What was the SS Central America - or 'Ship of Gold' - and why did it sink?

As Tommy Thompson, who found the greatest sunken treasure in American history, is arrested, we look back at the story of how the SS Central America – and thousands of pounds of California gold – was lost

By Andrew Marszal 29 January 2015 • 1:35pm

The U.S. Mail ship S.S. Central America, which sank after sailing into a hurricane in September 1857

The SS Central America, a 280ft side-wheel steamer, sunk off the coast of the Carolinas in 1857 during a hurricane while sailing from Panama to New York.

It was carrying up to 20 tons of gold from the goldfields of California, worth $2 million at the time – or around $54m in today's money.

More than 140 years later, it was found by treasure hunter Tommy Thompson, who was today arrested after two years on the run following a legal dispute with investors in his search expedition for the wreckage.

But what was the ship doing shipping Californian gold from Central America to New York, and how was it found?

California gold rush

California underwent a historic gold rush between the years 1848-55, after a carpenter called James Wilson Marshall found gold in a river bed in the Sierra Nevada Mountains, near Sacramento, while constructing a saw mill.

Word quickly spread, and over the next eight years an estimated 300,000 people migrated from the eastern US and abroad to California in search of their fortune. San Francisco grew from a village of 200 residents in 1846 to a bustling town of around 36,000 just seven years later.

A total of $2 billion worth of precious metal was extracted from the area during the Gold Rush.

As US President James K. Polk put it: “The accounts of abundance of gold are of such an extraordinary character as would scarcely command belief were they not corroborated by the authentic reports of officers in the public service.”

Treasure hunter Tommy Thompson smiles at gold he found at the bottom of the Atlantic Ocean

^{Tommy Thompson with gold he found at the bottom of the Atlantic Ocean (AP)}

Gold transportation

Much of the gold mined in California was transported by ship from California to Panama City, and then across the isthmus to Chagres or – once the Panama Railway was completed in 1855 – to Aspinwall, now known as Colon.

From there it was shipped to New York.

For this reason, the SS Central America was launched in 1852 by the United States Mail Steamship Company, also transporting mail, other cargo and passengers, between New York and Aspinwall.

Between 1852 and 1857 it transported one-third of the entire California Gold Rush output.

Each leg of the voyage typically took between 19 and 24 days.

a Gold Rush-era $20 gold coin recovered from the SS Central America, still with some Atlantic Ocean residue on it, September 2013

^{A Gold Rush-era $20 gold coin recovered from the SS Central America (AP)}

Panic of 1857

The boom on the West Coast, in part driven by gold, meant New York banks ploughed millions of dollars into investments intended to open up the western frontier. Railroad, industries and factories sprung up, borrowing heavily on generous terms.

However, with the end of the gold rush and a fall in the value of western land, as well as grain price, migration westward slowed drastically, and investments began to fail.

In September 1857, Ohio Life Insurance and Trust Company – a major banking institution based in New York – collapsed, with rumours of embezzlement rife.

The ensuing panic led to many customers trying to withdraw their money from other banks. For this reason, a particularly large cargo of an estimated 30,000 pounds of gold was dispatched from the San Francisco Mint to shore up eastern banks.