An appellate court has upheld a lower court decision that ordered American treasure-hunter Odyssey Marine Exploration to return to Spain some 594,000 gold and silver coin valued at roughly $500 million recovered on the ocean floor from a sunken Spanish Galleon. The United States government supported the Spanish in the claim and the coins are supposed to be returned to Spain within ten days.
Here is how the Court described the case in an earlier ruling:
Odyssey is a deep-ocean exploration and shipwreck recovery business. In 2006, Odyssey began what it called the Amsterdam Project, researching ships that sank in a heavily-traveled area, which included an area off the coast of Gibraltar. Odyssey developed a list of target vessels to search for, one of which was the Nuestra Senora de las Mercedes (Mercedes), a Spanish vessel that sank in 1804. According to Odyssey, it “recogniz[ed] that Spain may have had a cultural (if not legal) interest in vessels that may be located within the Amsterdam area, [and] invited Spain to participate in the project.” Odyssey’s Resp. to Spain’s Motion to Dismiss, Dkt. 138 at 3. Odyssey’s CEO and counsel then met with a representative from Spain’s Ministry of Culture. What occurred at the meeting is disputed, but both Odyssey and Spain agree Spain did not give Odyssey approval to salvage any sunken Spanish vessels.
In March 2007, while Odyssey was surveying the Amsterdam area, Odyssey discovered a shipwreck in international waters 100 miles west of the Straits of Gibraltar at a depth of 1,100 meters. The remains of the shipwrecked vessel were spread over the seabed in an area 368 meters long and 110 meters wide. Odyssey conducted a detailed survey of the shipwreck before disturbing any artifacts on the ocean floor and then began to recover objects from the site. Odyssey ultimately recovered approximately 594,000 coins and a number of other small artifacts.
The company claimed that the size of the debris field made the origin of all of the coins impossible to determine. However, the U.S. courts disagreed. The company called the ship The Black Swan but the court found the identity of the vessel was the Nuestra Señora de las Mercedes sunk by the British off Cape St. may, Portugal in October 1804.
The court found that the company was looking for the Mercedes and found the Mercedes — noting that all of the coins were minted in Lima, Peru and all of the cannon matched those believed to be on the Mercedes.
Here is how the district court described the life and demise of the ship:
The historical prelude to the Mercedes’s fateful, October 5, 1804, encounter with a British squadron near Cape Saint Mary, Portugal is well documented and is the obvious starting point for correlating the res to the Mercedes. Within a decade, Spain fought with the British against revolutionary France (Guerra de la Convencion or War of the Convention — 1793-1795); ended those hostilities with the Peace of Basel (1795); quickly signed another treaty pledging support to France (Treaty of San Ildefonso — August 1796); and reaffirmed this alliance in a second treaty that demanded it cede Louisiana to France (Second Treaty of San Ildefonso — 1800). (Doc. 131, Ex. C PP18-19.) In 1802, after years of constant strife, the European powers settled into a temporary respite with the Treaty of Amiens. (Doc. 131, Ex. C P 20.) But this lull [**17] did not allay Spain’s concerns about France. Fearing France’s invasion, yet knowing that Britain would consider Spain’s actions a cause for attack, Spain sought to appease France by secretly agreeing to pay a monetary subsidy in lieu of furnishing the military aid required by the first Treaty of San Ildefonso. (Doc. 131, Ex. C PP 21-22.) In short, Spain needed all its resources for these tumultuous times; accordingly, it dispatched frigates to collect “specie and precious produce” from its American Viceroyalties. (Doc. 131, Ex. A at PP 15-16.) One was the Mercedes. (Doc. 131, Ex. A at P 15.) By the time the Mercedes reached El Callao (near Lima, Peru), France and Britain were already at war. (Doc. 131, Ex. A at P 14; Doc. 131, Ex. C at P 24.) Madrid’s June 8, 1803, dispatch to the Viceroy of Peru (the Marquis of Aviles) captures the fluidity of the political events:
The political circumstances in Europe and the declared War between England and France require every Commander of the King’s vessels to increase their care and vigilance to be prepared just in case H[is] M[ajesty] found himself in the difficult circumstance of taking part in this [conflict] …; but in the meantime and to not [**18] endanger the existing specie in that Realm and give time to examine [*1133] the state that European political affairs are acquiring, as prudence dictates, H[is] M[ajesty] has found it proper to resolve that Y[our] E[xcellency] suspend the departure from Callao of the frigates, Asuncion, Clara, and Mercedes, which have gone [there] for specie ….
