life. So I
held it up.”
Cairns nodded. “Who was the book addressed to?”
“It was addressed to an actress. She came down to see me and said, ‘I
want my _Ulysses_.’ I said, ‘Lady, I ain’t going to give it to you.
It’s a dirty book.’ ‘Well,’ she said, ‘at least let me look at it.’ I
looked at her and said, ‘Lady, are you married?’ She said, ‘No, I am
not married.’ And then I said, ‘Well, lady, I ain’t even going to let
you see it.’”
After this revealing interview, Cairns decided to work with the
Treasury and Customs in an advisory capacity. A procedure was set up
whereby questionable items were forwarded to him at Baltimore for his
recommendation before the Bureau made any formal ruling. The procedure
worked so well that it was continued through the years.
Cairns left Baltimore to join the Treasury in 1937 as the Senior
Assistant General Counsel. He remained with the Treasury until
December, 1942, when he came to the National Gallery in his present
post. Over the years, Cairns’ work as a “censor” has become
less difficult as the courts have become more liberal in their
interpretations of what constitutes obscenity and what does not. Cairns
now receives only about 5 to 7 per cent of the questionable imports and
he does not consider them to be difficult cases.
More than 90 per cent of the questionable items are what Cairns refers
to as “junk,” and “hard core” pornography. There never is any question
about the hard-core pornography. It consists of filthy pictures and
objects obviously manufactured with a lascivious and lewd intent.
Customs examiners have learned over the years to recognize such
shipments almost immediately by the wrapping of the packages, the names
of the shipping companies, and the countries of origin. For a time
France was the source of most of the pornographic material. Then it
was Italy. Then the source shifted again back to France. Then to India.
For a time Japan was the major supplier of pornography, and at present
Sweden is a leader in this field.
In some cases, Cairns advised test cases so that the court might
decide the issue and establish a legal precedent. One such case
involved the importation of birth control items by a doctor in seeming
violation of the law banning “any article whatever for the prevention
of conception.” Did the statute mean such items could not be imported
for medical purposes? Cairns thought it a point for the court to
decide--and the decision was that the statute was not intended to
exclude such imports by a medical practitioner.
Another such case involved the importation of acknowledged hard-core
pornography in 1950 by Dr. Alfred C. Kinsey, the Indiana University
professor whose controversial “Kinsey Report” on human sexual behavior
created a stir in the late 1940s.
The Kinsey case developed when Dr. Kinsey had shipped from Europe to
the Institute of Sex Research of Indiana University a case filled with
pornographic books, sailors’ postcards, and photographs of males and
females in the sexual act. Customs previously had banned such items
with no voice raised in objection. But a nationwide interest was
aroused when Collector of Customs Alden H. Baker at Indianapolis took
one look at the Kinsey material and declared it “damned dirty stuff.”
Baker refused to release the shipment to Dr. Kinsey and defended his
position by saying, “There is nothing scientific about it.... If you
saw some of these pictures, you wouldn’t think they were scientific.”
He shipped the material to Washington, where Customs officials--and
Cairns--agreed with the collector that it was unadulterated pornography
specifically banned by law.
Kinsey protested the material was necessary to his research and that
since it was for scientific study the government had no right to
withhold it from him and from his colleagues at the Institute. He
issued a statement saying, “You can use the Bible or almost anything
for obscene purposes. Any material you can think of can be made
obscene by perverting it to erotic stimulations.... The Institute of
Sex Research at Indiana University considers this issue is one that
concerns all scholars the world over who need access to so-called
obscene materials for scientific investigations which in the long run
may contribute immeasurably to human welfare.”
Kinsey appealed to members of Congress for an amendment to the tariff
laws which would permit him to have access to the material impounded
by Customs. Then he went to see Cairns, to ask for his help. As Cairns
recalled the meeting, “He came to see me about it and said that I had
admitted the works of Havelock Ellis and he felt he was entitled to
have the material on which Ellis based his studies. I said that may
be, but before you came to see me, you had asked Congress to amend the
statute to permit you to import hard-core pornography. How can I, as
an administrator, say that the statute doesn’t cover you when you have
already asked for an amendment which they have refused to grant?”
In any case, the test case served its purpose. The court held that
since the material was intended for scientific use, the statute barring
pornography did not apply in this case. The ruling did not mean that
the court was lowering the bars for importation of pornographic
material to everyone who wished to import it into the country. It
only meant that the bars were being lowered for the Institute of Sex
Research in its investigations.
Cairns considers it no great accomplishment to separate the obscene
from the artistic. “I have long been of the view,” he once said, “that
any man of letters can tell whether the impulse behind a book is
literary or pornographic.”
Once when asked if reading and viewing pornographic material over a
long span of years had had any effect on his own morals, Cairns grinned
and said, “According to the theory of censorship I should be fairly
corrupted by now--but I don’t believe I am. I just find the stuff
boring.”
20
OF TOY CANARIES AND PIRATES
One day in 1957 an examiner in the New York Customs Appraiser’s Stores
opened a packing case received from Switzerland. He lifted out a small
brass object resembling a canary cage. On a tiny swing in the cage sat
an extremely lifelike little bird. When the examiner wound a key in
the bottom of the cage, the bird threw back its head, opened its beak,
and burst into song. It ruffled its feathers and wagged its tail as it
trilled its merry little time.
The examiner called to a colleague nearby and said, “Hey, Joe! Come and
look at this one.”
He turned the key and they watched the little bird perform. The
examiner said, “Cute, isn’t it?”
“If my wife sees it, she’ll want one,” the other examiner replied. “It
certainly is beautifully made. How are you going to classify it?”
There was the rub. What was this tiny cage with the singing bird?
Was it a toy, dutiable at 50 per cent of its value? Was it a musical
instrument, subject to a duty of 35 per cent? Or was it, as the
importer claimed, simply a “manufacture of metal,” subject to a duty of
20 per cent?
The examiner disagreed with the importer. He ruled that the little
singing bird with the music box in the bottom of the cage was in fact
a musical instrument. This opinion was sustained by the appraiser. The
appraiser’s decision was supported by the Collector of Customs.
The importer took the case to court. His attorney called one company
witness who testified the imports were designed as ornaments for home
decoration. He said they could be used as a nice toy--but they weren’t
toys. And he had “never known it to be used in an orchestra.” Therefore
it could not be held to be a musical instrument.
After the court heard the testimony and listened to the trilling of
the tiny bird in its small brass cage, the court was moved to lyrical
language in its decision, saying:
It may be contended that this bird does not emit a continuous
melody, and that it is not an instrument upon which a chromatic
scale can be played.... Music is the one harmonious science that
dispells discord, softens the winds, and makes all nature kin. It
has quickened the step for the warrior in the field of battle; has
riveted the attention of the savage on the march of his enemy;
has stirred the ambitions of men to higher ideals; and caused the
beauty of the human heart to speak in friendliness and love....
Indeed, if it was not for sweet music, human life would be so
dreary as to be unbearable. It matters not whence it may arise,
from the throat of the opera singer or of the bird. From the
scintillating trills of the flute or the low notes of the Chinese
gong, music is yet the curious and most harmonious succession of
sounds conceivable. It is the anesthetic of life.
The instrument in question is a musical one, and the tuneful ear of
the Collector was correct in thus classifying it.
The protest is overruled.
The case of the Singing Canary underscores one of the most important
functions of the U.S. Customs Bureau--the classifying of millions of
imports which arrive in the United States and the determination of
their dutiable value. The Customs Appraiser’s Stores--the port depots
where the imports are examined--are sometimes a weird world in which
things are not what they seem.
Every schoolboy is taught that a whale is a mammal. But when whale
steaks reach the Customs examiners, they are classified as “fish cut to
portions.” A tomato is a fruit to a botanist. But to every housewife
and the Customs examiner it is a vegetable. Botanists classify rhubarb
as a vegetable--but in Customs’ language it is a fruit.
Customs examiners are not just being arbitrary and ornery when they
make these classifications in defiance of the botanist and the
dictionary. The contradictions came about because the U.S. Court of
Customs and the U.S. Court of Customs Appeals have made these rulings
for the purpose of identifying imports so that a proper rate of duty
may be paid upon them.
