The biggest lode of gold ever to go down at sea – a disaster that triggered the financial Panic of 1857 – is going on the auction block for the first time.
After a 10-year court battle, a federal judge has lifted an injunction that was preventing Sotheby’s from auctioning the first 400 pounds of the three-ton lode, which altogether is worth some $100 million.
The treasure, which sat on the ocean floor for 130 years, was lost when the S.S. Central America went down in a mammoth hurricane off the Carolinas on Sept. 12, 1857. The ship was rushing back to Manhattan with a huge stash of raw gold from the California Gold Rush.
The wreck claimed 425 lives – the worst maritime disaster in American history up to that time – and also set in motion a chain of events that led to economic ruin and the Civil War.
New York banks desperately needed the California gold to stop a national run on banks that had begun only days earlier with the collapse of the corrupt Ohio Life Insurance & Trust Co.
But the gold bars, nuggets and gold dust never arrived – causing more than 60 New York banks to close their windows. It triggered the worst recession of the time, and wiped out New York’s financial clout almost overnight.
It also brought political tragedy. The Deep South’s cotton crop was spared in the Panic, which made Southerners fabulously wealthy.
Some historians say this shift of wealth to the South emboldened the slave-run economy to secede.
Experts say the gold is the only remaining evidence of the Gold Rush and is the largest raw gold holding of its kind to come to market.
Crude gold bars direct from the gold fields, original gold dust packets and even gold nuggets as large as a pound are in the sale June 20-21.
“This is the first time anyone can own gold directly from the Gold Rush. All the other gold was minted, but this has been preserved on the ocean floor,” said David Tripp, Sotheby’s gold expert.
Sotheby’s is selling just 8 percent of the gold stash. The remaining 92 percent belongs to a syndicate owned by Dwight Manley, the former agent and manager of basketball player Dennis Rodman.
The gold sale is also Sotheby’s sweet revenge against rival Christie’s. Christie’s had invested $35 million into the original salvage syndicate in 1990 in exchange for rights to auction the treasure.
But a legal squabble among syndicate partners blocked the sale, and Christie’s sued for its money back. Manley stepped in, bought out the syndicate and paid off Christie’s claim. Manley intends to sell the treasure himself over the next two years.
Sotheby’s got its share of the treasure for auction from a group of insurance companies that had insured the original steamship voyage in 1857.
The insurers sued for a piece of the treasure and won. They included Atlantic Mutual of New York, which originally paid out $150,000 in claims.
Sotheby’s had planned to sell the gold in December, but legal action blocked the sale.
The treasure was recovered in 1990 by ocean engineer Tommy Thompson and his syndicate, Columbus-America Discovery Group. Thompson had sought to block the insurance companies’ claims.