(Doc. 131, Ex. C at P 24.)
The following summer, the Mercedes and three other frigates (the Clara, the Medea, and the Fama), set out from Montevideo bound for Cadiz. (Doc. 131, Ex. C at PP 27-28.) Spain undoubtedly anticipated a conflict with the British. (Doc. 131, Ex. C at P 27.) On the morning of October 5, 1804, only a day’s sail from Cadiz, a British squadron forewarned of the mission intercepted the four frigates south of Cape Saint Mary. (Doc. 131, Ex. A at P 23; Doc. 138, Ex. E at Annex 27.) The British demanded their surrender; the Spaniards refused.
As soon as the [British] officer returned with an unsatisfactory answer, I fired another shot a-head of the Admiral, and bore down close on his weather-bow. At this moment the Admiral’s second a-stern fired into the Amphion; the Admiral fired in to the Indefatigable; and I made the signal for close battle, which was instantly commenced with all the alacrity and vigour of English sailors. In less than ten minutes, la Mercedes, the Admiral’s second a-stern, blew up along-side the Amphion, with a tremendous explosion.
Captain Graham Moore, Indefatigable 6
The force of the blast blew part of one of her quarterdeck guns into the Amphion’s rigging. 7 More than 250 perished, including its Captain (Jose Manuel Goycoa) and the family of Second Squadron Leader Diego de Alvear. (Doc. 131, Ex. A at PP 9, 25.) The remaining Spanish frigates surrendered, were taken to Great Britain, and impounded. (Doc. 131, Ex. A at P 26; Doc. 131, Ex. D at P 19.) Two months later, Spain declared war against Britain and sealed its fate by an allegiance to France. (Doc. 131, Ex. A at P 27.)Of course, that battles pales in comparison to the carnage in federal court over ownership of the coins.
The long litigation involved some interesting historic cases and rivaling claims. It was Chief Justice Marshall who first ruled on the underlying doctrine of sovereign immunity in a case involving another Napoleonic War vessel — finding that the courts of the United States lacked jurisdiction over an armed ship of a foreign state in a United States port. The Schooner Exchange v. M’Faddon, 11 U.S. (7 Cranch) 116, 146-47, 3 L. Ed. 287 (1812). He enforced a rule that sought to protect the “perfect equality and absolute independence of sovereigns, and th[e] common interest impelling them to mutual intercourse.” Thus the case turned on the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C.S. § 1602 et seq. The lower court held:
Unquestionably, the Mercedes is the property of Spain — constructed in 1788 by Navy Engineers in the shipyard of the Spanish Navy in Havana, Cuba; commanded by officers and crewed by sailors of the Royal Spanish Navy throughout its service; and designated as a Spanish frigate of war. (Doc. 131, Ex. A at PP 7, 9, 12). It remains on the Royal Navy’s official registry of ships. (Doc. 131, Ex. [**38] A at P 7.) As such, 1609’s plain reading limits Odyssey to arguing the Court has jurisdiction under “existing international agreements” or as permitted by 1610 and 1611. None of these exceptions apply here, as Spain urges and Odyssey’s silence concedes. 17 Instead, Odyssey sidesteps § 1609’s exceptions by claiming: § 1609 does not shield property outside the United States; Spain must actually “possess” the res; the cargo should be partitioned to satisfy the descendants’ claims to the private lots; and other provisions of the FSIA deny Spain sovereign immunity from in personam claims. These contentions are without merit as all evade the FSIA’s goals, its statutory scheme, and the special status accorded warships per the various treaties and agreements § 1609 necessarily incorporates.
This is a video of the actual claims of the Odyssey sinking in the Florida courts.
Source: Daily Mail
Wikipedia has a very long posting on the Black Swan Project/Mercedes that addresses many of the questions asked here. Good background info.
Final paragraphs address the final decision and the pass by the supremes as represented by Thomas.
Being that gold is a good price now, i would have melted at least half of it down and paid for my excavation and time. That destruction of early 17 century coins would ultimatly have been caused by the outrageous court system in America!
Never never never try to equate common sense when a courtroom judge is involved!