The courts have said over and over that in the language of commerce and
in the everyday language of the streets, a whale must be considered to
be a fish because it lives in the sea. Also, they have said the tomato
is a vegetable because it is sold and eaten as a vegetable. And rhubarb
in the legal world has become a fruit because it is bought and sold as
a fruit.
In most cases, the appraisers have no difficulty in establishing the
proper rate of duty to be paid on an import because the rate is fixed
by law and the import is easily identified. But there are a great many
imports not identified in any of the tariff acts or the amendments
adopted by Congress, a lack which often creates difficulties, as it did
when one importer brought in a shipment of Chinese mah-jongg sets.
The dominolike pieces used in playing the game were made of bone and
bamboo. The importer and the government agreed that the material of
chief value in the mah-jongg pieces was bone. The importer insisted
that the duty should be 20 per cent of the value because the games were
“manufactures of bone.” However the Collector classified these sets as
“dominoes” and set the duty at 50 per cent. He ruled that the mah-jongg
pieces came under the paragraph 341 of the Tariff Act of 1913 which
provided for a duty of that rate on “dice, dominoes, draughts, chess
men, and billiard, pool, bagatelle balls, and poker chips of ivory,
bone or other material.”
This case also found its way into the Customs Court. The government
attorneys argued that the mah-jongg pieces should be classed as
“dominoes by similitude” even though they were not specifically listed
under the acts passed by Congress.
The importer argued through his attorneys that the mah-jongg sets
were not specifically named by Congress in any of the classifications
established in the various acts and therefore the duty should be
applied on the “component material of chief value.”
In this case the ruling went against the government. The court held
that the mah-jongg sets were properly classifiable at 20 per cent as
manufactures in which bone was the “component material of chief value.”
The appraisers’ staffs make millions of classifications each year on
imported items, and there is remarkably little dispute over their
decisions. Out of these millions, no more than 700 are disputed and
contested in the courts annually.
Sometimes a seemingly obscure and innocuous ruling on a classification
will blow up a storm across the country. Such a case developed when an
importer brought in from Europe do-it-yourself kits containing parts of
a miniature electric train and engine to be assembled by the purchaser.
The locomotives, freight cars, cabooses, passenger cars, track, and
other equipment were precision-made scale models of larger railroad
equipment. They were all made to a standard “HO” scale of 3.5
millimeters to one foot. The trains were designed to run at the scale
speed, which meant that at maximum speed they would travel 60 feet a
minute. At that speed, they would simulate the operation of a full-size
train.
All of the equipment was manufactured according to the strictest
standards set up by the National Model Railroad Association. This
Association has been described as “an organization of adult model
railroad hobbyists founded in 1935 to make and promulgate standards
for wheels, flanges, rails, switches, and other working parts of
model railroads, with the purpose of achieving interchangeability of
equipment from different manufacturers.”
The examiner who inspected the imported miniatures classified them as
“toys”--and as such subject to duty of 50 per cent of their value. In
the Tariff Act of 1930, Congress had described a toy as “an article
chiefly used for the amusement of children, whether or not also
suitable for physical exercise or for mental development.”
The ruling brought a pained cry from miniature railroad hobbyists
across the country.
Toys, indeed! The hobbyists were outraged that this import should be
put in the same category with playthings and that anyone should have
the affrontery to think that such railroad equipment--even though
Lilliputian in size--could be put together, and operated, by a mere
child.
When the Collector at the Port of New York supported the ruling of the
appraiser that the miniature railroad equipment should be classed as
toys, the ruling was appealed to the U.S. Court of Customs. And when
the case came to trial the importer had behind him ranks of witnesses
from all walks of life ready to dispute the government’s description
of the equipment: dentists, technical consultants, salesmen in various
lines of business, doctors, lawyers, editors, publishers, and writers.
One after another, the witnesses took the witness chair to deride
this nonsense that the miniature trains were made “for the amusement
of children.” They gave technical testimony on the operation of these
miniatures to prove that no child could be trusted with them and in
fact could not operate them.
To prove this point one witness testified, “It requires a knowledge of
electricity and requires a thorough understanding of how the trains
operate. For example, our accessories all operate on alternating
current; our trains run on direct current. It is necessary to know the
two types of current which our power-packs provide to connect up the
wires correctly. In the case of the alternating current, they have two
leads; one would be a common terminal, connecting all the different
accessories and switches, and another would be a specific one which
would go to each individual switch.... The locomotive can also be
operated from an overhead wire with pantographs they have located on
the roof. This makes it possible to operate two trains on the same
track under independent control. To do this, it is necessary to set
up a catenary system, which is an overhead wire system, such as the
Pennsylvania and New Haven Railroad use in this area. This, naturally,
requires wiring.”
The importer insisted that the miniatures should not be classified as
toys but should be classified as electrical equipment subject to a
lower rate of duty.
Under this barrage of expert testimony from adults who play with small
trains, the court overruled the Collector. The court held that the
model railroad sets were not “toys,” because they were used chiefly by
adults or by grown-up children and that they “do not come within the
legal meaning of the word toy.”
In years past, Customs officials tried to establish a detailed
classification system in which the examiner could refer to a given page
in a book and quickly come up with the answer as to classification and
duty of any item. But the system broke down under the weight of a vast
number of new products arriving on the market. Discussing this effort
a Customs Bureau official said: “On tariff classification, a number
of people, who call up and ask for rates, think there is a detailed,
logical breakdown and that we just thumb through a book and come up
with an answer. To someone who hasn’t worked with classification, that
seems like the way to do it. That is the way the old-timers used to
try to classify. They used to try to set up categories with a place
for everything, and everything in its place. But every time anyone set
up one of these classification systems, along would come some new item
which didn’t fit anywhere. So the present tendency in classification
systems is to set up a specific category for the more important items,
and then to set up what might be called a basket category to catch
everything else.”
The impossibility of achieving an easy index for classifying imports
was illustrated in recent years when a machine arrived from Europe
described by the importer as “printing machinery.”
The machine had the equivalent of a type font but, instead of type,
the font contained pictures of type on a transparent plate. The
type-setter, using a keyboard similar to that on a linotype machine,
punched out sentences on a roll of perforated tape. Then the tape was
fed into the machine, and as each perforation passed an electronic
control, a transparent plate bearing the image of a letter dropped into
place to be photographed by a high-speed camera. In this way a full
sentence was formed with photographed characters. This process was
continued, letter by letter, until a column of “type” was set up on a
film. Then the film was developed and, by a photoengraving process, was
reproduced on a metal plate ready for printing on paper. In all the
process there was no actual type used.
Customs was baffled by this one. Was the machine to be classed as
photographic equipment, printing equipment or as typesetting machinery?
It did not set type. It did not actually print. And it was more than
a mere camera. The Bureau decided this was a case in which the court
should hear all the arguments and make a decision--and a decision has
yet to be made.
When Congress passed the 1930 Tariff Act there were roughly 700
categories of imports. Since that time--with the adoption of the
Reciprocal Trade Agreement Act--the number of categories has been
increased by the thousands. Most of the increases were in categories
created to help foreign countries expand their trade in the United
States. The duty on a comparatively few imports has been revised
upward as a measure of protecting some of the American industries from
lower-cost foreign competition. In the vast majority of cases the
revisions have been downward, following the trend toward removing
tariff barriers by international agreement.
In arriving at the dutiable value of an import, Customs officials are
bound by the Tariff Act, which lays down the rules under which they
calculate the true value of an article. This system of appraisal is
complex and varies from category to category. Congress has proclaimed
that duty on certain items shall be fixed on the foreign value--that
is, the selling price in the country of production. Some items are
appraised on their export value--the price which the exporter pays
for them. Others are valued on their United States value, which means
the price at which the exporter sells them in the United States. Some
appraisals are based on cost of production.
Duties based on the American selling price are designed solely to
protect certain American industries from foreign competition. Among
the leading industries receiving this protection are the rubber
and coal-tar dye industries. For example, an importer may be able
to purchase a pound of coal-tar dye in Switzerland for $2. But if
that dye is competitive with a dye of a similar shade produced in
the United States, then the import will be appraised at $5 a pound,
notwithstanding the fact that the importer paid the Swiss manufacturer
only $2 a pound for the product.
