The Great Gold Swindle of Lubec, Maine

thankful.

CHAPTER 1

Initiating the Intrigue

Among the passengers debarking from the Boston Boat one evening in early 1898 were two distinguished-looking gentlemen who carried expensive luggage and exuded an air of influence nicely tempered by conservative good taste. One was obviously a man of the cloth, wearing the distinctive black suit and high-buttoned vest associated with the clergy of the period. Pushing through the crowd of passengers and onlookers, they beckoned to a carriage driver and directed him to transport them and their luggage to the Lubec Inn, the best hostelry in town.

Mr. Charles Fisher, formerly of Martha’s Vineyard and until recently a floorwalker in a Brooklyn department store, and the Reverend Prescott Jernegan of Middletown, Massachusetts, had two things in common, despite a rather obvious disparity in their backgrounds. One of these was an aversion to gainful employment and the other a burning desire for a fast buck. Those who witnessed the pair’s arrival could not know that they were seeing the opening act of a drama whose players were a cast of the most elite suckers ever assembled anywhere.¹

Thus opens a brief account of extracting gold from seawater. This narrative expands greatly on the 1976 story, reprinting with additions and annotations a comprehensive newspaper series from the mid-twentieth century. We will learn background, the hatching of the scheme and its development and demise from Lubec native Carrie Comstock Bangs. Ms. Bangs (December 3, 1898–October 17, 1975) set out to write her full account of the swindle for the weekly Lubec Herald newspaper on her fiftieth birthday in 1948. Half a century had passed since the rise and fall of the scam. Bangs took advantage of 1898 issues of the Herald at hand for reference. The weekly periodical began in 1886, but the only known complete run from volume 1, number 1, through 1909 has since been lost. Thus, the sixty-three weeks of her articles preserve a primary source of history not otherwise available.

Bangs usually cites dates for her many quotes from the Lubec Herald and other newspapers such as the Boston Globe. Frustratingly, she also offers quotations lacking citations of sources or dates. Her columns are reproduced as written, each chapter a week’s column. I offer occasional clarification and additional data within brackets.

THE GOLD FROM SEAWATER STORY OF 1898

Articles 1 & 2, December 16 and 23, 1948

The year 1948 marks the golden anniversary of Lubec’s own Klondike of 1898. So much of this remarkable story has become so dimmed in the intervening years as to be almost forgotten. But with the help of those who remember, and by a study of the newspapers of the times, we may hope to recapture the essence of this fantastic tale.

Many absorbing things were going on that year: the Spanish-American War, Bismarck’s death, the Dreyfus Affair and the real Klondike, or Alaska Gold Rush.

The Gold-from-Seawater story covers a number of states from Maine to Florida, and there were many people who were connected with or affected by this venture in some way.

Contradictions exist in many of the sources of information, due in part to reporters writing about an unfamiliar place from a distance. It will be our aim to give all possible angles that the reader may choose for himself the one that suits him best.

Before recounting the story of this magnificent fiasco, we might list the dramatis personae of the Electrolytic Marine Salts Company:

Reverend Prescott Ford Jernegan,

Vice-President and General Manager

Charles E. Fisher, Assistant Manager

Andrew N. Pierson, Superintendent

Arthur B. Ryan, President

William R. Usher, Treasurer

Albert P. Sawyer, Director

William Phelan, New York Detective

Marcus W. Jernegan, brother of Prescott F. Jernegan

Mr. Farmer, Bookkeeper

Big Jack Ives, Watchman

R.D. Shanahan, Contractor

William F. Arrington, Chemist

Workmen, Stockholders, and interested onlookers a-plenty.

THE KLONDIKE

Article 3, December 30, 1948

After a period of fifty years, only traces of piling remain to show that there ever was such a thing as the project to extract from the ocean water, its gold.

In October 1897, two newcomers to Lubec leased from Hiram the old tidal water gristmill for purposes then unknown to the general public. This mill was a heterogeneous group of buildings that bridged the gap between Millard’s Point and the land opposite, at the entrance of the Mill Pond at North Lubec.

About this time, Mr. Jernegan was heard to remark that millions of dollars were going through Lubec Narrows every day. That traces of gold do exist in ocean water was a generally recognized fact, and it was not unreasonable to believe that some method could be evolved for getting it out.