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@Frag: What in the world do you think will be gained by adopting a gold standard?
I do not think anything would be gained. Perhaps you think it would keep our government from printing money: Maybe, but the reason they print money is to pay for their operations. The printed money causes inflation, which you do not like, because it is like a tax on your assets.
But if we went to a gold standard, the government would still have the power, and would still need to pay for their operations, so they would assess a regular tax on your assets that would raise the same amount you were losing to inflation.
Except for one thing: Right now, inflation hurts the rich much more than it does the middle class, because the rich (by definition) have more liquid assets than the poor, and own (not owe) more debt in the form of loans they have made and investments they have made in loaning institutions.
But with a regular tax, as always, the rich will have their minions in Congress engineer myriad ways for them to pay less than their fair share (or what they used to lose to inflation) and the burden will fall disproportionately on the middle class.
Unless you are packing about ten million dollars in net worth, you accomplish nothing with a gold standard that is in your own self-interest, you instead create yet another tax, and yet more ways for the wealthy to avoid paying for their fair share of the society they live in.
The problem you have is not a gold standard or the lack of it, the problem is the power of our government to spend money on operations and policies against your will. A gold standard will not fix that, not for one minute.
It is a myth that we cannot return to a gold standard. A gold standard is simply fixing the value of a piece of paper or “note” to a set amount of precious metal. The ratio could be anything, like say $2000 per oz of gold.
Anyways, the power to create money rests in the people since ultimately it is just a convenient way to exchange labor. Stay tuned for many states creating their own money. We already have digital currency. We should be allowed to have competing currencies.
As far as the ship wreck coins, I say put them back. Spread them out over the whole of the ocean. Or even better tell the governments to get stuffed and move take your coins to the Caymans.
So I see the argument that “Mercedes” was a Spanish ship, however you lost me on who is the rightful owner of the gold coins. Minted in Lima, Peru probably melted down from the spoils of relentless attacks on native people with stone age technology. Are they saying the if you murder people who have no chance of beating you… that it is legally and morally correct to keep the money?
“The court found that the company was looking for the Mercedes and found the Mercedes — noting that all of the coins were minted in Lima, Peru and all of the cannon matched those believed to be on the Mercedes.”
@Commoner: Fascinating.
If you are talking about my post that preceded yours by 25 minutes, here is an article on Salon that addresses the issue directly, for the high-tech industry, and engineers specifically, which is in the process of being off-shored permanently in the interest of exactly what I am talking about: Lower wages, no taxes, no unions, no workplace protections or standards.
We have lost our manufacturing base for the same reason. Because of cheap communication and technology, our jobs are being off-shored from the bottom up, skill-level wise. We have gone way past the high-school graduate factory worker, now we are eroding real knowledge jobs: computer programmers and scientists, engineers of all stripes (electrical, mechanical, structural, etc), physicists and geologists, all sorts of Masters and PhD level technical professions. We cannot compete with countries that do not have to follow our domestic laws that prevent employers from abusing their employees.
@Bron: No it isn’t, the people that DID pay it did not stop earning, and that is the pyschological point you are trying to avoid: As long as there is profit in business, people will continue to engage in it.
You expect them to follow their own self-interest, don’t you? So do I. It is not in their self-interest to stop earning money, even if the tax rate IS 95%. No matter what the tax rate is, employee cost is, cost of goods is, whatever: If the bottom line is enough to make it worth whatever time they have to put into the business (which may be very little), they will keep their business going.
The Republican line is essentially that businesses are intractably stubborn and if they cannot earn 15% returns, they would rather earn NOTHING. It simply isn’t true. Walmart earned $24B last year and paid $7B in taxes, leaving $17B. Do you honestly think Walmart would shut down if they had to pay $10B and were left with only $14B?
Would they lay anybody off? Of course not, Walmart is already one of the most notoriously harsh, stingy, demanding employers in the country, if they could afford to have fewer employees they would already. They can’t afford to have fewer employees without losing sales, and thus profits. Will they demand lower prices from their suppliers? Also impossible, Walmart is as stingy and financially brutal with suppliers as they are with employees, if they could pay them less they would already. So, finally, will they just call it quits and give up $14B a year?