However, most appraisements are made on the basis of export value, the
price charged by the manufacturer or the seller in the foreign country.
The imports brought to the Appraiser’s Stores for examination form a
cross section of the commercial treasures of the world and they are
unbelievably varied. The examiners--trained by years of study and
on-the-job experience--have become experts in appraising the quality
and the value of a staggering number of imports. Whether the import
is wool, cotton, silk, sugar, hog bristles, furs, diamonds, ore,
chemicals, exotic foods, or an antique table, there is someone with a
background of knowledge on the subject.
One of the largest single sources of Customs revenue continues over
the years to be duties collected on raw wool which has not yet
been processed for manufacturing. The wool examiner is one of the
most highly trained of the specialists within the Bureau. He must
be--because the Tariff Act of 1930 requires him to be able to identify
by type thirty different wools from all parts of the world, in
addition to being able to determine whether a shipment of hair is from
the Angora rabbit, the Cashmere goat, the Bactrian camel of Central
Asia, or the llama and vicuna of South America.
The Bureau has found that the only way to obtain these specialists
is to recruit young men who are interested in this field of work,
and to train them under the guidance of experienced examiners. The
recruits must spend hours with books outside their regular work hours,
in addition to attending technical training schools and visiting
manufacturing and processing plants throughout the United States.
As far as the Tariff Act is concerned, the term “wool” includes not
only the fleece from sheep, but the fiber from other animals. This is
why the examiner must be able to distinguish Cashmere goat hair from
the hair of the Angora goat raised in the southwestern part of the
United States; and to learn the subtle differences between two grades
of coarse hairs as well as the variations between the finest of fleeces.
Wool is graded by numbers, starting with 36 for the coarsest and moving
through the 70s to the very finest. A miscalculation in the grading can
deprive the Treasury of revenues--or cause an injustice to an importer.
For years, examinations of wool were conducted on the piers by taking
samples from the ends of the highly compressed bales, which were
covered with burlap and bound by steel bands. The examiner had no way
of knowing--except to have a bale of fleece opened--whether or not the
outer fleece concealed a higher grade of wool in the center of the
bale. In some isolated cases, examiners found that a coarse grade of
carpet wool concealed extremely high-grade wool. Contraband such as
narcotics also was found hidden inside suspect bales.
Perhaps of even greater importance, the examiner had no reliable method
of determining the amount of dirt, vegetable fiber, grease and other
foreign matter contained throughout the bale--and the duties were
supposed to be assessed only on the “clean content” of the wool.
This haphazard method of examination drew the fire of Congress in 1930.
To correct the situation, the Customs Bureau established the post of
Wool Administrator in New York City. It was his job to coordinate
the examinations throughout the country and to establish more uniform
practices. Daniel J. Kelly was named Administrator, with three
assistants--Morris Shuster in Philadelphia, Al Kelleher in Boston and
John Walker in New York.
The Bureau assigned to Chief Chemist Louis Tanner of the Boston
laboratory the job of finding a method to determine the “clean content”
of wool shipments. He developed a special boring tool which enabled
examiners to take samples, or cores, of wool from inside the bales,
and to judge the uniformity of the fiber in an entire bale without
disturbing the bindings. This method proved so simple and effective
that it has been adopted by the commercial trade and by government
agencies in other countries throughout the world.
Imports of all kinds and types reach the Appraiser’s Stores in this
manner: When merchandise is ready for export from a foreign country
to the United States, the exporter prepares a special customs invoice
describing the merchandise and giving its value. This invoice is sent
to the American importer. When the importer is notified that the
merchandise has arrived at a port of entry, he turns over the invoice
to his customs broker. The broker calculates the estimated rate of
duty, then proceeds to the Customs House. There he makes what is called
a formal entry of the merchandise, filing the information he has
received from the exporter and paying the duty.
In the Collector’s office at the Customs House, the broker’s estimates
of value and duty are reviewed for any errors. Then the invoice is
transmitted to the appraiser’s office, where it is assigned to the
expert who will examine this particular merchandise.
The Collector notifies the Customs inspector at the pier that he is
to send a 10 per cent sampling of the imported merchandise to the
Appraiser’s Stores to be physically examined by the specialist in that
field. The specialist examines the samples of merchandise to see that
they are correctly identified by the importer. Then he determines
whether the broker’s estimates of value and duty are correct.
If the broker entered the merchandise at $100 a unit and the examiner
believes that the appraised value should be $125 a unit, then the
examiner makes the change. His report is then forwarded to the office
of the Collector for final action, and normally the Collector accepts
the examiner’s judgment.
The Collector then notifies the broker or the importer of the action
that has been taken. The importer and broker may accept the ruling or
they may take issue. If they disagree, they may appeal to the United
States Customs Court. If either the importer or the government is
dissatisfied with the lower court’s decision, an appeal may be taken to
the U.S. Court of Customs and Patent Appeals. Usually the decision of
the Appeals Court is accepted as being final, but either of the parties
may carry the appeal further, to the Supreme Court.
* * * * *
It seems odd that piracy should be a concern of Customs in the 1960s,
as it was in the days of Jean and Pierre Laffite. But piracy still
exists in modern dress and is a troublesome problem. The only practical
difference between the modern pirates and the cutlass-carrying
freebooters of the past is that the pirates’ methods have changed.
There was the case that might be called “The Pirates of Taiwan”--a case
which created an incident of international embarrassment between the
governments of the United States and Formosa (Taiwan) and a potential
threat to the U.S. book publishing industry.
The “pirates” of Taiwan were the owners of small printing shops who
engaged in the business of publishing--without the consent of the
authors or the original publishers--almost every book of any merit
printed in the English language.
With fantastically cheap labor, cheap paper, and a photo-offset
printing process, the publishers in Taiwan reproduced such extensive
works as the _Encyclopaedia Britannica_, dictionaries, sets of medical
and scientific works, volumes of the classics, standard reference
books, best-selling novels and popular non-fiction. The books were
carbon copies of the originals, even to the U.S. copyright numbers and
the phrase “Manufactured in the United States.” Nothing was changed in
the pirating process, not even the typographical errors. From a casual
examination, there was nothing to indicate that the books had not been
published in Philadelphia, Boston, or New York.
The pirating problem became acute in 1959 when the Chinese publishers
arranged contacts with sales agents in the United States, men
and women usually located on or near a campus of a university or
college. These agents solicited orders primarily from professors
and teachers, librarians, researchers, and students. A standard set
of the _Encyclopaedia Britannica_--normally costing about $400--was
offered for less than $50. The $35 _Columbia Encyclopedia_ was listed
at $7.13. _Gray’s Anatomy_, a standard work for all medical students
and normally costing $17.50, could be purchased for $2.50. Allen
Drury’s best-selling novel of political life in Washington, _Advise and
Consent_, cost $5.75 in American bookstores--but was advertised by the
Chinese publishers at $1.25.
In some instances, the Chinese publishers obtained lists of likely
customers and solicited them by mail. The prospects usually were
men, women and organizations with modest incomes who were forced to
operate on a very limited budget. And here they were being offered the
opportunity to obtain expensive volumes of literary works--which they
had long dreamed of owning--for only a fraction of the price being
charged throughout the United States.
The books were shipped from Taiwan in individual packages. Even when
the packages were opened for inspection by a Customs examiner, there
was nothing to arouse suspicion of any irregularity. The first hint
which Customs had of fraud was when a complaint was lodged in 1959
by the American Book Publishers Council and the American Textbook
Publishers Institute.
The book publishers appealed for help to the State Department, the
Customs Bureau, Congress and even to the White House. The sales of
pirated books in the United States had become a multi-million-dollar
business which threatened to destroy the American book market.
In theory, at least, the publishers could have protected themselves
from the sales of pirated books in the United States by registering
each title with the Customs Bureau and paying a fee of $75. The
registration would have banned any import of a similar title without
the publisher’s consent.
