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The E-Sylum: Volume 12, Number 6, February 8, 2009, Article 25

THE MYSTERY OF THE COUNTERFEIT CHRYSANTHEMUMS

Thursday's New York Times had an interesting article about a case of counterfeiting in Japan. -Editor
After two years of Government leaks and speculation, one of Japan's most intriguing financial whodunits has entered a new chapter.

A lawsuit filed here this morning demands resolution of the mystery: Did the Japanese police uncover the biggest and most well-financed counterfeit operation in history, or instead commit a major blunder by seizing 103,000 genuine gold coins as fake and incorrectly accusing a Briton of dealing in them?

Paul Davies, the British coin dealer at the center of this strange affair, insists that several thousand of the coins confiscated from him two years ago are genuine. In his suit, Mr. Davies demands that the coins be returned, or that he be paid for their full value, plus interest.

The suit is intended to force the police to do something they have failed to do for the last two years -- prove the gold coins are indeed counterfeits.

The mystery first became public in February 1990, when the Finance Ministry said it had discovered 103,000 counterfeit gold coins. They are said to have appeared among the 11 million special coins the Government minted in 1986 and 1987 to commemorate the 60th year of the reign of Emperor Hirohito, known posthumously as Emperor Showa.

The coins actually served several purposes. They were regarded as a fitting way to mark the Emperor's long rule and Japan's emergence in the 1980's as an economic powerhouse. But they were also a major money-making enterprise. An Official Gold Rush

There was a gold fever in Japan at that time, and the coins, slightly larger than a quarter, with the Imperial chrysanthemum symbol stamped on one side, were eagerly snapped up by collectors.

The Finance Ministry took advantage of that fervor by giving each coin a face value of 100,000 yen (about $778 at today's currency rates), the price at which they were sold and could be redeemed. But the coins included what was then only about 40,000 yen worth of gold each. That meant the Government earned about 60,000 yen on each coin it sold, a total of some $5 billion if all went well.

The markup also meant that if some clever forger could manage to buy tons of gold, refine it to the unusually pure level of 99.99 percent used by the Japanese Government, and mint exact replicas, he or she could also claim these extraordinary profits.

It has been reported, however, that almost a million of the official coins went unsold. And that is where the story gets interesting.

Mr. Davies, a voluble man who acknowledges that gold moves in strange ways, and who is clearly relishing a showdown with the Japanese authorities, has his own theory.

He has commissioned three reports by one of Europe's top anti-counterfeit experts, Ernest Newman, which insist without the slightest doubt that the coins are genuine. Microscopic striations that the Japanese contend are proof of the forgery are actually marks from the very dies the Government used to mint the coins, Mr. Davies and Mr. Newman contend.

Mr. Davies has theorized that the suspect coins came from the Government's unsold lot of nearly a million coins.

To read the complete article, see: Numismatic Mystery: A New Turn in the Case of the Chrysanthemum Coins (http://query.nytimes.com/gst/fullpage.html?
res=9E0CE7DD1330F933A15756C0A964958260)



Wayne Homren, Editor

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