As far as Lubec is concerned, there were three leading characters in the organization that became known as the Electrolytic Marine Salts Company. Reverend Prescott Ford Jernegan, a native of Martha’s Vineyard and a minister of the First Baptist Church of Middletown, Connecticut, was the originator of the plan to procure the gold from the water. Mr. Jernegan lived in the house now occupied by Mrs. Dennis Tyler. At that time, thick dark spruce trees were plentiful near the house and the eastern end of the Mill Pond. This house was known as the Jernegan House for many years thereafter.

Klondike Plant No. 1 looking east. Originally this was the gristmill of Hiram Comstock, who later bought it back for his Starvation sardine cannery. The millpond is in the foreground. The structures, erected on pilings, spanned Mill Creek near its exit into Johnson Bay. Millard’s Point is the left bank of Mill Creek. The house had been purchased by Reverend Jernegan and later burned, possibly in the August 6, 1921 fire that started on the west side of the Neck and swept across the main road. The Lubec Herald of August 11 headlined this event as the Worst Forest Fire in History of Town. This picture was taken about 1910. Courtesy of Edith Comstock.

Mr. Charles E. Fisher, also of Martha’s Vineyard, who had, among other things, been a floorwalker in a Brooklyn, New York department store, was locally regarded as the brains of the company. Mr. Fisher lived in lavish style in the house later owned by I.M. Bangs and more recently by C.H. Nugent.

The Bangs House. Built on North Lubec Road after the marriage of Albert L. Bangs and Mary E. Comstock Bangs, the couple sold it to Andrew N. Pierson of Cromwell, Connecticut, a superintendent of the Klondike plant. Albert bought it back later in 1898, according to his son Olaf, married to Helen. The property was acquired by Captain James Bangs, Albert’s father, in 1855 from Major Lemuel Trescott, who is buried in a small adjacent fenced military cemetery. It later burned. Courtesy of the Lubec Memorial Library.

Mr. Andrew N. Pierson, a florist of Cromwell, Connecticut, bought the house owned by A.L. Bangs [Albert Leon Bangs, 1865–1946], who later bought it back from Mr. Pierson.

It might be wondered why such a remote spot as North Lubec was selected for the work of this company until one recalls the unusual range of tides to which the Passamaquoddy region is subject. [This area lies within the lower Bay of Fundy, which experiences the widest tidal range in the world. Low to high tide at Lubec can exceed twenty-two feet within about six and a quarter hours.] Then, too, there was good boat service between Eastport and the westward.

This 1914 U.S. Geological Survey map (Eastport Quadrangle) shows all of Seward Neck (North Lubec), as well as Lubec village at the northeast end of Lubec Neck. The site of North Lubec’s Klondike Plant #1 is Mill Creek, just south of North Lubec Landing, where the ferryboats arrived and departed. Farther south is a waterway crossing the Neck to South Bay on the west. Known as the Canal, the Electrolytic Marines Salts Co. began construction of Plant #2 by damming the entrance from Johnson’s Bay on the east. Geologic Atlas of the United States. Eastport Folio Maine. Contour interval 20 feet.

The old Starvation or gristmill at Mill Creek, which had also seen service as a sardine factory, became known as Plant No. l. Gold began to be produced in paying quantities, and a few months later surveying and construction began on Plant No. 2 at the Canal.

People in general were skeptical of the idea of obtaining the gold at first, and men accustomed to large dealings in the stock market were doubtful of a concern whose promoters included a preacher, a floorwalker and a florist engaged in a work so foreign to their vocations. Lubec folks, too, were reluctant to place faith in the program, and the Lubec Herald of March 1, 1898, felt constrained to chide them for their slowness to accept the new order of things. The article said, in part, Good fortune has befallen the Town…A company of able and wealthy men from Mass. and Conn. have located in our midst and are now operating the most wonderful plant in the known world. In spite of all ridicule and false reports the fact stands indisputable that at North Lubec gold and silver are being taken from the sea water in quantities that make the enterprise a paying investment…This is no visionary scheme. The property is bought and paid for, the survey is completed and within a few weeks the plans will all have been drawn and work be actually begun. The time for doubting and surmising has gone by. We must now awake to the realization of facts and act accordingly.