Such a procedure would have been prohibitive in its cost because each
title produced is regarded by law as a different product. A single
publisher might well have had to register as many as 2,000 titles
annually to obtain total protection--at a cost of more than $150,000 in
fees and incidental expenses. This cost would have been in addition to
the $300,000 paid to copyright the works, at $150 per title.
When Customs agents opened an investigation they discovered that in
the first half of February, 1960, sales of pirated books at Iowa
State University alone totalled more than $1,200. It was obvious that
American publishers and authors were literally being robbed of millions
of dollars. Not only were the books being mailed to the United States
in large quantities, but a great many sales were being made on Formosa
to military personnel, to students, and to tourists who could not pass
up such a bargain in literature.
Action was taken by Customs to halt the importation of the books
through seizure at the ports of entry. Then the U.S. Ambassador to
Nationalist China, Everett F. Drumright, took up the problem with
Foreign Minister S. K. Huang in Taipei, seeking a ban on the export of
the books.
The problem was not one presenting an easy solution because the laws
of Taiwan technically tolerated such piracy. Many members of Chiang
Kai-shek’s government were not entirely sympathetic to shutting off
this lucrative trade which brought dollars into the treasury. There
was the fact, too, that lack of any copyright agreement gave Chinese
students access to cheap editions of technical books and famous works
of literature.
However, an arrangement was worked out on the diplomatic level for a
ban on the wholesale export of pirated books from Taiwan. The American
publishers agreed to make available certain of their works to Chinese
students. This agreement brought a halt to much of the illicit traffic,
but the problem of pirated books continues to be troublesome.
Competition for world trade has also brought some sharp practices in
which foreign manufacturers copy American-made automobile parts, tools,
and other merchandise and then ship them into the United States. The
articles are identical in appearance to the American-made product
down to such small details as the American manufacturer’s registered
trademark. But the price--and quality--are far below the American
level.
The piracy in the field of trademarks is a continuing problem for
Customs. There are approximately 5,000 trademarks registered with the
Customs Bureau, including those registered by foreign firms. And each
manufacturer guards his trademark jealously.
Many foreign trademark owners, for the protection of their
representatives in this country, will not permit more than one of
their trademarked articles to be imported into the United States by a
tourist. Many tourists will go abroad and purchase an unusual bargain
in a camera, perfume or some other item. They are dismayed when they
return to this country to find that Customs will not permit them to
keep more than one of the articles.
In these cases, Customs is following the letter of the law in
preventing more than one article from being imported bearing the
restricted trademark. It is only the trademark which Customs is
interested in protecting. If the importer of the articles should
obliterate or remove the trademark from the items he is carrying,
Customs inspectors would have no objections to allowing them into the
country.
The trademark prohibitions sometimes create unique problems. One of
these developed when a Mexican cattle raiser shipped a herd of cattle
to the Mexican border and was preparing to bring them into the United
States at Nogales, Arizona. Before the cattle could cross the border
an American cattle raiser rushed to Nogales and demanded that Customs
halt the importation of the Mexican cattle. He argued that he was the
owner of the cattle brand seared into the hides of the Mexican cattle
and that any importation bearing this brand would be a violation of the
trademark laws.
An investigation by Customs officers revealed that the American cattle
owner was entirely correct. By chance, the Mexican cattle raiser
had the same cattle brand as the American rancher. The American’s
cattle brand was registered with the Customs Bureau, and his cattle
brand was entitled to the same protection given to the trademarks of
manufacturers. Eventually, the protesting American and the baffled
Mexican got together and the American gave his consent for the
importation of the cattle.
One section of the trademark law prohibits the importation of any
articles which are marked in a manner to indicate a false country of
origin. It also bans imports which are marked with false descriptions.
To enforce this section of the law, Customs officers must police
millions of imports to weed out the products of foreign manufacturers
who engage in some shady and sharp practices.
In recent months there arrived from Japan a large shipment of boys’
baseball bats which were boldly marked with large letters burned into
the wood, “American Model.” At the end of the bat in extremely small
letters was stamped the word “Japan.” The Customs Service felt that
the purchaser of these bats could only assume, by looking at them and
seeing “American Model” in large letters, that they had been made in
the United States. It ruled that before the bats could be entered, the
word “Japan” would have to be stamped onto the bats in close proximity
to the words “American Model,” to remove the taint of deception.
Another manufacturer shipped into the country flatware made of iron
with a chrome plating. It was marked with the word “stainless,”
implying that it was stainless steel. The courts and the Federal
Trade Commission have held that the world “stainless,” when used in
describing manufactured articles, has a very specific meaning: that the
product has a great deal of resistance to normal corrosive elements
and to wear and tear that other metals normally do not have. And to
describe an article as stainless steel, it must be an alloy of steel
mixed with chromium in approved percentages.
To protect the manufacturers of stainless steel products in this
country, the Customs Bureau instituted a campaign to halt such sharp
practices and to educate foreign manufacturers to the fact that they
cannot mark products with the word “stainless” unless they meet the
very severe test required for the use of this word. The shipment of
cast-iron flatware was refused entry, and inspectors were alerted to
guard against any such shenanigans in the future.
21
THE MIDDLE MEN
Mr. and Mrs. John Smith of Lima, Ohio, were strolling through the
streets in Florence, Italy, enjoying their first European vacation,
when Mrs. Smith noticed a beautiful, hand-blown glass bowl in the
window of a small shop.
“John!” she exclaimed. “There is the bowl I’ve been looking for. It
would be perfect for our Christmas eggnog parties. Let’s go in and
price it.”
They stepped inside the shop and a clerk brought the bowl from the
window to a table where Mr. and Mrs. Smith could examine it more
closely. It was a lovely piece of glass and obviously the work of a
fine Venetian craftsmen. After admiring the delicate etchings on the
glass, Mrs. Smith asked, “How much is it?”
The clerk said the bowl was one of the best pieces in the house and
that it was priced at $75.
“My goodness,” Mrs. Smith exclaimed. “That bowl would cost double the
price at home. It’s a good buy.”
Mr. Smith said, “But how will we ever get it home? We can’t lug it all
over Europe with us. We would be certain to break it.”
The clerk interrupted, saying, “Pardon me. You don’t have to worry
about getting the bowl to your home. We will take care of everything
for you--the packing and the shipping. And we will insure it against
breakage. We ship hundreds of purchases every year for American
visitors.”
Mr. Smith asked, “How much do you charge for that service?”
The clerk shrugged. “There is no charge for our service, sir,” he said.
“There will be a small shipping charge which you can pay on receipt
of the package, but as for the trouble of packaging and handling the
shipment from here, that is merely a part of the service we give our
customers.”
“We won’t be back home for another three weeks,” Mrs. Smith said.
“What will happen if the bowl arrives before we reach home?”
“You need not worry about that,” the clerk said. “I’ll hold the bowl
for several days and then ship it so that it will not arrive until
after you have reached home.”
“Well, that seems simple enough,” Mr. Smith said. “As long as you can
handle this for us, then we’ll buy it.” He pulled out his wallet and
paid for the bowl. Then he carefully wrote out his home address in
Lima, Ohio.
“Don’t worry about a thing,” the clerk said, smiling. “The bowl will
arrive soon after you get home.”
As the Smiths left the shop, Mrs. Smith said to her husband, “Well, the
Italians certainly do make it easy for the Americans to buy something
and send it home. I had no idea there would be so little red tape to
sending a purchase home.”
A month later Mrs. Smith was at home when the telephone rang. It was
a long-distance call from New York. A strange man--someone she had
never heard of--asked if she had ordered a glass bowl from a shop in
Florence, Italy. He explained that he was a Customs broker, the bowl
had been consigned to him, and he was prepared to clear the package and
forward the shipment if she authorized him to do so. He explained there
would be a nominal fee for his services in getting the package released
from Customs and forwarded to the Smiths in Lima.
Mrs. Smith was so flustered she told the caller she would have her
husband get in touch with him. What was this strange man doing with her
bowl? The clerk in Florence had said he would take care of everything,
and now this broker was saying something about having legal title to
the shipment and that she would have to pay a fee to get her bowl
shipped to her. He had explained that she could come to New York and
arrange personally for the Customs clearance if she wished to do so.
Mrs. Smith telephoned her husband at his office and told him about the
call from the broker in New York. She gave her husband the man’s name
and his telephone number in New York.
