Prescott Jernegan and the Gold from Seawater Swindle
Photo courtesy of Martha's Vineyard Museum
Martha's Vineyard's history is a rich narrative of people and events. In a regularly appearing series, The Times has invited the Martha's Vineyard Museum to draw on its unique cache of contemporary photos and first-person accounts to describe interesting but often unfamiliar moments in Island history called to mind sometimes, but not always, by present dates.
"A Scientific Fact: It has been well known that the waters of the ocean throughout their extent contain from one half to one grain of gold per ton and about twice that quantity of silver. At the proportion of half a grain to a ton, the gold in a cubic mile of sea water is worth $65,000,000."
So begins the 1898 promotional pamphlet of the Electrolytic Marine Salts Company titled "Gold from Sea Water at a Profit: The Facts." The company, founded by two Edgartown men named Prescott Jernegan and Charles Fisher, introduced a revolutionary method of gold mining. To investors, the concept of extracting gold from seawater was almost too good to be true. Unfortunately for them, it was. The bogus maritime alchemists who promised riches left their investors with nothing but a defunct company and a story that attracted national attention. When it broke in late July of 1898, Jernegan and Fisher were exposed as frauds.
Research materials in the Martha's Vineyard Museum archives include Prescott Jernegan's unpublished autobiography and plenty of information about the infamous swindle. The idea of a hoax involving the extraction of gold from seawater first came to Jernegan in 1896 while bedridden in Edgartown with typhoid fever.
It was a troubling year for Jernegan. A minister, he lost jobs with two churches, and his wife considered leaving him for another man. In his feverish delirium, he recalled an article about a recent discovery of trace amounts of gold in seawater. He wrote, "it instantly occurred to me that since gold was already contained in sea water it would be an easy matter to conceal more gold there, then to sell the 'secret' for a large sum of money and disappear into parts unknown." He saw the idea as a guaranteed way to "become something out of nothing."
Jernegan contacted his childhood friend Charles Fisher, a charismatic and adventurous young man, to propose his money-making scheme. Fisher, also in financial trouble, enthusiastically agreed to join his friend. It would be easy, Jernegan figured, to exploit a rich, greedy capitalist who would not resist the riches of gold: "It seemed to me that I might justly plunder one of these men and, like the Robin Hood of old, use the money for good and generous purposes."
For four months, Jernegan and Fisher tried to develop a method that would make their dreams of creating an oceanic gold mine a reality. Jernegan met with an acquaintance from his preaching days in Middletown, a wealthy jeweler named Arthur Ryan. He showed Ryan a small box containing a copper plate and a thin layer of mercury. This accumulator, he said, would collect gold as water ran through with the changing tide. An interested Ryan consulted with his friend, a florist named Andrew Pierson. The two men decided that they would invest if Jernegan and Fisher could prove that their device actually worked.
Unsure of how to proceed, Jernegan and Fisher went to Providence, R.I., to perfect their demonstration. After several failed trials, they came across a method that involved adding an electric current to their mercury sample. Although this process did not actually collect gold, they believed the demonstration would be elaborate enough to fool their audience.
Jernegan met with the potential investors in Providence to prove once and for all that he could extract gold from the sea. To assure them that they were in complete control of the demonstration, Jernegan let Ryan and Pierson buy their own materials and conduct the experiment. The men gathered in a small hut on the pier and lowered a wired box containing a copper plate and an electronically charged layer of mercury a few feet into the ocean. The next morning, Ryan and Pierson took the contents of the box to a chemist of their choosing for analysis. They returned with astonishing results: five grains of gold and ten grains of silver were present. Delighted, the two investors each loaned Jernegan over $5,000 to extract gold in mass quantities.
How did Jernegan and Fisher dupe their audiences? The popular story told in newspapers was that Fisher, who did not attend the demonstration, wore a diving suit and inserted gold into the contraption while it was still under water. In his memoir, Jernegan insists that Fisher never did this. The partners entertained the idea, but abandoned it after Fisher nearly drowned during a trial run. Instead, Fisher cleverly inserted gold into the mercury samples before they were assayed.
The con men continued to wow investors with their demonstrations. With the help of several gold-enthused businessmen, Jernegan and Fisher organized a stock company called the Electrolytic Marine Salts Company in 1897. They named Arthur Ryan, the company's first investor, as president.
The business partners built a plant in North Lubec, Maine, to "produce" gold on a large scale. In reality, Fisher would walk the accumulators with mercury into an isolated laboratory, and return with previously purchased gold. The partners sent $2,000 worth of gold each week to the company's office in Boston to convince the public that the plant was turning a profit.
As word spread, more people rushed to purchase shares. The directors of the company proposed to make 10 million shares of stock available to the public for $1 per share. The Electrolytic Marine Salts Company had over 1,000 stockholders, with $750,000 invested in the company. Although Jernegan and Fisher were making money, they were no longer exploiting one extremely wealthy capitalist as they originally planned. Instead, the men who once likened themselves to Robin Hood took advantage of middle class people trying to make extra income from the company's shares.
In late July 1898, a former friend of Fisher's who knew about the plan from its earliest stages blackmailed Jernegan and Fisher. He demanded that they either pay him, or he would leak their secret to the press. They refused, and on July 31, The New York Herald published a story announcing that the gold from the Electrolytic Marine Salts Company did not come from the ocean. Jernegan and Fisher were nowhere to be found.
Fisher fled to New Zealand with $100,000, and died a few years later in Australia. Jernegan set sail for Europe with his wife, son, and $150,000. After a year of guilt bearing down on his conscience, Jernegan returned $144,000 to the treasurer of the company and further authorized him to withdraw another $35,000 from Jernegan's bank account in the States. After his wife left to go back to the U.S. with her son, she was granted a divorce on grounds of abandonment.
Jernegan finally settled in the Philippines from 1901 to 1910 where he taught and wrote several historical books. While he was abroad, the U.S. press published several articles about his scandal and whereabouts. Eventually he moved to California, where he lived until his death in 1942. He returned to Edgartown only once, to visit his mother and sister.
There are several versions of the Gold from Seawater Swindle. The story's complexities make it all the more enticing to investigate, requiring researchers to critically evaluate the accuracy of their sources. Articles written in the early 1900s about the scandal contradict Jernagan's own recollection of the experience. Then again, Prescott wrote his manuscript nearly 30 years after the incident, so who is to say his account is errorless, if it is even true at all? With these questions in mind, we do know one thing for certain: one cubic mile of seawater does not contain $65 million in gold.
Jackson Murphy, who has a research and writing internship in the curatorial department at the Martha's Vineyard Museum this summer, is going into his junior year at Connecticut College in New London.
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