FIRST DREAM OF SEA’S WEALTH

Article 24, September 29, 1949

Prescott Ford Jernegan was born on December 17, 1866. That would make him about eighty three years of age at present, if living, and there is reason to believe that he may be! [According to the website Girl on a Whaleship, based on Jernegan’s older sister Laura’s diaries, Prescott Jernegan died at age seventy-four on February 23, 1942, while visiting Texas.]

Prescott F. Jernegan. Courtesy of Peggy Bailey.

So much is written in the newspapers of 1898 in regard to this story of the Electrolytic Marine Salts Company that should be made available to the people of Lubec, who, assuredly, have a right to all possible particulars. From the Boston Globe of August 7, 1898, appears an article that deals with the period when Mr. Jernegan was a student, and regarded as a grind, at Boston [sic; should be Brown] University:

"It was undoubtedly during his college life that Jernegan’s attention at first turned to his dreams of mineral wealth in and under the sea that afterward matured in the colossal swindle of The Electrolytic Marine Salts Company. In his graduating year about the time of the University Commencement, he made a visit to the works of The Sea Water Steel Company on the shores of Block Island. About that time, some summer visitors, reputed to be wealthy, had conceived the idea of gathering through some process the small particles of rich and valuable steel which washed up from the sea bottom along Crescent Beach [near Old Harbor, Block Island, Rhode Island].

"Several Brown University students were serving as waiters in the hotels of Block Island at that time, and they made some investigations on their own account. With magnets, they gathered a quantity of this steel and when they returned to college it became a matter of deep consideration among some of the old professors and students as well. Persons from the West, interested in the iron industry, established a plant on the sandy beach, just above the mark of the winter and storm tides.

"The place for half a mile was literally black with fine steel sand. The plant cost about $10,000 and consisted of an engine, a large tank or two and some machinery about which the projectors observed great secrecy. A considerable quantity of this valuable steel sand was obtained, through a system of magnets, at first, and later by a more complicated system which separated the white beach sand from the steel. The steel shipped away was found to be of a particularly valuable character, but there was not sufficient quantity washed up along the shore to make it a paying enterprise, and last year not a vestige of the plant remained on the beach. It had completely rotted away.

It was stated at this time that during the investigations of the sea water steel projectors, some particles of gold had been obtained but not enough to make the effort to secure it remunerative. There are graduates of Brown University in Providence today who recall these incidents, and the interest that Jernegan took in the matter at that time. They believed that he at first considered the extraction of gold from sea water practicable, and that when he decided to stock his company he had an idea that with sufficient capital the thing could be made successful.

Now, of course, we know that steel is an alloy, or mixture of iron with some other metal or metals. Undoubtedly, that steel sand was magnetite, an angular and black iron compound common to the shore line of Long Island Sound. The chronicler has personally obtained some of this type of sand, near New Haven, with a magnet. But no gold, you may be certain.

GOLD ENTERED JERNEGAN’S life some years later. Graduating from Brown University with ordination into the ministry, he taught for a year at Phillips Andover Academy. According to a published account in Edgartown, he read Looking Back by Edward Bellamy, a highly popular utopian novel of 1887 that initiated a Nationalist political movement. This book changed the whole later course of my life, he said.²

Jernegan entered Newton Theological Seminary and then, in early 1892, accepted a pastorage at the Middletown Connecticut Baptist Church. His congregation, finding him a bit too liberal for its taste, tolerated him until July 1895. Finding himself in need of employment, his wife and small son settled in Boston when the president of Newton Seminary recommended him to DeLand Baptist Church in Florida in the Daytona Beach metropolitan area. DeLand is home to the main campus of Stetson University, founded by John B. Stetson (1830–1906), who invented the traditional cowboy hat. Stetson was a major funder of Jernegan’s new establishment, paying a third of his salary.³ Stetson’s religious ethics led him to offer good working conditions and benefits to his employees, a practice undoubtedly appealing to Jernegan’s evolving social concerns.

Florida was extending the Atlantic Intracoastal Waterway, comprehensively chronicled in Florida’s Big Dig by William G. Crawford Jr. A segment of canal development under