And then Mr. Smith exploded with anger. “It’s a gyp deal of some sort,”
he said. “I am going to call the nearest Customs office and see what
this is all about. We didn’t tell that clerk to send the package to
anyone in New York. I don’t know how he got into this picture. There’s
something funny going on and I’m going to find what it’s all about.”
Within a short time, Mr. Smith learned--by checking with a Customs
officer--that he was not being gypped. The broker in New York was a
legitimate broker, licensed by the Federal government to act as a
clearing agent for merchandise arriving in the port of New York. The
call that had been made to Mrs. Smith was a routine call, because the
package containing the bowl had been consigned to the broker in routine
fashion either by the shipper in Florence or by the carrier which
brought the package into the port of New York.
Mr. Smith asked why it was that Customs in New York could not forward
the bowl directly to him without going through a broker. That seemed
the easy way to handle the shipment without all this red tape and the
payment of a fee to some stranger whose name he had never heard before
this day. Mr. Smith declared heatedly that he didn’t have time to go
running off to New York for a $75 glass bowl. As a matter of fact the
bowl wasn’t worth all that trouble and expense. He and his wife wanted
the bowl and they wanted it as quickly as possible.
The Customs officer explained that unless Mr. Smith or his wife went to
the port of entry to clear the shipment with Customs--or unless they
authorized the broker to act as their agent--the bowl would be held by
Customs for five days. Then if it were not claimed, it would be sent
to a warehouse. It would remain in the warehouse for one year, and if
it had not been claimed within that period, then it would be sold at
auction along with other unclaimed packages. The officer explained
further that Customs was not authorized by law to act as the forwarding
agent for anyone--except in cases where a shipment valued at less than
$250 was received by mail from an overseas point.
“Now, if you had shipped the bowl by mail,” the Customs officer said,
“it would have been delivered to your post office and you could have
obtained its release with no difficulty at all.”
Smith retorted, “This is a fine time to tell me I should have shipped
by mail. All I can say is it’s a hell of a way to run a railroad.” He
slammed down the phone, cursing Customs and all of the government’s red
tape. Then, reluctantly and angrily, he called the strange broker in
New York and authorized him to clear the glass bowl. Thus the day was
ruined for Mr. and Mrs. John Smith of Lima, Ohio.
The story of Mr. and Mrs. Smith is not unusual. Similar cases occur
daily throughout the United States as returning travellers discover
that they could have saved themselves worry, time, and money by
familiarizing themselves with the Customs procedures governing
the importation of foreign purchases into the United States. Had
Mr. and Mrs. Smith taken the time to read a few relatively simple
instructions--available to travellers in pamphlet form--they would not
have gotten into the difficulty they did.
In the first place, they would not have accepted the glib assurance of
the Florence clerk that he would take care of everything. Instead, they
would have instructed the clerk to mail the glass bowl by parcel post,
marked as a “tourist purchase.” When the package arrived in New York,
the post office would have turned it over to Customs in routine fashion
for examination. An examiner would have verified the contents and its
value and then returned the package to the post office to be forwarded
directly to the Smiths in their home town. If any duty were due, it
could have been paid to the postmaster after filling out a simple entry
form. No broker. No delay. No red tape.
But this is what happened to the Smith’s glass bowl after it was
purchased in Florence: the clerk turned the package over to a
forwarding agent with no special instructions. The agent routinely
consigned the shipment to a broker in New York with whom he had been
doing business for years. The bill of lading was made out to the New
York broker, which meant that when the package arrived in New York, the
broker had legal title to the glass bowl because it was consigned to
him.
What few travellers realize is that there is no automatic movement of
merchandise arriving by ship from overseas. Someone has to be on hand
to clear each shipment with Customs and pay any duties that might be
due. Someone must see to it that the merchandise is moved from the
piers to its destination. And this is usually the job of the broker, a
point which many people do not understand and which causes considerable
difficulty.
The broker is the expediter of the multi-billion-dollar flow of
merchandise through the ports of entry in the United States. He is the
legal representative of his client in dealing with Customs problems.
The Customs Service is not interested in merchandise until it arrives
within the limits of a port of entry to be unloaded. At this point
the merchandise legally becomes an import. And the merchandise passes
through Customs under two types of general entries. One is called the
“consumption entry” and the other is known as a “warehouse entry.”
Most imports arrive and are passed through Customs under the
consumption entry, which permits the importer to pay the duties, obtain
a release, and get immediate possession of all of his merchandise.
When merchandise is brought into the country under a warehouse entry,
the major part of the merchandise is sent to a Customs bonded warehouse
for storage. No duties are deposited when the papers are filed except
for that portion of the merchandise which is to be taken immediately
by the importer. In other words, the importer is permitted to place
his goods in storage without payment of duties and then is permitted
the privilege of making partial withdrawals from the warehouse, paying
duties on whatever he draws for consumption.
There is a continual movement of merchandise from one bonded warehouse
to another. This is particularly true in movements of liquor from one
part of the country to another. Liquors may move across the country
and may be in six or a dozen different bonded warehouses before they
are withdrawn for consumption and taxes are paid. This system permits
merchants to move their merchandise freely to meet shifting consumer
demands.
The normal period for bonded storage is three years, but this period
may be extended. If no extension is granted and the goods still remain
in a bonded warehouse beyond the three-year period, they are considered
unclaimed and abandoned to the government. The government then puts the
merchandise up for public auction.
* * * * *
A point of constant friction in the field of imports is the law which
requires that imports shall be marked “legibly and conspicuously” with
the name of the country of origin. It has been the Customs Bureau’s
position that if the marking can be reasonably expected to remain on
the article until it reaches the ultimate purchaser, then that is all
that the laws requires. But there are many exporters and importers who
disagree with the Customs interpretation of the law.
As one Customs veteran explained: “The domestic people, of course,
would like to have great big red letters 40 feet high on a 20-foot
article spelling out the name of the country of origin. Of course, it
frequently happens that the importer would like to have this name about
as small as the Lord’s Prayer on the point of a pin.
“The markings from some countries increase the value of the article.
Chinaware from England, for example. The English are very happy to put
their marking under the glaze, where it will remain. There are other
countries that are just as happy to put this identification on by paper
sticker, which may come off in the rain. So we always are in the middle
in the argument over markings on imports.”
The purpose of the law, of course, is to inform the ultimate buyer of
the country from which the merchandise came. Normally the ultimate
purchaser is considered to be the man who buys it across the
counter--the last person to receive the article in the condition in
which it was imported.
A great deal of merchandise is permitted into the country under what
is known as the “informal entry procedure.” The informal entry is used
where the value of a shipment does not exceed $250. The entry was
devised for the benefit particularly of persons passing across the
borders of the United States from Canada and Mexico.
In such border crossings, there is no formal appraisement. The Customs
officers on duty write up the entries, take a look at the merchandise
and decide themselves whether the value is correct. Then the duty is
paid on the spot and the merchandise is released.
This informal entry procedure is also used at the airfields to expedite
shipments of merchandise by air. It is used in the clearing of baggage
through Customs when travellers arrive from overseas, and in the
clearance of non-commercial shipments which include personal and
household effects.
* * * * *
In the vast majority of importations, the broker plays an important
part. The broker may be an individual, a partnership, corporation, or
association. In any case, those acting as brokers must be licensed
by the Customs Bureau, meet certain standards, and submit to Federal
regulation of their operations.
Applicants for individual broker’s licenses must undergo an examination
at the headquarters port in the Customs district in which the broker
intends to operate. The purpose of this examination is to determine
the applicants knowledge of Customs laws and procedure and his fitness
to render a service to importers and exporters. This knowledge must
necessarily be quite broad in scope, and a grade of 75 per cent is
required for passing.
However, those applying for a broker’s license as a corporation,
partnership, or association do not take an examination. Their
applications are forwarded by the Collector to the Supervising Customs
Agent, who conducts an investigation and then makes a report and
recommendation. The agents verify the correctness of the statements
made in the applications and the qualifications of the person or
persons who will actually handle the customs business. The government
requires that each broker keep current records reflecting his financial
transactions as a broker, and these records must be available for
government inspection at any time.
