Paths of Gold
In 1848, gold was discovered in California, and the region's 10-year-long gold rush began. The Panama Route connected steamships in the Pacific and Atlantic oceans across the Isthmus of Panama by rail. These "Panama Steamers" carried almost all of the gold exported from California to eastern cities.
The ship route ran from San Francisco to Panama City, rail from Panama City to Chagres, and from there by boat again to Havana, and then New York.
Lost Treasure on the Perilous Panama Route
On September 3, 1857, the S.S. Central America left Panama for New York with 475 passengers, 103 crew and more than three tons of gold. Four days later, the ship sank in a hurricane off the South Carolina coast. There were only 153 survivors.
The loss of the gold from the Central America was a terrible blow to financial markets, leading to an economic depression that lasted until the Civil War.
The Central America's 1857 gold would be worth nearly $58 million at today's value. Recovered in 1986, the cargo from the ship's wreck is the largest collection of early California gold.
More than 300 privately mined coins were recovered from the wreckage of the Central America.
Turning Gold into Dollars
During the early years of the gold rush, there was no easy way to change mined gold into currency in order to buy other goods; there were no branches of the United States Mint west of the Mississippi. Gold dust, although accepted as a means of exchange, was impractical for daily use. Private companies began to make their own gold coins to answer the need for currency.
Making a Mint
When the federal government opened the San Francisco Branch Mint in 1854, federal coins slowly replaced privately minted ones. Up until 1850, the largest government-issued gold coin was the $10 piece, known as the "eagle." Then the United States Mint created a $20 gold coin, called the "double eagle," filling a need for a higher-value coin. Of the more than 7,500 gold coins recovered from the Central America, most were double eagles.
Worth and Weight
The first step in turning gold into money was to weigh and assay it. Assayers were chemists trained to test the purity of gold. After weighing and issuing a receipt to the miner for it, the assayer melted the gold in a furnace and poured it into an iron mold to form a bar called an ingot.
Next, the assayer cut small chips from opposite corners of the cooled ingot and performed chemical analysis of one chip in order to determine its purity. The other chip was the assayer's commission.
Finally, the ingot was stamped with the assayer's information. Ingots could be used as currency in large transactions, such as banking or commercial shipments to New York.