Hell no. $14 billion is $14 billion in pure profit, after all expenses and taxes. If you owned Walmart, it is $14B in free money every year, in your pocket, virtually risk free. You will not burn it because it isn’t $17B, and if you don’t want it because you do not think it is lucrative enough, somebody else (like Target) will be happy to take it.
And that is my point: The Republicans are full of it, the rich aren’t going to pull a Galt and pout and lose billions in profits, EVER. Lower taxes do not encourage anything, in fact they discourage growth. The only reason business taxes are low and the rich have preferred rates is because the rich acquired our government, as a cost-saving measure: It was more cost-effective to corrupt about 400 politicians than to continue to pay hundreds of billions in high taxes.
Tony C:
“Undoubtedly. When is that? Under Eisenhower, the maximum income tax rate on the highest earners was 95%, for quite some time. For many years, the top tax rate was over 70%. Eisenhower seriously pitched the legislative idea of raising it to 100%.”
Hardly anyone made enough to pay those levels. It was only on incomes of over $400,000.00. The average salary was around $3-6 thousand per year.
Deductions were many and so the 90% tax rate is a bogus argument.
fascinating.
@Woosty: Couldn’t read it, the anti-viral software on my computer is set to maximum, and unlike this site, Obama’s site wants to run something disallowed on my computer.
But I assume it is propaganda that ignores all the necessary caveats in order to present the rosiest picture possible to supporters. For Obama supporters, I have an equal amount of cynicism with regard to the Republican doom and gloom crowd, they also ignore all the necessary caveats in order to present the darkest picture possible to their supporters.
In my view, the job picture will not recover in the USA until we level the playing field with what is virtually (and as Gene has noted, sometimes literally) foreign slave labor, and we significantly raise income taxes on current corporations and the wealthy, and punish (by taxation and tariff) the offshoring of jobs.
I am not exactly a protectionist or anti-global trade, but currently it is my effective stance because
a) I believe worker health and safety protections are necessary,
b) I believe in forcing a minimum living wage,
c) I believe (a & b) add costs and liability for employers,
d) thus I do not believe we can compete, on a cost-of-goods basis, with foreign producers that do not have to obey either (a) or (b).
But, when (a) and (b) are enforced, I have no problem with trade, with Canada, Germany, most of Europe. Japan, Iceland, Sweden and Australia (I think, I am not completely sure of labor law everywhere). At least if the goods are produced by their workers in their country, and not imported.
I like foreign trade on a level playing field, what is costing us jobs is trade with China, Pakistan, India, Africa, South America, and other countries with legalized worker brutality.
not to threadjack but since you are talking economics what is your response to this? http://www.barackobama.com/jobsrecord?source=20120203_BO_FB&utm_medium=fb&utm_source=bo_fb&utm_campaign=20120203_bo_fb_jobs_record_jan
@Bron: that is a contradictory statement, force and reason are mutually exclusive.
Well, it is metaphorical, when they are confronted with a new expense they have a choice, but they are “forced” to make a choice: Pay the expense or go out of business. Some may choose one, some may choose the other, but typically the choice is made rationally: If the business with the expense is still making a profit, or if the expense can be passed on to customers by raising prices, then even if one is livid with anger over the expense, the vast majority of business owners will opt for rationality, pay it, and continue in business.
@Bron: At some point the cost of the tax will rise to an unsustainable level.
Undoubtedly. When is that? Under Eisenhower, the maximum income tax rate on the highest earners was 95%, for quite some time. For many years, the top tax rate was over 70%. Eisenhower seriously pitched the legislative idea of raising it to 100%.
It is true that at some point, customers will give up luxuries in order to buy essentials, or less important things for more important things, but … so what?
Virtually everybody does that, it is the human condition. Sociologically speaking, self-spending by those that can afford anything averages out to around $125K per month, so unless you can afford that without blinking chances are you can’t have everything you want.
And besides, isn’t it part of your philosophy that if people cannot afford a product, the business making it should go out of business? This is no different, if somebody produces a luxury and the rich that can afford it choose to spend their money elsewhere: tough luck, producer, the market doesn’t like your product that much.
The reason why doesn’t matter. The taxes cover the essentials of the society, including care for the elderly that relieves their children of the burden so the children can be productive workers. We have to pay the essentials first, and if that shrinks the market for some luxury producers, so be it: I am not pushing somebody’s grandma into a grave so the rich can pay $600 for a bottle of wine instead of $900.
