California Gold Rush Continues In Virginia Courtroom

NORFOLK, Va. - As the SS Central America broke apart in a hurricane and its passengers fought desperately to live, the fortunes harvested from California's gold fields no longer mattered.

``The love of gold was forgotten in the anxiety and terror of the moment and many a man unbuckled his gold-stuffed belt and flung his hard-earned treasure upon the deck, some hoping to lighten their weight . . . while others threw it away in despair,'' miner William Chase recalled after he and 152 other survivors were brought to port here.

On the night of Sept. 12, 1857, the steamer went down 160 miles off the coast of the Carolinas, taking with it 425 people and three tons of California gold - enough to cause a panic on Wall Street.

For 132 years, the gold remained almost forgotten.

All that changed last summer, when a group of high-tech treasure hunters plucked a ton of it from the ocean floor 1 1/2 miles below the surface after a four-year, $10 million search. Estimates of the treasure's value went as high as $1 billion.

But whose gold is it? For the scientists and engineers who discovered what project leader Thomas G. Thompson describes as ``rivers of gold coins, carpets of gold,'' dreams of wealth have turned into a legal nightmare as the quest moves from the high seas to a federal court.

No sooner had news of the find been telecast around the world than 39 insurance companies showed up to assert rights to the riches, arguing they once had paid claims on the cargo.

The question of who owns the most valuable underwater treasure in history will be decided by a

judge sometime this summer following testimony in U.S. District Court that ended last week.

The legal conflict is rooted in the centuries-old law of the sea. But the outcome may well hinge on the even older concept of ``finders keepers.''

While a fortune rides on Judge Richard Kellam's decision, the discovery and excavation of the wreck against enormous odds already has accomplished one of the goals of the hunters.

``The Central America had been forgotten, and we wanted people to understand the ship and that time in American history,'' said Thompson, an ocean engineer and scientist from Columbus, Ohio, who raised money from private investors and formed Columbus-America Discovery Group to search for the ship.

Once, the SS Central America was the most famous ship in the United States, as fabled in its demise as the Titanic would become 55 years later.

Some historians say the loss of the ship marked the end of a brief period of national adventure and expansion since its sinking accelerated the financial panic and bank failures of 1857 and soon would be followed by the Civil War.

It had been a free-wheeling era that opened with the discovery of the California gold fields in 1848. In the years that followed, nearly a half-million Americans streamed into the state. The nation was destined to claim the West.

The fastest way to California from the East Coast was a sea route to Panama, then an overland leg across the isthmus, and a second ship to San Francisco. For the new tycoons returning East with fortunes in gold, it was also the safest route home.

The Central America was a luxurious, steam-powered side-wheeler that made 43 trips between Panama and New York and delivered one third of the gold shipped from California during its time, from 1853 to its sinking.

On Wednesday, Sept. 9, 1857, midway in its 44th trip, the steamship ran into a hurricane one day out of Havana. The next day the storm worsened, and on the third day the ship was taking on water.

Remarkably, two passing ships saved 153 people, including the women and children. The remaining 425, including Capt. William L. Herndon, were lost.

Vivid tales of heroism and rescue told by the survivors were carried to the nation via the new overland telegraph, making the disaster a national phenomenon. But the real value of those first-hand accounts lay hidden for more than a century.

Technology that allows searchers to scan ocean floors with sonar and to lower robots to probe wrecks in deep water was developed in the late 1970s and early 1980s, creating a fiercely competitive new marine salvage industry.

Melvin Fisher fueled the enthusiasm by recovering $400 million worth of treasure from a 17th-century Spanish galleon off Florida's coast in 1985. And the capabilities of deep-water searching were proven when a joint U.S.-French expedition located the Titanic in 2 1/2 miles of water, also in 1985.

That same year, Thompson, geologist Bob Evans, and journalist Barry Schatz formed Columbus-America and raised money for their search from private investors in increments as small as $5,000. Most investors were friends and family from the Columbus area.

Operating a research ship with a crew of 30 or 35 sailors and scientists costs up to $30,000 a day, so identifying the wreck site as well as possible before sailing was vital.

The first step was returning to the personal accounts of the sinking, and a team of historians and researchers gathered all available written accounts of the disaster. Computers analyzed the material and correlated it with maps, meteorological and navigational records from 1857, and even data on the Earth's rotation.

