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Image courtesy: Ira & Larry Goldberg Coins & Collectibles
The United States has always been a country of high growth, with booms, busts, and panic attacks. This is the history of America. Today, we panic about global warming; yesterday, we panicked over COVID-19. In the mid-1800s, a rapid, nationwide financial panic overtook the country, catalyzed by the 1857 shipwreck of the SS Central America, which had been carrying millions of dollars in gold gained from the waning California Gold Rush. Although the country’s economy had been booming in the years prior, declining stocks and the loss of crucial gold needed for US coinage and bank reserves poised the stretched economy for a bust instead.
And now, WorthPoint Industry partner Ira & Larry Goldberg Coins & Collectibles is auctioning one such gold item recovered from that fateful shipwreck: a gold ingot molded by the well-known Kellogg & Humbert Assayers. As the auction house notes, this gold bar represents many individuals’ efforts toiling years in streams and valleys during the California Gold Rush to recover gold nuggets and, more often than not, tiny gold dust traces. But these fortunes promised in the West were later lost at sea on the way to the East, compiling the financial issues that launched the Panic of 1857.
The Challenge of Coinage in the Growing United States
While the country was benefiting from the California Gold Rush and the first public electrical telegraphs in the 1840s, there was a simultaneous growing need for banks to have hard currency reserves. The US had grown quickly, and so, too, had the cost of everything. Although the country’s western edge promised precious and semi-precious metals that could fuel the economy, there was a problem: The New West needed coinage for itself and a mint to make it. On the other hand, the older East Coast needed its coin supply and had mints but lacked precious metals.
The country solved this by creating coin mints in San Francisco, Carson City, and Denver. (In addition to minting silver and copper, the San Francisco Mint processed more than $4 million worth of gold coins in its first year, 1854.) Then, to get gold from California to the hungry mint in Philadelphia, which was feeding a needy and growing immigrant-fueled country, the East relied on an age-old solution: a treasure ship laden with gold.
From California Gold to United States Mints
While sending California’s gold back to the East by steamship may seem easy today, it was not a simple task in the 1850s. The arduous process began with digging and gathering the gold from the earth, often by hand. The arduous process began with digging and gathering the gold from the earth, often by hand. The gold was then smelted and delivered to an assay office like Kellogg & Humbert in San Francisco. Once the gold was assayed, converted into gold bars, and stamped with identifying marks from the assayer, the ingots were moved to be loaded and transported by ship.
In 1857, the world was very different than today. In America, California gold was worth approximately $20 per ounce and was becoming a world financial reserve standard, replacing silver as a reserve currency. Additionally, neither the Panama Canal nor transcontinental railroads existed yet. Thus, transporting raw bullion from San Francisco to the Philadelphia Mint was long and dangerous. Moving cargo from the Pacific to the Atlantic involved a trip around the tip of South America or overland through countries like Panama. Gold was much more suited for this trip than silver—although denser and thus heavier pound per pound, gold consumed a fraction of space per dollar.
The Panic of 1857 and the Sinking of the SS Central America
In September 1857 a cargo of the SS Central America was picked up in Nicaragua that included a massive amount of treasure bullion from the California gold mines. The 1857 seeds of a financial meltdown had also begun in August with the failure NH Wolfe the USA’s oldest flour and grain company. The stock market had already peaked in July. By September the economy was ready for a bust and on September 3rd, the SS Central America left port in Panama and on to NY via Havana. No one seemed to be concerned this was hurricane season but perhaps there was an awareness. By September 8th the ship had stopped in Havana and would move on that morning with fine weather. Less than 24 hours later it was in a strong Category 2 hurricane off the Carolinas. By September 12th it was on the bottom of the ocean off of South Carolina with 425 of 578 persons dead along with 30,000 pounds of gold. Up until that time this was the biggest disaster in US maritime history. The 30,000 pounds weight loss of gold was forever history and helped to push the US and World economies over the Panic Edge. The cargo remained at the bottom of the ocean until salvaged in 1988.
Goldbergs pre Long Beach Auction features a trophy item from this salvage. It is item 485 and is a 104 ounce buillion bar stamped by the infamous assayer of the time, Kellogg and Humbert. It’s estimate is $300,000 In Comparison
- a 32.4 ounce bar was auctioned by Holabird from the wreck for $138,000 This is 3.2X’s the gold for 2.17 x the estimate. Yet during this time gold has gone up by about 15%
- Although values fluctuate for gold it has has gone from $20 an ounce to about $2,150 an ounce since the shipwreck an increase roughly of 100 times
- Inflation has caused an 1857 to be worth has increased about 37 times in value in today’s terms. Gold has fared much better.
- This 104 ounce bar was once easy to find and is now much rarer than it’s smaller cousin looking at auction records.
What is the premium for this gargantuan salvaged relic that began this trek from CA 170 years ago and is to be auctioned at Goldberg’s? I would say the $300,000 is a bargain and low. I will watch it and report back. It is a key item in this sale and also being sold by a fabled auction and a data partner of WorthPoint’s. It is one of two sales they are having in this first week of June. To view this item click on this link. To view this auction click on this link. To view the other auction for the partial sale of the Peh family click on this link. That sale is officially estimated at about $1M but I expect it will bring much more. For more history on this shipwreck I found these two sites helpful.
I would be interested in your feedback and thoughts.
Will Seippel is the founder, president, and CEO of WorthPoint. Will has been an avid collector since 1974 and dealer of just about all things antique—with an emphasis on ephemera— since 1984. He is also the creator and founder of HIP, a website devoted to recording the best of the world’s history that has been saved on film.
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