Investing in Antique Mechanical Toys Isn’t Child’s Play

Jeffrey Levitt brims with enthusiasm as he examines one of the antique piggy banks on display at his gallery on fashionable Madison Avenue.

“You might say these are the hottest bank investments in the U.S.,” he says. “Only don’t be put off by their size.”

In his hand, an intricately rendered cast-iron girl with a gold-painted face and yellow dress holds a jump rope. He puts a quarter into the paws of a sculpted squirrel perched on the bank’s coin box.

“Character, charm, motion,” Levitt marvels, as the toy bank creaks into operation. The girl’s legs oscillate, her head turns and the rope coasts over her body.

The mechanical ballet may seem like child’s play, but it’s actually a hot investment.

About 80 years ago, the toy could be bought for $18 from a New York street vendor. Ten years ago, versions were auctioned for $8,000 to $10,000 apiece. Now Levitt sells each one for $55,000.

Cheer up, bank investors. While bank stocks are getting pounded, prices on toy mechanical banks--handsomely crafted, antique devices made about 100 years ago--are soaring.

And Levitt, 33, has put them within reach of American investors at his gallery, Mint and Boxed, which opened here in September.

Toy collectors are not the only ones taking notice.

“As buy-and-hold investments, I recommend them. They beat the pants off bank stocks--at least at the moment,” says Charles Peabody, an analyst at Kidder Peabody & Co. “Bank stocks are below their 10- and 12-year lows. Yet over a 10-year period, mechanical banks have risen steadily.”

Looking for a long-term investment in a blue-chip bank? Better to invest in “Frog on an Arched Track,” a creation of James Fallows & Sons of Philadelphia, circa 1880, Levitt says.

This much sought-after toy stands about eight inches tall, weighs two pounds and retails for $225,000. In 1980, its market value was $15,000. Prices on other mechanical banks have tripled in that period, averaging 20% growth a year, antique experts say.

By comparison, the share price of J.P. Morgan & Co., historically one of the stronger U.S. bank stocks, has grown at an 11% annual rate, excluding dividends, according to analyst Raphael Soifer at Brown Brothers Harriman Co.

The opening of Levitt’s gallery marks the first time collectible mechanical banks are being offered over the counter in this country. In the past, they were usually snapped up by wealthy enthusiasts at Sunday morning auctions or after the deaths of avid collectors.

About 35 American companies produced the banks between 1869 and 1920, mostly in Pennsylvania. Made of various materials, such as wood, tin and lead, the most valuable banks are of cast iron.

While most collectible toys hail from Europe, or are strongly European-influenced, Levitt says mechanical banks are an American phenomenon--a quirky byproduct of the new art of industrial design in the years after the Civil War.

According to Levitt, the banks “offered a creative outlet for the pioneers of industrial production.”

Levitt himself is a bit of a storybook character.

Considered the world’s foremost antique toy expert, Levitt, a Briton, says he has invested a good portion of his inherited fortune in his business. His deadpan face bears a fleeting resemblance to comedian Pee Wee Herman.

Levitt’s fascination with toys began at age 24 when he was laid up in a London hospital. A get-well present from a friend--a toy 1950s London city bus--evoked memories of his childhood and buoyed his spirits.

It also interested him in toys as collectibles. He soon discovered a small world of avid collectors who would cross the Gobi desert to secure a good deal on an antique toy.

What was lacking, he found, was a retail establishment that could cater to the needs of these buyers.

He used family money to open his first gallery in London in 1988. Last year, he opened a branch in Tokyo.

Overseas collectors have been among his best customers. He has sold several banks to Japanese buyers and is in talks to sell others. British buyers, too, are cashing in on the boom.

Sir Anthony Joliffe, a former lord mayor of London who runs an accounting firm, is an avid investor. He recently bought two banks, “The Magician,” made by J.M. Stevens in Cromwell, Conn., in 1901, for $18,000, and “Professor Pug Frog’s Great Bicycle Feat,” circa 1892, for $30,000.

“Without doubt, they’re the best investment I’ve ever made,” he says. “I invest in stocks and bonds. My toys have outpaced them all. I am glad that Jeffrey has introduced me to toy banks.”

For his part, Levitt has gone to great lengths to buy a mechanical bank. He once caught wind of an East German merchant who had a stash of valuable toys. The owner wanted the most expensive Mercedes, a 560SEC sedan, in exchange for the collection. With the help of a West German official, the paperwork was cut for the transaction.

Levitt bought the car, drove it through Checkpoint Charley and returned on foot with a suitcase full of toys, including a mechanical bank.

Back on the third floor of his New York gallery, Levitt examines the details of the “Perfection Registering Bank,” which dates from 1893. About six inches high, the bank features Dorothy from the classic “Wizard of Oz.”

This is Levitt’s personal favorite. Put a dime in the slot and Dorothy, with Toto in tow, advances along a register. When she reaches the $5 mark, a door opens and dimes come pouring out.

“It’s a run on deposits, as you say in America,” Levitt says.