The Customs Service has no part in fixing the fees charged by customs
brokers for their services. However, if a complaint is made against
an individual broker or a brokerage house, then the complaint is
investigated by Customs Service agents and if the fees charged by the
broker are found to be excessive or “unconscionable,” then action
is taken by the Service to correct the situation. In cases where
investigation discloses irregularities, the Secretary of the Treasury
has the authority to suspend or revoke the license of a broker. Such
action is taken, however, only after a quasi-judicial hearing in which
the accused broker has the right of cross-examining witnesses. If the
decision goes against him, then the broker may, if he wishes, appeal
his case to a U.S. Circuit Court of Appeals.
The broker plays a prominent role as the middle man in the
import-export business, but this does not mean that an importer must
necessarily seek the services of a broker in bringing merchandise into
the country. Under the law, any citizen may act as his own agent in
clearing his own imports through Customs and no license is required.
* * * * *
One of the ancient devices to aid the importer is known as the
“drawback” privilege. “Drawback” is a word which is found in customs
language through the centuries, and it is another word for “refund.”
In brief, the drawback works in this fashion: an importer brings
merchandise into the United States to be used in the manufacture of
certain articles. At the time of importation, he pays the normal duty.
After the articles are manufactured, they are exported to another
country. It is then that the manufacturer is entitled to a refund on
that part of the imports which he shipped back out of the country.
The drawback plays an important part in the manufacturing operations of
all nations. It enables manufacturers to meet competition in the export
market. For example, an automobile manufacturer in the United States
imports a large amount of steel to be used in the manufacturing of
his automobiles. Ten per cent of this steel is used in cars which are
shipped overseas. Thus the manufacturer is entitled to a drawback or
refund of 10 per cent of the duties he paid on the imported steel.
Congress has liberalized the drawback provisions so that a manufacturer
does not necessarily have to use the imported materials in his exports
in order to qualify for a refund of duties. An automobile manufacturer
may export automobiles made entirely of domestic steel. But if the
steel he used in the exports is of “the same kind and quality” as the
imported steel, then he is allowed to obtain a refund on that quantity
of steel used in the exported automobiles.
Virtually every manufacturer who is in the export business takes
advantage of this drawback material, and its value to the manufacturing
industry in the United States is realized when it is noted that the
refunds paid in recent years have been running about $9 million
annually.
Oddly enough, there are some American manufacturers who do not even
know that they have the privilege of a duty refund. They have been
importing materials for years, paying duties, and then exporting the
finished products without making any claim for a refund of duties on
the materials shipped back overseas. One midwestern manufacturer in
recent years discovered that he had paid the government in excess of
$1,500,000 in duties--and he was entitled to a refund of the entire
amount.
This situation developed as a result of the Korean War. Because of the
tremendous devastation in Korea, the U.S. government entered into a
program of rebuilding the Korean economy. The midwestern manufacturer
obtained orders from the government to supply a quantity of heavy
machinery and equipment, the contract running into many millions of
dollars.
In that period during and after the Korean War, there was a shortage of
domestic steel. For that reason the manufacturer imported virtually all
the steel used in the machinery manufactured for the Korean government.
When he discovered that he was due a refund of duties, he obtained all
his records over the past years, and submitted them to the government.
These records were verified and the manufacturer was paid more than
$1,500,000.
* * * * *
The maze of tariff laws which has grown up over the years has developed
some peculiar situations, and one of the oddest of these involves
the Virgin Islands, the insular possession which has attracted many
manufacturers in recent years.
One reason that the Virgin Islands is proving attractive to new
industries is that under the present laws, manufacturers operating in
the Virgin Islands pay an import duty of only 6 per cent on merchandise
brought into the Islands for use in manufacturing. Their finished
products are permitted into the mainland free of any duty--provided the
foreign materials used are less than 50 per cent of the total value.
This quirk in the law has created extreme problems for some American
industries, such as the watch industry. For example, a manufacturer
in the Virgin Islands will import various watch parts from France
or Japan and pay only a 6 per cent duty on these imports. The parts
will be assembled into a finished watch, and if the watch meets the
requirements fixed by law, then it enters the United States free. In
other words, the manufacturer in the Virgin Islands pays a 6 per cent
duty on watch parts on which the American manufacturer is required to
pay a 50 per cent duty. And this variance extends to other fields of
manufacturing.
There has been, in recent years, a growing opposition to the duty
differential which is permitted manufacturers in the Virgin Islands.
Discussing this situation before Congress in September, 1960,
Representative Eugene J. McCarthy of Minnesota voiced the views of
many when he said: “In recent months there has been a growing tendency
for companies to establish themselves in U.S. insular possessions on
a basis that results in their escaping the proper payment of duty on
products they wish to import into the United States. Section 301
of the Tariff Act of 1930, as amended, was intended to promote the
development of employment opportunities in our insular possessions....
(Instead, it) has become an avenue for the avoidance of very
substantial amounts of duty....”
The McCarthy argument is disputed by the Virgin Island manufacturing
interests, but nevertheless the situation underscores the complexity of
the laws by which the Customs Bureau is bound.
* * * * *
In the fourteenth and fifteenth centuries, free-trade zones were
common throughout the world. There were no customs requirements, and
merchandise moved through these ports with no restrictions. Gradually
the free-trade ports disappeared as the various countries imposed
tariffs on imports and exports for revenue and for protection purposes.
The nearest thing to the old free-trade port that exists in the United
States today is the foreign-trade zone. It is a sort of No Man’s Land
which has been described as “a neutral stockaded area where a shipper
may put down his load, catch his breath, and decide what to do next.”
There are four of these zones in the United States, located at New
York, New Orleans, San Francisco and Seattle. They are fenced and
guarded areas into which importers may bring merchandise without
payment of duties--excepting prohibited merchandise such as narcotics,
subversive or immoral literature, or lottery matter. The merchandise
may remain in the zone indefinitely, and once it is there it may be
manipulated, processed or manufactured without being subject to any
Federal or state controls.
The foreign-trade zones are used for many operations such as assembling
machinery, dyeing and bleaching materials, bottling, weaving, printing,
extracting oils and other components from raw materials, and for
cleaning, grading, sorting, and repackaging materials for a specific
market.
It is only when the finished product is removed from the zone that it
becomes subject to commodity quotas, commodity standards, labelling
and marketing requirements, licenses, fees, controls and taxes that
normally apply to all imports. However, if it is to his advantage, the
importer may ask for an earlier determination of the duties and taxes
due--before the processing changes the classification of the goods
involved.
The foreign-trade zones are intriguing areas because although they
are physically within the United States, for all practical commercial
purposes they remain outside the United States--reminders of an earlier
day when trade through many ports of the world was unfettered.
22
THE RESTLESS AMERICAN
Inspector Leonard Simon, a tall man with faint crinkles about his eyes,
stood at his post in the Customs baggage examination area late one
August afternoon at New York’s Idlewild International Airport. He was
waiting for the rush of travellers who then were disembarking from a
huge Pan American Boeing 707 jet which had just completed its swift
flight from Paris.
Simon had arrived on the job early that morning and this was one of the
few times he had been able to relax. Tourists returning from Europe
had been pouring through the airport in droves. And before the day was
ended, he and his fellow inspectors would have examined the documents
and the luggage of passengers disgorged from more than 100 airliners--a
restless army arriving from all parts of the world.
At the peak of the traffic, as many as 1,000 persons moved through
the inspection lanes each hour. Fifteen years earlier--in the
postwar years--only a handful of officers was needed to handle the
international air traffic. The jet age had changed all this. A force of
248 men was now required, and each year travel by air was increasing.
They came in waves from the planes, laden with boxes, bundles, bags and
cases--impatient to clear this last official hurdle which stood between
them and their destination. There was a certain air of resentment
about some of them when they entered the inspection lanes, as though
they were being forced to undergo an unpleasant inoculation which was
entirely unnecessary. Some showed their nervousness with self-conscious
titters. Some were openly hostile to the inspectors. And some viewed
the routine with bored resignation.
Nevertheless, most of the travellers accepted the examinations with
good grace, answering with candor the routine questions about their
purchases abroad, and paying any duties assessed without complaint when
the purchases exceeded the duty-free exemption of $100.
