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S.S. Central America Gold Bars
Kellogg & Humbert Gold Ingot. 152.96 Ounces. CABG-440. The S.S. Central America took with it more than 500 souls and $1.2 million in gold when it slipped 7,200 feet below the sea off the coast of the Carolinas in 1857. Its story has been widely publicized since 1988, when the Columbus-America Discovery Group found and began to recover contents from the wreckage. Its claim to fame as one of the greatest treasure finds in history is well-deserved, yet the loss of the Central America represents something more. It illuminates the connections between two geographically and economically distant coasts at a crucial period in this country's storied history.
"Hard Money" West, "Paper Money" East
Gold in all its forms instantly comes to mind when one contemplates commerce on the Western frontier. Raw gold dust predominated as a medium of exchange, but coins and bars also traded when available. The issuance of paper money had been explicitly banned upon the adoption California's constitution in 1849. Per Bowers' 2002 tome, A California Gold Rush History:
"When California was admitted into the Union on September 9, 1850, it already had a "hard money" economy, with not a piece of paper money in sight. The dependence upon silver and gold coins and the exclusion of paper money prevailed for many years thereafter."
California mines were producing an estimated $300,000 worth of gold per day in 1849. There was seemingly no reason for banks to issue paper money under those circumstances. The same could not be said for East Coast states, save for Georgia and North Carolina. The Northeast relied heavily on banknotes, a long-standing tradition despite innumerable instances of fraud (phantom banks, spurious notes, insufficient reserves, etc.). These factors had led to a serious financial crisis in 1837, accounting for the Hard Times of 1837-1843, and had a tremendous influence on California's skepticism toward commercial banking. Clearly, the economies of the East and West were vastly different, yet they were inextricably intertwined.
Linking the Coasts
The Panama route played a vital role in bridging the geographic and economic gap between California and the Eastern states. James P. Delgado writes in To California by Sea: A Maritime History of the California Gold Rush: "On Panama steamers and across the isthmus California's wealth poured east, and mail and newspapers forged a regular link between California and the rest of the world." The route facilitated the movement of United States coinage westward, where federal specie was required to make payments at the Custom House.
The S.S. Central America, formerly the George Law, was one of the many ships responsible for moving gold, mail, and passengers from California along the Atlantic coast between New York and Havana. Its loss in September 1857 would highlight the interconnectedness between East and West, aggravating the first major panic in 20 years.
Economic Turbulence
By 1857, what had been a booming economy began to show signs of a slowdown. Banks were heavily invested in railroad ventures and agricultural industries, and started to suffer for a variety of reasons, including reduced foreign investment. The trade deficit grew, bank reserves became depleted, and investors got nervous. Outright panic ensued on August 24, when the Ohio Life Insurance & Trust Company declared bankruptcy. The firm was widely considered to be a sound lender, and its failure pointed to serious structural issues underpinning the American economy. Stock markets reacted accordingly in the weeks and months that followed.
At the same time, there was a belief that "the periodic arrival in New York City of treasure-laden ships from Panama pumped vitality into the eastern markets with 'new money' to help alleviate the situation, although few took the time to look at the actual numbers involved," according to Bowers. Two months prior to the fall of the Ohio Life Insurance & Trust Company, Harper's magazine included this prophetic commentary in its June 20 issue:
Kellogg & Humbert Gold Ingot. 152.96 Ounces. CABG-440. The S.S. Central America took with it more than 500 souls and $1.2 million in gold when it slipped 7,200 feet below the sea off the coast of the Carolinas in 1857. Its story has been widely publicized since 1988, when the Columbus-America Discovery Group found and began to recover contents from the wreckage. Its claim to fame as one of the greatest treasure finds in history is well-deserved, yet the loss of the Central America represents something more. It illuminates the connections between two geographically and economically distant coasts at a crucial period in this country's storied history.
"Hard Money" West, "Paper Money" East
Gold in all its forms instantly comes to mind when one contemplates commerce on the Western frontier. Raw gold dust predominated as a medium of exchange, but coins and bars also traded when available. The issuance of paper money had been explicitly banned upon the adoption California's constitution in 1849. Per Bowers' 2002 tome, A California Gold Rush History:
"When California was admitted into the Union on September 9, 1850, it already had a "hard money" economy, with not a piece of paper money in sight. The dependence upon silver and gold coins and the exclusion of paper money prevailed for many years thereafter."
California mines were producing an estimated $300,000 worth of gold per day in 1849. There was seemingly no reason for banks to issue paper money under those circumstances. The same could not be said for East Coast states, save for Georgia and North Carolina. The Northeast relied heavily on banknotes, a long-standing tradition despite innumerable instances of fraud (phantom banks, spurious notes, insufficient reserves, etc.). These factors had led to a serious financial crisis in 1837, accounting for the Hard Times of 1837-1843, and had a tremendous influence on California's skepticism toward commercial banking. Clearly, the economies of the East and West were vastly different, yet they were inextricably intertwined.
Linking the Coasts
The Panama route played a vital role in bridging the geographic and economic gap between California and the Eastern states. James P. Delgado writes in To California by Sea: A Maritime History of the California Gold Rush: "On Panama steamers and across the isthmus California's wealth poured east, and mail and newspapers forged a regular link between California and the rest of the world." The route facilitated the movement of United States coinage westward, where federal specie was required to make payments at the Custom House.
The S.S. Central America, formerly the George Law, was one of the many ships responsible for moving gold, mail, and passengers from California along the Atlantic coast between New York and Havana. Its loss in September 1857 would highlight the interconnectedness between East and West, aggravating the first major panic in 20 years.
Economic Turbulence
By 1857, what had been a booming economy began to show signs of a slowdown. Banks were heavily invested in railroad ventures and agricultural industries, and started to suffer for a variety of reasons, including reduced foreign investment. The trade deficit grew, bank reserves became depleted, and investors got nervous. Outright panic ensued on August 24, when the Ohio Life Insurance & Trust Company declared bankruptcy. The firm was widely considered to be a sound lender, and its failure pointed to serious structural issues underpinning the American economy. Stock markets reacted accordingly in the weeks and months that followed.
At the same time, there was a belief that "the periodic arrival in New York City of treasure-laden ships from Panama pumped vitality into the eastern markets with 'new money' to help alleviate the situation, although few took the time to look at the actual numbers involved," according to Bowers. Two months prior to the fall of the Ohio Life Insurance & Trust Company, Harper's magazine included this prophetic commentary in its June 20 issue: