The $3,000,000 Transaction
The $3,000,000 Transaction

The Threshold Question

In his book Men Under the Sea (Dodd, Mead & Company, New York, 1939, at pages 213 and 218-9), Commander Edward Ellsberg discusses the rumors of a gold shipment lost aboard the RMS Lusitania when that ship was torpedoed on May 7, 1915, during World War I.

Did the Lusitania have any treasure aboard to dive for? Transatlantic liners do carry gold. … [However,] slight consideration will show the impossibility of any large amount aboard.
For the flow of gold between England and America is like a tide governed by inexorable economic conditions which dictate its flow. When financial conditions are such to cause gold movements in quantity, then during that period the shipments are always in one direction. No more can the golden tides flow in both directions at once than can those of the ocean, which under the compulsion of the moon and the sun follow in the direction of heavenly forces dragging them on. … The flow of gold to London had stopped long before the summer of 1915, and the tide was setting strongly westward. Unfortunately for the treasure legends of the Lusitania, she was headed eastward when torpedoed. There was no gold in her.

Does the rumor of gold aboard RMS Republic at least satisfy this threshold question: was the direction of the "golden tide" eastbound, or westbound? Was gold being exported, or imported, when the RMS Republic departed New York on January 22, 1909?

During January, 1909, gold was being exported from New York; gold was headed eastward, toward Europe, in the direction planned for RMS Republic.

Gold Market and Export Activity - January, 1909.

The chart "Gold Engagements - January 1909" (Please click for chart. A familiarity with the sequence of engagements is essential to the discussion.) indicates the day and date of specific gold engagements, the financial institution through whom the engagement was placed, the amount and composition (bars, if available from the Assay Office, otherwise coin from the Sub-Treasury), and the reported destination. The chart also correlates the engagement information with the U. S. Customs House "Reports of Exports" for the Port of New York.1

This correlation identifies the engagements exported each week. The slight difference between the total for engagements and that for exports in each week's correlation is attributable to the rounding off of engagements by the newspapers at the time that they were originally reported. The information for this chart was derived from both the New York Evening Post and the New York Commercial. The "Export Reports" in these two newspapers provided only information relating to the total of gold, but not composition, exported from the Port of New York. Information regarding the composition of the engagements was provided by articles describing market activity. All information is referenced by footnotes.

The French Bank's Gold.


A Paris View of the Recent Great
Accumulations - How Much of the
New Gold Paris Has Taken and

PARIS, JANUARY 10 - The financial editor of the Paris Débats is thought to reflect opinion and sentiment at the Bank of France.
"... If gold comes to France, it is because exchanges are favorable to us. At present the current exchange on London - in the neighborhood of 25.10 - and the price of gold in England lend themselves to arbitrage, which consists in buying up in Paris checks on London and making gold come from England in return. Such an operation yields a profit and that is why bankers engage in it. But the Bank of France does not buy this gold. It is turned over to the Bank in accounts current, and, since gold is still enforced currency (cours force) in France, it will be granted that the Bank cannot do otherwise than accept it.
"It is true that the gold which thus comes into it is not coined. But the Bank of France takes the gold bars only at their par value, making a deduction of coinage expenses. If the Bank refused gold in bars, bankers would only have to get the gold coined at the mint. It would cost them no dearer to bring 20-franc gold pieces to the Bank. So, when it is said in London that such and such a quantity of gold has been bought in the market for the Bank of France, the Bank in reality has had no share in the operation, which is carried on apart from the Bank, without need of the Bank's consent, and even without the Bank knowing it.
[Emphases supplied.]

N. Y. Evening Post, Jan. 23, 09, 8:1.

Gold is at the Export Point, January 1909,
"Gold Shipments Indirectly."



Belief in Some Quarters That Pressure of European Sell-
ing Will Be Relaxed After Russian Loan Has
Been Placed - Indirect Inducements for
Gold Exports - Advance in Bank
of England Rate a Factor -
Light Supply of Com-
mercial Bills.


The strength in exchange [to the export point] is not due to any excess in importations of merchandise over exports but to the persistent selling in this market of American securities by European holders. The selling may be either for the purpose of taking profits or to supply funds for subscription to the Russian loan which is to be offered next week. [Emphasis supplied.]
In the opinion of some authorities the pressure of foreign sales of stocks upon our market will be relaxed after the placing of the Russian loan. Whether gold exports will cease at that time is a question which cannot be answered. There are some indications that the Bank of France has been offering inducements for gold shipments indirectly, although not directly as was done a year or more ago. [Emphases supplied.]
The highest quotation for demand sterling for the week, 4.8750@4.8755, was made on Tuesday [January 12, 1909] when announcement was made of the largest engagements of gold for shipment to Paris.


Wall Street Journal, Jan. 18, 1909; 2:4

The Republic's Third TheoryTM Gold:
The $3,000,000 American Gold Eagle Engagement.



National City Bank Takes Last $500,000
Worth for Paris, Bringing Total of
Movement to $9,100,000 - World's
Money Markets Shifted Since Saturday.

International bankers are understood to have made efforts to secure gold bars from the Philadelphia mint yesterday when the supply of bars at the New York assay office was exhausted by the withdrawal of $500,000, for shipment to Paris tomorrow. The National City Bank made the engagement yesterday and although foreign exchange rates were at a level where gold could be shipped abroad with profit, the movement was checked again by the small supply of bars. ...

While it would be expensive to transport gold bars from Philadelphia here, international bankers attempted to secure bars yesterday rather than ship gold coin. ...

However, it is highly possible that in the event of the bankers being unable to secure a supply of bars at Philadelphia gold coin will be shipped as all the foreign bankers are in the market for gold. There has been much disapproval expressed against the small supply of gold bars at the assay office as on every occasion of gold exports last year the movement was stopped by this lack. Now there is scant doubt but that the bankers will ship gold coin, and it is expected that millions of the newly coined gold eagles [our emphasis] will be sent to foreign countries and be melted.

The Bank of France alone may save the gold coin received, and ship it back at a later date when monetary conditions change...

New York Commercial, January 12, 09, 14:5


The firm of Goldman, Sachs & Co. will ship $1,000,000 of United States gold coin to Paris to-morrow, and the National City Bank will ship $2,500,000, of which $500,000 will be in bars and the balance, $2,000,000, in United States gold coin. These shipments will make a total of $5,500,000 since Jan. 1. of which the City Bank will have sent $4,500,000. The effort to get gold bars from the United States Mint in Philadelphia for shipment to Paris so as to avoid the necessity of shipping coin was abandoned because it was found that the expense of bringing the gold from Philadelphia would exceed the extra expense of shipping coin.

The Globe and Commercial Advertiser, January 12, 1909, 12:3

$3,500,000 GOLD FOR EUROPE

To-morrow's Steamer to Be Treasure-
Ship - Sterling Still Strong.

Despite further large engagements of gold for export, sterling exchange rates continued very firm to-day, demand bills still hovering about 4.87 1/2, the highest level in more than a year. Announcements of engagements of gold for export to Paris continue, and to-morrow's steamer, the OCEANIC [the unlikely shipment aboard White Star Line's Oceanic will be discussed in detail later], will carry away altogether $3,500,000, mostly in coin. In addition to the $500,000 gold [bars] taken by the National City Bank early yesterday, $2,000,000 more was engaged by that institution, and another million by Goldman, Sachs & Co. This makes a total of $6,000,000 engaged since the middle of last week, and $12,100,000 since December 3, when the first shipment of the present movement was made.

All of the $3,000,000 secured to-day for export was in the shape of coin, taken from the Sub-Treasury here. Efforts of bankers to secure bars from the Philadelphia Mint for shipment to Europe were unsuccessful, owing to the fact that the cost of transferring the money [gold certificates of deposit] for payment to Philadelphia, and bringing the bars to New York for shipment, would bring the total expense above that which would be entailed by the shipment of coin.

New York Post, January 12, 09, 2:3

Negotiations [Emphasis supplied.] for $2,000,000 gold coin for export are reported in addition to $500,000 in bars taken by the National City Bank for shipment.
The expense of expressing gold bars from Philadelphia to New York city is said to be as large as would be the export of gold coin from New York to Europe.

Christian Science Monitor (Boston, New York market to 2:40 p.m.)
January 12, 1909, 8:1.

Gold engagements [for January 12, 1909] are reported of $2,000,000 by the City Bank, and $1,000,000 by Messrs. Goldman, Sachs, and Co., for Paris.

The Times (London), Jan. 13, 09, 12:1

SHIP $3,000,000 IN GOLD COIN.

Two Concerns Accept Money Because
Bars Mean High Cost.

The National City Bank engaged $2,000,000 additional gold coin yesterday for shipment to Paris by to-day's steamer, and Goldman, Sachs & Co. engaged $1,000,000. Efforts to obtain gold bars from Philadelphia proved unavailing because of the great cost of transportation, and the bankers decided to ship coin.
Altogether $12,100,000 gold bars and coin has been engaged for export since December 3 last, when the movement was begun.

New York Press, January 13, 1909, 8:6

Gold for export [original bold] to the amount of $3,000,000 was engaged yesterday. Owing to the exhaustion of the supply for gold bars used for exporting purposes, the shipments to be made will consist of gold coin. Owing to the loss entailed through abrasion in the sending of coin, international bankers attempted to get gold bars from the Philadelphia mint for shipment to Europe, but were unsuccessful, owing to the fact that the cost of transferring the money for payment to Philadelphia and bringing the bars to New York for shipment would bring the total expense above that which would be entailed by the shipment of coin.

New York American, January 13, 1909, 11:4

TO SHIP $3,500,000 GOLD.

Metal Goes to Paris from National
City Bank and Goldman,
Sachs & Co.

On the Oceanic to-day $3,500,000 in gold will go to the Bank of France, making a total since January 1 of $6,500,000 and $12,100,000 since December 3.

The National City Bank sends to-day $2,500,000 of the total, and of this $520,000 is in gold bars, from the United States Assay Office. This metal is of high grade, all being more than .996 fine gold and some of it as high as .999. [Note: this quality of bar is consistent with "mint" bars for use in coinage, as opposed to assay office bars.] The minting operation kept the force busy Monday and yesterday and exhausted the bullion on hand. The remainder of the National City Bank's consignment will be in coin presumably from the Sub-Treasury although no request for it had been received up to a late hour yesterday afternoon. [Emphasis supplied.]

Goldman, Sachs & Co. are sending $1,000,000 in coin, completing the $3,500,000 shipped to-day.

As a reason for the Bank of France's zeal in accummulating the enormous quantity of gold it is said that Russia may engage much more than the $270,000,000 loan originally arranged for, in view of possible complications in the Balkans. Austria, too, it is pointed out, might want gold for emergency purposes of similar character.

Sterling rates were firm yesterday, at about 4.87 1/2, the highest level for more than a year.

N. Y. Herald, Jan. 13, 09, 16:1


Banks Will Ship $3,500,000 Today - Most
of It Coin.

Gold engagements aggregating $3,500,000, were announced yesterday for shipment to Paris today and indications pointed to a further outflow of the metal before the end of this week. The National City Bank added $2,000,000 to the $500,000 engaged on Monday, and Goldman, Sachs & Co. announced the engagement of $1,000,000. Only $500,000 of this total is in the shape of gold bars, the bankers being forced to ship gold coin, owing to the scarcity of bars suitable for export. ...

... The shipments today will almost all be in gold coin, a transaction that was not thought possible at any reasonable profit.

New York Commercial, January 13, 09, 1:4


$3,500,000 Going Out To-day and Much
More Likely to Go.

Gold to the amount of $3,500,000 will be shipped to Paris to-day. Part of this is the $500,000 in bars secured by the National City Bank on Monday. The remainder is $2,000,000 coin taken yesterday by the [National] City Bank and $1,000,000 coin taken by Goldman, Sachs & Co. ...

N. Y. Sun, January 13, 09, 3:6

GOLD EXPORTS - The National City Bank will ship $2,500,000 gold to Paris today, and Goldman, Sachs & Co., $1,000,000. Of this amount only $500,000 will be in gold bars. Sterling exchange rates were strong yesterday, the advance being due in great part to the continued selling of American securities for European account. ...

N. Y. Tribune, January 13, 09, 13:1

Gold engagements were made yesterday which brought up the amount of exports to date to $12,100,000. Bankers believe that more than $20,000,000 will go to Europe on the present movement, particularly if the Bank of England increases its discount rate on Thursday. Money rates have as yet been unaffected by exports.
A report, discredited by bankers, gained some circulation to the effect that the European banks are increasing their gold supplies in preparation for war. Exchange authorities believe the movement due almost wholly to preliminary arrangements for the Russian loan.
[Emphases supplied.]

New York World, January 13, 1909, 10:1.

Gold Exports.

The National City Bank of New York will ship altogether by today's steamer $2,500,000 gold to Paris.
Goldman, Sachs & Co. are shipping $1,000,000 gold coin to Paris by Wednesday's steamer. This makes a total of $5,500,000 on the present movement.

Boston Herald, January 13, 1909, 8:5.


Importations by Bank of France Needed
in Flotation of New Loan.

[Dispatch to the Associated Press](brackets in original)

Paris, January 12 - The shipments of gold from New York are destined for the Bank of France, which has arranged for the engagements through Paris banking houses. The movement is a natural one, resulting from the favorable rate of exchange. The gold is probably for assisting in the flotation of the new Russian loan, which is announced for January 21 at 89 1/4.

New York Post, January 13, 09, 1:6;
Evening Mail, January 13, 09, 4:2;
Evening Telegram, January 13, 09, 15:3;
New York Herald, January 14, 09, 17:3; and
New York Times, January 14, 09, 4:3

One matter concerning which a good deal of curiosity was expressed to-day was the action of the Bank of France in offering to pay as high as 5 per cent. in this market for the use of money between January 22 and 25, the time covered in the bringing out of the new Russian loan.

New York Sun, January 16, 1909, 10:2.

... It appears , according to Paris cable, that the Bank of France has thus far encouraged the movement [export of gold from New York] through arrangements the Bank has made with Paris banking houses. This statement indicates that these bankers have been enabled to offer inducements to their New York correspondents to ship the gold by making advances on the metal while it was in transit to Paris. If such, or other facilities, have been extended, that fact will go far to explain why the sale of bills incident to the export made so slight an impression on the market. If the movement of gold hence to Paris shall be solely on account of the Russian loan issue, it has been suggested that it will cease this week, for further exports cannot be made available before the subscription books for the loan shall be opened. [Emphasis supplied.] On the contrary, it is possible that consignees of the gold may be unwilling to forego the present opportunity for procuring the metal, under the existing favorable conditions, and they may attract additional sums, which will be employed for other purposes. ...

The Commercial and Financial Chronicle, Jan. 16, 09, 123:1.

The engagement of gold at New York on January 12, 1909, was, indeed, the last purchase of gold made by French bankers at New York (their next purchase took place on April 23, 1909), supporting the Chronicle's contention that the purchased gold was solely on account of the Russian loan issue.

... Though additional engagements of gold coin were effected on Tuesday [January 12, 1909], the market did not reflect offerings of bills incident to the intended shipment, and a strong tone continued to prevail. ...

The Commercial and Financial Chronicle, Jan. 16, 09, 127:2.

National City Bank of New York, 55 Wall Street.
View of the interior of the Bank, with a view of
the entrance to the President's Office. Circa 1910.

The newspaper accounts report that a $3,000,000 engagement occurred on January 12, 1909, and that this gold was to be applied to the imminent Russian Loan which was scheduled to close just 9 days later, January 21, 1909. Paris banking houses, ostensibly shipping their gold to their depository, the Bank of France, secured this engagement through National City Bank, today's Citibank, ($2,000,000) and Goldman, Sachs & Company ($1,000,000). Unfortunately for the banks, the New York Assay Office had just recently exhausted its supply of gold bars, and, therefore, this engagement was placed with the Sub-Treasury; a $3,000,000 face value in gold pieces comprised entirely of newly minted American Gold Eagles.

It must be noted that a differentiation in coin-engagement descriptions was made at the time. For example, a Journal of Commerce article of January 28, 09, 3:4, describes a slightly later engagement to Argentina as follows:

Yesterday there was withdrawn from the Sub-Treasury $1,000,000 in gold coin for shipment to Argentina. One lot of $500,000, taken by Goldman, Sachs & Company, was in eagles, and the other $500,000, which is being shipped by Muller, Schall & Company, in mixed gold.

A $500,000 engagement in "eagles" would be comprised of $5,000 bags, each containing equal denomination coin, purchased at face value. $500,000 in "mixed gold" coin refers to a shipment comprised of 500 troy ounce bags of mixed denomination purchased by weight.2

The January 12th engagement is unique; it is the only $3,000,000 coin engagement, and the only $3,000,000 engagement comprised entirely of newly minted American Gold Eagles, which occurred at any time during the ten year period 1904 through 1913 (one occurred in 1914) and it also complies to the specifications of the legendary gold lost aboard the REPUBLIC.

If we were to place it aboard the REPUBLIC, this $3,000,000 American Gold Eagle engagement would also fall within the typical time delay parameters between engagement and shipment.

Why would this shipment be placed aboard Republic? We discuss that next ...



1Information derived from the Saturday editions of the New York Post. The more detailed export reports appeared in the Monday editions of the Journal of Commerce and are used later in this report.

2See: Operations of the Assay Office and Sub-Treasury.