Echoes From The Past Revisited, The Panic of 1857 and the Continuing Saga of The Discovery of Gold In California

An interesting sidelight to gold’s saga revolves around the tragic loss in September, 1857, of the SS Central America, a sailing vessel bound for New York carrying passengers and three tons of gold ingots and newly minted gold coins from California. Lashed by a massive hurricane, the ship went down in 7,200 feet of water about 160 miles east of Cape Hatteras, N.C, at a time when U.S. bankers desperately needed the ship to reach its destination safely. The story was front-page news across the country and was accentuated by the Panic of 1857, which lasted for three years. Many people lost their jobs.

The sinking of the Central America was one of the worst at sea disasters in American history, claiming over 400
lives, and was front-page news all over the country. The loss of the approximately $1.5 million in gold the ship had carried, valued at roughly $18 per ounce, stunned the financial community and compounded the woes of the New York bankers, adding to the Panic.

The Panic was marked by a decline in wheat prices when the Crimean War ended in February, 1856. This drop was keenly felt by American farmers who had profited from the war. On a wider scale however, there had been a decade of land speculation and investment in railroad securities, aided by heavy borrowing. Banks had invested in businesses that were failing, causing people to panic. Investors were losing heavily in the stock market, railroads were unable to pay their debts, and businesses and factories failed idling hundreds of thousands of workers. People feared financial ruin and ran to the banks to withdraw their money. But the banks did not deal in paper money; they used gold and silver. But because of their failed invedstments, the banks could not gather all the gold their customers demanded. From August to September, 1857, a run on New York banks had required them to pay out more than twenty percent of their gold reserves and many banks failed.

However, the tragic loss of the Central America had a remarkable ending so far as the gold is concerned. In 1988, the ship and its treasure were located on the ocean floor by Tommy Thompson, an oceanographer from landlocked Ohio. Images aboard his vessel revealed a veritable king’s ransom in gold ingots and coins on the sea bottom where they had lain for over a century. Boosted by modern technological advances, the gold was recovered in 1989. The salvaged gold was estimated to be worth in the neighborhood of $1 billion, a record gold treasure haul.

The largest ingot recovered was an astonishing 933.94 ounces, nearly 80 pounds, with an 1857 value of $17,433.57. Nearly 7,500 coins were also recovered, many of them 1857-S Coronet double eagles. After being subject to a special conservation process, many coins were found to exhibit the brilliant proof like luster imparted to them the day they were struck at the San Francisco mint. The brilliance of the coins and gold bars was made possible by the oceanic conditions in which they were discovered, submerged under thousands of feet of ocean water at a temperature of 34 degrees Farenheit.

In my book, “The Art of Clear Writing,” (available on amazon.com through Kindle Books and in print), to demonstrate the use of parenthesis and brackets, I point out that coin collecting can be interesting as well as a good investment. Here is what I wrote:
Coin collecting can be very interesting, historically speaking,
as well as a good investment. Coin grading is subjective (a matter of
opinion, which can change over time), so never buy any coin without
first inspecting it.

Carson City silver dollars, aka Morgan silver dollars [named for the designer, George T. Morgan], minted in Carson City, Nevada between 1878 and 1893, are still popular today because of their attractive design and because they are a throwback
to the days of the Old West.

Copyright 2013. Arnold G. Regardie. All rights reserved.

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