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.