The results narrowed the likely resting place to 1,400 square miles of ocean floor called the Blake Ridge, nearly 200 miles off the coast of the Carolinas.

For 40 days in the summer of 1986, the group searched the ocean bottom with special sonar equipment until an image flashed on the screen that appeared to be the Central America. Analysis over the winter led to the conclusion that it was the ship, lying beneath 1 1/2 miles of ocean.

Weather in the Atlantic limits ocean searches to a four-month window from June to September. The winter was spent developing new technology to map the site and recover the cargo in a manner precise enough to retain its archeological value.

When they returned the next summer, the most important task was to establish exclusive rights under admiralty law to search for the gold. Thompson and his crew knew that at least two competing groups were looking for the Central America.

In July 1987, the group learned that another salvage ship was headed toward them. With cables strung 1 1/2 miles down, a close encounter could rip up lines and cut loose their robotic vehicle. Moreover, the other ship, which was affiliated with Columbia University, would see exactly where Columbus-America was searching.

Gaining rights to the site became compelling, so they needed to get to court with something from the Central America as fast as possible. The group had brought up its first - and less than auspicious - find, a lump of coal coated with deep-water organisms. Crew members hung it from the Columbus-America's ship's rigging where it was snagged by a small plane and flown to Norfolk airport. The group's attorney, Richard Robol, was waiting there to rush the coal to court.

On July 8, Judge Kellam ordered the Columbia University vessel not to enter a 12-mile area around the site despite objections by the vessel's lawyer that his clients were not ``pirates . . . or poachers or claim jumpers.''

Two months later, the judge found another ship in contempt of court for entering the area. And in 1989, he granted Columbus-America permanent rights to a 20-square-mile area of ocean - the first time private individuals had been granted rights in international waters.

The judge also broke ground with a ruling that the group had taken ``telepossession'' of the

wreck through its underwater robot, rather than the actual human presence previously required under admiralty law.

By the summer of 1989, the group was ready to start bringing up gold with Nemo, a remote-controlled, underwater vehicle specially-designed for the task. Nemo has five video cameras and a high-precision robotic arm, so shipboard operators could watch as it used its thrusters to blow away more than a century of silt.

``It was absolutely phenomenal,'' Thompson recalled. ``There was a garden of gold. A bridge of gold bars. Bars had been stacked on wood, but the wood had disintegrated and the gold remained cemented together.

``Gold is very bright down there. There were rivers of gold coins, carpets of gold. They were stuck together falling off beams that had disappeared. Bags that held gold dust were long gone, but the dust was stuck together. Nemo blew off silt, and a carpet of gold coins appeared before you.''

The treasure's highest value lies not in its impressive bulk, but its uniqueness - uncirculated coins from the U.S. Mint in San Francisco, rare slugs of ``pioneer gold''

used before the mint opened in 1854, gold bars weighing from 5 ounces to 62 pounds.

Nemo had made 15 dives and brought up a ton of gold by mid-September when Hurricane Hugo chased the ship to port here, where most of the original survivors were brought in 1857.

Within weeks of the gold's recovery, papers were filed in court on behalf of 39 U.S. and English insurance companies - including some defunct ones - asserting title to the treasure. The companies, including Lloyd's of London, Atlantic Mutual and Insurance Co. of North America, maintain that they paid claims on the gold when it was lost, so they own it now.

Attorneys argued that the gold could be viewed as having been in deep storage for 132 years. If the judge agrees, he could still award Columbus-America a share of the gold as salvor.

Columbus-America's attorneys contend that the property was abandoned - no effort was made by the insurers to recover the gold - and so it belongs to its discoverers. The argument relies on the nautical law of finds - a legal version of the ``finders keepers'' concept.

But papers filed in federal court have raised a new issue: Just who are the finders?

Attorneys for Columbia University contended that its expedition was the first to discover the Central America. According to the claim, the university-sponsored ship located the sunken treasure with sonar in 1984 but did not know what it was.

The university said it is the rightful owner of the gold that has been recovered and the treasure that remains in the ocean.

At any rate, recent court rulings favor salvors and the law of finds, according to Joshua Morse, an expert in the field at Florida State University. In Melvin Fisher's case, an appeals court upheld a ruling that the treasure lost in 1622 was abandoned property. A similar ruling involved 28 tons of Italian marble buried at sea for 100 years.

``How long do you have to leave it before it's abandoned?'' Morse said. ``No one really knows.''