A few of the travellers had voiced complaints, as did the fat,
perspiring man who demanded in a loud voice, “Why is it that our
government is the only one which treats a citizen as if he might be a
criminal?” He looked about belligerently to see if anyone would take
exception to the statement, but the inspectors acted as though they had
not heard the remark. None of them was in the mood for an unnecessary
argument.
With minor variations, the scene had been replayed over and over
throughout the day. Now, as the crowd from the 707 jet moved toward the
inspection lanes, Simon ground out his cigarette in an ash tray and
nudged a fellow inspector. He said, “Here comes trouble.”
“Which one?” the man asked.
“The Duchess,” Simon said, the crinkles deepening about his eyes. “The
tall woman with her nose in the air. I’ll bet she comes to my station.”
Sure enough, The Duchess bustled into Simon’s lane and fixed him with
a beady stare. “Young man,” she said with a heavy British accent, “can
you tell me why I must go through with this nonsense of having my
luggage examined?”
“I’m sorry,” Simon said, “but it’s a routine precaution we must take
with all travellers unless they have the immunity of a diplomatic
passport. I’m just doing my duty.”
The woman glared. “I still think it’s a lot of nonsense. It’s most
inconvenient. What do you think I’m carrying that is illegal?”
Simon said seriously, “We were informed that you were smuggling twenty
small Russians into the country in your suitcases. I’ve got to see if
it’s true.”
It was a corny gag but, unexpectedly, The Duchess laughed. “All right,
young man,” she said. “Get on with your job and I’ll not trouble you
again.”
The visitor from Britain had hardly left Simon’s station when he looked
up and saw a well-known film star entering his lane. He knew her
immediately from her pictures in the newspapers and from the film he
had seen a few days earlier at a neighborhood theater. The papers had
said she would be returning to Hollywood from Europe, where she had
been working for several months on a new picture.
There had been stories of her appearances in Paris, Rome, Madrid and
Monaco, and the usual gossip about the men with whom she had been seen.
Now here she was in person--dressed in a fetching suit which had a
made-in-Paris look to it. She carried a handsome Italian-made handbag.
On her wrist was a watch which Simon saw at a glance was worth several
hundred dollars, because it was encrusted with small diamonds.
The actress handed Simon her declaration. It was signed with a carefree
flourish--but there were no purchases listed, only personal belongings.
Simon felt like groaning when he saw the declaration. It simply didn’t
make sense for a well-known actress to be in Europe for six months
without making a single purchase of clothing or jewelry.
Simon said, “You are certain you understand the regulations? A good
many people don’t know that the declaration must include any wearing
apparel purchased abroad, even though it has been worn.” Simon
was trying, tactfully, to suggest that if she had any undeclared
purchases, she still could “remember” them and amend the declaration
without penalty. He didn’t want to make trouble for her because, as
he explained later, “I really liked her pictures.” And there was the
chance that she didn’t understand the regulations.
The actress snapped, “Of course, I understand. I took these things with
me when I left the country.”
It was the tone of voice that did it. Simon shrugged and asked her
to open her suitcases. The top layers of clothing were dresses with
California designers’ labels attached, and Simon saw they were genuine
California models.
Beneath these dresses there were other gowns with no labels on them.
But Simon didn’t have to rely on a label to know that these were
creations from the houses of Dior and Balenciaga. He recognized their
Paris origin from the distinctive stitching and from other small
peculiarities of design which were more reliable identifications than
labels. A label might be changed or removed--but the work of the French
seamstresses could not be altered.
Simon had only to glance through the suitcases to see that the matter
had gone beyond his authority. He signalled for one of his superiors.
The actress was asked to step into a private room for questioning and
for a more thorough examination of her luggage. She was found to be
carrying undeclared clothing and jewelry worth $10,800. She was not
subjected to criminal prosecution, but she paid into the Treasury
the value of the purchases in addition to the stiff penalty for the
smuggling attempt. She left New York for Hollywood a much wiser young
woman, although she would never feel moved to voice any praise for the
Customs Bureau and its employees.
The case of the Hollywood actress is only one minor example of why
the Bureau requires that travellers’ luggage be examined upon arrival
in the United States. Each year roughly 150 million persons and 43
million vehicles cross and recross the borders. Among those millions
are cheats, smugglers and conspirators seeking to evade the payment of
duties on imports or trying to bring contraband into the country.
Baggage examinations have been made since the Republic was in its
infancy. The system has been continued simply because no one yet has
devised a better way to protect the Treasury from those who seek to
avoid the payment of legitimate duties. The system remains much the
same as it was in the days of George Washington--and without doubt just
as annoying to travellers.
There is an old story that Napoleon once assembled his marshals, just
before launching a long-planned campaign, to deliver a stirring address
on the brilliance of his strategy, the weaknesses of the enemies, and
the indomitable spirit of the Napoleonic legions.
“Nothing,” thundered the little emperor, “can stop our march!”
Then a voice piped up from the rear: “Sire, you forget the French
Customs!”
The U.S. Customs Service in its more than 170 years of operation
has never achieved a position of such bureaucratic eminence as the
anonymous storyteller attributed to the French Customs--even though
some tired and disgruntled travellers returning from abroad might
feel inclined to dispute this point. But there is no doubt that among
governmental agencies, the Customs Service has--in Madison Avenue
terms--projected a poor image of itself and the importance of the role
it plays in protecting the Treasury.
Smuggling and attempts at fraud continue to be big-money problems.
During the fiscal year 1960, Customs agents and inspectors made 13,531
seizures of merchandise, narcotics and other imports worth $8,238,649.
From these seizures, the Treasury received a total of $1,402,084.24
in fines and penalties--of which $896,159.42 was collected by Customs
agents.
While the value of the seizures reported by Customs in one year may
seem high, Customs officers are certain that they intercept only a part
of the contraband that is brought into the United States. They are
equally certain that diligent inspection and enforcement work slow down
the operations of the underworld operators, the one-shot smugglers, and
the chiselers who--if this deterrent did not exist--would flood the
country with illegal imports.
Unfortunately, there is no way in looking at passengers arriving
by plane or by ship to separate the honest from the dishonest. The
little gray-haired lady with a shawl about her shoulders, wearing
steel spectacles and a shy, grandmotherly smile, may have two pounds
of heroin concealed beneath her petticoat. And the square-jawed,
blue-eyed, All-American business executive with the firm handclasp may
be trying to bring into the country a diamond ring and several watches.
Frequently men of wealth try to smuggle purchases past the inspectors
merely to see if they can get away with it. Such a case involved a
Pittsburgh industrialist who arrived in New York from a trip to Europe.
He was a man whose name was well-known in the business world and who
was financially able to pay tariff duties on purchases costing tens of
thousands of dollars. But when an inspector looked at his new hand-made
alligator bags--purchased in Italy--he was reasonably certain the
luggage was grossly undervalued on the businessman’s declaration. The
inspector called for an appraiser to check his judgment. The appraiser
asked the businessman to open one of the bags, and the traveller said
belligerently, “Why do you want to open it?” The appraiser replied,
“Because I want to see inside. Any objection?” And he proceeded with an
examination of the luggage.
Upon opening one of the bags, he found two expensive Patek Philippe
watches--rated among the world’s best. Not only did the traveller’s
declaration not list any watches, but more than one watch of this
particular brand could not legally be imported without a special permit
from the agency which handled them in the United States. Another
handbag contained several other expensive watches.
When the watches were found, the businessman looked at the appraiser
and the inspector and grinned. He said, “Well, now that you’ve caught
me, how much is it going to cost? Let me pay you and get on my way.”
The appraiser said, “I’m sorry but it isn’t that simple. This could be
a criminal case rather than just a matter of just paying for a mistake.”
By this time the businessman had wiped the smile from his face. He was
beginning to sweat. He lowered his voice and said, “Let me speak to you
privately.”
The inspector and appraiser took the traveller into a private office,
where he apologized abjectly. He explained that he was trying to be
a “wise guy.” He said he thought it would be amusing to see if he
could bluff his way past Customs and he hadn’t realized the serious
implications involved.
