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Tuesday, October 1, 2019

sinking of SS Central America ! ~ panic of 1857

The annals of history contains many dark pages of cruelty, harshness, injustice, harped on mankind by fellow humans – somehow the perpetrators were described as kind, valourous, noble people as history is seen from the side from which it is written.  In 1857, many fighters mutineered against the British which was clamped down harshly – history does not hold pages for those who fought freedom of their motherland. This is not about Indian Freedom struggle wrongly dubbed as ‘sepoy mutiny’ but someother happenings across the world in that year 1857.

SS Central America, as a 280-foot (85 m) sidewheel steamer  operated between Central America and the eastern coast of the United States during the 1850s. She was originally named the SS George Law, after Mr. George Law of New York. The ship sank in a hurricane in Sept 1857, along with 425 of her 578 passengers and crew ~ but more important was the  30,000 pounds (14,000 kg) of cargo (gold) that went inside the sea.  On 9 Sept 1857, the ship was caught up in a Category 2 hurricane while off the coast of the Carolinas.  A leak in one of the seals between the paddle wheel shafts and the ship's sides sealed its fate.  

~ and there is something that an Insurance Company brought out too .. on that  morning of August 24, 1857, the president of Ohio Life Insurance and Trust Company announced that its New York branch had suspended payments.  The company had large mortgage holdings and was the liaison to other Ohio investment banks. Ohio Life failed due to fraudulent activities by the company's management, and its failure threatened to precipitate the failure of other Ohio banks or even worse, to create a run on the banks.  According to an article in the New York Daily Times, Ohio Life Insurance and Trust Company's "New York City and Cincinnati [branches were] suspended; with liabilities, it is said, of $7,000,000".  The failure of Ohio Life brought attention to the financial state of the railroad industry and land markets, thereby causing the financial panic to become a more public issue.

Away in United Kingdom, aged 70 years, 109 days, Palmerston became the oldest person in British political history to be appointed Prime Minister for the first time. Henry John Temple, ( 1784 – 1865) was a British statesman who served twice as Prime Minister in the mid-19th century. Palmerston dominated British foreign policy during the period 1830 to 1865, when Britain was at the height of its imperial power.  Palmerston passed the Matrimonial Causes Act 1857, which for the first time made it possible for courts to grant a divorce and removed divorce from the jurisdiction of the ecclesiastical courts. In June news came to Britain of the Indian Rebellion of 1857. Palmerston sent Sir Colin Campbell and reinforcements to India. Palmerston also agreed to transfer the authority of the British East India Company to the Crown. This was enacted in the Government of India Act 1858. After the Italian republican Felice Orsini tried to assassinate the French emperor with a bomb made in Britain, Palmerston introduced a Conspiracy to Murder bill, which made it a felony to plot in Britain to murder someone abroad.

~ and in 1857 US economy collapsed with the financial panic.  The Panic of 1857 was a financial panic in the United States caused by the declining international economy and over-expansion of the domestic economy. Because of the interconnectedness of the world economy by the 1850s, the financial crisis that began in late 1857 was the first worldwide economic crisis.  In Britain, the Palmerston government circumvented the requirements of the Bank Charter Act 1844, which required gold and silver reserves to back up the amount of money in circulation. Beginning in September 1857, the financial downturn did not last long; however, a proper recovery was not seen until the American Civil War, in 1861. The sinking of SS Central America contributed to the panic of 1857, as New York banks were awaiting a much-needed shipment of gold. American banks did not recover until after the civil war. After the failure of Ohio Life Insurance and Trust Company, the financial panic quickly spread as businesses began to fail, the railroad industry experienced financial declines, and hundreds of workers were laid off.

Since the years immediately preceding the Panic of 1857 were prosperous, many banks, merchants, and farmers had seized the opportunity to take risks with their investments and as soon as market prices began to fall, they quickly began to experience the effects of financial panic.   Because of the telegraph, word of the office closure spread quickly and many investors, already shaky over declining markets, caused a financial panic. The markets wouldn't recover until two years later.  By 1859, the Panic began to level off and the economy had begun to stabilize. President James Buchanan, after announcing that the paper-money system seemed to be the root cause of the Panic, decided to withdraw the usage of all bank notes under twenty dollars.  He also revealed this new strategy of "reform not relief", expressing his feeling that "the government sympathized but could do nothing to alleviate the suffering individuals".

The results of the Panic of 1857 were that the largely agrarian southern economy, which also had few railroads, suffered little, whereas the northern economy took a significant hit and made a slow recovery. The area affected the most by the Panic was the Great Lakes region, and the troubles of that region were "quickly passed to those enterprises in the East that depended upon western sales."  Near the end of the Panic, in 1859, tensions between the North and South regarding the issue of slavery in the United States were increasing.

Commander William Lewis Herndon, a distinguished officer who had served during the Mexican–American War and explored the Amazon Valley, was captain of Central America, that sank.   Decades later, the ship was located by the Columbus-America Discovery Group of Ohio, led by Tommy Gregory Thompson, using Bayesian search theory in Sept 1988.  Significant amounts of gold and artifacts were recovered and brought to the surface by another ROV built specifically for the recovery.   A recovered gold ingot weighing 80 lb (36 kg) sold for a record $8 million and was recognized as the most valuable piece of currency in the world at that time. Thirty-nine insurance companies filed suit, claiming that because they paid damages in the 19th century for the lost gold, they had the right to it. The team that found it argued that the gold had been abandoned. After a legal battle, 92% of the gold was awarded to the discovery team in 1996.

Dred Scott v. Sandford, 60 U.S. (19 How.) 393 (1857), was a landmark decision of the U.S. Supreme Court in which the Court held that the Constitution of the United States was not meant to include American citizenship for black people, regardless of whether they were enslaved or free, and therefore the rights and privileges it confers upon American citizens could not apply to them. The plaintiff in the case was Dred Scott, an enslaved black man whose owners had taken him from Missouri, which was a slave-holding state, into the Missouri Territory, most of which had been designated "free" territory by the Missouri Compromise of 1820. When his owners later brought him back to Missouri, Scott sued in court for his freedom, claiming that because he had been taken into "free" U.S. territory, he had automatically been freed, and was legally no longer a slave. Scott sued first in Missouri state court, which ruled that he was still a slave under its law. He then sued in U.S. federal court, which ruled against him by deciding that it had to apply Missouri law to the case. He then appealed to the U.S. Supreme Court.

With regards – S. Sampathkumar
24th Aug 2019.
Ps: recovered gold photos : credit -

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