July 30, 1898: Authorities in Boston issue an arrest warrant for the Rev. Prescott Jernegan in connection with a factory in Lubec, Maine, that Jernegan’s investors were told was extracting gold from seawater.
Jernegan, a Bowdoin College graduate and Baptist minister, and fellow Martha’s Vineyard native Charles Fisher convinced two gullible investors that the process was real by manipulating a seaside experiment that seemed to confirm the two entrepreneurs’ claims. Thus armed with start-up capital, the swindlers cobbled together the Electrolytic Marine Salts Co. and established offices in New York, London and Boston. Jernegan solicited investment from his acquaintances and former schoolmates.
Jernegan and Fisher then went to Lubec. They began retrofitting a grist mill, saying they had picked Lubec because of its extreme tides; their real reason was that Lubec was so remote that it was unlikely to receive many prying visitors. They set up underwater “gold accumulators” and hired 100 men to work on the project.
For the few visitors who did arrive, Fisher repeated his earlier sleight-of-hand trick. According to some versions of the story, it consisted of going underwater to place gold in the accumulators when nobody was looking. Others say he inserted gold surreptitiously in advance into mercury samples that were added to seawater, supposedly to draw the gold from the water. In either case, the company sent the staged result to Boston for verification, giving the duo a chance to lure even more investors. Some of the money was used to develop the Lubec project further and to buy more gold for the contrived demonstrations; Jernegan and Fisher kept the rest.
By the summer of 1898, investors had provided the company almost $1 million – the equivalent of about $31.1 million in 2019. Then a disgruntled former partner spilled the beans to the New York Herald, and the scheme began to collapse. When investors arrived in Lubec to find out what had happened, Fisher had disappeared and Jernegan had taken his wife to Paris.
Jernegan first says he took only his fair share from the money, that Fisher fled with all the company’s money, and that he was looking for Fisher so they could get the plant running again. Nonetheless, Jernegan later sent $85,000 to the United States to help reimburse the cheated investors. After the money arrived and the company’s assets were sold off, the investors received 36 cents per dollar invested.
With that, the great gold swindle of Lubec was over.
Presented by:
Joseph Owen is an author, retired newspaper editor and board member of the Kennebec Historical Society. Owen’s book, “This Day in Maine,” can be ordered at islandportpress.com. To get a signed copy use promo code signedbyjoe at checkout. Joe can be contacted at: jowen@mainetoday.com.
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