There goes another industry. Now, why would anyone want to be a treasure hunter. Let the governments do it and then they can fight over the spoils. That seems to be what governments do. The problem is that govenment is a confiscatory agency that loots from their Citizens and generally are not willing to do the productive work. Why work when you can steal. The U.S. has approximately 114 different taxes, if you think I’m being overly critical and the primary reason 41,000 factories have closed in the lsast decade, we have 18% E-6 unemployment and 40 million on food stamps. Keep voting for the lesser of two evils. Go Ron Paul or Gary Johnson. Our only hope and they will probably be shot if elected.
Tony C:
“Business owners are forced into rationality.”
that is a contradictory statement, force and reason are mutually exclusive. When a man has a gun pointed at his head and you tell him to do something, chances are he is going to do it in the hopes of saving his life. Rationality has nothing to do with it.
I might also point out that customers are rational and will, at some point, either find a cheaper alternative or just not make the purchase.
At some point the cost of the tax will rise to an unsustainable level.
@Jeff Nabors: if business owners will keep running their businesses regardless of whether they get to keep their profits,
Are you illiterate? I did not say they would do that, I said, correctly and from 30 years of experience consulting with businesses, that as long as they are earning about what they could working for somebody else, they will continue to work for themselves, because it is good to be the king.
I also said that many business owners have limited options for other employment, so their margins can shrink quite a bit before something else becomes more financially attractive.
That cannot possibly be interpreted as “regardless of whether they get to keep their profits”.
@Jeff: if the U.S. government could pay for it’s liabilities, why would deficits be increasing?
Expedient Cowardice, mostly. Borrowing and paying sub-1% interest is easier than facing their constituents and telling them they need to raise taxes.
Politicians like to spend money, on pet projects and political favors. If they can raise taxes on the opposing party’s support demographic, they will, but if they cannot, they will borrow the money instead, and kick the can down the road for some other poor sucker to figure out how to pay. The trick is that the debt ceiling must be increased by Congress, but voters cannot seem to get worked up about that vote, it seems like a technicality. As we have seen recently, politicians that oppose increasing it are accused of wanting the country to default on its debts. (Which of course is not the only option, and equivalent to saying “If you do not let me borrow money for a new entertainment system, then I have no choice but to default on my house mortgage.”)
So there you go, deficit growth. Obviously our government spends beyond its income, but it is not spending beyond the means of the country, not yet, by a long shot. The deficit could triple.
Currently the debt is $14.5T, with 118M households in the USA, that is $123K per household. But do not forget, corporations pay taxes too, and currently households pay about half the taxes, corporations pay about half. Also do not forget, all we have to pay is the interest, and the USA gets a killer rate: Less than 1%. So say $1,230 per year per household, but cut that in half, for the share corporations would pay. So the average household would pay $615/yr in interest on the national debt. The average household income in the USA is $68,000. Which means the tax on gross income needed to pay the interest on the debt should be about 0.9%. That is hidden in your income and other taxes.
Plus, the majority of the debt is owed to Americans in America, and national debt is not like personal debt: There is no way to foreclose on it or force a country to pay, the lenders cannot seize our property. This is called, in business, “no recourse” loans, meaning if we do not pay the lender can’t do anything to collect. (No recourse loans are a way for corporations to give officers bonuses without the officer declaring any income; the officer just never pays the loan back, and the corporation is prohibited from doing anything about it. But of course they didn’t want to do anything about it, it is a legal fraud.)
Seriously, national debt is a red herring, a political football to be kicked around. The National debt is not that big of a deal, it is not a crisis, we are never going to default on any debt we have, and I doubt we will stop borrowing and increasing the deficit in the next 20 years.
They are establishing a precedent to overthrow the old laws of salvage. The real owners are the Native peoples of the Americas that were forced to mine it as slaves or had it stolen from them by the Spanish. It is the old story of thieves supported by thieves in the courts.
@TonyC, if business owners will keep running their businesses regardless of whether they get to keep their profits, do you also believe that Odyssey Marine Exploration will continue to find treasures and report them to governments?
Also, if the U.S. government could pay for it’s liabilities, why would deficits be increasing?
If Spain gets it, the quicker it’ll end up at Goldman Sachs, or Chase.