“He was a pretty shaken man when he left that office,” the appraiser
recalled. “No criminal case was made against him but he did pay a stiff
penalty.”
For the transgressions of the few, the great majority must undergo the
inconveniences of delay in having their baggage inspected.
There is no doubt that the inspectors who arrive on the job out of
sorts, grumpy and even rude make more enemies for the Customs Bureau
in dealing with the public than a dozen Customs men could have made
working in any other capacity.
Such an experience brought a protest from a Canadian, who wrote _The
New York Times_ in November, 1958, complaining of rude treatment
by a churlish airport inspector. The inspector curtly demanded the
Canadian’s bags be opened for inspection. Then without as much as
a peek inside them, he ordered the bags to be closed in what the
visitor termed “an exercise in official nuisance and an assertion of
bureaucratic authority.” He added, “The trip began with irritation from
this first contact with a representative of the United States....”
Baggage inspection--while it is only a small part of the overall Bureau
operation--nevertheless is one of the most sensitive parts of the
Bureau’s work, and officials are painfully aware of this fact. They
are trying to eliminate the kind of patently absurd situation which
inspired a _New Yorker_ cartoonist to picture a stern, arms-folded
Customs inspector at the U.S.-Mexico border facing a very pregnant
young lady and saying, “That’s the rule, lady--if you got it in Mexico,
you pay duty on it.”
The keeper of the law can hardly hope to win popularity contests. But
most of the complaints against Customs spring from the average American
traveller’s resentment of the baggage inspection. People simply don’t
like to have a stranger poking about among personal belongings.
The Bureau has been seeking ways to speed up the examinations and to
keep the public at least tranquil, if not happy, over the operation.
Conveyor belts have been installed at examination counters at airports
in New York, Miami, San Juan and San Francisco, and are planned at
other major points of international travel. They have helped to cut
down delays. Campaigns are conducted among employees to promote greater
courtesy in dealing with the travelling public.
Inspector Simon, discussing this situation, said: “We rarely have
difficulty with seasoned travellers who know all the rules. It’s the
people who don’t travel too often, the person who makes one trip in
ten years’ time, and the general tourist who are always apprehensive
about Customs. One of the most difficult things is to settle them down
and make them feel at ease so that you can get the answers to your
questions without upsetting them too much. Once they feel that you
understand their situation and you start to discuss with them what they
have purchased and what they might have ordered to be shipped later and
how they must go about clearing these articles, then they relax a bit
and you find that it is easier to handle them.”
To train new Customs employees in their duties and responsibilities,
the Customs Bureau operates a school for inspectors and examiners in an
old building at 54 Stone Street in lower Manhattan. Here the recruits
are not only instructed in the proper way to meet the public and to
inspect luggage, but also how to look for the tricks of the smuggler,
how to obtain a sample from a shipment of wool for a laboratory
analysis, the proper procedures for verifying shipments of merchandise
to determine their dutiable value, and what items are on the forbidden
list, such as narcotics and certain plants and vegetables. They also
must familiarize themselves with an impost book on whose pages are
listed more than 60,000 articles which are dutiable. And in hours of
study there is instruction in other phases of the Bureau’s widespread
operations.
While the schooling is helpful for any future inspectors, only
experience will give them the finesse and the tact necessary to avoid
constant irritations in dealing with the thousands of people who pass
through the ports each year from overseas, or from Canada and Mexico.
Customs inspectors have learned from long experience that elderly women
returning from abroad for the first time and women who are travelling
alone are apt to be the most emotional when approaching the Customs
inspection lane. They require special attention by inspectors in
filling out the proper forms and in getting their baggage prepared for
inspection. Many of them regard Customs as a frightening barrier to
entry into the United States--and not as an agency to help them comply
with the laws which were written by Congress.
Actually, a close look at the record reveals that the Customs Bureau is
one of the more efficient units in the Federal government. Even though
the work load for examiners, agents, appraisers and other employees has
increased more than 200 per cent over the past ten years, the Bureau
does the job with fewer employees. In 1951 the Bureau had a total
of 8,561 employees--8 more than were employed in 1962. The Bureau’s
operating budget had increased from $40,500,000 to $63,400,000 over
that period, but most of the increase went into pay raises voted by
Congress, employee retirement funds, increased health benefits, and
employee insurance contributions.
In 1960, the Bureau won a commendation from the watchdog Bureau of the
Budget for an impressive showing in management improvements effected by
outgoing Commissioner Ralph Kelly.
Since that remote day in 1789 when William Seton paid the first $774.41
in duties into the U.S. Treasury, the responsibility for policing the
imports has grown steadily.
The nerve center for the sprawling operation is located in the office
of Commissioner Philip Nichols, Jr., in Washington, D. C., whose top
lieutenant is a long-time government career man, Assistant Commissioner
David B. Strubinger.
Management control is maintained through seven main divisions: the
Division of Engineering and Weighing, the Division of Laboratories,
the Division of Tariff and Marine Administration, the Division of
Personnel, the Supervisor of Appraisers, the Division of Investigations
and Patrols, and the Division of Fiscal Administration.
In the field there are forty-five collectors of customs in thirty-two
Customs districts, thirty-two appraisers, nine chief chemists, seven
comptrollers, thirteen supervising Customs agents, and nine chief
laboratory chemists, in addition to the inspectors, enforcement agents,
examiners, border patrolmen, technicians, and clerical workers.
In the fiscal year 1960, the imports reached $13 billion, and in 1962
they climbed to more than $15 billion--pouring through 350 ports of
entry and Customs stations along the borders. The collection of duties
soared in 1962 to more than $1.5 billion. International air travel at
New York’s Idlewild Airport increased more than 10 per cent over the
preceding year, and air cargo shipments were up 20 per cent. Similar
reports came from other points of international travel.
Perhaps one of the more notable achievements of the Service is the fact
that with improved management controls, better auditing procedures, and
swift action against crooked employees, the Bureau has not had a major
household scandal in more than a quarter of a century.
For years, the Bureau has had one of the lowest personnel turnover
rates of any of the government agencies. It is now in a period of
rapid change. The reason is that many of the long-time employees,
including those in top management positions, are reaching retirement
age. They are the ones who came into the Service in the early 1920s and
chose to remain.
Government employees may retire any time from age sixty-two on to
the mandatory retirement age of seventy. Most of those retiring are
stepping out at age sixty-five, and since 1960 the Bureau has been
forced to seek approximately 400 new employees each year--with a heavy
turnover in the upper management echelon.
The management vacancies are being filled by promotions within the
Service. The upward move has left openings in the lower positions
for young men and women interested in a government career and, more
particularly, in the specialized work offered by Customs. This trend in
employment will continue through 1965.
Why did they stay with the Customs Bureau in such numbers? One of the
old-timers put it this way: “We came into the Customs Service as young
people and it became a part of our life. We felt we had more than an
ordinary job. We felt we were taking part in something important to our
country--and for this reason we felt important. There never was time to
get bored because there never was a day when you didn’t run up against
a new and interesting problem. I don’t mean a gimmick problem--but a
problem that might mean millions of dollars. Of course, no job can be
perfect--but I don’t know where I could have found another that would
have kept me interested this long....”
There is every reason to believe that the Customs Service--the gray old
frontier sheriff among the Federal agencies--is improving with age.
ABOUT THE AUTHOR
Don Whitehead was born in Inman, Virginia, and studied at
the University of Kentucky. He has spent most of his working
life in newspaper work, and for twenty-one years was with the
Associated Press, twice winning Pulitzer prizes. For a time
he was chief of the Washington, D.C., bureau of the _New York
Herald Tribune_. In 1956 he wrote the widely acclaimed _The
F.B.I. Story_, and in 1960 he wrote _Journey into Crime_. He
now lives with his wife in Concord, Tennessee, where he writes
a column for the Knoxville _News-Sentinel_ and does freelance
writing.
Transcriber’s Notes
Punctuation, hyphenation, and spelling were made consistent when a
predominant preference was found in the original book; otherwise they
were not changed.
Simple typographical errors were corrected; unbalanced quotation
marks were remedied when the change was obvious, and otherwise left
unbalanced.
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